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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SHORT-TERM INVESTMENTS CO.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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SHORT-TERM INVESTMENTS CO.
LIQUID ASSETS PORTFOLIO
PRIME PORTFOLIO
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2000
TO THE SHAREHOLDERS:
Short-Term Investments Co. (the company) is holding a special meeting of
shareholders on Wednesday, May 3, 2000 at 3:00 p.m., Central time. The place of
the meeting is the company's offices at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173.
The company, a Maryland corporation, consists of the following series
portfolios: Liquid Assets Portfolio and Prime Portfolio. This proxy statement
relates to both of these series portfolios (together, the funds).
The purposes of the meeting are as follows:
(1) To elect ten directors, each of whom will serve until his or her successor
is elected and qualified.
(2) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(3) To approve changing the fundamental investment restrictions of both funds.
(4) To approve changing the investment objectives of both funds so that they are
non-fundamental.
(5) To ratify the selection of KPMG LLP as independent accountants for each of
the funds for the fiscal year ending in 2000.
(6) To transact such other business as may properly come before the meeting.
You may vote at the meeting if you are the record owner of shares of a fund
as of the close of business on February 18, 2000. If you attend the meeting, you
may vote your shares in person. If you expect to attend the meeting in person,
please notify the company by calling 1-800-952-3502. If you do not expect to
attend the meeting, please fill in, date, sign and return the proxy card in the
enclosed envelope which requires no postage if mailed in the United States.
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It is important that you return your signed proxy card promptly so that a
quorum may be assured. If we do not hear from you after a reasonable amount of
time, you may receive a telephone call, reminding you to vote your shares.
Thank you for your cooperation and continued support.
By order of the Board,
/s/ CAROL F. RELIHAN
Carol F. Relihan
Secretary
March 9, 2000
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SHORT-TERM INVESTMENTS CO.
LIQUID ASSETS PORTFOLIO
PRIME PORTFOLIO
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
Toll Free: (800) 454-0327
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PROXY STATEMENT
DATED MARCH 9, 2000
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2000
WHO IS ASKING FOR MY VOTE?
The Board of Directors (the Board) of Short-Term Investments Co. (the
company) is sending you this proxy statement and the enclosed proxy card (or
cards) on behalf of the two separate series portfolios of the company listed
above (together, the funds). The Board is soliciting your proxy to vote at the
2000 special meeting of shareholders of the company (the meeting).
WHEN AND WHERE WILL THE MEETING BE HELD?
The meeting will be held at the company's offices, 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, at 3:00 p.m., Central time, on Wednesday, May 3,
2000. If you expect to attend the meeting in person, please notify the company
by calling 1-800-952-3502.
WHO IS ELIGIBLE TO VOTE?
The Board is sending this proxy statement, the attached notice of meeting
and the enclosed proxy card on or about March 9, 2000 to all shareholders
entitled to vote. Shareholders who owned shares of common stock of any class of
a fund at the close of business on February 18, 2000 (the record date) are
entitled to vote. The number of shares outstanding on the record date for each
class of each fund are in Appendix A. Each share of common stock of a fund that
you own entitles you to one vote on each proposal set forth in this proxy
statement (a fractional share has a fractional vote).
WHAT PROPOSALS APPLY TO MY FUND?
The following summarizes each proposal to be presented at the meeting:
1. Electing directors
2. Approving a new advisory agreement with A I M Advisors, Inc.
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3. Changing the funds' fundamental investment restrictions
4. Changing the investment objectives of the funds so that they are
non-fundamental
5. Ratifying the Board's selection of independent accountants
6. Considering other matters
The Board is soliciting each fund with respect to each proposal.
WHAT ARE THE DIFFERENT WAYS I CAN VOTE?
Voting by Proxy
Whether you plan to attend the meeting or not, the Board urges you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the meeting and vote.
The Board has named Robert H. Graham and Gary T. Crum and Lewis F. Pennock
as proxies. If you properly fill in your proxy card and send it to the company
in time to vote, your proxy will vote your shares as you have directed. If you
sign the proxy card but do not make specific choices, your proxy will vote your
shares with respect to Proposals 1 through 5 as recommended by the Board.
If any other matter is presented, your proxy will vote in accordance with
his or her best judgment. At the time this proxy statement was printed, the
Board knew of no matters that needed to be acted on at the meeting other than
those discussed in this proxy statement.
If you appoint a proxy, you may revoke it at any time before it is
exercised. You can do this by sending in another proxy with a later date or by
notifying the company's secretary in writing before the meeting that you have
revoked your proxy.
Voting in Person
If you do attend the meeting and wish to vote in person, you will be given
a ballot when you arrive. However, if your shares are held in the name of your
broker, bank or other nominee, you must bring a letter from the nominee
indicating that you are the beneficial owner of the shares on the record date
and authorizing you to vote.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
The Board recommends that shareholders vote as follows:
- FOR electing all ten nominees for director.
- FOR approving a new advisory agreement.
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- FOR changing the funds' fundamental investment restrictions.
- FOR changing the investment objectives of the funds so that they are
non-fundamental.
- FOR ratifying the Board's selection of independent accounts.
WHAT IS THE QUORUM REQUIREMENT?
A quorum of shareholders is necessary to hold a valid meeting. The presence
in person or by proxy of shareholders entitled to cast thirty percent (30%) of
all votes entitled to be cast at the meeting shall constitute a quorum at all
meetings of the shareholders, except with respect to any matter which by law or
the Charter of the company requires the separate approval of one or more classes
or series of the capital stock of the company, in which case the holders of
one-third of the shares of each such class or series (or of such classes or
series voting together as a single class) entitled to vote on the matter shall
constitute a quorum.
Under rules applicable to broker-dealers, if your broker holds your shares
in its name, the broker will be entitled to vote your shares on Proposals 1 and
5 (election of directors and ratification of selection of accountants) even if
it has not received instructions from you. Your broker will not be entitled to
vote on Proposals 2, 3, 4 or 6 (approving a new advisory agreement for your
fund, changing your fund's investment restrictions, making your fund's
investment objective non-fundamental and considering other matters) unless it
has received instructions from you. If your broker does not vote your shares on
Proposals 2, 3, 4 or 6 because it has not received instructions from you, these
shares will be considered broker non-votes.
Broker non-votes and abstentions with respect to any proposal will count as
present for establishing a quorum.
WHAT IS THE VOTE NECESSARY TO APPROVE EACH PROPOSAL?
The affirmative vote of a plurality of votes cast is necessary to elect the
directors, meaning that the nominees receiving the most votes will be elected
(Proposal 1). In an uncontested election for directors, the plurality
requirement is not a factor.
The affirmative vote of a majority of the outstanding voting securities of
each applicable fund, as defined in the Investment Company Act of 1940, as
amended (the 1940 Act), is required to:
- approve the funds' new advisory agreement (Proposal 2);
- approve new fundamental investment restrictions for the funds (Proposal
3); and
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- make the investment objective of each fund non-fundamental (Proposal 4).
The 1940 Act defines a majority of the outstanding voting securities of a
fund (a 1940 Act majority) as the lesser of (a) the vote of holders of 67% or
more of the voting securities of the fund present in person or by proxy, if the
holders of more than 50% of the outstanding voting securities of the fund are
present in person or by proxy, or (b) the vote of the holders of more than 50%
of the outstanding voting securities of the fund. Broker non-votes and
abstentions will not count as votes cast and will have the effect of votes
against Proposals 2 through 4.
The affirmative vote of a majority of votes cast is necessary to ratify the
selection of KPMG LLP as your fund's independent accountants (Proposal 5). For
Proposal 5, abstentions will not count as votes cast and will have no effect on
the outcome of the vote.
CAN THE MEETING BE ADJOURNED?
The proxies may propose to adjourn the meeting to permit further
solicitation of proxies or for other purposes. Any such adjournment will require
the affirmative vote of a majority of the votes cast.
HOW CAN I OBTAIN MORE INFORMATION ABOUT THE FUNDS?
UPON YOUR REQUEST, EACH FUND WILL FURNISH YOU A FREE COPY OF ITS MOST
RECENT ANNUAL REPORT AND THE MOST RECENT SEMIANNUAL REPORT SUCCEEDING THE ANNUAL
REPORT, IF ANY. YOU SHOULD DIRECT YOUR REQUEST TO FUND MANAGEMENT COMPANY AT
P.O. BOX 4497, HOUSTON, TX 77210-4497 OR BY CALLING 1-800-659-1005.
PROPOSAL 1: ELECTION OF DIRECTORS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THE ELECTION OF DIRECTORS?
Proposal 1 applies to all shareholders of both funds.
WHO ARE THE NOMINEES FOR DIRECTOR?
For election of directors at the meeting, the Board has approved the
nomination of Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Edward K. Dunn,
Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Prema Mathai-Davis,
Lewis F. Pennock and Louis S. Sklar, each to serve as director until his or her
successor is elected and qualified.
The proxies will vote for the election of these nominees unless you
withhold authority to vote for any or all of them in the proxy. Each of the
nominees has
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indicated that he or she is willing to serve as a director. If any or all of the
nominees should become unavailable for election due to events not now known or
anticipated, the persons named as proxies will vote for such other nominee or
nominees as the directors who are not interested persons of the company, as
defined in the 1940 Act (the independent directors), may recommend.
All of the nominees presently are directors of the company. The nominees
serve as directors, trustees or officers of the following open-end management
investment companies advised or managed by A I M Advisors, Inc. (AIM): AIM
Advisor Funds, Inc., AIM Equity Funds, Inc., AIM Funds Group, AIM International
Funds, Inc., AIM Investment Securities Funds, AIM Special Opportunities Funds,
AIM Summit Fund, Inc., AIM Tax Exempt Funds, Inc., AIM Variable Insurance Funds,
Inc., Short-Term Investments Co., Short-Term Investments Trust and Tax-Free
Investments Co. (these investment companies and their series portfolios, if any,
are referred to collectively as the AIM funds). Robert H. Graham also serves as
a director or trustee, and officer of other open-end and closed-end management
investment companies managed or advised by AIM. No director or nominee is a
party adverse to the company or any of its affiliates in any material pending
legal proceedings, nor does any director or nominee have an interest materially
adverse to the company.
The following table sets forth information concerning the nominees:
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE DIRECTOR SINCE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- ------------------- ----------------------------------------
<S> <C> <C>
+*Charles T. Bauer (81) May 5, 1993 Director and Chairman, A I M Management
11 Greenway Plaza Group Inc., A I M Advisors, Inc., A I M
Suite 100 Capital Management, Inc., A I M
Houston, TX 77046-1173 Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company; and
Executive Vice Chairman and Director,
AMVESCAP PLC.
Bruce L. Crockett (55) May 5, 1993 Director, ACE Limited (insurance
906 Frome Lane company). Formerly, Director, President
McLean, VA 22102 and Chief Executive Officer, COMSAT
Corporation; and Chairman, Board of
Governors of INTELSAT (international
communications company).
+Owen Daly II (75) May 5, 1993 Formerly, Director, Cortland Trust Inc.
Six Blythewood Road (investment company), CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company
and Monumental General Insurance
Company; and Chairman of the Board of
Equitable Bancorporation.
</TABLE>
+ Does not include years of service as a director or trustee of any
predecessor funds.
* Mr. Bauer is an interested person of AIM and the company, as defined in the
1940 Act, primarily because of his positions with AIM and its affiliated
companies, as set forth above, and through his ownership of stock of
AMVESCAP PLC, which, through A I M Management Group Inc., owns all of the
outstanding stock of AIM.
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<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE DIRECTOR SINCE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- ------------------- ----------------------------------------
<S> <C> <C>
Edward K. Dunn, Jr. (64) March 10, 1998 Chairman of the Board of Directors,
2 Hopkins Plaza Mercantile Mortgage Corporation.
8th Floor, Suite 805 Formerly, Vice Chairman of the Board of
Baltimore, MD 21201 Directors and President and Chief
Operating Officer, Mercantile-Safe
Deposit & Trust Co.; and President,
Mercantile Bankshares.
Jack M. Fields (48) March 11, 1997 Chief Executive Officer, Texana Global,
Jetero Plaza, Suite E Inc. (foreign trading company) and
8810 Will Clayton Parkway Twenty First Century Group, Inc. (a
Humble, TX 77338 governmental affairs company); and
Director, Telscape International and
Administaff. Formerly, Member of the
U.S. House of Representatives.
+**Carl Frischling (63) May 5, 1993 Partner, Kramer Levin Naftalis & Frankel
919 Third Avenue LLP (law firm). Formerly, Partner, Reid
New York, NY 10022 & Priest (law firm).
+***Robert H. Graham (53) May 10, 1994 Director, President and Chief Executive
11 Greenway Plaza Officer, A I M Management Group Inc.;
Suite 100 Director and President, A I M Advisors,
Houston, TX 77046-1173 Inc.; Director and Senior Vice
President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management
Company; and Director and Chief
Executive Officer, Managed Products,
AMVESCAP PLC.
Prema Mathai-Davis (49) September 10, 1998 Chief Executive Officer, YWCA of the
350 Fifth Avenue, Suite U.S.A.
301
New York, NY 10118
+Lewis F. Pennock (57) May 5, 1993 Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
+Louis S. Sklar (60) May 5, 1993 Executive Vice President, Development
The Williams Tower and Operations, Hines Interests Limited
50th Floor Partnership (real estate development).
2800 Post Oak Boulevard
Houston, TX 77056
</TABLE>
+ Does not include years of service as a director or trustee of any predecessor
funds.
** Mr. Frischling is an interested person of the company, as defined in the
1940 Act, primarily because of payments received by his law firm from the
Company for services to the independent directors of the Company.
*** Mr. Graham is an interested person of AIM and the company, as defined in the
1940 Act, primarily because of his positions with AIM and its affiliated
companies, as set forth above, and through his ownership of stock of
AMVESCAP PLC, which, through A I M Management Group Inc., owns all of the
outstanding stock of AIM.
WHAT ARE THE RESPONSIBILITIES OF THE BOARD?
The Board is responsible for the general oversight of the funds' business
and for assuring that the funds are managed in the best interests of each fund's
respective shareholders. The Board periodically reviews the funds' investment
performance as well as the quality of other services provided to the funds and
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their shareholders by each of the fund's service providers, including AIM and
its affiliates. At least annually, the Board reviews the fees paid by the
company for these services and the overall level of the funds' operating
expenses.
WHY ARE DIRECTORS BEING ELECTED AT THE PRESENT TIME?
Under the 1940 Act, the Board may fill vacancies on the Board or appoint
new directors only if, immediately thereafter, at least two-thirds of the
directors will have been elected by shareholders. Currently, seven of the
company's ten directors have been elected by shareholders. As directors retire,
resign or otherwise cease their service as directors in the future, the company
may be unable to fill the vacancies created by such action because three of the
company's ten directors have not been elected by shareholders. To provide the
Board with the flexibility to fill vacancies created when directors cease their
service as directors, and in light of the fact that only seven of the company's
directors have been elected by shareholders, the Board believes it is
appropriate for shareholders to elect directors at the present time.
HOW LONG CAN DIRECTORS SERVE ON THE BOARD?
Directors generally hold office until their successors are elected and
qualified. Pursuant to a policy adopted by the Board, each duly elected or
appointed independent director may continue to serve as a director until
December 31 of the year in which the director turns 72. Independent directors
who were age 65 or older and serving on the board of one or more of the AIM
funds when the policy was initially adopted in 1992 may continue to serve until
December 31 of the year in which the director turns 75. A director of the
company may resign or be removed for cause by a vote of the holders of a
majority of the outstanding shares of the company at any time. A majority of the
Board may extend, from time to time, the retirement date of a director. The
Board has agreed to extend the retirement date of Mr. Daly, who otherwise would
have retired December 31, 2000, to December 31, 2001. In making this decision,
the Board took into account Mr. Daly's experience and active participation as a
director.
WHAT ARE SOME OF THE WAYS IN WHICH THE BOARD REPRESENTS MY INTERESTS?
The Board seeks to represent shareholder interests by:
- reviewing the funds' investment performance on an individual basis with
the funds' respective managers;
- reviewing the quality of the various other services provided to the funds
and their shareholders by each of the fund's service providers, including
AIM and its affiliates;
- discussing with senior management of AIM steps being taken to address any
performance deficiencies;
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- reviewing the fees paid to AIM and its affiliates to ensure that such
fees remain reasonable and competitive with those of other mutual funds,
while at the same time providing sufficient resources to continue to
provide high-quality services in the future;
- monitoring potential conflicts between the funds and AIM and its
affiliates to ensure that the funds continue to be managed in the best
interests of their shareholders; and
- monitoring potential conflicts among funds to ensure that shareholders
continue to realize the benefits of participation in a large and diverse
family of funds.
WHAT ARE THE COMMITTEES OF THE BOARD?
The standing Committees of the Board are the Audit Committee, the
Capitalization Committee, the Investments Committee and the Nominating and
Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for:
- considering management's recommendations of independent accountants for
each fund and evaluating such accountants' performance, costs and
financial stability;
- with AIM, reviewing and coordinating audit plans prepared by the funds'
independent accountants and management's internal audit staff; and
- reviewing financial statements contained in periodic reports to
shareholders with the funds' independent accountants and management.
The members of the Capitalization Committee are Messrs. Bauer, Graham
(Chairman) and Pennock. The Capitalization Committee is responsible for:
- increasing or decreasing the aggregate number of shares of any class of
the company's common stock by classifying and reclassifying the company's
authorized but unissued shares of common stock, up to the company's
authorized capital;
- fixing the terms of such classified or reclassified shares of common
stock; and
- issuing such classified or reclassified shares of common stock upon the
terms set forth in the applicable fund's prospectus, up to the company's
authorized capital.
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The members of the Investments Committee are Messrs. Bauer, Crockett, Daly,
Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr. Mathai-Davis. The
Investments Committee is responsible for:
- overseeing AIM's investment-related compliance systems and procedures to
ensure their continued adequacy; and
- considering and acting, on an interim basis between meetings of the full
Board, on investment-related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing
matters.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for:
- considering and nominating individuals to stand for election as
independent directors as long as the company maintains a distribution
plan pursuant to Rule 12b-1 under the 1940 Act;
- reviewing from time to time the compensation payable to the independent
directors; and
- making recommendations to the Board regarding matters related to
compensation, including deferred compensation plans and retirement plans
for the independent directors.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as directors, provided (i) that such
person is a shareholder of record at the time he or she submits such names and
is entitled to vote at the meeting of shareholders at which directors will be
elected, and (ii) that the Nominating and Compensation Committee or the Board,
as applicable, shall make the final determination of persons to be nominated.
HOW OFTEN DOES THE BOARD MEET?
The Board typically conducts regular meetings nine times a year to review
the operations of the funds and of the other AIM funds. Typically, five of these
nine meetings are held in person, each over a two-day period. One or more
Committees of the Board generally meet in conjunction with each in-person
meeting of the Board. In addition, the Board or any Committee may hold special
meetings by telephone or in person to discuss specific matters that may require
action prior to the next regular meeting.
During the fiscal year ended August 31, 1999, the Board held 9 meetings,
the Audit Committee held 5 meetings, the Investments Committee held 4 meetings
and the Nominating and Compensation Committee held 6 meetings. The
Capitalization Committee did not meet. All of the current directors and Com-
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mittee members then serving attended at least 75% of the meetings of the Board
and applicable Committees, if any, held during the fiscal year ended August 31,
1999.
WHAT ARE THE DIRECTORS PAID FOR THEIR SERVICES?
Each director is reimbursed for expenses incurred in connection with each
meeting of the Board or any Committee attended. Each director who is not also an
officer of the company 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 all of the other AIM funds. Each such director receives a fee,
allocated among the AIM funds for which he or she serves as a director or
trustee, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued for
each director:
<TABLE>
<CAPTION>
TOTAL
RETIREMENT BENEFITS COMPENSATION
AGGREGATE COMPENSATION ACCRUED BY ALL FROM ALL
DIRECTOR FROM THE COMPANY(1) AIM FUNDS(2) AIM FUNDS(3)
- -------- ---------------------- ------------------- ------------
<S> <C> <C> <C>
Charles T. Bauer..... 0 0 0
Bruce L. Crockett.... $9,888 $ 37,485 $103,500
Owen Daly II......... 9,888 122,898 103,500
Edward K. Dunn
Jr. ............... 9,888 0 103,500
Jack M. Fields....... 9,845 15,826 101,500
Carl Frischling(4)... 9,844 97,791 103,500
Robert H. Graham..... 0 0 0
John F. Kroeger(5)... 731 107,896 0
Prema Mathai-Davis... 9,337 0 101,500
Lewis F. Pennock..... 9,844 45,766 103,500
Ian W. Robinson(6)... 5,857 94,422 25,000
Louis S. Sklar....... 9,844 90,232 101,500
</TABLE>
(1) The total amount of compensation deferred by all directors of the company
during the fiscal year ended August 31, 1999, including earnings thereon,
was $61,406.
(2) During the fiscal year ended August 31, 1999, the total amount of expenses
allocated to the company in respect of such retirement benefits was $96,514.
Data reflects compensation for the calendar year ended December 31, 1999.
(3) Each director serves as director or trustee of at least 12 registered
investment companies advised by AIM. Data reflects compensation for the
calendar year ended December 31, 1999. Accruals for 1999 are based on
actuarial projections from 1998.
(4) During the fiscal year ended August 31, 1999, the company paid $36,414 in
legal fees to Mr. Frischling's law firm, Kramer Levin Naftalis & Frankel,
LLP, for services rendered to the independent directors of the company.
(5) Mr. Kroeger was a director until June 11, 1998, when he resigned. On that
date, he became a consultant to the company. Mr. Kroeger passed away on
November 26, 1998. Mr. Kroeger's widow will receive his pension as
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described below under "AIM Funds Retirement Plan for Eligible Directors/
Trustees."
(6) Mr. Robinson was a director until March 12, 1999, when he retired.
A I M Management Group Inc. (AIM Management) has requested proposals from
real estate development firms in the greater Houston area in connection with
exploring possible options upon the expiration of the lease of AIM Management's
current office space on December 31, 2003. Mr. Sklar is employed by Hines
Interests Limited Partnership (Hines). Two of Hines' affiliates, Hines Corporate
Properties, LLC and Sugarland Properties Incorporated (collectively, Hines
Affiliates), have each submitted office space proposals to AIM Management for
evaluation. Mr. Sklar would have an indirect financial interest, and may have a
direct equity interest, in these proposals. Since the Hines Affiliates'
proposals are among many being evaluated by AIM Management, it is not currently
possible to determine the extent of any such interest, or to determine whether
AIM Management will proceed with negotiations with Hines Affiliates on any
specific proposal.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible Directors/
Trustees, each director (who is not an employee of any of the AIM funds, AIM
Management or any of their affiliates) may be entitled to certain benefits upon
retirement from the Board. Pursuant to such retirement plan, a director becomes
eligible to retire and to receive full benefits under the plan when he or she
has attained age 65 and has completed at least five years of continuous service
with one or more of the regulated investment companies managed, administered or
distributed by AIM or its affiliates (the applicable AIM funds). Each eligible
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 or her date of retirement equal to a maximum of 75% of the annual retainer
paid or accrued by the applicable AIM funds for such 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) and based on the number of such director's years of service (not in
excess of 10 years of service) completed with respect to any of the applicable
AIM funds. Such benefit is payable to each eligible director in quarterly
installments. If an eligible director dies after attaining the normal retirement
date but before receipt of all benefits under the plan, the director's surviving
spouse (if any) shall receive a quarterly survivor's benefit equal to 50% 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 applicable AIM fund.
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<PAGE> 15
Set forth below is a table that shows the estimated annual benefits payable
to an eligible director upon retirement assuming the retainer amount reflected
below and various years of service. The estimated credited years of service for
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and
Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 20, 18, 11, 10 and 1 years,
respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
ANNUAL
RETIREMENT
COMPENSATION
PAID BY ALL
NUMBER OF YEARS OF SERVICE APPLICABLE
WITH THE APPLICABLE AIM FUNDS AIM FUNDS
- ----------------------------- ------------
<S> <C>
10........................ $67,500
9........................ $60,750
8........................ $54,000
7........................ $47,250
6........................ $40,500
5........................ $33,750
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling, and Sklar and Dr. Mathai-Davis (the
deferring directors) have each executed a deferred compensation agreement.
Pursuant to the agreements, the deferring directors may elect to defer receipt
of up to 100% of their compensation payable by the company, 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' accounts will
be paid in cash, in generally equal quarterly installments over a period of five
(5) or ten (10) years (depending on the agreement) beginning on the date the
deferring director's retirement benefits commence under the plan. The Board, 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 company. If a deferring director dies prior to the distribution of amounts
in his or her deferral account, the balance of the deferral account will be
distributed to his or her designated beneficiary in a single lump sum payment as
soon as practicable after such deferring director's death. The 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
company and of each other AIM fund from which they are deferring compensation.
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<PAGE> 16
WHAT ARE THE OFFICERS PAID FOR THEIR SERVICES?
The company does not pay its officers for the services they provide to the
company. Instead, the officers, who are also officers or employees of AIM or its
affiliates, are compensated by AIM Management or its affiliates.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 1?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 2:
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 2 applies to all shareholders of both funds.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve a new advisory agreement between AIM
and the company for your fund. The Board is asking you to vote on this new
agreement because the company may amend its advisory agreement only with
shareholder approval. A form of the company's proposed Master Investment
Advisory Agreement is in Appendix B. The proposed advisory agreement amends the
current advisory agreement primarily by:
- omitting references to the provision of administrative services to the
funds;
- omitting certain expense limitations that are no longer applicable;
- clarifying existing non-exclusivity provisions;
- clarifying existing delegation provisions;
- adding provisions regarding affiliated brokerage;
- adding certain provisions relating to certain functions to be performed
by AIM in connection with the funds' securities lending program; and
- clarifying existing liability provisions.
At a meeting held on February 3, 2000, the Board voted to recommend that
you approve a proposal to adopt the new advisory agreement.
WHO IS THE FUNDS' INVESTMENT ADVISOR?
AIM became the investment advisor for each of the funds on the dates
indicated in Appendix C. The current Master Investment Advisory Agreement,
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<PAGE> 17
as amended, was executed, and the funds' shareholders last voted on such
agreement, on the dates indicated in Appendix C. The Board, including a majority
of the independent directors, last approved the current advisory agreement on
May 11, 1999.
AIM is a wholly owned subsidiary of AIM Management, a holding company that
has been engaged in the financial services business since 1976. The address of
AIM and AIM Management is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
AIM was organized in 1976, and, together with its subsidiaries, advises or
manages approximately 120 investment portfolios encompassing a broad range of
investment objectives. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. A list of the principal executive
officer and the directors of AIM is in Appendix D.
DO ANY OF THE COMPANY'S DIRECTORS OR EXECUTIVE OFFICERS HOLD POSITIONS WITH AIM?
Charles T. Bauer, Robert H. Graham, Gary T. Crum, Carol F. Relihan,
Melville B. Cox, Dana R. Sutton, Karen Dunn Kelley and J. Abbott Sprague, all of
whom are directors and/or executive officers of the company, also are directors
and/or officers of AIM. Each of them also beneficially owns shares of AMVESCAP
PLC and/or options to purchase shares of AMVESCAP PLC.
WHAT ARE THE TERMS OF THE CURRENT ADVISORY AGREEMENT?
Under the terms of the current advisory agreement, AIM supervises all
aspects of the funds' operations and provides investment advisory services to
the funds. AIM obtains and evaluates economic, statistical and financial
information to formulate and implement investment programs for the funds. AIM
will not be liable to the funds or their shareholders except in the case of
AIM's willful misfeasance, bad faith, gross negligence or reckless disregard of
duty.
The current advisory agreement provides that the funds will pay or cause to
be paid all of their expenses not assumed by AIM, including without limitation:
- brokerage commissions;
- taxes;
- legal, accounting, auditing or governmental fees;
- the cost of preparing share certificates;
- custodian, transfer and shareholder service agent costs;
- expenses of issue, sale, redemption, and repurchase of shares;
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<PAGE> 18
- expenses of registering and qualifying shares for sale;
- expenses relating to director and shareholder meetings;
- the cost of preparing and distributing reports and notices to
shareholders;
- the fees and other expenses incurred by the funds in connection with
membership in investment company organizations;
- the cost of printing copies of prospectuses and statements of additional
information distributed to the funds' shareholders; and
- all other charges and costs of the funds' operations unless otherwise
explicitly provided.
The current advisory agreement will continue in effect from year to year
for each fund only if such continuance is specifically approved at least
annually by (i) the Board or the vote of a majority of the outstanding voting
securities of that fund (as defined in the 1940 Act), and (ii) the affirmative
vote of a majority of independent directors by votes cast in person at a meeting
called for such purpose. The current advisory agreement provides that the Board,
a majority of the outstanding voting securities of a fund or AIM may terminate
the agreement for a fund on 60 days' written notice without penalty. The
agreement terminates automatically in the event of its assignment.
AIM may from time to time waive or reduce its fee. AIM may rescind
voluntary fee waivers or reductions at any time without further notice to
investors. If, during any fiscal year, AIM has waived or reduced fees, AIM will
retain its ability to be reimbursed for such fee waiver or reduction prior to
the end of such fiscal year. If AIM has agreed to contractual fee waivers or
reductions, AIM may not alter those arrangements to a fund's detriment during
the period stated in the agreement between AIM and the company. AIM may not
change provisions in the current advisory agreement imposing expense limitations
without shareholder approval.
The annual rates at which AIM receives fees from each fund under the
current advisory agreement, as well as the dollar amounts of advisory fees net
of any expense limitations or fee waivers paid to AIM by each fund and the
dollar amount of advisory fees (if any) waived by AIM for each fund for the
fiscal year ended August 31, 1999, are in Appendix E.
WHAT ADDITIONAL SERVICES ARE PROVIDED BY AIM AND ITS AFFILIATES?
AIM and its affiliates also provide additional services to the company and
the funds. AIM provides or arranges for others to provide administrative
services to the funds. Fund Management Company serves as the funds' principal
underwriter for each of the funds and A I M Fund Services, Inc. serves as the
funds' transfer agent. These companies are wholly owned subsidiaries of AIM.
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<PAGE> 19
Information concerning fees paid to AIM and its affiliates for these services is
in Appendix F.
WHAT ADVISORY FEES DOES AIM CHARGE FOR SIMILAR FUNDS IT MANAGES?
The advisory fee schedules for other funds advised by AIM with similar
investment objectives as the funds are in Appendix G.
WHAT ARE THE TERMS OF THE PROPOSED ADVISORY AGREEMENT?
The primary differences between the current advisory agreement and the
proposed advisory agreement that the Board approved are:
- To omit references to the provision of administrative services to the
funds by AIM, because such services are covered by a separate
administrative services agreement between AIM and the company;
- To omit certain expense limitations that are no longer applicable;
- To clarify non-exclusivity provisions that are set forth in the current
advisory agreement;
- To clarify delegation provisions that are set forth in the current
advisory agreement;
- To add provisions regarding affiliated brokerage;
- To add certain provisions relating to certain functions to be performed
by AIM in connection with the funds' securities lending program; and
- To clarify that one fund is not liable for another fund's obligations,
and that AIM's liability to one fund does not automatically extend to
another fund.
Each of these changes is discussed more fully below. Except for these
changes, the terms of the current advisory agreement and the proposed advisory
agreement are substantially similar, except for the effective dates and the
renewal dates.
Administrative Services
The company and AIM are parties to a Master Administrative Services
Agreement dated February 28, 1997. The current advisory agreement states that
AIM may provide certain administrative services to the funds at the Board's
request. The Board has traditionally asked AIM to provide such services to the
funds. AIM then provides such services pursuant to the Master Administrative
Services Agreement.
The Board proposes to separate the advisory services and the administrative
services that AIM provides to the company, so that the provision of administra-
16
<PAGE> 20
tive services is dealt with solely in a Master Administrative Services
Agreement. As a result, the proposed advisory agreement omits all references to
the Master Administrative Services Agreement. Since this omission will not
change the administrative services that AIM provides to the company or the
compensation AIM receives for providing administrative services, the Board
believes that this change is a matter of form rather than a substantive change
in the relationship between AIM and the company.
Expense Limitations
The current advisory agreement provides that advisory fees will be reduced
in accordance with certain expense limitations set forth in securities
regulations of the states in which the funds' shares are qualified for sale.
States can no longer impose expense limitations because federal law has
pre-empted these state regulations. Accordingly, the Board believes that this
expense limitation provision should be omitted from the proposed advisory
agreement.
Non-Exclusivity Provisions
The current advisory agreement provides that neither AIM nor the directors
or officers of the company owe an exclusive duty to the company. The current
advisory agreement expressly permits AIM to render investment advisory,
administrative and other services to other entities (including investment
companies). The current advisory agreement also expressly permits the directors
and officers of the company to serve as partners, officers, directors or
trustees of other entities (including other investment advisory companies). The
Board believes that the non-exclusivity provision in the current advisory
agreement should be divided into two separate provisions: one dealing with AIM
and the other dealing with officers and directors of the company.
The non-exclusivity provisions of the proposed advisory agreement are
substantially similar to the provision in the current advisory agreement.
However, the proposed advisory agreement explicitly states that the company
recognizes that AIM's obligations to other clients may adversely affect the
company's ability to participate in certain investment opportunities. The
proposed advisory agreement also explicitly states that AIM, in its sole
discretion, shall be entitled to determine the allocation of investment
opportunities among the AIM funds and other clients in accordance with a policy
that AIM believes to be equitable.
Delegation
The proposed advisory agreement expands the extent to which AIM can
delegate its rights, duties and obligations by expressly providing that AIM may
delegate any or all of its rights, duties or obligations under the agreement to
one or more sub-advisors rather than solely certain specified advisory services.
It also provides that AIM may replace sub-advisors from time to time in
accordance with applicable federal securities laws and rules and regulations in
effect or
17
<PAGE> 21
interpreted from time to time by the SEC or with exemptive orders or other
similar relief. If, in accordance with the laws, rules, interpretations and
exemptions, AIM is not required to seek shareholder approval of the appointment
of a sub-advisor, it may do so solely upon approval of the Board. Under the
current agreement, any appointment of a sub-advisor would require shareholder
approval.
Affiliated Brokerage
Although AIM does not currently execute trades through brokers or dealers
that are affiliated with AIM, the proposed advisory agreement includes a new
provision that would permit such trades, subject to compliance with applicable
federal securities laws, rules, interpretation and exemptions.
Securities Lending
If a fund engages in securities lending, AIM will provide the fund
investment advisory services and related administrative services. The proposed
advisory agreement includes a new provision that specifies the administrative
services to be rendered by AIM if a fund engages in securities lending
activities, as well as the compensation AIM may receive for such administrative
services. Services to be provided include: (a) overseeing participation in the
securities lending program to ensure compliance with all applicable regulatory
and investment guidelines; (b) assisting the securities lending agent or
principal (the agent) in determining which specific securities are available for
loan; (c) monitoring the agent to ensure that securities loans are effected in
accordance with AIM's instructions and with procedures adopted by the Board; (d)
preparing appropriate periodic reports for, and seeking appropriate approvals
from, the Board with respect to securities lending activities; (e) responding to
agent inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with
securities lending is included in the current advisory fee schedule. As
compensation for the related administrative services AIM will provide, a lending
fund shall pay AIM a fee equal to 25% of the net monthly interest or fee income
retained or paid to the fund from such activities. AIM currently intends to
waive such fees, and has agreed to seek Board approval prior to its receipt of
all or a portion of such fees.
Liability
The proposed advisory agreement clarifies that no fund shall be liable for
the obligations of another fund, and the liability of AIM to one fund shall not
automatically render AIM liable to any other fund.
18
<PAGE> 22
WHAT FACTORS DID THE DIRECTORS CONSIDER IN APPROVING THE ADVISORY AGREEMENT?
At the request of AIM, the Board discussed the approval of the proposed
advisory agreement at a meeting held in person on February 3, 2000. The
independent directors also discussed approval of the proposed advisory agreement
with independent counsel at that meeting. In evaluating the proposed advisory
agreement, the Board requested and received information from AIM to assist it in
its deliberations.
The board considered the following factors in determining the
reasonableness and fairness of the proposed changes to the current advisory
agreement with respect to each fund.
- The qualifications of AIM to provide investment advisory services. The
Board reviewed the credentials and experience of the officers and employees of
AIM who provide investment advisory services to the funds, and noted that the
persons providing services to the funds would not change if the new advisory
agreement is approved by shareholders.
- The range of investment advisory services provided by AIM. The Board
reviewed the services to be provided by AIM under the new advisory agreement,
and noted that no changes in the level or type of services provided by AIM would
occur if the new advisory agreement is approved by shareholders, other than the
provision by AIM of certain administrative services if a fund engages in
securities lending.
- The qualifications of AIM to provide a range of management and
administrative services. The Board reviewed the general nature of the non-
investment advisory services performed by AIM and its affiliates, such as
administrative, transfer agency and distribution services, and the fees received
by AIM and its affiliates for performing such services. In addition to reviewing
such services, the Board also considered the organizational structure employed
by AIM and its affiliates to provide those services. The Board reviewed the
proposed elimination from the new advisory agreement of references to the
provision by AIM of administrative services. The Board also reviewed the
proposed form of administrative services agreement, noted that the services to
be provided under the existing and proposed administrative services agreements
are the same, and concluded that the administrative services to be provided by
AIM would not change if all references to administrative services were deleted
from the new advisory agreement.
- The performance record of the funds. The Board determined that AIM has
provided high quality services with respect to each fund, after considering
performance information that it received during the past year from AIM regarding
the funds. The Board also determined that each fund's performance would not have
been affected if the proposed advisory agreement had been in effect during the
past fiscal year, since no changes to advisory fees are being proposed, other
than to permit AIM's receipt of fees for providing administrative
19
<PAGE> 23
services in connection with securities lending. Such fees would be paid only to
the extent that a fund engages in securities lending, and therefore are not paid
if the fund does not engage in securities lending. The Board noted that the
funds do not currently engage in securities lending, but that such arrangements
provide the opportunity for both the fund and AIM to obtain additional income.
The Board noted that AIM currently intends to waive its right to receive any
fees under the proposed investment advisory agreement for the administrative
services it may provide in connection with securities lending activities. The
Board also noted that AIM has agreed to seek Board approval prior to its receipt
of all or a portion of such fees.
- The profitability of AIM. The Board reviewed information concerning the
profitability of AIM's (and its affiliates') investment advisory and other
activities and its financial condition. The Board noted that no changes to the
advisory fees were being proposed, other than to permit AIM's receipt of fees
for providing administrative services in connection with securities lending, and
further noted that AIM currently intends to waive its right to receive any such
fees and has agreed to seek Board approval prior to its receipt of all or a
portion of such fees. The Board also noted that, in accordance with an exemptive
order issued by the SEC, before a fund may participate in a securities lending
program, the Board must approve such participation. In addition, the Board must
evaluate the securities lending arrangements annually and determine that it is
in the best interests of the shareholders of the fund to invest in AIM-advised
money market funds any cash collateral a fund receives as security for the
borrower's obligation to return the loaned securities. If a fund invests the
cash collateral in AIM-advised money market funds, AIM will receive additional
advisory fees from these money market funds, because the invested cash
collateral will increase the assets of these funds and AIM receives advisory
fees based upon the assets of these funds. The Board noted that the cash
collateral relates to assets of a fund that have already been invested, and the
investment of the cash collateral is intended to benefit a fund by providing it
with additional income. The Board also noted that an investment of the cash
collateral in an AIM-advised money market fund would have a positive effect on
the profitability of AIM.
- The terms of the proposed agreement. The Board reviewed the terms of the
proposed agreement, including changes being made to clarify non-exclusivity,
delegation and liability provisions, to separate administrative services from
advisory services, to have AIM assist the funds if they engage in securities
lending and to permit AIM to engage in brokerage transactions with affiliates.
The Board determined that these changes reflect the current environment in which
the funds operate, and that AIM should have the flexibility to take advantage of
that environment.
After considering the foregoing factors, the Board concluded that it is in
the best interests of the funds and their shareholders to approve the new
advisory agreement.
20
<PAGE> 24
The Board reached its conclusion after careful discussion and analysis. The
Board believes that it has carefully and thoroughly examined the pertinent
issues and alternatives. In recommending that you approve the proposed advisory
agreement, the independent directors have considered what they believe to be in
your best interests. In so doing, they were advised by independent counsel,
retained by the independent directors and paid for by the company, as to the
nature of the matters to be considered and the standards to be used in reaching
their decision.
In accordance with an exemptive order issued by the SEC, before a fund may
participate in a securities lending program, the Board must approve such
participation. In addition, the Board must evaluate the securities lending
arrangements annually, and must determine that it is in the best interests of
the shareholders of the fund to invest in AIM-advised money market funds any
cash collateral a fund receives as security for the borrower's obligation to
return the loaned securities. If a fund invests the cash collateral in
AIM-advised money market funds, AIM will receive additional advisory fees from
these money market funds, because the invested cash collateral will increase the
assets of these funds and AIM receives advisory fees based upon the assets of
these funds.
WHEN WILL PROPOSAL 2 BE IMPLEMENTED?
If approved, the new advisory agreement will become effective on May 25,
2000 and will expire, unless renewed, on or before June 30, 2001. If
shareholders do not approve the proposed advisory agreement with respect to a
fund, the current advisory agreement will continue in effect for such fund.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 2?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSALS 3(a) THROUGH 3(j):
CHANGES TO THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF EACH FUND
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve changing your fund's investment
restrictions. The Board is asking you to vote on these changes because the
investment restrictions described below are fundamental and shareholders must
approve any change.
Pursuant to the 1940 Act, each fund has adopted fundamental restrictions
covering certain types of investment practices, which may be changed only with
21
<PAGE> 25
shareholder approval. Restrictions that a fund has not specifically designated
as being fundamental are considered to be "non-fundamental" and may be changed
by the Board without shareholder approval. In addition to investment
restrictions, the funds operate pursuant to investment objectives and policies.
These objectives and policies govern the investment activities of the funds and
further limit their ability to invest in certain types of securities or engage
in certain types of transactions.
The Board is proposing that you approve changes to your fund's fundamental
investment restrictions. The changes will conform these restrictions to a set of
uniform model restrictions under which most AIM funds will operate. The Board
approved the changes to your fund's fundamental investment restrictions at a
meeting held on February 3, 2000. The current fundamental investment
restrictions for each fund are in Appendix H.
WHAT ARE THE REASONS FOR THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
Several of the funds' current fundamental restrictions reflect regulatory,
business or industry conditions, practices or requirements that are no longer
applicable. For example, the National Securities Markets Improvement Act of 1996
(NSMIA) preempted state laws, under which the funds previously were regulated
and which required the adoption of certain restrictions. In addition, other
fundamental restrictions reflect federal regulatory requirements that remain in
effect but are not required to be stated as fundamental, or in some cases even
as non-fundamental, restrictions. Also, as new AIM funds have been created or
acquired during recent years, substantially similar fundamental restrictions
often have been phrased in slightly different ways, sometimes resulting in minor
but unintended differences in effect or potentially giving rise to unintended
differences in interpretation.
Accordingly, the Board has approved changes to certain of the funds'
fundamental restrictions in order to simplify, modernize and make more uniform
those restrictions that are required to be fundamental.
The Board expects that you will benefit from these changes in a number of
ways. The proposed uniform restrictions will provide the funds with as much
investment flexibility as is possible under the 1940 Act. The Board believes
that eliminating the disparities among the AIM funds' fundamental restrictions
will enhance management's ability to manage efficiently and effectively the
funds' assets in changing regulatory and investment environments. In addition,
by reducing to a minimum those restrictions that can be changed only by
shareholder vote, each fund will be able to avoid the costs and delays
associated with a shareholder meeting if the Board decides to make future
changes to a fund's investment policies.
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<PAGE> 26
WHAT ARE THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
Each proposed change to the funds' fundamental restrictions is discussed
below. The proposed fundamental restrictions will provide the funds with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
operating under such interpretations or exemptions. Even though the funds will
have this flexibility, if the proposed fundamental restrictions are approved,
several new non-fundamental investment restrictions (which function as internal
operating guidelines) will become effective. AIM must follow these
non-fundamental investment restrictions in managing the funds. Of course, if
circumstances change, the Board may change or eliminate any non-fundamental
investment restriction in the future without shareholder approval.
With respect to each fund and each fundamental or non-fundamental
restriction, if a percentage restriction is adhered to at the time of an
investment or transaction, a later increase or decrease in percentage resulting
from a change in the values of the fund's portfolio securities or the amount of
its total assets will not be considered a violation of the restriction.
PROPOSAL 3(a):
CHANGE TO FUNDAMENTAL RESTRICTION ON
ISSUER DIVERSIFICATION
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(a) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(a), a new fundamental restriction on issuer
diversification would replace the current restriction for each fund as follows:
"The fund is a 'diversified company' as defined in the 1940 Act. The
fund will not purchase the securities of any issuer if, as a result,
the fund would fail to be a diversified company within the meaning of
the 1940 Act, and the rules and regulations promulgated thereunder, as
such statute, rules and regulations are amended from time to time or
are interpreted from time to time by the SEC staff (collectively, the
1940 Act laws and interpretations) or except to the extent that the
fund may be permitted to do so by exemptive order or similar relief
(collectively, with the 1940 Act laws and interpretations, the 1940
Act laws, interpretations and exemptions). In complying with this
restriction, however, the fund may purchase securities of other
investment companies to the extent permitted by the 1940 Act laws,
interpretations and exemptions."
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<PAGE> 27
Discussion:
The proposed changes will permit the funds to take advantage of 1940 Act
laws, interpretations and exemptions in effect from time to time relating to
issuer diversification. However, the Board does not expect this change to have
any material impact on the funds' current operations.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each of the funds:
"In complying with the fundamental restriction regarding issuer
diversification, the fund will not, with respect to 100% of its total
assets, purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the fund's
total assets would be invested in the securities of that issuer,
except as permitted by Rule 2a-7 under the 1940 Act, or (ii) the fund
would hold more than 10% of the outstanding voting securities of that
issuer. The fund may (i) purchase securities of other investment
companies as permitted by Section 12(d)(1) of the 1940 Act and (ii)
invest its assets in securities of other money market funds and lend
money to other investment companies or their series portfolios that
have AIM or an affiliate of AIM as an investment advisor (an AIM
fund), subject to the terms and conditions of any exemptive orders
issued by the SEC."
PROPOSAL 3(b):
CHANGE TO FUNDAMENTAL RESTRICTION ON BORROWING MONEY AND ISSUING SENIOR
SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(b) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(b), the existing fundamental restriction on
issuing senior securities and borrowing money for each of the funds would be
changed to read as follows:
"The fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act laws, interpretations and exemptions."
Discussion:
The 1940 Act establishes limits on the ability of the funds to borrow money
or issue "senior securities," a term that is defined, generally, to refer to
obligations that have a priority over the company's shares of common stock with
respect to the distribution of its assets or the payment of dividends.
Currently, the
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<PAGE> 28
fundamental restriction for the funds is more limiting than required by the 1940
Act.
The proposed changes would make the funds' restrictions on borrowing money
or issuing senior securities consistent and no more limiting than required by
the 1940 Act. The proposed changes will also permit the funds to take advantage
of the 1940 Act laws, interpretations and exemptions in effect from time to time
relating to permitted borrowings and issuance of senior securities. The Board
believes that changing the funds' fundamental restriction in this manner will
provide flexibility for future contingencies. However, the Board does not expect
this change to have any material impact on the funds' current operations.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each of the funds:
"In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the fund may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). The fund may
borrow from banks, broker-dealers or an AIM fund. The fund may not
borrow for leveraging, but may borrow for temporary or emergency
purposes, in anticipation of or in response to adverse market
conditions, or for cash management purposes. The fund may not purchase
additional securities when any borrowings from banks exceed 5% of the
fund's total assets."
PROPOSAL 3(c):
CHANGE TO FUNDAMENTAL RESTRICTION ON
UNDERWRITING SECURITIES
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(c) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(c), the existing fundamental restriction on
underwriting securities for each of the funds would be changed to read as
follows:
"The fund may not underwrite the securities of other issuers. This
restriction does not prevent the fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the fund may be considered to be an
underwriter under the Securities Act of 1933."
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<PAGE> 29
Discussion:
The proposed changes to this fundamental restriction would expand the types
of transactions in which a fund may engage even if it may be considered to be an
underwriter. Otherwise, the proposed restriction is substantially similar to the
funds' current investment restriction.
PROPOSAL 3(d):
CHANGE TO FUNDAMENTAL RESTRICTION ON
INDUSTRY CONCENTRATION
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(d) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(d), the existing fundamental restriction on
industry concentration for each of the funds would be changed to read as
follows:
"The fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act laws, interpretations and exemptions) of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the fund's investments in (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, (ii) tax-exempt obligations issued by governments
or political subdivisions of governments, or (iii) bank instruments.
In complying with this restriction, the fund will not consider a
bank-issued guaranty or financial guaranty insurance as a separate
security."
Discussion:
The proposed changes to the funds' fundamental restriction on concentration
would clarify that for industry concentration purposes, the funds will not
consider a bank-issued guaranty or financial guaranty insurance as a separate
security. The proposed changes will also permit the funds to take advantage of
laws, interpretations and exemptions in effect from time to time relating to
concentration issues.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each of the funds:
"In complying with the fundamental restriction regarding industry
concentration, the fund may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in
the same industry."
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PROPOSAL 3(e):
CHANGE TO FUNDAMENTAL RESTRICTION ON PURCHASING OR SELLING REAL ESTATE
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(e) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(e), the existing fundamental restriction on
real estate investments for each of the funds would be changed to read as
follows:
"The fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the fund from investing in issuers
that invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by
real estate or interests therein."
Discussion:
The proposed changes to this fundamental change would clarify the types of
real estate related securities that are permissible investments for each fund.
In addition, the proposed restriction includes an exception that permits each
fund to hold real estate acquired as a result of ownership of securities or
other instruments. However, the Board does not expect this change to have any
material impact on the funds' current operations.
PROPOSAL 3(f):
CHANGE TO FUNDAMENTAL RESTRICTION ON PURCHASING OR SELLING COMMODITIES AND
ELIMINATION OF FUNDAMENTAL RESTRICTIONS ON MARGIN TRANSACTIONS, ON PURCHASING
SECURITIES ON MARGIN, SHORT SALES OF SECURITIES
AND INVESTING IN PUT OR CALL OPTIONS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(f) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(f), the existing fundamental restriction
that prohibits the purchase of commodities and commodity futures contracts, as
well as, margin transactions, short sales of securities and investing in put or
call options for each of the funds would be changed to read as follows:
"The fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the fund from
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<PAGE> 31
engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical
commodities."
Discussion:
The funds are not required to have a fundamental restriction with regard to
margin transactions, short sales of securities or investing in put or call
options. In order to conform the fundamental restrictions for all AIM funds, the
Board believes that the funds' fundamental restriction with regard to margin
transactions, short sales of securities and investing in put or call options
should be deleted. The funds do not intend to engage in margin transactions,
short sales or put or call options. The funds will not purchase any security on
margin, except that each may obtain such short-term credits as may be necessary
for the clearance of purchases and sales of portfolio securities. The Board does
not expect this change to have any material impact on either of the fund's
current operations.
The proposed changes to this fundamental restriction on purchasing or
selling commodities are intended to conform this limitation to similar
limitations for other AIM funds. The funds do not intend to engage in futures
contracts and options thereon or invest in securities that are secured by
physical commodities. The Board does not expect this change to have any material
impact on either of the fund's current operations.
PROPOSAL 3(g):
CHANGE TO FUNDAMENTAL RESTRICTION ON MAKING LOANS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(g) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(g), the existing fundamental restriction on
making loans for each of the funds would be changed to read as follows:
"The fund may not make personal loans or loans of its assets to
persons who control or are under common control with the fund, except
to the extent permitted by 1940 Act laws, interpretations and
exemptions. This restriction does not prevent the fund from, among
other things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and
participation interests."
Discussion:
The proposed changes to this fundamental restriction would broaden the
situations in which a fund could lend its assets. In addition, the proposed
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<PAGE> 32
restriction more completely describes various types of debt instruments
available in the financial markets that the funds may purchase that do not
constitute the making of a loan, and broadens the potential circumstances under
which the funds could make loans.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for each of the funds:
"In complying with the fundamental restriction with regard to making
loans, the fund may lend up to 33 1/3% of its total assets and may
lend money to another AIM fund, on such terms and conditions as the
SEC may require in an exemptive order."
PROPOSAL 3(h):
APPROVAL OF A NEW FUNDAMENTAL INVESTMENT
RESTRICTION ON INVESTING ALL OF EACH FUND'S ASSETS
IN AN OPEN-END FUND
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(h) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(h), the following fundamental investment
restriction on investing in an open-end fund would be added for each of the
funds:
"The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objectives, policies and restrictions as the
fund."
Discussion:
The Board has approved, subject to shareholder approval, the adoption of a
new fundamental investment restriction that would permit each of the funds to
invest all of its assets in another open-end fund. At present the Board has not
considered any specific proposal to authorize a fund to invest all of its assets
in this fashion. The Board will authorize investing a fund's assets in another
open-end fund only if the Board first determines that is in the best interests
of such fund and its shareholders.
The purpose of this proposal is to enhance the flexibility of each fund and
permit it to take advantage of potential efficiencies in the future available
through investment in another open-end fund. This structure allows several funds
with different distribution pricing structures, but the same investment
objective, policies and limitations, to combine their assets in a pooled fund
instead of managing them separately. This could lower the costs of obtaining
portfolio
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<PAGE> 33
execution, custodial, investment advisory and other services for the fund and
could assist in portfolio management to the extent the cash flows of each
investment vehicle offset each other or provide for less volatile asset changes.
Of course, such benefits may not occur.
At present, certain of the fundamental investment restrictions of each fund
may prevent it from investing all of its assets in another registered investment
company and would require a vote of fund shareholders before such a structure
could be adopted. To avoid the costs associated with a subsequent shareholder
meeting, the Board recommends that you vote to permit all of the assets of your
fund to be invested in an open-end fund, without a further vote of shareholders,
but only if the Board subsequently determines that such action is in the best
interests of your fund and its shareholders. If you approve this proposal, the
fundamental restrictions of your fund would be changed to permit such
investment.
A fund's methods of operation and shareholder services would not be
materially affected by its investment in an open-end fund, except that the
assets of the fund might be managed as part of a larger pool. If a fund invested
all of its assets in an open-end fund, it would hold only investment securities
issued by the open-end fund, and the open-end fund would invest directly in
individual securities of other issuers. The fund otherwise would continue its
normal operations. The Board would retain the right to withdraw the fund's
investments from the open-end fund, and the fund then would resume investing
directly in individual securities of other issuers as it does currently.
AIM may benefit from the use of this structure if, as a result, overall
assets under management are increased (since management fees are based on
assets). Also, AIM's expense of providing investment and other services to the
funds may be reduced.
If you approve the proposed restriction, each fund will have the ability to
invest all of its assets in another open-end investment company. Because the
funds do not currently intend to do so, the following non-fundamental investment
restriction will become effective for each of the funds:
"Notwithstanding the fundamental restriction with regard to investing
all assets in an open-end fund, the fund may not invest all of its
assets in the securities of a single open-end management investment
company with the same fundamental investment objectives, policies and
restrictions as the fund."
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<PAGE> 34
PROPOSAL 3(i):
ELIMINATION OF FUNDAMENTAL RESTRICTION ON
MORTGAGING OR PLEDGING ASSETS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(i) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(i), the existing fundamental restriction on
mortgaging or pledging assets for each of the funds would be eliminated.
Discussion:
The funds are not required to have a fundamental restriction with respect
to the mortgaging or pledging of assets. In order to maximize the funds'
flexibility in this area, the Board believes that the funds' restriction on
mortgaging or pledging assets should be eliminated. The Board does not expect
this change to have any material impact on the funds' current operations.
PROPOSAL 3(j):
ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN OBLIGATIONS NOT PAYABLE
IN UNITED STATES CURRENCY
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 3(j) applies to shareholders of both funds.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 3(j), the existing fundamental restriction on
investing in obligations not payable in United States currency for each of the
funds would be eliminated.
Discussion:
The funds are not required to have fundamental restrictions on investing in
obligations not payable in United States currency. However, as money market
funds, they can only invest in obligations payable as to principal and interest
in United States currency. However, the Board does not expect this change to
have any material impact on the funds' current operations.
WHEN WILL PROPOSALS 3(a) THROUGH 3(j) BE IMPLEMENTED?
If you approve each of the above proposals, a new fundamental restriction
will replace the fundamental investment restrictions for both funds.
Accordingly, the proposed fundamental restrictions will become the only
fundamental investment restrictions under which the specified funds will
operate. If approved, the above restrictions may not be changed with respect to
your fund without the
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<PAGE> 35
approval of the holders of a majority of your fund's outstanding voting
securities (as defined in the 1940 Act). The Board anticipates that these
proposals, if approved, will be implemented on May 25, 2000.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSALS 3(a) THROUGH 3(j)?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" PROPOSALS 3(a) THROUGH 3(j).
PROPOSAL 4:
CHANGING THE INVESTMENT OBJECTIVES OF THE FUNDS SO THAT THEY ARE NON-FUNDAMENTAL
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 4 applies to shareholders of both funds.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve changing your fund's investment
objective so that it is non-fundamental, rather than fundamental. The Board is
asking you to vote on this change because the investment objective of your fund
presently is fundamental and shareholders must approve any change.
The current investment objective of your fund is in Appendix I. By making
this objective non-fundamental, the Board may change it as it deems appropriate,
without seeking a shareholder vote. The Board does not anticipate changing the
investment objective of your fund at the present time.
The Board expects that you will benefit from this proposed change because
it will have the ability to respond more quickly to new developments and
changing trends in the marketplace without incurring the time and the costs of a
shareholder vote. This should make your fund more competitive among its peers.
WHEN WILL PROPOSAL 4 BE IMPLEMENTED?
The Board anticipates that Proposal 4, if approved, will be implemented on
May 25, 2000.
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<PAGE> 36
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 4?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 5:
RATIFICATION OF SELECTION OF KPMG LLP AS INDEPENDENT ACCOUNTANTS
WHICH FUNDS' SHAREHOLDERS WILL VOTE ON THIS PROPOSAL?
Proposal 5 applies to all shareholders of both funds.
WHAT AM I BEING ASKED TO APPROVE?
The Board has selected KPMG LLP as independent accountants for each fund
for its fiscal year ending August 31, 2000. As each fund's independent
accountants, KPMG LLP will examine and verify the accounts and securities of
that fund and report on them to the Board and to that fund's shareholders. The
Board's selection will be submitted for your ratification at the meeting.
WHY HAS THE BOARD SELECTED KPMG LLP AS THE INDEPENDENT ACCOUNTANTS?
KPMG was selected primarily on the basis of its expertise as auditors of
investment companies, its independence from AIM and its affiliates, the quality
of its audit services, and the competitiveness of the fees charged for these
services. KPMG LLP also serves as independent accountants for some of the other
AIM funds.
WILL A REPRESENTATIVE FROM KPMG LLP BE AVAILABLE FOR QUESTIONS?
The Board expects that a representative of KPMG LLP will be present at the
meeting. The representative will have an opportunity to make a statement should
he or she desire to do so and will be available to respond to shareholders'
questions.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 5?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
GENERAL INFORMATION
WHO ARE THE EXECUTIVE OFFICERS OF THE COMPANY?
Information about the executive officers of the company is in Appendix J.
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<PAGE> 37
WHAT IS THE SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN HOLDERS?
Information about the ownership of each class of each fund's shares by the
directors and the executive officers of the company and by 5% holders of each
class is in Appendix K.
WHO ARE THE INVESTMENT ADVISOR, ADMINISTRATOR AND PRINCIPAL UNDERWRITER OF THE
FUNDS?
A I M Advisors, Inc., whose principal address is 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, serves as the investment advisor and
administrator for the funds.
Fund Management Company, whose principal address is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173, serves as the principal underwriter for
each of the funds.
HOW WILL THE COMPANY SOLICIT PROXIES?
The company will bear the cost of soliciting proxies. The company expects
to solicit proxies principally by mail, but the company may also solicit proxies
by facsimile or personal interview. The company may also reimburse firms and
others for their expenses in forwarding solicitation materials to the beneficial
owners of shares of the funds.
HOW CAN I SUBMIT A PROPOSAL?
As a general matter, the funds do not hold regular meetings of
shareholders. If you wish to submit a proposal for consideration at a meeting of
shareholders of a fund, you should send such proposal to the company at the
address set forth on the first page of this proxy statement. To be considered
for presentation at a shareholders' meeting, the company must receive proposals
a reasonable time before proxy materials are prepared relating to that meeting.
Your proposal also must comply with applicable law.
OTHER MATTERS
The Board does not know of any matters to be presented at the meeting other
than those set forth in this proxy statement. If any other business should come
before the meeting, the persons named in the accompanying proxy will vote
thereon in accordance with their best judgment.
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<PAGE> 38
APPENDIX A
SHARES OF SHORT-TERM INVESTMENTS CO.
OUTSTANDING ON FEBRUARY 18, 2000
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF FUND (CLASS) OUTSTANDING
- -------------------- ------------------
<S> <C>
Liquid Assets Portfolio
Cash Management Class..................................... 2,727,483,327.700
Institutional Class....................................... 14,844,473,499.800
Personal Investment Class................................. 5,502,065.510
Private Investment Class.................................. 477,806,680.430
Reserve Class............................................. 95,323.500
Resource Class............................................ 670,068,014.450
Prime Portfolio
Cash Management Class..................................... 1,081,452,220.670
Institutional Class....................................... 11,287,510,843.630
Personal Investment Class................................. 99,165,272.380
Private Investment Class.................................. 408,082,773.330
Reserve Class............................................. 114,770,746.800
Resource Class............................................ 831,469,741.390
</TABLE>
A-1
<PAGE> 39
APPENDIX B
SHORT-TERM INVESTMENTS CO.
FORM OF MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this day of , , by and
between Short-Term Investments Co., a Maryland corporation (the "Company") with
respect to its series of shares shown on the Schedule A attached hereto, as the
same may be amended from time to time, and A I M Advisors, Inc., a Delaware
corporation (the "Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, the Company's Charter (the "Charter") authorizes the Board of
Directors of the Company (the "Board of Directors") to create separate series of
shares of common stock of the Company, and as of the date of this Agreement, the
Board of Directors has created two separate series portfolios (such portfolios
and any other portfolios hereafter added to the Company being referred to
collectively herein as the "Funds"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for the
Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Board of Directors. The Advisor shall give the
Company and the Funds the benefit of its best judgment, efforts and facilities
in rendering its services as investment advisor.
B-1
<PAGE> 40
2. Investment Analysis and Implementation. In carrying out its obligations
under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Funds,
and whether concerning the individual issuers whose securities are included
in the assets of the Funds or the activities in which such issuers engage,
or with respect to securities which the Advisor considers desirable for
inclusion in the Funds' assets;
(c) determine which issuers and securities shall be represented in the
Funds' investment portfolios and regularly report thereon to the Board of
Directors;
(d) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Board of Directors; and
(e) take, on behalf of the Company and the Funds, all actions which
appear to the Company and the Funds necessary to carry into effect such
purchase and sale programs and supervisory functions as aforesaid,
including but not limited to the placing of orders for the purchase and
sale of securities for the Funds.
3. Securities Lending Duties and Fees. The Advisor agrees to provide the
following services in connection with the securities lending activities of each
Fund: (a) oversee participation in the securities lending program to ensure
compliance with all applicable regulatory and investment guidelines; (b) assist
the securities lending agent or principal (the "Agent") in determining which
specific securities are available for loan; (c) monitor the Agent to ensure that
securities loans are effected in accordance with the Advisor's instructions and
with procedures adopted by the Board of Directors; (d) prepare appropriate
periodic reports for, and seek appropriate approvals from, the Board of
Directors with respect to securities lending activities; (e) respond to Agent
inquiries; and (f) perform such other duties as necessary.
As compensation for such services provided by the Advisor in connection
with securities lending activities of each Fund, a lending Fund shall pay the
Advisor a fee equal to 25% of the net monthly interest or fee income retained or
paid to the Fund from such activities.
4. Delegation of Responsibilities. The Advisor is authorized to delegate
any or all of its rights, duties and obligations under this Agreement to one or
more sub-advisors, and may enter into agreements with sub-advisors, and may
replace any such sub-advisors from time to time in its discretion, in accordance
B-2
<PAGE> 41
with the 1940 Act, the Advisers Act, and rules and regulations thereunder, as
such statutes, rules and regulations are amended from time to time or are
interpreted from time to time by the staff of the Securities and Exchange
Commission ("SEC"), and if applicable, exemptive orders or similar relief
granted by the SEC and upon receipt of approval of such sub-advisors by the
Board of Directors and by shareholders (unless any such approval is not required
by such statutes, rules, regulations, interpretations, orders or similar
relief).
5. Independent Contractors. The Advisor and any sub-advisors shall for all
purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Company in any way or otherwise be deemed to be an agent of the
Company.
6. Control by Board of Directors. Any investment program undertaken by the
Advisor pursuant to this Agreement, as well as any other activities undertaken
by the Advisor on behalf of the Funds, shall at all times be subject to any
directives of the Board of Directors.
7. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers Act and
any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company, as
the same may be amended from time to time under the Securities Act of 1933
and the 1940 Act;
(c) the provisions of the Charter, as the same may be amended from
time to time;
(d) the provisions of the by-laws of the Company, as the same may be
amended from time to time; and
(e) any other applicable provisions of state, federal or foreign law.
8. Broker-Dealer Relationships. The Advisor is responsible for decisions to
buy and sell securities for the Funds, broker-dealer selection, and negotiation
of brokerage commission rates.
(a) The Advisor's primary consideration in effecting a security
transaction will be to obtain the best execution.
(b) In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration: the
best net price available; the reliability, integrity and financial
condition of the broker-dealer; the size of and the difficulty in executing
the order; and the value of the expected contribution of the broker-dealer
to the investment performance of the Funds on a continuing basis.
Accordingly, the price to the Funds
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<PAGE> 42
in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of
the fund execution services offered.
(c) Subject to such policies as the Board of Directors may from time
to time determine, the Advisor shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely
by reason of its having caused the Funds to pay a broker or dealer that
provides brokerage and research services to the Advisor an amount of
commission for effecting a fund investment transaction in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction, if the Advisor determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed
in terms of either that particular transaction or the Advisor's overall
responsibilities with respect to a particular Fund, other Funds of the
Company, and to other clients of the Advisor as to which the Advisor
exercises investment discretion. The Advisor is further authorized to
allocate the orders placed by it on behalf of the Funds to such brokers and
dealers who also provide research or statistical material, or other
services to the Funds, to the Advisor, or to any sub-advisor. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine and the Advisor will report on said allocations regularly to the
Board of Directors indicating the brokers to whom such allocations have
been made and the basis therefor.
(d) With respect to one or more Funds, to the extent the Advisor does
not delegate trading responsibility to one or more sub-advisors, in making
decisions regarding broker-dealer relationships, the Advisor may take into
consideration the recommendations of any sub-advisor appointed to provide
investment research or advisory services in connection with the Funds, and
may take into consideration any research services provided to such sub-
advisor by broker-dealers.
(e) Subject to the other provisions of this Section 8, the 1940 Act,
the Securities Exchange Act of 1934, and rules and regulations thereunder,
as such statutes, rules and regulations are amended from time to time or
are interpreted from time to time by the staff of the SEC, any exemptive
orders issued by the SEC, and any other applicable provisions of law, the
Advisor may select brokers or dealers with which it or the Funds are
affiliated.
9. Compensation. The compensation that each Fund shall pay the Advisor is
set forth in Schedule B attached hereto.
10. Expenses of the Funds. All of the ordinary business expenses incurred
in the operations of the Funds and the offering of their shares shall be borne
by the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage commis-
B-4
<PAGE> 43
sions, taxes, legal, accounting, auditing, or governmental fees, the cost of
preparing share certificates, custodian, transfer and shareholder service agent
costs, expenses of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to directors and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Company on behalf
of the Funds in connection with membership in investment company organizations
and the cost of printing copies of prospectuses and statements of additional
information distributed to the Funds' shareholders.
11. Services to Other Companies or Accounts. The Company understands that
the Advisor now acts, will continue to act and may act in the future as
investment manager or advisor to fiduciary and other managed accounts, and as
investment manager or advisor to other investment companies, including any
offshore entities, or accounts, and the Company has no objection to the Advisor
so acting, provided that whenever the Company and one or more other investment
companies or accounts managed or advised by the Advisor have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to each company and account.
The Company recognizes that in some cases this procedure may adversely affect
the size of the positions obtainable and the prices realized for the Funds.
12. Non-Exclusivity. The Company understands that the persons employed by
the Advisor to assist in the performance of the Advisor's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict the right of the Advisor
or any affiliate of the Advisor to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature. The Company
further understands and agrees that officers or directors of the Advisor may
serve as officers or directors of the Company, and that officers or directors of
the Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
13. Effective Date, Term and Approval. This Agreement shall become
effective with respect to a Fund, if approved by the shareholders of such Fund,
on the Effective Date for such Fund, as set forth in Schedule A attached hereto.
If so approved, this Agreement shall thereafter continue in force and effect
until June 30, 2001, and may be continued from year to year thereafter, provided
that the continuation of the Agreement is specifically approved at least
annually:
(a) (i) by the Board of Directors or (ii) by the vote of "a majority
of the outstanding voting securities" of such Fund (as defined in Section
2(a)(42) of the 1940 Act); and
B-5
<PAGE> 44
(b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Company directors), by
votes cast in person at a meeting specifically called for such purpose.
14. Termination. This Agreement may be terminated as to the Company or as
to any one or more of the Funds at any time, without the payment of any penalty,
by vote of the Board of Directors or by vote of a majority of the outstanding
voting securities of the applicable Fund, or by the Advisor, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by the party entitled to receipt thereof. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
15. Amendment. No amendment of this Agreement shall be effective unless it
is in writing and signed by the party against which enforcement of the amendment
is sought.
16. Liability of Advisor and Fund. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company or to
the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security. Any
liability of the Advisor to one Fund shall not automatically impart liability on
the part of the Advisor to any other Fund. No Fund shall be liable for the
obligations of any other Fund.
17. Liability of Shareholders. Notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually but are binding
only upon the assets and property of the Company and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as shareholders of private corporations for
profit.
18. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company and that of the Advisor shall be 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173.
19. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of
B-6
<PAGE> 45
any controlling decision of any such court, by rules, regulations or orders of
the SEC issued pursuant to said Acts. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
Subject to the foregoing, this Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the State of Texas.
20. License Agreement. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Company with respect to such series of shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
<TABLE>
<S> <C>
SHORT-TERM INVESTMENTS CO.
(a Maryland corporation)
Attest:
By:
- ---------------------------------------
Assistant Secretary --------------------------------------
President
(SEAL)
Attest: A I M ADVISORS, INC.
- --------------------------------------- By:
Assistant Secretary
--------------------------------------
(SEAL) President
</TABLE>
B-7
<PAGE> 46
SCHEDULE A
FUNDS AND EFFECTIVE DATES
<TABLE>
<CAPTION>
EFFECTIVE DATE OF
NAME OF FUND ADVISORY AGREEMENT
- ------------ ------------------
<S> <C>
Liquid Assets Portfolio May 25, 2000
Prime Portfolio May 25, 2000
</TABLE>
B-8
<PAGE> 47
SCHEDULE B
COMPENSATION TO THE ADVISOR
The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered, an advisory fee for such Fund set forth
below. Such fee shall be calculated by applying the following annual rates to
the average daily net assets of such Fund for the calendar year computed in the
manner used for the determination of the net asset value of shares of such Fund.
LIQUID ASSETS PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
All assets....................... 0.15%
</TABLE>
PRIME PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $100 million............... 0.20%
Over $100 million to $200
million........................ 0.15%
Over $200 million to $300
million........................ 0.10%
Over $300 million to $1.5
billion........................ 0.06%
Over $1.5 billion................ 0.05%
</TABLE>
B-9
<PAGE> 48
APPENDIX C
DATES OF ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
DATE OF CURRENT DATE LAST SUBMITTED DATE AIM BECAME
NAME OF FUND ADVISORY AGREEMENT TO A VOTE OF SHAREHOLDERS INVESTMENT ADVISOR
- ------------ ------------------ ------------------------- ------------------
<S> <C> <C> <C>
Liquid Assets
Portfolio February 28, 1997 February 7, 1997* August 6, 1993
Prime Portfolio February 28, 1997 February 7, 1997* October 15, 1980
</TABLE>
* The current advisory agreement was last submitted to a vote of public
shareholders in connection with a merger between A I M Management Group Inc.
and a subsidiary of INVESCO PLC.
C-1
<PAGE> 49
APPENDIX D
PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS OF A I M ADVISORS, INC.
The following table provides information with respect to the principal
executive officer and the directors of A I M Advisors, Inc., all of whose
business address is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH AIM PRINCIPAL OCCUPATION
- ---------------- ----------------- --------------------
<S> <C> <C>
Charles T. Bauer........ Director and Chairman See director table under Proposal 1.
Gary T. Crum............ Director and Senior Vice See Appendix J.
President
Robert H. Graham........ Director and President See director table under Proposal 1.
Dawn M. Hawley.......... Director, Senior Vice Senior Vice President, Chief
President and Treasurer Financial Officer and Treasurer,
A I M Management Group Inc.; and
Vice President and Treasurer, A I M
Capital Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund Management
Company.
Carol F. Relihan........ Director, Senior Vice See Appendix J.
President, General
Counsel and Secretary
</TABLE>
D-1
<PAGE> 50
APPENDIX E
ADVISORY AGREEMENT FEE SCHEDULE
<TABLE>
<CAPTION>
AGGREGATE
TOTAL NET NET FEES
ASSETS FOR THE PAID TO AIM FEE WAIVERS
MOST FOR THE MOST FOR THE MOST
RECENTLY RECENTLY RECENTLY
ANNUAL RATE COMPLETED COMPLETED COMPLETED
(BASED ON AVERAGE FISCAL PERIOD FISCAL PERIOD FISCAL PERIOD
NAME OF FUND DAILY NET ASSETS) OR YEAR OR YEAR OR YEAR
- ------------ ----------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Liquid Assets 0.15% of the average daily $6,194,495,351 $3,598,269 $6,215,196
Portfolio net assets of the Portfolio
Prime Portfolio 0.20% of the first $100 $8,724,224,691 $5,205,023 -0-
million
0.15% over $100 million up
to $200 million
0.10% over $200 million up
to $300 million
0.06% over $300 million up
to $1.5 billion
0.05% over $1.5 billion
</TABLE>
E-1
<PAGE> 51
APPENDIX F
FEES PAID TO AIM AND ITS AFFILIATES IN MOST RECENT FISCAL YEAR
The following chart sets forth the fees paid during the fiscal period or
year ended August 31, 1999 by the company to A I M Advisors, Inc. ("AIM") for
administrative services and to affiliates of AIM. The administrative and other
services currently provided by AIM and its affiliates will continue to be
provided after the investment advisory contract with AIM is approved.
<TABLE>
<CAPTION>
AIM FUND
(ADMINISTRATIVE MANAGEMENT A I M FUND
SERVICES) COMPANY* SERVICES, INC.
--------------- ---------- --------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS CO.
Liquid Assets Portfolio................ $155,139 $ 18,931 $720,090
Prime Portfolio........................ 258,934 304,402 903,145
</TABLE>
* Net amount received from Rule 12b-1 fees. Excludes amounts reallowed to
brokers, dealers, agents and other service providers.
F-1
<PAGE> 52
APPENDIX G
ADVISORY FEE SCHEDULES FOR OTHER AIM FUNDS
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have a similar investment
objective as Liquid Assets Portfolio and Prime Portfolio, all of which have
similar investment objectives.
<TABLE>
<CAPTION>
FEE WAIVERS,
EXPENSE LIMITATIONS
AND/OR EXPENSE
ANNUAL RATE TOTAL NET ASSETS FOR REIMBURSEMENTS FOR
(BASED ON AVERAGE THE MOST RECENTLY THE MOST RECENTLY
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR COMPLETED FISCAL YEAR
- ------------ ----------------- --------------------- ---------------------
<S> <C> <C> <C>
AIM Money Market Fund........ 0.55% of the first $1 billion; 0.50% $1,451,025,249 N/A
of the excess over $1 billion
AIM V.I. Money Market $ 95,152,169 N/A
Fund........................ 0.40% of first $250 million; 0.35% of
excess over $250 million
Government & Agency $ 279,185,112 Limit Net Expenses,
Portfolio................... 0.10% excluding Rule 12b-1
distribution plan fee,
interest expense, taxes
and extraordinary expenses
to, 0.06%
Treasury Portfolio........... 0.15% of first $300 million; 0.06% $5,203,747,106 N/A
over $300 million up to $1.5 billion;
0.05% of the excess over $1.5 billion
Treasury TaxAdvantage $ 133,893,290 Limit Net Expenses,
Portfolio................... 0.20% of the first $250 million; excluding Rule 12b-1
0.15% over $250 million up to $500 distribution plan fee,
million; 0.10% of the excess over interest expense, taxes
$500 million and extraordinary
expenses, to 0.11%
</TABLE>
G-1
<PAGE> 53
APPENDIX H
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
LIQUID ASSETS PORTFOLIO AND PRIME PORTFOLIO
Liquid Assets and Prime 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
CD's, bankers' acceptances, time deposits and bank repurchase agreements;
(2) purchase securities of any one issuer (other than obligations of
the U.S. Government, its agencies or instrumentalities) if, immediately
after such purchase, more than 5% of the value of the Portfolio's total
assets would be invested in such issuer, except as permitted by Rule 2a-7
under the 1940 Act, as amended from time to time, and except that the
Portfolio may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order;
(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 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;
H-1
<PAGE> 54
(7) invest in real estate, except that the Portfolio may purchase and
sell securities secured by real estate or interests therein or issued by
issuers which invest in real estate or interests therein;
(8) purchase or sell commodities or commodity futures contracts,
purchase securities on margin, make short sales or invest in puts or calls;
or
(9) invest in any obligation not payable as to principal and interest
in United States currency.
H-2
<PAGE> 55
APPENDIX I
CURRENT INVESTMENT OBJECTIVES
LIQUID ASSETS PORTFOLIO
The fund's investment objective is to provide as high a level of current
income as is consistent with the preservation of capital and liquidity.
PRIME PORTFOLIO
The fund's investment objective is to maximize current income consistent
with the preservation of capital and maintenance of liquidity.
I-1
<PAGE> 56
APPENDIX J
EXECUTIVE OFFICERS OF SHORT-TERM INVESTMENTS CO.
The following table provides information with respect to the executive
officers of the company. Each executive officer is elected by the Board and
serves until his or her successor is chosen and qualified or until his or her
resignation or removal by the Board. The business address of all officers of the
company is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION PRINCIPAL OCCUPATION(S)
WITH THE COMPANY OFFICER SINCE DURING PAST 5 YEARS
- ---------------------- ------------- -----------------------
<S> <C> <C>
Charles T. Bauer (81), May 5, 1993 See director table under Proposal 1
Chairman
Robert H. Graham (53), January 1, 1994 See director table under Proposal 1
President
Gary T. Crum (52), September 11, 1993 Director and President, A I M Capital
Senior Vice President Management, Inc.; Director and
Executive Vice President, A I M
Management Group Inc.; Director and
Senior Vice President A I M Advisors,
Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
Carol F. Relihan (45) August 4, 1994 Director, Senior Vice President,
Senior Vice President and General Counsel and Secretary, A I M
Secretary Advisors, Inc.; Senior Vice President,
General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice
President and General Counsel, Fund
Management Company; Vice President and
General Counsel, A I M Fund Services,
Inc.; and Vice President, A I M
Capital Management, Inc. and A I M
Distributors, Inc.
Melville B. Cox (56), September 11, 1993 Vice President and Chief Compliance
Vice President Officer, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund Management
Company
Dana R. Sutton (41), September 11, 1993 Vice President and Fund Controller,
Vice President and Treasurer A I M Advisors, Inc.; and Assistant
Vice President and Assistant
Treasurer, Fund Management Company.
Karen Dunn Kelley (39) September 11, 1993 Senior Vice President, A I M Capital
Vice President Management, Inc. and Vice President,
A I M Advisors, Inc.
J. Abbott Sprague (45) September 11, 1993 Director and President, Fund
Vice President Management Company; Director, A I M
Fund Services, Inc.; and Senior Vice
President, A I M Advisors, Inc. and
A I M Management Group, Inc.
</TABLE>
J-1
<PAGE> 57
APPENDIX K
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
As of February 18, 2000, none of the directors or executive officers of the
trust owned shares of any fund of the company. The directors and officers, as a
group, held less than 1% of the shares of any fund as of February 18, 2000
K-1
<PAGE> 58
SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS
To the best knowledge of the company, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of each fund as of
February 18, 2000, and the amount of the outstanding shares owned of record or
beneficially by such holders, are set forth below.
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NAME AND ADDRESS OF SHARES OWNED CLASS OWNED SHARES OWNED CLASS OWNED
FUND (CLASS) RECORD OWNER OF RECORD OF RECORD BENEFICIALLY* BENEFICIALLY*
- ------------ ------------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
LIQUID ASSETS
PORTFOLIO
Cash Management
Class.............. CIBC World 472,643,624 17.33% - 0 - - 0 -
Markets
200 Liberty Street
World Financial
Center
New York, NY 10281
Mellon Global Cash
Management Accounts 328,605,000 12.05% - 0 - - 0 -
Three Mellon Bank
Center
Room 2501
Pittsburgh, PA
15259-0001
Bank Of New York 260,012,215 9.53% - 0 - - 0 -
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Hambrecht & Quist 193,510,094 7.09% - 0 - - 0 -
LLC
230 Park Avenue,
19th Floor
New York, NY 10169
Gateway Securities, 184,725,212 6.77% - 0 - - 0 -
LLC
PO Box 2000
N. Sioux City, ND
57049-2000
Gateway, Inc. 161,858,540 5.93% - 0 - - 0 -
610 Gateway Drive
N. Sioux City, SD
57049-2000
</TABLE>
K-2
<PAGE> 59
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NAME AND ADDRESS OF SHARES OWNED CLASS OWNED SHARES OWNED CLASS OWNED
FUND (CLASS) RECORD OWNER OF RECORD OF RECORD BENEFICIALLY* BENEFICIALLY*
- ------------ ------------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
First Union 158,186,034 5.80% - 0 - - 0 -
Subaccounts
8739 Research Drive
Capital Markets
Charlotte, NC
28262-0675
Institutional
Class.............. A I M Advisors, 2,987,589,352** 20.13% - 0 - - 0 -
Inc.
AIM Fund of Funds
Account
Money Market
Portfolio Admin.
11 Greenway Plaza,
Ste. 100
Houston, TX
77046
Turtle & Co Sweep 1,632,319,992 11.00% - 0 - - 0 -
P.O.Box 9427
Boston, MA 02209
BZW Barclays Global 1,468,570,000 9.89% - 0 - - 0 -
Investors, As Agent
980 9th St.
Suite 600
Sacramento, CA
95814
Paine Webber SSB 1,097,039,951 7.39% - 0 - - 0 -
1000 Harbor Blvd
6th Floor
Mutual Fund
Operations
State Street
Custodial Accounts
Weehawken, NJ
07087-6790
Personal Investment
Class.............. Huntington 4,712,201 85.64% - 0 - - 0 -
Investment 112
135 North
Pennsylvania
Suite 800
Indianapolis, IN
46204
Texas Capital Bank, 659,080 11.98% - 0 - - 0 -
N.A.
2100 McKinney
Ave., Ste 900
Dallas, TX 75201
</TABLE>
K-3
<PAGE> 60
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NAME AND ADDRESS OF SHARES OWNED CLASS OWNED SHARES OWNED CLASS OWNED
FUND (CLASS) RECORD OWNER OF RECORD OF RECORD BENEFICIALLY* BENEFICIALLY*
- ------------ ------------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Private Investment
Class.............. Bank of New York 214,958,923 44.99% - 0 - - 0 -
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital 59,191,565 12.39% - 0 - - 0 -
Corp
41 S High St.,
Ninth Floor
Columbus, OH 43287
Mellon Bank NA 48,694,262 10.19% - 0 - - 0 -
P.O. Box 710
Pittsburgh, PA
15230 0710
Central Carolina 44,084,232 9.23% - 0 - - 0 -
Bank and Trust Co
111 Corcoran Street
Durham, NC 27702
Reserve Class........ First National 95,324 100.00% - 0 - - 0 -
Banker's Bank
P.O. Drawer 80579
Baton Rouge, LA
70898
Resource Class....... CIBC World 381,087,780 56.87% - 0 - - 0 -
Markets
200 Liberty Street
World Financial
Center
New York, NY 10281
Hambrecht & Quist 180,464,460 26.93% - 0 - - 0 -
LLC
230 Park Avenue,
19th Floor
New York, NY 10169
Hambrecht & Quist 63,403,834 9.46% - 0 - - 0 -
LLC
1100 Newport
Center Drive,
Second Floor
Newport Beach, CA
92660
</TABLE>
K-4
<PAGE> 61
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NAME AND ADDRESS OF SHARES OWNED CLASS OWNED SHARES OWNED CLASS OWNED
FUND (CLASS) RECORD OWNER OF RECORD OF RECORD BENEFICIALLY* BENEFICIALLY*
- ------------ ------------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
PRIME PORTFOLIO
Cash Management
Class.............. Bank of New York 269,300,692 24.90% - 0 - - 0 -
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Hambrecht & Quist 122,496,762 11.33% - 0 - - 0 -
LLC
230 Park Avenue,
19th Floor
New York, NY 10169
CIBC World Markets 97,672,909 9.03% - 0 - - 0 -
200 Liberty Street
World Financial
Center
New York, NY 10281
IGT 80,251,465 7.42% - 0 - - 0 -
P.O. Box 10120
Reno, NV 89502
Bost & Co FBO The 76,794,760 7.10% - 0 - - 0 -
Kwelm Partnership
P.O. Box 3198
Attn: Mutual Fund
Operations
Pittsburgh, PA
15230-3198
Mellon Bank NA 58,293,184 5.39% - 0 - - 0 -
P.O. Box 710
Pittsburgh, PA
15230-0710
Institutional
Class.............. A I M Advisors, 2,987,589,352** 26.47% - 0 - - 0 -
Inc.
AIM Fund of Funds
Account
Money Market
Portfolio Admin.
11 Greenway Plaza,
Ste. 100
Houston, TX
77046
</TABLE>
K-5
<PAGE> 62
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NAME AND ADDRESS OF SHARES OWNED CLASS OWNED SHARES OWNED CLASS OWNED
FUND (CLASS) RECORD OWNER OF RECORD OF RECORD BENEFICIALLY* BENEFICIALLY*
- ------------ ------------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
First Trust/Var & 706,774,047 6.26% - 0 - - 0 -
Co
Funds Control Suite
0404
180 East Fifth
Street
St. Paul, MN 55101
Turtle & Co Sweep 677,366,818 6.00% - 0 - - 0 -
P.O. Box 9427
Boston, MA 02209
Trulin & Co 644,613,989 5.71% - 0 - - 0 -
P.O. Box 1412
Rochester, NY 14603
Personal Class....... Cullen/Frost 80,307,762 80.98% - 0 - - 0 -
Discount Brokers
P.O. Box 2358
San Antonio, TX
78299
First American Bank 5,597,262 5.64% - 0 - - 0 -
SSB
P.O. Box 1033
Bryan, TX 77805
First Interstate - 5,365,528 5.41% - 0 - - 0 -
Montana
P.O. Box 30918
Billings, MT 59116
Private Class........ Huntington Capital 138,636,085 33.97% - 0 - - 0 -
Corp
41 S High St.,
Ninth Floor
Columbus, OH 43287
Harris Trust & 58,768,604 14.40% - 0 - - 0 -
Savings Bank
111 West Monroe St
Lower Level East
Chicago, IL 60690
Cullen/Frost 52,630,498 12.90% - 0 - - 0 -
Discount Brokers
P.O. Box 2358
San Antonio, TX
78299
</TABLE>
K-6
<PAGE> 63
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NAME AND ADDRESS OF SHARES OWNED CLASS OWNED SHARES OWNED CLASS OWNED
FUND (CLASS) RECORD OWNER OF RECORD OF RECORD BENEFICIALLY* BENEFICIALLY*
- ------------ ------------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Frost National Bank 40,297,799 9.87% - 0 - - 0 -
TX
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX
78298-2479
Bank of Oklahoma, 30,718,771 7.53% - 0 - - 0 -
N.A. Institutional
Investments
P.O. Box 2300
Tulsa, OK 74192
Reserve Class........ Bank of New York 114,159,276 99.47% - 0 - - 0 -
440 Mamoroneck 5th
Floor
Harrison, NY 10286
Resource Class....... First Union 203,252,589 24.44% - 0 - - 0 -
Securities, Inc.
ATTN: MONEY FUNDS
8739 Research Drive
Capital Markets
Charlotte, NC
28262-0675
CIBC World Markets 185,228,785 22.28% - 0 - - 0 -
200 Liberty Street
World Financial
Center
New York, NY 10281
Harris Methodist 164,427,684 19.78% - 0 - - 0 -
Health System
600 East Las
Colinas Blvd Ste
1550
Irving, TX 75039
Mellon Bank NA 100,730,636 12.11% - 0 - - 0 -
P.O. Box 710
Pittsburgh, PA
15230-0710
</TABLE>
* The company has no knowledge as to whether all or any portion of the
shares owned of record are also owned beneficially.
** Represents shares held in a cash management account for the benefit of
certain AIM funds.
K-7
<PAGE> 64
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
PROXY CARD PROXY CARD
PROXY SOLICITED BY THE BOARD OF TRUSTEES OF
LIQUID ASSETS PORTFOLIO
(A PORTFOLIO OF SHORT-TERM INVESTMENTS CO.)
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock and each of them separately, proxies with the power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Special Meeting of Shareholders on May 3, 2000, at 3:00 p.m., Central
time, and at any adjournment thereof, all of the shares of the portfolio which
the undersigned would be entitled to vote if personally present. IF THIS PROXY
IS SIGNED AND RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED "FOR"
EACH DIRECTOR AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature
-----------------------------------
Signature (if held jointly)
-----------------------------------
Dated 10S27_STIC-1
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL. TO VOTE, FILL IN THE BOX COMPLETELY.
EXAMPLE: [X]
<TABLE>
<S> <C> <C> <C>
1. To elect ten individuals to the Board of Directors of Short-Term Investments FOR WITHHOLD FOR ALL
Co. each of whom will serve until his or her successor is elected ALL AUTHORITY FOR EXCEPT
and qualified: ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE NUMBER(S) ON THE LINE PROVIDED. ___________________________________
FOR AGAINST ABSTAIN
2. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
3. To approve changing the fundamental investment restrictions of the fund.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(a) Change to Fundamental Restriction [ ] [ ] [ ] (f) Change to Fundamental Restriction [ ] [ ] [ ]
on Issuer Diversification. on Purchasing or Selling
Commodities and Elimination of
Fundamental Restrictions on
Margin Transactions, on Purchasing
Securities on Margin, Short Sales
of Securities and Investing in Put
or Call Options.
(b) Change to Fundamental Restriction [ ] [ ] [ ] (g) Change to Fundamental Restriction on [ ] [ ] [ ]
on Borrowing Money and Issuing Making Loans.
Senior Securities.
(c) Change to Fundamental Restriction [ ] [ ] [ ] (h) Approval of a New Fundamental [ ] [ ] [ ]
on Underwriting Securities. Investment Restriction on Investing
All of the Fund's Assets in an
Open-End Fund.
(d) Change to Fundamental Restriction [ ] [ ] [ ] (i) Elimination of Fundamental [ ] [ ] [ ]
on Industry Concentration. Restriction on Mortgaging or
Pledging Assets.
(e) Change to Fundamental Restriction [ ] [ ] [ ] (j) Elimination of Fundamental [ ] [ ] [ ]
on Purchasing or Selling Real Restriction on Investing In
Estate. Obligations Not Payable In
United States Currency.
FOR AGAINST ABSTAIN
4. To approve changing the investment objective of the fund so that it is [ ] [ ] [ ]
non-fundamental.
5. To ratify the selection of KPMG LLP as independent accountants [ ] [ ] [ ]
for the fiscal year ending in 2000.
6. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 65
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
PROXY CARD PROXY CARD
PROXY SOLICITED BY THE BOARD OF TRUSTEES OF
PRIME PORTFOLIO
(A PORTFOLIO OF SHORT-TERM INVESTMENTS CO.)
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham, Gary T. Crum and Lewis F.
Pennock and each of them separately, proxies with the power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Special Meeting of Shareholders on May 3, 2000, at 3:00 p.m., Central
time, and at any adjournment thereof, all of the shares of the portfolio which
the undersigned would be entitled to vote if personally present. IF THIS PROXY
IS SIGNED AND RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED "FOR"
EACH DIRECTOR AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS PROXY CARD.
All joint owners should sign. When
signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
-----------------------------------
Signature
-----------------------------------
Signature (if held jointly)
-----------------------------------
Dated 10S27_STIC-2
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL. TO VOTE, FILL IN THE BOX COMPLETELY.
EXAMPLE: [X]
<TABLE>
<S> <C> <C> <C>
7. To elect ten individuals to the Board of Directors of Short-Term Investments FOR WITHHOLD FOR ALL
Co., each of whom will serve until his or her successor is elected ALL AUTHORITY FOR EXCEPT
and qualified: ALL NOMINEES
01 Charles T. Bauer 04 Edward K. Dunn, Jr. 07 Robert H. Graham 10 Louis S. Sklar [ ] [ ] [ ]
02 Bruce L. Crockett 05 Jack M. Fields 08 Prema Mathai-Davis
03 Owen Daly II 06 Carl Frischling 09 Lewis F. Pennock
TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND WRITE THE NOMINEE NUMBER(S) ON THE LINE PROVIDED.__________________________________
FOR AGAINST ABSTAIN
8. To approve a new Master Investment Advisory Agreement with A I M Advisors, Inc. [ ] [ ] [ ]
9. To approve changing the fundamental investment restrictions of the fund.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(k) Change to Fundamental Restriction [ ] [ ] [ ] (p) Change to Fundamental Restriction [ ] [ ] [ ]
on Issuer Diversification. on Purchasing or Selling
Commodities and Elimination of
Fundamental Restrictions on
Margin Transactions, on Purchasing
Securities on Margin, Short Sales
of Securities and Investing in Put
or Call Options.
(l) Change to Fundamental Restriction [ ] [ ] [ ] (q) Change to Fundamental Restriction on [ ] [ ] [ ]
on Borrowing Money and Issuing Making Loans.
Senior Securities.
(m) Change to Fundamental Restriction [ ] [ ] [ ] (r) Approval of a New Fundamental [ ] [ ] [ ]
on Underwriting Securities. Investment Restriction on Investing
All of the Fund's Assets in an
Open-End Fund.
(n) Change to Fundamental Restriction [ ] [ ] [ ] (s) Elimination of Fundamental [ ] [ ] [ ]
on Industry Concentration. Restriction on Mortgaging or
Pledging Assets.
(o) Change to Fundamental Restriction [ ] [ ] [ ] (t) Elimination of Fundamental [ ] [ ] [ ]
on Purchasing or Selling Real Restriction on Investing In
Estate. Obligations Not Payable In
United States Currency.
FOR AGAINST ABSTAIN
10. To approve changing the investment objective of the fund so that it is [ ] [ ] [ ]
non-fundamental.
11. To ratify the selection of KPMG LLP as independent accountants [ ] [ ] [ ]
for the fiscal year ending in 2000.
12. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
