-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SvReN9JO7IzMhi2Re3+cFKSVQOHXWa0In/+YGmOmi8WmP4ejV7bOPqU6TKYl8apK FMQAc0eWqSKKzHDWSYnwgw== 0000950129-96-003474.txt : 19961220 0000950129-96-003474.hdr.sgml : 19961220 ACCESSION NUMBER: 0000950129-96-003474 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 22 FILED AS OF DATE: 19961218 EFFECTIVENESS DATE: 19961218 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHORT TERM INVESTMENTS TRUST CENTRAL INDEX KEY: 0000205007 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 741093914 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-58287 FILM NUMBER: 96682870 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02729 FILM NUMBER: 96682871 BUSINESS ADDRESS: STREET 1: C/O AIM ADVISORS INC STREET 2: 11 GREENWAY PLAZA SUITE 1919 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7136261919 MAIL ADDRESS: STREET 1: C/O AIM ADVISORS INC STREET 2: 11 GREENWAY PLAZA, SUITE 1919 CITY: HOUSTON STATE: TX ZIP: 77046 FORMER COMPANY: FORMER CONFORMED NAME: SHORT TERM INVESTMENTS CO DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AIM BOND SHARES INC DATE OF NAME CHANGE: 19800909 485BPOS 1 AIM STIT - P.E. AMEND #29 TO REG. NO. 2-58287 1 As filed with the Securities and Exchange Commission on December 18, 1996 Registration No. 2-58287 Investment Co. Act No. 811-2729 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------ Pre-Effective Amendment No. ------- ------ Post-Effective Amendment No. 29 X ------ ------ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ------ Amendment No. 30 X ------- ------ (Check appropriate box or boxes.) SHORT-TERM INVESTMENTS TRUST (Exact Name of Registrant as Specified in Charter) 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code (713) 626-1919 Charles T. Bauer 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173 (Name and Address of Agent for Service) Copy to: Stephen I. Winer, Esquire Martha J. Hays, Esquire A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll 11 Greenway Plaza, Suite 1919 1735 Market Street, 51st Floor Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Amendment It is proposed that this filing will become effective (check appropriate box) - ------ immediately upon filing pursuant to paragraph (b) X on December 30,1996 pursuant to paragraph (b) - ------ 60 days after filing pursuant to paragraph (a)(1) - ------ on (date) pursuant to paragraph (a)(1) - ------ 75 days after filing pursuant to paragraph (a)(2) - ------ on (date) pursuant to paragraph (a)(2) of rule 485. If appropriate, check the following box: - ------ This post-effective amendment designates a new effective date for a previously filed post-effective amendment. 2 Registrant continues its election to register an indefinite number of shares of beneficial interest under Rule 24f-2 under the Investment Company Act of 1940 and filed its Rule 24f-2 Notice for the fiscal period ended August 31, 1996, on October 28, 1996. 3 SHORT-TERM INVESTMENTS TRUST Registration Statement on Form N-1A CROSS REFERENCE SHEET (as required by Rule 495) Note: The Registrant currently offers two portfolios of investments, the Treasury Portfolio and the Treasury TaxAdvantage Portfolio. The Treasury Portfolio is comprised of five classes of shares - the Cash Management Class, the Institutional Class, the Personal Investment Class, the Private Investment Class, and the Resource Class. Each class of shares of the Treasury Portfolio is offered to customers of certain institutions pursuant to separate Prospectuses and a combined Statement of Additional Information. The Treasury TaxAdvantage Portfolio is comprised of two classes of shares. Each class of shares of the Treasury TaxAdvantage Portfolio is offered to customers of certain institutions pursuant to separate Prospectuses and a combined Statement of Additional Information. Form N-1A Item Number - ----------- I. TREASURY PORTFOLIO -CASH MANAGEMENT CLASS Part A - Prospectus
Item No. Prospectus Location - -------- ------------------- 1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses 3. Condensed Financial Information . . . . . . . . . . . Financial Highlights 4. General Description of Registrant . . . . . . . . . . Cover Page; Investment Program; General Information 5. Management of the Fund . . . . . . . . . . . . . . . Management; General Information 5A. Management's Discussion of Fund Performance . . . . . [included in annual report] 6. Capital Stock and Other Securities . . . . . . . . . General Information; Dividends; Taxes 7. Purchase of Securities Being Offered . . . . . . . . Purchase of Shares; Net Asset Value 8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of Shares 9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable
1 4 II. TREASURY PORTFOLIO - INSTITUTIONAL CLASS Part A - Prospectus
Item No. Prospectus Location - -------- ------------------- 1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses 3. Condensed Financial Information . . . . . . . . . . . Financial Highlights 4. General Description of Registrant . . . . . . . . . . Cover Page; Investment Program; General Information 5. Management of the Fund . . . . . . . . . . . . . . . Management of the Trust; General Information 5A. Management's Discussion of Fund Performance . . . . . [included in annual report] 6. Capital Stock and Other Securities . . . . . . . . . General Information; Dividends; Taxes 7. Purchase of Securities Being Offered . . . . . . . . Purchase of Shares; Net Asset Value; Management of the Fund - Distribution Plan 8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of Shares 9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable III. TREASURY PORTFOLIO - PERSONAL INVESTMENT CLASS Part A - Prospectus Item No. Prospectus Location - -------- ------------------- 1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses 3. Condensed Financial Information . . . . . . . . . . Financial Highlights 4. General Description of Registrant . . . . . . . . . . Cover Page; Investment Program; General Information 5. Management of the Fund . . . . . . . . . . . . . . . Management of the Trust; General Information 5A. Management's Discussion of Fund Performance . . . . . [included in annual report] 6. Capital Stock and Other Securities . . . . . . . . . General Information; Dividends; Taxes 7. Purchase of Securities Being Offered . . . . . . . . Purchase of Shares; Net Asset Value; Management of the Fund - Distribution Plan
2 5 8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of Shares 9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable IV. TREASURY PORTFOLIO - PRIVATE INVESTMENT CLASS Part A - Prospectus Item No. Prospectus Location - -------- ------------------- 1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses 3. Condensed Financial Information . . . . . . . . . . . Financial Highlights 4. General Description of Registrant . . . . . . . . . . Cover Page; Summary; Investment Program; General Information 5. Management of the Fund . . . . . . . . . . . . . . . Management of the Trust; General Information 5A. Management's Discussion of Fund Performance . . . . . [included in annual report] 6. Capital Stock and Other Securities . . . . . . . . . General Information; Dividends; Taxes 7. Purchase of Securities Being Offered . . . . . . . . Purchase of Shares; Net Asset Value; Management of the Fund - Distribution Plan 8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of Shares 9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable V. TREASURY PORTFOLIO - RESOURCE CLASS Part A - Prospectus Item No. Prospectus Location - -------- ------------------- 1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses 3. Condensed Financial Information . . . . . . . . . . . Not Applicable 4. General Description of Registrant . . . . . . . . . . Cover Page; Summary; Investment Program; General Information 5. Management of the Fund . . . . . . . . . . . . . . . Management of the Trust; General Information 5A. Management's Discussion of Fund Performance . . . . . [included in annual report]
3 6 6. Capital Stock and Other Securities . . . . . . . . . General Information; Dividends; Taxes 7. Purchase of Securities Being Offered . . . . . . . . Purchase of Shares; Net Asset Value; Management of the Fund - Distribution Plan 8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of Shares 9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable VI. TREASURY PORTFOLIO - CASH MANAGEMENT CLASS, INSTITUTIONAL CLASS, PERSONAL INVESTMENT CLASS, PRIVATE INVESTMENT CLASS, RESOURCE CLASS Part B - Statement of Additional Information Item No. Statement of Additional - ---------- ----------------------- Information Location -------------------- 10. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 11. Table of Contents . . . . . . . . . . . . . . . . . . Table of Contents 12. General Information and History . . . . . . . . . . . General Information About the Trust 13. Investment Objectives and Policies . . . . . . . . . Investment Program and Restrictions 14. Management of the Fund . . . . . . . . . . . . . . . General Information About the Trust - Trustees and Officers 15. Control Persons and Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . General Information About the Trust - Principal Holders of Securities 16. Investment Advisory and Other Services . . . . . . . General Information About the Trust - Investment Advisor 17. Brokerage Allocation and Other Practices . . . . . . Portfolio Transactions 18. Capital Stock and Other Securities . . . . . . . . . General Information About the Trust - The Trust and its Shares 19. Purchase, Redemption and Pricing of Securities Being Offered . . . . . . . . . . . . . . Purchases and Redemptions 20. Tax Status . . . . . . . . . . . . . . . . . . . . . Tax Matters 21. Underwriters . . . . . . . . . . . . . . . . . . . . Purchases and Redemptions; Distribution Agreement 22. Calculation of Performance Data . . . . . . . . . . . Performance Information 23. Financial Statements . . . . . . . . . . . . . . . . Not Applicable
4 7 VII. TREASURY TAXADVANTAGE PORTFOLIO - INSTITUTIONAL CLASS Part A - Prospectus
Item No. Prospectus Location - -------- ------------------- 1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses 3. Condensed Financial Information . . . . . . . . . . . Financial Highlights 4. General Description of Registrant . . . . . . . . . . Cover Page; Summary; Investment Program; General Information 5. Management of the Fund . . . . . . . . . . . . . . . Management of the Trust; General Information 5A. Management's Discussion of Fund Performance . . . . . [included in annual report] 6. Capital Stock and Other Securities . . . . . . . . . General Information; Dividends; Taxes 7. Purchase of Securities Being Offered . . . . . . . . Purchase of Shares; Net Asset Value; Suitability for Investors 8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of Shares 9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable VIII. TREASURY TAX-ADVANTAGE PORTFOLIO - PRIVATE INVESTMENT CLASS Part A - Prospectus Item No. Prospectus Location - -------- ------------------- 1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses 3. Condensed Financial Information . . . . . . . . . . Financial Highlights 4. General Description of Registrant . . . . . . . . . . Cover Page; Investment Program; General Information 5. Management of the Fund . . . . . . . . . . . . . . . Management of the Trust; General Information 5A. Management's Discussion of Fund Performance . . . . . [included in annual report] 6. Capital Stock and Other Securities . . . . . . . . . General Information; Dividends; Taxes 7. Purchase of Securities Being Offered . . . . . . . . Purchase of Shares; Net Asset Value; Management of the Trust - Distribution Plan
5 8 8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of Shares 9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable IX. TREASURY TAXADVANTAGE PORTFOLIO - INSTITUTIONAL CLASS AND PERSONAL INVESTMENT CLASS Part B - Statement of Additional Information Item No. Statement of Additional - ---------- ----------------------- Information Location -------------------- 10. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page 11. Table of Contents . . . . . . . . . . . . . . . . . . Table of Contents 12. General Information and History . . . . . . . . . . . General Information About the Trust 13. Investment Objectives and Policies . . . . . . . . . Investment Program and Restrictions 14. Management of the Fund . . . . . . . . . . . . . . . General Information About the Trust - Trustees and Officers 15. Control Persons and Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . General Information About the Trust - Principal Holders of Securities 16. Investment Advisory and Other Services . . . . . . . General Information About the Trust - Investment Advisor 17. Brokerage Allocation and Other Practices . . . . . . Portfolio Transactions 18. Capital Stock and Other Securities . . . . . . . . . General Information About the Trust - The Trust and its Shares 19. Purchase, Redemption and Pricing of Securities Being Offered . . . . . . . . . . . . . . Purchases and Redemptions 20. Tax Status . . . . . . . . . . . . . . . . . . . . . Dividends and Tax Matters 21. Underwriters . . . . . . . . . . . . . . . . . . . . Purchases and Redemptions; Distribution Agreement; Distribution Plan 22. Calculation of Performance Data . . . . . . . . . . . Performance Information 23. Financial Statements . . . . . . . . . . . . . . . . Financial Statements X. ALL CLASSES OF REGISTRANT
Part C Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Registration Statement. 6 9 SHORT-TERM INVESTMENTS TRUST Prospectus - -------------------------------------------------------------------------------- TREASURY PORTFOLIO The Treasury Portfolio is a money market fund CASH whose investment objective is the maximization of MANAGEMENT current income to the extent consistent with the CLASS preservation of capital and the maintenance of liquidity. The Treasury Portfolio seeks to achieve its objective by investing in direct obligations of the DECEMBER 30, 1996 U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Treasury Portfolio will have maturities of 397 days or less. The Treasury Portfolio is a series portfolio of Short-Term Investments Trust (the "Trust"), an open- end, diversified, series management investment company. This Prospectus relates solely to the Cash Management Class of the Treasury Portfolio, a class of shares designed to be a convenient vehicle in which institutional customers of banks, certain broker-dealers and other financial institutions can invest in a diversified money market fund. The Trust also offers shares of other classes of the Treasury Portfolio pursuant to separate prospectuses: the Institutional Class, Private Investment Class, Personal Investment Class and Resource Class, as well as shares of classes of another portfolio of the Trust, the Treasury TaxAdvantage Portfolio. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN SHARES OF THE CASH MANAGEMENT CLASS OF THE TREASURY PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS BELOW OR CALL (800) 877-7745. THE SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST. THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT THE TREASURY PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. [LOGO APPEARS HERE] Fund Management Company 11 Greenway Plaza Suite 1919 Houston, Texas 77046-1173 (800) 877-7745 10 SUMMARY THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE The Trust is an open-end diversified series management investment company. This Prospectus relates to the Cash Management Class (the "Class") of the Treasury Portfolio (the "Portfolio"). The Portfolio is a money market fund which invests in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Portfolio will have maturities of 397 days or less. The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. Pursuant to separate prospectuses, the Trust also offers shares of other classes of shares of beneficial interest of the Portfolio representing an interest in the Portfolio. Such classes have different distribution arrangements and are designed for institutional and other categories of investors. The Trust also offers shares of two classes of another portfolio, the Treasury TaxAdvantage Portfolio, each pursuant to separate prospectuses. Such classes have different distribution arrangements and are designed for institutional and other categories of investors. The portfolios of the Trust are referred to collectively as the "Portfolios." Because the Trust declares dividends on a daily basis, shares of each class of the Portfolio have the same net asset value (proportionate interest in the net assets of the Portfolio) and bear equally those expenses, such as the advisory fee, that are allocated to the Portfolio as a whole. All classes of the Portfolio share a common investment objective and portfolio of investments. However, different classes of the Portfolio have different shareholder qualifications and are separately allocated certain class expenses, such as those associated with the distribution of their shares. Therefore, each class will have a different dividend payment and a different yield. INVESTORS IN THE CLASS The Class is designed to be a convenient vehicle in which institutional customers of banks, certain broker-dealers and other financial institutions can invest in a diversified open-end money market fund. PURCHASE OF SHARES Shares of the Class that are offered hereby are sold at net asset value. The minimum initial investment in the Class is $1,000,000. There is no minimum amount for subsequent investments. Payment for shares of the Class purchased must be in funds immediately available to the Portfolio. See "Purchase of Shares." REDEMPTION OF SHARES Redemptions may be made without charge at net asset value. Payment for redeemed shares of the Class for which redemption orders are received prior to 4:00 p.m. Eastern Time will normally be made on the same day. See "Redemption of Shares." DIVIDENDS The net income of the Portfolio is declared as a dividend daily to shareholders of record immediately after 4:00 p.m. Eastern Time. Dividends are paid monthly by check or wire transfer unless the shareholder has previously elected to have such dividends automatically reinvested in additional shares of the Class. Information concerning the amount of the dividends declared on any particular day will normally be available by 5:00 p.m. Eastern Time on that day. See "Dividends." CONSTANT NET ASSET VALUE The Trust uses the amortized cost method of valuing the securities of the Portfolio and rounds the per share net asset value to the nearest whole cent. Accordingly, the net asset value per share of the Portfolio will normally remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value." INVESTMENT ADVISOR A I M Advisors, Inc. ("AIM") serves as the Portfolio's investment advisor and receives a fee based on the Portfolio's average daily net assets. During the fiscal year ended August 31, 1996, the Trust paid AIM advisory fees with respect to the Portfolio which represented 0.06% of the average daily net assets of the Portfolio. AIM is primarily engaged in the business of acting as manager or advisor to investment companies. Under a separate Administrative Services Agreement, AIM may be reimbursed by the Trust for its costs of performing certain accounting and other administrative services for the Fund. See "Management of the Trust -- Investment Advisor" and "-- Administrative Services." 2 11 On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced that it had entered into an Agreement and Plan of Merger among INVESCO plc, INVESCO Group Services Inc. and AIM Management, pursuant to which AIM Management will be merged with INVESCO Group Services, Inc. INVESCO 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. It is contemplated that the merger will occur on February 28, 1997. The Trust's investment advisor, AIM, is a wholly-owned subsidiary of AIM Management. The proposed transaction may be deemed to cause an "assignment" (as that term is defined under the Investment Company Act of 1940, as amended (the "1940 Act")) of the Master Investment Advisory Agreement between the Trust and AIM. Under the 1940 Act and the Master Investment Advisory Agreement, an assignment results in the automatic termination of the Master Investment Advisory Agreement. On December 11, 1996, the Board of Trustees of the Trust approved a new investment advisory agreement, subject to shareholder approval, between AIM and the Trust with respect to the Portfolio. Shareholders will be asked to approve the proposed advisory agreement at an annual meeting of shareholders to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also approved a new administrative services agreement with AIM and a new distribution agreement with Fund Management Company ("FMC"). There are no material changes to the terms of the new agreements, including the fees payable by the Portfolio. No change is anticipated in the investment advisory or other personnel responsible for the Portfolio as a result of these new agreements. The Board of Trustees has approved these new agreements because the Portfolio's corresponding existing agreements will terminate upon the consummation of the proposed merger of AIM Management into a subsidiary of INVESCO plc. Provided that the Portfolio's shareholders approve the new investment advisory agreement at the Annual Meeting and the merger is consummated, the new investment advisory agreement with respect to the Portfolio, as well as the new administrative services and distribution agreements, will automatically become effective as of the closing date of the merger. DISTRIBUTOR AND DISTRIBUTION PLAN FMC acts as the exclusive distributor of the shares of the Class. Pursuant to a plan of distribution adopted by the Trust's Board of Trustees, FMC receives a fee from the Trust of up to 0.10% of the average daily net assets of the Portfolio attributable to the shares of the Class as compensation for distribution-related services pursuant to plans of distribution adopted by the Trust's Board of Trustees. The Trust may also make payments pursuant to such distribution plans to certain broker-dealers or other financial institutions for distribution-related services. See "Purchase of Shares" and "Distribution Plan." SPECIAL RISK CONSIDERATIONS The Portfolio may borrow money and enter into reverse repurchase agreements. The Portfolio may invest in repurchase agreements and purchase securities for delayed delivery. Accordingly, an investment in the Portfolio may entail somewhat different risks from an investment in an investment company that does not engage in such practices. There can be no assurance that the Portfolio will be able to maintain a stable net asset value of $1.00 per share. See "Investment Program." The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and Design are service marks of A I M Management Group Inc. 3 12 TABLE OF FEES AND EXPENSES SHAREHOLDER TRANSACTION EXPENSES* Maximum sales load imposed on purchases (as a percentage of offering price).................................... None Maximum sales load on reinvested dividends (as a percentage of offering price).................................... None Deferred sales load (as a percentage of original purchase price or redemption proceeds, as applicable).................................... None Redemption fees (as a percentage of amount redeemed, if applicable)............................................... None Exchange fee.............................................................. None ANNUAL PORTFOLIO OPERATING EXPENSES -- CASH MANAGEMENT CLASS (AS A PERCENTAGE OF AVERAGE NET ASSETS) Management fees........................................................... 0.06% 12b-1 fees (after fee waivers)**.......................................... 0.08% Other expenses: Custodian fees......................................................... 0.01% Other.................................................................. 0.02% ---- Total other expenses.............................................. 0.03% ---- Total portfolio operating expenses -- Cash Management Class............... 0.17% =====
- --------------- * Beneficial owners of shares of the Class should consider the effect of any charges imposed by their bank, broker-dealer or other financial institution for various services. ** If there were no fee waivers, 12b-1 fees and Total portfolio operating expenses would have been 0.10% and 0.19%, respectively. EXAMPLE An investor in the Class would pay the following expenses on a $1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end of each time period. 1 year............................................................... $ 2 3 years.............................................................. $ 5 5 years.............................................................. $10 10 years.............................................................. $22
The Table of Fees and Expenses is designed to assist an investor in understanding the various costs and expenses that an investor in the Class will bear directly or indirectly. (For more complete descriptions of the various costs and expenses, see "Management of the Trust" below.) The expense figures are based upon actual costs and fees charged to the Class for the fiscal year ended August 31, 1996. The Table of Fees and Expenses reflects a voluntary waiver of 12b-1 fees for the Class. Future waivers of fees (if any) may vary from the figures reflected in the Table of Fees and Expenses. To the extent any service providers assume expenses of the Class, such assumption of expenses will have the effect of lowering the Class's overall expense ratio and increasing its yield to investors. Beneficial owners of shares of the Class should also consider the effect of any charges imposed by the institution maintaining their accounts. The example in the Table of Fees and Expenses assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses -- Cash Management Class" remain the same in the years shown. The example shown in the above table is based on the amounts listed under "Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. 4 13 FINANCIAL HIGHLIGHTS Shown below are the per share data, ratios and supplemental data (collectively, "data") for the three-year period ended August 31, 1996 and the period August 17, 1993 (date operations commenced) through August 31, 1993. The data has been audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified report thereon appears in the Statement of Additional Information.
1996 1995 1994 1993 -------- ------- ------- ------- Net asset value, beginning of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income......................... 0.05 0.05 0.03 0.001 -------- ------- ------- ------- Total from investment operations....... 0.05 0.05 0.03 0.001 -------- ------- ------- ------- Less distributions: Dividends from net investment income.......... (0.05) (0.05) (0.03) (0.001) -------- ------- ------- ------- Net asset value, end of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= Total return.................................... 5.48% 5.57% 3.44% 2.91%(a) ======== ======= ======= ======= Ratios/supplemental data: Net assets, end of period (000s omitted)...... $789,627 $81,219 $73,619 $ 8,681 ======== ======= ======= ======= Ratio of expenses to average net assets(c).... 0.17%(a)(b) 0.18% 0.16% 0.16%(a) ======== ======= ======= ======= Ratio of net investment income to average net assets(d)................................... 5.25%(a)(b) 5.42% 3.48% 3.00%(a) ======== ======= ======= =======
- --------------- (a) Annualized. (b) Ratios are based on average net assets of $547,363,692. (c) Ratios of expenses to average net assets prior to waiver of distribution fees and/or expense reimbursements were 0.19%, 0.20%, 0.21% and 0.18% for the periods 1996-1993, respectively. Ratios are annualized for periods less than one year. (d) Ratios of net investment income to average net assets prior to waiver of distribution fees and/or expense reimbursements were 5.23%, 5.40%, 3.43% and 2.98% for the periods 1996-1993, respectively. SUITABILITY FOR INVESTORS The shares of the Class are intended for use primarily by institutional customers of banks, certain broker-dealers and other financial institutions who seek a convenient vehicle in which to invest in an open-end diversified money market fund. It is expected that the shares of the Class may be particularly suitable investments for corporate cash managers, municipalities or other public entities. The minimum initial investment is $1,000,000. Investors in the shares of the Class have the opportunity to receive a somewhat higher yield than might be obtainable through direct investment in money market instruments, and enjoy the benefits of diversification, economies of scale and same-day liquidity. Generally, higher interest rates can be obtained on the purchase of very large blocks of money market instruments. Of course, any such relative increase in interest rates may be offset to some extent by the operating expenses of the shares of the Class. INVESTMENT PROGRAM INVESTMENT OBJECTIVE The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The money market instruments in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on money market instruments of lesser quality. The Portfolio consists exclusively of money market instruments which have maturities of 397 days or less from the date of purchase (except that securities subject to repurchase agreements may have longer maturities). 5 14 INVESTMENT POLICIES The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds, and repurchase agreements relating to such securities. The Portfolio may also engage in the investment practices described below. The market values of the money market instruments held by the Portfolio will be affected by changes in the yields available on similar securities. If yields have increased since a security was purchased, the market value of such security will generally have decreased. Conversely, if yields have decreased, the market value of such security will generally have increased. REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase agreements with banks and broker-dealers pertaining to the securities described above and which at the date of purchase are "First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. Generally, "First Tier" securities are securities that are rated in the highest rating category by two nationally recognized statistical rating organizations ("NRSROs") or, if only rated by one NRSRO, are rated in the highest rating category by that NRSRO or, if unrated, are determined by AIM (under the supervision of and pursuant to guidelines established by the Trust's Board of Trustees) to be of comparable quality to a rated security that meets the foregoing quality standards. A repurchase agreement is an instrument under which the Portfolio acquires ownership of a debt security and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed-upon time and price, thereby determining the yield during the Portfolio's holding period. Repurchase transactions are limited to a term not to exceed 365 days. The Portfolio may enter into repurchase agreements only with institutions believed by the Trust's Board of Trustees to present minimal credit risk. With regard to repurchase transactions, in the event of a bankruptcy or other default of a seller of a repurchase agreement (such as the seller's failure to repurchase the obligation in accordance with the terms of the agreement), the Portfolio could experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period while the Portfolio seeks to enforce its rights thereto, (b) possible subnormal levels of income and lack of access to income during this period, and (c) expenses of enforcing its rights. Repurchase agreements are considered to be loans under the 1940 Act. BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money and enter into reverse repurchase agreements with respect to its portfolio securities in amounts up to 10% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement. Reverse repurchase agreements involve the sale by the Portfolio of a portfolio security at an agreed-upon price, date and interest payment. The Portfolio will borrow money or enter into reverse repurchase agreements solely for temporary or defensive purposes, such as to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests should they occur. Reverse repurchase transactions are limited to a term not to exceed 92 days. The Portfolio will use reverse repurchase agreements when the interest income to be earned from the securities that would otherwise have to be liquidated to meet redemption requests is greater than the interest expense of the reverse repurchase transaction. Reverse repurchase agreements involve the risk that the market value of securities retained by the Portfolio in lieu of liquidation may decline below the repurchase price of the securities sold by the Portfolio which it is obligated to repurchase. The risk, if encountered, could cause a reduction in the net asset value of the Portfolio's shares. Reverse repurchase agreements are considered to be borrowings by the Portfolio under the 1940 Act. LENDING OF PORTFOLIO SECURITIES. The Portfolio may also lend its portfolio securities in amounts up to 33-1/3% of its total assets to financial institutions in accordance with the investment restrictions of the Portfolio. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned or of delay in recovering the securities loaned or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers deemed by AIM to be of good standing and only when, in AIM's judgment, the income to be earned from the loans justifies the attendant risks. PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's investments, AIM may indicate to dealers or issuers its interest in acquiring certain securities for the Portfolio for settlement beyond a customary settlement date. In some cases, the Portfolio may agree to purchase such securities at stated prices and yields. In such cases, such securities are considered "delayed delivery" securities when traded in the secondary market. Since this is done to facilitate the acquisition of portfolio securities and is not for the purpose of investment leverage, the amount of delayed delivery securities involved may not exceed the estimated amount of funds available for investment on the settlement date. Until the settlement date, assets of the Portfolio with a dollar value sufficient at all times to make payment for the delayed delivery securities will be segregated. The total amount of segregated assets may not exceed 25% of the Portfolio's total assets. The delayed delivery securities, which will not begin to accrue interest until the settlement date, will be recorded as an asset of the Portfolio and will be subject to the risks of market value fluctuations. The purchase price of the delayed delivery securities will be recorded as a liability of the Portfolio until settlement. Absent extraordinary circumstances, the Portfolio's right to acquire delayed delivery securities will not be divested prior to the settlement date. ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net assets in illiquid securities. 6 15 PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term trading and will generally hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money markets. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. Securities held by the Portfolio will be disposed of prior to maturity if an earlier disposition is deemed desirable by AIM to meet redemption requests. In addition, AIM will continually monitor the creditworthiness of issuers whose securities are held by the Portfolio, and securities held by the Portfolio may be disposed of prior to maturity as a result of a revised credit evaluation of the issuer or other circumstances or considerations. The investment policies described above may be changed by the Board of Trustees without the affirmative vote of a majority of the outstanding shares of the Portfolio. INVESTMENT RESTRICTIONS The Portfolio's investment program is subject to a number of investment restrictions which reflect self-imposed standards as well as federal and state regulatory limitations. These restrictions are designed to minimize certain risks associated with investing in specified types of securities or engaging in certain transactions and to limit the amount of the Portfolio's assets which may be concentrated in any specific industry or issuer. The most significant of these restrictions provide that the Portfolio will not: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time; or (2) borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the Portfolio's investment program may be considered the issuance of senior securities. The Portfolio will not purchase securities while borrowings in excess of 5% of its total assets are outstanding. The foregoing investment restrictions of the Portfolio (as well as certain others set forth in the Statement of Additional Information) are matters of fundamental policy which may not be changed without the affirmative vote of a majority of the outstanding shares of the Portfolio. The Board of Trustees has unanimously approved the elimination of or changes to certain fundamental investment policies of the Trust, subject to shareholder approval. Shareholders will be asked to approve these changes at the Annual Meeting. If approved, they will become effective on March 1, 1997. The Trust is currently generally prohibited from investing in other investment companies. The Board of Trustees has approved the elimination of this prohibition, and the amendment to another fundamental investment policy that corresponds to the proposed elimination. The elimination of the fundamental investment policy that prohibits the Trust from investing in other investment companies and the proposed amendment to the corresponding fundamental investment policy would permit investment in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. The Board of Trustees has approved the amendment of Investment No. (1) of the Trust indicated above. In the event shareholders approve the proposed change, Investment Restriction No. (1) will read in full as follows: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such rule may be amended from time to time, and except that the Portfolio may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. In addition to the restrictions described above, the Portfolio must also comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time, which govern the operations of money market funds, and may be more restrictive than the policies described herein. The SEC has proposed certain changes to Rule 2a-7. While such proposed changes may have a prospective impact on the investments of the Portfolio, the Portfolio anticipates no difficulty in complying 7 16 with any proposed change if adopted by the SEC. A description of further investment restrictions applicable to the Portfolio is contained in the Statement of Additional Information. PURCHASE OF SHARES Shares of the Class are sold on a continuing basis at their net asset value next determined after an order has been received by the Portfolio. As discussed below, the Trust reserves the right to reject any purchase order. Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a recordkeeping, account maintenance or other fee to their customers, and beneficial holders of the shares of the Class should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. To facilitate the investment of proceeds of purchase orders, the investors are urged to place their orders as early in the day as possible. Purchase orders will be accepted for execution on the day the order is placed, provided that the order is properly submitted and received by the Portfolio prior to 4:00 p.m. Eastern Time on a business day of the Portfolio. Purchase orders received after such time will be processed at the next day's net asset value. Shares of the Class will earn the dividend declared on the effective date of purchase. A "business day of the Portfolio" is any day on which both the Federal Reserve Bank of New York and The Bank of New York, the Trust's custodian bank, are open for business. It is expected that The Bank of New York and the Federal Reserve Bank of New York will be closed during the next twelve months on Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. Shares of the Class are sold to institutional customers of banks, certain broker-dealers and other financial institutions (individually, an "Institution" and collectively, "Institutions"). Individuals, corporations, partnerships and other businesses that maintain qualified accounts at an Institution may invest in the shares of the Class. Each Institution will render administrative support services to its customers who are the beneficial owners of the shares of the Class. Such services may include, among other things, establishment and maintenance of shareholder accounts and records; assistance in processing purchase and redemption transactions in shares of the Class; providing periodic statements showing a customer's account balance in shares of the Class; distribution of Trust proxy statements, annual reports and other communications to shareholders whose accounts are serviced by the Institution; and such other services as the Trust may reasonably request. Institutions will be required to certify to the Trust that they comply with applicable state laws regarding registration as broker-dealers, or that they are exempt from such registration. Prior to the initial purchase of shares of the Class, an Account Application, which can be obtained from A I M Institutional Fund Services, Inc. ("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Any changes made to the information provided in the Account Information and Authorization Form must be made in writing or by completing a new form and providing it to AIFS. An investor must open an account in the shares of the Class through an Institution in accordance with procedures established by such Institution. Each Institution separately determines the rules applicable to accounts in the shares of the Class opened with it, including minimum initial and subsequent investment requirements and the procedures to be followed by investors to effect purchases of shares of the Class. The minimum initial investment is $1,000,000, and there is no minimum amount of subsequent purchases of shares of the Class by an Institution on behalf of its customers. An investor who proposes to open a Portfolio account with an Institution should consult with a representative of such Institution to obtain a description of the rules governing such an account. The Institution holds shares of the Class registered in its name, as agent for the customer, on the books of the Institution. A statement with regard to the customer's shares of the Class is supplied to the customer periodically, and confirmations of all transactions for the account of the customer are provided by the Institution to the customer promptly upon request. In addition, the Institution sends to each customer proxies, periodic reports and other information with regard to the customer's shares of the Class. The customer's shares of the Class are fully assignable and subject to encumbrance by the customer. All agreements which relate to a customer's account with an Institution are with the Institution. An investor may terminate his relationship with an Institution at any time, in which case an account in the investor's name will be established directly with the Portfolio and the investor will become a shareholder of record. In such case, however, the investor will not be able to purchase additional shares of the Class directly, except through reinvestment of dividends and distributions. Orders for the purchase of shares of the Class are placed by the investor with the Institution. The Institution is responsible for the prompt transmission of the order to the Trust. The Portfolio will normally be required to make immediate settlement in federal funds (member bank deposits with a Federal Reserve Bank) for portfolio securities purchased. Accordingly, payment for shares of the Class purchased by Institutions on behalf of their customers must be in federal funds. If an investor's order to purchase shares of the Class is paid for other than in federal funds, the Institution, acting on behalf of the investor, completes the conversion into federal funds (which may take two business days), or itself advances federal funds prior to conversion, and promptly transmits the order and payment in the form of federal funds to AIFS. 8 17 Subject to the conditions stated above and to the Trust's right to reject any purchase order, orders will be accepted (i) when payment for the shares of the Class purchased is received by The Bank of New York, the Trust's custodian bank, in the form described above and notice of such order is provided to AIFS or (ii) at the time the order is placed, if the Portfolio is assured of payment. Shares of the Class purchased by orders which are accepted prior to 3:00 p.m. Eastern Time will earn the dividend declared on the date of purchase. Federal Reserve wires should be sent as early as possible in order to facilitate crediting to the shareholder's account. Any funds received with respect to an order which is not accepted by the Trust and any funds received for which an order has not been received will be returned to the sending Institution. An order must specify that it is for the purchase of shares of the "Cash Management Class of the Treasury Portfolio," otherwise any funds received will be returned to the sending Institution. The Trust reserves the right in its sole discretion to withdraw all or any part of the offering made by this Prospectus or to reject any purchase order. REDEMPTION OF SHARES A shareholder may redeem any or all of its shares of the Class at the net asset value next determined after receipt of the redemption request in proper form by the Trust. Redemption requests with respect to the Class may also be made via AIM LINK(@), a personal computer application software product. Normally, the net asset value per share of the Portfolio will remain constant at $1.00. See "Net Asset Value." Redemption requests with respect to shares of the Class are normally made through a customer's Institution. Payment for redeemed shares of the Class is normally made by Federal Reserve wire to the commercial bank account designated in the Institution's Account Application, but may be remitted by check upon request by a shareholder. If a redemption request is received by AIFS prior to 4:00 p.m. Eastern Time on a business day of the Portfolio, the redemption will be effected at the net asset value next determined on such day and the shares of the Class to be redeemed will not receive the dividend declared on the effective date of the redemption. If a redemption request is received by AIFS after 4:00 p.m. Eastern Time or on other than a business day of the Portfolio, the redemption will be effected at the net asset value of the Portfolio determined as of 4:00 p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of such redemption will normally be wired on the effective day of the redemption. A shareholder may change the bank account designated to receive redemption proceeds by written notice to the Trust. The authorized signature on the notice must be guaranteed by a commercial bank or a trust company. Additional documentation may be required when deemed appropriate by the Trust or AIFS, the Trust's transfer agent. Shareholders may request a redemption by telephone. AIFS and FMC will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth in the Account Application if they reasonably believe such request to be genuine but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), and mailings of confirmations promptly after the transaction. Payment for shares of the Class redeemed by mail and payment for telephone redemptions in amounts of less than $1,000 will be made by check mailed within seven days after receipt of the redemption request in proper form. The Trust may make payment for telephone redemptions in excess of $1,000 by check when it is considered to be in the Portfolio's best interest to do so. The shares of the Class are not redeemable at the option of the Trust unless the Board of Trustees of the Trust determines in its sole discretion that failure to so redeem may have materially adverse consequences to the shareholders of the Trust. DIVIDENDS Dividends from the net income of the Portfolio are declared daily to shareholders of record of each class of the Portfolio as of immediately after 4:00 p.m. Eastern Time on the day of declaration. Net income for dividend purposes is determined daily as of 4:00 p.m. Eastern Time. The dividend accrued and paid for each class will consist of (a) income of the Portfolio, the allocation of which is based upon such class' pro rata share of the total outstanding shares representing an interest in the Portfolio, less (b) Portfolio expenses, such as custodian fees, trustees' fees, accounting and legal expenses, based upon such class' pro rata share of the net assets of the Portfolio, less (c) expenses directly attributable to such class, such as distribution expenses, if any, and transfer agency fees. Although realized gains and losses on the assets of the Portfolio are reflected in its net asset value, they are not expected to be of an amount which would affect its $1.00 per share net asset value for purposes of purchases 9 18 and redemptions. See "Net Asset Value." Distributions from net realized short-term gains may be declared and paid yearly or more frequently. See "Taxes." The Portfolio does not expect to realize any long-term capital gains or losses. All dividends declared during a month will normally be paid by wire transfer. Payment will normally be made on the first business day of the following month. A shareholder may elect to have all dividends automatically reinvested in additional full and fractional Shares at the net asset value as of 4:00 p.m. Eastern Time on the last business day of the month. Such election, or any revocation thereof, must be made in writing by the Institution to AIFS at 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173 and will become effective with dividends paid after its receipt by AIFS. If a shareholder redeems all the Shares in its account at any time during the month, all dividends declared through the date of redemption are paid to the shareholder along with the proceeds of the redemption. The Portfolio uses its best efforts to maintain its net asset value per share at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should the Trust incur or anticipate any unusual expense, loss or depreciation which could adversely affect the income or net asset value of the Portfolio, the Trust's Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of the then prevailing circumstances. For example, under such unusual circumstances, the Board of Trustees might reduce or suspend the daily dividend in order to prevent to the extent possible the net asset value per share of the Portfolio from being reduced below $1.00. Thus, such expenses, losses or depreciation may result in a shareholder receiving no dividends for the period during which it held its Shares and cause such a shareholder to receive upon redemption a price per share lower than the shareholder's original cost. TAXES The policy of the Portfolio is to distribute to its shareholders at least 90% of its investment company taxable income for each year and consistent therewith to meet the distribution requirements of Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Portfolio also intends to meet the distribution requirements imposed by the Code in order to avoid the imposition of a 4% excise tax. The Portfolio intends to distribute at least 98% of its net investment income for the calendar year and at least 98% of its net realized capital gains, if any, for the period ending on October 31. The Portfolio also intends to meet the other requirements of Subchapter M, including the requirements with respect to diversification of assets and sources of income, so that the Portfolio will pay no taxes on net investment income and net realized capital gains paid to shareholders. Dividends paid by the Portfolio are subject to taxation as of the date of payment, whether received by shareholders in cash or shares of the Class. The Code provides an exception to this general rule: if the Portfolio declares a dividend in October, November or December to shareholders of record in such months and pays the dividend during January of the next year, a shareholder will be treated for tax purposes as having received the dividend on December 31 of the year in which it is declared rather than in January when it is paid. It is anticipated that no portion of distributions will be eligible for the dividends received deduction for corporations. Dividends paid by the Portfolio from its net investment income and short-term capital gains are taxable to shareholders at ordinary income tax rates. The Portfolio will be treated as a separate corporation for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M. Therefore, the Portfolio may not offset its gains against the losses of the other portfolio of the Trust and each portfolio of the Trust must specifically comply with all the provisions of the Code. Distributions and transactions referred to in the preceding paragraphs may be subject to state, local or foreign taxes, and the treatment thereof may differ from the federal income tax consequences discussed herein. Shareholders are advised to consult with their own tax advisors concerning the application of state, local or foreign taxes. Foreign persons who file a United States tax return after December 31, 1996 for a U.S. tax refund and who are not eligible to obtain a social security number must apply to the Internal Revenue Service ("IRS") for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or AIFS. NET ASSET VALUE The net asset value per share of the Portfolio is determined daily as of 4:00 p.m. Eastern Time on each business day of the Portfolio. Net asset value per share is determined by dividing the value of the Portfolio's securities, cash and other assets (including interest accrued but not collected) less all of its liabilities (including accrued expenses and dividends payable), by the number of shares outstanding of the Portfolio and rounding the resulting per share net asset value to the nearest one cent. 10 19 The securities of the Portfolio are valued on the basis of amortized cost pursuant to rules promulgated by the SEC applicable to money market funds. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if the security were sold. During such periods, the daily yield on shares of the Portfolio, computed as described in "Purchases and Redemptions -- Performance Information" in the Statement of Additional Information, may differ somewhat from an identical computation made by an investment company with identical investments utilizing available indications as to market value to value its portfolio securities. YIELD INFORMATION Yield information for the Class can be obtained by calling the Trust at (800) 877-7745. Yields will fluctuate from time to time and are not necessarily indicative of future results. Accordingly, the yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time. Yield is a function of the type and quality of the Portfolio's investments, the Portfolio's maturity and the operating expense ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should be carefully considered by an investor before making an investment in the Portfolio. For the seven-day period ended August 31, 1996, the current yield and the effective yield of the Class (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the average annualized current yield for the period) were 5.15% and 5.28%, respectively. The performance numbers for any other seven-day period may be substantially different from those quoted above. To assist banks and other institutions performing their own subaccounting, same day information as to the daily dividend per share for the Portfolio to eight decimal places and current yield normally will be available by 5:00 p.m. Eastern Time. From time to time and in its discretion, AIM or its affiliates may waive all or a portion of its advisory fees and/or assume certain expenses of the Portfolio. Such a practice will have the effect of increasing the Portfolio's yield and total return. REPORTS TO SHAREHOLDERS The Trust furnishes shareholders with semi-annual reports containing information about the Portfolio and its operations, including a list of the investments held by the Portfolio and financial statements. The annual financial statements are audited by the Trust's independent auditors. Unless otherwise requested by the shareholder, each shareholder will be provided by its Institution with a written confirmation for each transaction. Institutions establishing sub-accounts will receive a written confirmation for each transaction in a sub-account. Duplicate confirmations may be transmitted to the beneficial owner of the sub-account if requested by the Institution. The Institution will receive a periodic statement setting forth, for each sub-account, the share balance, income earned for the month, income earned for the year to date and the total current value of the account. MANAGEMENT OF THE TRUST BOARD OF TRUSTEES The overall management of the business and affairs of the Trust is vested with its Board of Trustees. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to the Trust, including agreements with the Trust's investment advisor, distributor, custodian and transfer agent. The day-to-day operations of the Trust are delegated to the Trust's officers and to AIM, subject always to the objective and policies of the Trust and to the general supervision of the Trust's Board of Trustees. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor for the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM was organized in 1976 and, together with its affiliates, manages or advises 41 investment company portfolios. As of November 14, 1996, the total assets of the investment company portfolios managed or advised by AIM and its affiliates were approximately $61.1 billion. All of the directors and certain of the officers of AIM are also trustees or executive officers of the Trust. AIM is a wholly-owned subsidiary of AIM Management. AIM Management is a holding company in the financial services business. 11 20 Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the Portfolio's assets and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale. For the fiscal year ended August 31, 1996, AIM received fees from the Trust, with respect to the Portfolio under the Advisory Agreement which represented 0.06% of the Portfolio's average daily net assets. During such fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.17% of the Class's average daily net assets. ADMINISTRATIVE SERVICES The Trust has entered into a Master Administrative Services Agreement dated as of October 18, 1993 with AIM (the "Administrative Services Agreement"), pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Portfolio, including the services of a principal financial officer of the Trust and related staff. As compensation to AIM for its services under the Administrative Services Agreement, the Portfolio may reimburse AIM for expenses incurred by AIM in connection with such services. EXPENSES In addition to fees paid to AIM pursuant to the Advisory Agreement and the expenses reimbursed to AIM under the Administrative Services Agreement, the Trust also pays or causes to be paid all other expenses of the Trust, including, without limitation: the charges and expenses of any registrar, any custodian or depository appointed by the Trust for the safekeeping of its cash, portfolio securities and other property, and any transfer, dividend or accounting agent or agents appointed by the Trust; brokers' commissions chargeable to the Trust in connection with portfolio securities transactions to which the Trust is a party; all taxes, including securities issuance and transfer taxes, and fees payable by the Trust to federal, state or other governmental agencies; the costs and expenses of engraving or printing of certificates representing shares of the Trust; all costs and expenses in connection with the registration and maintenance of registration of the Trust and its shares with the SEC and various states and other jurisdictions (including filing and legal fees and disbursements of counsel); the costs and expenses of printing, including typesetting, and distributing prospectuses and statements of additional information of the Trust and supplements thereto to the Trust's shareholders; all expenses of shareholders' and trustees' meetings and of preparing, printing and mailing of prospectuses, proxy statements and reports to shareholders; fees and travel expenses of trustees and trustee members of any advisory board or committee; all expenses incident to the payment of any dividend, distribution, withdrawal or redemption, whether in shares or in cash; charges and expenses of any outside service used for pricing of the Trust's shares; charges and expenses of legal counsel, including counsel to the trustees of the Trust who are not "interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of independent accountants in connection with any matter relating to the Trust; membership dues of industry associations; interest payable on Trust borrowings; postage; insurance premiums on property or personnel (including officers and trustees) of the Trust which inure to its benefit; and extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs and any indemnification related thereto). Except as disclosed under the caption "Distribution Plan," FMC bears the expenses of printing and distributing prospectuses and statements of additional information (other than those prospectuses and statements of additional information distributed to existing shareholders of the Trust) and any other promotional or sales literature used by FMC or furnished by FMC to purchasers or dealers in connection with the public offering of the Trust's shares. Expenses of the Trust which are not directly attributable to the operations of any class of shares or portfolio of the Trust are prorated among all classes of the Trust based upon the relative net assets of each class. Expenses of the Trust except those listed in the next sentence are prorated among all classes of such portfolio based upon the relative net assets of each such class. Distribution and service fees, transfer agency fees and shareholder recordkeeping fees which are directly attributable to a specific class of shares are charged against the income available for distribution as dividends to the holders of such shares. FEE WAIVERS AIM or its affiliates may in its discretion from time to time agree to waive voluntarily all or any portion of its advisory fee and/or assume certain expenses of the Portfolio but will retain its ability to be reimbursed for such fee or expenses prior to the end of each fiscal year. FMC may in its discretion from time to time agree to waive voluntarily its 12b-1 fee but will retain its ability to be reimbursed prior to the end of the fiscal year. AIM voluntarily reimbursed expenses of $113,500 on the Personal Investment Class during the year ended August 31, 1996. 12 21 DISTRIBUTOR The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Certain trustees and officers of the Trust are affiliated with FMC and AIM. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of the Trust either directly or through other broker-dealers. FMC is the distributor of several of the mutual funds managed or advised by AIM. FMC may, from time to time, at its expense, pay a bonus or other consideration or incentive to dealers or financial institutions who sell a minimum dollar amount of the shares of the Class during a specific period of time. In some instances, these incentives may be offered only to certain dealers or financial institutions who have sold or may sell significant amounts of shares. The total amount of such additional bonus payments or other consideration shall not exceed .05% of the net asset value of the shares of the Class sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of shares of the Class or the amount received as proceeds from such sales. Sales of the shares of the Class may not be used to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any jurisdiction. DISTRIBUTION PLAN The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Trust may compensate FMC in connection with the distribution of the shares of the Class an amount equal to 0.10% on an annualized basis of the average daily net assets of the Portfolio attributable to the Class. Such amount may be expended when and if authorized by the Board of Trustees and may be used to finance such distribution-related services as expenses of organizing and conducting sales seminars, printing of prospectuses and statements of additional information (and supplements thereto) and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature and costs of administering the Plan. Of the compensation paid to FMC under the Plan, a service fee may be paid to dealers and other financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of the Class, in amounts of up to 0.10% of the average daily net assets of the Portfolio attributable to the Class which are attributable to the customers of such dealers or financial institutions. The Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Portfolio with respect to the Class. The Plan does not obligate the Trust to reimburse FMC for the actual expenses FMC may incur in fulfilling its obligations under the Plan on behalf of the Class. Thus, under the Plan, even if FMC's actual expenses exceed the fee payable to FMC thereunder at any given time, the Trust will not be obligated to pay more than that fee. If FMC's expenses are less than the fee it receives, FMC will retain the full amount of the fee. The Plan requires the officers of the Trust to provide the Board of Trustees at least quarterly with a written report of the amounts expended pursuant to the Plan and the purposes for which such expenditures were made. The Board of Trustees shall review these reports in connection with their decisions with respect to the Plan. As required by Rule 12b-1 under the 1940 Act, the Plan was initially approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan ("Qualified Trustees") on July 19, 1993. In approving the continuance of the Plan in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plan will benefit the Fund and the holders of the shares of the Class. The Plan may be terminated by a vote of a majority of the Qualified Trustees, or by a vote of a majority of the holders of the outstanding voting securities of the class to which the Plan relates. Any change in the Plan that would increase materially the distribution expenses paid by the Class requires shareholder approval; otherwise the Plan may be amended by the trustees, including a majority of the Qualified Trustees, by vote cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plan is in effect, the selection or nomination of the Qualified Trustees is committed to the discretion of the Qualified Trustees. PORTFOLIO TRANSACTIONS AND BROKERAGE AIM is responsible for decisions to buy and sell securities for the Portfolio, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid 13 22 and asked prices. The Portfolio may also purchase securities from underwriters at prices which include a concession paid by the issuer to the underwriter. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the executions and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment programs. Certain research services furnished by dealers may be useful to clients of AIM other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. GENERAL INFORMATION ORGANIZATION AND DESCRIPTION OF SHARES The Trust is a Delaware business trust. The Trust was originally incorporated in Maryland on January 24, 1977, but had no operations prior to November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts business trust; and effective October 15, 1993, the Trust was reorganized as a Delaware business trust. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are divided into seven classes. Five classes, including the Class, represent interests in the Portfolio and two classes represent interests in the Treasury TaxAdvantage Portfolio. Each class of shares has a par value of $.01 per share. The other classes of the Trust may have different sales charges and other expenses which may affect performance. An investor may obtain information concerning the Trust's other classes by contacting FMC. All shares of the Trust have equal rights with respect to voting, except that the holders of shares of a particular portfolio or class will have the exclusive right to vote on matters pertaining solely to that portfolio or class. For example, holders of shares of a particular portfolio will have the exclusive right to vote on any investment advisory agreement or investment restriction that relates only to such portfolio. In addition, if a portfolio is divided into various classes, holders of shares of a particular class will have the exclusive right to vote on any matter, such as distribution arrangements, which relates solely to such class. The holders of shares of the Portfolio have distinctive rights with respect to dividends and redemption which are more fully described in this Prospectus. In the event of liquidation or termination of the Trust, holders of shares of each portfolio will receive pro rata, subject to the rights of creditors, (a) the proceeds of the sale of the assets held in the respective portfolio to which such shares relate, less (b) the liabilities of the Trust attributable or allocated to the respective portfolio based on the liquidation value of the portfolio. Fractional shares of each portfolio have the same rights as full shares to the extent of their proportionate interest. There will not normally be annual shareholders' meetings. Shareholders may remove trustees from office by votes cast at a meeting of shareholders called solely for such purpose or by written consent. A meeting of shareholders for the sole purpose of considering removal of a trustee shall be called at the request of the holders of 10% or more of the Trust's outstanding shares. As of December 1, 1996, The Bank of New York was the owner of record of 68.64% of the outstanding shares of the Class. As long as The Bank of New York owns over 25% of such shares, it may be presumed to be in "control" of the Cash Management Class of the Treasury Portfolio, as defined in the 1940 Act. There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's shares, when issued, will be fully paid and non-assessable. The Board of Trustees may create additional portfolios of the Trust without shareholder approval. TRANSFER AGENT AND CUSTODIAN The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, acts as custodian for the portfolio securities and cash of the Portfolio. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for the shares of the Class. LEGAL COUNSEL The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the Trust and has passed upon the legality of the shares of the Portfolio. 14 23 SHAREHOLDER INQUIRIES Shareholder inquiries concerning the status of an account should be directed to an investor's Institution, or to the Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 877-7745. OTHER INFORMATION This Prospectus sets forth basic information that investors should know about the Trust and the Portfolio prior to investing. A Statement of Additional Information has been filed with the SEC. Copies of the Statement of Additional Information are available upon request and without charge by writing or calling the Trust or FMC. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted herein, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. 15 24 [THIS PAGE INTENTIONALLY LEFT BLANK] 25 =============================================================================== SHORT-TERM INVESTMENTS TRUST PROSPECTUS 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 December 30, 1996 (800) 877-7745 SHORT-TERM INVESTMENT ADVISOR INVESTMENTS TRUST A I M ADVISORS, INC. 11 Greenway Plaza, Suite 1919 --------------------- Houston, Texas 77046-1173 (713) 626-1919 TREASURY PORTFOLIO DISTRIBUTOR --------------------- FUND MANAGEMENT COMPANY 11 Greenway Plaza, Suite 1919 CASH MANAGEMENT CLASS Houston, Texas 77046-1173 TABLE OF CONTENTS (800) 877-7745 PAGE AUDITORS KPMG PEAT MARWICK LLP Summary............................. 2 NationsBank Building Table of Fees and Expenses.......... 4 700 Louisiana Financial Highlights................ 5 Houston, Texas 77002 Suitability for Investors........... 5 Investment Program.................. 5 CUSTODIAN Purchase of Shares.................. 8 THE BANK OF NEW YORK Redemption of Shares................ 9 90 Washington Street, Dividends........................... 9 11th Floor Taxes............................... 10 New York, New York 10286 Net Asset Value..................... 10 Yield Information................... 11 TRANSFER AGENT Reports to Shareholders............. 11 A I M INSTITUTIONAL FUND SERVICES, INC. Management of the Trust............. 11 11 Greenway Plaza, Suite 1919 General Information................. 14 Houston, Texas 77046-1173
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE. =============================================================================== 26 SHORT-TERM INVESTMENTS TRUST Prospectus - -------------------------------------------------------------------------------- TREASURY PORTFOLIO The Treasury Portfolio is a money market fund whose investment objective is the maximization of current income to the extent consistent with the INSTITUTIONAL preservation of capital and the maintenance of CLASS liquidity. The Treasury Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the DECEMBER 30, 1996 Treasury Portfolio will have maturities of 397 days or less. The Treasury Portfolio is a series portfolio of Short-Term Investments Trust (the "Trust"), an open- end diversified series management investment company. This Prospectus relates solely to the Institutional Class of the Treasury Portfolio, a class of shares designed to be a convenient vehicle in which institutions, particularly banks, acting for themselves or in a fiduciary, advisory, agency, custodial or other similar capacity can invest in a diversified money market fund. The Trust also offers shares of other classes of the Treasury Portfolio pursuant to separate prospectuses: the Personal Investment Class, Private Investment Class, Cash Management Class and Resource Class, as well as shares of classes of another portfolio of the Trust, the Treasury TaxAdvantage Portfolio. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN SHARES OF THE INSTITUTIONAL CLASS OF THE TREASURY PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION THE ("SEC") AND IS HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS BELOW OR CALL (800) 877-7745. THE SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST. THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT THE TREASURY PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. [LOGO APPEARS HERE] Fund Management Company 11 Greenway Plaza Suite 1919 Houston, Texas 77046-1173 (800) 659-1005 27 SUMMARY THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE The Trust is an open-end diversified series management investment company. This Prospectus relates to the Institutional Class (the "Class") of the Treasury Portfolio (the "Portfolio"). The Portfolio is a money market fund which invests in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Portfolio will have maturities of 397 days or less. The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservations of capital and the maintenance of liquidity. Pursuant to separate prospectuses, the Trust also offers shares of other classes of shares of beneficial interest of the Portfolio representing an interest in the Portfolio. Such classes have different distribution arrangements and are designed for institutional and other categories of investors. The Trust also offers shares of two classes of another portfolio, the Treasury TaxAdvantage Portfolio, each pursuant to a separate prospectus. The portfolios of the Trust are referred to collectively as the "Portfolios." Because the Trust declares dividends on a daily basis, shares of each class of the Portfolio have the same net asset value (proportionate interest in the net assets of the Portfolio) and bear equally those expenses, such as the advisory fee, that are allocated to the Portfolio as a whole. All classes of the Portfolio share a common investment objective and portfolio of investments. However, different classes of the Portfolio have different shareholder qualifications and are separately allocated certain class expenses, such as those associated with the distribution of their shares. Therefore, each class will have a different dividend payment and a different yield. INVESTORS IN THE CLASS The Class is designed to be a convenient and economical vehicle in which institutions, particularly banks, acting for themselves or in a fiduciary, advisory, agency, custodial or other similar capacity can invest short-term cash reserves. Although shares of the Class may not be purchased by individuals directly, institutions may purchase shares for accounts maintained by individuals. See "Suitability for Investors." For the fiscal year ended August 31, 1996, the expenses of operation for the Class represented 0.09% of the average daily net assets of the Class. PURCHASE OF SHARES Shares of the Class are sold at net asset value without a sales charge. The minimum initial investment in the Class is $1,000,000. There is no minimum amount for subsequent investments. Payment for shares of the Class purchased must be in federal funds or other funds immediately available to the Portfolio. See "Purchase of Shares." REDEMPTION OF SHARES Redemptions may be made without charge at net asset value. Payment for redeemed shares of the Class for which redemption orders are received prior to 4:00 p.m. Eastern Time will normally be made in federal funds on the same day. See "Redemption of Shares." DIVIDENDS The net income of each Portfolio is declared as a dividend daily to shareholders of record immediately after 4:00 p.m. Eastern Time. Dividends are paid monthly by check or wire transfer unless the shareholder has previously elected to have such dividends automatically reinvested in additional shares of the Class. Information concerning the amount of the dividends declared on any particular day will normally be available by 5:00 p.m. Eastern Time on that day. See "Dividends." CONSTANT NET ASSET VALUE The Trust uses the amortized cost method of valuing the securities held by the Portfolio and rounds the per share net asset value to the nearest whole cent. Accordingly, the net asset value per share of the Portfolio will normally remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value." INVESTMENT ADVISOR A I M Advisors, Inc. ("AIM") serves as the Portfolio's investment advisor and receives a fee based on the Portfolio's average daily net assets. During the fiscal year ended August 31, 1996, the Trust paid AIM fees with respect to the Portfolio which represented 0.06% of the average daily net assets of the Portfolio. AIM is primarily engaged in the business of acting as manager or 2 28 advisor to investment companies. Under an Administrative Services Agreement, AIM may be reimbursed by the Trust for its costs of performing certain accounting and other administrative services for the Trust. See "Management of the Trust -- Investment Advisor" and "-- Administrative Services." On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced that it had entered into an Agreement and Plan of Merger among INVESCO plc, INVESCO Group Services, Inc. and AIM Management, pursuant to which AIM Management will be merged with INVESCO Group Services, Inc. INVESCO 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. It is contemplated that the merger will occur on February 28, 1997. The Trust's investment advisor, AIM, is a wholly-owned subsidiary of AIM Management. The proposed transaction may be deemed to cause an "assignment" (as that term is defined under the Investment Company Act of 1940, as amended (the "1940 Act")) of the Master Investment Advisory Agreement between the Trust and AIM. Under the 1940 Act and the Master Investment Advisory Agreement, an assignment results in the automatic termination of the Master Investment Advisory Agreement. On December 11, 1996, the Board of Trustees of the Trust approved a new investment advisory agreement, subject to shareholder approval, between AIM and the Trust with respect to the Portfolio. Shareholders will be asked to approve the proposed advisory agreement at an annual meeting of shareholders to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also approved a new administrative services agreement with AIM and a new distribution agreement with Fund Management Company ("FMC"). There are no material changes to the terms of the new agreements, including the fees payable by the Portfolio. No change is anticipated in the investment advisory or other personnel responsible for the Portfolio as a result of these new agreements. The Board of Trustees has approved these new agreements because the Portfolio's corresponding existing agreements will terminate upon the consummation of the proposed merger of AIM Management into a subsidiary of INVESCO plc. Provided that the Portfolio's shareholders approve the new investment advisory agreement at the Annual Meeting and the merger is consummated, the new investment advisory agreement with respect to the Portfolio, as well as the new administrative services and distribution agreements, will automatically become effective as of the closing date of the merger. DISTRIBUTOR Fund Management Company ("FMC") acts as the exclusive distributor of the Trust's shares. FMC does not receive any fee for distribution services from the Trust. See "Purchase of Shares." SPECIAL RISK CONSIDERATIONS The Portfolio may borrow money and enter into reverse repurchase agreements. The Portfolio may invest in repurchase agreements and purchase securities for delayed delivery. Accordingly, an investment in the Portfolio may entail somewhat different risks from an investment in an investment company that does not engage in such practices. There can be no assurance that the Portfolio will be able to maintain a stable net asset value of $1.00 per share. See "Investment Program." The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and Design are service marks of A I M Management Group Inc. 3 29 TABLE OF FEES AND EXPENSES SHAREHOLDER TRANSACTION EXPENSES* Maximum sales load imposed on purchases (as a percentage of offering price)................................................ None Maximum sales load on reinvested dividends (as a percentage of offering price)................................................ None Deferred sales load (as a percentage of original purchase price or redemption proceeds, as applicable)............................ None Redemption fees (as a percentage of amount redeemed, if applicable).................................................... None Exchange fee...................................................... None ANNUAL PORTFOLIO OPERATING EXPENSES -- INSTITUTIONAL CLASS (as a percentage of average net assets) Management fees................................................... 0.06% 12b-1 fees........................................................ None Other expenses: Custodian fees................................................. 0.01% Other.......................................................... 0.02% ---- Total other expenses......................................... 0.03% ---- Total portfolio operating expenses -- Institutional Class......... 0.09% ====
- --------------- * Beneficial owners of shares of the Class should consider the effect of any charges imposed by their bank or other financial institution for various services. EXAMPLE An investor would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period. 1 year............................................................... $ 1 3 years.............................................................. $ 3 5 years.............................................................. $ 5 10 years.............................................................. $12
The Table of Fees and Expenses is designed to assist an investor in understanding the various costs and expenses that an investor in the Class will bear directly or indirectly. (For more complete descriptions of the various costs and expenses, see "Management of the Trust" below.) The expense figures are based upon actual costs and fees charged to the Class for the fiscal year ended August 31, 1996. To the extent any service providers assume expenses of the Class, such assumption of expenses will have the effect of lowering the Class's overall expense ratio and increasing its yield to investors. Beneficial owners of shares of the Class should also consider the effect of any charges imposed by the institution maintaining their accounts. The example in the Table of Fees and Expenses assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses -- Institutional Class" remain the same in the years shown. The example shown in the above table is based on the amounts listed under "Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. 4 30 FINANCIAL HIGHLIGHTS Shown below are the per share data, ratios and supplemental data (collectively, "data") for each of the years in the ten-year period ended August 31, 1996. The data has been audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified report on the financial statements and the related notes appears in the Statement of Additional Information.
1996 1995 1994 1993 1992 1991 1990 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income...... 0.05 0.06 0.04 0.03 0.05 0.07 0.08 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations........... 0.05 0.06 0.04 0.03 0.05 0.07 0.08 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Less distributions: Dividends from net investment income................... (.05) (0.06) (0.04) (0.03) (0.05) (0.07) (0.08) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========== ========== ========== ========== ========== ========== ========== Total return................ 5.57% 5.66% 3.53% 3.22% 4.56% 7.04% 8.52% ========== ========== ========== ========== ========== ========== ========== Ratios/supplemental data: Net assets, end of period (000s omitted)........... $2,335,441 $2,669,637 $2,452,389 $3,652,672 $3,835,387 $2,437,902 $1,703,460 ========== ========== ========== ========== ========== ========== ========== Ratio of expenses to average net assets................. 0.09%(a) 0.10% 0.08% 0.08% 0.09% 0.10% 0.12% ========== ========== ========== ========== ========== ========== ========== Ratio of net investment income to average net assets..................... 5.43%(a) 5.53% 3.39% 3.17% 4.38% 6.73% 8.19% ========== ========== ========== ========== ========== ========== ========== 1989 1988 1987 ---------- ---------- -------- Net asset value, beginning of period.................. $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income...... 0.09 0.07 0.06 ---------- ---------- -------- Total from investment operations........... 0.09 0.07 0.06 ---------- ---------- -------- Less distributions: Dividends from net investment income................... (0.09) (0.07) (0.06) ---------- ---------- -------- Net asset value, end of period..................... $ 1.00 $ 1.00 $ 1.00 ========== ========== ========= Total return................ 9.03% 6.98% 6.17% ========== ========== ========= Ratios/supplemental data: Net assets, end of period (000s omitted)........... $1,189,822 $1,121,144 $650,547 ========== ========== ========= Ratio of expenses to average net assets................. 0.11% 0.13% 0.14% ========== ========== ========= Ratio of net investment income to average net assets..................... 8.69% 6.76% 6.01% ========== ========== =========
- --------------- (a) Ratios are based on average net assets of $2,499,257,005. 5 31 SUITABILITY FOR INVESTORS The Class is intended for use primarily by institutions, particularly banks, acting for themselves or in a fiduciary, advisory, agency, custodial or other similar capacity. They are designed to be a convenient and economical vehicle in which such institutions can invest short-term cash reserves. Shares of the Class may not be purchased directly by individuals, although institutions may purchase shares for accounts maintained by individuals. Prospective investors should determine if an investment in the Class is consistent with the objectives of an account and with applicable state and federal laws and regulations. An investment in the Class may relieve the institution of many of the investment and administrative burdens encountered when investing in money market instruments directly. These include: selection of portfolio investments; surveying the market for the best price at which to buy and sell; valuation of portfolio securities; selection and scheduling of maturities; receipt, delivery and safekeeping of securities; and portfolio recordkeeping. It is anticipated that most investors will perform their own sub-accounting. To assist these institutions, information concerning the dividends declared by the Portfolios on any particular day will normally be available by 5:00 p.m. Eastern Time on that day. Investors in the Class have the opportunity to receive a somewhat higher yield than might be obtainable through direct investment in money market instruments and enjoy the benefits of same-day liquidity. Generally, higher interest rates can be obtained on the purchase of very large blocks of money market instruments. Of course, any such relative increase in interest rates may be offset to some extent by the operating expenses of the Class. However, these expenses are expected to be relatively small due primarily to the following factors: the Class will have a small number of shareholders who do not need many of the services provided by other money market investment companies, thereby resulting in lower transfer agent fees and costs for printing reports and proxy statements; sales of the shares of the Class to institutions acting for themselves or in a fiduciary capacity are exempt from the registration requirements of most state securities laws, thereby resulting in reduced state registration fees; and the relatively low investment advisory fee paid to AIM. INVESTMENT PROGRAM INVESTMENT OBJECTIVE The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The money market instruments in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on money market instruments of lesser quality. The Portfolio consists exclusively of money market instruments which have maturities of 397 days or less from the date of purchase (except that securities subject to repurchase agreements may have longer maturities). INVESTMENT POLICIES The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds, and repurchase agreements relating to such securities. The Portfolio may also engage in certain investment practices described below. The market values of the money market instruments held by the Portfolio will be affected by changes in the yields available on similar securities. If yields have increased since a security was purchased, the market value of such security will generally have decreased. Conversely, if yields have decreased, the market value of such security will generally have increased. REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase agreements with banks and broker-dealers pertaining to the securities described above and which at the date of purchase are "First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. Generally, "First Tier" securities are securities that are rated in the highest rating category by two nationally recognized statistical rating organizations ("NRSROs") or, if only rated by one NRSRO, are rated in the highest rating category by that NRSRO or, if unrated, are determined by AIM (under the supervision of and pursuant to guidelines established by the Trust's Board of Trustees) to be of comparable quality to a rated security that meets the foregoing quality standards. A repurchase agreement is an instrument under which the Portfolio acquires ownership of a debt security and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed-upon time and price, thereby determining the yield during the Portfolio's holding period. Repurchase transactions are limited to a term not to exceed 365 days. The Portfolio may enter into repurchase agreements only with institutions believed by the Trust's Board of Trustees to present minimal credit risk. With regard to repurchase transactions, in the event of a bankruptcy or other default of a seller of a repurchase agreement (such as the seller's failure to repurchase the obligation in accordance with the terms of the agreement), the Portfolio could experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period while the Portfolio seeks to enforce its rights thereto, (b) possible subnormal levels of income and lack of access to income during this period, and (c) expenses of enforcing its rights. Repurchase agreements are considered to be loans under the 1940 Act. 6 32 BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money and enter into reverse repurchase agreements with respect to its portfolio securities in amounts up to 10% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement. Reverse repurchase agreements involve the sale by the Portfolio of a portfolio security at an agreed-upon price, date and interest payment. The Portfolio will borrow money or enter into reverse repurchase agreements solely for temporary or defensive purposes, such as to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests should they occur. Reverse repurchase transactions are limited to a term not to exceed 92 days. The Portfolio will use reverse repurchase agreements when the interest income to be earned from the securities that would otherwise have to be liquidated to meet redemption requests is greater than the interest expense of the reverse repurchase transaction. Reverse repurchase agreements involve the risk that the market value of securities retained by the Portfolio in lieu of liquidation may decline below the repurchase price of the securities sold by the Portfolio which it is obligated to repurchase. The risk, if encountered, could cause a reduction in the net asset value of the Portfolio's shares. Reverse repurchase agreements are considered to be borrowings by the Portfolio under the 1940 Act. LENDING OF PORTFOLIO SECURITIES. The Portfolio may also lend its portfolio securities in amounts up to 33-1/3% of its total assets to financial institutions in accordance with the investment restrictions of the Portfolio. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned or of delay in recovering the securities loaned or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers deemed by AIM to be of good standing and only when, in AIM's judgment, the income to be earned from the loans justifies the attendant risks. PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's investments, AIM may indicate to dealers or issuers its interest in acquiring certain securities for the Portfolio for settlement beyond a customary settlement date. In some cases, the Portfolio may agree to purchase such securities at stated prices and yields. In such cases, such securities are considered "delayed delivery" securities when traded in the secondary market. Since this is done to facilitate the acquisition of portfolio securities and is not for the purpose of investment leverage, the amount of delayed delivery securities involved may not exceed the estimated amount of funds available for investment on the settlement date. Until the settlement date, assets of the Portfolio with a dollar value sufficient at all times to make payment for the delayed delivery securities will be segregated. The total amount of segregated assets may not exceed 25% of the Portfolio's total assets. The delayed delivery securities, which will not begin to accrue interest until the settlement date, will be recorded as an asset of the Portfolio and will be subject to the risks of market value fluctuations. The purchase price of the delayed delivery securities will be recorded as a liability of the Portfolio until settlement. Absent extraordinary circumstances, the Portfolio's right to acquire delayed delivery securities will not be divested prior to the settlement date. ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net assets in illiquid securities. PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term trading and will generally hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money markets. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. Securities held by the Portfolio will be disposed of prior to maturity if an earlier disposition is deemed desirable by AIM to meet redemption requests. In addition, AIM will continually monitor the creditworthiness of issuers whose securities are held by the Portfolio, and securities held by the Portfolio may be disposed of prior to maturity as a result of a revised credit evaluation of the issuer or other circumstances or considerations. The Portfolio's policy of investing in securities with maturities of 397 days or less will result in high portfolio turnover. Since brokerage commissions are not normally paid on investments of the type made by the Portfolio, the high turnover rate should not adversely affect the Portfolio's net income. The investment policies described above may be changed by the Board of Trustees without the affirmative vote of a majority of the outstanding shares of the Portfolio. INVESTMENT RESTRICTIONS The Portfolio's investment program is subject to a number of investment restrictions which reflect self-imposed standards as well as federal and state regulatory limitations. These restrictions are designed to minimize certain risks associated with investing in specified types of securities or engaging in certain transactions and to limit the amount of the Portfolio's assets which may be concentrated in any specific industry or issuer. The most significant of these restrictions provide that the Portfolio will not: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be in- 7 33 vested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time; or (2) borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities, or to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the Portfolio's investment program may be considered the issuance of senior securities. The Portfolio will not purchase securities while borrowings in excess of 5% of its total assets are outstanding. The foregoing investment restrictions of the Portfolio (as well as certain others set forth in the Statement of Additional Information) are matters of fundamental policy which may not be changed without the affirmative vote of a majority of the outstanding shares of the Portfolio. The Board of Trustees has unanimously approved the elimination of or changes to certain fundamental investment policies of the Trust, subject to shareholder approval. Shareholders will be asked to approve these changes at the Annual Meeting. If approved, they will become effective on March 1, 1997. The Trust is currently generally prohibited from investing in other investment companies. The Board of Trustees has approved the elimination of this prohibition, and the amendment to another fundamental investment policy that corresponds to the proposed elimination. The elimination of the fundamental investment policy that prohibits the Trust from investing in other investment companies and the proposed amendment to the corresponding fundamental investment policy would permit investment in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. The Board of Trustees has approved the amendment of Investment No. (1) of the Trust indicated above. In the event shareholders approve the proposed change, Investment Restriction No. (1) will read in full as follows: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such rule may be amended from time to time, and except that the Portfolio may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. In addition to the restrictions described above, the Portfolio must also comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time, which govern the operations of money market funds, and may be more restrictive than the policies described herein. The SEC has proposed certain changes to Rule 2a-7. While such proposed changes may have a prospective impact on the investments of the Portfolio, the Portfolio anticipates no difficulty in complying with any proposed change if adopted by the SEC. A description of further investment restrictions applicable to the Portfolio is contained in the Statement of Additional Information. PURCHASE OF SHARES Shares of the Class are sold on a continuing basis at their net asset value next determined after an order has been received by the Portfolio. As discussed below, the Trust reserves the right to reject any purchase order. Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a record keeping, account maintenance or other fee to their customers, and beneficial holders of the shares of the Class should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. To facilitate the investment of proceeds of purchase orders, the investors are urged to place their orders as early in the day as possible. Purchase orders will be accepted for execution on the day the order is placed, provided that the order is properly submitted and received by the Portfolio prior to 4:00 p.m. Eastern Time on a business day of the Portfolio. Purchase orders received after such time will be processed at the next day's net asset value. Shares of the Class will earn the dividend declared on the effective date of purchase. A "business day of the Portfolio" is any day on which both the Federal Reserve Bank of New York and The Bank of New York, the Trust's custodian bank, are open for business. It is expected that The Bank of New York and the Federal Reserve Bank of New York will be closed during the next twelve months on Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. 8 34 Subject to the conditions stated above and the Trust's right to reject any purchase order, orders will be accepted (i) when payment for the shares of the Class purchased is received by The Bank of New York, the Trust's custodian bank, in the form described below and notice of such order is provided to A I M Institutional Fund Services, Inc. ("AIFS") (the Trust's transfer agent), or (ii) at the time the order is placed, if the Portfolio is assured of payment. Shares of the Class purchased by orders which are accepted prior to 4:00 p.m. Eastern Time will earn the dividend declared on the date of purchase. Payments for shares of the Class purchased must be in the form of federal funds or other funds immediately available to the Portfolio. Federal Reserve wires should be sent as early as possible in order to facilitate crediting to the shareholder's account. Any funds received with respect to an order which is not accepted by the Trust and any funds received for which an order has not been received will be returned to the sending institution. An order to purchase shares must specify that it is for the purchase of "Shares of the Institutional Class of the Treasury Portfolio," otherwise any funds received will be returned to the sending institution. The minimum initial investment in the Class is $1,000,000. Institutions may be requested to maintain separate Master Accounts in the shares of the Class held by the institution (i) for its own account, for the account of other institutions and for accounts for which the institution acts as a fiduciary, and (ii) for accounts for which the institution acts in some other capacity. An institution's Master Account(s) and sub-accounts in the shares of the Class may be aggregated for the purpose of the minimum investment requirement. No minimum amount is required for subsequent investments in the Portfolio nor are minimum balances required. Prior to the initial purchase of shares of the Class, an Account Application must be completed and sent to A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Account Applications may be obtained from AIFS. Any changes made to the information provided in the Account Application must be made in writing or by completing a new form and providing it to AIFS. Banks will be required to certify to the Trust that they comply with applicable state law regarding registration as broker-dealers, or that they are exempt from such registration. The Trust reserves the right in its sole discretion to withdraw all or any part of the offering made by this Prospectus or to reject any purchase order. REDEMPTION OF SHARES A shareholder may redeem any or all of its shares of the Class at the net asset value next determined after receipt of the redemption request in proper form by the Trust. Redemption requests with respect to the Class may also be made via AIM LINK(R), a personal computer application software product. Normally, the net asset value per share of the Portfolio will remain constant at $1.00. See "Net Asset Value." Redemption requests with respect to shares of the Class are normally made by calling the Trust. Payment for redeemed shares of the Class is normally made by Federal Reserve wire to the commercial bank account designated in the institution's Account Application, but may be remitted by check upon request by a shareholder. If a redemption request is received by AIFS prior to 4:00 p.m. Eastern Time on a business day of the Portfolio, the redemption will be effected at the net asset value next determined on such day and the shares of the Class to be redeemed will not receive the dividend declared on the effective date of the redemption. If a redemption request is received by AIFS after 4:00 p.m. Eastern Time or on other than a business day of the Portfolio, the redemption will be effected at the net asset value of the Portfolio determined as of 4:00 p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of such redemption will normally be wired on the effective day of the redemption. A shareholder may change the bank account designated to receive redemption proceeds by written notice to the Trust. The authorized signature on the notice must be guaranteed by a commercial bank or a trust company. Additional documentation may be required when deemed appropriate by the Trust or AIFS, the Trust's transfer agent. Shareholders may request a redemption by telephone. AIFS and FMC will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth in the Account Application if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), and mailings of confirmations promptly after the transaction. Payment for shares of the Class redeemed by mail and payment for telephone redemptions in amounts of less than $1,000 will be made by check mailed within seven days after receipt of the redemption request in proper form. The Trust may make payment for telephone redemptions in excess of $1,000 by check when it is considered to be in the Portfolio's best interest to do so. 9 35 The shares of the Class are not redeemable at the option of the Trust unless the Board of Trustees of the Trust determines in its sole discretion that failure to so redeem may have materially adverse consequences to the shareholders of the Trust. DIVIDENDS Dividends from the net income of the Portfolio are declared daily to shareholders of record of each class of the Portfolio as of immediately after 4:00 p.m. Eastern Time on the day of declaration. Net income for dividend purposes is determined daily as of 4:00 p.m. Eastern Time. The dividend accrued and paid for each class will consist of (a) income of the Portfolio, the allocation of which is based upon such class's pro rata share of the total outstanding shares representing an interest in the Portfolio, less (b) Portfolio expenses, such as custodian fees, trustees' fees, accounting and legal expenses, based upon such class' pro rata share of the net assets of the Portfolio, less (c) expenses directly attributable to such class, such as distribution expenses, if any, and transfer agency fees. Although realized gains and losses on the assets of the Portfolio are reflected in its net asset value, they are not expected to be of an amount which would affect its $1.00 per share net asset value for purposes of purchases and redemptions. See "Net Asset Value." Distributions from net realized short-term gains may be declared and paid yearly or more frequently. See "Taxes." The Portfolio does not expect to realize any long-term capital gains or losses. All dividends declared during a month will normally be paid by wire transfer. Payment will normally be made on the first business day of the following month. A shareholder may elect to have all dividends automatically reinvested in additional full and fractional shares of the Class at the net asset value as of 4:00 p.m. Eastern Time on the last business day of the month. Such election, or any revocation thereof, must be made in writing by the institution to AIFS, 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 and will become effective with dividends paid after its receipt by AIFS. If a shareholder redeems all the shares of the Class in its account at any time during the month, all dividends declared through the date of redemption are paid to the shareholder along with the proceeds of the redemption. The Portfolio uses its best efforts to maintain its net asset value per share of the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should the Trust incur or anticipate any unusual expense, loss or depreciation which could adversely affect the income or net asset value of the Portfolio, the Trust's Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of the then prevailing circumstances. For example, under such unusual circumstances, the Board of Trustees might reduce or suspend the daily dividend in order to prevent to the extent possible the net asset value per share of the Portfolio from being reduced below $1.00. Thus, such expenses, losses or depreciation may result in a shareholder receiving no dividends for the period during which it held its shares of the Class and cause such a shareholder to receive upon redemption a price per share lower than the shareholder's original cost. TAXES The policy of the Portfolio is to distribute to its shareholders at least 90% of its investment company taxable income for each year and consistent therewith to meet the distribution requirements of Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Portfolio also intends to meet the distribution requirements imposed by the Code in order to avoid the imposition of a 4% excise tax. The Portfolio intends to distribute at least 98% of its net investment income for the calendar year and at least 98% of its net realized capital gains, if any, for the period ending on October 31. The Portfolio also intends to meet the other requirements of Subchapter M, including the requirements with respect to diversification of assets and sources of income, so that the Portfolio will pay no taxes on net investment income and net realized capital gains paid to shareholders. Dividends paid by the Portfolio are subject to taxation as of the date of payment, whether received by shareholders in cash or shares of the Class. The Code provides an exception to this general rule: if the Portfolio declares a dividend in October, November or December to shareholders of record in such months and pays the dividend during January of the next year, a shareholder will be treated for tax purposes as having received the dividend on December 31 of the year in which it is declared rather than in January when it is paid. It is anticipated that no portion of distributions will be eligible for the dividends received deduction for corporations. Dividends paid by the Portfolio from its net investment income and short-term capital gains are taxable to shareholders at ordinary income tax rates. The Portfolio will be treated as a separate corporation for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M. Therefore, the Portfolio may not offset its gains against the losses of the other portfolio of the Trust and each portfolio of the Trust must specifically comply with all the provisions of the Code. Distributions and transactions referred to in the preceding paragraphs may be subject to state, local or foreign taxes, and the treatment thereof may differ from the federal income tax consequences discussed herein. Shareholders are advised to consult with their own tax advisors concerning the application of state, local or foreign taxes. 10 36 Foreign persons who file a United States tax return after December 31, 1996 for a U.S. tax refund and who are not eligible to obtain a social security number must apply to the Internal Revenue Service ("IRS") for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or AIFS. NET ASSET VALUE The net asset value per share of the Portfolio is determined daily as of 4:00 p.m. Eastern Time on each business day of the Portfolio. Net asset value per share is determined by dividing the value of the Portfolio's securities, cash and other assets (including interest accrued but not collected) less all of its liabilities (including accrued expenses and dividends payable), by the number of shares outstanding of the Portfolio and rounding the resulting per share net asset value to the nearest one cent. The securities of the Portfolio are valued on the basis of amortized cost pursuant to rules promulgated by the SEC applicable to money market funds. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if the security were sold. During such periods, the daily yield on shares of the Portfolio, computed as described in "Purchases and Redemptions -- Performance Information" in the Statement of Additional Information, may differ somewhat from an identical computation made by an investment company with identical investments utilizing available indications as to market value to value its portfolio securities. YIELD INFORMATION Yield information for the Class can be obtained by calling the Trust at (800) 659-1005. Yields will fluctuate from time to time and are not necessarily indicative of future results. Accordingly, the yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time. Yield is a function of the type and quality of the Portfolio's investments, the Portfolio's maturity and the operating expense ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should be carefully considered by the investor before making an investment in the Portfolio. For the seven-day period ended August 31, 1996, the current yield and the effective yield of the Class (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the annualized current yield for the period) were 5.23% and 5.36%. These performance numbers are quoted for illustration purposes only. The performance numbers for any other seven-day period may be substantially different from those quoted above. To assist banks and other institutions performing their own subaccounting, same day information as to the daily dividend per share for the Portfolio to eight decimal places and current yield normally will be available by 5:00 p.m. Eastern Time. From time to time and in its discretion, AIM or its affiliates may waive all or a portion of its advisory fees and/or assume certain expenses of the Portfolio. Such a practice will have the effect of increasing the Portfolios' yield and total return. REPORTS TO SHAREHOLDERS The Trust furnishes shareholders with semi-annual reports containing information about the Portfolio and its operations, including a list of the investments held by the Portfolio and financial statements. The annual financial statements are audited by the Trust's independent auditors. Unless otherwise requested by the shareholder, each shareholder will be provided with a written confirmation for each transaction. Institutions establishing sub-accounts will receive a written confirmation for each transaction in a sub-account. Duplicate confirmations may be transmitted to the beneficial owner of the sub-account if requested by the institution. The institution will receive a periodic statement setting forth, for each sub-account, the share balance, income earned for the month, income earned for the year to date and the total current value of the account. MANAGEMENT OF THE TRUST BOARD OF TRUSTEES The overall management of the business and affairs of the Trust is vested with its Board of Trustees. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to the Trust, including agreements with the Trust's investment advisor, distributor, custodian and transfer agent. The day-to-day operations of the 11 37 Trust are delegated to the Trust's officers and to AIM, subject always to the objectives and policies of the Trust and to the general supervision of the Trust's Board of Trustees. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor for the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM, organized in 1976, together with its affiliates, manages or advises 41 investment company portfolios. As of November 14, 1996, the total assets of the investment company managed, advised or administered by AIM and its affiliates were approximately $61.1 billion. All of the directors and certain of the officers of AIM are also trustees or executive officers of the Fund. AIM is a wholly-owned subsidiary of AIM Management. AIM Management is a holding company engaged in the financial services business. Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the Portfolio's assets and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale. For the fiscal year ended August 31, 1996, AIM received fees from the Trust under an advisory agreement previously in effect, which provided for the same level of compensation to AIM as the Advisory Agreement, with respect to the Portfolio which represented 0.06% of the Portfolio's average daily net assets. During such fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.09% of the Class' average daily net assets. ADMINISTRATIVE SERVICES The Trust has entered into a Master Administrative Services Agreement dated as of October 18, 1993 with AIM (the "Administrative Services Agreement"), pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Portfolio, including the services of a principal financial officer of the Trust and related staff. As compensation to AIM for its services under the Administrative Services Agreement, the Portfolio may reimburse AIM for expenses incurred by AIM in connection with such services. FEE WAIVERS AIM or its affiliates may in its discretion from time to time agree to waive voluntarily all or any portion of its advisory fee and/or assume certain expenses of the Portfolio but will retain its ability to be reimbursed for such fee or expenses prior to the end of each fiscal year. AIM voluntarily reimbursed expenses of $113,500 on the Portfolio during the year ended August 31, 1996. DISTRIBUTOR The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Certain trustees and officers of the Trust are affiliated with FMC and AIM. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of the Trust either directly or through other broker-dealers. FMC is the distributor of several of the mutual funds managed or advised by AIM. PORTFOLIO TRANSACTIONS AND BROKERAGE AIM is responsible for decisions to buy and sell securities for the Portfolios, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid and asked prices. The Portfolio may also purchase securities from underwriters at prices which include a concession paid by the issuer to the underwriter. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the executions and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment programs. Certain research services furnished by dealers may be useful to 12 38 clients of AIM other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. GENERAL INFORMATION ORGANIZATION AND DESCRIPTION OF SHARES The Trust is a Delaware business trust. The Trust was originally incorporated in Maryland on January 24, 1977, but had no operations prior to November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts business trust; and effective October 15, 1993, the Trust was reorganized as a Delaware business trust. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury Portfolio (the " Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are divided into seven classes of which five, including the Class, represent interests in the Portfolio and two classes represent interests in the Treasury TaxAdvantage Portfolio. Each class of shares has a par value of $.01 per share. The other classes of the Trust may have different sales charges and other expenses which may affect performance. An investor may obtain information concerning the Trust's other classes by contacting FMC. All shares of the Trust have equal rights with respect to voting, except that the holders of shares of a particular portfolio or class will have the exclusive right to vote on matters pertaining solely to that portfolio or class. For example, holders of shares of a particular portfolio will have the exclusive right to vote on any investment advisory agreement or investment restriction that relates only to such portfolio. In addition, if a portfolio is divided into various classes, holders of shares of a particular class will have the exclusive right to vote on any matter, such as distribution arrangements, which relates solely to such class. The holders of shares of the Portfolio have distinctive rights with respect to dividends and redemption which are more fully described in this Prospectus. In the event of liquidation or termination of the Trust, holders of shares of each portfolio will receive pro rata, subject to the rights of creditors, (a) the proceeds of the sale of the assets held in the respective portfolio to which such shares relate, less (b) the liabilities of the Trust attributable or allocated to the respective portfolio based on the liquidation value of the portfolio. Fractional shares of each portfolio have the same rights as full shares to the extent of their proportionate interest. There will not normally be annual shareholders' meetings. Shareholders may remove trustees from office by votes cast at a meeting of shareholders called solely for such purpose or by written consent. A meeting of shareholders for the sole purpose of considering removal of a trustee shall be called at the request of the holders of 10% or more of the Trust's outstanding shares. There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's shares, when issued, will be fully paid and non-assessable. The Board of Trustees may create additional portfolios of the Trust without shareholder approval. TRANSFER AGENT AND CUSTODIAN The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, acts as custodian for the portfolio securities and cash of the Portfolio. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for the shares of the Class. LEGAL COUNSEL The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the Trust and has passed upon the legality of the shares of the Portfolio. SHAREHOLDER INQUIRIES Shareholder inquiries concerning the status of an account should be directed to the Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 659-1005. OTHER INFORMATION This Prospectus sets forth basic information that investors should know about the Trust and the Portfolio prior to investing. A Statement of Additional Information has been filed with the SEC. Copies of the Statement of Additional Information are available upon request and without charge by writing or calling the Trust or FMC. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted herein, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. 13 39 [THIS PAGE INTENTIONALLY LEFT BLANK] 40 [THIS PAGE INTENTIONALLY LEFT BLANK] 41 =============================================================================== SHORT-TERM INVESTMENTS TRUST PROSPECTUS 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 December 30, 1996 (800) 659-1005 SHORT-TERM INVESTMENT ADVISOR INVESTMENTS TRUST A I M ADVISORS, INC. 11 Greenway Plaza, Suite 1919 --------------------- Houston, Texas 77046-1173 (713) 626-1919 TREASURY PORTFOLIO DISTRIBUTOR --------------------- FUND MANAGEMENT COMPANY 11 Greenway Plaza, Suite 1919 INSTITUTIONAL CLASS Houston, Texas 77046-1173 (800) 659-1005 TABLE OF CONTENTS PAGE AUDITORS ---- KPMG PEAT MARWICK LLP NationsBank Building Summary............................. 2 700 Louisiana Table of Fees and Expenses.......... 4 Houston, Texas 77002 Financial Highlights................ 5 Suitability For Investors........... 6 CUSTODIAN Investment Program.................. 6 THE BANK OF NEW YORK Purchase of Shares.................. 8 90 Washington Street Redemption of Shares................ 9 11th Floor Dividends........................... 10 New York, New York 10286 Taxes............................... 10 Net Asset Value..................... 11 TRANSFER AGENT Yield Information................... 11 A I M INSTITUTIONAL FUND SERVICES, INC. Reports to Shareholders............. 11 11 Greenway Plaza, Suite 1919 Management of the Trust............. 11 Houston, Texas 77046-1173 General Information................. 13 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE. ===============================================================================
42 PROSPECTUS PERSONAL INVESTMENT CLASS OF THE TREASURY PORTFOLIO OF SHORT-TERM INVESTMENTS TRUST 11 GREENWAY PLAZA, SUITE 1919 HOUSTON, TEXAS 77046-1173 (800) 877-4744 ------------------ The Treasury Portfolio is a money market fund whose investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Treasury Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Treasury Portfolio will have maturities of 397 days or less. The Treasury Portfolio is a series portfolio of Short-Term Investments Trust (the "Trust"), an open-end, diversified, series, management investment company. This Prospectus relates solely to the Personal Investment Class of the Treasury Portfolio, a class of shares designed to be a convenient vehicle in which customers of banks, certain broker-dealers and other financial institutions can invest in a diversified money market fund. The Trust also offers shares of the following classes of the Treasury Portfolio pursuant to separate prospectuses: the Institutional Class, Private Investment Class, Cash Management Class and Resource Class, as well as shares of classes of another portfolio of the Trust, the Treasury TaxAdvantage Portfolio. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------ THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN SHARES OF THE PERSONAL INVESTMENT CLASS OF THE TREASURY PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS ABOVE OR CALL (800) 877-4744. THE SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST. THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT THE TREASURY PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. PROSPECTUS DATED: DECEMBER 30, 1996 43 TABLE OF CONTENTS
PAGE ---- SUMMARY.......................................... 2 TABLE OF FEES AND EXPENSES....................... 5 FINANCIAL HIGHLIGHTS............................. 6 SUITABILITY FOR INVESTORS........................ 7 INVESTMENT PROGRAM............................... 7 PURCHASE OF SHARES............................... 10 REDEMPTION OF SHARES............................. 12 DIVIDENDS........................................ 13 TAXES............................................ 13 NET ASSET VALUE.................................. 14 YIELD INFORMATION................................ 14 REPORTS TO SHAREHOLDERS.......................... 15 MANAGEMENT OF THE TRUST.......................... 15 GENERAL INFORMATION.............................. 18
SUMMARY THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE The Trust is an open-end diversified series management investment company. This Prospectus relates to the Personal Investment Class (the "Class") of the Treasury Portfolio (the "Portfolio"). The Portfolio is a money market fund which invests in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Portfolio will have maturities of 397 days or less. The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. Pursuant to separate prospectuses, the Trust also offers shares of other classes of shares of beneficial interest of the Portfolio representing an interest in the Portfolio. Such classes have different distribution arrangements and are designed for institutional and other categories of investors. The Trust also offers shares of two classes of another portfolio, the Treasury TaxAdvantage Portfolio, each pursuant to a separate prospectus. The portfolios of the Trust are referred to collectively as the "Portfolios." Because the Trust declares dividends on a daily basis, shares of each class of the Portfolio have the same net asset value (proportionate interest in the net assets of the Portfolio) and bear equally those expenses, such as the advisory fee, that are allocated to the Portfolio as a whole. All classes of the Portfolio share a common investment objective and portfolio of investments. However, different classes of the Portfolio have different shareholder qualifications and are separately allocated certain class expenses, such as those associated with the distribution of their shares. Therefore, each class will have a different dividend payment and a different yield. INVESTORS IN THE CLASS The Class is designed to be a convenient vehicle in which customers of banks, certain broker-dealers and other financial institutions can invest in a diversified open-end money market fund. PURCHASE OF SHARES Shares of the Class that are offered hereby are sold at net asset value. The minimum initial investment in the Class is $1,000. There is no minimum amount for subsequent investments. Payment for shares purchased must be in funds immediately available to the Trust. See "Purchase of Shares." 2 44 REDEMPTION OF SHARES Redemptions may be made without charge at net asset value. Payment for redeemed shares of the Class for which redemption orders are received prior to 4:00 p.m. Eastern Time will normally be made on the same day. See "Redemption of Shares." DIVIDENDS The net income of the Portfolio is declared as a dividend daily to shareholders of record immediately after 4:00 p.m. Eastern Time. Dividends are paid monthly by check or wire transfer unless the shareholder has previously elected to have such dividends automatically reinvested in additional shares of the Class. Information concerning the amount of the dividends declared on any particular day will normally be available by 5:00 p.m. Eastern Time on that day. See "Dividends." CONSTANT NET ASSET VALUE The Trust uses the amortized cost method of valuing its portfolio securities and rounds its per share net asset value to the nearest whole cent. Accordingly, the net asset value per share of the Portfolio will normally remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value." INVESTMENT ADVISOR A I M Advisors, Inc. ("AIM") serves as the Trust's investment advisor and receives a fee based on the Trust's average daily net assets. During the fiscal year ended August 31, 1996, AIM received advisory fees with respect to the Portfolio which represented 0.06% of the average daily net assets of the Portfolio. AIM is primarily engaged in the business of acting as manager or advisor to investment companies. Under a separate Administrative Services Agreement, AIM may be reimbursed by the Trust for its costs of performing certain accounting and other administrative services for the Trust. See "Management of the Trust -- Investment Advisor" and "-- Administrative Services." On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced that it had entered into an Agreement and Plan of Merger among INVESCO plc, INVESCO Group Services Inc. and AIM Management, pursuant to which AIM Management will be merged with INVESCO Group Services Inc. INVESCO 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. It is contemplated that the merger will occur on February 28, 1997. The Trust's investment advisor, AIM, is a wholly-owned subsidiary of AIM Management. The proposed transaction may be deemed to cause an "assignment" (as that term is defined under the Investment Company Act of 1940, as amended (the "1940 Act")) of the Master Investment Advisory Agreement between the Trust and AIM. Under the 1940 Act and the Master Investment Advisory Agreement, an assignment results in the automatic termination of the Master Investment Advisory Agreement. On December 11, 1996, the Board of Trustees of the Trust approved a new investment advisory agreement, subject to shareholder approval, between AIM and the Trust with respect to the Portfolio. Shareholders will be asked to approve the proposed advisory agreement at an annual meeting of shareholders 3 45 to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also approved a new administrative services agreement with AIM and a new distribution agreement with Fund Management Company ("FMC"). There are no material changes to the terms of the new agreements, including the fees payable by the Portfolio. No change is anticipated in the investment advisory or other personnel responsible for the Portfolio as a result of these new agreements. The Board of Trustees has approved these new agreements because the Portfolio's corresponding existing agreements will terminate upon the consummation of the proposed merger of AIM Management into a subsidiary of INVESCO plc. Provided that the Portfolio's shareholders approve the new investment advisory agreement at the Annual Meeting and the merger is consummated, the new investment advisory agreement with respect to the Portfolio, as well as the new administrative services and distribution agreements, will automatically become effective as of the closing date of the merger. DISTRIBUTOR AND DISTRIBUTION PLAN Fund Management Company ("FMC") acts as the exclusive distributor of shares of the Class. Pursuant to a plan of distribution adopted by the Trust's Board of Trustees, the Trust may pay to FMC as well as certain broker-dealers or other financial institutions up to 0.75% of the average daily net asset value of the Portfolio attributable to the Class. Of this amount, up to 0.25% may be for continuing personal services to shareholders provided by broker-dealers, banks or other financial institutions and the balance would be deemed an asset-based sales charge. See "Purchase of Shares" and "Distribution Plan." SPECIAL RISK CONSIDERATIONS The Portfolio may borrow money and enter into reverse repurchase agreements. The Portfolio may invest in repurchase agreements and purchase securities for delayed delivery. Accordingly, an investment in the Portfolio may entail somewhat different risks from an investment in an investment company that does not engage in such practices. There can be no assurance that the Portfolio will be able to maintain a stable net asset value of $1.00 per share. See "Investment Program." The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and Design are service marks of A I M Management Group Inc. 4 46 TABLE OF FEES AND EXPENSES SHAREHOLDER TRANSACTION EXPENSES* Maximum sales load imposed on purchases (as a percentage of offering price).................................. None Maximum sales load on reinvested dividends (as a percentage of offering price).................................. None Deferred sales load (as a percentage of original purchase price or redemption proceeds, as applicable).................................. None Redemption fees (as a percentage of amount redeemed, if applicable)............................................. None Exchange fee............................................................ None ANNUAL PORTFOLIO OPERATING EXPENSES -- PERSONAL INVESTMENT CLASS (AS A PERCENTAGE OF AVERAGE NET ASSETS) Management fees......................................................... 0.06% 12b-1 fees (after fee waivers)**........................................ 0.50%*** Other expenses: Custodian fees....................................................... 0.01% Other (after expense reimbursements)**............................... 0.02% ----- Total other expenses............................................ 0.03% ---- Total portfolio operating expenses -- Personal Investment Class............................................ 0.59% =====
- ------------ * Beneficial owners of shares of the Class should consider the effect of any charges imposed by their bank, broker-dealer or financial institution for various services. ** Had there been no fee waivers and no expense reimbursements, 12b-1 fees, Other expenses and Total portfolio operating expenses would have been 0.75%, 0.10% and 0.92%, respectively. *** It is possible that as a result of Rule 12b-1 fees, long-term shareholders may pay more than the economic equivalent of the maximum front-end sales charges permitted under rules of the National Association of Securities Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is estimated that it would take a substantial number of years for a shareholder to exceed such maximum front-end sales charges. EXAMPLE An investor in the Class would pay the following expenses on a $1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end of each time period. 1 year............................................... $6 3 years.............................................. $19 5 years.............................................. $33 10 years.............................................. $74
The Table of Fees and Expenses is designed to assist an investor in understanding the various costs and expenses that an investor in the Class will bear directly or indirectly. (For more complete descriptions of the various costs and expenses, see "Management of the Trust" below.) The expense figures are based upon actual 5 47 costs and fees charged to the Class for the fiscal year ended August 31, 1996. Future waivers of fees (if any) may vary from the figures reflected in the Table of Fees and Expenses. To the extent any service providers assume additional expenses of the Class, such assumption of additional expenses will have the effect of lowering the Class' overall expense ratio and increasing its yield to investors. Beneficial owners of shares of the Class should also consider the effect of any charges imposed by the institution maintaining their accounts. The example in the Table of Fees and Expenses assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses -- Personal Investment Class" remain the same in the years shown. The example shown in the above table is based on the amounts listed under "Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. FINANCIAL HIGHLIGHTS Shown below are the per share data, ratios and supplemental data (collectively "data") for each of the years in the five-year period ended August 31, 1996 and the period August 8, 1991 (date operations commenced) through August 31, 1991. The data has been audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified report thereon appears in the Statement of Additional Information.
1996 1995 1994 1993 1992 1991 -------- -------- ------- ------- ------- ------- Net asset value, beginning of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income........... 0.05 0.05 0.03 0.03 0.04 0.003 -------- -------- ------- ------- ------- ------- Total from investment operations.............. 0.05 0.05 0.03 0.03 0.04 0.003 -------- -------- ------- ------- ------- ------- Less distributions: Dividends (from net investment income)....................... (0.05) (0.05) (0.03) (0.03) (0.04) (0.003) -------- -------- ------- ------- ------- ------- Net asset value, end of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======= ======= ======= ======= Total return...................... 5.04% 5.13% 3.02% 2.77% 4.07% 5.04%(a) ======== ======== ======= ======= ======= ======= Ratios/supplemental data: Net assets, end of period (000s omitted).................. $192,947 $114,527 $88,582 $69,867 $23,853 $ 330 ======== ======== ======= ======= ======= ======= Ratio of expenses to average net assets(c)....................... 0.59%(b) 0.60% 0.58% 0.53% 0.49% 0.81%(a) ======== ======== ======= ======= ======= ======= Ratio of net investment income to average net assets(d)........... 4.91%(b) 5.03% 2.99% 2.70% 3.55% 5.03%(a) ======== ======== ======= ======= ======= =======
- --------------- (a) Annualized. (b) Ratios are based on average net assets of $142,591,904. (c) Ratios of expenses to average net assets prior to waiver of distribution fees and/or expense reimbursements were 0.92%, 0.90%, 0.91%, 0.93%, 1.03% and 12.68% for the periods 1996-1991, respectively. (d) Ratios of net investment income to average net assets prior to waiver of distribution fees and/or expense reimbursements were 4.58%, 4.73%, 2.66%, 2.29%, 3.01% and (6.84%) for the periods 1996-1991, respectively. 6 48 SUITABILITY FOR INVESTORS The Shares of the Class are intended for use primarily by customers of banks, certain broker-dealers and other financial institutions who seek a convenient vehicle in which to invest in an open-end diversified money market fund. The minimum initial investment is $1,000. Investors in the Class have the opportunity to receive a somewhat higher yield than might be obtainable through direct investment in money market instruments, and enjoy the benefits of diversification, economies of scale and same-day liquidity. Generally, higher interest rates can be obtained on the purchase of very large blocks of money market instruments. Of course, any such relative increase in interest rates may be offset to some extent by the operating expenses of the Class. INVESTMENT PROGRAM INVESTMENT OBJECTIVE The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The money market instruments in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on money market instruments of lesser quality. The Portfolio consists exclusively of money market instruments which have maturities of 397 days or less from the date of purchase (except that securities subject to repurchase agreements may have longer maturities). INVESTMENT POLICIES The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds, and repurchase agreements relating to such securities. The Portfolio may also engage in the investment practices described below. The market values of the money market instruments held by the Portfolio will be affected by changes in the yields available on similar securities. If yields have increased since a security was purchased, the market value of such security will generally have decreased. Conversely, if yields have decreased, the market value of such security will generally have increased. REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase agreements with banks and broker-dealers pertaining to the securities described above and which at the date of purchase are "First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. Generally, "First Tier" securities are securities that are rated in the highest rating category by two nationally recognized statistical rating organizations ("NRSROs") or, if only rated by one NRSRO, are rated in the highest rating category by that NRSRO or, if unrated, are determined by AIM (under the supervision of and pursuant to guidelines established by the Trust's Board of Trustees) to be of comparable quality to a rated security that meets the foregoing quality standards. A repurchase agreement is an instrument under which the Portfolio acquires ownership of a debt security and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed-upon time and price, thereby determining the yield during the Portfolio's holding period. Repurchase transactions are limited to a term not to exceed 365 days. The Portfolio may enter into repurchase agreements only with institutions believed by the Trust's Board of Trustees to present minimal credit risk. With regard to repurchase transactions, in the event of a bankruptcy or other default of a seller of a repurchase agreement (such as the seller's failure to repurchase the obligation in accordance with the terms of the agreement), the Portfolio could experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period while the Portfolio 7 49 seeks to enforce its rights thereto, (b) possible subnormal levels of income and lack of access to income during this period and (c) the expense of enforcing its rights. Repurchase agreements are considered to be loans under the 1940 Act. BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money and enter into reverse repurchase agreements with respect to its portfolio securities in amounts up to 10% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement. Reverse repurchase agreements involve the sale by the Portfolio of a portfolio security at an agreed-upon price, date and interest payment. The Portfolio will borrow money or enter into reverse repurchase agreements solely for temporary or defensive purposes, such as to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests should they occur. Reverse repurchase transactions are limited to a term not to exceed 92 days. The Portfolio will use reverse repurchase agreements when the interest income to be earned from the securities that would otherwise have to be liquidated to meet redemption requests is greater than the interest expense of the reverse repurchase transaction. Reverse repurchase agreements involve the risk that the market value of securities retained by the Portfolio in lieu of liquidation may decline below the repurchase price of the securities sold by the Portfolio which it is obligated to repurchase. The risk, if encountered, could cause a reduction in the net asset value of the Portfolio's shares. Reverse repurchase agreements are considered to be borrowings under the 1940 Act. LENDING OF PORTFOLIO SECURITIES. The Portfolio may lend its portfolio securities in amounts up to 33-1/3% of its total assets to financial institutions in accordance with the investment restrictions of the Portfolio. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned or of delay in recovering the securities loaned or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers deemed by AIM to be of good standing and only when, in AIM's judgment, the income to be earned from the loans justifies the attendant risks. PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term trading and will generally hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money markets. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. Securities held by the Portfolio will be disposed of prior to maturity if an earlier disposition is deemed desirable by AIM to meet redemption requests. In addition, AIM will continually monitor the creditworthiness of issuers whose securities are held by the Portfolio, and securities held by the Portfolio may be disposed of prior to maturity as a result of a revised credit evaluation of the issuer or other circumstances or considerations. The Portfolio's policy of investing in securities with maturities of 397 days or less will result in high portfolio turnover. Since brokerage commissions are not normally paid on investments of the type made by the Portfolio, the high turnover rate should not adversely affect the Portfolio's net income. PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's investments, AIM may indicate to dealers or issuers its interest in acquiring certain securities for the Portfolio for settlement beyond a customary settlement date. In some cases, the Portfolio may agree to purchase such securities at stated prices and yields. In such cases, such securities are considered "delayed delivery" securities when traded in the secondary market. Since this is done to facilitate the acquisition of portfolio securities and is not for the purpose of investment leverage, the amount of delayed delivery securities involved may not exceed the estimated amount 8 50 of funds available for investment on the settlement date. Until the settlement date, assets of the Portfolio with a dollar value sufficient at all times to make payment for the delayed delivery securities will be segregated. The total amount of segregated assets may not exceed 25% of the Portfolio's total assets. The delayed delivery securities, which will not begin to accrue interest until the settlement date, will be recorded as an asset of the Portfolio and will be subject to the risks of market value fluctuations. The purchase price of the delayed delivery securities will be recorded as a liability of the Portfolio until settlement. Absent extraordinary circumstances, the Portfolio's right to acquire delayed delivery securities will not be divested prior to the settlement date. ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net assets in illiquid securities. The investment policies described above may be changed by the Board of Trustees without the affirmative vote of a majority of the outstanding shares of the Portfolio. INVESTMENT RESTRICTIONS The Portfolio's investment program is subject to a number of investment restrictions which reflect self-imposed standards as well as federal and state regulatory limitations. These restrictions are designed to minimize certain risks associated with investing in specified types of securities or engaging in certain transactions and to limit the amount of the Portfolio's assets which may be concentrated in any specific industry or issuer. The most significant of these restrictions provide that the Portfolio will not: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time; or (2) borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the Portfolio's investment program may be considered the issuance of senior securities. The Portfolio will not purchase securities while borrowings in excess of 5% of its total assets are outstanding. The foregoing investment restrictions of the Portfolio (as well as certain others set forth in the Statement of Additional Information) are matters of fundamental policy which may not be changed without the affirmative vote of a majority of the outstanding shares of the Portfolio. The Board of Trustees has unanimously approved the elimination of or changes to certain fundamental investment policies of the Trust, subject to shareholder approval. Shareholders will be asked to approve these changes at the Annual Meeting. If approved, they will become effective on March 1, 1997. The Trust is currently generally prohibited from investing in other investment companies. The Board of Trustees has approved the elimination of this prohibition, and the amendment to another fundamental investment policy that corresponds to the proposed elimination. The elimination of the fundamental investment policy that prohibits the Trust from investing in other investment companies and the proposed amendment to the corresponding fundamental investment policy would permit investment in other investment 9 51 companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. The Board of Trustees has approved the amendment of Investment No. (1) of the Trust indicated above. In the event shareholders approve the proposed change, Investment Restriction No. (1) will read in full as follows: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such rule may be amended from time to time, and except that the Portfolio may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. In addition to the restrictions described above, the Portfolio must also comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time, which govern the operations of money market funds, and may be more restrictive than the policies described herein. The SEC has proposed certain changes to Rule 2a-7. While such proposed changes may have a prospective impact on the investments of the Portfolio, the Portfolio anticipates no difficulty in complying with any proposed change if adopted by the SEC. A description of further investment restrictions applicable to the Portfolio is contained in the Statement of Additional Information. PURCHASE OF SHARES Shares of the Class are sold on a continuing basis at their net asset value next determined after an order has been received by the Portfolio. As discussed below, the Trust reserves the right to reject any purchase order. Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a recordkeeping, account maintenance or other fee to their customers, and beneficial holders of the shares should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. To facilitate the investment of proceeds of purchase orders, investors are urged to place their orders as early in the day as possible. Purchase orders will be accepted for execution on the day the order is placed, provided that the order is properly submitted and received by the Portfolio prior to 4:00 p.m. Eastern Time on a business day of the Portfolio. Purchase orders received after such time will be processed at the next day's net asset value. Shares of the Class will earn the dividend declared on the effective date of purchase. A "business day of the Portfolio" is any day on which both the Federal Reserve Bank of New York and The Bank of New York, the Trust's custodian bank, are open for business. It is expected that The Bank of New York and the Federal Reserve Bank of New York will be closed during the next twelve months on Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. Shares of the Class are sold to customers of banks, certain broker-dealers and other financial institutions (individually, an "Institution" and, collectively, "Institutions"). Individuals, corporations, partnerships and other businesses that maintain qualified accounts at an Institution may invest in the Class. Each Institution will render administrative support services to its customers who are the beneficial owners of the Class. Such services may include, among other things, establishment and maintenance of shareholder accounts and records; assistance in processing purchase and redemption transactions in shares of the Class; providing periodic statements showing a customer's account balance in shares; distribution of Trust proxy statements, 10 52 annual reports and other communications to shareholders whose accounts are serviced by the Institution; and such other services as the Trust may reasonably request. Institutions will be required to certify to the Trust that they comply with applicable state laws regarding registration as broker-dealers, or that they are exempt from such registration. Prior to the initial purchase of shares of the Class, an Account Application, which can be obtained from A I M Institutional Fund Services, Inc. ("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Any changes made to the information provided in the Account Application must be made in writing or by completing a new form and providing it to AIFS. An investor must open an account in the Class through an Institution in accordance with procedures established by such Institution. Each Institution separately determines the rules applicable to accounts in the Class opened with it, including minimum initial and subsequent investment requirements and the procedures to be followed by investors to effect purchases of the Class. The minimum initial investment is $1,000, and there is no minimum amount of subsequent purchases of the Class by an Institution on behalf of its customers. An investor who proposes to open a Portfolio account with an Institution should consult with a representative of such Institution to obtain a description of the rules governing such an account. The Institution holds shares of the Class registered in its name, as agent for the customer, on the books of the Institution. A statement with regard to the customer's shares in the Class is supplied to the customer periodically, and confirmations of all transactions for the account of the customer are provided by the Institution to the customer promptly upon request. In addition, the Institution sends each customer proxies, periodic reports and other information with regard to the customer's shares. The customer's shares are fully assignable and subject to encumbrance by the customer. All agreements which relate to a customer's account with an Institution are with the Institution. An investor may terminate his relationship with an Institution at any time, in which case an account in the investor's name will be established directly with the Portfolio and the investor will become a shareholder of record. In such case, however, the investor will not be able to purchase additional shares in the Class directly, except through reinvestment of dividends and distributions. Orders for the purchase of shares in the Class are placed by the investor with the Institution. The Institution is responsible for the prompt transmission of the order to the Trust. The Portfolio will normally be required to make immediate settlement in federal funds (member bank deposits with a Federal Reserve Bank) for portfolio securities purchased. Accordingly, payment for shares purchased by Institutions on behalf of their customers must be in federal funds. If an investor's order to purchase shares is paid for other than in federal funds, the Institution, acting on behalf of the investor, completes the conversion into federal funds (which may take two business days), or itself advances federal funds prior to conversion, and promptly transmits the order and payment in the form of federal funds to AIFS. Subject to the conditions stated above and to the Trust's right to reject any purchase order, orders will be accepted (i) when payment for the shares purchased is received by The Bank of New York, the Trust's custodian bank, in the form described above and notice of such order is provided to AIFS or (ii) at the time the order is placed, if the Portfolio is assured of payment. Shares purchased by orders which are accepted prior to 4:00 p.m. Eastern Time will earn the dividend declared on the date of purchase. Federal Reserve wires should be sent as early in the day as possible in order to facilitate crediting to the shareholder's account. Any funds received with respect to an order which is not accepted by the Trust and any funds received for which an order has not been received will be returned to the sending Institution. An order 11 53 must specify that it is for the purchase of "Shares of the Personal Investment Class of the Treasury Portfolio," otherwise any funds received will be returned to the sending Institution. The Trust reserves the right in its sole discretion to withdraw all or any part of the offering made by this Prospectus or to reject any purchase order. REDEMPTION OF SHARES A shareholder may redeem any or all of its shares of the Class at the net asset value next determined after receipt of the redemption request in proper form by the Trust. Redemption requests with respect to the Class may also be made via AIM LINK(@), a personal computer application software product. Normally, the net asset value per share of the Portfolio will remain constant at $1.00. See "Net Asset Value." Redemption requests with respect to shares are normally made through a customer's Institution. Payment for redeemed shares of the Class is normally made by Federal Reserve wire to the commercial bank account designated in the Institution's Account Application, but may be remitted by check upon request by a shareholder. If a redemption request is received by AIFS prior to 4:00 p.m. Eastern Time on a business day of the Portfolio, the redemption will be effected at the net asset value next determined on such day and the shares of the Class to be redeemed will not receive the dividend declared on the effective date of the redemption. If a redemption request is received by AIFS after 4:00 p.m. Eastern Time or on other than a business day of the Portfolio, the redemption will be effected at the net asset value of the Portfolio determined as of 4:00 p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of such redemption will normally be wired on the effective day of the redemption. A shareholder may change the bank account designated to receive redemption proceeds by written notice to the Trust. The authorized signature on the notice must be guaranteed by a commercial bank or a trust company. Additional documentation may be required when deemed appropriate by the Trust or AIFS, the Trust's transfer agent. Shareholders may request a redemption by telephone. AIFS and FMC will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth in the Account Application if they reasonably believe such request to be genuine but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), and mailings of confirmations promptly after the transaction. Payment for shares of the Class redeemed by mail and payment for telephone redemptions in amounts of less than $1,000 will be made by check mailed within seven days after receipt of the redemption request in proper form. The Trust may make payment for telephone redemptions in excess of $1,000 by check when it is considered to be in the Portfolio's best interest to do so. Shares of the Class are not redeemable at the option of the Trust unless the Board of Trustees of the Trust determines in its sole discretion that failure to so redeem may have materially adverse consequences to the shareholders of the Trust. 12 54 DIVIDENDS Dividends from the net income of the Portfolio are declared daily to shareholders of record of the Class of the Portfolio as of immediately after 4:00 p.m. Eastern Time on the day of declaration. Net income for dividend purposes is determined daily as of 4:00 p.m. Eastern Time. The dividend accrued and paid for each class will consist of (a) income of the Portfolio, the allocation of which is based upon such class' pro rata share of the total outstanding shares representing an interest in the Portfolio, less (b) Portfolio expenses, such as custodian fees, trustees' fees and accounting and legal expenses, based upon such class' pro rata share of the net assets of the Portfolio, less (c) expenses directly attributable to such class, such as distribution expenses, if any, and transfer agency fees. Although realized gains and losses on the assets of the Portfolio are reflected in its net asset value, they are not expected to be of an amount which would affect its $1.00 per share net asset value for purposes of purchases and redemptions. See "Net Asset Value." Distributions from net realized short-term gains may be declared and paid yearly or more frequently. See "Taxes." The Portfolio does not expect to realize any long-term capital gains or losses in the Portfolio. All dividends declared during a month will normally be paid by wire transfer. Payment will normally be made on the first business day of the following month. A shareholder may elect to have all dividends automatically reinvested in additional full and fractional shares of the Class at the net asset value as of 4:00 p.m. Eastern Time on the last business day of the month. Such election, or any revocation thereof, must be made in writing by the Institution to AIFS, 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173 and will become effective with dividends paid after its receipt by AIFS. If a shareholder redeems all the shares in its account at any time during the month, all dividends declared through the date of redemption are paid to the shareholder along with the proceeds of the redemption. The Portfolio uses its best efforts to maintain the net asset value per share of the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should the Trust incur or anticipate any unusual expense, loss or depreciation which could adversely affect the income or net asset value of the Portfolio, the Trust's Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of the then prevailing circumstances. For example, under such unusual circumstances, the Board of Trustees might reduce or suspend the daily dividend in order to prevent to the extent possible the net asset value per share of the Portfolio from being reduced below $1.00. Thus, such expenses, losses or depreciation may result in a shareholder receiving no dividends for the period during which it held its shares of the Class and cause such a shareholder to receive upon redemption a price per share lower than the shareholder's original cost. TAXES The policy of the Portfolio is to distribute to its shareholders at least 90% of its investment company taxable income for each year and consistent therewith to meet the distribution requirements of Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Portfolio also intends to meet the distribution requirements imposed by the Code in order to avoid the imposition of a 4% excise tax. The Portfolio intends to distribute at least 98% of its net investment income for the calendar year and at least 98% of its net realized capital gains, if any, for the period ending on October 31. The Portfolio also intends to meet the other requirements of Subchapter M, including the requirements with respect to diversification of assets and sources of income, so that the Portfolio will pay no taxes on net investment income and net realized capital gains paid to shareholders. 13 55 Dividends paid by the Portfolio are subject to taxation as of the date of payment, whether received by shareholders in cash or shares of the Class. The Code provides an exception to this general rule: if the Portfolio declares a dividend in October, November or December to shareholders of record in such months and pays the dividend during January of the next year, a shareholder will be treated for tax purposes as having received the dividend on December 31 of the year in which it is declared rather than in January when it is paid. It is anticipated that no portion of distributions will be eligible for the dividends received deduction for corporations. Dividends paid by the Portfolio from its net investment income and short-term capital gains are taxable to shareholders at ordinary income tax rates. The Portfolio will be treated as a separate corporation for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M. Therefore, the Portfolio may not offset its gains against the losses of the other portfolio of the Trust and each portfolio of the Trust must specifically comply with all the provisions of the Code. Distributions and transactions referred to in the preceding paragraphs may be subject to state, local or foreign taxes, and the treatment thereof may differ from the federal income tax consequences discussed herein. Shareholders are advised to consult with their own tax advisors concerning the application of state, local or foreign taxes. Foreign persons who file a United States tax return after December 31, 1996 for a U.S. tax refund and who are not eligible to obtain a social security number must apply to the Internal Revenue Service ("IRS") for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or AIFS. NET ASSET VALUE The net asset value per share of the Portfolio is determined daily as of 4:00 p.m. Eastern Time on each business day of the Portfolio. Net asset value per share is determined by dividing the value of the Portfolio's securities, cash and other assets (including interest accrued but not collected) less all its liabilities (including accrued expenses and dividends payable) by the number of shares outstanding of the Portfolio and rounding the resulting per share net asset value to the nearest one cent. The securities of the Portfolio are valued on the basis of amortized cost pursuant to rules promulgated by the SEC applicable to money market funds. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if the security were sold. During such periods, the daily yield on shares of the Portfolio computed as described in "Purchases and Redemptions -- Performance Information" in the Statement of Additional Information, may differ somewhat from an identical computation made by an investment company with identical investments utilizing available indications as to market value to value its portfolio securities. YIELD INFORMATION Yield information for the Class can be obtained by calling the Trust at (800) 877-4744. Yields will fluctuate from time to time and are not necessarily indicative of future results. Accordingly, the yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a 14 56 stated period of time. Yield is a function of the type and quality of the Portfolio's investments, the Portfolio's maturity and the operating expense ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY OTHER INSTITUTION. These factors should be carefully considered by the investor before investing in the Portfolio. For the seven-day period ended August 31, 1996, the current yield and the effective yield of the Class (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the annualized current yield for the period) were 4.73% and 4.84%, respectively, excluding capital gains distributions. These performance numbers are quoted for illustration purposes only. The performance numbers for any other seven-day period may be substantially different from those quoted above. To assist banks and other institutions performing their own sub-accounting, same day information as to the daily dividend per share for the Portfolio to eight decimal places and current yield normally will be available by 5:00 p.m. Eastern Time. From time to time and in its discretion, AIM or its affiliates may waive all or a portion of its advisory fees and/or assume certain expenses of the Portfolio. Such a practice will have the effect of increasing the Portfolio's yield and total return. REPORTS TO SHAREHOLDERS The Trust furnishes shareholders with semi-annual reports containing information about the Portfolio and its operations, including a list of the investments held by the Portfolio and financial statements. The annual financial statements are audited by the Trust's independent auditors. Unless otherwise requested by the shareholder, each shareholder will be provided by its Institution a written confirmation for each transaction. Institutions establishing sub-accounts will receive a written confirmation for each transaction in a sub-account. Duplicate confirmations may be transmitted to the beneficial owner of the sub-account if requested by the Institution. The Institution will receive a periodic statement setting forth, for each sub-account, the share balance, income earned for the month, income earned for the year to date and the total current value of the account. MANAGEMENT OF THE TRUST BOARD OF TRUSTEES The overall management of the business and affairs of the Trust is vested with the Board of Trustees. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to the Trust, including agreements with the Trust's investment advisor, distributor, custodian and transfer agent. The day-to-day operations of the Trust are delegated to the Trust's officers and to AIM, subject always to the objective and policies of the Trust and to the general supervision of the Trust's Board of Trustees. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor for the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM was organized in 1976 and, together with its affiliates, manages or advises 41 investment company portfolios. As of November 14, 1996, the total assets of the 15 57 investment company portfolios managed or advised by AIM and its affiliates were approximately $61.1 billion. All of the directors and certain of the officers of AIM are also trustees or executive officers of the Trust. AIM is a wholly-owned subsidiary of AIM Management, a privately held corporation. AIM Management is a holding company engaged in the financial services business. Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the Portfolio's assets and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale. For the fiscal year ended August 31, 1996, AIM received fees with respect to the Portfolio from the Trust under an advisory agreement previously in effect, which provided for the same level of compensation to AIM as the Advisory Agreement, which represented 0.06% of the Portfolio's average daily net assets. During such fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.59% of the Class' average daily net assets. ADMINISTRATIVE SERVICES The Trust has entered into a Master Administrative Services Agreement dated as of October 18, 1993 with AIM (the "Administrative Services Agreement"), pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Portfolio, including the services of a principal financial officer of the Trust and related staff. As compensation to AIM for its services under the Administrative Services Agreement, the Portfolio may reimburse AIM for expenses incurred by AIM in connection with such services. FEE WAIVERS AIM or its affiliates may in its discretion from time to time agree to waive voluntarily all or any portion of its advisory fee and/or assume certain expenses of the Portfolio but will retain its ability to be reimbursed for such fee or expenses prior to the end of the fiscal year. FMC may in its discretion from time to time voluntarily agree to waive its 12b-1 fee, but will retain its ability to be reimbursed prior to the end of each fiscal year. AIM voluntarily reimbursed expenses of $113,500 on the Portfolio during the year ended August 31, 1996. DISTRIBUTOR The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Certain trustees and officers of the Trust are affiliated with FMC. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of the Trust either directly or through other broker-dealers. FMC is the distributor of several of the mutual funds managed or advised by AIM. FMC may, from time to time, at its expense, pay a bonus or other consideration or incentive to dealers or banks who sell a minimum dollar amount of the shares of the Class during a specific period of time. In some instances, these incentives may be offered only to certain dealers or institutions who have sold or may sell significant amounts of shares. The total amount of such additional bonus payments or other consideration shall not exceed .05% of the net asset value of the shares of the Class sold. Any such bonus or incentive programs 16 58 will not change the price paid by investors for the purchase of shares of the Class or the amount received as proceeds from such sales. Sales of shares of the Class may not be used to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any jurisdiction. DISTRIBUTION PLAN The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Trust may compensate FMC in connection with the distribution of the shares of the Class an amount equal to 0.75% on an annualized basis of the average daily net assets of the Portfolio attributable to the Class. Such amounts may be expended when and if authorized by the Board of Trustees and may be used to finance such distribution-related services as expenses of organizing and conducting sales seminars, printing of prospectuses and statements of additional information (and supplements thereto) and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature and costs of administering the Plan. Of the compensation paid to FMC under the Plan, payment of a service fee may be paid to dealers and other financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of the Class, in amounts of up to 0.25% of the average daily net assets of the Portfolio attributable to the Class which are attributable to the customers of such dealers or financial institutions. Payments to dealers and other financial institutions in excess of such amount and payments retained by FMC would be characterized as an asset-based sales charge pursuant to the Plan. The Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Portfolio with respect to the Class. The Plan does not obligate the Trust to reimburse FMC for the actual expenses FMC may incur in fulfilling its obligations under the Plan on behalf of the Class. Thus, under the Plan, even if FMC's actual expenses exceed the fee payable to FMC thereunder at any given time, the Trust will not be obligated to pay more than that fee. If FMC's expenses are less than the fee it receives, FMC will retain the full amount of the fee. The Plan requires the officers of the Trust to provide the Board of Trustees at least quarterly with a written report of the amounts expended pursuant to the Plan and the purposes for which such expenditures were made. The Board of Trustees shall review these reports in connection with their decisions with respect to the Plan. As required by Rule 12b-1 under the 1940 Act, the Plan was initially approved by the Trust's Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan ("Qualified Trustees"), on July 19, 1993. In approving the continuance of the Plan in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plan will benefit the Trust and the shareholders of the shares of the Class. The Plan may be terminated by a vote of a majority of the Qualified Trustees, or by a vote of a majority of the holders of the outstanding voting securities of the Class. Any change in the Plan that would increase materially the distribution expenses paid by the Class requires shareholder approval; otherwise the Plan may be amended by the trustees, including a majority of the Qualified Trustees, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plan is in effect, the selection or nomination of the Qualified Trustees is committed to the discretion of the Qualified Trustees. 17 59 PORTFOLIO TRANSACTIONS AND BROKERAGE AIM is responsible for decisions to buy and sell securities for the Portfolio, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid and asked prices. The Portfolio may also purchase securities from underwriters at prices which include a concession paid by the issuer to the underwriter. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the executions and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment programs. Certain research services furnished by dealers may be useful to clients of AIM other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. GENERAL INFORMATION ORGANIZATION AND DESCRIPTION OF SHARES The Trust is a Delaware business trust. The Trust was originally incorporated in Maryland on January 24, 1977, but had no operations prior to November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts business trust; and effective October 15, 1993, the Trust was reorganized as a Delaware business trust. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are divided into seven classes. Five classes, including the Class, represent interests in the Portfolio and two classes represent interests in the Treasury TaxAdvantage Portfolio. Each class of shares has a par value of $.01 per share. The other classes of the Trust may have different sales charges and other expenses which may affect performance. An investor may obtain information concerning the Trust's other classes by contacting FMC. All shares of the Trust have equal rights with respect to voting, except that the holders of shares of a particular portfolio or class will have the exclusive right to vote on matters pertaining solely to that portfolio or class. For example, holders of shares of a particular portfolio will have the exclusive right to vote on any investment advisory agreement or investment restriction that relates only to such portfolio. In addition, if a portfolio is divided into various classes, holders of shares of a particular class will have the exclusive right to vote on any matter, such as distribution arrangements, which relates solely to such class. The holders of shares of the Portfolio have distinctive rights with respect to dividends and redemption which are more fully described in this Prospectus. In the event of liquidation or termination of the Trust, holders of shares of each portfolio will receive pro rata, subject to the rights of creditors, (a) the proceeds of the sale of the assets held in the respective portfolio to which such shares relate, less (b) the liabilities of the Trust attributable or allocated to the respective portfolio based on the liquidation value of the portfolio. Fractional shares of each portfolio have the same rights as full shares to the extent of their proportionate interest. 18 60 There will not normally be annual shareholders' meetings. Shareholders may remove trustees from office by votes cast at a meeting of shareholders called solely for such purpose or by written consent. A meeting of shareholders for the sole purpose of considering removal of a trustee shall be called at the request of the holders of 10% or more of the Trust's outstanding shares. As of December 1, 1996, Cullen/Frost Discount Brokers was the owner of record of 64.64%, and The Bank of New York was the owner of record of 26.55%, of the outstanding shares of the Class. As long as each of Cullen/Frost Discount Brokers and The Bank of New York owns over 25% of such shares, it may be presumed to be in "control" of the Personal Investment Class of the Treasury Portfolio as defined in the 1940 Act. There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's shares, when issued, will be fully paid and non-assessable. The Board of Trustees may create additional portfolios or classes of the Trust without shareholder approval. TRANSFER AGENT AND CUSTODIAN The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, acts as custodian for the portfolio securities and cash of the Portfolio. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for shares of the Class. LEGAL COUNSEL The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the Trust and has passed upon the legality of the shares of the Portfolio. SHAREHOLDER INQUIRIES Shareholder inquiries concerning the status of an account should be directed to the Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 877-4744. OTHER INFORMATION This Prospectus sets forth basic information that investors should know about the Trust and the Portfolio prior to investing. A Statement of Additional Information has been filed with the SEC. Copies of the Statement of Additional Information are available upon request and without charge by writing or calling the Trust or FMC. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted herein, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. 19 61 [THIS PAGE INTENTIONALLY LEFT BLANK] 62 SHORT-TERM INVESTMENTS TRUST SHORT-TERM 11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST Houston, Texas 77046-1173 (800) 877-4744 PERSONAL INVESTMENT CLASS INVESTMENT ADVISOR OF THE A I M ADVISORS, INC. -------------------------------------------- 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 TREASURY PORTFOLIO PROSPECTUS (713) 626-1919 DISTRIBUTOR DECEMBER 30, 1996 FUND MANAGEMENT COMPANY 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 [LOGO APPEARS HERE] (800) 877-4744 Fund Management Company AUDITORS KPMG PEAT MARWICK LLP NationsBank Building 700 Louisiana Houston, Texas 77002 CUSTODIAN THE BANK OF NEW YORK 90 Washington Street 11th Floor New York, New York 10286 TRANSFER AGENT A I M INSTITUTIONAL FUND SERVICES, INC. 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
63 PROSPECTUS PRIVATE INVESTMENT CLASS OF THE TREASURY PORTFOLIO OF SHORT-TERM INVESTMENTS TRUST 11 GREENWAY PLAZA, SUITE 1919 HOUSTON, TEXAS 77046-1173 (800) 877-7748 ------------------ The Treasury Portfolio is a money market fund whose investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Treasury Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Treasury Portfolio will have maturities of 397 days or less. The Treasury Portfolio is a series portfolio of Short-Term Investments Trust (the "Trust"), an open-end diversified, series, management investment company. This Prospectus relates solely to the Private Investment Class of the Treasury Portfolio, a class of shares designed to be a convenient vehicle in which customers of banks, certain broker-dealers and other financial institutions can invest short-term cash reserves. The Trust also offers shares of other classes of the Treasury Portfolio pursuant to separate prospectuses: the Institutional Class, Cash Management Class, Personal Investment Class and Resource Class, as well as shares of classes of another portfolio of the Trust, the Treasury TaxAdvantage Portfolio. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------ THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN SHARES OF THE PRIVATE INVESTMENT CLASS OF THE TREASURY PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS ABOVE OR CALL (800) 877-7748. THE SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST. THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT THE TREASURY PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. PROSPECTUS DATED: DECEMBER 30, 1996 64 TABLE OF CONTENTS
PAGE ---- SUMMARY.......................................... 2 TABLE OF FEES AND EXPENSES....................... 5 FINANCIAL HIGHLIGHTS............................. 6 SUITABILITY FOR INVESTORS........................ 7 INVESTMENT PROGRAM............................... 7 PURCHASE OF SHARES............................... 10 REDEMPTION OF SHARES............................. 12 DIVIDENDS........................................ 13 TAXES............................................ 13 NET ASSET VALUE.................................. 14 YIELD INFORMATION................................ 14 REPORTS TO SHAREHOLDERS.......................... 15 MANAGEMENT OF THE TRUST.......................... 15 GENERAL INFORMATION.............................. 18
SUMMARY THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE The Trust is an open-end diversified series management investment company. This Prospectus relates to the Private Investment Class (the "Class") of the Treasury Portfolio (the "Portfolio"). The Portfolio is a money market fund which invests in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Portfolio will have maturities of 397 days or less. The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. Pursuant to separate prospectuses, the Trust also offers other shares of other classes of shares of beneficial interest of the Portfolio representing an interest in the Portfolio. Such classes have different distribution arrangements and are designed for institutional and other categories of investors. The Trust also offers shares of two classes of another portfolio, the Treasury TaxAdvantage Portfolio, each pursuant to a separate prospectus. The portfolios of the Trust are referred to collectively as "Portfolios." Because the Trust declares dividends on a daily basis, shares of each class of the Portfolio have the same net asset value (proportionate interest in the net assets of the Portfolio) and bear equally those expenses, such as the advisory fee, that are allocated to the Portfolio as a whole. All classes of the Portfolio share a common investment objective and portfolio of investments. However, different classes of the Portfolio have different shareholder qualifications, and are separately allocated certain class expenses, such as those associated with the distribution of their shares. Therefore, each class will have a different dividend payment and a different yield. INVESTORS IN THE CLASS The Class is designed to be a convenient vehicle in which customers of banks, certain broker-dealers and other financial institutions can invest in a diversified open-end money market fund. PURCHASE OF SHARES Shares of the Class that are offered hereby are sold at net asset value. The minimum initial investment in the Class is $10,000. There is no minimum amount for subsequent investments. Payment for shares of the Class purchased must be in funds immediately available to the Trust. See "Purchase of Shares." 2 65 REDEMPTION OF SHARES Redemptions may be made without charge at net asset value. Payment for redeemed shares of the Class for which redemption orders are received prior to 4:00 p.m. Eastern Time will normally be made on the same day. See "Redemption of Shares." DIVIDENDS The net income of the Portfolio is declared as a dividend daily to shareholders of record immediately after 4:00 p.m. Eastern Time. Dividends are paid monthly by check or wire transfer unless the shareholder has previously elected to have such dividends automatically reinvested in additional shares of the Class. Information concerning the amount of the dividends declared on any particular day will normally be available by 5:00 p.m. Eastern Time on that day. See "Dividends." CONSTANT NET ASSET VALUE The Trust uses the amortized cost method of valuing the securities held by the Portfolio and rounds the per share net asset value to the nearest whole cent. Accordingly, the net asset value per share of the Portfolio will normally remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value." INVESTMENT ADVISOR A I M Advisors, Inc. ("AIM") serves as the Trust's investment advisor and receives a fee based on the Trust's average daily net assets. During the fiscal year ended August 31, 1996, the Trust paid AIM advisory fees with respect to the Portfolio which represented 0.06% of the average daily net assets of the Portfolio. AIM is primarily engaged in the business of acting as manager or advisor to investment companies. Under an Administrative Services Agreement, AIM may be reimbursed by the Trust for its costs of performing certain accounting and other administrative services for the Trust. See "Management of the Trust -- Investment Advisor" "-- Administrative Services." On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced that it had entered into an Agreement and Plan of Merger among INVESCO plc, INVESCO Group Services Inc. and AIM Management, pursuant to which AIM Management will be merged with INVESCO Group Services, Inc. INVESCO 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. It is contemplated that the merger will occur on February 28, 1997. The Trust's investment advisor, AIM, is a wholly-owned subsidiary of AIM Management. The proposed transaction may be deemed to cause an "assignment" (as that term is defined under the Investment Company Act of 1940, as amended (the "1940 Act")) of the Master Investment Advisory Agreement between the Trust and AIM. Under the 1940 Act and the Master Investment Advisory Agreement, an assignment results in the automatic termination of the Master Investment Advisory Agreement. On December 11, 1996, the Board of Trustees of the Trust approved a new investment advisory agreement, subject to shareholder approval, between AIM and the Trust with respect to the Portfolio. Shareholders will be asked to approve the proposed advisory agreement at an annual meeting of shareholders to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also approved a new administrative services agreement with AIM and a new distribution agreement with Fund Management 3 66 Company ("FMC"). There are no material changes to the terms of the new agreements, including the fees payable by the Portfolio. No change is anticipated in the investment advisory or other personnel responsible for the Portfolio as a result of these new agreements. The Board of Trustees has approved these new agreements because the Portfolio's corresponding existing agreements will terminate upon the consummation of the proposed merger of AIM Management into a subsidiary of INVESCO plc. Provided that the Portfolio's shareholders approve the new investment advisory agreement at the Annual Meeting and the merger is consummated, the new investment advisory agreement with respect to the Portfolio, as well as the new administrative services and distribution agreements, will automatically become effective as of the closing date of the merger. DISTRIBUTOR AND DISTRIBUTION PLAN Fund Management Company ("FMC") acts as the exclusive distributor of the shares of the Class. Pursuant to a plan of distribution adopted by the Trust's Board of Trustees, the Trust may pay up to 0.50% of the average daily net asset value of the Portfolio attributable to the Class to FMC as well as to certain broker-dealers or other financial institutions. Of this amount, up to 0.25% may be for continuing personal services to shareholders provided by broker-dealers or institutions and the balance would be deemed an asset-based sales charge. See "Purchase of Shares" and "Distribution Plan." SPECIAL RISK CONSIDERATIONS The Portfolio may borrow money and enter into reverse repurchase agreements. The Portfolio may invest in repurchase agreements and purchase securities for delayed delivery. Accordingly, an investment in the Portfolio may entail somewhat different risks from an investment in an investment company that does not engage in such practices. There can be no assurance that the Portfolio will be able to maintain a stable net asset value of $1.00 per share. See "Investment Program." The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and Design are service marks of A I M Management Group Inc. 4 67 TABLE OF FEES AND EXPENSES SHAREHOLDER TRANSACTION EXPENSES* Maximum sales load imposed on purchases (as a percentage of offering price)................................. None Maximum sales load on reinvested dividends (as a percentage of offering price)................................. None Deferred sales load (as a percentage of original purchase price or redemption proceeds, as applicable)................................. None Redemption fees (as a percentage of amount redeemed, if applicable)...................................................... None Exchange fee........................................................... None ANNUAL PORTFOLIO OPERATING EXPENSES -- PRIVATE INVESTMENT CLASS (AS A PERCENTAGE OF AVERAGE NET ASSETS) Management fees........................................................ 0.06% 12b-1 fees (after fee waivers)**....................................... 0.30%*** Other expenses: Custodian fees...................................................... 0.01% Other............................................................... 0.02% ---- Total other expenses........................................... 0.03% ----- Total portfolio operating expenses -- Private Investment Class............................................ 0.39% =====
- --------------- * Beneficial owners of shares of the Class should consider the effect of any changes imposed by their bank, broker-dealer or other financial institution for various services. ** Had there been no fee waivers, 12b-1 fees would have been 0.50% and Total portfolio operating expenses would have been 0.59%. *** It is possible that as a result of Rule 12b-1 fees, long-term shareholders may pay more than the economic equivalent of the maximum front-end sales charges permitted under rules of the National Association of Securities Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is estimated that it would take a substantial number of years for a shareholder to exceed such maximum front-end sales charges. EXAMPLE An investor in the Class would pay the following expenses on a $1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end of each time period. 1 year............................................................... $ 4 3 years.............................................................. $13 5 years.............................................................. $22 10 years.............................................................. $49
The Table of Fees and Expenses is designed to assist an investor in understanding the various costs and expenses that an investor in the Class will bear directly or indirectly. (For more complete descriptions of the various costs and expenses, see "Management of the Trust" below.) The expense figures are based upon actual 5 68 costs and fees charged to the Class for the fiscal year ended August 31, 1996. The Table of Fees and Expenses reflects a voluntary waiver of 12b-1 fees for the Class. Future waivers of fees (if any) may vary from the figures reflected in the Table of Fees and Expenses. To the extent any service providers assume additional expenses of the Class, such assumption of additional expenses will have the effect of lowering the Class's overall expense ratio and increasing its yield to investors. Beneficial owners of shares of the Class should also consider the effect of any charges imposed by the institution maintaining their accounts. The example in the Table of Fees and Expenses assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses -- Private Investment Class" remain the same in the years shown. The example shown in the above table is based on the amounts listed under "Annual Portfolio Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. FINANCIAL HIGHLIGHTS Shown below are the per share data, ratios and supplemental data for the four-year period ended August 31, 1996 and the period November 25, 1991 (date operations commenced) through August 31, 1992. The data has been audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified report thereon appears in the Statement of Additional Information.
1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- Net asset value, beginning of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income..................... 0.05 0.05 0.03 0.03 0.03 -------- -------- -------- -------- -------- Total from investment operations.......... 0.05 0.05 0.03 0.03 0.03 -------- -------- -------- -------- -------- Less distributions: Dividends from net investment income...... (0.05) (0.05) (0.03) (0.03) (0.03) -------- -------- -------- -------- -------- Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total return................................ 5.25% 5.34% 3.22% 2.91% 3.92%(a) ======== ======== ======== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted)................................ $352,537 $394,585 $412,716 $204,281 $ 525 ======== ======== ======== ======== ======== Ratio of expenses to average net assets(c)............................... 0.39%(b) 0.40% 0.38% 0.38% 0.40%(a) ======== ======== ======== ======== ======== Ratio of net investment income to average net assets(d)........................... 5.14%(b) 5.23% 3.26% 2.81% 3.68%(a) ======== ======== ======== ======== ========
- --------------- (a) Annualized. (b) Ratios are based on average net assets of $407,231,329. (c) Ratios of expenses to average net assets prior to waiver of distribution fees and/or expense reimbursements were 0.59%, 0.60%, 0.60%, 0.67% and 4.54% for the periods 1996-1992, respectively. (d) Ratios of net investment income to average net assets prior to waiver of distribution fees and/or expense reimbursements were 4.94%, 5.03%, 3.05%, 2.52% and (0.47%) for the periods 1996-1992, respectively. 6 69 SUITABILITY FOR INVESTORS The Class is intended for use primarily by customers of banks, certain broker-dealers and other financial institutions who seek a convenient vehicle in which to invest in an open-end diversified money market fund. The minimum initial investment is $10,000. Investors in the Class have the opportunity to receive a somewhat higher yield than might be obtainable through direct investment in money market instruments, and enjoy the benefits of diversification, economies of scale and same-day liquidity. Generally, higher interest rates can be obtained on the purchase of very large blocks of money market instruments. Of course, any such relative increase in interest rates may be offset to some extent by the operating expenses of the Class. INVESTMENT PROGRAM INVESTMENT OBJECTIVE The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The money market instruments in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on money market instruments of lesser quality. The Portfolio consists exclusively of money market instruments which have maturities of 397 days or less from the date of purchase (except that securities subject to repurchase agreements may have longer maturities). INVESTMENT POLICIES The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds, and repurchase agreements relating to such securities. The Portfolio may also engage in certain investment practices described below. The market values of the money market instruments held by the Portfolio will be affected by changes in the yields available on similar securities. If yields have increased since a security was purchased, the market value of such security will generally have decreased. Conversely, if yields have decreased, the market value of such security will generally have increased. REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase agreements with banks and broker-dealers pertaining to the securities described above and which at the date of purchase are "First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. Generally, "First Tier" securities are securities that are rated in the highest rating category by two nationally recognized statistical rating organizations ("NRSROs") or, if only rated by one NRSRO, are rated in the highest rating category by that NRSRO or, if unrated, are determined by AIM (under the supervision of and pursuant to guidelines established by the Trust's Board of Trustees) to be of comparable quality to a rated security that meets the foregoing quality standards. A repurchase agreement is an instrument under which the Portfolio acquires ownership of a debt security and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed-upon time and price, thereby determining the yield during the Portfolio's holding period. Repurchase transactions are limited to a term not to exceed 365 days. The Portfolio may enter into repurchase agreements only with institutions believed by the Trust's Board of Trustees to present minimal credit risk. With regard to repurchase transactions, in the event of a bankruptcy or other default of a seller of a repurchase agreement (such as the seller's failure to repurchase the obligation in accordance with the terms of the agreement), the Portfolio could experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period while the Portfolio 7 70 seeks to enforce its rights thereto, (b) possible subnormal levels of income and lack of access to income during this period, and (c) expenses of enforcing its rights. Repurchase agreements are considered to be loans by the Portfolio under the 1940 Act. BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money and enter into reverse repurchase agreements with respect to its portfolio securities in amounts up to 10% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement. Reverse repurchase agreements involve the sale by the Portfolio of a portfolio security at an agreed-upon price, date and interest payment. The Portfolio will borrow money or enter into reverse repurchase agreements solely for temporary or defensive purposes, such as to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests should they occur. Reverse repurchase transactions are limited to a term not to exceed 92 days. The Portfolio will use reverse repurchase agreements when the interest income to be earned from the securities that would otherwise have to be liquidated to meet redemption requests is greater than the interest expense of the reverse repurchase transaction. Reverse repurchase agreements involve the risk that the market value of securities retained by the Portfolio in lieu of liquidation may decline below the repurchase price of the securities sold by the Portfolio which it is obligated to repurchase. The risk, if encountered, could cause a reduction in the net asset value of the Portfolio's shares. Reverse repurchase agreements are considered to be borrowings by the Portfolios under the 1940 Act. LENDING OF PORTFOLIO SECURITIES. The Portfolio may also lend its portfolio securities in amounts up to 33-1/3% of its total assets to financial institutions in accordance with the investment restrictions of the Portfolio. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned or of delay in recovering the securities loaned or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers deemed by AIM to be of good standing and only when, in AIM's judgment, the income to be earned from the loans justifies the attendant risks. PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term trading and will generally hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money markets. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. Securities held by the Portfolio will be disposed of prior to maturity if an earlier disposition is deemed desirable by AIM to meet redemption requests. In addition, AIM will continually monitor the creditworthiness of issuers whose securities are held by the Portfolio, and securities held by the Portfolio may be disposed of prior to maturity as a result of a revised credit evaluation of the issuer or other circumstances or considerations. The Portfolio's policy of investing in securities with maturities of 397 days or less will result in high portfolio turnover. Since brokerage commissions are not normally paid on investments of the type made by the Portfolio, the high turnover rate should not adversely affect the Portfolio's net income. PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's investments, AIM may indicate to dealers or issuers its interest in acquiring certain securities for the Portfolio for settlement beyond a customary settlement date. In some cases, the Portfolio may agree to purchase such securities at stated prices and yields. In such cases, such securities are considered "delayed delivery" securities when traded in the secondary market. Since this is done to facilitate the acquisition of portfolio securities and is not for the purpose of investment leverage, the amount of delayed delivery securities involved may not exceed the estimated amount 8 71 of funds available for investment on the settlement date. Until the settlement date, assets of the Portfolio with a dollar value sufficient at all times to make payment for the delayed delivery securities will be segregated. The total amount of segregated assets may not exceed 25% of the Portfolio's total assets. The delayed delivery securities, which will not begin to accrue interest until the settlement date, will be recorded as an asset of the Portfolio and will be subject to the risks of market value fluctuations. The purchase price of the delayed delivery securities will be recorded as a liability of the Portfolio until settlement. Absent extraordinary circumstances, the Portfolio's right to acquire delayed delivery securities will not be divested prior to the settlement date. ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net assets in illiquid securities. The investment policies described above may be changed by the Board of Trustees without the affirmative vote of a majority of the outstanding shares of the Portfolio. INVESTMENT RESTRICTIONS The Portfolio's investment program is subject to a number of investment restrictions which reflect self-imposed standards as well as federal and state regulatory limitations. These restrictions are designed to minimize certain risks associated with investing in specified types of securities or engaging in certain transactions and to limit the amount of the Portfolio's assets which may be concentrated in any specific industry or issuer. The most significant of these restrictions provide that the Portfolio will not: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such rule may be amended from time to time; or (2) borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the Portfolio's investment program may be considered the issuance of senior securities. The Portfolio will not purchase securities while borrowings in excess of 5% of its total assets are outstanding. The foregoing investment restrictions of the Portfolio (as well as certain others set forth in the Statement of Additional Information) are matters of fundamental policy which may not be changed without the affirmative vote of a majority of the outstanding shares of the Portfolio. The Board of Trustees has unanimously approved the elimination of or changes to certain fundamental investment policies of the Trust, subject to shareholder approval. Shareholders will be asked to approve these changes at the Annual Meeting. If approved, they will become effective on March 1, 1997. The Trust is currently generally prohibited from investing in other investment companies. The Board of Trustees has approved the elimination of this prohibition, and the amendment to another fundamental investment policy that corresponds to the proposed elimination. The elimination of the fundamental investment policy that prohibits the Trust from investing in other investment companies and the proposed amendment to the corresponding fundamental investment policy would permit investment in other investment 9 72 companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. The Board of Trustees has approved the amendment of Investment No. (1) of the Trust indicated above. In the event shareholders approve the proposed change, Investment Restriction No. (1) will read in full as follows: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such rule may be amended from time to time, and except that the Portfolio may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. In addition to the restrictions described above, the Portfolio must also comply with the requirements of Rule 2a-7 under the 1940 Act, as such rule may be amended from time to time, which govern the operations of money market funds, and may be more restrictive than the policies described herein. The SEC has proposed certain changes to Rule 2a-7. While such proposed changes may have a prospective impact on the investments of the Portfolio, the Portfolio anticipates no difficulty in complying with any proposed change if adopted by the SEC. A description of further investment restrictions applicable to the Portfolio is contained in the Statement of Additional Information. PURCHASE OF SHARES Shares of the Class are sold on a continuing basis at their net asset value next determined after an order has been received by the Portfolio. As discussed below, the Trust reserves the right to reject any purchase order. Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a recordkeeping, account maintenance or other fee to their customers, and beneficial holders of the shares of the Class should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. To facilitate the investment of proceeds of purchase orders, investors are urged to place their orders as early in the day as possible. Purchase orders will be accepted for execution on the day the order is placed, provided that the order is properly submitted and received by the Portfolio prior to 4:00 p.m. Eastern Time on a business day of the Portfolio. Purchase orders received after such time will be processed at the next day's net asset value. Shares of the Class will earn the dividend declared on the effective date of purchase. A "business day of the Portfolio" is any day on which both the Federal Reserve Bank of New York and The Bank of New York, the Trust's custodian bank, are open for business. It is expected that The Bank of New York and the Federal Reserve Bank of New York will be closed during the next twelve months on Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. Shares of the Class are sold to customers of banks, certain broker-dealers and other financial institutions (each, an Institution, and collectively, "Institutions"). Individuals, corporations, partnerships and other businesses that maintain qualified accounts at an Institution may invest in the shares of the Class. Each Institution will render administrative support services to its customers who are the beneficial owners of the shares of the Class. Such services may include, among other things, establishment and maintenance of shareholder accounts and records; assistance in processing purchase and redemption transactions in shares of 10 73 the Class; providing periodic statements showing a customer's account balance in shares of the Class; distribution of Trust proxy statements, annual reports and other communications to shareholders whose accounts are serviced by the Institution; and such other services as the Trust may reasonably request. Institutions will be required to certify to the Trust that they comply with applicable state law regarding registration as broker-dealers, or that they are exempt from such registration. Prior to the initial purchase of shares of the Class, an Account Application, which can be obtained from A I M Institutional Fund Services, Inc. ("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Any changes made to the information provided in the Account Application must be made in writing or by completing a new form and providing it to AIFS. An investor must open an account in the shares of the Class through an Institution in accordance with procedures established by such Institution. Each Institution separately determines the rules applicable to accounts in the shares of the Class opened with it, including minimum initial and subsequent investment requirements and the procedures to be followed by investors to effect purchases of shares of the Class. The minimum initial investment is $10,000, and there is no minimum amount of subsequent purchases of shares of the Class by an Institution on behalf of its customers. An investor who proposes to open a Portfolio account with an Institution should consult with a representative of such Institution to obtain a description of the rules governing such an account. The Institution holds shares of the Class registered in its name, as agent for the customer, on the books of the Institution. A statement with regard to the customer's shares of the Class is supplied to the customer periodically, and confirmations of all transactions for the account of the customer are provided by the Institution to the customer promptly upon request. In addition, the Institution sends to each customer proxies, periodic reports and other information with regard to the customer's shares of the Class. The customer's shares of the Class are fully assignable and subject to encumbrance by the customer. All agreements which relate to a customer's account with an Institution are with the Institution. An investor may terminate his relationship with an Institution at any time, in which case an account in the investor's name will be established directly with the Portfolio and the investor will become a shareholder of record. In such case, however, the investor will not be able to purchase additional shares of the Class directly, except through reinvestment of dividends and distributions. Orders for the purchase of shares of the Class are placed by the investor with the Institution. The Institution is responsible for the prompt transmission of the order to the Trust. The Portfolio will normally be required to make immediate settlement in federal funds (member bank deposits with a Federal Reserve Bank) for portfolio securities purchased. Accordingly, payment for shares of the Class purchased by Institutions on behalf of their customers must be in federal funds. If an investor's order to purchase shares of the Class is paid for other than in federal funds, the Institution, acting on behalf of the investor, completes the conversion into federal funds (which may take two business days), or itself advances federal funds prior to conversion, and promptly transmits the order and payment in the form of federal funds to AIFS. Subject to the conditions stated above and to the Trust's right to reject any purchase order, orders will be accepted (i) when payment for the shares of the Class purchased is received by The Bank of New York, the Trust's custodian bank, in the form described above and notice of such order is provided to AIFS or (ii) at the time the order is placed, if the Portfolio is assured of payment. Shares of the Class purchased by orders which are accepted prior to 4:00 p.m. Eastern Time will earn the dividend declared on the date of purchase. Federal Reserve wires should be sent as early as possible in order to facilitate crediting to the shareholder's account. Any funds received with respect to an order which is not accepted by the Trust and any funds received for which an order has not been received will be returned to the sending Institution. An order 11 74 must specify that it is for the purchase of Shares of the "Private Investment Class of the Treasury Portfolio," otherwise any funds received will be returned to the sending Institution. The Trust reserves the right in its sole discretion to withdraw all or any part of the offering made by this Prospectus or to reject any purchase order. REDEMPTION OF SHARES A shareholder may redeem any or all of its shares of the Class at the net asset value next determined after receipt of the redemption request in proper form by the Trust. Redemption requests with respect to the Class may also be made via AIM LINK(R), a personal computer application software product. Normally, the net asset value per share of the Portfolio will remain constant at $1.00. See "Net Asset Value." Redemption requests with respect to shares of the Class are normally made through a customer's Institution. Payment for redeemed shares of the Class is normally made by Federal Reserve wire to the commercial bank account designated in the Institution's Account Application, but may be remitted by check upon request by a shareholder. If a redemption request is received by AIFS prior to 4:00 p.m. Eastern Time on a business day of the Portfolio, the redemption will be effected at the net asset value next determined on such day and the shares of the Class to be redeemed will not receive the dividend declared on the effective date of the redemption. If a redemption request is received by AIFS after 4:00 p.m. Eastern Time or on other than a business day of the Portfolio, the redemption will be effected at the net asset value of the Portfolio determined as of 4:00 p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of such redemption will normally be wired on the effective day of the redemption. A shareholder may change the bank account designated to receive redemption proceeds by written notice to the Trust. The authorized signature on the notice must be guaranteed by a commercial bank or a trust company. Additional documentation may be required when deemed appropriate by the Trust or AIFS, the Trust's transfer agent. Shareholders may request a redemption by telephone. AIFS and FMC will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth in the Account Application if they reasonably believe such request to be genuine but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), and mailings of confirmations promptly after the transaction. Payment for shares of the Class redeemed by mail and payment for telephone redemptions in amounts of less than $1,000 will be made by check mailed within seven days after receipt of the redemption request in proper form. The Trust may make payment for telephone redemptions in excess of $1,000 by check when it is considered to be in the Portfolio's best interest to do so. In certain cases, the Trust may call for the redemption of, or refuse to transfer or issue, shares of the Class in order to comply with law or to further the purposes for which the Trust is formed. If a transfer or redemption of shares of the Class causes the value of shares of the Class in an account to be less than $500, the Trust may cause the remaining shares to be redeemed. 12 75 DIVIDENDS Dividends from the net income of the Portfolio are declared daily to shareholders of record of each class of the Portfolio as of immediately after 4:00 p.m. Eastern Time on the day of declaration. Net income for dividend purposes is determined daily as of 4:00 p.m. Eastern Time. The dividend accrued and paid for each class will consist of (a) income of the Portfolio, the allocation of which is based upon such class' pro rata share of the total outstanding shares representing an interest in the Portfolio, less (b) Portfolio expenses, such as custodian fees, trustees' fees, accounting and legal expenses, based upon such class' pro rata share of the net assets of the Portfolio, less (c) expenses directly attributable to such class, such as distribution expenses, if any, and transfer agency fees. Although realized gains and losses on the assets of the Portfolio are reflected in its net asset value, they are not expected to be of an amount which would affect its $1.00 per share net asset value for purposes of purchases and redemptions. See "Net Asset Value." Distributions from net realized short-term gains may be declared and paid yearly or more frequently. See "Taxes." The Portfolio does not expect to realize any long-term capital gains or losses. All dividends declared during a month will normally be paid by wire transfer. Payment will normally be made on the first business day of the following month. A shareholder may elect to have all dividends automatically reinvested in additional full and fractional shares of the Class at the net asset value as of 4:00 p.m. Eastern Time on the last business day of the month. Such election, or any revocation thereof, must be made in writing by the Institution to AIFS at 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173 and will become effective with dividends paid after its receipt by AIFS. If a shareholder redeems all the shares of the Class in its account at any time during the month, all dividends declared through the date of redemption are paid to the shareholder along with the proceeds of the redemption. The Portfolio uses its best efforts to maintain the net asset value per share at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should the Trust incur or anticipate any unusual expense, loss or depreciation which could adversely affect the income or net asset value of the Portfolio, the Trust's Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of the then prevailing circumstances. For example, under such unusual circumstances, the Board of Trustees might reduce or suspend the daily dividend in order to prevent to the extent possible the net asset value per share of the Portfolio from being reduced below $1.00. Thus, such expenses, losses or depreciation may result in a shareholder receiving no dividends for the period during which it held its shares of the Class and cause such a shareholder to receive upon redemption a price per share lower than the shareholder's original cost. TAXES The policy of the Portfolio is to distribute to its shareholders at least 90% of its investment company taxable income for each year and consistent therewith to meet the distribution requirements of Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Portfolio also intends to meet the distribution requirements imposed by the Code in order to avoid the imposition of a 4% excise tax. The Portfolio intends to distribute at least 98% of its net investment income for the calendar year and at least 98% of its net realized capital gains, if any, for the period ending on October 31. The Portfolio also intends to meet the other requirements of Subchapter M, including the requirements with respect to diversification of assets and sources of income, so that the Portfolio will pay no taxes on net investment income and net realized capital gains paid to shareholders. 13 76 Dividends paid by the Portfolio are subject to taxation as of the date of payment, whether received by shareholders in cash or shares of the Class. The Code provides an exception to this general rule: if the Portfolio declares a dividend in October, November or December to shareholders of record in such months and pays the dividend during January of the next year, a shareholder will be treated for tax purposes as having received the dividend on December 31 of the year in which it is declared rather than in January when it is paid. It is anticipated that no portion of distributions will be eligible for the dividends received deduction for corporations. Dividends paid by the Portfolio from its net investment income and short-term capital gains are taxable to shareholders at ordinary income tax rates. The Portfolio will be treated as a separate corporation for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M. Therefore, the Portfolio may not offset its gains against the losses of the other portfolio of the Trust and each portfolio of the Trust must specifically comply with all the provisions of the Code. Distributions and transactions referred to in the preceding paragraphs may be subject to state, local or foreign taxes, and the treatment thereof may differ from the federal income tax consequences discussed herein. Shareholders are advised to consult with their own tax advisors concerning the application of state, local or foreign taxes. Foreign persons who file a United States tax return after December 31, 1996 for a U.S. tax refund and who are not eligible to obtain a social security number must apply to the Internal Revenue Service ("IRS") for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or AIFS. NET ASSET VALUE The net asset value per share of the Portfolio is determined daily as of 4:00 p.m. Eastern Time on each business day of the Portfolio. Net asset value per share is determined by dividing the value of the Portfolio's securities, cash and other assets (including interest accrued but not collected) less all of its liabilities (including accrued expenses and dividends payable), by the number of shares outstanding of the Portfolio and rounding the resulting per share net asset value to the nearest one cent. The securities of the Portfolio are valued on the basis of amortized cost pursuant to rules promulgated by the SEC to money market funds. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if the security were sold. During such periods, the daily yield on shares of the Portfolio, computed as described in "Purchases and Redemptions -- Performance Information" in the Statement of Additional Information, may differ somewhat from an identical computation made by an investment company with identical investments utilizing available indications as to market value to value its portfolio securities. YIELD INFORMATION Yield information for the Class can be obtained by calling the Trust at (800) 877-7748. Yields will fluctuate from time to time and are not necessarily indicative of future results. Accordingly, the yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a 14 77 stated period of time. Yield is a function of the type and quality of a Portfolio's investments, the Portfolio's maturity and the operating expense ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should be carefully considered by the investor before making an investment in the Portfolio. For the seven-day period ended August 31, 1996, the current yield and the effective yield (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the annualized current yield for the period) of the Class were 4.93% and 5.05%, respectively. These performance numbers are quoted for illustration purposes only. The performance numbers for any other seven-day period may be substantially different from those quoted above. To assist banks and other institutions performing their own subaccounting, same day information as to the daily dividend per share for the Portfolio to eight decimal places and current yield normally will be available by 5:00 p.m. Eastern Time. From time to time and in its discretion, AIM or its affiliates may waive all or a portion of its advisory fees and/or assume certain expenses of the Portfolio. Such a practice will have the effect of increasing the Portfolio's yield and total return. REPORTS TO SHAREHOLDERS The Trust furnishes shareholders with semi-annual reports containing information about the Portfolio and its operations, including a list of the investments held in the Portfolio and financial statements. The annual financial statements are audited by the Trust's independent auditors. Unless otherwise requested by the shareholder, each shareholder will be provided with a written confirmation for each transaction by its Institution. Institutions establishing sub-accounts will receive a written confirmation for each transaction in a sub-account. Duplicate confirmations may be transmitted to the beneficial owner of the sub-account if requested by the Institution. The Institution will receive a periodic statement setting forth, for each sub-account, the share balance, income earned for the month, income earned for the year to date and the total current value of the account. MANAGEMENT OF THE TRUST BOARD OF TRUSTEES The overall management of the business and affairs of the Trust is vested with its Board of Trustees. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to the Trust, including agreements with the Trust's investment advisor, distributor, custodian and transfer agent. The day-to-day operations of the Trust are delegated to the Trust's officers and to AIM, subject always to the objectives and policies of the Trust and to the general supervision of the Trust's Board of Trustees. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor for the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM was organized in 1976 and, together with its affiliates, manages or advises 41 investment company portfolios. As of November 14, 1996, the total assets of the 15 78 investment company portfolios managed or advised by AIM and its affiliates were approximately $61.1 billion. All of the directors and certain of the officers of AIM are also trustees or executive officers of the Trust. AIM is a wholly owned subsidiary of AIM Management. AIM Management is a holding company engaged in the financial services business. Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the Portfolio's assets and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale. For the fiscal year ended August 31, 1996, AIM received fees from the Trust under an advisory agreement previously in effect, which provided for the same level of compensation to AIM as the Advisory Agreement, with respect to the Portfolio which represented 0.06% of such Portfolio's average daily net assets. During such fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.39% of the Class' average daily net assets. ADMINISTRATIVE SERVICES The Trust has entered into a Master Administrative Services Agreement effective October 18, 1993 with AIM (the "Administrative Services Agreement"), pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Portfolio, including the services of a principal financial officer of the Trust and related staff. As compensation to AIM for its services under the Administrative Services Agreement, the Portfolio may reimburse AIM for expenses incurred by AIM in connection with such services. FEE WAIVERS AIM or its affiliates may in its discretion from time to time agree to waive voluntarily all or any portion of its advisory fee and/or assume certain expenses of the Portfolio but will retain its ability to be reimbursed for such fee or expenses prior to the end of the fiscal year. FMC may in its discretion from time to time voluntarily agree to waive its 12b-1 fee, but will retain its ability to be reimbursed prior to the end of each fiscal year. AIM voluntarily reimbursed expenses of $113,500 on the Portfolio during the year ended August 31, 1996. DISTRIBUTOR The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Certain trustees and officers of the Trust are affiliated with FMC and AIM. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of the Class either directly or through other broker-dealers. FMC is the distributor of several of the mutual funds managed or advised by AIM. FMC may, from time to time, at its expense, pay a bonus or other consideration or incentive to dealers or banks who sell a minimum dollar amount of the shares of the Class during a specific period of time. In some instances, these incentives may be offered only to certain dealers or institutions who have sold or may sell significant amounts of shares. The total amount of such additional bonus payments or other consideration shall not exceed 0.05% of the net asset value of the shares of the Class sold. Any such bonus or incentive programs 16 79 will not change the price paid by investors for the purchase of shares of the Class or the amount received as proceeds from such sales. Dealers or institutions may not use sales of the shares of the Class to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any jurisdiction. DISTRIBUTION PLAN The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Trust may compensate FMC in connection with the distribution of shares of the Class in an amount equal to 0.50% on an annualized basis of the average daily net assets of the Portfolio attributable to the Class. Such amounts may be expended when and if authorized by the Board of Trustees and may be used to finance such distribution-related services as expenses of organizing and conducting sales seminars, printing of prospectuses and statements of additional information (and supplements thereto) and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature and costs of administering the Plan. Of the compensation paid to FMC under the Plan, a service fee may be paid to dealers and other financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of the Class, in amounts of up to 0.25% of the average net assets of the Portfolio attributable to the Class which are attributable to the customers of such dealers or financial institutions. Payments to dealers and other financial institutions in excess of such amount and payments retained by FMC would be characterized as an asset-based sales charge pursuant to the Plan. The Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Portfolio with respect to the Class. The Plan does not obligate the Trust to reimburse FMC for the actual expenses FMC may incur in fulfilling its obligations under the Plan on behalf of the Class. Thus, under the Plan, even if FMC's actual expenses exceed the fee payable to FMC thereunder at any given time, the Trust will not be obligated to pay more than that fee. If FMC's expenses are less than the fee it receives, FMC will retain the full amount of the fee. The Plan requires the officers of the Trust to provide the Board of Trustees at least quarterly with a written report of the amounts expended pursuant to each Plan and the purposes for which such expenditures were made. The Board of Trustees shall review these reports in connection with their decisions with respect to the Plan. As required by Rule 12b-1 under the 1940 Act, the Plan was initially approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Fund and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan ("Qualified Trustees") on July 19, 1993. In approving the continuance of the Plan in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plan will benefit the Trust and the shareholders of the Class. The Plan may be terminated by a vote of a majority of the Qualified Trustees, or by a vote of a majority of the holders of the outstanding voting securities of the shares of the Class. Any change in the Plan that would increase materially the distribution expenses paid by the Class requires shareholder approval; otherwise the Plan may be amended by the trustees, including a majority of the Qualified Trustees, by vote cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plan is in effect, the selection or nomination of the Qualified Trustees is committed to the discretion of the Qualified Trustees. 17 80 PORTFOLIO TRANSACTIONS AND BROKERAGE AIM is responsible for decisions to buy and sell securities for the Portfolio, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid and asked prices. The Portfolio may also purchase securities from underwriters at prices which include a concession paid by the issuer to the underwriter. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the executions and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment programs. Certain research services furnished by dealers may be useful to clients of AIM other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. GENERAL INFORMATION ORGANIZATION AND DESCRIPTION OF SHARES The Trust is a Delaware business trust. The Trust was originally incorporated in Maryland on January 24, 1977, but had no operations prior to November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts business trust; and effective October 15, 1993, the Trust was reorganized as a Delaware business trust. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are divided into seven classes. Five classes, including the Class, represent interests in the Portfolio, and two classes represent interests in the Treasury TaxAdvantage Portfolio. Each class of shares has a par value of $.01 per share. The other classes of the Trust may have different sales charges and other expenses which may affect performance. An investor may obtain information concerning the Trust's other classes by contacting FMC. All shares of the Trust have equal rights with respect to voting, except that the holders of shares of a particular portfolio or class will have the exclusive right to vote on matters pertaining solely to that portfolio or class. For example, holders of shares of a particular portfolio will have the exclusive right to vote on any investment advisory agreement or investment restriction that relates only to such portfolio. In addition, if a portfolio is divided into various classes, holders of shares of a particular class will have the exclusive right to vote on any matter, such as distribution arrangements, which relates solely to such class. The shareholders of the Class have distinctive rights with respect to dividends and redemption which are more fully described in this Prospectus. In the event of liquidation or termination of the Trust, holders of shares of each portfolio will receive pro rata, subject to the rights of creditors, (a) the proceeds of the sale of the assets held in the respective portfolio to which such shares relate, less (b) the liabilities of the Trust attributable to the respective portfolio or allocated to the respective portfolio based on the liquidation value of such portfolio. 18 81 Fractional shares of each portfolio have the same rights as full shares to the extent of their proportionate interest. There will not normally be annual shareholders' meetings. Shareholders may remove trustees from office by votes cast at a meeting of shareholders called solely for such purpose or by written consent. A meeting of shareholders for the sole purpose of considering removal of a trustee shall be called at the request of the holders of 10% or more of the Trust's outstanding shares. As of December 1, 1996, Liberty Bank & Trust Company of Tulsa, N.A. was the owner of record of 45.06% of the outstanding shares of the Class. As long as Liberty Bank & Trust Company of Tulsa, N.A. owns over 25% of such shares, it may be presumed to be in "control" of the Private Investment Class of the Treasury Portfolio, as defined in the 1940 Act. There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's shares, when issued, will be fully paid and non-assessable. The Board of Trustees may create additional portfolios and classes of the Trust without shareholder approval. TRANSFER AGENT AND CUSTODIAN The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, acts as custodian for the portfolio securities and cash of the Portfolio. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for the shares of the Class. LEGAL COUNSEL The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the Trust and has passed upon the legality of the shares of the Portfolio. SHAREHOLDER INQUIRIES Shareholder inquiries concerning the status of an account should be directed to an investor's Institution, or to the Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 877-7748. OTHER INFORMATION This Prospectus sets forth basic information that investors should know about the Trust and the Portfolio prior to investing. A Statement of Additional Information has been filed with the SEC. Copies of the Statement of Additional Information are available upon request and without charge by writing or calling the Trust or FMC. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted herein, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. 19 82 [THIS PAGE INTENTIONALLY LEFT BLANK] 83 SHORT-TERM INVESTMENTS TRUST SHORT-TERM 11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST Houston, Texas 77046-1173 (800) 877-7748 PRIVATE INVESTMENT CLASS INVESTMENT ADVISOR OF THE A I M ADVISORS, INC. -------------------------------------------- 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 TREASURY PORTFOLIO PROSPECTUS (713) 626-1919 DISTRIBUTOR DECEMBER 30, 1996 FUND MANAGEMENT COMPANY 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 [LOGO APPEARS HERE] (800) 877-7748 Fund Management Company AUDITORS KPMG PEAT MARWICK LLP NationsBank Building 700 Louisiana Houston, Texas 77002 CUSTODIAN THE BANK OF NEW YORK 90 Washington Street 11th Floor New York, New York 10286 TRANSFER AGENT A I M INSTITUTIONAL FUND SERVICES, INC. 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
84 SHORT-TERM INVESTMENTS TRUST Prospectus - -------------------------------------------------------------------------------- TREASURY PORTFOLIO The Treasury Portfolio is a money market fund whose investment objective is the maximization of RESOURCE current income to the extent consistent with the CLASS preservation of capital and the maintenance of liquidity. The Treasury Portfolio seeks to achieve its objective by investing in direct obligations of the DECEMBER 30, 1996 U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Treasury Portfolio will have maturities of 397 days or less. The Treasury Portfolio is a series portfolio of Short-Term Investments Trust (the "Trust"), an open- end, diversified, series management investment company. This Prospectus relates solely to the Resource Class of the Treasury Portfolio, a class of shares designed to be a convenient vehicle in which institutional customers of banks, certain broker-dealers and other financial institutions can invest in a diversified money market fund. The Trust also offers shares of other classes of the Treasury Portfolio pursuant to separate prospectuses: the Institutional Class, Private Investment Class, Personal Investment Class and Cash Management Class, as well as shares of classes of another portfolio of the Trust, the Treasury TaxAdvantage Portfolio. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN SHARES OF THE RESOURCE CLASS OF THE TREASURY PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS BELOW OR CALL (800) 825-6858. THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT THE TREASURY PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. [LOGO APPEARS HERE] Fund Management Company 11 Greenway Plaza Suite 1919 Houston, Texas 77046-1173 (800) 825-6858 85 SUMMARY THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE The Trust is an open-end diversified series management investment company. This Prospectus relates to the Resource Class (the "Class") of the Treasury Portfolio (the "Portfolio"). The Portfolio is a money market fund which invests in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The instruments purchased by the Portfolio will have maturities of 397 days or less. The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. Pursuant to separate prospectuses, the Trust also offers shares of other classes of shares of beneficial interest of the Portfolio representing an interest in the Portfolio. Such classes have different distribution arrangements and are designed for institutional and other categories of investors. The Trust also offers shares of two classes of another portfolio, the Treasury TaxAdvantage Portfolio, each pursuant to separate prospectuses. Such classes have different distribution arrangements and are designed for institutional and other categories of investors. The portfolios of the Trust are referred to collectively as the "Portfolios." Because the Trust declares dividends on a daily basis, shares of each class of the Portfolio have the same net asset value (proportionate interest in the net assets of the Portfolio) and bear equally those expenses, such as the advisory fee, that are allocated to the Portfolio as a whole. All classes of the Portfolio share a common investment objective and portfolio of investments. However, different classes of the Portfolio have different shareholder qualifications and are separately allocated certain class expenses, such as those associated with the distribution of their shares. Therefore, each class will have a different dividend payment and a different yield. INVESTORS IN THE CLASS The Class is designed to be a convenient vehicle in which institutional customers of banks, certain broker-dealers and other financial institutions can invest in a diversified open-end money market fund. PURCHASE OF SHARES Shares of the Class that are offered hereby are sold at net asset value. The minimum initial investment in the Class is $10,000. There is no minimum amount for subsequent investments. Payment for shares of the Class purchased must be in funds immediately available to the Portfolio. See "Purchase of Shares." REDEMPTION OF SHARES Redemptions may be made without charge at net asset value. Payment for redeemed shares of the Class for which redemption orders are received prior to 4:00 p.m. Eastern Time will normally be made on the same day. See "Redemption of Shares." DIVIDENDS The net income of the Portfolio is declared as a dividend daily to shareholders of record immediately after 4:00 p.m. Eastern Time. Dividends are paid monthly by check or wire transfer unless the shareholder has previously elected to have such dividends automatically reinvested in additional shares of the Class. Information concerning the amount of the dividends declared on any particular day will normally be available by 5:00 p.m. Eastern Time on that day. See "Dividends." CONSTANT NET ASSET VALUE The Trust uses the amortized cost method of valuing the securities of the Portfolio and rounds the per share net asset value to the nearest whole cent. Accordingly, the net asset value per share of the Portfolio will normally remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value." INVESTMENT ADVISOR A I M Advisors, Inc. ("AIM") serves as the Portfolio's investment advisor and receives a fee based on the Portfolio's average daily net assets. During the fiscal year ended August 31, 1996, the Trust paid AIM advisory fees with respect to the Portfolio which represented 0.06% of the average daily net assets of the Portfolio. AIM is primarily engaged in the business of acting as manager or advisor to investment companies. Under a separate Administrative Services Agreement, AIM may be reimbursed by the Trust for its costs of performing certain accounting and other administrative services for the Fund. See "Management of the Trust -- Investment Advisor" and "-- Administrative Services." 2 86 On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced that it had entered into an Agreement and Plan of Merger among INVESCO plc, INVESCO Group Services, Inc. and AIM Management, pursuant to which AIM Management will be merged with INVESCO Group Services, Inc. INVESCO 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. It is contemplated that the merger will occur on February 28, 1997. The Trust's investment advisor, AIM, is a wholly-owned subsidiary of AIM Management. The proposed transaction may be deemed to cause an "assignment" (as that term is defined under the Investment Company Act of 1940, as amended (the "1940 Act")) of the Master Investment Advisory Agreement between the Trust and AIM. Under the 1940 Act and the Master Investment Advisory Agreement, an assignment results in the automatic termination of the Master Investment Advisory Agreement. On December 11, 1996, the Board of Trustees of the Trust approved a new investment advisory agreement, subject to shareholder approval, between AIM and the Trust with respect to the Portfolio. Shareholders will be asked to approve the proposed advisory agreement at an annual meeting of shareholders to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also approved a new administrative services agreement with AIM and a new distribution agreement with Fund Management Company ("FMC"). There are no material changes to the terms of the new agreements, including the fees payable by the Portfolio. No change is anticipated in the investment advisory or other personnel responsible for the Portfolio as a result of these new agreements. The Board of Trustees has approved these new agreements because the Portfolio's corresponding existing agreements will terminate upon the consummation of the proposed merger of AIM Management into a subsidiary of INVESCO plc. Provided that the Portfolio's shareholders approve the new investment advisory agreement at the Annual Meeting and the merger is consummated, the new investment advisory agreement with respect to the Portfolio, as well as the new administrative services and distribution agreements, will automatically become effective as of the closing date of the merger. DISTRIBUTOR AND DISTRIBUTION PLAN Fund Management Company ("FMC") acts as the exclusive distributor of the shares of the Class. Pursuant to a plan of distribution adopted by the Trust's Board of Trustees, FMC receives a fee from the Trust of up to 0.20% of the average daily net assets of the Portfolio attributable to the shares of the Class as compensation for distribution-related services pursuant to plans of distribution adopted by the Trust's Board of Trustees. The Trust may also make payments pursuant to such distribution plans to certain broker-dealers or other financial institutions for distribution-related services. See "Purchase of Shares" and "Distribution Plan." SPECIAL RISK CONSIDERATIONS The Portfolio may borrow money and enter into reverse repurchase agreements. The Portfolio may invest in repurchase agreements and purchase securities for delayed delivery. Accordingly, an investment in the Portfolio may entail somewhat different risks from an investment in an investment company that does not engage in such practices. There can be no assurance that the Portfolio will be able to maintain a stable net asset value of $1.00 per share. See "Investment Program." The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and Design are service marks of A I M Management Group Inc. 3 87 TABLE OF FEES AND EXPENSES SHAREHOLDER TRANSACTION EXPENSES* Maximum sales load imposed on purchases (as a percentage of offering price)................................... None Maximum sales load on reinvested dividends (as a percentage of offering price)................................... None Deferred sales load (as a percentage of original purchase price or redemption proceeds, as applicable)................................... None Redemption fees (as a percentage of amount redeemed, if applicable).............................................. None Exchange fee............................................................. None ANNUAL PORTFOLIO OPERATING EXPENSES -- RESOURCE CLASS (AS A PERCENTAGE OF AVERAGE NET ASSETS) Management fees.......................................................... 0.06% 12b-1 fees (after fee waivers)**......................................... 0.16% Other expenses (estimated): Custodian fees........................................................ 0.01% Other................................................................. 0.02% ---- Total other expenses............................................. 0.03% ---- Total portfolio operating expenses -- Resource Class..................... 0.25% ====
- --------------- * Beneficial owners of shares of the Class should consider the effect of any charges imposed by their bank, broker-dealer or other financial institution for various services. ** Had there been no fee waivers, 12b-1 fees and Total portfolio operating expenses would have been 0.20% and 0.29%, respectively. EXAMPLE An investor in the Class would pay the following expenses on a $1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end of each time period. 1 year................................................................ $ 3 3 years............................................................... $ 8
The Table of Fees and Expenses is designed to assist an investor in understanding the various costs and expenses that an investor in the Class will bear directly or indirectly. (For more complete descriptions of the various costs and expenses, see "Management of the Trust" below.) The Other Expenses and 12b-1 fees figure is based upon estimated costs and the estimated size of the Class and the Portfolio and estimated fees to be charged for the current fiscal year. Thus, actual expenses may be greater or less than such estimates. Future waivers of fees (if any) may vary from the figures reflected in the Table of Fees and Expenses. To the extent any service providers assume expenses of the Class, such assumption of expenses will have the effect of lowering the Class's overall expense ratio and increasing its yield to investors. Beneficial owners of shares of the Class should also consider the effect of any charges imposed by the institution maintaining their accounts. The example in the Table of Fees and Expenses assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses -- Resource Class" remain the same in the years shown. The example shown in the above table is based on the amounts listed under "Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. 4 88 FINANCIAL HIGHLIGHTS Shown below are the per share data, ratios and supplemental data for the period March 12, 1996 (date operations commenced) through August 31, 1996. The data has been audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified report thereon appears in the Statement of Additional Information.
1996 ------- Net asset value, beginning of period......................................... $ 1.00 Income from investment operations: Net investment income...................................................... 0.03 ------- Total from investment operations........................................... 0.03 ------- Less distributions: Dividends from net investment income....................................... (0.03) ------- Net asset value, end of period............................................. $ 1.00 ======= Total return............................................................... 5.09%(a) ======= Ratios/supplemental data: Net assets, end of period (000s omitted)................................... $33,339 ======= Ratios of expenses to average net assets(c)................................ 0.25%(a)(b) ======= Ratio of net investment income to average net assets(d).................... 5.07%(a)(b) =======
- --------------- (a) Annualized. (b) Ratios are annualized and based on average net assets of $41,695,963. (c) Ratio of expenses to average net assets prior to waiver of distribution fees was 0.29% for the period 1996. (d) Ratio of net investment income to average net assets prior to waiver of distribution fees was 5.03% for the period 1996. SUITABILITY FOR INVESTORS The shares of the Class are intended for use primarily by institutional customers of banks, certain broker-dealers and other financial institutions who seek a convenient vehicle in which to invest in an open-end diversified money market fund. It is expected that the shares of the Class may be particularly suitable investments for corporate cash managers, municipalities or other public entities. The minimum initial investment is $10,000. Investors in the shares of the Class have the opportunity to receive a somewhat higher yield than might be obtainable through direct investment in money market instruments, and enjoy the benefits of diversification, economies of scale and same-day liquidity. Generally, higher interest rates can be obtained on the purchase of very large blocks of money market instruments. Of course, any such relative increase in interest rates may be offset to some extent by the operating expenses of the shares of the Class. INVESTMENT PROGRAM INVESTMENT OBJECTIVE The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury and repurchase agreements secured by such obligations. The money market instruments in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on money market instruments of lesser quality. The Portfolio consists exclusively of money market instruments which have maturities of 397 days or less from the date of purchase (except that securities subject to repurchase agreements may have longer maturities). 5 89 INVESTMENT POLICIES The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds, and repurchase agreements relating to such securities. The Portfolio may also engage in the investment practices described below. The market values of the money market instruments held by the Portfolio will be affected by changes in the yields available on similar securities. If yields have increased since a security was purchased, the market value of such security will generally have decreased. Conversely, if yields have decreased, the market value of such security will generally have increased. REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase agreements with banks and broker-dealers pertaining to the securities described above and which at the date of purchase are "First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. Generally, "First Tier" securities are securities that are rated in the highest rating category by two nationally recognized statistical rating organizations ("NRSROs") or, if only rated by one NRSRO, are rated in the highest rating category by that NRSRO or, if unrated, are determined by AIM (under the supervision of and pursuant to guidelines established by the Trust's Board of Trustees) to be of comparable quality to a rated security that meets the foregoing quality standards. A repurchase agreement is an instrument under which the Portfolio acquires ownership of a debt security and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed-upon time and price, thereby determining the yield during the Portfolio's holding period. Repurchase transactions are limited to a term not to exceed 365 days. The Portfolio may enter into repurchase agreements only with institutions believed by the Trust's Board of Trustees to present minimal credit risk. With regard to repurchase transactions, in the event of a bankruptcy or other default of a seller of a repurchase agreement (such as the seller's failure to repurchase the obligation in accordance with the terms of the agreement), the Portfolio could experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period while the Portfolio seeks to enforce its rights thereto, (b) possible subnormal levels of income and lack of access to income during this period, and (c) expenses of enforcing its rights. Repurchase agreements are considered to be loans under the 1940 Act. BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money and enter into reverse repurchase agreements with respect to its portfolio securities in amounts up to 10% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement. Reverse repurchase agreements involve the sale by the Portfolio of a portfolio security at an agreed-upon price, date and interest payment. The Portfolio will borrow money or enter into reverse repurchase agreements solely for temporary or defensive purposes, such as to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests should they occur. Reverse repurchase transactions are limited to a term not to exceed 92 days. The Portfolio will use reverse repurchase agreements when the interest income to be earned from the securities that would otherwise have to be liquidated to meet redemption requests is greater than the interest expense of the reverse repurchase transaction. Reverse repurchase agreements involve the risk that the market value of securities retained by the Portfolio in lieu of liquidation may decline below the repurchase price of the securities sold by the Portfolio which it is obligated to repurchase. The risk, if encountered, could cause a reduction in the net asset value of the Portfolio's shares. Reverse repurchase agreements are considered to be borrowings by the Portfolio under the 1940 Act. LENDING OF PORTFOLIO SECURITIES. The Portfolio may also lend its portfolio securities in amounts up to 33-1/3% of its total assets to financial institutions in accordance with the investment restrictions of the Portfolio. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned or of delay in recovering the securities loaned or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers deemed by AIM to be of good standing and only when, in AIM's judgment, the income to be earned from the loans justifies the attendant risks. PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's investments, AIM may indicate to dealers or issuers its interest in acquiring certain securities for the Portfolio for settlement beyond a customary settlement date. In some cases, the Portfolio may agree to purchase such securities at stated prices and yields. In such cases, such securities are considered "delayed delivery" securities when traded in the secondary market. Since this is done to facilitate the acquisition of portfolio securities and is not for the purpose of investment leverage, the amount of delayed delivery securities involved may not exceed the estimated amount of funds available for investment on the settlement date. Until the settlement date, assets of the Portfolio with a dollar value sufficient at all times to make payment for the delayed delivery securities will be segregated. The total amount of segregated assets may not exceed 25% of the Portfolio's total assets. The delayed delivery securities, which will not begin to accrue interest until the settlement date, will be recorded as an asset of the Portfolio and will be subject to the risks of market value fluctuations. The purchase price of the delayed delivery securities will be recorded as a liability of the Portfolio until settlement. Absent extraordinary circumstances, the Portfolio's right to acquire delayed delivery securities will not be divested prior to the settlement date. ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net assets in illiquid securities. 6 90 PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term trading and will generally hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money markets. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. Securities held by the Portfolio will be disposed of prior to maturity if an earlier disposition is deemed desirable by AIM to meet redemption requests. In addition, AIM will continually monitor the creditworthiness of issuers whose securities are held by the Portfolio, and securities held by the Portfolio may be disposed of prior to maturity as a result of a revised credit evaluation of the issuer or other circumstances or considerations. The investment policies described above may be changed by the Board of Trustees without the affirmative vote of a majority of the outstanding shares of the Portfolio. INVESTMENT RESTRICTIONS The Portfolio's investment program is subject to a number of investment restrictions which reflect self-imposed standards as well as federal and state regulatory limitations. These restrictions are designed to minimize certain risks associated with investing in specified types of securities or engaging in certain transactions and to limit the amount of the Portfolio's assets which may be concentrated in any specific industry or issuer. The most significant of these restrictions provide that the Portfolio will not: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time; or (2) borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the Portfolio's investment program may be considered the issuance of senior securities. The Portfolio will not purchase securities while borrowings in excess of 5% of its total assets are outstanding. The foregoing investment restrictions of the Portfolio (as well as certain others set forth in the Statement of Additional Information) are matters of fundamental policy which may not be changed without the affirmative vote of a majority of the outstanding shares of the Portfolio. The Board of Trustees has unanimously approved the elimination of or changes to certain fundamental investment policies of the Trust, subject to shareholder approval. Shareholders will be asked to approve these changes at the Annual Meeting. If approved, they will become effective on March 1, 1997. The Trust is currently generally prohibited from investing in other investment companies. The Board of Trustees has approved the elimination of this prohibition, and the amendment to another fundamental investment policy that corresponds to the proposed elimination. The elimination of the fundamental investment policy that prohibits the Trust from investing in other investment companies and the proposed amendment to the corresponding fundamental investment policy would permit investment in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. The Board of Trustees has approved the amendment of Investment No. (1) of the Trust indicated above. In the event shareholders approve the proposed change, Investment Restriction No. (1) will read in full as follows: (1) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as such rule may be amended from time to time, and except that the Portfolio may purchase securities of other investment companies to the extent permitted by applicable law or exemptive order. In addition to the restrictions described above, the Portfolio must also comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time, which govern the operations of money market funds, and may be more restrictive than the policies described herein. The SEC has proposed certain changes to Rule 2a-7. While such proposed changes may have a prospective impact on the investments of the Portfolio, the Portfolio anticipates no difficulty in complying 7 91 with any proposed change if adopted by the SEC. A description of further investment restrictions applicable to the Portfolio is contained in the Statement of Additional Information. PURCHASE OF SHARES Shares of the Class are sold on a continuing basis at their net asset value next determined after an order has been received by the Portfolio. As discussed below, the Trust reserves the right to reject any purchase order. Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a recordkeeping, account maintenance or other fee to their customers, and beneficial holders of the shares of the Class should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. To facilitate the investment of proceeds of purchase orders, the investors are urged to place their orders as early in the day as possible. Purchase orders will be accepted for execution on the day the order is placed, provided that the order is properly submitted and received by the Portfolio prior to 4:00 p.m. Eastern Time on a business day of the Portfolio. Purchase orders received after such time will be processed at the next day's net asset value. Shares of the Class will earn the dividend declared on the effective date of purchase. A "business day of the Portfolio" is any day on which both the Federal Reserve Bank of New York and The Bank of New York, the Trust's custodian bank, are open for business. It is expected that The Bank of New York and the Federal Reserve Bank of New York will be closed during the next twelve months on Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. Shares of the Class are sold to institutional customers of banks, certain broker-dealers and other financial institutions (individually, an "Institution" and collectively, "Institutions"). Individuals, corporations, partnerships and other businesses that maintain qualified accounts at an Institution may invest in the shares of the Class. Each Institution will render administrative support services to its customers who are the beneficial owners of the shares of the Class. Such services may include, among other things, establishment and maintenance of shareholder accounts and records; assistance in processing purchase and redemption transactions in shares of the Class; providing periodic statements showing a customer's account balance in shares of the Class; distribution of Trust proxy statements, annual reports and other communications to shareholders whose accounts are serviced by the Institution; and such other services as the Trust may reasonably request. Institutions will be required to certify to the Trust that they comply with applicable state laws regarding registration as broker-dealers, or that they are exempt from such registration. Prior to the initial purchase of shares of the Class, an Account Application, which can be obtained from A I M Institutional Fund Services, Inc. ("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Any changes made to the information provided in the Account Application must be made in writing or by completing a new form and providing it to AIFS. An investor must open an account in the shares of the Class through an Institution in accordance with procedures established by such Institution. Each Institution separately determines the rules applicable to accounts in the shares of the Class opened with it, including minimum initial and subsequent investment requirements and the procedures to be followed by investors to effect purchases of shares of the Class. The minimum initial investment is $10,000, and there is no minimum amount of subsequent purchases of shares of the Class by an Institution on behalf of its customers. An investor who proposes to open a Portfolio account with an Institution should consult with a representative of such Institution to obtain a description of the rules governing such an account. The Institution holds shares of the Class registered in its name, as agent for the customer, on the books of the Institution. A statement with regard to the customer's shares of the Class is supplied to the customer periodically, and confirmations of all transactions for the account of the customer are provided by the Institution to the customer promptly upon request. In addition, the Institution sends to each customer proxies, periodic reports and other information with regard to the customer's shares of the Class. The customer's shares of the Class are fully assignable and subject to encumbrance by the customer. All agreements which relate to a customer's account with an Institution are with the Institution. An investor may terminate his relationship with an Institution at any time, in which case an account in the investor's name will be established directly with the Portfolio and the investor will become a shareholder of record. In such case, however, the investor will not be able to purchase additional shares of the Class directly, except through reinvestment of dividends and distributions. Orders for the purchase of shares of the Class are placed by the investor with the Institution. The Institution is responsible for the prompt transmission of the order to the Trust. The Portfolio will normally be required to make immediate settlement in federal funds (member bank deposits with a Federal Reserve Bank) for portfolio securities purchased. Accordingly, payment for shares of the Class purchased by Institutions on behalf of their customers must be in federal funds. If an investor's order to purchase shares of the Class is paid for other than in federal funds, the Institution, acting on behalf of the investor, completes the conversion into federal funds (which may take two business days), or itself advances federal funds prior to conversion, and promptly transmits the order and payment in the form of federal funds to AIFS. 8 92 Subject to the conditions stated above and to the Trust's right to reject any purchase order, orders will be accepted (i) when payment for the shares of the Class purchased is received by The Bank of New York, the Trust's custodian bank, in the form described above and notice of such order is provided to AIFS or (ii) at the time the order is placed, if the Portfolio is assured of payment. Shares of the Class purchased by orders which are accepted prior to 3:00 p.m. Eastern Time will earn the dividend declared on the date of purchase. Federal Reserve wires should be sent as early as possible in order to facilitate crediting to the shareholder's account. Any funds received with respect to an order which is not accepted by the Trust and any funds received for which an order has not been received will be returned to the sending Institution. An order must specify that it is for the purchase of shares of the "Resource Class of the Treasury Portfolio," otherwise any funds received will be returned to the sending Institution. The Trust reserves the right in its sole discretion to withdraw all or any part of the offering made by this Prospectus or to reject any purchase order. REDEMPTION OF SHARES A shareholder may redeem any or all of its shares of the Class at the net asset value next determined after receipt of the redemption request in proper form by the Trust. Redemption requests with respect to the Class may also be made via AIM LINK(R), a personal computer application software product. Normally, the net asset value per share of the Portfolio will remain constant at $1.00. See "Net Asset Value." Redemption requests with respect to shares of the Class are normally made through a customer's Institution. Payment for redeemed shares of the Class is normally made by Federal Reserve wire to the commercial bank account designated in the Institution's Account Application, but may be remitted by check upon request by a shareholder. If a redemption request is received by AIFS prior to 4:00 p.m. Eastern Time on a business day of the Portfolio, the redemption will be effected at the net asset value next determined on such day and the shares of the Class to be redeemed will not receive the dividend declared on the effective date of the redemption. If a redemption request is received by AIFS after 4:00 p.m. Eastern Time or on other than a business day of the Portfolio, the redemption will be effected at the net asset value of the Portfolio determined as of 4:00 p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of such redemption will normally be wired on the effective day of the redemption. A shareholder may change the bank account designated to receive redemption proceeds by written notice to the Trust. The authorized signature on the notice must be guaranteed by a commercial bank or a trust company. Additional documentation may be required when deemed appropriate by the Trust or AIFS, the Trust's transfer agent. Shareholders may request a redemption by telephone. AIFS and FMC will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth in the Account Application if they reasonably believe such request to be genuine but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), and mailings of confirmations promptly after the transaction. Payment for shares of the Class redeemed by mail and payment for telephone redemptions in amounts of less than $1,000 will be made by check mailed within seven days after receipt of the redemption request in proper form. The Trust may make payment for telephone redemptions in excess of $1,000 by check when it is considered to be in the Portfolio's best interest to do so. The shares of the Class are not redeemable at the option of the Trust unless the Board of Trustees of the Trust determines in its sole discretion that failure to so redeem may have materially adverse consequences to the shareholders of the Trust. DIVIDENDS Dividends from the net income of the Portfolio are declared daily to shareholders of record of each class of the Portfolio as of immediately after 4:00 p.m. Eastern Time on the day of declaration. Net income for dividend purposes is determined daily as of 4:00 p.m. Eastern Time. The dividend accrued and paid for each class will consist of (a) income of the Portfolio, the allocation of which is based upon such class' pro rata share of the total outstanding shares representing an interest in the Portfolio, less (b) Portfolio expenses, such as custodian fees, trustees' fees, accounting and legal expenses, based upon such class' pro rata share of the net assets of the Portfolio, less (c) expenses directly attributable to such class, such as distribution expenses, if any, and transfer agency fees. Although realized gains and losses on the assets of the Portfolio are reflected in its net asset value, they are not expected to be of an amount which would affect its $1.00 per share net asset value for purposes of purchases 9 93 and redemptions. See "Net Asset Value." Distributions from net realized short-term gains may be declared and paid yearly or more frequently. See "Taxes." The Portfolio does not expect to realize any long-term capital gains or losses. All dividends declared during a month will normally be paid by wire transfer. Payment will normally be made on the first business day of the following month. A shareholder may elect to have all dividends automatically reinvested in additional full and fractional Shares at the net asset value as of 4:00 p.m. Eastern Time on the last business day of the month. Such election, or any revocation thereof, must be made in writing by the Institution to AIFS at 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173 and will become effective with dividends paid after its receipt by AIFS. If a shareholder redeems all the Shares in its account at any time during the month, all dividends declared through the date of redemption are paid to the shareholder along with the proceeds of the redemption. The Portfolio uses its best efforts to maintain its net asset value per share at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should the Trust incur or anticipate any unusual expense, loss or depreciation which could adversely affect the income or net asset value of the Portfolio, the Trust's Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of the then prevailing circumstances. For example, under such unusual circumstances, the Board of Trustees might reduce or suspend the daily dividend in order to prevent to the extent possible the net asset value per share of the Portfolio from being reduced below $1.00. Thus, such expenses, losses or depreciation may result in a shareholder receiving no dividends for the period during which it held its Shares and cause such a shareholder to receive upon redemption a price per share lower than the shareholder's original cost. TAXES The policy of the Portfolio is to distribute to its shareholders at least 90% of its investment company taxable income for each year and consistent therewith to meet the distribution requirements of Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Portfolio also intends to meet the distribution requirements imposed by the Code in order to avoid the imposition of a 4% excise tax. The Portfolio intends to distribute at least 98% of its net investment income for the calendar year and at least 98% of its net realized capital gains, if any, for the period ending on October 31. The Portfolio also intends to meet the other requirements of Subchapter M, including the requirements with respect to diversification of assets and sources of income, so that the Portfolio will pay no taxes on net investment income and net realized capital gains paid to shareholders. Dividends paid by the Portfolio are subject to taxation as of the date of payment, whether received by shareholders in cash or shares of the Class. The Code provides an exception to this general rule: if the Portfolio declares a dividend in October, November or December to shareholders of record in such months and pays the dividend during January of the next year, a shareholder will be treated for tax purposes as having received the dividend on December 31 of the year in which it is declared rather than in January when it is paid. It is anticipated that no portion of distributions will be eligible for the dividends received deduction for corporations. Dividends paid by the Portfolio from its net investment income and short-term capital gains are taxable to shareholders at ordinary income tax rates. The Portfolio will be treated as a separate corporation for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M. Therefore, the Portfolio may not offset its gains against the losses of the other portfolio of the Trust and each portfolio of the Trust must specifically comply with all the provisions of the Code. Distributions and transactions referred to in the preceding paragraphs may be subject to state, local or foreign taxes, and the treatment thereof may differ from the federal income tax consequences discussed herein. Shareholders are advised to consult with their own tax advisors concerning the application of state, local or foreign taxes. Foreign persons who file a United States tax return after December 31, 1996 for a U.S. tax refund and who are not eligible to obtain a social security number must apply to the Internal Revenue Service ("IRS") for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or AIFS. NET ASSET VALUE The net asset value per share of the Portfolio is determined daily as of 4:00 p.m. Eastern Time on each business day of the Portfolio. Net asset value per share is determined by dividing the value of the Portfolio's securities, cash and other assets (including interest accrued but not collected) less all of its liabilities (including accrued expenses and dividends payable), by the number of shares outstanding of the Portfolio and rounding the resulting per share net asset value to the nearest one cent. 10 94 The securities of the Portfolio are valued on the basis of amortized cost pursuant to rules promulgated by the SEC applicable to money market funds. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if the security were sold. During such periods, the daily yield on shares of the Portfolio, computed as described in "Purchases and Redemptions -- Performance Information" in the Statement of Additional Information, may differ somewhat from an identical computation made by an investment company with identical investments utilizing available indications as to market value to value its portfolio securities. YIELD INFORMATION Yield information for the Class can be obtained by calling the Trust at (800) 825-6858. Yields will fluctuate from time to time and are not necessarily indicative of future results. Accordingly, the yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time. Yield is a function of the type and quality of the Portfolio's investments, the Portfolio's maturity and the operating expense ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should be carefully considered by an investor before making an investment in the Portfolio. For the seven day period ended August 31, 1996 the current yield and the effective yield of the Class (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the annualized current yield for the period) were 5.07% and 5.20%, respectively. To assist banks and other institutions performing their own subaccounting, same day information as to the daily dividend per share for the Portfolio to eight decimal places and current yield normally will be available by 5:00 p.m. Eastern Time. From time to time and in its discretion, AIM or its affiliates may waive all or a portion of its advisory fees and/or assume certain expenses of the Portfolio. Such a practice will have the effect of increasing the Portfolio's yield and total return. REPORTS TO SHAREHOLDERS The Trust furnishes shareholders with semi-annual reports containing information about the Portfolio and its operations, including a list of the investments held by the Portfolio and financial statements. The annual financial statements are audited by the Trust's independent auditors. Unless otherwise requested by the shareholder, each shareholder will be provided by its Institution with a written confirmation for each transaction. Institutions establishing sub-accounts will receive a written confirmation for each transaction in a sub-account. Duplicate confirmations may be transmitted to the beneficial owner of the sub-account if requested by the Institution. The Institution will receive a periodic statement setting forth, for each sub-account, the share balance, income earned for the month, income earned for the year to date and the total current value of the account. MANAGEMENT OF THE TRUST BOARD OF TRUSTEES The overall management of the business and affairs of the Trust is vested with its Board of Trustees. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to the Trust, including agreements with the Trust's investment advisor, distributor, custodian and transfer agent. The day-to-day operations of the Trust are delegated to the Trust's officers and to AIM, subject always to the objective and policies of the Trust and to the general supervision of the Trust's Board of Trustees. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor for the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM was organized in 1976 and, together with its affiliates, manages or advises 41 investment company portfolios. As of November 14, 1996, the total assets of the investment company portfolios managed or advised by AIM and its affiliates were approximately $61.1 billion. All of the directors and certain of the officers of AIM are also trustees or executive officers of the Trust. AIM is a wholly-owned subsidiary of AIM Management. AIM Management is a holding company engaged in the financial services business. 11 95 Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the Portfolio's assets and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale. For the fiscal year ended August 31, 1996, AIM received fees from the Trust, with respect to the Portfolio under the Advisory Agreement which represented 0.06% of the Portfolio's average daily net assets. ADMINISTRATIVE SERVICES The Trust has entered into a Master Administrative Services Agreement dated as of October 18, 1993 with AIM (the "Administrative Services Agreement"), pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Portfolio, including the services of a principal financial officer of the Trust and related staff. As compensation to AIM for its services under the Administrative Services Agreement, the Portfolio may reimburse AIM for expenses incurred by AIM in connection with such services. EXPENSES In addition to fees paid to AIM pursuant to the Advisory Agreement and the expenses reimbursed to AIM under the Administrative Services Agreement, the Trust also pays or causes to be paid all other expenses of the Trust, including, without limitation: the charges and expenses of any registrar, any custodian or depository appointed by the Trust for the safekeeping of its cash, portfolio securities and other property, and any transfer, dividend or accounting agent or agents appointed by the Trust; brokers' commissions chargeable to the Trust in connection with portfolio securities transactions to which the Trust is a party; all taxes, including securities issuance and transfer taxes, and fees payable by the Trust to federal, state or other governmental agencies; the costs and expenses of engraving or printing of certificates representing shares of the Trust; all costs and expenses in connection with the registration and maintenance of registration of the Trust and its shares with the SEC and various states and other jurisdictions (including filing and legal fees and disbursements of counsel); the costs and expenses of printing, including typesetting, and distributing prospectuses and statements of additional information of the Trust and supplements thereto to the Trust's shareholders; all expenses of shareholders' and trustees' meetings and of preparing, printing and mailing of prospectuses, proxy statements and reports to shareholders; fees and travel expenses of trustees and trustee members of any advisory board or committee; all expenses incident to the payment of any dividend, distribution, withdrawal or redemption, whether in shares or in cash; charges and expenses of any outside service used for pricing of the Trust's shares; charges and expenses of legal counsel, including counsel to the trustees of the Trust who are not "interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of independent accountants in connection with any matter relating to the Trust; membership dues of industry associations; interest payable on Trust borrowings; postage; insurance premiums on property or personnel (including officers and trustees) of the Trust which inure to its benefit; and extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs and any indemnification related thereto). Except as disclosed under the caption "Distribution Plan," FMC bears the expenses of printing and distributing prospectuses and statements of additional information (other than those prospectuses and statements of additional information distributed to existing shareholders of the Trust) and any other promotional or sales literature used by FMC or furnished by FMC to purchasers or dealers in connection with the public offering of the Trust's shares. Expenses of the Trust which are not directly attributable to the operations of any class of shares or portfolio of the Trust are prorated among all classes of the Trust based upon the relative net assets of each class. Expenses of the Trust except those listed in the next sentence are prorated among all classes of such portfolio based upon the relative net assets of each such class. Distribution and service fees, transfer agency fees and shareholder record keeping fees which are directly attributable to a specific class of shares are charged against the income available for distribution as dividends to the holders of such shares. FEE WAIVERS AIM or its affiliates may in its discretion from time to time agree to waive voluntarily all or any portion of its advisory fee and/or assume certain expenses of the Portfolio but will retain its ability to be reimbursed for such fee or expenses prior to the end of each fiscal year. FMC may in its discretion from time to time agree to waive voluntarily its 12b-1 fee but will retain its ability to be reimbursed prior to the end of the fiscal year. AIM voluntarily reimbursed expenses of $113,500 on the Portfolio during the year ended August 31, 1996. 12 96 DISTRIBUTOR The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Certain trustees and officers of the Trust are affiliated with FMC and AIM. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of the Trust either directly or through other broker-dealers. FMC is the distributor of several of the mutual funds managed or advised by AIM. FMC may, from time to time, at its expense, pay a bonus or other consideration or incentive to dealers or financial institutions who sell a minimum dollar amount of the shares of the Class during a specific period of time. In some instances, these incentives may be offered only to certain dealers or financial institutions who have sold or may sell significant amounts of shares. The total amount of such additional bonus payments or other consideration shall not exceed .05% of the net asset value of the shares of the Class sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of shares of the Class or the amount received as proceeds from such sales. Sales of the shares of the Class may not be used to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any jurisdiction. DISTRIBUTION PLAN The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Trust may compensate FMC in connection with the distribution of the shares of the Class an amount equal to 0.20% on an annualized basis of the average daily net assets of the Portfolio attributable to the Class. Such amount may be expended when and if authorized by the Board of Trustees and may be used to finance such distribution-related services as expenses of organizing and conducting sales seminars, printing of prospectuses and statements of additional information (and supplements thereto) and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature and costs of administering the Plan. Of the compensation paid to FMC under the Plan, a service fee may be paid to dealers and other financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of the Class, in amounts of up to 0.20% of the average daily net assets of the Portfolio attributable to the Class which are attributable to the customers of such dealers or financial institutions. The Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Portfolio with respect to the Class. The Plan does not obligate the Trust to reimburse FMC for the actual expenses FMC may incur in fulfilling its obligations under the Plan on behalf of the Class. Thus, under the Plan, even if FMC's actual expenses exceed the fee payable to FMC thereunder at any given time, the Trust will not be obligated to pay more than that fee. If FMC's expenses are less than the fee it receives, FMC will retain the full amount of the fee. The Plan requires the officers of the Trust to provide the Board of Trustees at least quarterly with a written report of the amounts expended pursuant to the Plan and the purposes for which such expenditures were made. The Board of Trustees shall review these reports in connection with their decisions with respect to the Plan. As required by Rule 12b-1 under the 1940 Act, the Plan was initially approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan ("Qualified Trustees") on July 19, 1993. In approving the continuance of the Plan in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plan will benefit the Trust and the holders of the shares of the Class. The Plan may be terminated by a vote of a majority of the Qualified Trustees, or by a vote of a majority of the holders of the outstanding voting securities of the class to which the Plan relates. Any change in the Plan that would increase materially the distribution expenses paid by the Class requires shareholder approval; otherwise the Plan may be amended by the trustees, including a majority of the Qualified Trustees, by vote cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plan is in effect, the selection or nomination of the Qualified Trustees is committed to the discretion of the Qualified Trustees. PORTFOLIO TRANSACTIONS AND BROKERAGE AIM is responsible for decisions to buy and sell securities for the Portfolio, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid 13 97 and asked prices. The Portfolio may also purchase securities from underwriters at prices which include a concession paid by the issuer to the underwriter. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the executions and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment programs. Certain research services furnished by dealers may be useful to clients of AIM other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. GENERAL INFORMATION ORGANIZATION AND DESCRIPTION OF SHARES The Trust is a Delaware business trust. The Trust was originally incorporated in Maryland on January 24, 1977, but had no operations prior to November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts business trust; and effective October 15, 1993, the Trust was reorganized as a Delaware business trust. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are divided into seven classes. Five classes, including the Class, represent interests in the Portfolio and two classes represent interests in the Treasury TaxAdvantage Portfolio. Each class of shares has a par value of $.01 per share. The other classes of the Trust may have different sales charges and other expenses which may affect performance. An investor may obtain information concerning the Trust's other classes by contacting FMC. All shares of the Trust have equal rights with respect to voting, except that the holders of shares of a particular portfolio or class will have the exclusive right to vote on matters pertaining solely to that portfolio or class. For example, holders of shares of a particular portfolio will have the exclusive right to vote on any investment advisory agreement or investment restriction that relates only to such portfolio. In addition, if a portfolio is divided into various classes, holders of shares of a particular class will have the exclusive right to vote on any matter, such as distribution arrangements, which relates solely to such class. The holders of shares of the Portfolio have distinctive rights with respect to dividends and redemption which are more fully described in this Prospectus. In the event of liquidation or termination of the Trust, holders of shares of each portfolio will receive pro rata, subject to the rights of creditors, (a) the proceeds of the sale of the assets held in the respective portfolio to which such shares relate, less (b) the liabilities of the Trust attributable or allocated to the respective portfolio based on the liquidation value of the portfolio. Fractional shares of each portfolio have the same rights as full shares to the extent of their proportionate interest. There will not normally be annual shareholders' meetings. Shareholders may remove trustees from office by votes cast at a meeting of shareholders called solely for such purpose or by written consent. A meeting of shareholders for the sole purpose of considering removal of a trustee shall be called at the request of the holders of 10% or more of the Trust's outstanding shares. As of December 1, 1996, Corestates Capital Markets was the owner of record of 63.59%, and Mellon Bank was the owner of record of 35.27%, of the outstanding shares of the Class. As long as each of Corestates Capital Markets and Mellon Bank owns over 25% of such shares, it may be presumed to be in "control" of the Resource Class of the Treasury Portfolio, as defined in the 1940 Act. There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's shares, when issued, will be fully paid and non-assessable. The Board of Trustees may create additional portfolios of the Trust without shareholder approval. TRANSFER AGENT AND CUSTODIAN The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, acts as custodian for the portfolio securities and cash of the Portfolio. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for the shares of the Class. LEGAL COUNSEL The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the Trust and has passed upon the legality of the shares of the Portfolio. 14 98 SHAREHOLDER INQUIRIES Shareholder inquiries concerning the status of an account should be directed to an investor's Institution, or to the Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 825-6858. OTHER INFORMATION This Prospectus sets forth basic information that investors should know about the Trust and the Portfolio prior to investing. A Statement of Additional Information has been filed with the SEC. Copies of the Statement of Additional Information are available upon request and without charge by writing or calling the Trust or FMC. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted herein, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. 15 99 [THIS PAGE INTENTIONALLY LEFT BLANK] 100 ============================================================================================ SHORT-TERM INVESTMENTS TRUST PROSPECTUS 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 December 30, 1996 (800) 825-6858 SHORT-TERM INVESTMENT ADVISOR INVESTMENTS TRUST A I M ADVISORS, INC. 11 Greenway Plaza, Suite 1919 --------------------- Houston, Texas 77046-1173 (713) 626-1919 TREASURY PORTFOLIO DISTRIBUTOR --------------------- FUND MANAGEMENT COMPANY 11 Greenway Plaza, Suite 1919 RESOURCE CLASS Houston, Texas 77046-1173 (800) 877-7745 TABLE OF CONTENTS PAGE AUDITORS KPMG PEAT MARWICK LLP Summary........................................... 2 NationsBank Building Table of Fees and Expenses........................ 4 700 Louisiana Financial Highlights.............................. 5 Houston, Texas 77002 Suitability for Investors......................... 5 Investment Program................................ 5 CUSTODIAN Purchase of Shares................................ 8 THE BANK OF NEW YORK Redemption of Shares.............................. 9 90 Washington Street Dividends......................................... 9 11th Floor Taxes............................................. 10 New York, New York 10286 Net Asset Value................................... 10 Yield Information................................. 11 TRANSFER AGENT Reports to Shareholders........................... 11 A I M INSTITUTIONAL FUND SERVICES, INC. Management of the Trust........................... 11 11 Greenway Plaza, Suite 1919 General Information............................... 14 Houston, Texas 77046-1173 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE. ===============================================================================
101 STATEMENT OF ADDITIONAL INFORMATION SHORT-TERM INVESTMENTS TRUST TREASURY PORTFOLIO (CASH MANAGEMENT CLASS) (INSTITUTIONAL CLASS) (PERSONAL INVESTMENT CLASS) (PRIVATE INVESTMENT CLASS) (RESOURCE CLASS) 11 GREENWAY PLAZA SUITE 1919 HOUSTON, TEXAS 77046-1173 (800) 659-1005 --------------------- THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF EACH OF THE ABOVE NAMED FUNDS, COPIES OF WHICH MAY BE OBTAINED BY WRITING FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA, SUITE 1919, HOUSTON, TEXAS 77046-1173 OR CALLING (800) 659-1005 --------------------- STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 30, 1996 RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE TREASURY PORTFOLIO: CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 30, 1996, INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 30, 1996, PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 30, 1996, PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 30, 1996 AND RESOURCE CLASS PROSPECTUS DATED DECEMBER 30, 1996 102 TABLE OF CONTENTS
PAGE ---- Introduction....................................................... 3 General Information about the Trust................................ 3 The Trust and Its Shares...................................... 3 Trustees and Officers......................................... 4 Remuneration of Trustees...................................... 7 Investment Advisor............................................ 8 Administrative Services....................................... 9 Expenses...................................................... 9 Banking Regulations........................................... 10 Transfer Agent and Custodian.................................. 10 Reports....................................................... 10 Principal Holders of Securities............................... 11 Purchases and Redemptions.......................................... 13 Net Asset Value Determination................................. 13 Distribution Agreement........................................ 14 Distribution Plan............................................. 14 Performance Information....................................... 15 Suspension of Redemption Rights............................... 15 Investment Program and Restrictions................................ 16 Investment Program............................................ 16 Eligible Securities........................................... 16 Investment Restrictions....................................... 16 Other Investment Policies..................................... 17 Portfolio Transactions............................................. 17 Tax Matters........................................................ 19 Qualification as a Regulated Investment Company............... 19 Excise Tax on Regulated Investment Companies.................. 20 Portfolio Distributions....................................... 20 Sale or Redemption of Shares.................................. 20 Foreign Shareholders.......................................... 20 Effect of Future Legislation; Local Tax Considerations........ 20 Financial Statements............................................... FS-1
2 103 INTRODUCTION The Treasury Portfolio (the "Portfolio") is an investment portfolio of Short-Term Investments Trust (the "Trust"), a mutual fund. The rules and regulations of the United States Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors certain information concerning the activities of the fund being considered for investment. This information is included in the Cash Management Class Prospectus dated December 30, 1996, the Institutional Class Prospectus dated December 30, 1996, the Personal Investment Class Prospectus dated December 30, 1996, the Private Investment Class Prospectus dated December 30, 1996 and the Resource Class Prospectus dated December 30, 1996 (each a "Prospectus"). Additional copies of each Prospectus and this Statement of Additional Information may be obtained without charge by writing the principal distributor of the Trust's shares, Fund Management Company ("FMC"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or by calling (800) 659-1005. Investors must receive a Prospectus before they invest. This Statement of Additional Information is intended to furnish prospective investors with additional information concerning each class of the Portfolio. Some of the information required to be in this Statement of Additional Information is also included in each Prospectus; and, in order to avoid repetition, reference will be made to sections of the applicable Prospectus. Additionally, each Prospectus and this Statement of Additional Information omit certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted from each Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. GENERAL INFORMATION ABOUT THE TRUST THE TRUST AND ITS SHARES The Trust is an open-end diversified management series investment company which was originally organized as a corporation under the laws of the State of Maryland on January 24, 1977, but which had no operations prior to November 10, 1980. The Trust was reorganized as a business trust under the laws of the Commonwealth of Massachusetts on December 31, 1986. The Trust was again reorganized as a business trust under the laws of the State of Delaware on October 15, 1993. A copy of the Agreement and Declaration of Trust (the "Declaration of Trust") establishing the Trust is on file with the SEC. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Statement of Additional Information for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are redeemable at the net asset value thereof at the option of the shareholder or at the option of the Trust in certain circumstances. For information concerning the methods of redemption and the rights of share ownership, investors should consult each Prospectus under the captions "General Information" and "Redemption of Shares." The Trust offers on a continuous basis shares representing an interest in one of two portfolios: the Portfolio and the Treasury TaxAdvantage Portfolio (together, the "Portfolios"). The Portfolio consists of the following five classes of shares: Cash Management Class, Institutional Class, Personal Investment Class, Private Investment Class and Resource Class. Each class of shares is sold pursuant to a separate Prospectus and this joint Statement of Additional Information. Each such class has different shareholder qualifications and bears expenses differently. This Statement of Additional Information relates to each class of the Portfolio. The classes of the Treasury TaxAdvantage Portfolio are offered pursuant to separate prospectuses and a separate statement of additional information. Shares of beneficial interest of the Trust will be redeemable at the net asset value thereof at the option of the shareholder or at the option of the Trust in certain circumstances. For information concerning the methods of redemption and the rights of share ownership, investors should consult the Prospectus under the captions "Redemption of Shares." As used in the Prospectus, the term "majority of the outstanding shares" of the Trust, a particular portfolio or a particular class means, respectively, the vote of the lesser of (i) 67% or more of the shares of the Trust, such portfolio or such class present at a meeting of the Trust's shareholders, if the holders of more than 50% of the outstanding shares of the Trust, such portfolio or such class are present or represented by proxy, or (ii) more than 50% of the outstanding shares of the Trust, such portfolio or such class. Shareholders of the Trust do not have cumulative voting rights. Therefore the holders of more than 50% of the outstanding shares of all series or classes voting together for election of trustees may elect all of the members of the Board of Trustees and in such event, the remaining holders cannot elect any members of the Board of Trustees. 3 104 The Declaration of Trust provides for the perpetual existence of the Trust. The Trust, either Portfolio and any class thereof, however, may be terminated at any time, upon the recommendation of the Board of Trustees, by vote of a majority of the outstanding shares of the Trust, such Portfolio and such class, respectively; provided, however, that the Board of Trustees may terminate, without such shareholder approval, the Trust, either Portfolio and any class thereof with respect to which there are fewer than 100 shares outstanding. The Declaration of Trust permits the trustees to issue an unlimited number of full and fractional shares, of $.01 par value, of each class of shares of beneficial interest of the Trust. The Board of Trustees may establish additional series or classes of shares from time to time without shareholder approval. Additional information concerning the rights of share ownership is set forth in the prospectus applicable to each such class or series of shares of the Trust. The assets received by the Trust for the issue or sale of shares of each class relating to a portfolio and all income, earnings, profits, losses and proceeds therefrom, subject only to the rights of creditors, will be allocated to that portfolio, and constitute the underlying assets of that portfolio. The underlying assets of each portfolio will be segregated and will be charged with the expenses with respect to that portfolio and with a share of the general expenses of the Trust. While certain expenses of the Trust will be allocated to the separate books of account of each portfolio, certain other expenses may be legally chargeable against the assets of the entire Trust. Under Delaware law, shareholders of a Delaware business trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations, however, there is a remote possibility that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. However, the Declaration of Trust disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Declaration of Trust provides for indemnification out of the Trust's property for all losses and expenses of any shareholder of the Trust held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which the Trust would be unable to meet its obligations and wherein the complaining party was held not to be bound by the disclaimer. The Declaration of Trust further provides that the trustees will not be liable for errors of judgment or mistakes of fact or law. However, nothing in the Declaration of Trust protects a trustee against any liability to which a trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. The Declaration of Trust provides for indemnification by the Trust of the trustees and the officers of the Trust except with respect to any matter as to which any such person did not act in good faith in the reasonable belief that his action was in or not opposed to the best interests of the Trust. Such person may not be indemnified against any liability to the Trust or to the Trust's shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. The Declaration of Trust also authorizes the purchase of liability insurance on behalf of trustees and officers. As described in the Prospectus, the Trust will not normally hold annual shareholders' meetings. At such time as less than a majority of the trustees have been elected by the shareholders, the trustees then in office will call a shareholders' meeting for the election of trustees. In addition, trustees may be removed from office by a written consent signed by the holders of two-thirds of the outstanding shares of the Trust and filed with the Trust's custodian or by a vote of the holders of two-thirds of the outstanding shares at a meeting duly called for that purpose, which meeting shall be held upon written request of the holders of not less than 10% of the outstanding shares of the Trust. TRUSTEES AND OFFICERS The trustees and officers of the Trust and their principal occupations during the last five years are set forth below. Unless otherwise indicated, the address of each trustee and officer is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. **CHARLES T. BAUER, Trustee and Chairman (77) Director, Chairman and Chief Executive Officer, A I M Management Group Inc.; and Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company. - --------------- * A trustee who is an "interested person" of the Trust and A I M Advisors, Inc., as defined in the Investment Company Act of 1940, as amended (the "1940 Act"). 4 105 BRUCE L. CROCKETT, Trustee (52) 906 Frome Lane McLean, VA 22102 Formerly, Director, President and Chief Executive Officer, COMSAT Corporation (includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video Enterprises, COMSAT RSI and COMSAT International Ventures). Previously, President and Chief Operating Officer, COMSAT Corporation; President, World Systems Division, COMSAT Corporation; and Chairman, Board of Governors of INTELSAT; (each of the COMSAT companies listed above is an international communication, information and entertainment-distribution services company). OWEN DALY II, Trustee (72) 6 Blythewood Road Baltimore, MD 21210 Director, Cortland Trust Inc. (investment company). Formerly, Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental General Insurance Company; and Chairman of the Board of Equitable Bancorporation. *CARL FRISCHLING, Trustee (59) 919 Third Avenue New York, NY 10022 Partner, Kramer, Levin, Naftalis & Frankel (law firm). Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner, Spengler Carlson Gubar Brodsky & Frischling (law firm). **ROBERT H. GRAHAM, Trustee and President (50) Director, President and Chief Operating Officer, A I M Management Group Inc.; Director and President, A I M Advisors, Inc.; and Director and Senior Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company. JOHN F. KROEGER, Trustee (72) 37 Pippins Way Morristown, NJ 07960 Director, Flag Investors International Fund, Inc., Flag Investors Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc., Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund, Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell & Stockel Associates, Inc. (consulting firm). LEWIS F. PENNOCK, Trustee (54) 6363 Woodway, Suite 825 Houston, TX 77057 Attorney in private practice in Houston, Texas. IAN W. ROBINSON, Trustee (73) 183 River Drive Tequesta, FL 33469 Formerly, Executive Vice President and Chief Financial Officer, Bell Atlantic Management Services, Inc. (provider of centralized management services to telephone companies); Executive Vice President, Bell Atlantic Corporation (parent of seven telephone companies); and Vice President and Chief Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone Company. - --------------- *A trustee who is an "interested person" of the Trust, as defined in the 1940 Act. **A trustee who is an "interested person" of the Trust and A I M Advisors, Inc., as defined in the 1940 Act. 5 106 LOUIS S. SKLAR, Trustee (57) Transco Tower, 50th Floor 2800 Post Oak Blvd. Houston, TX 77056 Executive Vice President, Development and Operations, Hines Interests Limited Partnership (real estate development). *JOHN J. ARTHUR, Senior Vice President and Treasurer (52) Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice President and Treasurer, A I M Management Group Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services Inc. and Fund Management Company. GARY T. CRUM, Senior Vice President (49) Director and President, A I M Capital Management, Inc.; Director and Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc.; and Director, A I M Distributors, Inc. *CAROL F. RELIHAN, Senior Vice President and Secretary (42) Senior Vice President, General Counsel and Secretary, A I M Advisors, Inc.; Vice President, General Counsel and Secretary, A I M Management Group Inc.; Vice President and General Counsel, Fund Management Company; and Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc. DANA R. SUTTON, Vice President and Assistant Treasurer (37) Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice President and Assistant Treasurer, Fund Management Company. MELVILLE B. COX, Vice President (53) Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company. Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary, Charles Schwab Family of Funds and Schwab Investments; Chief Compliance Officer, Charles Schwab Investment Management, Inc.; and Vice President, Integrated Resources Life Insurance Co. and Capitol Life Insurance Co. KAREN DUNN KELLEY, Vice President (36) Senior Vice President, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. J. ABBOTT SPRAGUE, Vice President (41) Director and President, A I M Institutional Fund Services, Inc. and Fund Management Company; Director and Senior Vice President, A I M Advisors, Inc.; and Senior Vice President, A I M Management Group Inc. The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee and the Nominating and Compensation Committee. The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman), Pennock and Robinson. The Audit Committee is responsible for meeting with the Trust's auditors to review audit procedures and results and to consider any matters arising from an audit to be brought to the attention of the trustees as a whole with respect to the Trust's fund accounting or its internal accounting controls, or for considering such matters as may from time to time be set forth in a charter adopted by the Board of Trustees and such committee. The members of the Investments Committee are Messrs. Bauer, Crockett, Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible for reviewing portfolio compliance, brokerage allocation, portfolio investment pricing issues, interim dividend and distribution issues, or considering such matters as may from time to time be set forth in a charter adopted by the Board of Trustees and such committee. - --------------- *Mr. Arthur and Ms. Relihan are married to each other. 6 107 The members of the Nominating and Compensation Committee are Messrs. Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and Compensation Committee is responsible for considering and nominating individuals to stand for election as trustees who are not interested persons as long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act, reviewing from time to time the compensation payable to the disinterested trustees, or considering such matters as may from time to time be set forth in a charter adopted by the Board of Trustees and such committee. All of the Trust's trustees also serve as directors or trustees of some or all of the other investment companies managed or advised by A I M Advisors, Inc. ("AIM") or distributed and administered by FMC. All of the Fund's executive officers hold similar offices with some or all of such investment companies. REMUNERATION OF TRUSTEES Each trustee is reimbursed for expenses incurred in connection with each meeting of the Board of Trustees or any committee thereof. Each trustee who is not an officer of the Trust is compensated for his services according to a fee schedule which recognizes the fact that such trustee also serves as a director or trustee of other regulated investment companies managed, administered or distributed by AIM or its affiliates (the "AIM Funds"). Each such trustee receives a fee, allocated among the AIM Funds for which he serves as a director or trustee, which consists of an annual retainer component and a meeting fee component. Set forth below is information regarding compensation paid or accrued for each trustee of the Trust:
RETIREMENT TOTAL BENEFITS COMPENSATION AGGREGATE ACCRUED FROM COMPENSATION BY ALL ALL FROM AIM AIM TRUSTEE TRUST(1) FUNDS(2) FUNDS(3) ------- ------ ------- ------- Charles T. Bauer.................................. $ 0 $ 0 $ 0 Bruce L. Crockett................................. 4,823 3,655 57,750 Owen Daly II...................................... 5,708 18,662 58,125 Carl Frischling................................... 5,560 11,323 57,250(4) Robert H. Graham.................................. 0 0 0 John F. Kroeger................................... 5,345 22,313 58,125 Lewis F. Pennock.................................. 4,705 5,067 58,125 Ian W. Robinson................................... 4,841 15,381 56,750 Louis S. Sklar.................................... 5,613 6,632 57,250
- --------------- (1) The total amount of compensation deferred by all Trustees of the Trust during the fiscal year ended August 31, 1996, including interest earned thereon, was $20,310. (2) During the fiscal year ended August 31, 1996, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $25,775. Data reflects compensation for the calendar year ended December 31, 1995. (3) Each serves as a Director or Trustee of a total of 10 AIM Funds. Data reflects total compensation for the calendar year ended December 31, 1995. (4) See also page 8 regarding fees earned by Mr. Frischling's law firm. AIM Funds Retirement Plan for Eligible Directors/Trustees Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Trustees. Pursuant to the Plan, the normal retirement date is the date on which the eligible trustee has attained age 65 and has completed at least five years of continuous service with one or more of the AIM Funds. Each eligible trustee is entitled to receive an annual benefit from the AIM Funds commencing on the first day of the calendar quarter coincident with or following his date of retirement equal to 75% of the retainer paid or accrued by the AIM Funds for such trustee during the twelve-month period immediately preceding the trustee's retirement (including amounts deferred under a separate agreement between the AIM Funds and the trustee) for the number of such trustee's years of service (not in excess of 10 years of service) completed with respect to any of the AIM Funds. Such benefit is payable to each eligible trustee in quarterly installments. If an eligible trustee dies after attaining the normal retirement date but before receipt of any benefits under the Plan commences, the trustee's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased trustee, for no more than ten years beginning the first day of the calendar quarter following the date of the trustee's death. Payments under the Plan are not secured or funded by any AIM Fund. 7 108 Set forth below is a table that shows the estimated annual benefits payable to an eligible trustee upon retirement assuming various compensation and years of service classifications. The estimated credited years of service for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 9, 9, 19, 18, 14, 9 and 6 years, respectively. ESTIMATED BENEFITS UPON RETIREMENT
ANNUAL COMPENSATION PAID BY ALL AIM FUNDS NUMBER OF YEARS OF SERVICE ----------------------------------- WITH THE AIM FUNDS $55,000 $60,000 $65,000 --------------------------- ------- ------- ------- 10........................... $41,250 $45,000 $48,750 9........................... $37,125 $40,500 $43,875 8........................... $33,000 $36,000 $39,000 7........................... $28,875 $31,500 $34,125 6........................... $24,750 $27,000 $29,250 5........................... $20,625 $22,500 $24,375
Deferred Compensation Agreements Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this paragraph only, the "deferring trustees") have each executed a Deferred Compensation Agreement (collectively, the "Agreements"). Pursuant to the Agreements, the deferring trustees may elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the deferring trustees may select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the deferring trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of five years beginning on the date the deferring trustee's retirement benefits commence under the Plan. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the deferring trustee's termination of service as a trustee of the Trust. If a deferring trustee dies prior to the distribution of amounts in his deferral account, the balance of the deferral account will be distributed to his designated beneficiary in a single lump sum payment as soon as practicable after such deferring trustee's death. The Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the deferring trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation. The Portfolio paid legal fees of $12,753 for the year ended August 31, 1996 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board of Trustees. Carl Frischling, a trustee of the Trust, is a member of that firm. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor of the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM was organized in 1976, and together with its affiliates advises or manages 41 investment company portfolios. As of November 14, 1996, total assets of the investment company portfolios managed or advised by AIM and its affiliates were approximately $61.1 billion. Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the assets of the Portfolio. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. Any investment program undertaken by AIM will at all times be subject to the policies and control of the Trust's Board of Trustees. AIM shall not be liable to the Trust or to its shareholders for any act or omission by AIM or for any loss sustained by the Trust or its shareholders except in the case of willful misfeasance, bad faith, gross negligence or reckless disregard of duty. AIM and the Trust have adopted a Code of Ethics which requires investment personnel (a) to pre-clear all personal securities transactions, (b) to file reports regarding such transactions, and (c) to refrain from personally engaging in (i) short-term trading of a security, (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security, and (iii) transactions involving securities being considered for investment by an AIM Fund. The Code also prohibits investment personnel from purchasing securities in an initial public offering. Personal trading reports are reviewed periodically by AIM, and the Board of Trustees reviews annually such reports (including information on any substantial violations of the Code). Violations of the Code may result in censure, monetary penalties, suspension or termination of employment. 8 109 As compensation for its services with respect to the Portfolio, AIM receives a monthly fee which is calculated by applying the following annual rates to the average daily net assets of the Portfolio:
NET ASSETS RATE ---------- ---- First $300 million............................................ .15% Over $300 million to $1.5 billion............................. .06% Over $1.5 billion............................................. .05%
The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Trust's shares are qualified for sale. The Advisory Agreement provides that, upon the request of the Board of Trustees, AIM may perform or arrange for the performance of certain additional services on behalf of the Portfolio which are not required by the Advisory Agreement. AIM may receive reimbursement or reasonable compensation for such additional services, as may be agreed upon by AIM and the Board of Trustees, based upon a finding by the Board of Trustees that the provision of such services would be in the best interest of the Portfolio and its shareholders. The Board of Trustees has made such a finding and, accordingly, has entered into a Master Administrative Services Agreement under which AIM will provide the additional services described below under the caption "Administrative Services." Pursuant to the Advisory Agreement between the Trust and AIM, currently in effect, AIM received fees from the Trust for the fiscal years ended August 31, 1996, 1995 and 1994 with respect to the Portfolio in the amounts of $2,227,788, $1,925,198 and $2,337,627, respectively. The Advisory Agreement was approved for its initial term by the Board of Trustees on July 19, 1993. The Advisory Agreement will continue in effect until June 30, 1997, and from year to year thereafter, provided that it is specifically approved at least annually by the Trust's Board of Trustees and the affirmative vote of a majority of the trustees who are not parties to the Advisory Agreement or "interested persons" of any such party by votes cast in person at a meeting called for such purpose. The Trust or AIM may terminate the Advisory Agreement on 60 days' notice without penalty. The Advisory Agreement terminates automatically in the event of its assignment, as defined in the 1940 Act. AIM is a wholly-owned subsidiary of A I M Management Group Inc. ("AIM Management"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. All of the directors and certain of the officers of AIM are also executive officers of the Trust and their affiliations are shown under "Trustees and Officers." The address of each director and officer of AIM is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. FMC is a registered broker-dealer and wholly-owned subsidiary of AIM. FMC acts as distributor of the Shares. ADMINISTRATIVE SERVICES AIM also acts as the Portfolio's administrator pursuant to a Master Administrative Services Agreement dated as of October 18, 1993 between AIM and the Trust (the "Administrative Services Agreement"). Under the Administrative Services Agreement, AIM performs accounting and other administrative services for the Portfolio. As full compensation for the performance of such services, AIM is reimbursed for any personnel and other costs (including applicable office space, facilities and equipment) of furnishing the services of a principal financial officer of the Trust and of persons working under his supervision for maintaining the financial accounts and books and records of the Trust, including calculation of the Portfolio's daily net asset value, and preparing tax returns and financial statements for the Portfolio. The method of calculating such reimbursements must be annually approved, and the amounts paid will be periodically reviewed, by the Trust's Board of Trustees. Under the Administrative Services Agreement, AIM was reimbursed for the fiscal years ended August 31, 1996, 1995 and 1994, $86,796, $135,387 and $97,055, respectively, for fund accounting services for the Portfolio. Under the terms of a Transfer Agency and Service Agreement, dated September 16, 1994, as amended, July 1, 1995, between the Trust and A I M Institutional Fund Services, Inc. ("AIFS"), a registered transfer agent and wholly-owned subsidiary of AIM, as well as under previous agreements, AIFS received $256,535, $114,179 and $13,752, for the fiscal years ended August 31, 1996, 1995 and 1994 respectively, for the provision of certain shareholder services for the Portfolio. EXPENSES In addition to fees paid to AIM pursuant to the Agreement and the expenses reimbursed to AIM under the Administrative Services Agreement, the Trust also pays or causes to be paid all other expenses of the Trust, including, without limitation: the 9 110 charges and expenses of any registrar, any custodian or depository appointed by the Trust for the safekeeping of its cash, portfolio securities and other property, and any transfer, dividend or accounting agent or agents appointed by the Trust; brokers' commissions chargeable to the Trust in connection with portfolio securities transactions to which the Trust is a party; all taxes, including securities issuance and transfer taxes, and fees payable by the Trust to federal, state or other governmental agencies; the costs and expenses of engraving or printing of certificates representing shares of the Trust; all costs and expenses in connection with the registration and maintenance of registration of the Trust and its shares with the SEC and various states and other jurisdictions (including filing and legal fees and disbursements of counsel); the costs and expenses of printing, including typesetting, and distributing prospectuses and statements of additional information of the Trust and supplements thereto to the Trust's shareholders; all expenses of shareholders' and trustees' meetings and of preparing, printing and mailing of prospectuses, proxy statements and reports to shareholders; fees and travel expenses of trustees and trustee members of any advisory board or committee; all expenses incident to the payment of any dividend, distribution, withdrawal or redemption, whether in shares or in cash; charges and expenses of any outside service used for pricing of the Trust's shares; charges and expenses of legal counsel, including counsel to the trustees of the Trust who are not "interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of independent accountants in connection with any matter relating to the Trust; membership dues of industry associations; interest payable on Trust borrowings; postage; insurance premiums on property or personnel (including officers and trustees) of the Trust which inure to its benefit; and extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs and any indemnification related thereto). FMC bears the expenses of printing and distributing prospectuses and statements of additional information (other than those prospectuses and statements of additional information distributed to existing shareholders of the Trust) and any other promotional or sales literature used by FMC or furnished by FMC to purchasers or dealers in connection with the public offering of the Trust's shares. Expenses of the Trust which are not directly attributable to the operations of any class of shares or portfolio of the Trust are prorated among all classes of the Trust. Expenses of the Trust except those listed in the next sentence are prorated among all classes of such Portfolio. Expenses of the Trust which are directly attributable to a specific class of shares are charged against the income available for distribution as dividends to the holders of such shares. BANKING REGULATIONS The Glass-Steagall Act and other applicable laws, among other things, generally prohibit federally chartered or supervised banks from engaging in the business of underwriting, selling or distributing securities, but permit banks to make shares of mutual funds available to their customers and to perform administrative and shareholder servicing functions. However, judicial or administrative decisions or interpretations of such laws, as well as changes in either federal or state statutes or regulations relating to the permissible activities of banks or their subsidiaries or affiliates, could prevent a bank from continuing to perform all or a part of its servicing activities. If a bank were prohibited from so acting, shareholder clients of such bank would be permitted to remain shareholders of the Trust and alternate means for continuing the servicing of such shareholders would be sought. In such event, changes in the operation of the Trust might occur and shareholders serviced by such bank might no longer be able to avail themselves of any automatic investment or other services then being provided by such bank. It is not expected that shareholders would suffer any adverse financial consequences as a result of any of these occurrences. In addition, state securities laws on this issue may differ from the interpretations of federal law expressed herein and certain banks and financial institutions may be required to register as dealers pursuant to state law. TRANSFER AGENT AND CUSTODIAN The Bank of New York ("BONY") acts as custodian for the portfolio securities and cash of the Portfolio. BONY receives such compensation from the Trust for its services in such capacity as is agreed to from time to time by BONY and the Trust. The address of BONY is 90 Washington Street, 11th Floor, New York, New York 10286. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for the shares of each class of the Portfolio and receives an annual fee from the Trust for its services in such capacity in the amount of .007% of average daily net assets of the Trust, payable monthly. Such compensation may be changed from time to time as is agreed to by A I M Institutional Fund Services, Inc. and the Trust. REPORTS The Trust furnishes shareholders with semi-annual reports containing information about the Trust and its operations, including a schedule of investments held in the Portfolio and its financial statements. The annual financial statements are audited by the Trust's independent auditors. The Board of Trustees has selected KPMG Peat Marwick LLP, NationsBank Building, 700 Louisiana, Houston, Texas 77002, as the independent auditors to audit the financial statements and review the tax returns of the Portfolio. 10 111 PRINCIPAL HOLDERS OF SECURITIES TREASURY PORTFOLIO To the best of the knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of any class of the Portfolio as of December 1, 1996, and the percentage of such shares owned by such shareholders as of such date are as follows: CASH MANAGEMENT CLASS
PERCENT OWNED OF NAME AND ADDRESS RECORD OF RECORD OWNER ONLY (a) ---------------- -------- The Bank of New York........................................................... 68.64% (b) 4 Fisher lane White Plains, NY 10603 Fund Services Associates....................................................... 22.85% 11835 West Olympic Boulevard Suite 205 Los Angeles, CA 90064
INSTITUTIONAL CLASS
PERCENT OWNED OF NAME AND ADDRESS RECORD OF RECORD OWNER ONLY (a) ---------------- -------- Trust Company Bank............................................................. 10.66% P.O. Box 105504 Atlanta, GA 30348 Victoria Bank & Trust.......................................................... 8.76% One O'Connor Plaza 6th Fl. Victoria, TX 77902 Liberty Registration Co. of Oklahoma........................................... 7.46% P.O. Box 25848 Oklahoma City, OK 73125 U.S. Bank of Washington....................................................... 7.31% P.O. Box 3168 Portland, OR 97208 NationsBank Texas.............................................................. 6.32% P.O. Box 831000 Dallas, TX 75283-1000 Wachovia Bank and Trust........................................................ 5.85% P.O. Box 3075 Winston-Salem, NC 27150 SunTrust Bank.................................................................. 5.67% P.O. Box 105504 Atlanta, GA 30308 FRNCO.......................................................................... 5.47% P.O. Box 939 Rogers, AR 72757-0939 Key Trust Company.............................................................. 5.02% 4900 Tiedman Cleveland, OH 44101-5971
- --------------- (a) The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. (b) A shareholder who holds more than 25% of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. 11 112 PERSONAL INVESTMENT CLASS
PERCENT OWNED OF NAME AND ADDRESS RECORD OF RECORD OWNER ONLY (a) ---------------- ---------- Cullen/Frost Discount Brokers............................................ 64.64% (b) P.O. Box 2358 San Antonio, TX 78299 The Bank of New York..................................................... 26.55% (b) 4 Fisher Lane White Plains, NY 10603 Kinco & Co............................................................... 6.88% c/o RNB Securities 1 Hanson Pl., Lower Level Brooklyn, NY 11243
PRIVATE INVESTMENT CLASS
PERCENT OWNED OF NAME AND ADDRESS RECORD OF RECORD OWNER ONLY (a) ---------------- --------- Liberty Bank and Trust Co. of Tulsa, N.A. ............................... 45.06% (b) P.O. Box 25848 Oklahoma City, OK 73125 First Trust/VAR & Co..................................................... 19.67% 180 E. 5th Street St. Paul, MN 55101 Huntington Capital Corp.................................................. 17.05% 41 S. High St., 9th Floor Columbus, Ohio 43287 The Bank of New York..................................................... 6.25% 4 Fisher Lane White Plains, NY 10603
RESOURCE CLASS
PERCENT OWNED OF NAME AND ADDRESS RECORD OF RECORD OWNER ONLY (a) ---------------- --------- Corestates Capital Markets............................................... 63.59% (b) 1345 Chestnut Street Philadelphia, PA 19101 Mellon Bank.............................................................. 35.27% (b) Three Mellon Center, Room 3840 Pittsburgh, PA 15259-0001
- --------------- (a) The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. (b) A shareholder who holds more than 25% of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. 12 113 TREASURY TAXADVANTAGE PORTFOLIO To the best of the knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of any class of the Treasury TaxAdvantage Portfolio as of December 1, 1996, and the percentage of such shares owned by such shareholders as of such date are as follows: INSTITUTIONAL CLASS
PERCENT OWNED OF NAME AND ADDRESS RECORD OF RECORD OWNER ONLY(a) ---------------- -------- First Trust/VAR & Co. ............................................. 33.57% (b) 180 East 5th Street St. Paul, MN 55101 Peoples Two Ten Company............................................ 19.12% c/o Summit Bank Trust Operations, 7th Floor P.O. Box 821 Hackensack, NJ 07602 Boatmen's Trust Company............................................ 11.22% 100 North Broadway St. Louis, MO 63178 Liberty Registration Co. of Oklahoma............................... 10.02% P.O. Box 25848 Oklahoma City, OK 73125
PRIVATE INVESTMENT CLASS
PERCENT OWNED OF NAME AND ADDRESS RECORD OF RECORD OWNER ONLY(a) ---------------- -------- First National Bank of Chicago..................................... 61.27% (b) Mail Suite 0126 Chicago, IL 60670-0126 The Bank of New York............................................... 19.76% 4 Fisher Lane White Plains, NY 10603 Huntington Capital Corp............................................ 18.82% 41 S. High St., 9th Floor Columbus, OH 43287
- --------------- (a) The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. (b) A shareholder who holds more than 25% of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. Shares shown as beneficially owned by the above institutions are those shares for which the institutions possessed or shared voting or investment power with respect to such shares on behalf of their underlying accounts. To the best of the knowledge of the Trust, as of December 1, 1996, the trustees and officers of the Trust beneficially owned less than 1% of each class of the Trust's outstanding shares. PURCHASES AND REDEMPTIONS NET ASSET VALUE DETERMINATION Shares of the Portfolio are sold at net asset value. Shareholders may at any time redeem all or a portion of their shares at net asset value. The investor's price for purchases and redemptions will be the net asset value next determined following the receipt of an order to purchase or a request to redeem shares. The valuation of the portfolio instruments based upon their amortized cost and the concomitant maintenance of the net asset value per share of $1.00 for the Portfolio is permitted in accordance with applicable rules and regulations of the SEC, including Rule 2a-7, which require the Trust to adhere to certain conditions. These rules require that the Trust maintain a dollar-weighted average portfolio maturity of 90 days or less for the Portfolio, purchase only instruments having remaining maturities of 397 days or less and invest only in securities determined by the Trust's Board of Trustees to be of high quality with minimal credit risk. 13 114 The Board of Trustees is required to establish procedures designed to stabilize, to the extent reasonably practicable, the Trust's price per share at $1.00 for the Portfolio as computed for the purpose of sales and redemptions. Such procedures include review of the Portfolio's portfolio holdings by the Board of Trustees, at such intervals as they may deem appropriate, to determine whether the net asset value calculated by using available market quotations or other reputable sources for the Portfolio deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to existing holders of the Portfolio's shares. In the event the Board of Trustees determines that such a deviation exists for the Portfolio, it will take such corrective action as the Board of Trustees deems necessary and appropriate with respect to the Portfolio, including the sales of portfolio instruments prior to maturity to realize capital gains or losses or to shorten the average portfolio maturity; the withholding of dividends; redemption of shares in kind; or the establishment of a net asset value per share by using available market quotations. DISTRIBUTION AGREEMENT The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of each class of the Portfolio. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. See "General Information About the Trust - -- Trustees and Officers" and "-- Investment Advisor" for information as to the affiliation of certain trustees and officers of the Trust with FMC, AIM and AIM Management. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of each class of the Portfolio either directly or through other broker-dealers. The Distribution Agreement also provides that FMC will pay promotional expenses, including the incremental costs of printing prospectuses and statements of additional information, annual reports and other periodic reports for distribution to persons who are not shareholders of the Trust and the costs of preparing and distributing any other supplemental sales literature. FMC has not undertaken to sell any specified number of shares of the Portfolio. The Distribution Agreement will remain in effect until June 30, 1997, and it will continue in effect from year to year thereafter only if such continuation is specifically approved at least annually by the Trust's Board of Trustees and the affirmative vote of the trustees who are not parties to the Distribution Agreement or "interested persons" of any such party by votes cast in person at a meeting called for such purpose. A prior distribution agreement between the Trust and FMC, with terms substantially the same as those of the Distribution Agreement was in effect through October 15, 1993. The Trust or FMC may terminate the Distribution Agreement on 60 days' written notice without penalty. The Distribution Agreement will terminate automatically in the event of its "assignment," as defined in the 1940 Act. DISTRIBUTION PLAN The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Plan, the Trust may enter into Shareholder Service Agreements ("Service Agreements") with selected broker-dealers, banks, other financial institutions or their affiliates. Such firms may receive from the Portfolio compensation for servicing investors as beneficial owners of the shares of the Cash Management Class, Personal Investment Class, Private Investment Class and Resource Class of the Portfolio. These services may include among other things: (i) answering customer inquiries regarding the shares of the class and the Portfolio; (ii) assisting customers in changing dividend options, account designations and addresses; (iii) performing sub-accounting; (iv) establishing and maintaining shareholder accounts and records; (v) processing purchase and redemption transactions; (vi) automatic investment in the shares of the class of customer cash account balances; (vii) providing periodic statements showing a customer's account balance and integrating such statements with those of other transactions and balances in the customer's other accounts serviced by such firm; (viii) arranging for bank wires; and (ix) such other services as the Trust may request on behalf of the shares of the class, to the extent such firms are permitted to engage in such services by applicable statute, rule or regulation. The Plan may only be used for the purposes specified above and as stated in the Plan. Expenses may not be carried over from year to year. For the fiscal year ended August 31, 1996, FMC received compensation pursuant to the Plan in the amount of $437,891, or an amount equal to 0.08% of the average daily net assets of the Cash Management Class, $712,960, or an amount equal to 0.50% of the average daily net assets of the Personal Investment Class, $1,221,692, or an amount equal to 0.30% of the average daily net assets of the Private Investment Class, and $31,534, or an amount equal to 0.16% of the average daily net assets of the Resource Class. With respect to the Cash Management Class, $436,895 of such amount (or an amount equal to 0.08% of the average daily net assets of the class) was paid to dealers and financial institutions and $996 (or an amount equal to 0% of the average daily net assets of the class) was retained by FMC. With respect to the Personal Investment Class, $588,562 of such amount (or an amount equal to 0.41% of the average daily net assets of the class) was paid to dealers and financial institutions and $124,398 (or an amount equal to 0.09% of the average daily net assets of the class) was retained by FMC. With respect to the Private Investment Class, $1,039,267 of such amount (or an amount equal to 0.26% of the average daily net assets of the class) was paid to dealers and financial institutions and $182,425 (or an amount equal to 0.04% of the average daily net assets of the class) was retained by FMC. With respect to the Resource Class, $31,534 of such amount (or an amount equal to 0.16% 14 115 of the average daily net assets of the class) was paid to dealers and financial institutions and none of such compensation was retained by FMC. FMC is a wholly-owned subsidiary of AIM, a wholly-owned subsidiary of AIM Management. Charles T. Bauer, a Trustee and Chairman of the Trust, owns shares of AIM Management and Robert H. Graham, a Trustee and President of the Trust, also owns shares of AIM Management. PERFORMANCE INFORMATION As stated under the caption "Yield Information" in the Prospectus, yield information for the shares of each class of the Portfolio may be obtained by calling the Trust at (800) 659-1005. The current yield quoted will be the net average annualized yield for an identified period, such as seven days or a month. Current yield will be computed by assuming that an account was established with a single share (the "Single Share Account") on the first day of the period. To arrive at the quoted yield, the net change in the value of that Single Share Account for the period (which would include dividends accrued with respect to the share, and dividends declared on shares purchased with dividends accrued and paid, if any, but would not include realized gains and losses or unrealized appreciation or depreciation) will be multiplied by 365 and then divided by the number of days in the period, with the resulting figure carried to the nearest hundredth of one percent. The Trust may also furnish a quotation of effective yield that assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the average annualized yield for the period, which will be computed by compounding the unannualized current yield for the period by adding 1 to the unannualized current yield, raising the sum to a power equal to 365 divided by the number of days in the period, and then subtracting 1 from the result. For the seven-day period ended August 31, 1996, the current yield and the effective yield (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the annualized current yield for the period) were 5.15% and 5.28%, for the Cash Management Class, were 5.23% and 5.36%, for the Institutional Class, were 4.73% and 4.84%, for the Personal Investment Class, were 4.93% and 5.05%, for the Private Investment Class and were 5.07% and 5.20%, for the Resource Class respectively. These yields are quoted for illustration purposes only. The yields for any other seven-day period may be substantially different from the yields quoted above. The Trust may compare the performance of a class or the performance of securities in which it may invest to: - IBC/Donoghue's Money Fund Averages, which are average yields of various types of money market funds that include the effect of compounding distributions; - other mutual funds, especially those with similar investment objectives. These comparisons may be based on data published by IBC/Donoghue's Money Fund Report of Holliston, Massachusetts or by Lipper Analytical Services, Inc., a widely recognized independent service located in Summit, New Jersey, which monitors the performance of mutual funds; - yields on other money market securities or averages of other money market securities as reported by the Federal Reserve Bulletin, by TeleRate, a financial information network, or by Bloomberg, a financial information firm; and - other fixed-income investments such as Certificates of Deposit ("CDs"). The principal value and interest rate of CDs and money market securities are fixed at the time of purchase whereas a class's yield will fluctuate. Unlike some CDs and certain other money market securities, money market mutual funds are not insured by the FDIC. Investors should give consideration to the quality and maturity of the portfolio securities of the respective investment companies when comparing investment alternatives. The Trust may reference the growth and variety of money market mutual funds and AIM's innovation and participation in the industry. SUSPENSION OF REDEMPTION RIGHTS The right of redemption may be suspended or the date of payment upon redemption may be postponed when (a) trading on the New York Stock Exchange is restricted, as determined by applicable rules and regulations of the SEC, (b) the New York Stock Exchange is closed for other than customary weekend or holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the Portfolio not reasonably practicable. 15 116 INVESTMENT PROGRAM AND RESTRICTIONS INVESTMENT PROGRAM The Portfolio seeks to achieve its objective by investing in high grade money market instruments. The money market instruments in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on money market instruments of lesser quality. The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds and repurchase agreements relating to such securities. The Portfolio may enter into repurchase agreements with respect to U.S. Treasury securities. The Portfolio may also borrow money and enter into reverse repurchase agreements with respect to its portfolio securities in amounts up to 10% of the value of its total assets at the time of borrowing or entering into a repurchase agreement. The Portfolio will only borrow money or enter into reverse repurchase agreements for temporary or emergency purposes to facilitate the orderly sale of portfolio securities to accommodate abnormally heavy redemption requests should they occur. ELIGIBLE SECURITIES Rule 2a-7 under the 1940 Act, which governs the operations of money market funds, defines an "Eligible Security" as follows: (i) a security with a remaining maturity of 397 calendar days or less that has received a short-term rating (or that has been issued by an issuer that is rated with respect to a class of short-term debt obligations, or any debt obligation within that class, that is comparable in priority and security with the security) by the Requisite NRSROs(1) in one of the two highest rating categories for short-term debt obligations (within which there may be sub-categories or gradations indicating relative standing); or (ii) a security: (A) that at the time of issuance had a remaining maturity of more than 397 calendar days but that has a remaining maturity of 397 calendar days or less, and (B) whose issuer has received from the Requisite NRSROs a rating, with respect to a class of debt obligations (or any debt obligation within that class) that is now comparable in priority and security with the security, in one of the two highest rating categories (within which there may be sub-categories or gradations indicating relative standing); or (iii) an Unrated Security that is of comparable quality to a security meeting the requirements of paragraphs (a)(9)(i) or (ii) of this section, as determined by the money market fund's board of directors; provided, however, that: (A) the board of directors may base its determination that a Standby Commitment that is not a Demand Feature is an Eligible Security upon a finding that the issuer of the commitment presents a minimal risk of default; and (B) a security that at the time of issuance had a remaining maturity of more than 397 calendar days but that has a remaining maturity of 397 calendar days or less and that is an unrated security is not an Eligible Security if the security has received a long-term rating from any NRSRO that is not within the NRSRO's three highest long-term rating categories (within which there may be sub-categories or gradations indicating relative standing). INVESTMENT RESTRICTIONS As a matter of fundamental policy which may not be changed without a majority vote of shareholders of the Portfolio (as that term is defined under "General Information about the Trust -- The Trust and its Shares"), the Portfolio may not: (1) concentrate more than 25% of the value of its total assets in the securities of one or more issuers conducting their principal business activities in the same industry, provided that there is no limitation with respect to investments in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities and bank instruments, such as CDs, bankers' acceptances, time deposits and bank repurchase agreements; - --------------- (1) "Requisite NRSRO" shall mean (a) any two nationally recognized statistical rating organizations that have issued a rating with respect to a security or class of debt obligations of an issuer, or (b) if only one NRSRO has issued a rating with respect to such security or class of debt obligations of an issuer at the time the fund purchases or rolls over the security, that NRSRO. At present the NRSROs are: Standard & Poor's Corp., Moody's Investors Service, Inc., Duff and Phelps, Inc., Fitch Investors Services, Inc. and, with respect to certain types of securities, IBCA Limited and its affiliate, IBCA Inc. Subcategories or gradations in ratings (such as a "+" or "-") do not count as rating categories. 16 117 (2) purchase securities of any one issuer (other than obligations of the U.S. Government, its agencies and instrumentalities) if, immediately after such purchase, more than 5% of the value of the Portfolio's total assets would be invested in such issuer, except as permitted by Rule 2a-7 under the 1940 Act, as amended from time to time; (3) borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the Portfolio's investment program may be considered the issuance of senior securities, provided that the Portfolio will not purchase portfolio securities while borrowings in excess of 5% of its total assets are outstanding; (4) mortgage, pledge or hypothecate any assets except to secure permitted borrowings and except for reverse repurchase agreements and then only in an amount up to 33 1/3% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement; (5) make loans of money or securities other than (a) through the purchase of debt securities in accordance with the Portfolio's investment program, (b) by entering into repurchase agreements and (c) by lending portfolio securities to the extent permitted by law or regulation; (6) underwrite securities issued by any other person, except to the extent that the purchase of securities and the later disposition of such securities in accordance with the Portfolio's investment program may be deemed an underwriting; (7) invest in real estate, except that the Portfolio may purchase and sell securities secured by real estate or interests therein or issued by issuers which invest in real estate or interests therein; (8) purchase or sell commodities or commodity futures contracts, purchase securities on margin, make short sales or invest in puts or calls; (9) invest in any obligation not payable as to principal and interest in United States currency; or (10) acquire for value the securities of any other investment company, except in connection with a merger, consolidation, reorganization or acquisition of assets. On December 11, 1996, the Board of Trustees of the Trust approved, subject to shareholder approval, the elimination of or changes to certain fundamental investment policies of the Trust. Shareholders of the Trust will be asked to approve these changes at an annual meeting of shareholders to be held on February 7, 1997. If approved, these changes will become effective as of March 1, 1997. The Board of Trustees has approved the elimination of Investment Restriction No. (10), indicated above, and a change to Investment Restriction No. (2), indicated above, of the Trust. In the event shareholders approve the proposed changes, Investment Restriction No. (10) will no longer apply and Investment Restriction No. (2) will read in full as follows: (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. OTHER INVESTMENT POLICIES The Portfolio does not intend to invest in companies for the purpose of exercising control or management. The Portfolio may also lend its portfolio securities in amounts up to 33 1/3% of its total assets to financial institutions in accordance with the investment restrictions of the Portfolio. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned or of delay in recovering the securities loaned or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers deemed by AIM to be of good standing and only when, in AIM's judgment, the income to be earned from the loans justifies the attendant risks. None of the foregoing policies is fundamental. 17 118 PORTFOLIO TRANSACTIONS AIM is responsible for decisions to buy and sell securities for the Portfolio, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid and asked prices. The Portfolio may also purchase securities from underwriters at prices which include a commission paid by the issuer to the underwriter. The Portfolio does not seek to profit from short-term trading, and will generally (but not always) hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money markets. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. The amortized cost method of valuing portfolio securities requires that the Portfolio maintain an average weighted portfolio maturity of ninety days or less. Thus, there is likely to be relatively high portfolio turnover, but since brokerage commissions are not normally paid on money market instruments, the high rate of portfolio turnover is not expected to have a material effect on the net income or expenses of the Portfolio. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the execution and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment program. Certain research services furnished by dealers may be useful to AIM with respect to clients other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. AIM is of the opinion that the material received is beneficial in supplementing AIM's research and analysis; and, therefore, it may benefit the Portfolio by improving the quality of AIM's investment advice. The advisory fees paid by the Portfolio are not reduced because AIM receives such services. From time to time, the Trust may sell a security, or purchase a security from an AIM Fund or another investment account advised by AIM or A I M Capital Management, Inc. ("AIM Capital"), when such transactions comply with applicable rules and regulations and are deemed consistent with the investment objective(s) and policies of the investment accounts advised by AIM or AIM Capital. Procedures pursuant to Rule 17a-7 under the 1940 Act regarding transactions between investment accounts advised by AIM or AIM Capital have been adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. Although such transactions may result in custodian, tax or other related expenses, no brokerage commissions or other direct transaction costs are generated by transactions among the investment accounts advised by AIM or AIM Capital. Provisions of the 1940 Act and rules and regulations thereunder have been construed to prohibit the Trust from purchasing securities or instruments from, or selling securities or instruments to, any holder of 5% or more of the voting securities of any investment company managed or advised by AIM. The Trust has obtained an order of exemption from the SEC which permits the Trust to engage in certain transactions with such 5% holder, if the Trust complies with conditions and procedures designed to ensure that such transactions are executed at fair market value and present no conflicts of interest. AIM and its affiliates manage several other investment accounts, some of which may have objectives similar to the Portfolio's. It is possible that at times identical securities will be acceptable for one or more of such investment accounts. However, the position of each account in the securities of the same issue may vary and the length of time that each account may choose to hold its investment in the securities of the same issue may likewise vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Portfolio and one or more of these accounts and is considered at or about the same time, transactions in such securities will be allocated in good faith among such accounts, in accordance with applicable laws and regulations, in order to obtain the best net price and most favorable execution. The allocation and combination of simultaneous securities purchases on behalf of the Portfolio will be made in the same way that such purchases are allocated among or combined with those of other AIM accounts. Simultaneous transactions could adversely affect the ability of the Portfolio to obtain or dispose of the full amount of a security which it seeks to purchase or sell. Under the 1940 Act, persons affiliated with the Trust are prohibited from dealing with the Portfolios as principal in any purchase or sale of securities unless an exemptive order allowing such transactions is obtained from the SEC. Furthermore, the 1940 Act prohibits the Trust from purchasing a security being publicly underwritten by a syndicate of which persons affiliated with the Trust are a member except in accordance with certain conditions. These conditions may restrict the ability of the Portfolio to purchase money market obligations being publicly underwritten by such a syndicate, and the Portfolio may be required to wait until the syndicate has been terminated before buying such securities. At such time, the market price of the securities may be higher or lower than the original offering price. A person affiliated with the Trust may, from time to time, serve as place- 18 119 ment agent or financial advisor to an issuer of money market obligations and be paid a fee by such issuer. The Portfolio may purchase such money market obligations directly from the issuer, provided that the purchase made in accordance with procedures adopted by the Trust's Board of Trustees and any such purchases are reviewed at least quarterly by the Trust's Board of Trustees and a determination is made that all such purchases were effected in compliance with such procedures, including a determination that the placement fee or other remuneration paid by the issuer to the person affiliated with the Trust was fair and reasonable in relation to the fees charged by others performing similar services. During the fiscal year ended August 31, 1996, no securities or instruments were purchased by the Portfolio from issuers who paid placement fees or other compensation to a broker affiliated with the Portfolio. TAX MATTERS The following is only a summary of certain additional tax considerations generally affecting the Portfolio and its shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Portfolio or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful planning. QUALIFICATION AS A REGULATED INVESTMENT COMPANY The Portfolio has elected to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a regulated investment company, the Portfolio is not subject to federal income tax on the portion of its net investment income (i.e., taxable interest, dividends and other taxable ordinary income, net of expenses) and capital gain net income (i.e., the excess of capital gains over capital losses) that it distributes to shareholders, provided that it distributes at least 90% of its investment company taxable income (i.e., net investment income and the excess of net short-term capital gain over net long-term capital loss) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Distributions by the Portfolio made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gains for the taxable year and can therefore satisfy the Distribution Requirement. In addition to satisfying the Distribution Requirement, a regulated investment company must (1) derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies (to the extent such currency gains are directly related to the regulated investment company's principal business of investing in stock or securities) and other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies (the "Income Requirement"); and (2) derive less than 30% of its gross income (exclusive of certain gains on designated hedging transactions that are offset by realized or unrealized losses on offsetting positions) from the sale or other disposition of stock, securities or foreign currencies (or of options, futures or forward contracts thereon) held for less than three months (the "Short-Short Gain Test"). However, foreign currency gains, including those derived from options, futures and forwards contracts, will not be characterized as Short-Short Gain if they are directly related to the regulated investment company's principal business of investing in stock or securities (or in options or futures thereon). Because of the Short-Short Gain Test, a fund may have to limit the sale of appreciated securities that it has held for less than three months. However, the Short-Short Gain Test will not prevent a fund from disposing of investments at a loss, since the recognition of a loss before the expiration of the three-month holding period is disregarded. Interest (including original issue discount) received by a fund at maturity or upon the disposition of a security held for less than three months will not be treated as gross income derived from the sale or other disposition of a security within the meaning of the Short-Short Gain Test. However, income that is attributable to realized market appreciation will be treated as gross income from the sale or other disposition of securities for this purpose. In addition to satisfying the requirements described above, a regulated investment company must satisfy an asset diversification test in order to qualify for tax purposes as a regulated investment company. Under this test, at the close of each quarter of a fund's taxable year, at least 50% of the value of a fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which a fund has not invested more than 5% of the value of a fund's total assets in securities of such issuer and as to which a fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any other issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which a fund controls and which are engaged in the same or similar trades or businesses. If, for any taxable year the Portfolio does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of the Portfolio's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends received deduction in the case of corporate shareholders. 19 120 EXCISE TAX ON REGULATED INVESTMENT COMPANIES A 4% non-deductible excise tax is imposed on a regulated investment company that fails to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income for the one-year period ended on October 31 of such calendar year (or, at the election of a regulated investment company having a taxable year ending November 30 or December 31, for its taxable year( a "taxable year election")). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. The Portfolio intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, investors should note that the Portfolio may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability. PORTFOLIO DISTRIBUTIONS The Portfolio anticipates distributing substantially all of its investment company taxable income for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they will not qualify for the 70% dividends received deduction for corporations. Distributions by the Portfolio will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of the Portfolio. Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date. Ordinarily, shareholders are required to take distributions by the Portfolio into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Portfolio) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year. The Portfolio will be required in certain cases to withhold and remit to the U.S. Treasury 31% of the ordinary income dividends and capital gain dividends, and in certain cases, of the proceeds of redemption of shares, paid to any shareholder (1) who has provided either an incorrect tax identification number or no number at all, (2) who is subject to backup withholding by the Internal Revenue Service for failure to report the receipt of interest or dividend income properly, or (3) who has failed to certify to the Trust that it is not subject to backup withholding or that it is a corporation or other "exempt recipient." SALE OR REDEMPTION OF SHARES A shareholder will recognize gain or loss on the sale or redemption of shares of a class in an amount equal to the difference between the proceeds of the sale or redemption and the shareholder's adjusted tax basis in the shares. All or a portion of any loss so recognized may be disallowed if the shareholder purchases other shares of the class within 30 days before or after the sale or redemption. In general, any gain or loss arising from (or treated as arising from) the sale or redemption of shares of a class will be considered capital gain or loss and will be long-term capital gain or loss if the shares were held for longer than one year. However, any capital loss arising from the sale or redemption of shares held for six months or less will be treated as a long-term capital loss to the extent of the amount of capital gain dividends received on such shares. For this purpose, the special holding period rules of Code Section 246(c)(3) and (4) generally will apply in determining the holding period of shares. FOREIGN SHAREHOLDERS Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from the Portfolio is "effectively connected" with a U.S. trade or business carried on by such shareholder. If the income from the Portfolio is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, dividends and distributions (other than capital gains dividends) will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the dividend or distribution. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gains realized on the sale of shares of a class, capital gain dividends and amounts retained by the Portfolio that are designated as undistributed capital gains. If the income from the Portfolio is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends and any gains realized upon the sale of shares of the Portfolio will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic corporations. 20 121 In the case of foreign noncorporate shareholders, the Portfolio may be required to withhold U.S. federal income tax at a rate of 31% on distributions that are otherwise exempt from withholding tax unless such shareholders furnish the Portfolio with proper notification of their foreign status. The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisers with respect to the particular tax consequences to them of an investment in the Portfolio, including the applicability of foreign taxes. EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS The foregoing general discussion of U.S. federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on December 30, 1996. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Rules of state and local taxation of ordinary income dividends and capital gain dividends from regulated investment companies often differ from the rules for U.S. federal income taxation described above. Shareholders are urged to consult their tax advisers as to the consequences of these and other state and local tax rules affecting investment in the Trust. 21 122 FINANCIAL STATEMENTS FS-1 123 TREASURY PORTFOLIO CASH MANAGEMENT CLASS SCHEDULE OF INVESTMENTS August 31, 1996
MATURITY PAR (000) VALUE U.S. TREASURY SECURITIES - 27.96% U.S. TREASURY BILLS(a) - 16.97% 5.20% 09/17/96 $175,000 $ 174,646,111 - ------------------------------------------------------------------------------ 5.02% 10/24/96 50,000 49,630,472 - ------------------------------------------------------------------------------ 5.16% 12/05/96 50,000 49,319,167 - ------------------------------------------------------------------------------ 5.115% 12/12/96 50,000 49,275,374 - ------------------------------------------------------------------------------ 5.22% 12/26/96 25,000 24,579,500 - ------------------------------------------------------------------------------ 5.215% 01/02/97 25,000 24,554,552 - ------------------------------------------------------------------------------ 5.33% 01/30/97 50,000 48,882,181 - ------------------------------------------------------------------------------ 5.095% 02/13/97 25,000 24,416,198 - ------------------------------------------------------------------------------ 5.10% 02/13/97 25,000 24,415,625 - ------------------------------------------------------------------------------ 5.09% 03/06/97 25,000 24,342,541 - ------------------------------------------------------------------------------ 5.248% 05/01/97 25,000 24,118,129 - ------------------------------------------------------------------------------ 5.28% 05/01/97 25,000 24,112,667 - ------------------------------------------------------------------------------ 5.318% 05/29/97 40,000 38,404,750 - ------------------------------------------------------------------------------ 5.505% 06/26/97 25,000 23,860,771 - ------------------------------------------------------------------------------ 5.39% 07/24/97 25,000 23,779,764 - ------------------------------------------------------------------------------ 628,337,802 - ------------------------------------------------------------------------------ U.S. TREASURY NOTES - 10.99% 6.50% 09/30/96 50,000 50,052,967 - ------------------------------------------------------------------------------ 7.00% 09/30/96 75,000 75,104,646 - ------------------------------------------------------------------------------ 8.00% 10/15/96 55,000 55,174,050 - ------------------------------------------------------------------------------ 7.50% 12/31/96 100,000 100,785,704 - ------------------------------------------------------------------------------ 8.00% 01/15/97 75,000 75,763,373 - ------------------------------------------------------------------------------ 6.625% 03/31/97 25,000 25,132,339 - ------------------------------------------------------------------------------ 6.875% 03/31/97 25,000 25,188,361 - ------------------------------------------------------------------------------ 407,201,440 - ------------------------------------------------------------------------------ Total U.S. Treasury Securities 1,035,539,242 - ------------------------------------------------------------------------------ Total Investments (excluding Repurchase Agreements) 1,035,539,242 - ------------------------------------------------------------------------------ REPURCHASE AGREEMENTS - 76.94%(b) BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000 - ------------------------------------------------------------------------------ Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000 - ------------------------------------------------------------------------------ Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696 - ------------------------------------------------------------------------------ Deutsche Morgan Grenfell/C.J. Lawrence, Inc. 5.25%(g) -- 560,000 560,000,000 - ------------------------------------------------------------------------------ CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000 - ------------------------------------------------------------------------------ HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------
F-2 124
MATURITY PAR (000) VALUE REPURCHASE AGREEMENTS - continued Morgan (J.P.) Securities, Inc. 5.23%(k) 09/03/96 $175,000 $ 175,000,000 - ------------------------------------------------------------------------ Nesbitt Burns Securities, Inc. 5.26%(l) -- 96,000 96,000,000 - ------------------------------------------------------------------------ Nikko Securities Co. International (The), Inc. 5.22%(m) -- 175,000 175,000,000 - ------------------------------------------------------------------------ Nomura Securities International, Inc. 5.25%(n) -- 175,000 175,000,000 - ------------------------------------------------------------------------ UBS Securities LLC 5.23%(o) -- 175,000 175,000,000 - ------------------------------------------------------------------------ Total Repurchase Agreements 2,849,692,696 - ------------------------------------------------------------------------ TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p) - ------------------------------------------------------------------------ OTHER ASSETS LESS LIABILITIES - (4.90)% (181,340,798) - ------------------------------------------------------------------------ NET ASSETS - 100.00% $3,703,891,140 ========================================================================
NOTES TO SCHEDULE OF INVESTMENTS: (a) U. S. Treasury bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Portfolio. (b) Collateral on repurchase agreements, including the Portfolio's pro-rata interest in joint repurchase agreements, is taken into possession by the Portfolio upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds, private accounts and certain non-registered investment companies managed by the investment advisor or its affiliates. (c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to 01/31/98. (d) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $164,934,000 U.S. Treasury obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26. (e) Open repurchase agreement entered into 07/01/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS, due 02/15/98 to 02/15/19. (f) Joint repurchase agreement entered into 08/30/96 with a maturing value of $148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations, 5.375% to 7.875% due 11/30/97 to 11/15/07. (g) Open repurchase agreement entered into 03/20/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0% due 08/21/97. (h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97. (i) Joint repurchase agreement entered into 08/30/96 with a maturing value of $834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0% to 10.75% due 10/10/96 to 08/15/05. (j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to 11/15/16. (k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to 02/15/23. (l) Open joint repurchase agreement entered into 04/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $638,599,000 U.S. Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25. (m) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $177,003,000 U.S. Treasury obligations, 0% to 7.50% due 11/30/96 to 11/15/16. (n) Open repurchase agreement entered into 07/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $171,615,000 U.S. Treasury obligations, 0% to 12.75% due 09/12/96 to 11/15/24. (o) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $172,532,000 U.S. Treasury obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96. (p) Also represents cost for federal income tax purposes. See Notes to Financial Statements. F-3 125 STATEMENT OF ASSETS AND LIABILITIES August 31, 1996 ASSETS: Investments, excluding repurchase agreements, at value (amortized cost) $1,035,539,242 - ------------------------------------------------------------------------ Repurchase agreements 2,849,692,696 - ------------------------------------------------------------------------ Interest receivable 9,950,056 - ------------------------------------------------------------------------ Investment for deferred compensation plan 46,313 - ------------------------------------------------------------------------ Other assets 152,808 - ------------------------------------------------------------------------ Total assets 3,895,381,115 - ------------------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 174,646,111 - ------------------------------------------------------------------------ Dividends 16,137,308 - ------------------------------------------------------------------------ Deferred compensation 46,313 - ------------------------------------------------------------------------ Accrued advisory fees 195,369 - ------------------------------------------------------------------------ Accrued distribution fees 228,007 - ------------------------------------------------------------------------ Accrued transfer agent fees 12,984 - ------------------------------------------------------------------------ Accrued trustees' fees 3,575 - ------------------------------------------------------------------------ Accrued administrative services fees 7,904 - ------------------------------------------------------------------------ Accrued operating expenses 212,404 - ------------------------------------------------------------------------ Total liabilities 191,489,975 - ------------------------------------------------------------------------ NET ASSETS $3,703,891,140 ======================================================================== NET ASSETS: Institutional Class $2,335,440,965 ======================================================================== Private Investment Class $ 352,537,425 ======================================================================== Personal Investment Class $ 192,946,526 ======================================================================== Cash Management Class $ 789,626,991 ======================================================================== Resource Class $ 33,339,233 ======================================================================== SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE: Institutional Class 2,335,032,174 ======================================================================== Private Investment Class 352,475,718 ======================================================================== Personal Investment Class 192,912,753 ======================================================================== Cash Management Class 789,488,776 ======================================================================== Resource Class 33,333,398 ======================================================================== NET ASSET VALUE PER SHARE: Net asset value, offering and redemption price per share $ 1.00 ========================================================================
See Notes to Financial Statements. F-4 126 STATEMENT OF OPERATIONS For the year ended August 31, 1996 INVESTMENT INCOME: Interest income $ 198,959,801 - --------------------------------------------------------------------- EXPENSES: Advisory fees 2,227,788 - --------------------------------------------------------------------- Custodian fees 186,211 - --------------------------------------------------------------------- Administrative services fees 86,796 - --------------------------------------------------------------------- Trustees' fees and expenses 26,562 - --------------------------------------------------------------------- Registration and filing fees 301,601 - --------------------------------------------------------------------- Transfer agent fees 256,535 - --------------------------------------------------------------------- Distribution fees (Note 2) 2,404,078 - --------------------------------------------------------------------- Other 235,516 - --------------------------------------------------------------------- Total expenses 5,725,087 - --------------------------------------------------------------------- Less expenses assumed by advisor (113,500) - --------------------------------------------------------------------- Net expenses 5,611,587 - --------------------------------------------------------------------- Net investment income 193,348,214 - --------------------------------------------------------------------- Net realized gain on sales of investments 490,127 - --------------------------------------------------------------------- Net increase in net assets resulting from operations $ 193,838,341 =====================================================================
STATEMENT OF CHANGES IN NET ASSETS For the years ended August 31, 1996 and 1995
1996 1995 -------------- -------------- OPERATIONS: Net investment income $ 193,348,214 $ 164,659,385 - ---------------------------------------------------------------------------- Net realized gain on sales of investments 490,127 67,230 - ---------------------------------------------------------------------------- Net increase in net assets resulting from operations 193,838,341 164,726,615 - ---------------------------------------------------------------------------- Distributions to shareholders from net investment income (193,348,214) (164,659,385) - ---------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investments -- (63,547) - ---------------------------------------------------------------------------- Share transactions-net 443,432,341 232,658,749 - ---------------------------------------------------------------------------- Net increase in net assets 443,922,468 232,662,432 - ---------------------------------------------------------------------------- NET ASSETS: Beginning of period 3,259,968,672 3,027,306,240 - ---------------------------------------------------------------------------- End of period $3,703,891,140 $3,259,968,672 ============================================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $3,703,242,819 $3,259,810,478 - ---------------------------------------------------------------------------- Undistributed net realized gain on sales of investments 648,321 158,194 - ---------------------------------------------------------------------------- $3,703,891,140 $3,259,968,672 =============================================================================
See Notes to Financial Statements. F-5 127 NOTES TO FINANCIAL STATEMENTS August 31, 1996 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES Short-Term Investments Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end series, diversified management investment company. The Fund is organized as a Delaware business trust consisting of two different portfolios, each of which offers separate series of shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio. Information presented in these financial statements pertains only to the Treasury Portfolio (the "Portfolio"), with assets, liabilities and operations of each portfolio being accounted for separately. The Portfolio consists of five different classes of shares: the Institutional Class, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class. Matters affecting each class are voted on exclusively by the shareholders of each class. The Portfolio's investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations - The Portfolio invests only in securities which have maturities of 397 days or less. The securities are valued on the basis of amortized cost which approximates market value. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. B. Securities Transactions, Investment Income and Distributions - Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income, adjusted for amortization of premiums and discounts on investments, is accrued daily. Dividends to shareholders are declared daily and are paid on the first business day of the following month. C. Federal Income Taxes - The Portfolio intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Expenses - Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to more than one class, e.g., advisory fees, are allocated among them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM receives a monthly fee with respect to the Portfolio calculated by applying a monthly rate, based upon the following annual rates, to the average daily net assets of the Portfolio:
Net Assets RATE - ----------------------------------------------------------------------------- First $300 million 0.15% - ----------------------------------------------------------------------------- Over $300 million to $1.5 billion 0.06% - ----------------------------------------------------------------------------- Over $1.5 billion 0.05% - -----------------------------------------------------------------------------
AIM will, if necessary, reduce its fee for any fiscal year to the extent required so that the amount of ordinary expenses of the Portfolio (excluding interest, taxes, brokerage commissions and extraordinary expenses) paid or incurred by the Portfolio for such fiscal year does not exceed the applicable expense limitations imposed by the state securities regulations in any state in which the Portfolio's shares are qualified for sale. AIM voluntarily reimbursed expenses of $113,500 during the year ended August 31, 1996. F-6 128 The Portfolio, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain costs incurred in providing accounting services to the Portfolio. During the year ended August 31, 1996, the Portfolio reimbursed AIM $86,796 for such services. The Portfolio, pursuant to a transfer agent and service agreement, has agreed to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing transfer agent and shareholder services to the Portfolio. During the year ended August 31, 1996, the Portfolio paid AIFS $256,535 for such services. Under the terms of a master distribution agreement between Fund Management Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the Fund's shares. The Fund has adopted a master distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class of the Portfolio. The Plan provides that the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, respectively, maximum annual rate of the average daily net assets attributable to such class. Of this amount, the Fund may pay an asset-based sales charge to FMC and the Fund may pay a service fee of (a) 0.25% of the average daily net assets of each of the Private Investment Class and the Personal Investment Class, (b) 0.10% of the average daily net assets of the Cash Management Class and (c) 0.20% of the average daily net assets of the Resource Class, to selected banks, broker- dealers and other financial institutions who offer continuing personal shareholder services to their customers who purchase and own shares of the Private Investment Class, the Personal Investment Class, the Cash Management Class or the Resource Class. Any amounts not paid as a service fee under such Plan would constitute an asset-based sales charge. During the year ended August 31, 1996, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class accrued for compensation to FMC amounts of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan. Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS. During the year ended August 31, 1996, the Portfolio paid legal fees of $12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of that firm is a trustee of the Fund. NOTE 3-TRUSTEES' FEES Trustees' fees represent remuneration paid or accrued to each trustee who is not an "interested person" of AIM. The Fund invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan. F-7 129 NOTE 4-SHARE INFORMATION Changes in shares outstanding during the years ended August 31, 1996 and 1995 were as follows:
1996 1995 -------------------------------- --------------------------------- SHARES AMOUNT SHARES AMOUNT --------------- --------------- --------------- ---------------- Sold: Institutional Class 15,527,980,642 $15,527,980,642 13,265,129,336 $ 13,265,129,336 - ------------------------------------------------------------------------------------------- Private Investment Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415 - ------------------------------------------------------------------------------------------- Personal Investment Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796 - ------------------------------------------------------------------------------------------- Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296 - ------------------------------------------------------------------------------------------- Resource Class* 157,958,663 157,958,663 -- -- - ------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277 - ------------------------------------------------------------------------------------------- Private Investment Class 3,211,766 3,211,766 2,167,906 2,167,906 - ------------------------------------------------------------------------------------------- Personal Investment Class 4,455,140 4,455,140 2,719,512 2,719,512 - ------------------------------------------------------------------------------------------- Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137 - ------------------------------------------------------------------------------------------- Resource Class* 789,507 789,507 -- -- - ------------------------------------------------------------------------------------------- Reacquired: Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790) - ------------------------------------------------------------------------------------------- Private Investment Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234) - ------------------------------------------------------------------------------------------- Personal Investment Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208) - ------------------------------------------------------------------------------------------- Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694) - ------------------------------------------------------------------------------------------- Resource Class* (125,414,773) (125,414,773) -- -- - ------------------------------------------------------------------------------------------- Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749 ===========================================================================================
NOTE 5-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a share outstanding of the Treasury Portfolio Cash Management Class during each of the years in the three year period ended August 31, 1996 and the period August 17, 1993 (date operations commenced) through August 31, 1993.
1996 1995 1994 1993 -------- ------- ------- ------ Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------- -------- ------- ------- ------ Income from investment operations: Net investment income 0.05 0.05 0.03 0.001 - ----------------------- -------- ------- ------- ------ Total from investment operations 0.05 0.05 0.03 0.001 - ----------------------- -------- ------- ------- ------ Less distributions: Dividends from net investment income (0.05) (0.05) (0.03) (0.001) - ----------------------- -------- ------- ------- ------ Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======================= ======== ======= ======= ====== Total return 5.48% 5.57% 3.44% 2.91%(a) ======================= ======== ======= ======= ====== Ratios/supplemental data: Net assets, end of period (000s omitted) $789,627 $81,219 $73,619 $8,681 ======================= ======== ======= ======= ====== Ratio of expenses to average net assets 0.17%(b)(c) 0.18%(c) 0.16%(c) 0.16%(a)(c) ======================= ======== ======= ======= ====== Ratio of net investment income to average net assets 5.25%(b)(d) 5.42%(d) 3.48%(d) 3.00%(a)(d) ======================= ======== ======= ======= ======
(a) Annualized. (b) Ratios are based on average net assets of $547,363,692. (c) Ratios of expenses to average net assets prior to waiver of distribution fees and/or expense reimbursements were 0.19%, 0.20%, 0.21% and 0.18% for the periods 1996-1993, respectively. Ratios are annualized for periods less than one year. (d) Ratios of net investment income to average net assets prior to waiver of distribution fees and/or expense reimbursements were 5.23%, 5.40%, 3.43% and 2.98% for the periods 1996-1993, respectively. Ratios are annualized for periods less than one year. F-8 130 INDEPENDENT AUDITORS' REPORT To the Board of Trustees and Shareholders Short-Term Investments Trust: We have audited the accompanying statement of assets and liabilities of the Treasury Portfolio (a series portfolio of Short-Term Investments Trust), including the schedule of investments, as of August 31, 1996, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended and the period August 17, 1993 (date operations commenced) through August 31, 1993. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 1996 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Treasury Portfolio as of August 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended and the period August 17, 1993 (date operations commenced) through August 31, 1993, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas October 4, 1996 F-9 131 TREASURY PORTFOLIO INSTITUTIONAL CLASS SCHEDULE OF INVESTMENTS August 31, 1996
MATURITY PAR (000) VALUE U.S. TREASURY SECURITIES - 27.96% U.S. TREASURY BILLS(a) - 16.97% 5.20% 09/17/96 $175,000 $ 174,646,111 - ------------------------------------------------------------------------------ 5.02% 10/24/96 50,000 49,630,472 - ------------------------------------------------------------------------------ 5.16% 12/05/96 50,000 49,319,167 - ------------------------------------------------------------------------------ 5.115% 12/12/96 50,000 49,275,374 - ------------------------------------------------------------------------------ 5.22% 12/26/96 25,000 24,579,500 - ------------------------------------------------------------------------------ 5.215% 01/02/97 25,000 24,554,552 - ------------------------------------------------------------------------------ 5.33% 01/30/97 50,000 48,882,181 - ------------------------------------------------------------------------------ 5.095% 02/13/97 25,000 24,416,198 - ------------------------------------------------------------------------------ 5.10% 02/13/97 25,000 24,415,625 - ------------------------------------------------------------------------------ 5.09% 03/06/97 25,000 24,342,541 - ------------------------------------------------------------------------------ 5.248% 05/01/97 25,000 24,118,129 - ------------------------------------------------------------------------------ 5.28% 05/01/97 25,000 24,112,667 - ------------------------------------------------------------------------------ 5.318% 05/29/97 40,000 38,404,750 - ------------------------------------------------------------------------------ 5.505% 06/26/97 25,000 23,860,771 - ------------------------------------------------------------------------------ 5.39% 07/24/97 25,000 23,779,764 - ------------------------------------------------------------------------------ 628,337,802 - ------------------------------------------------------------------------------ U.S. TREASURY NOTES - 10.99% 6.50% 09/30/96 50,000 50,052,967 - ------------------------------------------------------------------------------ 7.00% 09/30/96 75,000 75,104,646 - ------------------------------------------------------------------------------ 8.00% 10/15/96 55,000 55,174,050 - ------------------------------------------------------------------------------ 7.50% 12/31/96 100,000 100,785,704 - ------------------------------------------------------------------------------ 8.00% 01/15/97 75,000 75,763,373 - ------------------------------------------------------------------------------ 6.625% 03/31/97 25,000 25,132,339 - ------------------------------------------------------------------------------ 6.875% 03/31/97 25,000 25,188,361 - ------------------------------------------------------------------------------ 407,201,440 - ------------------------------------------------------------------------------ Total U.S. Treasury Securities 1,035,539,242 - ------------------------------------------------------------------------------ Total Investments (excluding Repurchase Agreements) 1,035,539,242 - ------------------------------------------------------------------------------ REPURCHASE AGREEMENTS - 76.94%(b) BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000 - ------------------------------------------------------------------------------ Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000 - ------------------------------------------------------------------------------ Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696 - ------------------------------------------------------------------------------ Deutsche Morgan Grenfell/C.J. Lawrence, Inc. 5.25%(g) -- 560,000 560,000,000 - ------------------------------------------------------------------------------ CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000 - ------------------------------------------------------------------------------ HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------
F-10 132
MATURITY PAR (000) VALUE REPURCHASE AGREEMENTS - continued Morgan (J.P.) Securities, Inc. 5.23%(k) 09/03/96 $175,000 $ 175,000,000 - ---------------------------------------------------------------------------- Nesbitt Burns Securities, Inc. 5.26%(l) -- 96,000 96,000,000 - ---------------------------------------------------------------------------- Nikko Securities Co. International (The), Inc. 5.22%(m) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- Nomura Securities International, Inc. 5.25%(n) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- UBS Securities LLC 5.23%(o) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- Total Repurchase Agreements 2,849,692,696 - ---------------------------------------------------------------------------- TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p) - ---------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES - (4.90)% (181,340,798) - ---------------------------------------------------------------------------- NET ASSETS - 100.00% $3,703,891,140 ============================================================================
NOTES TO SCHEDULE OF INVESTMENTS: (a) U. S. Treasury bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Portfolio. (b) Collateral on repurchase agreements, including the Portfolio's pro-rata interest in joint repurchase agreements, is taken into possession by the Portfolio upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds, private accounts and certain non-registered investment companies managed by the investment advisor or its affiliates. (c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to 01/31/98. (d) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $164,934,000 U.S. Treasury obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26. (e) Open repurchase agreement entered into 07/01/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS, due 02/15/98 to 02/15/19. (f) Joint repurchase agreement entered into 08/30/96 with a maturing value of $148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations, 5.375% to 7.875% due 11/30/97 to 11/15/07. (g) Open repurchase agreement entered into 03/20/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0% due 08/21/97. (h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97. (i) Joint repurchase agreement entered into 08/30/96 with a maturing value of $834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0% to 10.75% due 10/10/96 to 08/15/05. (j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to 11/15/16. (k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to 02/15/23. (l) Open joint repurchase agreement entered into 04/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $638,599,000 U.S. Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25. (m) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $177,003,000 U.S. Treasury obligations, 0% to 7.50% due 11/30/96 to 11/15/16. (n) Open repurchase agreement entered into 07/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $171,615,000 U.S. Treasury obligations, 0% to 12.75% due 09/12/96 to 11/15/24. (o) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $172,532,000 U.S. Treasury obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96. (p) Also represents cost for federal income tax purposes. See Notes to Financial Statements. F-11 133 STATEMENT OF ASSETS AND LIABILITIES August 31, 1996 ASSETS: Investments, excluding repurchase agreements, at value (amortized cost) $1,035,539,242 - ------------------------------------------------------------------------ Repurchase agreements 2,849,692,696 - ------------------------------------------------------------------------ Interest receivable 9,950,056 - ------------------------------------------------------------------------ Investment for deferred compensation plan 46,313 - ------------------------------------------------------------------------ Other assets 152,808 - ------------------------------------------------------------------------ Total assets 3,895,381,115 - ------------------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 174,646,111 - ------------------------------------------------------------------------ Dividends 16,137,308 - ------------------------------------------------------------------------ Deferred compensation 46,313 - ------------------------------------------------------------------------ Accrued advisory fees 195,369 - ------------------------------------------------------------------------ Accrued distribution fees 228,007 - ------------------------------------------------------------------------ Accrued transfer agent fees 12,984 - ------------------------------------------------------------------------ Accrued trustees' fees 3,575 - ------------------------------------------------------------------------ Accrued administrative services fees 7,904 - ------------------------------------------------------------------------ Accrued operating expenses 212,404 - ------------------------------------------------------------------------ Total liabilities 191,489,975 - ------------------------------------------------------------------------ NET ASSETS $3,703,891,140 ======================================================================== NET ASSETS: Institutional Class $2,335,440,965 ======================================================================== Private Investment Class $ 352,537,425 ======================================================================== Personal Investment Class $ 192,946,526 ======================================================================== Cash Management Class $ 789,626,991 ======================================================================== Resource Class $ 33,339,233 ======================================================================== SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE: Institutional Class 2,335,032,174 ======================================================================== Private Investment Class 352,475,718 ======================================================================== Personal Investment Class 192,912,753 ======================================================================== Cash Management Class 789,488,776 ======================================================================== Resource Class 33,333,398 ======================================================================== NET ASSET VALUE PER SHARE: Net asset value, offering and redemption price per share $ 1.00 ========================================================================
See Notes to Financial Statements. F-12 134 STATEMENT OF OPERATIONS For the year ended August 31, 1996 INVESTMENT INCOME: Interest income $ 198,959,801 - --------------------------------------------------------------------- EXPENSES: Advisory fees 2,227,788 - --------------------------------------------------------------------- Custodian fees 186,211 - --------------------------------------------------------------------- Administrative services fees 86,796 - --------------------------------------------------------------------- Trustees' fees and expenses 26,562 - --------------------------------------------------------------------- Registration and filing fees 301,601 - --------------------------------------------------------------------- Transfer agent fees 256,535 - --------------------------------------------------------------------- Distribution fees (Note 2) 2,404,078 - --------------------------------------------------------------------- Other 235,516 - --------------------------------------------------------------------- Total expenses 5,725,087 - --------------------------------------------------------------------- Less expenses assumed by advisor (113,500) - --------------------------------------------------------------------- Net expenses 5,611,587 - --------------------------------------------------------------------- Net investment income 193,348,214 - --------------------------------------------------------------------- Net realized gain on sales of investments 490,127 - --------------------------------------------------------------------- Net increase in net assets resulting from operations $ 193,838,341 =====================================================================
STATEMENT OF CHANGES IN NET ASSETS For the years ended August 31, 1996 and 1995
1996 1995 -------------- -------------- OPERATIONS: Net investment income $ 193,348,214 $ 164,659,385 - ----------------------------------------------------------------------------- Net realized gain on sales of investments 490,127 67,230 - ----------------------------------------------------------------------------- Net increase in net assets resulting from operations 193,838,341 164,726,615 - ----------------------------------------------------------------------------- Distributions to shareholders from net investment income (193,348,214) (164,659,385) - ----------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investments -- (63,547) - ----------------------------------------------------------------------------- Share transactions-net 443,432,341 232,658,749 - ----------------------------------------------------------------------------- Net increase in net assets 443,922,468 232,662,432 - ----------------------------------------------------------------------------- NET ASSETS: Beginning of period 3,259,968,672 3,027,306,240 - ----------------------------------------------------------------------------- End of period $3,703,891,140 $3,259,968,672 ============================================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $3,703,242,819 $3,259,810,478 - ----------------------------------------------------------------------------- Undistributed net realized gain on sales of investments 648,321 158,194 - ----------------------------------------------------------------------------- $3,703,891,140 $3,259,968,672 =============================================================================
See Notes to Financial Statements. F-13 135 NOTES TO FINANCIAL STATEMENTS August 31, 1996 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES Short-Term Investments Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end series, diversified management investment company. The Fund is organized as a Delaware business trust consisting of two different portfolios, each of which offers separate series of shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio. Information presented in these financial statements pertains only to the Treasury Portfolio (the "Portfolio"), with assets, liabilities and operations of each portfolio being accounted for separately. The Portfolio consists of five different classes of shares: the Institutional Class, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class. Matters affecting each class are voted on exclusively by the shareholders of each class. The Portfolio's investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations - The Portfolio invests only in securities which have maturities of 397 days or less. The securities are valued on the basis of amortized cost which approximates market value. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. B. Securities Transactions, Investment Income and Distributions - Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income, adjusted for amortization of premiums and discounts on investments, is accrued daily. Dividends to shareholders are declared daily and are paid on the first business day of the following month. C. Federal Income Taxes - The Portfolio intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Expenses - Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to more than one class, e.g., advisory fees, are allocated among them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM receives a monthly fee with respect to the Portfolio calculated by applying a monthly rate, based upon the following annual rates, to the average daily net assets of the Portfolio:
Net Assets RATE - ----------------------------------------------------------------------------- First $300 million 0.15% - ----------------------------------------------------------------------------- Over $300 million to $1.5 billion 0.06% - ----------------------------------------------------------------------------- Over $1.5 billion 0.05% - -----------------------------------------------------------------------------
AIM will, if necessary, reduce its fee for any fiscal year to the extent required so that the amount of ordinary expenses of the Portfolio (excluding interest, taxes, brokerage commissions and extraordinary expenses) paid or incurred by the Portfolio for such fiscal year does not exceed the applicable expense limitations imposed by the state securities regulations in any state in which the Portfolio's shares are qualified for sale. AIM voluntarily reimbursed expenses of $113,500 during the year ended August 31, 1996. F-14 136 The Portfolio, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain costs incurred in providing accounting services to the Portfolio. During the year ended August 31, 1996, the Portfolio reimbursed AIM $86,796 for such services. The Portfolio, pursuant to a transfer agent and service agreement, has agreed to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing transfer agent and shareholder services to the Portfolio. During the year ended August 31, 1996, the Portfolio paid AIFS $256,535 for such services. Under the terms of a master distribution agreement between Fund Management Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the Fund's shares. The Fund has adopted a master distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class of the Portfolio. The Plan provides that the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, respectively, maximum annual rate of the average daily net assets attributable to such class. Of this amount, the Fund may pay an asset-based sales charge to FMC and the Fund may pay a service fee of (a) 0.25% of the average daily net assets of each of the Private Investment Class and the Personal Investment Class, (b) 0.10% of the average daily net assets of the Cash Management Class and (c) 0.20% of the average daily net assets of the Resource Class, to selected banks, broker- dealers and other financial institutions who offer continuing personal shareholder services to their customers who purchase and own shares of the Private Investment Class, the Personal Investment Class, the Cash Management Class or the Resource Class. Any amounts not paid as a service fee under such Plan would constitute an asset-based sales charge. During the year ended August 31, 1996, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class accrued for compensation to FMC amounts of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan. Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS. During the year ended August 31, 1996, the Portfolio paid legal fees of $12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of that firm is a trustee of the Fund. NOTE 3-TRUSTEES' FEES Trustees' fees represent remuneration paid or accrued to each trustee who is not an "interested person" of AIM. The Fund invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan. F-15 137 NOTE 4-SHARE INFORMATION Changes in shares outstanding during the years ended August 31, 1996 and 1995 were as follows:
1996 1995 -------------------------------- --------------------------------- SHARES AMOUNT SHARES AMOUNT --------------- --------------- --------------- ---------------- Sold: Institutional Class 15,527,980,642 $15,527,980,642 13,265,129,336 $ 13,265,129,336 - ------------------------------------------------------------------------------------------- Private Investment Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415 - ------------------------------------------------------------------------------------------- Personal Investment Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796 - ------------------------------------------------------------------------------------------- Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296 - ------------------------------------------------------------------------------------------- Resource Class* 157,958,663 157,958,663 -- -- - ------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277 - ------------------------------------------------------------------------------------------- Private Investment Class 3,211,766 3,211,766 2,167,906 2,167,906 - ------------------------------------------------------------------------------------------- Personal Investment Class 4,455,140 4,455,140 2,719,512 2,719,512 - ------------------------------------------------------------------------------------------- Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137 - ------------------------------------------------------------------------------------------- Resource Class* 789,507 789,507 -- -- - ------------------------------------------------------------------------------------------- Reacquired: Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790) - ------------------------------------------------------------------------------------------- Private Investment Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234) - ------------------------------------------------------------------------------------------- Personal Investment Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208) - ------------------------------------------------------------------------------------------- Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694) - ------------------------------------------------------------------------------------------- Resource Class* (125,414,773) (125,414,773) -- -- - ------------------------------------------------------------------------------------------- Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749 ===========================================================================================
* The Resource Class commenced operations on March 12, 1996. NOTE 5-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a share outstanding of the Institutional Class during each of the years in the ten-year period ended August 31, 1996.
1996 1995 1994 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment income 0.05 0.06 0.04 0.03 0.05 0.07 0.08 0.09 - ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Less distributions: Dividends from net investment income (0.05) (0.06) (0.04) (0.03) (0.05) (0.07) (0.08) (0.09) - ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ================ ========== ========== ========== ========== ========== ========== ========== ========== Total return 5.57% 5.66% 3.53% 3.22% 4.56% 7.04% 8.52% 9.03% ================ ========== ========== ========== ========== ========== ========== ========== ========== Ratios/supplemental data: Net assets, end of period (000s omitted) $2,335,441 $2,669,637 $2,452,389 $3,652,672 $3,835,387 $2,437,902 $1,703,460 $1,189,822 ================ ========== ========== ========== ========== ========== ========== ========== ========== Ratio of expenses to average net assets 0.09%(a) 0.10% 0.08% 0.08% 0.09% 0.10% 0.12% 0.11% ================ ========== ========== ========== ========== ========== ========== ========== ========== Ratio of net investment income to average net assets 5.43%(a) 5.53% 3.39% 3.17% 4.38% 6.73% 8.19% 8.69% ================ ========== ========== ========== ========== ========== ========== ========== ========== 1988 1987 --------- --------- Net asset value, beginning of period 1.00 1.00 - -------------------- --------- --------- Income from investment operations: Net investment income 0.07 0.06 - -------------------- --------- --------- Less distributions: Dividends from net investment income (0.07) ( 0.06) - -------------------- --------- --------- Net asset value, end of period 1.00 1.00 ==================== ========= ========= Total return 6.98% 6.17% ==================== ========= ========= Ratios/supplemental data: Net assets, end of period (000s omitted) 1,121,144 $ 650,547 ==================== ========= ========= Ratio of expenses to average net assets 0.13% 0.14% ==================== ========= ========= Ratio of net investment income to average net assets 6.76% 6.01% ==================== ========= =========
(a) Ratios are based on average net assets of $2,499,257,005. F-16 138 INDEPENDENT AUDITORS' REPORT To the Board of Trustees and Shareholders Short-Term Investments Trust: We have audited the accompanying statement of assets and liabilities of the Treasury Portfolio (a series portfolio of Short-Term Investments Trust), including the schedule of investments, as of August 31, 1996, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the ten-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 1996 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Treasury Portfolio as of August 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the ten-year period then ended, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas October 4, 1996 F-17 139 TREASURY PORTFOLIO PERSONAL INVESTMENT CLASS SCHEDULE OF INVESTMENTS August 31, 1996
MATURITY PAR (000) VALUE U.S. TREASURY SECURITIES - 27.96% U.S. TREASURY BILLS(a) - 16.97% 5.20% 09/17/96 $175,000 $ 174,646,111 - ------------------------------------------------------------------------------ 5.02% 10/24/96 50,000 49,630,472 - ------------------------------------------------------------------------------ 5.16% 12/05/96 50,000 49,319,167 - ------------------------------------------------------------------------------ 5.115% 12/12/96 50,000 49,275,374 - ------------------------------------------------------------------------------ 5.22% 12/26/96 25,000 24,579,500 - ------------------------------------------------------------------------------ 5.215% 01/02/97 25,000 24,554,552 - ------------------------------------------------------------------------------ 5.33% 01/30/97 50,000 48,882,181 - ------------------------------------------------------------------------------ 5.095% 02/13/97 25,000 24,416,198 - ------------------------------------------------------------------------------ 5.10% 02/13/97 25,000 24,415,625 - ------------------------------------------------------------------------------ 5.09% 03/06/97 25,000 24,342,541 - ------------------------------------------------------------------------------ 5.248% 05/01/97 25,000 24,118,129 - ------------------------------------------------------------------------------ 5.28% 05/01/97 25,000 24,112,667 - ------------------------------------------------------------------------------ 5.318% 05/29/97 40,000 38,404,750 - ------------------------------------------------------------------------------ 5.505% 06/26/97 25,000 23,860,771 - ------------------------------------------------------------------------------ 5.39% 07/24/97 25,000 23,779,764 - ------------------------------------------------------------------------------ 628,337,802 - ------------------------------------------------------------------------------ U.S. TREASURY NOTES - 10.99% 6.50% 09/30/96 50,000 50,052,967 - ------------------------------------------------------------------------------ 7.00% 09/30/96 75,000 75,104,646 - ------------------------------------------------------------------------------ 8.00% 10/15/96 55,000 55,174,050 - ------------------------------------------------------------------------------ 7.50% 12/31/96 100,000 100,785,704 - ------------------------------------------------------------------------------ 8.00% 01/15/97 75,000 75,763,373 - ------------------------------------------------------------------------------ 6.625% 03/31/97 25,000 25,132,339 - ------------------------------------------------------------------------------ 6.875% 03/31/97 25,000 25,188,361 - ------------------------------------------------------------------------------ 407,201,440 - ------------------------------------------------------------------------------ Total U.S. Treasury Securities 1,035,539,242 - ------------------------------------------------------------------------------ Total Investments (excluding Repurchase Agreements) 1,035,539,242 - ------------------------------------------------------------------------------ REPURCHASE AGREEMENTS - 76.94%(b) BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000 - ------------------------------------------------------------------------------ Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000 - ------------------------------------------------------------------------------ Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696 - ------------------------------------------------------------------------------ Deutsche Morgan Grenfell/C.J. Lawrence, Inc. 5.25%(g) -- 560,000 560,000,000 - ------------------------------------------------------------------------------ CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000 - ------------------------------------------------------------------------------ HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------
F-18 140
MATURITY PAR (000) VALUE REPURCHASE AGREEMENTS - continued Morgan (J.P.) Securities, Inc. 5.23%(k) 09/03/96 $175,000 $ 175,000,000 - ---------------------------------------------------------------------------- Nesbitt Burns Securities, Inc. 5.26%(l) -- 96,000 96,000,000 - ---------------------------------------------------------------------------- Nikko Securities Co. International (The), Inc. 5.22%(m) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- Nomura Securities International, Inc. 5.25%(n) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- UBS Securities LLC 5.23%(o) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- Total Repurchase Agreements 2,849,692,696 - ---------------------------------------------------------------------------- TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p) - ---------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES - (4.90)% (181,340,798) - ---------------------------------------------------------------------------- NET ASSETS - 100.00% $3,703,891,140 ============================================================================
NOTES TO SCHEDULE OF INVESTMENTS: (a) U. S. Treasury bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Portfolio. (b) Collateral on repurchase agreements, including the Portfolio's pro-rata interest in joint repurchase agreements, is taken into possession by the Portfolio upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds, private accounts and certain non-registered investment companies managed by the investment advisor or its affiliates. (c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to 01/31/98. (d) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $164,934,000 U.S. Treasury obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26. (e) Open repurchase agreement entered into 07/01/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS, due 02/15/98 to 02/15/19. (f) Joint repurchase agreement entered into 08/30/96 with a maturing value of $148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations, 5.375% to 7.875% due 11/30/97 to 11/15/07. (g) Open repurchase agreement entered into 03/20/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0% due 08/21/97. (h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97. (i) Joint repurchase agreement entered into 08/30/96 with a maturing value of $834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0% to 10.75% due 10/10/96 to 08/15/05. (j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to 11/15/16. (k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to 02/15/23. (l) Open joint repurchase agreement entered into 04/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $638,599,000 U.S. Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25. (m) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $177,003,000 U.S. Treasury obligations, 0% to 7.50% due 11/30/96 to 11/15/16. (n) Open repurchase agreement entered into 07/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $171,615,000 U.S. Treasury obligations, 0% to 12.75% due 09/12/96 to 11/15/24. (o) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $172,532,000 U.S. Treasury obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96. (p) Also represents cost for federal income tax purposes. See Notes to Financial Statements. F-19 141 STATEMENT OF ASSETS AND LIABILITIES August 31, 1996 ASSETS: Investments, excluding repurchase agreements, at value (amortized cost) $1,035,539,242 - ------------------------------------------------------------------------ Repurchase agreements 2,849,692,696 - ------------------------------------------------------------------------ Interest receivable 9,950,056 - ------------------------------------------------------------------------ Investment for deferred compensation plan 46,313 - ------------------------------------------------------------------------ Other assets 152,808 - ------------------------------------------------------------------------ Total assets 3,895,381,115 - ------------------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 174,646,111 - ------------------------------------------------------------------------ Dividends 16,137,308 - ------------------------------------------------------------------------ Deferred compensation 46,313 - ------------------------------------------------------------------------ Accrued advisory fees 195,369 - ------------------------------------------------------------------------ Accrued distribution fees 228,007 - ------------------------------------------------------------------------ Accrued transfer agent fees 12,984 - ------------------------------------------------------------------------ Accrued trustees' fees 3,575 - ------------------------------------------------------------------------ Accrued administrative services fees 7,904 - ------------------------------------------------------------------------ Accrued operating expenses 212,404 - ------------------------------------------------------------------------ Total liabilities 191,489,975 - ------------------------------------------------------------------------ NET ASSETS $3,703,891,140 ======================================================================== NET ASSETS: Institutional Class $2,335,440,965 ======================================================================== Private Investment Class $ 352,537,425 ======================================================================== Personal Investment Class $ 192,946,526 ======================================================================== Cash Management Class $ 789,626,991 ======================================================================== Resource Class $ 33,339,233 ======================================================================== SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE: Institutional Class 2,335,032,174 ======================================================================== Private Investment Class 352,475,718 ======================================================================== Personal Investment Class 192,912,753 ======================================================================== Cash Management Class 789,488,776 ======================================================================== Resource Class 33,333,398 ======================================================================== NET ASSET VALUE PER SHARE: Net asset value, offering and redemption price per share $ 1.00 ========================================================================
See Notes to Financial Statements. F-20 142 STATEMENT OF OPERATIONS For the year ended August 31, 1996 INVESTMENT INCOME: Interest income $ 198,959,801 - --------------------------------------------------------------------- EXPENSES: Advisory fees 2,227,788 - --------------------------------------------------------------------- Custodian fees 186,211 - --------------------------------------------------------------------- Administrative services fees 86,796 - --------------------------------------------------------------------- Trustees' fees and expenses 26,562 - --------------------------------------------------------------------- Registration and filing fees 301,601 - --------------------------------------------------------------------- Transfer agent fees 256,535 - --------------------------------------------------------------------- Distribution fees (Note 2) 2,404,078 - --------------------------------------------------------------------- Other 235,516 - --------------------------------------------------------------------- Total expenses 5,725,087 - --------------------------------------------------------------------- Less expenses assumed by advisor (113,500) - --------------------------------------------------------------------- Net expenses 5,611,587 - --------------------------------------------------------------------- Net investment income 193,348,214 - --------------------------------------------------------------------- Net realized gain on sales of investments 490,127 - --------------------------------------------------------------------- Net increase in net assets resulting from operations $ 193,838,341 =====================================================================
See Notes to Financial Statements. F-21 143 STATEMENT OF CHANGES IN NET ASSETS For the years ended August 31, 1996 and 1995
1996 1995 -------------- -------------- OPERATIONS: Net investment income $ 193,348,214 $ 164,659,385 - ----------------------------------------------------------------------------- Net realized gain on sales of investments 490,127 67,230 - ----------------------------------------------------------------------------- Net increase in net assets resulting from operations 193,838,341 164,726,615 - ----------------------------------------------------------------------------- Distributions to shareholders from net investment income (193,348,214) (164,659,385) - ----------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investments -- (63,547) - ----------------------------------------------------------------------------- Share transactions-net 443,432,341 232,658,749 - ----------------------------------------------------------------------------- Net increase in net assets 443,922,468 232,662,432 - ----------------------------------------------------------------------------- NET ASSETS: Beginning of period 3,259,968,672 3,027,306,240 - ----------------------------------------------------------------------------- End of period $3,703,891,140 $3,259,968,672 ============================================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $3,703,242,819 $3,259,810,478 - ----------------------------------------------------------------------------- Undistributed net realized gain on sales of investments 648,321 158,194 - ----------------------------------------------------------------------------- $3,703,891,140 $3,259,968,672 =============================================================================
See Notes to Financial Statements. F-22 144 NOTES TO FINANCIAL STATEMENTS August 31, 1996 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES Short-Term Investments Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end series, diversified management investment company. The Fund is organized as a Delaware business trust consisting of two different portfolios, each of which offers separate series of shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio. Information presented in these financial statements pertains only to the Treasury Portfolio (the "Portfolio"), with assets, liabilities and operations of each portfolio being accounted for separately. The Portfolio consists of five different classes of shares: the Institutional Class, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class. Matters affecting each class are voted on exclusively by the shareholders of each class. The Portfolio's investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations - The Portfolio invests only in securities which have maturities of 397 days or less. The securities are valued on the basis of amortized cost which approximates market value. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. B. Securities Transactions, Investment Income and Distributions - Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income, adjusted for amortization of premiums and discounts on investments, is accrued daily. Dividends to shareholders are declared daily and are paid on the first business day of the following month. C. Federal Income Taxes - The Portfolio intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Expenses - Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to more than one class, e.g., advisory fees, are allocated among them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM receives a monthly fee with respect to the Portfolio calculated by applying a monthly rate, based upon the following annual rates, to the average daily net assets of the Portfolio:
Net Assets RATE - ------------------------------------------------------------------------------ First $300 million 0.15% - ------------------------------------------------------------------------------ Over $300 million to $1.5 billion 0.06% - ------------------------------------------------------------------------------ Over $1.5 billion 0.05% - ------------------------------------------------------------------------------
AIM will, if necessary, reduce its fee for any fiscal year to the extent required so that the amount of ordinary expenses of the Portfolio (excluding interest, taxes, brokerage commissions and extraordinary expenses) paid or incurred by the Portfolio for such fiscal year does not exceed the applicable expense limitations imposed by the state securities regulations in any state in which the Portfolio's shares are qualified for sale. AIM voluntarily reimbursed expenses of $113,500 during the year ended August 31, 1996. F-23 145 The Portfolio, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain costs incurred in providing accounting services to the Portfolio. During the year ended August 31, 1996, the Portfolio reimbursed AIM $86,796 for such services. The Portfolio, pursuant to a transfer agent and service agreement, has agreed to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing transfer agent and shareholder services to the Portfolio. During the year ended August 31, 1996, the Portfolio paid AIFS $256,535 for such services. Under the terms of a master distribution agreement between Fund Management Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the Fund's shares. The Fund has adopted a master distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class of the Portfolio. The Plan provides that the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, respectively, maximum annual rate of the average daily net assets attributable to such class. Of this amount, the Fund may pay an asset-based sales charge to FMC and the Fund may pay a service fee of (a) 0.25% of the average daily net assets of each of the Private Investment Class and the Personal Investment Class, (b) 0.10% of the average daily net assets of the Cash Management Class and (c) 0.20% of the average daily net assets of the Resource Class, to selected banks, broker- dealers and other financial institutions who offer continuing personal shareholder services to their customers who purchase and own shares of the Private Investment Class, the Personal Investment Class, the Cash Management Class or the Resource Class. Any amounts not paid as a service fee under such Plan would constitute an asset-based sales charge. During the year ended August 31, 1996, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class accrued for compensation to FMC amounts of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan. Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS. During the year ended August 31, 1996, the Portfolio paid legal fees of $12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of that firm is a trustee of the Fund. NOTE 3-TRUSTEES' FEES Trustees' fees represent remuneration paid or accrued to each trustee who is not an "interested person" of AIM. The Fund invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan. F-24 146 NOTE 4-SHARE INFORMATION Changes in shares outstanding during the years ended August 31, 1996 and 1995 were as follows:
1996 1995 --------------------------------- ---------------------------------- SHARES AMOUNT SHARES AMOUNT --------------- --------------- --------------- ----------------- Sold: Institutional Class 15,527,980,642 $ 15,527,980,642 13,265,129,336 $ 13,265,129,336 - --------------------------------------------------------------------------------------------- Private Investment Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415 - --------------------------------------------------------------------------------------------- Personal Investment Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796 - --------------------------------------------------------------------------------------------- Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296 - --------------------------------------------------------------------------------------------- Resource Class* 157,958,663 157,958,663 -- -- - --------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277 - --------------------------------------------------------------------------------------------- Private Investment Class 3,211,766 3,211,766 2,167,906 2,167,906 - --------------------------------------------------------------------------------------------- Personal Investment Class 4,455,140 4,455,140 2,719,512 2,719,512 - --------------------------------------------------------------------------------------------- Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137 - --------------------------------------------------------------------------------------------- Resource Class* 789,507 789,507 -- -- - --------------------------------------------------------------------------------------------- Reacquired: Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790) - --------------------------------------------------------------------------------------------- Private Investment Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234) - --------------------------------------------------------------------------------------------- Personal Investment Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208) - --------------------------------------------------------------------------------------------- Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694) - --------------------------------------------------------------------------------------------- Resource Class* (125,414,773) (125,414,773) -- -- - --------------------------------------------------------------------------------------------- Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749 =============================================================================================
* The Resource Class commenced operations on March 12, 1996. NOTE 5-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a share outstanding of the Treasury Portfolio Personal Investment Class during each of the years in the five-year period ended August 31, 1996 and the period August 8, 1991 (date operation commenced) through August 31, 1991.
1996 1995 1994 1993 1992 1991 -------- -------- ------- ------- ------- ------ Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------- -------- -------- ------- ------- ------- ------ Income from investment operations: Net investment income 0.05 0.05 0.03 0.03 0.04 0.003 - ----------------------- -------- -------- ------- ------- ------- ------ Total from investment operations 0.05 0.05 0.03 0.03 0.04 0.003 - ----------------------- -------- -------- ------- ------- ------- ------ Less distributions: Dividends from net investment income (0.05) (0.05) (0.03) (0.03) (0.04) (0.003) - ----------------------- -------- -------- ------- ------- ------- ------ Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======================= ======== ======== ======= ======= ======= ====== Total return 5.04% 5.13% 3.02% 2.77% 4.07% 5.04%(a) ======================= ======== ======== ======= ======= ======= ====== Ratios/supplemental data: Net assets, end of period (000s omitted) $192,947 $114,527 $88,582 $69,867 $23,853 $ 330 ======================= ======== ======== ======= ======= ======= ====== Ratio of expenses to average net assets 0.59%(b)(c) 0.60%(c) 0.58%(c) 0.53%(c) 0.49%(c) 0.81%(a)(c) ======================= ======== ======== ======= ======= ======= ====== Ratio of net investment income to average net assets 4.91%(b)(d) 5.03%(d) 2.99%(d) 2.70%(d) 3.55%(d) 5.03%(a)(d) ======================= ======== ======== ======= ======= ======= ======
(a) Annualized. (b) Ratios are based on average net assets of $142,591,904. (c) Ratios of expenses to average net assets prior to waiver of distribution fees and/or expense reimbursements were 0.92%, 0.90%, 0.91%, 0.93%, 1.03% and 12.68% for the periods 1996-1991, respectively. Ratios are annualized for periods less than one year. (d) Ratios of net investment income to average net assets prior to waiver of distribution fees and/or expense reimbursements were 4.58%, 4.73%, 2.66%, 2.29%, 3.01% and (6.84%) for the periods 1996-1991, respectively. Ratios are annualized for periods less than one year. F-25 147 INDEPENDENT AUDITORS' REPORT To the Board of Trustees and Shareholders Short-Term Investments Trust: We have audited the accompanying statement of assets and liabilities of the Treasury Portfolio (a series portfolio of Short-Term Investments Trust), including the schedule of investments, as of August 31, 1996, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended and the period August 8, 1991 (date operations commenced) through August 31, 1991. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 1996 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Treasury Portfolio as of August 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended and the period August 8, 1991 (date operations commenced) through August 31, 1991, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Houston, Texas October 4, 1996 F-26 148 TREASURY PORTFOLIO PRIVATE PLACEMENT CLASS SCHEDULE OF INVESTMENTS August 31, 1996
MATURITY PAR (000) VALUE U.S. TREASURY SECURITIES - 27.96% U.S. TREASURY BILLS(a) - 16.97% 5.20% 09/17/96 $175,000 $ 174,646,111 - ------------------------------------------------------------------------------ 5.02% 10/24/96 50,000 49,630,472 - ------------------------------------------------------------------------------ 5.16% 12/05/96 50,000 49,319,167 - ------------------------------------------------------------------------------ 5.115% 12/12/96 50,000 49,275,374 - ------------------------------------------------------------------------------ 5.22% 12/26/96 25,000 24,579,500 - ------------------------------------------------------------------------------ 5.215% 01/02/97 25,000 24,554,552 - ------------------------------------------------------------------------------ 5.33% 01/30/97 50,000 48,882,181 - ------------------------------------------------------------------------------ 5.095% 02/13/97 25,000 24,416,198 - ------------------------------------------------------------------------------ 5.10% 02/13/97 25,000 24,415,625 - ------------------------------------------------------------------------------ 5.09% 03/06/97 25,000 24,342,541 - ------------------------------------------------------------------------------ 5.248% 05/01/97 25,000 24,118,129 - ------------------------------------------------------------------------------ 5.28% 05/01/97 25,000 24,112,667 - ------------------------------------------------------------------------------ 5.318% 05/29/97 40,000 38,404,750 - ------------------------------------------------------------------------------ 5.505% 06/26/97 25,000 23,860,771 - ------------------------------------------------------------------------------ 5.39% 07/24/97 25,000 23,779,764 - ------------------------------------------------------------------------------ 628,337,802 - ------------------------------------------------------------------------------ U.S. TREASURY NOTES - 10.99% 6.50% 09/30/96 50,000 50,052,967 - ------------------------------------------------------------------------------ 7.00% 09/30/96 75,000 75,104,646 - ------------------------------------------------------------------------------ 8.00% 10/15/96 55,000 55,174,050 - ------------------------------------------------------------------------------ 7.50% 12/31/96 100,000 100,785,704 - ------------------------------------------------------------------------------ 8.00% 01/15/97 75,000 75,763,373 - ------------------------------------------------------------------------------ 6.625% 03/31/97 25,000 25,132,339 - ------------------------------------------------------------------------------ 6.875% 03/31/97 25,000 25,188,361 - ------------------------------------------------------------------------------ 407,201,440 - ------------------------------------------------------------------------------ Total U.S. Treasury Securities 1,035,539,242 - ------------------------------------------------------------------------------ Total Investments (excluding Repurchase Agreements) 1,035,539,242 - ------------------------------------------------------------------------------ REPURCHASE AGREEMENTS - 76.94%(b) BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000 - ------------------------------------------------------------------------------ Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000 - ------------------------------------------------------------------------------ Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696 - ------------------------------------------------------------------------------ Deutsche Morgan Grenfell/C.J. Lawrence, Inc. 5.25%(g) -- 560,000 560,000,000 - ------------------------------------------------------------------------------ CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000 - ------------------------------------------------------------------------------ HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------
F-27 149
MATURITY PAR (000) VALUE REPURCHASE AGREEMENTS - continued Morgan (J.P.) Securities, Inc. 5.23%(k) 09/03/96 $175,000 $ 175,000,000 - ---------------------------------------------------------------------------- Nesbitt Burns Securities, Inc. 5.26%(l) -- 96,000 96,000,000 - ---------------------------------------------------------------------------- Nikko Securities Co. International (The), Inc. 5.22%(m) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- Nomura Securities International, Inc. 5.25%(n) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- UBS Securities LLC 5.23%(o) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- Total Repurchase Agreements 2,849,692,696 - ---------------------------------------------------------------------------- TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p) - ---------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES - (4.90)% (181,340,798) - ---------------------------------------------------------------------------- NET ASSETS - 100.00% $3,703,891,140 ============================================================================
NOTES TO SCHEDULE OF INVESTMENTS: (a) U. S. Treasury bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Portfolio. (b) Collateral on repurchase agreements, including the Portfolio's pro-rata interest in joint repurchase agreements, is taken into possession by the Portfolio upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds, private accounts and certain non-registered investment companies managed by the investment advisor or its affiliates. (c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to 01/31/98. (d) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $164,934,000 U.S. Treasury obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26. (e) Open repurchase agreement entered into 07/01/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS, due 02/15/98 to 02/15/19. (f) Joint repurchase agreement entered into 08/30/96 with a maturing value of $148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations, 5.375% to 7.875% due 11/30/97 to 11/15/07. (g) Open repurchase agreement entered into 03/20/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0% due 08/21/97. (h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97. (i) Joint repurchase agreement entered into 08/30/96 with a maturing value of $834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0% to 10.75% due 10/10/96 to 08/15/05. (j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to 11/15/16. (k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to 02/15/23. (l) Open joint repurchase agreement entered into 04/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $638,599,000 U.S. Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25. (m) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $177,003,000 U.S. Treasury obligations, 0% to 7.50% due 11/30/96 to 11/15/16. (n) Open repurchase agreement entered into 07/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $171,615,000 U.S. Treasury obligations, 0% to 12.75% due 09/12/96 to 11/15/24. (o) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $172,532,000 U.S. Treasury obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96. (p) Also represents cost for federal income tax purposes. See Notes to Financial Statements. F-28 150 STATEMENT OF ASSETS AND LIABILITIES August 31, 1996 ASSETS: Investments, excluding repurchase agreements, at value (amortized cost) $1,035,539,242 - ------------------------------------------------------------------------ Repurchase agreements 2,849,692,696 - ------------------------------------------------------------------------ Interest receivable 9,950,056 - ------------------------------------------------------------------------ Investment for deferred compensation plan 46,313 - ------------------------------------------------------------------------ Other assets 152,808 - ------------------------------------------------------------------------ Total assets 3,895,381,115 - ------------------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 174,646,111 - ------------------------------------------------------------------------ Dividends 16,137,308 - ------------------------------------------------------------------------ Deferred compensation 46,313 - ------------------------------------------------------------------------ Accrued advisory fees 195,369 - ------------------------------------------------------------------------ Accrued distribution fees 228,007 - ------------------------------------------------------------------------ Accrued transfer agent fees 12,984 - ------------------------------------------------------------------------ Accrued trustees' fees 3,575 - ------------------------------------------------------------------------ Accrued administrative services fees 7,904 - ------------------------------------------------------------------------ Accrued operating expenses 212,404 - ------------------------------------------------------------------------ Total liabilities 191,489,975 - ------------------------------------------------------------------------ NET ASSETS $3,703,891,140 ======================================================================== NET ASSETS: Institutional Class $2,335,440,965 ======================================================================== Private Investment Class $ 352,537,425 ======================================================================== Personal Investment Class $ 192,946,526 ======================================================================== Cash Management Class $ 789,626,991 ======================================================================== Resource Class $ 33,339,233 ======================================================================== SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE: Institutional Class 2,335,032,174 ======================================================================== Private Investment Class 352,475,718 ======================================================================== Personal Investment Class 192,912,753 ======================================================================== Cash Management Class 789,488,776 ======================================================================== Resource Class 33,333,398 ======================================================================== NET ASSET VALUE PER SHARE: Net asset value, offering and redemption price per share $ 1.00 ========================================================================
See Notes to Financial Statements. F-29 151 STATEMENT OF OPERATIONS For the year ended August 31, 1996 INVESTMENT INCOME: Interest income $ 198,959,801 - --------------------------------------------------------------------- EXPENSES: Advisory fees 2,227,788 - --------------------------------------------------------------------- Custodian fees 186,211 - --------------------------------------------------------------------- Administrative services fees 86,796 - --------------------------------------------------------------------- Trustees' fees and expenses 26,562 - --------------------------------------------------------------------- Registration and filing fees 301,601 - --------------------------------------------------------------------- Transfer agent fees 256,535 - --------------------------------------------------------------------- Distribution fees (Note 2) 2,404,078 - --------------------------------------------------------------------- Other 235,516 - --------------------------------------------------------------------- Total expenses 5,725,087 - --------------------------------------------------------------------- Less expenses assumed by advisor (113,500) - --------------------------------------------------------------------- Net expenses 5,611,587 - --------------------------------------------------------------------- Net investment income 193,348,214 - --------------------------------------------------------------------- Net realized gain on sales of investments 490,127 - --------------------------------------------------------------------- Net increase in net assets resulting from operations $ 193,838,341 =====================================================================
STATEMENT OF CHANGES IN NET ASSETS For the years ended August 31, 1996 and 1995
1996 1995 -------------- -------------- OPERATIONS: Net investment income $ 193,348,214 $ 164,659,385 - ----------------------------------------------------------------------------- Net realized gain on sales of investments 490,127 67,230 - ----------------------------------------------------------------------------- Net increase in net assets resulting from operations 193,838,341 164,726,615 - ----------------------------------------------------------------------------- Distributions to shareholders from net investment income (193,348,214) (164,659,385) - ----------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investments -- (63,547) - ----------------------------------------------------------------------------- Share transactions-net 443,432,341 232,658,749 - ----------------------------------------------------------------------------- Net increase in net assets 443,922,468 232,662,432 - ----------------------------------------------------------------------------- NET ASSETS: Beginning of period 3,259,968,672 3,027,306,240 - ----------------------------------------------------------------------------- End of period $3,703,891,140 $3,259,968,672 ============================================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $3,703,242,819 $3,259,810,478 - ----------------------------------------------------------------------------- Undistributed net realized gain on sales of investments 648,321 158,194 - ----------------------------------------------------------------------------- $3,703,891,140 $3,259,968,672 =============================================================================
See Notes to Financial Statements. F-30 152 NOTES TO FINANCIAL STATEMENTS August 31, 1996 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES Short-Term Investments Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end series, diversified management investment company. The Fund is organized as a Delaware business trust consisting of two different portfolios, each of which offers separate series of shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio. Information presented in these financial statements pertains only to the Treasury Portfolio (the "Portfolio"), with assets, liabilities and operations of each portfolio being accounted for separately. The Portfolio consists of five different classes of shares: the Institutional Class, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class. Matters affecting each class are voted on exclusively by the shareholders of each class. The Portfolio's investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations - The Portfolio invests only in securities which have maturities of 397 days or less. The securities are valued on the basis of amortized cost which approximates market value. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. B. Securities Transactions, Investment Income and Distributions - Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income, adjusted for amortization of premiums and discounts on investments, is accrued daily. Dividends to shareholders are declared daily and are paid on the first business day of the following month. C. Federal Income Taxes - The Portfolio intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Expenses - Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to more than one class, e.g., advisory fees, are allocated among them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM receives a monthly fee with respect to the Portfolio calculated by applying a monthly rate, based upon the following annual rates, to the average daily net assets of the Portfolio:
Net Assets RATE - ----------------------------------------------------------------------------- First $300 million 0.15% - ----------------------------------------------------------------------------- Over $300 million to $1.5 billion 0.06% - ----------------------------------------------------------------------------- Over $1.5 billion 0.05% - -----------------------------------------------------------------------------
AIM will, if necessary, reduce its fee for any fiscal year to the extent required so that the amount of ordinary expenses of the Portfolio (excluding interest, taxes, brokerage commissions and extraordinary expenses) paid or incurred by the Portfolio for such fiscal year does not exceed the applicable expense limitations imposed by the state securities regulations in any state in which the Portfolio's shares are qualified for sale. AIM voluntarily reimbursed expenses of $113,500 during the year ended August 31, 1996. F-31 153 The Portfolio, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain costs incurred in providing accounting services to the Portfolio. During the year ended August 31, 1996, the Portfolio reimbursed AIM $86,796 for such services. The Portfolio, pursuant to a transfer agent and service agreement, has agreed to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing transfer agent and shareholder services to the Portfolio. During the year ended August 31, 1996, the Portfolio paid AIFS $256,535 for such services. Under the terms of a master distribution agreement between Fund Management Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the Fund's shares. The Fund has adopted a master distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class of the Portfolio. The Plan provides that the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, respectively, maximum annual rate of the average daily net assets attributable to such class. Of this amount, the Fund may pay an asset-based sales charge to FMC and the Fund may pay a service fee of (a) 0.25% of the average daily net assets of each of the Private Investment Class and the Personal Investment Class, (b) 0.10% of the average daily net assets of the Cash Management Class and (c) 0.20% of the average daily net assets of the Resource Class, to selected banks, broker- dealers and other financial institutions who offer continuing personal shareholder services to their customers who purchase and own shares of the Private Investment Class, the Personal Investment Class, the Cash Management Class or the Resource Class. Any amounts not paid as a service fee under such Plan would constitute an asset-based sales charge. During the year ended August 31, 1996, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class accrued for compensation to FMC amounts of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan. Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS. During the year ended August 31, 1996, the Portfolio paid legal fees of $12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of that firm is a trustee of the Fund. NOTE 3-TRUSTEES' FEES Trustees' fees represent remuneration paid or accrued to each trustee who is not an "interested person" of AIM. The Fund invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan. F-32 154 NOTE 4-SHARE INFORMATION Changes in shares outstanding during the years ended August 31, 1996 and 1995 were as follows:
1996 1995 -------------------------------- --------------------------------- SHARES AMOUNT SHARES AMOUNT --------------- --------------- --------------- ---------------- Sold: Institutional Class 15,527,980,642 $15,527,980,642 13,265,129,336 $ 13,265,129,336 - -------------------------------------------------------------------------------- Private Investment Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415 - -------------------------------------------------------------------------------- Personal Investment Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796 - -------------------------------------------------------------------------------- Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296 - -------------------------------------------------------------------------------- Resource Class* 157,958,663 157,958,663 -- -- - -------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277 - -------------------------------------------------------------------------------- Private Investment Class 3,211,766 3,211,766 2,167,906 2,167,906 - -------------------------------------------------------------------------------- Personal Investment Class 4,455,140 4,455,140 2,719,512 2,719,512 - -------------------------------------------------------------------------------- Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137 - -------------------------------------------------------------------------------- Resource Class* 789,507 789,507 -- -- - -------------------------------------------------------------------------------------------- Reacquired: Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790) - -------------------------------------------------------------------------------- Private Investment Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234) - -------------------------------------------------------------------------------- Personal Investment Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208) - -------------------------------------------------------------------------------- Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694) - -------------------------------------------------------------------------------- Resource Class* (125,414,773) (125,414,773) -- -- - -------------------------------------------------------------------------------------------- Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749 ============================================================================================
* The Resource Class commenced operations on March 12, 1996. NOTE 5-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a share outstanding of the Treasury Portfolio Private Investment Class during each of the years in the four-year period ended August 31, 1996 and the period November 25, 1991 (date operations commenced) through August 31, 1992.
1996 1995 1994 1993 1992 -------- -------- -------- -------- ----- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 - ----------------------- -------- -------- -------- -------- ----- Income from investment operations: Net investment income 0.05 0.05 0.03 0.03 0.03 - ----------------------- -------- -------- -------- -------- ----- Total from investment operations 0.05 0.05 0.03 0.03 0.03 - ----------------------- -------- -------- -------- -------- ----- Less distributions: Dividends from net investment income (0.05) (0.05) (0.03) (0.03) (0.03) - ----------------------- -------- -------- -------- -------- ----- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 ======================= ======== ======== ======== ======== ===== Total return 5.25% 5.34% 3.22% 2.91% 3.92%(a) ======================= ======== ======== ======== ======== ===== Ratios/supplemental data: Net assets, end of period (000s omitted) $352,537 $394,585 $412,716 $204,281 $ 525 ======================= ======== ======== ======== ======== ===== Ratio of expenses to average net assets 0.39%(b)(c) 0.40%(c) 0.38%(c) 0.38%(c) 0.40%(a)(c) ======================= ======== ======== ======== ======== ===== Ratio of net investment income to average net assets 5.14%(b)(d) 5.23%(d) 3.26%(d) 2.81%(d) 3.68%(a)(d) ======================= ======== ======== ======== ======== =====
(a) Annualized. (b) Ratios are based on average net assets of $407,231,329. (c) Ratios of expenses to average net assets prior to waiver of distribution fees and/or expense reimbursements were 0.59%, 0.60%, 0.60%, 0.67% and 4.54% for the periods 1996-1992, respectively. Ratios are annualized for periods less than one year. (d) Ratios of net investment income to average net assets prior to waiver of distribution fees and/or expense reimbursements were 4.94%, 5.03%, 3.05%, 2.52% and (0.47%) for the periods 1996-1992, respectively. Ratios are annualized for periods less than one year. F-33 155 INDEPENDENT AUDITORS' REPORT To the Board of Trustees and Shareholders Short-Term Investments Trust: We have audited the accompanying statement of assets and liabilities of the Treasury Portfolio (a series portfolio of Short-Term Investments Trust), including the schedule of investments, as of August 31, 1996, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended and the period November 25, 1991 (date operations commenced) through August 31, 1992. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 1996 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Treasury Portfolio as of August 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended and the period November 25, 1991 (date operations commenced) through August 31, 1992, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Houston, Texas October 4, 1996 F-34 156 TREASURY PORTFOLIO RESOURCE CLASS SCHEDULE OF INVESTMENTS August 31, 1996
MATURITY PAR (000) VALUE U.S. TREASURY SECURITIES - 27.96% U.S. TREASURY BILLS(a) - 16.97% 5.20% 09/17/96 $175,000 $ 174,646,111 - ------------------------------------------------------------------------------ 5.02% 10/24/96 50,000 49,630,472 - ------------------------------------------------------------------------------ 5.16% 12/05/96 50,000 49,319,167 - ------------------------------------------------------------------------------ 5.115% 12/12/96 50,000 49,275,374 - ------------------------------------------------------------------------------ 5.22% 12/26/96 25,000 24,579,500 - ------------------------------------------------------------------------------ 5.215% 01/02/97 25,000 24,554,552 - ------------------------------------------------------------------------------ 5.33% 01/30/97 50,000 48,882,181 - ------------------------------------------------------------------------------ 5.095% 02/13/97 25,000 24,416,198 - ------------------------------------------------------------------------------ 5.10% 02/13/97 25,000 24,415,625 - ------------------------------------------------------------------------------ 5.09% 03/06/97 25,000 24,342,541 - ------------------------------------------------------------------------------ 5.248% 05/01/97 25,000 24,118,129 - ------------------------------------------------------------------------------ 5.28% 05/01/97 25,000 24,112,667 - ------------------------------------------------------------------------------ 5.318% 05/29/97 40,000 38,404,750 - ------------------------------------------------------------------------------ 5.505% 06/26/97 25,000 23,860,771 - ------------------------------------------------------------------------------ 5.39% 07/24/97 25,000 23,779,764 - ------------------------------------------------------------------------------ 628,337,802 - ------------------------------------------------------------------------------ U.S. TREASURY NOTES - 10.99% 6.50% 09/30/96 50,000 50,052,967 - ------------------------------------------------------------------------------ 7.00% 09/30/96 75,000 75,104,646 - ------------------------------------------------------------------------------ 8.00% 10/15/96 55,000 55,174,050 - ------------------------------------------------------------------------------ 7.50% 12/31/96 100,000 100,785,704 - ------------------------------------------------------------------------------ 8.00% 01/15/97 75,000 75,763,373 - ------------------------------------------------------------------------------ 6.625% 03/31/97 25,000 25,132,339 - ------------------------------------------------------------------------------ 6.875% 03/31/97 25,000 25,188,361 - ------------------------------------------------------------------------------ 407,201,440 - ------------------------------------------------------------------------------ Total U.S. Treasury Securities 1,035,539,242 - ------------------------------------------------------------------------------ Total Investments (excluding Repurchase Agreements) 1,035,539,242 - ------------------------------------------------------------------------------ REPURCHASE AGREEMENTS - 76.94%(b) BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000 - ------------------------------------------------------------------------------ Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000 - ------------------------------------------------------------------------------ Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696 - ------------------------------------------------------------------------------ Deutsche Morgan Grenfell/C.J. Lawrence, Inc. 5.25%(g) -- 560,000 560,000,000 - ------------------------------------------------------------------------------ CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------ Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000 - ------------------------------------------------------------------------------ HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000 - ------------------------------------------------------------------------------
F-35 157
MATURITY PAR (000) VALUE REPURCHASE AGREEMENTS - continued Morgan (J.P.) Securities, Inc. 5.23%(k) 09/03/96 $175,000 $ 175,000,000 - ---------------------------------------------------------------------------- Nesbitt Burns Securities, Inc. 5.26%(l) -- 96,000 96,000,000 - ---------------------------------------------------------------------------- Nikko Securities Co. International (The), Inc. 5.22%(m) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- Nomura Securities International, Inc. 5.25%(n) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- UBS Securities LLC 5.23%(o) -- 175,000 175,000,000 - ---------------------------------------------------------------------------- Total Repurchase Agreements 2,849,692,696 - ---------------------------------------------------------------------------- TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p) - ---------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES - (4.90)% (181,340,798) - ---------------------------------------------------------------------------- NET ASSETS - 100.00% $3,703,891,140 ============================================================================
NOTES TO SCHEDULE OF INVESTMENTS: (a) U. S. Treasury bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Portfolio. (b) Collateral on repurchase agreements, including the Portfolio's pro-rata interest in joint repurchase agreements, is taken into possession by the Portfolio upon entering into the repurchase agreement. The collateral is marked to market daily to ensure its market value as being 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements are through participation in joint accounts with other mutual funds, private accounts and certain non-registered investment companies managed by the investment advisor or its affiliates. (c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to 01/31/98. (d) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $164,934,000 U.S. Treasury obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26. (e) Open repurchase agreement entered into 07/01/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS, due 02/15/98 to 02/15/19. (f) Joint repurchase agreement entered into 08/30/96 with a maturing value of $148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations, 5.375% to 7.875% due 11/30/97 to 11/15/07. (g) Open repurchase agreement entered into 03/20/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0% due 08/21/97. (h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97. (i) Joint repurchase agreement entered into 08/30/96 with a maturing value of $834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0% to 10.75% due 10/10/96 to 08/15/05. (j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to 11/15/16. (k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to 02/15/23. (l) Open joint repurchase agreement entered into 04/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $638,599,000 U.S. Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25. (m) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $177,003,000 U.S. Treasury obligations, 0% to 7.50% due 11/30/96 to 11/15/16. (n) Open repurchase agreement entered into 07/16/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $171,615,000 U.S. Treasury obligations, 0% to 12.75% due 09/12/96 to 11/15/24. (o) Open repurchase agreement entered into 07/15/96; however, either party may terminate the agreement upon demand. Interest rates, par and collateral are redetermined daily. Collateralized by $172,532,000 U.S. Treasury obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96. (p) Also represents cost for federal income tax purposes. See Notes to Financial Statements. F-36 158 STATEMENT OF ASSETS AND LIABILITIES August 31, 1996 ASSETS: Investments, excluding repurchase agreements, at value (amortized cost) $1,035,539,242 - ------------------------------------------------------------------------ Repurchase agreements 2,849,692,696 - ------------------------------------------------------------------------ Interest receivable 9,950,056 - ------------------------------------------------------------------------ Investment for deferred compensation plan 46,313 - ------------------------------------------------------------------------ Other assets 152,808 - ------------------------------------------------------------------------ Total assets 3,895,381,115 - ------------------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 174,646,111 - ------------------------------------------------------------------------ Dividends 16,137,308 - ------------------------------------------------------------------------ Deferred compensation 46,313 - ------------------------------------------------------------------------ Accrued advisory fees 195,369 - ------------------------------------------------------------------------ Accrued distribution fees 228,007 - ------------------------------------------------------------------------ Accrued transfer agent fees 12,984 - ------------------------------------------------------------------------ Accrued trustees' fees 3,575 - ------------------------------------------------------------------------ Accrued administrative services fees 7,904 - ------------------------------------------------------------------------ Accrued operating expenses 212,404 - ------------------------------------------------------------------------ Total liabilities 191,489,975 - ------------------------------------------------------------------------ NET ASSETS $3,703,891,140 ======================================================================== NET ASSETS: Institutional Class $2,335,440,965 ======================================================================== Private Investment Class $ 352,537,425 ======================================================================== Personal Investment Class $ 192,946,526 ======================================================================== Cash Management Class $ 789,626,991 ======================================================================== Resource Class $ 33,339,233 ======================================================================== Shares of beneficial interest, $.01 par value per share: Institutional Class 2,335,032,174 ======================================================================== Private Investment Class 352,475,718 ======================================================================== Personal Investment Class 192,912,753 ======================================================================== Cash Management Class 789,488,776 ======================================================================== Resource Class 33,333,398 ======================================================================== NET ASSET VALUE PER SHARE: Net asset value, offering and redemption price per share $ 1.00 ========================================================================
See Notes to Financial Statements. F-37 159 STATEMENT OF OPERATIONS For the year ended August 31, 1996 INVESTMENT INCOME: Interest income $ 198,959,801 - --------------------------------------------------------------------- EXPENSES: Advisory fees 2,227,788 - --------------------------------------------------------------------- Custodian fees 186,211 - --------------------------------------------------------------------- Administrative services fees 86,796 - --------------------------------------------------------------------- Trustees' fees and expenses 26,562 - --------------------------------------------------------------------- Registration and filing fees 301,601 - --------------------------------------------------------------------- Transfer agent fees 256,535 - --------------------------------------------------------------------- Distribution fees (Note 2) 2,404,078 - --------------------------------------------------------------------- Other 235,516 - --------------------------------------------------------------------- Total expenses 5,725,087 - --------------------------------------------------------------------- Less expenses assumed by advisor (113,500) - --------------------------------------------------------------------- Net expenses 5,611,587 - --------------------------------------------------------------------- Net investment income 193,348,214 - --------------------------------------------------------------------- Net realized gain on sales of investments 490,127 - --------------------------------------------------------------------- Net increase in net assets resulting from operations $ 193,838,341 =====================================================================
See Notes to Financial Statements. F-38 160 STATEMENT OF CHANGES IN NET ASSETS For the years ended August 31, 1996 and 1995
1996 1995 -------------- -------------- OPERATIONS: Net investment income $ 193,348,214 $ 164,659,385 - ----------------------------------------------------------------------------- Net realized gain on sales of investments 490,127 67,230 - ----------------------------------------------------------------------------- Net increase in net assets resulting from operations 193,838,341 164,726,615 - ----------------------------------------------------------------------------- Distributions to shareholders from net investment income (193,348,214) (164,659,385) - ----------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investments -- (63,547) - ----------------------------------------------------------------------------- Share transactions-net 443,432,341 232,658,749 - ----------------------------------------------------------------------------- Net increase in net assets 443,922,468 232,662,432 - ----------------------------------------------------------------------------- NET ASSETS: Beginning of period 3,259,968,672 3,027,306,240 - ----------------------------------------------------------------------------- End of period $3,703,891,140 $3,259,968,672 ============================================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $3,703,242,819 $3,259,810,478 - ----------------------------------------------------------------------------- Undistributed net realized gain on sales of investments 648,321 158,194 - ----------------------------------------------------------------------------- $3,703,891,140 $3,259,968,672 =============================================================================
See Notes to Financial Statements. F-39 161 NOTES TO FINANCIAL STATEMENTS August 31, 1996 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES Short-Term Investments Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end series, diversified management investment company. The Fund is organized as a Delaware business trust consisting of two different portfolios, each of which offers separate series of shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio. Information presented in these financial statements pertains only to the Treasury Portfolio (the "Portfolio"), with assets, liabilities and operations of each portfolio being accounted for separately. The Portfolio consists of five different classes of shares: the Institutional Class, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class. Matters affecting each class are voted on exclusively by the shareholders of each class. The Portfolio's investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations - The Portfolio invests only in securities which have maturities of 397 days or less. The securities are valued on the basis of amortized cost which approximates market value. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. B. Securities Transactions, Investment Income and Distributions - Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income, adjusted for amortization of premiums and discounts on investments, is accrued daily. Dividends to shareholders are declared daily and are paid on the first business day of the following month. C. Federal Income Taxes - The Portfolio intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Expenses - Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to more than one class, e.g., advisory fees, are allocated among them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM receives a monthly fee with respect to the Portfolio calculated by applying a monthly rate, based upon the following annual rates, to the average daily net assets of the Portfolio:
Net Assets RATE - ----------------------------------------------------------------------------- First $300 million 0.15% - ----------------------------------------------------------------------------- Over $300 million to $1.5 billion 0.06% - ----------------------------------------------------------------------------- Over $1.5 billion 0.05% - -----------------------------------------------------------------------------
AIM will, if necessary, reduce its fee for any fiscal year to the extent required so that the amount of ordinary expenses of the Portfolio (excluding interest, taxes, brokerage commissions and extraordinary expenses) paid or incurred by the Portfolio for such fiscal year does not exceed the applicable expense limitations imposed by the state securities regulations in any state in which the Portfolio's shares are qualified for sale. AIM voluntarily reimbursed expenses of $113,500 during the year ended August 31, 1996. F-40 162 The Portfolio, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain costs incurred in providing accounting services to the Portfolio. During the year ended August 31, 1996, the Portfolio reimbursed AIM $86,796 for such services. The Portfolio, pursuant to a transfer agent and service agreement, has agreed to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing transfer agent and shareholder services to the Portfolio. During the year ended August 31, 1996, the Portfolio paid AIFS $256,535 for such services. Under the terms of a master distribution agreement between Fund Management Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the Fund's shares. The Fund has adopted a master distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class of the Portfolio. The Plan provides that the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, respectively, maximum annual rate of the average daily net assets attributable to such class. Of this amount, the Fund may pay an asset-based sales charge to FMC and the Fund may pay a service fee of (a) 0.25% of the average daily net assets of each of the Private Investment Class and the Personal Investment Class, (b) 0.10% of the average daily net assets of the Cash Management Class and (c) 0.20% of the average daily net assets of the Resource Class, to selected banks, broker- dealers and other financial institutions who offer continuing personal shareholder services to their customers who purchase and own shares of the Private Investment Class, the Personal Investment Class, the Cash Management Class or the Resource Class. Any amounts not paid as a service fee under such Plan would constitute an asset-based sales charge. During the year ended August 31, 1996, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class accrued for compensation to FMC amounts of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan. Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS. During the year ended August 31, 1996, the Portfolio paid legal fees of $12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of that firm is a trustee of the Fund. NOTE 3-TRUSTEES' FEES Trustees' fees represent remuneration paid or accrued to each trustee who is not an "interested person" of AIM. The Fund invests trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan. F-41 163 NOTE 4-SHARE INFORMATION Changes in shares outstanding during the years ended August 31, 1996 and 1995 were as follows:
1996 1995 -------------------------------- --------------------------------- SHARES AMOUNT SHARES AMOUNT --------------- --------------- --------------- ---------------- Sold: Institutional Class 15,527,980,642 $15,527,980,642 13,265,129,336 $ 13,265,129,336 - ------------------------------------------------------------------------------------------- Private Investment Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415 - ------------------------------------------------------------------------------------------- Personal Investment Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796 - ------------------------------------------------------------------------------------------- Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296 - ------------------------------------------------------------------------------------------- Resource Class* 157,958,663 157,958,663 -- -- - -------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277 - ------------------------------------------------------------------------------------------- Private Investment Class 3,211,766 3,211,766 2,167,906 2,167,906 - ------------------------------------------------------------------------------------------- Personal Investment Class 4,455,140 4,455,140 2,719,512 2,719,512 - ------------------------------------------------------------------------------------------- Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137 - ------------------------------------------------------------------------------------------- Resource Class* 789,507 789,507 -- -- - ------------------------------------------------------------------------------------------- Reacquired: Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790) - ------------------------------------------------------------------------------------------- Private Investment Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234) - ------------------------------------------------------------------------------------------- Personal Investment Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208) - ------------------------------------------------------------------------------------------- Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694) - ------------------------------------------------------------------------------------------- Resource Class* (125,414,773) (125,414,773) -- -- - ------------------------------------------------------------------------------------------- Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749 ===========================================================================================
* The Resource Class commenced operations on March 12, 1996. NOTE 5-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a share outstanding of the Treasury Portfolio Resource Class during the period March 12, 1996 (date operations commenced) through August 31, 1996.
AUGUST 31, 1996 ---------- Net asset value, beginning of period $ 1.00 - ------------------------------------------------------- ------- Income from investment operations: Net investment income 0.03 - ------------------------------------------------------- ------- Total from investment operations 0.03 - ------------------------------------------------------- ------- Less distributions: Dividends from net investment income (0.03) - ------------------------------------------------------- ------- Net asset value, end of period $ 1.00 - ------------------------------------------------------- ======= Total return 5.09%(a) ======================================================= ======= Ratios/supplemental data: Net assets, end of period (000s omitted) $33,339 ======================================================= ======= Ratio of expenses to average net assets(a) 0.25%(b)(c) ======================================================= ======= Ratio of net investment income to average net assets(a) 5.07%(b)(d) ======================================================= =======
(a) Annualized. (b) Ratios are annualized and based on average net assets of $41,695,963. (c) Ratio of expenses to average net assets prior to waiver of distribution fees was 0.29% for the period 1996. (d) Ratio of net investment income to average net assets prior to waiver of distribution fees was 5.03% for the period 1996. F-42 164 INDEPENDENT AUDITORS' REPORT To the Board of Trustees and Shareholders Short-Term Investments Trust: We have audited the accompanying statement of assets and liabilities of the Treasury Portfolio (a series portfolio of Short-Term Investments Trust), including the schedule of investments, as of August 31, 1996, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for the period March 12, 1996 (date operations commenced) through August 31, 1996. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 1996 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Treasury Portfolio as of August 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for the period March 12, 1996 (date operations commenced) through August 31, 1996, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas October 4, 1996 F-43 165 SHORT-TERM INVESTMENTS TRUST Prospectus - -------------------------------------------------------------------------------- TREASURY TAXADVANTAGE The Treasury TaxAdvantage Portfolio is a money PORTFOLIO market fund whose investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Treasury TaxAdvantage INSTITUTIONAL CLASS Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury. The Treasury TaxAdvantage Portfolio's investment strategy is intended to enable the Portfolio to provide its shareholders with dividends that are exempt from state and local income taxation in certain jurisdictions. DECEMBER 30, 1996 The instruments purchased by the Treasury TaxAdvantage Portfolio will have maturities of 397 days or less. The Treasury TaxAdvantage Portfolio is a series portfolio of Short-Term Investments Trust (the "Trust"), an open-end diversified series management investment company. This prospectus relates solely to the Institutional Class of the Treasury TaxAdvantage Portfolio, a class of shares designed to be a convenient vehicle in which institutions, particularly banks, acting for themselves or in a fiduciary, advisory, agency, custodial or other similar capacity, can invest short-term cash reserves. The Trust also offers shares of another class of the Treasury TaxAdvantage Portfolio, the Private Investment Class, pursuant to a separate prospectus, as well as shares of classes of another portfolio, the Treasury Portfolio, pursuant to separate prospectuses. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN SHARES OF THE TREASURY TAXADVANTAGE PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY INCORPORATED BY REFERENCE. A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION IS ATTACHED HERETO. THE SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT THE TREASURY TAXADVANTAGE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. [LOGO APPEARS HERE] Fund Management Company 11 Greenway Plaza Suite 1919 Houston, Texas 77046-1173 (800) 659-1005 166 SUMMARY THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE The Trust is an open-end diversified series management investment company. Pursuant to this Prospectus, the Trust offers shares of the Institutional Class (the "Class") of the Treasury TaxAdvantage Portfolio (the "Portfolio") without a sales charge. The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. To achieve its objective, the Portfolio will invest in direct obligations of the U.S. Treasury. The instruments purchased by the Portfolio will have maturities of 397 days or less. The Portfolio's investment strategy is intended to enable the Portfolio to provide its shareholders with dividends that are exempt from state and local income taxation in certain jurisdictions. Pursuant to a separate prospectus, the Trust offers shares of another class of shares of beneficial interest of the Portfolio representing an interest in the Portfolio. Such class has a different distribution arrangement and is designed for another category of investors. The Trust also offers shares of several classes of the Trust representing an interest in another portfolio, the Treasury Portfolio. The portfolios of the Trust are referred to collectively as the "Portfolios." Because the Trust declares dividends on a daily basis, shares of each class of the Portfolio have the same net asset value (proportionate interest in the net assets of the Portfolio) and bear equally those expenses, such as the advisory fee, that are allocated to the Portfolio as a whole. All classes of the Portfolio share a common investment objective and portfolio of investments. However, different classes of the Portfolio have different shareholder qualifications and are separately allocated certain class expenses, such as those associated with the distribution of their shares. Therefore, each class will have a different dividend payment and a different yield. INVESTORS IN THE CLASS The Class is designed to be a convenient and economical investment vehicle in which institutions, particularly banks, acting for themselves or in a fiduciary, advisory, agency, custodial or other similar capacity, can invest short-term cash reserves. Although shares of the Class may not be purchased by individuals directly, institutions may purchase shares for accounts maintained by individuals. See "Suitability for Investors." Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a recordkeeping, account maintenance or other fee to their customers and beneficial holders of the shares of the Class should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. PURCHASE OF SHARES The shares of the Class are sold at net asset value, without a sales charge. The minimum initial investment in the Class is $1,000,000. There is no minimum amount for subsequent investments. Payment for shares of the Class purchased must be in federal funds or other funds immediately available to the Portfolio. See "Purchase of Shares." REDEMPTION OF SHARES Redemptions may be made without charge at net asset value. Payment for redeemed shares of the Class for which redemption orders are received prior to 1:00 p.m. Eastern Time will normally be made in federal funds on the same day. See "Redemption of Shares." DIVIDENDS The net income of the Portfolio is declared as a dividend daily to shareholders of record immediately after 1:00 p.m. Eastern Time. Dividends are paid monthly by check or wire transfer unless a shareholder has previously elected to have such dividends automatically reinvested in additional shares of the Class. Information concerning the amount of the dividends declared on any particular day will normally be available by 3:30 p.m. Eastern Time on that day. See "Dividends." CONSTANT NET ASSET VALUE The Trust uses the amortized cost method of valuing its securities held by the Portfolio and rounds the per share net asset value to the nearest whole cent. Accordingly, the net asset value per share of the Portfolio will normally remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. SEE "NET ASSET VALUE." 2 167 INVESTMENT ADVISOR A I M Advisors, Inc. ("AIM") serves as the Portfolio's investment advisor and receives a fee based on the Portfolio's average daily net assets pursuant to a master investment advisory agreement. For its services, AIM receives a fee based on the average daily net assets of the Portfolio. During the fiscal year ended August 31, 1996, the Trust paid AIM fees with respect to the Portfolio which represented 0.15% of the average net assets of the Portfolio. AIM is primarily engaged in the business of acting as manager or advisor to investment companies. See "Management of the Trust -- Investment Advisor." Under a separate administrative services agreement with the Trust, AIM may receive reimbursement of its costs to perform certain accounting and other administrative services for the Portfolio. See "Management of the Trust -- Investment Advisor" and "-- Administrative Services." On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced that it had entered into an Agreement and Plan of Merger among INVESCO plc, INVESCO Group Services, Inc. and AIM Management, pursuant to which AIM Management will be merged with INVESCO Group Services, Inc. INVESCO 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. It is contemplated that the merger will occur on February 28, 1997. The Trust's investment advisor, AIM, is a wholly-owned subsidiary of AIM Management. The proposed transaction may be deemed to cause an "assignment" (as that term is defined under the Investment Company Act of 1940, as amended (the "1940 Act")) of the Master Investment Advisory Agreement between the Trust and AIM. Under the 1940 Act and the Master Investment Advisory Agreement, an assignment results in the automatic termination of the Master Investment Advisory Agreement. On December 11, 1996, the Board of Trustees of the Trust approved a new investment advisory agreement, subject to shareholder approval, between AIM and the Trust with respect to the Portfolio. Shareholders will be asked to approve the proposed advisory agreement at an annual meeting of shareholders to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also approved a new administrative services agreement with AIM and a new distribution agreement with Fund Management Company ("FMC"). There are no material changes to the terms of the new agreements, including the fees payable by the Portfolio. No change is anticipated in the investment advisory or other personnel responsible for the Portfolio as a result of these new agreements. The Board of Trustees has approved these new agreements because the Portfolio's corresponding existing agreements will terminate upon the consummation of the proposed merger of AIM Management into a subsidiary of INVESCO plc. Provided that the Portfolio's shareholders approve the new investment advisory agreement at the Annual Meeting and the merger is consummated, the new investment advisory agreement with respect to the Portfolio, as well as the new administrative services and distribution agreements, will automatically become effective as of the closing date of the merger. DISTRIBUTOR Fund Management Company ("FMC") acts as the exclusive distributor of the shares of the Class. FMC does not receive any fee for distribution services from the Trust. See "Purchase of Shares." SPECIAL RISK CONSIDERATIONS The Portfolio may borrow money and enter into reverse repurchase agreements for temporary or emergency purposes, and may purchase securities for delayed delivery. Accordingly, an investment in the Portfolio may entail somewhat different risks from an investment in an investment company that does not engage in such practices. There can be no assurance that the Portfolio will be able to maintain a stable net asset value of $1.00 per share. See "Investment Program." The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and Design are service marks of A I M Management Group Inc. 3 168 TABLE OF FEES AND EXPENSES SHAREHOLDER TRANSACTION EXPENSES* Maximum sales load imposed on purchases (as a percentage of offering price)...................................... None Maximum sales load on reinvested dividends (as a percentage of offering price)...................................... None Deferred sales load (as a percentage of original purchase price or redemption proceeds, as applicable).................... None Redemption fees (as a percentage of amount redeemed, if applicable)................................................. None Exchange fee................................................................ None ANNUAL PORTFOLIO OPERATING EXPENSES -- INSTITUTIONAL CLASS (AS A PERCENTAGE OF AVERAGE NET ASSETS) Management fees**........................................................... 0.15% 12b-1 fees.................................................................. None Other expenses: Custodian fees........................................................... 0.01% Other.................................................................... 0.04% ----- Total other expenses................................................... 0.05% ---- Total portfolio operating expenses -- Institutional Class................................................. 0.20% =====
- ------------ * Beneficial owners of shares of the Class should consider the effect of any charges imposed by their bank or other financial institution for various services. ** Had there been no fee waivers, Management fees and Total portfolio operating expenses would have been 0.18% and 0.23%, respectively. EXAMPLE An investor would pay the following expenses on a $1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end of each time period. 1 year............................................................ $ 2 3 years........................................................... $ 6 5 years........................................................... $11 10 years........................................................... $26
The Table of Fees and Expenses is designed to assist an investor in understanding the various costs and expenses that an investor in the Class will bear directly or indirectly. For more complete descriptions of the various costs and expenses, see "Management of the Trust" below. The expense figures are based upon actual costs and fees charged to the Class for the fiscal year ended August 31, 1996. Future waivers of fees (if any) may vary from the figures reflected in the Table of Fees and Expenses. To the extent any service providers assume expenses of the Class, such assumption of expenses will have the effect of lowering the Class' overall expense ratio and increasing its yield to investors. Beneficial owners of shares of the Class should also consider the effect of any charges imposed by the institution maintaining their accounts. The example in the Table of Fees and Expenses assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses -- Institutional Class" remain the same in the years shown. The example shown in the above table is based on the amounts listed under "Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. 4 169 FINANCIAL HIGHLIGHTS Shown below are the per share ratios and supplemental data (collectively "data") for the years in the six-year period ended August 31, 1996 and the period August 17, 1990 (date operations commenced) through August 31, 1990. The data has been audited and reported on by KPMG Peat Marwick LLP, independent auditors, whose unqualified report on the financial statements and the related notes appears in the Statement of Additional Information.
AUGUST 31, ----------------------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- -------- -------- Net asset value, beginning of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income from investment operations: Net investment income... 0.05 0.05 0.03 0.03 0.04 0.07 0.003 -------- -------- -------- -------- -------- -------- ------- Less distributions: Dividends from net investment income..... (0.05) (0.05) (0.03) (0.03) (0.04) (0.07) (0.003) -------- -------- -------- -------- -------- -------- ------- Net asset value, end of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== ======== ======= Total return.............. 5.19% 5.35% 3.29% 2.96% 4.32% 6.70% 7.79%(a) ======== ======== ======== ======== ======== ======== ======= Ratios/supplemental data: Net assets, end of period (000s omitted).............. $407,218 $394,376 $403,882 $434,693 $573,283 $403,846 $ 16,201 ======== ======== ======== ======== ======== ======== ======= Ratio of expenses to average net assets.... 0.20%(b)(c) 0.20%(c) 0.20%(c) 0.20% 0.17%(e) 0.14%(e) 0.10%(a)(e) ======== ======== ======== ======== ======== ======== ======= Ratio of net investment income to average net assets................ 5.06%(b)(d) 5.21%(d) 3.23%(d) 2.93% 4.16%(f) 6.16%(f) 7.74%(a)(f) ======== ======== ======== ======== ======== ======== =======
- ------------ (a) Annualized. (b) Ratios are based on average net assets of $424,432,042. (c) Ratios of expenses to average net assets prior to waiver of advisory fees were 0.23% for the periods 1996-1994, respectively. (d) Ratios of net investment income to average net assets prior to waiver of advisory fees were 5.04%, 5.18% and 3.20% for the periods 1996-1994, respectively. (e) Ratios of expenses to average net assets prior to waiver of advisory fees and/or expense reimbursements were 0.21%, 0.25% and 1.24% for the periods 1992-1990, respectively. (f) Ratios of net investment income to average net assets prior to waiver of advisory fees and/or expense reimbursements were 4.13%, 6.04% and 6.60% for the periods 1992-1990, respectively. 5 170 SUITABILITY FOR INVESTORS The Class is intended for use primarily by institutions, particularly banks, acting for themselves or in a fiduciary, advisory, agency, custodial or other similar capacity. It is designed to be a convenient and economical vehicle in which such institutions can invest short-term cash reserves. The Portfolio's investment strategy is intended to provide its shareholders with dividends that are exempt from state and local income taxation in certain jurisdictions. Shares of the Class may not be purchased directly by individuals, although institutions may purchase shares for accounts maintained by individuals. Prospective investors should determine if an investment in the Class is consistent with the objectives of an account and with applicable state and federal laws and regulations. An investment in the Class may relieve the institution of many of the investment and administrative burdens encountered when investing in money market instruments directly. These include: selection of portfolio investments; surveying the market for the best price at which to buy and sell; valuation of portfolio securities; selection and scheduling of maturities; receipt, delivery and safekeeping of securities; and portfolio recordkeeping. It is anticipated that most institutions will perform their own sub-accounting. To assist these institutions, information concerning the dividends declared by the Portfolio on any particular day will normally be available by 3:30 p.m. Eastern Time on that day. Investors in the Class have the opportunity to receive a somewhat higher yield than might be obtainable through direct investment in money market instruments, and enjoy the benefits of same-day liquidity. Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a recordkeeping, account maintenance or other fee to their customers, and beneficial holders of the shares of the Class should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. Generally, higher interest rates can be obtained on the purchase of very large blocks of money market instruments. Of course, any such relative increase in interest rates may be offset to some extent by the operating expenses of the Class. However, these expenses are expected to be relatively small due primarily to the following factors: the Class will have a small number of shareholders who do not need many of the services provided by other money market investment companies, thereby resulting in lower transfer agent fees and costs for printing reports and proxy statements; sales of the Class' shares to institutions acting for themselves or in a fiduciary capacity are exempt from the registration requirements of most state securities laws, thereby resulting in reduced state registration fees; and the relatively low investment advisory fee paid to AIM. Because the Portfolio invests in direct obligations of the U.S. Treasury it may be considered to have somewhat less risk than many other money market funds and yields on the Portfolio may be expected to be somewhat lower than many other money market funds. However, the possible exemption from state and local income taxation with respect to dividends paid by the Portfolio may enable shareholders to achieve an after-tax return comparable to or higher than that obtained from other money market funds, which may provide an advantage to some shareholders. INVESTMENT PROGRAM INVESTMENT OBJECTIVE The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Portfolio intends to provide its shareholders with dividends that are exempt from state and local income taxation in certain jurisdictions. The Portfolio seeks to achieve its objective by investing in direct obligations of the U. S. Treasury. The obligations in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on instruments of lesser quality. INVESTMENT POLICIES The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds. The market values of the money market instruments held by the Portfolio will be affected by changes in the yields available on similar securities. If yields have increased since a security was purchased, the market value of such security will generally have decreased. Conversely, if yields have decreased, the market value of such security will generally have increased. BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money and enter into reverse repurchase agreements with respect to its portfolio securities in amounts up to 10% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement. The Portfolio will only borrow money or enter into reverse repurchase agreements for temporary or emergency purposes, such as to facilitate the orderly sale of portfolio securities to accommodate abnormally heavy redemption requests should they occur. Borrowing will not be made for leverage purposes. Reverse repurchase transactions are limited to a term not to exceed 92 days. The Portfolio will use reverse repurchase agreements when the interest income to be earned from the securities that would otherwise have to be liquidated to meet redemption requests is greater than the interest expense of the reverse repurchase transaction. Reverse repurchase agreements involve the risk that 6 171 the market value of securities retained by the Portfolio in lieu of liquidation may decline below the repurchase price of the securities sold by the Portfolio which it is obligated to repurchase. The risk, if encountered, could cause a reduction in the net asset value of the Portfolio's shares. Reverse repurchase agreements are considered to be borrowings under the 1940 Act. PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's investments, AIM may indicate to dealers or issuers its interest in acquiring certain securities for the Portfolio for settlement beyond a customary settlement date. In some cases, the Portfolio may agree to purchase such securities at stated prices and yields. In such cases, such securities are considered "delayed delivery" securities when traded in the secondary market. Since this is done to facilitate the acquisition of portfolio securities and is not for the purpose of investment leverage, the amount of delayed delivery securities involved may not exceed the estimated amount of funds available for investment on the settlement date. Until the settlement date, assets of the Portfolio with a dollar value sufficient at all times to make payment for the delayed delivery securities will be segregated. The total amount of segregated assets may not exceed 25% of the Portfolio's total assets. The delayed delivery securities, which will not begin to accrue interest until the settlement date, will be recorded as an asset of the Portfolio and will be subject to the risks of market value fluctuations. The purchase price of the delayed delivery securities will be recorded as a liability of the Portfolio until settlement. Absent extraordinary circumstances, the Portfolio's right to acquire delayed delivery securities will not be divested prior to the settlement date. ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net assets in illiquid securities. PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term trading and will generally hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money market. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. Securities held by the Portfolio will be disposed of prior to maturity if an earlier disposition is deemed desirable by AIM to meet redemption requests. The Portfolio's policy of investing in securities with maturities of 397 days or less will result in high portfolio turnover. Since brokerage commissions are not normally paid on investments of the type made by the Portfolio, however, the high turnover rate should not adversely affect the Portfolio's net income. The investment policies described above may be changed by the Board of Trustees without the affirmative vote of a majority of the outstanding shares of the Portfolio. INVESTMENT RESTRICTIONS The Portfolio's investment program is subject to a number of investment restrictions which reflect self-imposed standards as well as federal and state regulatory limitations. These restrictions are designed to minimize certain risks associated with investing in specified types of securities or engaging in certain transactions and to limit the amount of the Portfolio's assets which may be concentrated in any specific industry or issuer. The most significant of these restrictions provides that the Portfolio will not: borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the Portfolio's investment program may be considered the issuance of senior securities. The Portfolio will not purchase securities while borrowings in excess of 5% of its total assets are outstanding. The foregoing investment restriction of the Portfolio (as well as certain others set forth in the Statement of Additional Information) is a matter of fundamental policy which may not be changed without the affirmative vote of a majority of the outstanding shares of the Portfolio. The Board of Trustees has unanimously approved the elimination of a fundamental investment policy of the Trust, subject to shareholder approval. Shareholders will be asked to approve this change at the Annual Meeting. If approved, they will become effective on March 1, 1997. The Trust is currently generally prohibited from investing in other investment companies. The Board of Trustees has approved the elimination of this prohibition. The elimination of this fundamental investment policy would permit investment in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. 7 172 In addition to the restrictions described above, the Portfolio must also comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time, which governs the operations of money market funds, and may be more restrictive than the policies described herein. The SEC has proposed certain changes to Rule 2a-7. While such proposed changes may have a prospective impact on the investments of the Portfolio, the Portfolio anticipates no difficulty in complying with any proposed change if adopted by the SEC. A description of further investment restrictions applicable to the Portfolio is contained in the Statement of Additional Information. PURCHASE OF SHARES Shares of the Class are sold on a continuous basis at their net asset value next determined after an order has been received by the Portfolio. As discussed below, the Trust reserves the right to reject any purchase order. Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a recordkeeping, account maintenance or other fee to their customers, and beneficial holders of the shares of the Class should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. To facilitate the investment of proceeds of purchase orders, investors are urged to place their orders as early in the day as possible. Purchase orders will be accepted for execution on the day the order is placed, provided that the order is properly submitted and received by the Portfolio prior to 1:00 p.m. Eastern Time on a business day of the Portfolio. Purchase orders received after such time will be processed at the next day's net asset value. Shares of the Class will earn the dividend declared on the effective date of purchase. A "business day of the Portfolio" is any day on which both the Federal Reserve Bank of New York and The Bank of New York, the Trust's custodian, are open for business. It is expected that The Bank of New York and the Federal Reserve Bank of New York will be closed during the next twelve months on Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. Subject to the conditions stated above and the Trust's right to reject any purchase order, orders will be accepted (i) when payment for the shares of the Class purchased is received by The Bank of New York, the Trust's custodian bank, in the form described below and notice of such order is provided to A I M Institutional Fund Services, Inc. ("AIFS") (the Trust's transfer agent) or (ii) at the time the order is placed, if the Trust is assured of payment. Shares of the Class purchased by orders which are accepted prior to 1:00 p.m. Eastern Time will earn the dividend declared on the date of purchase. Payments for shares purchased must be in the form of federal funds or other funds immediately available to the Portfolio. Federal Reserve wires should be sent as early as possible in order to facilitate crediting to the shareholder's account. Any funds received with respect to an order which is not accepted by the Portfolio and any funds received for which an order has not been received will be returned to the sending institution. The minimum initial investment in the Class is $1,000,000. Institutions may be requested to maintain separate Master Accounts in the Class for shares held by the institution (i) for its own account, for the account of other institutions and for accounts for which the institution acts as a fiduciary, and (ii) for accounts for which the institution acts in some other capacity. An institution's Master Account(s) and sub-accounts with the Class may be aggregated for the purpose of the minimum investment requirement. No minimum amount is required for subsequent investments in the Class nor are minimum balances required. Prior to the initial purchase of shares of the Class, an Account Application must be completed and sent to A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Account Applications may be obtained from AIFS. Any changes made to the information provided in the Account Application must be made in writing or by completing a new form and providing it to AIFS. The Trust reserves the right in its sole discretion to withdraw all or any part of the offering made by this Prospectus or to reject any purchase order. REDEMPTION OF SHARES A shareholder may redeem any or all of its shares of the Class at the net asset value next determined after receipt of the redemption request in proper form by the Trust. Redemption requests with respect to the Class may also be made via AIM LINK(R), a personal computer application software product. Normally, the net asset value per share of the Portfolio will remain constant at $1.00 per share. See "Net Asset Value." Redemption requests with respect to shares are normally made by calling the Trust. Payment for redeemed shares is normally made by Federal Reserve wire to the commercial bank account designated in the shareholder's Account Application, but may be remitted by check upon request by a shareholder. If a redemption request is received by AIFS prior to 1:00 p.m. Eastern Time on a business day of the Portfolio, the redemption will be effected at the net 8 173 asset value next determined on such day and the shares to be redeemed will not receive the dividend declared on the effective date of the redemption. If a redemption request is received by AIFS after 1:00 p.m. Eastern Time or on other than a business day of the Portfolio, the redemption will be effected at the net asset value of the Portfolio determined as of 1:00 p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of such redemption will normally be wired on the effective day of the redemption. A shareholder may change the bank account designated to receive redemption proceeds by written notice to the Trust. The authorized signature on the notice must be guaranteed by a commercial bank or a trust company. Additional documentation may be required when deemed appropriate by the Trust or AIFS, the Trust's transfer agent. Shareholders may request a redemption by telephone. AIFS and FMC will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth in the Account Application if they reasonably believe such request to be genuine but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), and mailings of confirmations promptly after the transaction. Payment for shares of the Class redeemed by mail and payment for telephone redemptions in amounts under $1,000 will be made by check mailed within seven days after receipt of the redemption request in proper form. The Trust may make payment for telephone redemptions in excess of $1,000 by check when it is considered to be in the Portfolio's best interest to do so. The shares of the Class are not redeemable at the option of the Trust unless the Board of Trustees of the Trust determines in its sole discretion that failure to so redeem may have materially adverse consequences to the shareholders of the Trust. DIVIDENDS Dividends from the net income of the Portfolio are declared daily to shareholders of record of the Class as of immediately after 1:00 p.m. Eastern Time on the day of declaration. Net income for dividend purposes is determined daily as of 1 :00 p.m. Eastern Time. The dividend accrued and paid for each class will consist of (a) income of the Portfolio, the allocation of which is based upon such class' pro rata share of the total outstanding shares representing an interest in the Portfolio, less (b) Portfolio expenses, such as custodian fees, trustees' fees and accounting and legal expenses, based upon such class' pro rata share of the net assets of the Portfolio, less (c) expenses directly attributable to such class, such as distribution expenses, if any, and transfer agency fees. Although realized gains and losses on the assets of the Portfolio are reflected in its net asset value, they are not expected to be of an amount which would affect the Portfolio's net asset value of $1.00 per share for purposes of purchases and redemptions. See "Net Asset Value." Distributions from net realized short-term gains may be declared and paid yearly or more frequently. See "Taxes." The Portfolio does not expect to realize any long-term capital gains or losses. All dividends declared during a month will normally be paid by wire transfer. Payment will normally be made on the first business day of the following month. A shareholder may elect to have all dividends automatically reinvested in additional full and fractional shares of the Portfolio at the net asset value of such shares as of 1:00 p.m. Eastern Time on the last business day of the month. Such election, or any revocation thereof, must be made in writing by the shareholder to AIFS at P.O. Box 4497, Houston, Texas 77210-4497 and will become effective with dividends paid after its receipt by AIFS. If a shareholder redeems all the shares of the Portfolio in its account at any time during the month, all dividends declared through the date of redemption are paid to the shareholder along with the proceeds of the redemption. The Portfolio uses its best efforts to maintain its net asset value per share of the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should the Trust incur or anticipate any unusual expense, loss or depreciation which could adversely affect the income or net asset value of the Portfolio, the Trust's Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of the then prevailing circumstances. For example, under such unusual circumstances the Board of Trustees might reduce or suspend the daily dividend in order to prevent to the extent possible the net asset value per share of the Portfolio from being reduced below $1.00. Thus, such expenses, losses or depreciation may result in a shareholder receiving no dividends for the period during which it held its Shares and cause such a shareholder to receive upon redemption a price per share lower than the shareholder's original cost. TAXES FEDERAL TAXATION The policy of the Portfolio is to distribute to its shareholders at least 90% of its investment company taxable income for each year and consistent therewith to meet the distribution requirements of Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Portfolio intends to distribute at least 98% of its net investment income for the calendar 9 174 year and at least 98% of its net realized capital gains, if any, for the one-year period ending on October 31 and therefore to meet the distribution requirements imposed by the Code in order to avoid the imposition of a 4% excise tax. The Portfolio also intends to meet the other requirements of Subchapter M, including the requirements with respect to diversification of assets and sources of income, so that the Portfolio will pay no federal income taxes on net investment income and net realized capital gains paid to shareholders. The Portfolio will be treated as a separate corporation for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M. Therefore, the Portfolio may not offset its gains against losses of the other portfolio of the Trust and each portfolio of the Trust must specifically comply with all the provisions of the Code. Dividends paid by the Portfolio are subject to taxation as of the date of payment, whether received by shareholders in cash or shares of the Portfolio. The Code provides an exception to this general rule: if the Portfolio declares a dividend in October, November or December to shareholders of record in such months and pays the dividend during January of the next year, a shareholder will be treated for tax purposes as having received the dividend on December 31 of the year in which it is declared rather than in January of the following year when it is paid. It is anticipated that no portion of distributions will be eligible for the dividends received deduction for corporations. Dividends paid by the Portfolio from its net investment income and short-term capital gains are taxable to shareholders at ordinary income tax rates. Foreign persons who file a United States tax return after December 31, 1996 for a U.S. tax refund and who are not eligible to obtain a social security number must apply to the Internal Revenue Service ("IRS") for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or AIFS. STATE AND LOCAL TAXATION Distributions and other Trust transactions referred to in the preceding paragraphs may be subject to state, local or foreign taxes, and the treatment thereof may differ from the federal income tax consequences discussed herein. The Portfolio's investment strategy is intended to provide shareholders with dividends that are exempt from state and local personal and, in some cases, corporate income taxation in as many jurisdictions as possible. The possible exemption from such taxation may enable shareholders to achieve an after-tax return comparable to or higher than that obtained from other money market funds. Shareholders should consult their own tax advisors concerning the tax impact of their investment in the Portfolio and the application of state, local or foreign taxes. NET ASSET VALUE The net asset value per share of the Portfolio is determined daily as of 1:00 p.m. Eastern Time on each business day of the Portfolio. Net asset value per share is determined by dividing the value of the Portfolio's securities, cash and other assets (including interest accrued but not collected), less all its liabilities (including accrued expenses and dividends payable), by the number of shares outstanding of the Portfolio and rounding the resulting per share net asset value to the nearest one cent. The securities of the Portfolio are valued on the basis of amortized cost pursuant to rules promulgated by the SEC applicable to money market funds. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if the security were sold. During such periods, the daily yield on shares of the Portfolio, computed as described in "Purchases and Redemptions -- Performance Information" in the Statement of Additional Information, may differ somewhat from an identical computation made by an investment company with identical investments utilizing available indications as to market value to value its portfolio securities. YIELD INFORMATION Yield information for the Class can be obtained by calling the Trust at (800) 659-1005. Yields will fluctuate from time to time and are not necessarily indicative of future results. Accordingly, the yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time. Yield is a function of the type and quality of the Portfolio's investments, the Portfolio's maturity and the operating expense ratio of the Portfolio. A SHAREHOLDER'S INVESTMENT IN THE TRUST IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should be carefully considered by the investor before making an investment in the Portfolio. For the seven-day period ended August 31, 1996, the current yield and the effective yield of the Class (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the average annualized current yield for 10 175 the period) were 5.64% and 5.16%, respectively. These performance numbers are quoted for illustration purposes only. The performance numbers for any other seven-day period may be substantially different from those quoted above. To assist banks and other institutions performing their own sub-accounting, same day information as to the daily dividend per share for the Class to eight decimal places and current yield normally will be available by 3:30 p.m. Eastern Time. From time to time and in its discretion, AIM or its affiliates may waive all or a portion of its advisory fees and/or assume certain expenses of the Portfolio. Such a practice will have the effect of increasing the Portfolio's yield and total return. REPORTS TO SHAREHOLDERS The Trust furnishes shareholders with semi-annual reports containing information about the Portfolio and its operations, including a list of the investments held in the Portfolio and financial statements. The annual financial statements are audited by the Trust's independent certified public accountants. A copy of the current list of the investments of the Portfolio will be sent to shareholders upon request. Unless otherwise requested by the shareholder, each shareholder will be provided with a written confirmation for each transaction. Institutions establishing sub-accounts will receive a written confirmation for each transaction in a sub-account. Duplicate confirmations may be transmitted to the beneficial owner of the sub-account if requested by the institution. The institution will receive a periodic statement setting forth, for each sub-account, the share balance, income earned for the month, income earned for the year to date and the total current value of the account. MANAGEMENT OF THE TRUST BOARD OF TRUSTEES The overall management of the business and affairs of the Trust is vested with its Board of Trustees. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to the Trust, including agreements with the Trust's investment advisor, distributor, custodian and transfer agent. The day-to-day operations of the Trust are delegated to the Trust's officers and to AIM, subject always to the objective and policies of the Trust and to the general supervision of the Trust's Board of Trustees. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor for the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM, organized in 1976, together with its affiliates, manages or advises 41 investment company portfolios. As of November 14, 1996, the total assets of the investment company portfolios managed or advised by AIM and its affiliates were approximately $61.1 billion. All of the directors and certain of the officers of AIM are also trustees or executive officers of the Trust. AIM is a wholly-owned subsidiary of AIM Management. AIM Management is a holding company in the financial services business. Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the Portfolio's assets and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale. For the fiscal year ended August 31, 1996, AIM received fees from the Trust under the Advisory Agreement with respect to the Portfolio which represented 0.15% of the Portfolio's average daily net assets. During such fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.20% of the Class' average daily net assets. ADMINISTRATIVE SERVICES The Trust has entered into a Master Administrative Services Agreement dated as of October 18, 1993 with AIM (the "Administrative Services Agreement"), pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Portfolio, including the services of a principal financial officer of the Trust and related staff. As compensation to AIM for its services under the Administrative Services Agreement the Portfolio may reimburse AIM for expenses incurred by AIM in connection with such services. 11 176 FEE WAIVERS AIM or its affiliates may in its discretion from time to time agree to waive voluntarily all or any portion of its advisory fee and/or assume certain expenses of the Portfolio but will retain its ability to be reimbursed for such fee or expenses prior to the end of each fiscal year. AIM voluntarily waived advisory fees of $116,126 on the Portfolio and assumed expenses of $25,600. DISTRIBUTOR The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of the Portfolio. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Certain trustees and officers of the Trust are affiliated with FMC and AIM. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of the Trust either directly or through other broker-dealers. FMC is the distributor of several of the mutual funds managed or advised by AIM. FMC may, from time to time, at its expense, pay a bonus or other consideration or incentive to dealers, banks or other financial institutions who sell a minimum dollar amount of the shares of the Class during a specific period of time. In some instances, these incentives may be offered only to certain dealers, banks or financial institutions who have sold or may sell significant amounts of shares. The total amount of such additional bonus payments or other consideration shall not exceed .05% of the net asset value of the shares of the Class sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of shares of the Class or the amount received as proceeds from such sales. Sales of the shares of the Class may not be used to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any jurisdiction. PORTFOLIO TRANSACTIONS AND BROKERAGE AIM is responsible for decisions to buy and sell securities for the Portfolio, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid and asked prices. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the executions and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment programs. Certain research services furnished by dealers may be useful to clients of AIM with clients other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. GENERAL INFORMATION ORGANIZATION AND DESCRIPTION OF SHARES The Trust is a Delaware business trust. The Trust was originally incorporated in Maryland on January 24, 1977, but had no operations prior to November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts business trust; and effective October 15, 1993, the Trust was reorganized as a Delaware business trust. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury TaxAdvantage Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are divided into seven classes of which five represent interests in the Treasury Portfolio and two represent interests in the Portfolio. Each class of shares has a par value of $.01 per share. The other classes of the Trust may have different sales charges and other expenses which may affect performance. An investor may obtain information concerning the Trust's other classes by contacting FMC. All shares of the Trust have equal rights with respect to voting, except that the holders of shares of a particular portfolio or class will have the exclusive right to vote on matters pertaining solely to that portfolio or class. For example, holders of shares of a particular portfolio will have the exclusive right to vote on any investment advisory agreement or investment restriction that relates only to such portfolio. In addition, if a portfolio is divided into various classes, holders of shares of a particular class will have the exclusive right to vote on any matter, such as distribution arrangements, which relates solely to such class. The holders of shares of the Portfolio have distinctive rights with respect to dividends and redemption which are more fully described in this Prospectus. In the event of liquidation or termination of the Trust, holders of shares of each portfolio will receive 12 177 pro rata, subject to the rights of creditors, (a) the proceeds of the sale of the assets held in the respective portfolio to which such shares relate, less (b) the liabilities of the Trust attributable or allocated to the respective portfolio based on the liquidation value of the portfolio. Fractional shares of each portfolio have the same rights as full shares to the extent of their proportionate interest. There will not normally be annual shareholders' meetings. Shareholders may remove trustees from office by votes cast at a meeting of shareholders called solely for such purpose or by written consent. A meeting of shareholders for the sole purpose of considering removal of a trustee shall be called at the request of the holders of 10% or more of the Trust's outstanding shares. As of December 1, 1996, First Trust/VAR & Co. was the owner of record of 33.57% of the outstanding shares of the Class. As long as First Trust/VAR & Co. owns over 25% of such shares, it may be presumed to be in "control" of the Institutional Class of the Treasury TaxAdvantage Portfolio, as defined in the 1940 Act. There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's shares, when issued, will be fully paid and non-assessable. The Board of Trustees may create additional portfolios or classes of shares of the Trust without shareholder approval. TRANSFER AGENT AND CUSTODIAN The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, acts as custodian for the portfolio securities and cash of the Portfolio. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for the shares of the Class. LEGAL COUNSEL The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the Trust and has passed upon the legality of the shares of the Portfolio. SHAREHOLDER INQUIRIES Shareholder inquiries concerning the status of an account should be directed to the Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 659-1005. OTHER INFORMATION This Prospectus sets forth basic information that investors should know about the Trust and the Portfolio prior to investing. A Statement of Additional Information has been filed with the SEC. Copies of the Statement of Additional Information are available upon request and without charge by writing or calling the Trust or FMC. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted herein, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. 13 178 [THIS PAGE INTENTIONALLY LEFT BLANK] 14 179 =============================================================================== SHORT-TERM INVESTMENTS TRUST 11 Greenway Plaza, Suite 1919 PROSPECTUS Houston, Texas 77046-1173 (800) 659-1005 December 30, 1996 INVESTMENT ADVISOR SHORT-TERM A I M ADVISORS, INC. INVESTMENTS TRUST 11 Greenway Plaza, Suite 1919 --------------------- Houston, Texas 77046-1173 (713) 626-1919 TREASURY TAXADVANTAGE PORTFOLIO DISTRIBUTOR --------------------- FUND MANAGEMENT COMPANY 11 Greenway Plaza, Suite 1919 INSTITUTIONAL CLASS Houston, Texas 77046-1173 (800) 659-1005 TABLE OF CONTENTS AUDITORS KPMG PEAT MARWICK LLP PAGE NationsBank Building Summary........................... 2 700 Louisiana Building Table of Fees and Expenses........ 4 Houston, Texas 77002 Financial Highlights.............. 5 Suitability For Investors......... 6 CUSTODIAN Investment Program................ 6 THE BANK OF NEW YORK Purchase of Shares................ 8 90 Washington Street Redemption of Shares.............. 8 11th Floor Dividends......................... 9 New York, New York 10286 Taxes............................. 9 Net Asset Value................... 10 TRANSFER AGENT Yield Information................. 10 A I M INSTITUTIONAL FUND SERVICES, INC. Reports to Shareholders........... 11 11 Greenway Plaza, Suite 1919 Management of the Trust........... 11 Houston, Texas 77046-1173 General Information............... 12 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE. ==============================================================================
180 PROSPECTUS PRIVATE INVESTMENT CLASS OF THE TREASURY TAXADVANTAGE PORTFOLIO OF SHORT-TERM INVESTMENTS TRUST 11 GREENWAY PLAZA, SUITE 1919 HOUSTON, TEXAS 77046-1173 (800) 877-7748 ------------------ The Treasury TaxAdvantage Portfolio is a money market fund whose investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Treasury TaxAdvantage Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury. The Treasury TaxAdvantage Portfolio's investment strategy is intended to enable the Portfolio to provide its shareholders with dividends that are exempt from state and local income taxation in certain jurisdictions. The instruments purchased by the Treasury TaxAdvantage Portfolio will have maturities of 397 days or less. The Treasury TaxAdvantage Portfolio is a series portfolio of Short-Term Investments Trust (the "Trust"), an open-end diversified, series, management investment company. This Prospectus relates solely to the Private Investment Class of the Treasury TaxAdvantage Portfolio, a class of shares designed to be a convenient vehicle in which customers of banks, certain broker-dealers and other financial institutions can invest short-term cash reserves. The Trust also offers shares of another class of the Treasury TaxAdvantage Portfolio pursuant to a separate prospectus: the Institutional Class, as well as shares of other classes of another portfolio of the Trust, the Treasury Portfolio: the Cash Management Class, the Institutional Class, the Personal Investment Class, the Private Investment Class and the Resource Class. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------ THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN SHARES OF THE PRIVATE INVESTMENT CLASS OF THE TREASURY TAXADVANTAGE PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS ABOVE OR CALL (800) 877-7748. THE SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST. THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT THE TREASURY TAXADVANTAGE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. PROSPECTUS DATED: DECEMBER 30, 1996 181 TABLE OF CONTENTS
PAGE ---- SUMMARY.......................................... 2 TABLE OF FEES AND EXPENSES....................... 5 FINANCIAL HIGHLIGHTS............................. 6 SUITABILITY FOR INVESTORS........................ 7 INVESTMENT PROGRAM............................... 7 PURCHASE OF SHARES............................... 9 REDEMPTION OF SHARES............................. 11 DIVIDENDS........................................ 11 TAXES............................................ 12 NET ASSET VALUE.................................. 13 YIELD INFORMATION................................ 13 REPORTS TO SHAREHOLDERS.......................... 14 MANAGEMENT OF THE TRUST.......................... 14 GENERAL INFORMATION.............................. 17
SUMMARY THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE The Trust is an open-end diversified series management investment company. This Prospectus relates to the Private Investment Class (the "Class") of the Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio is a money market fund which invests in direct obligations of the U.S. Treasury. The instruments purchased by the Portfolio will have maturities of 397 days or less. The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Portfolio's investment strategy is intended to enable the Portfolio to provide its shareholders with dividends that are exempt from state and local income taxation in certain jurisdictions. Pursuant to a separate prospectus, the Trust also offers other shares of another class of shares of beneficial interest of the Portfolio representing an interest in the Portfolio. Such class has different distribution arrangements and is designed for institutional investors. The Trust also offers shares of several classes representing an interest in another portfolio, the Treasury Portfolio, pursuant to separate prospectuses. The portfolios of the Fund are referred to collectively as "Portfolios." Because the Trust declares dividends on a daily basis, shares of each class of the Portfolio have the same net asset value (proportionate interest in the net assets of the Portfolio) and bear equally those expenses, such as the advisory fee, that are allocated to the Portfolio as a whole. All classes of the Portfolio share a common investment objective and portfolio of investments. However, different classes of the Portfolio have different shareholder qualifications, and are separately allocated certain class expenses, such as those associated with the distribution of their shares. Therefore, each class will have a different dividend payment and a different yield. INVESTORS IN THE CLASS The Class is designed to be a convenient vehicle in which customers of banks, certain broker-dealers and other financial institutions can invest in a diversified open-end money market fund. PURCHASE OF SHARES Shares of the Class that are offered hereby are sold at net asset value. The minimum initial investment in the Class is $10,000. There is no minimum amount for subsequent investments. Payment for shares of the Class purchased must be in funds immediately available to the Trust. See "Purchase of Shares." 2 182 REDEMPTION OF SHARES Redemptions may be made without charge at net asset value. Payment for redeemed shares of the Class for which redemption orders are received prior to 1:00 p.m. Eastern Time will normally be made on the same day. See "Redemption of Shares." DIVIDENDS The net income of the Portfolio is declared as a dividend daily to shareholders of record immediately after 1:00 p.m. Eastern Time. Dividends are paid monthly by check or wire transfer unless the shareholder has previously elected to have such dividends automatically reinvested in additional shares of the Class. Information concerning the amount of the dividends declared on any particular day will normally be available by 3:30 p.m. Eastern Time on that day. See "Dividends." CONSTANT NET ASSET VALUE The Trust uses the amortized cost method of valuing the securities held by the Portfolio and rounds the per share net asset value to the nearest whole cent. Accordingly, the net asset value per share of the Portfolio will normally remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value." INVESTMENT ADVISOR A I M Advisors, Inc. ("AIM") serves as the Trust's investment advisor and receives a fee based on the Trust's average daily net assets. During the fiscal year ended August 31, 1996, the Trust paid AIM advisory fees with respect to the Portfolio which represented 0.15% of the average daily net assets of the Portfolio. AIM is primarily engaged in the business of acting as manager or advisor to investment companies. Under an Administrative Services Agreement, AIM may be reimbursed by the Trust for its costs of performing certain accounting and other administrative services for the Trust. See "Management of the Trust -- Investment Advisor" "-- Administrative Services." On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced that it had entered into an Agreement and Plan of Merger among INVESCO plc, INVESCO Group Services, Inc. and AIM Management, pursuant to which AIM Management will be merged with INVESCO Group Services, Inc. INVESCO 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. It is contemplated that the merger will occur on February 28, 1997. The Trust's investment advisor, AIM, is a wholly-owned subsidiary of AIM Management. The proposed transaction may be deemed to cause an "assignment" (as that term is defined under the Investment Company Act of 1940, as amended (the "1940 Act")) of the Master Investment Advisory Agreement between the Trust and AIM. Under the 1940 Act and the Master Investment Advisory Agreement, an assignment results in the automatic termination of the Master Investment Advisory Agreement. On December 11, 1996, the Board of Trustees of the Trust approved a new investment advisory agreement, subject to shareholder approval, between AIM and the Trust with respect to the Portfolio. Shareholders will be asked to approve the proposed advisory agreement at an annual meeting of shareholders 3 183 to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also approved a new administrative services agreement with AIM and a new distribution agreement with Fund Management Company ("FMC"). There are no material changes to the terms of the new agreements, including the fees payable by the Portfolio. No change is anticipated in the investment advisory or other personnel responsible for the Portfolio as a result of these new agreements. The Board of Trustees has approved these new agreements because the Portfolio's corresponding existing agreements will terminate upon the consummation of the proposed merger of AIM Management into a subsidiary of INVESCO plc. Provided that the Portfolio's shareholders approve the new investment advisory agreement at the Annual Meeting and the merger is consummated, the new investment advisory agreement with respect to the Portfolio, as well as the new administrative services and distribution agreements, will automatically become effective as of the closing date of the merger. DISTRIBUTOR AND DISTRIBUTION PLAN Fund Management Company ("FMC") acts as the exclusive distributor of the shares of the Class. Pursuant to a plan of distribution adopted by the Trust's Board of Trustees, the Trust may pay up to 0.50% of the average daily net asset value of the Portfolio attributable to the Class to FMC as well as to certain broker-dealers or other financial institutions. Of this amount, up to 0.25% may be for continuing personal services to shareholders provided by broker-dealers or institutions and the balance would be deemed an asset-based sales charge. See "Purchase of Shares" and "Distribution Plan." SPECIAL RISK CONSIDERATIONS The Portfolio may borrow money and enter into reverse repurchase agreements for temporary or emergency purposes, and may purchase securities for delayed delivery. Accordingly, an investment in the Portfolio may entail somewhat different risks from an investment in an investment company that does not engage in such practices. There can be no assurance that the Portfolio will be able to maintain a stable net asset value of $1.00 per share. See "Investment Program." The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and Design are service marks of A I M Management Group Inc. 4 184 TABLE OF FEES AND EXPENSES SHAREHOLDER TRANSACTION EXPENSES* Maximum sales load imposed on purchases (as a percentage of offering price).................................. None Maximum sales load on reinvested dividends (as a percentage of offering price).................................. None Deferred sales load (as a percentage of original purchase price or redemption proceeds, as applicable).................................. None Redemption fees (as a percentage of amount redeemed, if applicable)....................................................... None Exchange fee............................................................ None ANNUAL PORTFOLIO OPERATING EXPENSES -- PRIVATE INVESTMENT CLASS (AS A PERCENTAGE OF AVERAGE NET ASSETS) Management fees (after fee waivers)**................................... 0.15% 12b-1 fees (after fee waivers)**........................................ 0.25%*** Other expenses: Custodian fees....................................................... 0.01% Other................................................................ 0.04% ---- Total other expenses............................................ 0.05% ----- Total portfolio operating expenses -- Private Investment Class............................................. 0.45% =====
- --------------- * Beneficial owners of shares of the Class should consider the effect of any charges imposed by their bank, broker-dealer or financial institution for various services. ** Had there been no fee waivers, Management fees, 12b-1 fees and Total portfolio operating expenses would have been 0.18%, 0.50% and 0.73%, respectively. *** It is possible that as a result of Rule 12b-1 fees, long-term shareholders may pay more than the economic equivalent of the maximum front-end sales charges permitted under rules of the National Association of Securities Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is estimated that it would take a substantial number of years for a shareholder to exceed such maximum front-end sales charges. EXAMPLE An investor in the Class would pay the following expenses on a $1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end of each time period. 1 year............................................................... $ 5 3 years.............................................................. $14 5 years.............................................................. $25 10 years.............................................................. $57
The Table of Fees and Expenses is designed to assist an investor in understanding the various costs and expenses that an investor in the Class will bear directly or indirectly. (For more complete descriptions of the various costs and expenses, see "Management of the Trust" below.) The expense figures are based upon actual 5 185 costs and fees charged to the Class for the fiscal year ended August 31, 1996. The Table of Fees and Expenses reflects voluntary waivers for the Class. Future waivers of fees (if any) may vary from the figures reflected in the Table of Fees and Expenses. To the extent any service providers assume additional expenses of the Class, such assumption of additional expenses will have the effect of lowering the Class's overall expense ratio and increasing its yield to investors. Beneficial owners of shares of the Class should also consider the effect of any charges imposed by the institution maintaining their accounts. The example in the Table of Fees and Expenses assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses -- Private Investment Class" remain the same in the years shown. The example shown in the above table is based on the amounts listed under "Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. FINANCIAL HIGHLIGHTS Shown below are the per share data, ratios and supplemental data (collectively, "data") for the fiscal year ended August 31, 1996 and for the period December 21, 1994 (date operations commenced) through August 31, 1995. The data has been audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified report thereon appears in the Statement of Additional Information.
1996 1995 ------- ------ Net asset value, beginning of period.................................. $ 1.00 $ 1.00 Income from investment operations: Net investment income............................................... 0.05 0.04 ------- ------ Total from investment operations............................ 0.05 0.04 ------- ------ Less distributions: Dividends from net investment income................................ (0.05) (0.04) ------- ------ Net asset value, end of period........................................ $ 1.00 $ 1.00 ======= ====== Total return.......................................................... 4.93% 5.32%(a) ======= ====== Ratios/supplemental data: Net assets, end of period (000s omitted)............................ $49,978 $5,423 ======= ====== Ratio of expenses to average net assets(b).......................... 0.45%(c) 0.45%(a) ======= ====== Ratio of net investment income to average net assets(b)............. 4.72%(c) 5.21%(a) ======= ======
- --------------- (a) Annualized. (b) After waiver of advisory fees, distribution fees and expense reimbursements. Ratios of expenses and net investment income to average net assets prior to waivers and expense reimbursements were 0.85% and 4.32% for 1996 and 1.02% and 4.64% for 1995. (c) Ratios are based on average net assets of $21,111,080. 6 186 SUITABILITY FOR INVESTORS The Class is intended for use primarily by customers of banks, certain broker-dealers and other financial institutions who seek a convenient vehicle in which to invest in an open-end diversified money market fund. The Portfolio's investment strategy is intended to provide its shareholders with dividends that are exempt from state and local income taxation in certain jurisdictions. The minimum initial investment is $10,000. Investors in the Class have the opportunity to receive a somewhat higher yield than might be obtainable through direct investment in money market instruments, and enjoy the benefits of diversification, economies of scale and same-day liquidity. Generally, higher interest rates can be obtained on the purchase of very large blocks of money market instruments. Of course, any such relative increase in interest rates may be offset to some extent by the operating expenses of the Class. Because the Portfolio invests in direct obligations of the U.S. Treasury it may be considered to have somewhat less risk than many other money market funds and yields on the Portfolio may be expected to be somewhat lower than many other money market funds. However, the possible exemption from state and local income taxation with respect to dividends paid by the Portfolio may enable shareholders to achieve an after-tax return comparable to or higher than that obtained from other money market funds, which may provide an advantage to some shareholders. INVESTMENT PROGRAM INVESTMENT OBJECTIVE The investment objective of the Portfolio is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The Portfolio intends to provide its shareholders with dividends that are exempt from state and local income taxation in certain jurisdictions. The Portfolio seeks to achieve its objective by investing in direct obligations of the U.S. Treasury. The money market instruments in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on money market instruments of lesser quality. INVESTMENT POLICIES The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds. The market values of the money market instruments held by the Portfolio will be affected by changes in the yields available on similar securities. If yields have increased since a security was purchased, the market value of such security will generally have decreased. Conversely, if yields have decreased, the market value of such security will generally have increased. BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money and enter into reverse repurchase agreements with respect to its portfolio securities in amounts up to 10% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement. The Portfolio will only borrow money or enter into reverse repurchase agreements for temporary or emergency purposes, such as to facilitate the orderly sale of portfolio securities to accommodate abnormally heavy redemption requests should they occur. Borrowing will not be made for leverage purposes. Reverse repurchase transactions are limited to a term not to exceed 92 days. The Portfolio will use reverse repurchase agreements when the interest income to be earned from the securities that would otherwise have to be liquidated to meet redemption requests is greater than the interest expense of the reverse repurchase transaction. Reverse repurchase agreements involve the risk that the market value of securities retained by the Portfolio in lieu of liquidation may decline below 7 187 the repurchase price of the securities sold by the Portfolio which it is obligated to repurchase. The risk, if encountered, could cause a reduction in the net asset value of the Portfolio's shares. Reverse repurchase agreements are considered to be borrowings under the 1940 Act. PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's investments, AIM may indicate to dealers or issuers its interest in acquiring certain securities for the Portfolio for settlement beyond a customary settlement date. In some cases, the Portfolio may agree to purchase such securities at stated prices and yields. In such cases, such securities are considered "delayed delivery" securities when traded in the secondary market. Since this is done to facilitate the acquisition of portfolio securities and is not for the purpose of investment leverage, the amount of delayed delivery securities involved may not exceed the estimated amount of funds available for investment on the settlement date. Until the settlement date, assets of the Portfolio with a dollar value sufficient at all times to make payment for the delayed delivery securities will be segregated. The total amount of segregated assets may not exceed 25% of the Portfolio's total assets. The delayed delivery securities, which will not begin to accrue interest until the settlement date, will be recorded as an asset of the Portfolio and will be subject to the risks of market value fluctuations. The purchase price of the delayed delivery securities will be recorded as a liability of the Portfolio until settlement. Absent extraordinary circumstances, the Portfolio's right to acquire delayed delivery securities will not be divested prior to the settlement date. ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net assets in illiquid securities. PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term trading and will generally hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money market. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. Securities held by the Portfolio will be disposed of prior to maturity if an earlier disposition is deemed desirable by AIM to meet redemption requests. The Portfolio's policy of investing in securities with maturities of 397 days or less will result in high portfolio turnover. Since brokerage commissions are not normally paid on investments of the type made by the Portfolio, however, the high turnover rate should not adversely affect the Portfolio's net income. The investment policies described above may be changed by the Board of Trustees without the affirmative vote of a majority of the outstanding shares of the Portfolio. INVESTMENT RESTRICTIONS The Portfolio's investment program is subject to a number of investment restrictions which reflect self-imposed standards as well as federal and state regulatory limitations. These restrictions are designed to minimize certain risks associated with investing in specified types of securities or engaging in certain transactions and to limit the amount of the Portfolio's assets which may be concentrated in any specific industry or issuer. The most significant of these restrictions provides that the Portfolio will not: borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the 8 188 Portfolio's investment program may be considered the issuance of senior securities. The Portfolio will not purchase securities while borrowings in excess of 5% of its total assets are outstanding. The foregoing investment restriction of the Portfolio (as well as certain others set forth in the Statement of Additional Information) is a matter of fundamental policy which may not be changed without the affirmative vote of a majority of the outstanding shares of the Portfolio. In addition to the restrictions described above, the Portfolio must also comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time, which governs the operations of money market funds, and may be more restrictive than the policies described herein. The SEC has proposed certain changes to Rule 2a-7. While such proposed changes may have a prospective impact on the investments of the Portfolio, the Portfolio anticipates no difficulty in complying with any proposed change if adopted by the SEC. A description of further investment restrictions applicable to the Portfolio is contained in the Statement of Additional Information. PURCHASE OF SHARES Shares of the Class are sold on a continuing basis at their net asset value next determined after an order has been received by the Portfolio. As discussed below, the Trust reserves the right to reject any purchase order. Although there is no sales charge imposed on the purchase of shares of the Class, banks or other institutions may charge a recordkeeping, account maintenance or other fee to their customers, and beneficial holders of the shares of the Class should consult with the institutions maintaining their accounts to obtain a schedule of applicable fees. To facilitate the investment of proceeds of purchase orders, investors are urged to place their orders as early in the day as possible. Purchase orders will be accepted for execution on the day the order is placed, provided that the order is properly submitted and received by the Portfolio prior to 1:00 p.m. Eastern Time on a business day of the Portfolio. Purchase orders received after such time will be processed at the next day's net asset value. Shares of the Class will earn the dividend declared on the effective date of purchase. A "business day of the Portfolio" is any day on which both the Federal Reserve Bank of New York and The Bank of New York, the Trust's custodian bank, are open for business. It is expected that The Bank of New York and the Federal Reserve Bank of New York will be closed during the next twelve months on Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. Shares of the Class are sold to customers of banks, certain broker-dealers and other financial institutions (each, an Institution, and collectively, "Institutions"). Individuals, corporations, partnerships and other businesses that maintain qualified accounts at an Institution may invest in the shares of the Class. Each Institution will render administrative support services to its customers who are the beneficial owners of the shares of the Class. Such services may include, among other things, establishment and maintenance of shareholder accounts and records; assistance in processing purchase and redemption transactions in shares of the Class; providing periodic statements showing a customer's account balance in shares of the Class; distribution of Trust proxy statements, annual reports and other communications to shareholders whose accounts are serviced by the Institution; and such other services as the Trust may reasonably request. Institutions will be required to certify to the Trust that they comply with applicable state law regarding registration as broker-dealers, or that they are exempt from such registration. 9 189 Prior to the initial purchase of shares of the Class, an Account Application, which can be obtained from A I M Institutional Fund Services, Inc. ("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Any changes made to the information provided in the Account Application must be made in writing or by completing a new form and providing it to AIFS. An investor must open an account in the shares of the Class through an Institution in accordance with procedures established by such Institution. Each Institution separately determines the rules applicable to accounts in the shares of the Class opened with it, including minimum initial and subsequent investment requirements and the procedures to be followed by investors to effect purchases of shares of the Class. The minimum initial investment is $10,000, and there is no minimum amount of subsequent purchases of shares of the Class by an Institution on behalf of its customers. An investor who proposes to open a Portfolio account with an Institution should consult with a representative of such Institution to obtain a description of the rules governing such an account. The Institution holds shares of the Class registered in its name, as agent for the customer, on the books of the Institution. A statement with regard to the customer's shares of the Class is supplied to the customer periodically, and confirmations of all transactions for the account of the customer are provided by the Institution to the customer promptly upon request. In addition, the Institution sends to each customer proxies, periodic reports and other information with regard to the customer's shares of the Class. The customer's shares of the Class are fully assignable and subject to encumbrance by the customer. All agreements which relate to a customer's account with an Institution are with the Institution. An investor may terminate his relationship with an Institution at any time, in which case an account in the investor's name will be established directly with the Portfolio and the investor will become a shareholder of record. In such case, however, the investor will not be able to purchase additional shares of the Class directly, except through reinvestment of dividends and distributions. Orders for the purchase of shares of the Class are placed by the investor with the Institution. The Institution is responsible for the prompt transmission of the order to the Trust. The Portfolio will normally be required to make immediate settlement in federal funds (member bank deposits with a Federal Reserve Bank) for portfolio securities purchased. Accordingly, payment for shares of the Class purchased by Institutions on behalf of their customers must be in federal funds. If an investor's order to purchase shares of the Class is paid for other than in federal funds, the Institution, acting on behalf of the investor, completes the conversion into federal funds (which may take two business days), or itself advances federal funds prior to conversion, and promptly transmits the order and payment in the form of federal funds to AIFS. Subject to the conditions stated above and to the Trust's right to reject any purchase order, orders will be accepted (i) when payment for the shares of the Class purchased is received by The Bank of New York, the Trust's custodian bank, in the form described above and notice of such order is provided to AIFS or (ii) at the time the order is placed, if the Portfolio is assured of payment. Shares of the Class purchased by orders which are accepted prior to 12:00 p.m. Eastern Time will earn the dividend declared on the date of purchase. Federal Reserve wires should be sent as early as possible in order to facilitate crediting to the shareholder's account. Any funds received with respect to an order which is not accepted by the Trust and any funds received for which an order has not been received will be returned to the sending Institution. An order must specify that it is for the purchase of Shares of the "Private Investment Class of the Treasury TaxAdvantage Portfolio," otherwise any funds received will be returned to the sending Institution. The Trust reserves the right in its sole discretion to withdraw all or any part of the offering made by this Prospectus or to reject any purchase order. 10 190 REDEMPTION OF SHARES A shareholder may redeem any or all of its shares of the Class at the net asset value next determined after receipt of the redemption request in proper form by the Trust. Redemption requests with respect to the Class may also be made via AIM LINK--Registered Trademark--, a personal computer application software product. Normally, the net asset value per share of the Portfolio will remain constant at $1.00. See "Net Asset Value." Redemption requests with respect to shares of the Class are normally made through a customer's Institution. Payment for redeemed shares of the Class is normally made by Federal Reserve wire to the commercial bank account designated in the Institution's Account Application, but may be remitted by check upon request by a shareholder. If a redemption request is received by the Portfolio prior to 1:00 p.m. Eastern Time on a business day of the Portfolio, the redemption will be effected at the net asset value next determined on such day and the shares of the Class to be redeemed will not receive the dividend declared on the effective date of the redemption. If a redemption request is received by the Portfolio after 1:00 p.m. Eastern Time or on other than a business day of the Portfolio, the redemption will be effected at the net asset value of the Portfolio determined as of 1:00 p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of such redemption will normally be wired on the effective day of the redemption. A shareholder may change the bank account designated to receive redemption proceeds by written notice to the Trust. The authorized signature on the notice must be guaranteed by a commercial bank or a trust company. Additional documentation may be required when deemed appropriate by the Trust or AIFS, the Trust's transfer agent. Shareholders may request a redemption by telephone. AIFS and FMC will not be liable for any loss, expense or cost arising out of any telephone redemption request effected in accordance with the authorization set forth in the Account Application if they reasonably believe such request to be genuine but may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), and mailings of confirmations promptly after the transaction. Payment for shares of the Class redeemed by mail and payment for telephone redemptions in amounts of less than $1,000 will be made by check mailed within seven days after receipt of the redemption request in proper form. The Trust may make payment for telephone redemptions in excess of $1,000 by check when it is considered to be in the Portfolio's best interest to do so. In certain cases, the Trust may call for the redemption of, or refuse to transfer or issue, shares of the Class in order to comply with the law or to further the purposes for which the Trust is formed. If a transfer or redemption of shares of the Class causes the value of shares of the Class in an account to be less than $500, the Trust may cause the remaining shares to be redeemed. DIVIDENDS Dividends from the net income of the Portfolio are declared daily to shareholders of record of each class of the Portfolio as of immediately after 1:00 p.m. Eastern Time on the day of declaration. Net income for dividend purposes is determined daily as of 1:00 p.m. Eastern Time. The dividend accrued and paid for each class will consist of (a) income of the Portfolio, the allocation of which is based upon such class's pro rata share of the total outstanding shares representing an interest in the Portfolio, less (b) Portfolio expenses, such as custodian fees, trustees' fees, accounting and legal expenses, based upon such class' pro rata share of the net 11 191 assets of the Portfolio, less (c) expenses directly attributable to such class, such as distribution expenses, if any, and transfer agency fees. Although realized gains and losses on the assets of the Portfolio are reflected in its net asset value, they are not expected to be of an amount which would affect its $1.00 per share net asset value for purposes of purchases and redemptions. See "Net Asset Value." Distributions from net realized short-term gains may be declared and paid yearly or more frequently. See "Taxes." The Portfolio does not expect to realize any long-term capital gains or losses. All dividends declared during a month will normally be paid by wire transfer. Payment will normally be made on the first business day of the following month. A shareholder may elect to have all dividends automatically reinvested in additional full and fractional shares of the Class at the net asset value as of 1:00 p.m. Eastern Time on the last business day of the month. Such election, or any revocation thereof, must be made in writing by the Institution to AIFS at 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173, and will become effective with dividends paid after its receipt by AIFS. If a shareholder redeems all the shares of the Class in its account at any time during the month, all dividends declared through the date of redemption are paid to the shareholder along with the proceeds of the redemption. The Portfolio uses its best efforts to maintain the net asset value per share at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should the Trust incur or anticipate any unusual expense, loss or depreciation which could adversely affect the income or net asset value of the Portfolio, the Trust's Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of the then prevailing circumstances. For example, under such unusual circumstances, the Board of Trustees might reduce or suspend the daily dividend in order to prevent to the extent possible the net asset value per share of the Portfolio from being reduced below $1.00. Thus, such expenses, losses or depreciation may result in a shareholder receiving no dividends for the period during which it held its shares of the Class and cause such a shareholder to receive upon redemption a price per share lower than the shareholder's original cost. TAXES FEDERAL TAXATION The policy of the Portfolio is to distribute to its shareholders at least 90% of its investment company taxable income for each year and consistent therewith to meet the distribution requirements of Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Portfolio intends to distribute at least 98% of its net investment income for the calendar year and at least 98% of its net realized capital gains, if any, for the one-year period ending on October 31 and therefore to meet the distribution requirements imposed by the Code in order to avoid the imposition of a 4% excise tax. The Portfolio also intends to meet the other requirements of Subchapter M, including the requirements with respect to diversification of assets and sources of income, so that the Portfolio will pay no federal income taxes on net investment income and net realized capital gains paid to shareholders. The Portfolio will be treated as a separate corporation for purposes of determining taxable income, distribution requirements and other requirements of Subchapter M. Therefore, the Portfolio may not offset its gains against losses of the other portfolio of the Trust and each portfolio of the Trust must specifically comply with all the provisions of the Code. Dividends paid by the Portfolio are subject to taxation as of the date of payment, whether received by shareholders in cash or shares of the Portfolio. The Code provides an exception to this general rule: if the 12 192 Portfolio declares a dividend in October, November or December to shareholders of record in such months and pays the dividend during January of the next year, a shareholder will be treated for tax purposes as having received the dividend on December 31 of the year in which it is declared rather than in January of the following year when it is paid. It is anticipated that no portion of distributions will be eligible for the dividends received deduction for corporations. Dividends paid by the Portfolio from its net investment income and short-term capital gains are taxable to shareholders at ordinary income tax rates. Foreign persons who file a United States tax return after December 31, 1996 for a U.S. tax refund and who are not eligible to obtain a social security number must apply to the Internal Revenue Service ("IRS") for an individual taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying instructions, please contact your tax advisor or AIFS. STATE AND LOCAL TAXATION Distributions and other Trust transactions referred to in the preceding paragraphs may be subject to state, local or foreign taxes, and the treatment thereof may differ from the federal income tax consequences discussed herein. The Portfolio's investment strategy is intended to provide shareholders with dividends that are exempt from state and local personal and, in some cases, corporate income taxation in as many jurisdictions as possible. The possible exemption from such taxation may enable shareholders to achieve an after-tax return comparable to or higher than that obtained from other money market funds. Shareholders should consult their own tax advisors concerning the tax impact of their investment in the Portfolio and the application of state, local or foreign taxes. NET ASSET VALUE The net asset value per share of the Portfolio is determined daily as of 1:00 p.m. Eastern Time on each business day of the Portfolio. Net asset value per share is determined by dividing the value of the Portfolio's securities, cash and other assets (including interest accrued but not collected) less all of its liabilities (including accrued expenses and dividends payable), by the number of shares outstanding of the Portfolio and rounding the resulting per share net asset value to the nearest one cent. The securities of the Portfolio are valued on the basis of amortized cost pursuant to rules promulgated by the SEC applicable to money market funds. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if the security were sold. During such periods, the daily yield on shares of the Portfolio, computed as described in "Purchases and Redemptions -- Performance Information" in the Statement of Additional Information, may differ somewhat from an identical computation made by an investment company with identical investments utilizing available indications as to market value to value its portfolio securities. YIELD INFORMATION Yield information for the Class can be obtained by calling the Trust at (800) 877-7748. Yields will fluctuate from time to time and are not necessarily indicative of future results. Accordingly, the yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a 13 193 stated period of time. Yield is a function of the type and quality of a Portfolio's investments, the Portfolio's maturity and the operating expense ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should be carefully considered by the investor before making an investment in the Portfolio. For the seven-day period ended August 31, 1996, the current yield and the effective yield of the Class (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the average annualized current yield for the period) were 4.79% and 4.90%, respectively. These performance numbers are quoted for illustration purposes only. The performance numbers for any other seven-day period may be substantially different from those quoted above. To assist banks and other institutions performing their own sub-accounting, same day information as to the daily dividend per share for the Portfolio to eight decimal places and current yield normally will be available by 4:00 p.m. Eastern Time. From time to time and in its discretion, AIM or its affiliates may waive all or a portion of its advisory fees and/or assume certain expenses of the Portfolio. Such a practice will have the effect of increasing the Portfolio's yield and total return. REPORTS TO SHAREHOLDERS The Trust furnishes shareholders with semi-annual reports containing information about the Portfolio and its operations, including a list of the investments held in the Portfolio and financial statements. The annual financial statements are audited by the Trust's independent auditors. Unless otherwise requested by the shareholder, each shareholder will be provided with a written confirmation for each transaction by its Institution. Institutions establishing sub-accounts will receive a written confirmation for each transaction in a sub-account. Duplicate confirmations may be transmitted to the beneficial owner of the sub-account if requested by the Institution. The Institution will receive a periodic statement setting forth, for each sub-account, the share balance, income earned for the month, income earned for the year to date and the total current value of the account. MANAGEMENT OF THE TRUST BOARD OF TRUSTEES The overall management of the business and affairs of the Trust is vested with its Board of Trustees. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to the Trust, including agreements with the Trust's investment advisor, distributor, custodian and transfer agent. The day-to-day operations of the Trust are delegated to the Trust's officers and to AIM, subject always to the objectives and policies of the Trust and to the general supervision of the Trust's Board of Trustees. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor for the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM was organized in 1976 and, together with its affiliates, 14 194 manages or advises 41 investment company portfolios. As of November 14, 1996, total assets of the investment company portfolios managed or advised by AIM and its affiliates were approximately $61.1 billion. All of the directors and certain of the officers of AIM are also trustees or executive officers of the Trust. AIM is a wholly-owned subsidiary of AIM Management. AIM Management is a holding company in the financial services business. Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the Portfolio's assets and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale. For the fiscal year ended August 31, 1996, AIM received fees from the Trust under an advisory agreement previously in effect, which provided for the same level of compensation to AIM as the Advisory Agreement, as well as received fees from the Trust under the Advisory Agreement, with respect to the Portfolio which represented 0.15% of the Portfolio's average daily net assets. During such fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.45% of the Class' daily net assets. ADMINISTRATIVE SERVICES The Trust has entered into a Master Administrative Services Agreement dated as of October 18, 1993 with AIM (the "Administrative Services Agreement"), pursuant to which AIM has agreed to provide or arrange for the provision of certain accounting and other administrative services to the Portfolio, including the services of a principal financial officer of the Trust and related staff. As compensation to AIM for its services under the Administrative Services Agreement, the Portfolio may reimburse AIM for expenses incurred by AIM in connection with such services. FEE WAIVERS AIM or its affiliates may in its discretion from time to time agree to waive voluntarily all or any portion of its advisory fee and/or assume certain expenses of the Portfolio but will retain its ability to be reimbursed for such fee or expenses prior to the end of each fiscal year. FMC may in its discretion from time to time voluntarily agree to waive its 12b-1 fee, but will retain its ability to be reimbursed for such fee or expenses prior to the end of each fiscal year. AIM voluntarily waived advisory fees of $116,126 on the Portfolio and assumed expenses of $25,600. DISTRIBUTOR The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. Certain trustees and officers of the Trust are affiliated with FMC and AIM. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of the Class either directly or through other broker-dealers. FMC is the distributor of several of the mutual funds managed or advised by AIM. FMC may, from time to time, at its expense, pay a bonus or other consideration or incentive to dealers or banks who sell a minimum dollar amount of the shares of the Class during a specific period of time. In some instances, these incentives may be offered only to certain dealers or institutions who have sold or may sell 15 195 significant amounts of shares. The total amount of such additional bonus payments or other consideration shall not exceed 0.05% of the net asset value of the shares of the Class sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of shares of the Class or the amount received as proceeds from such sales. Dealers or institutions may not use sales of the shares of the Class to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any jurisdiction. DISTRIBUTION PLAN The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Trust may compensate FMC in connection with the distribution of shares of the Class in an amount equal to 0.50% on an annualized basis of the average daily net assets of the Portfolio attributable to the Class. Such amounts may be expended when and if authorized by the Board of Trustees and may be used to finance such distribution-related services as expenses of organizing and conducting sales seminars, printing of prospectuses and statements of additional information (and supplements thereto) and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature and costs of administering the Plan. Of the compensation paid to FMC under the Plan, a service fee may be paid to dealers and other financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of the Class, in amounts of up to 0.25% of the average net assets of the Portfolio attributable to the Class which are attributable to the customers of such dealers or financial institutions. Payments to dealers and other financial institutions in excess of such amount and payments retained by FMC would be characterized as an asset-based sales charge pursuant to the Plan. The Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Portfolio with respect to the Class. The Plan does not obligate the Trust to reimburse FMC for the actual expenses FMC may incur in fulfilling its obligations under the Plan on behalf of the Class. Thus, under the Plan, even if FMC's actual expenses exceed the fee payable to FMC thereunder at any given time, the Trust will not be obligated to pay more than that fee. If FMC's expenses are less than the fee it receives, FMC will retain the full amount of the fee. The Plan requires the officers of the Trust to provide the Board of Trustees at least quarterly with a written report of the amounts expended pursuant to each Plan and the purposes for which such expenditures were made. The Board of Trustees shall review these reports in connection with their decisions with respect to the Plan. As required by Rule 12b-1 under the 1940 Act, the Plan was approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan ("Qualified Trustees") on December 6, 1994. In approving the Plan in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plan will benefit the Trust and the shareholders of the Class. The Plan may be terminated by a vote of a majority of the Qualified Trustees, or by a vote of a majority of the holders of the outstanding voting securities of the shares of the Class. Any change in the Plan that would increase materially the distribution expenses paid by the Class requires shareholder approval; otherwise the Plan may be amended by the trustees, including a majority of the Qualified Trustees, by vote cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plan is in effect, the selection or nomination of the Qualified Trustees is committed to the discretion of the Qualified Trustees. 16 196 PORTFOLIO TRANSACTIONS AND BROKERAGE AIM is responsible for decisions to buy and sell securities for the Portfolio, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid and asked prices. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the executions and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment programs. Certain research services furnished by dealers may be useful to clients of AIM other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. GENERAL INFORMATION ORGANIZATION AND DESCRIPTION OF SHARES The Trust is a Delaware business trust. The Trust was originally incorporated in Maryland on January 24, 1977, but had no operations prior to November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts business trust; and effective October 15, 1993, the Trust was reorganized as a Delaware business trust. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury TaxAdvantage Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are divided into seven classes. Two classes, including the Class, represent interests in the Portfolio, and five classes represent interests in the Treasury Portfolio. Each class of shares has a par value of $.01 per share. The other classes of the Trust may have different sales charges and other expenses which may affect performance. An investor may obtain information concerning the Trust's other classes by contacting FMC. All shares of the Trust have equal rights with respect to voting, except that the holders of shares of a particular portfolio or class will have the exclusive right to vote on matters pertaining solely to that portfolio or class. For example, holders of shares of a particular portfolio will have the exclusive right to vote on any investment advisory agreement or investment restriction that relates only to such portfolio. In addition, if a portfolio is divided into various classes, holders of shares of a particular class will have the exclusive right to vote on any matter, such as distribution arrangements, which relates solely to such class. The shareholders of the Class have distinctive rights with respect to dividends and redemption which are more fully described in this Prospectus. In the event of liquidation or termination of the Trust, holders of shares of each portfolio will receive pro rata, subject to the rights of creditors, (a) the proceeds of the sale of the assets held in the respective portfolio to which such shares relate, less (b) the liabilities of the Trust attributable to the respective portfolio or allocated to the respective portfolio based on the liquidation value of such portfolio. Fractional shares of each portfolio have the same rights as full shares to the extent of their proportionate interest. 17 197 There will not normally be annual shareholders' meetings. Shareholders may remove trustees from office by votes cast at a meeting of shareholders called solely for such purpose or by written consent. A meeting of shareholders for the sole purpose of considering removal of a trustee shall be called at the request of the holders of 10% or more of the Trust's outstanding shares. As of December 1, 1996, First National Bank of Chicago was the owner of record of 61.27% of the outstanding shares of the Class. As long as First National Bank of Chicago owns over 25% of such shares, it may be presumed to be in "control" of the Private Investment Class of the Treasury TaxAdvantage Portfolio, as defined in the 1940 Act. There are no preemptive or conversion rights applicable to any of the Trust's shares. The Trust's shares, when issued, will be fully paid and non-assessable. The Board of Trustees may create additional portfolios and classes of the Trust without shareholder approval. TRANSFER AGENT AND CUSTODIAN The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, acts as custodian for the portfolio securities and cash of the Portfolio. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for the shares of the Portfolio. LEGAL COUNSEL The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania, serves as counsel to the Trust and has passed upon the legality of the shares of the Portfolio. SHAREHOLDER INQUIRIES Shareholder inquiries concerning the status of an account should be directed to an investor's Institution, or to the Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 877-7748. OTHER INFORMATION This Prospectus sets forth basic information that investors should know about the Trust and the Portfolio prior to investing. A Statement of Additional Information has been filed with the SEC. Copies of the Statement of Additional Information are available upon request and without charge by writing or calling the Trust or FMC. This Prospectus omits certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted herein, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. 18 198 [THIS PAGE INTENTIONALLY LEFT BLANK] 199 SHORT-TERM INVESTMENTS TRUST SHORT-TERM 11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST Houston, Texas 77046-1173 (800) 877-7748 PRIVATE INVESTMENT CLASS INVESTMENT ADVISOR OF THE A I M ADVISORS, INC. ----------------------- 11 Greenway Plaza, Suite 1919 TREASURY Houston, Texas 77046-1173 TAXADVANTAGE (713) 626-1919 PORTFOLIO PROSPECTUS DISTRIBUTOR FUND MANAGEMENT COMPANY DECEMBER 30, 1996 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 (800) 877-7748 [LOGO APPEARS HERE] Fund Management Company AUDITORS KPMG PEAT MARWICK LLP NationsBank Building 700 Louisiana Houston, Texas 77002 CUSTODIAN THE BANK OF NEW YORK 90 Washington Street 11th Floor New York, New York 10286 TRANSFER AGENT A I M INSTITUTIONAL FUND SERVICES, INC. 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
200 STATEMENT OF ADDITIONAL INFORMATION SHORT-TERM INVESTMENTS TRUST TREASURY TAXADVANTAGE PORTFOLIO (INSTITUTIONAL CLASS) (PRIVATE INVESTMENT CLASS) 11 GREENWAY PLAZA SUITE 1919 HOUSTON, TEXAS 77046-1173 (800) 659-1005 --------------------- THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF EACH OF THE ABOVE-NAMED FUNDS, COPIES OF WHICH MAY BE OBTAINED BY WRITING FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA, SUITE 1919, HOUSTON, TEXAS 77046-1173 OR CALLING (800) 659-1005 --------------------- STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 30, 1996 RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE TREASURY TAXADVANTAGE PORTFOLIO: INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 30, 1996 AND PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 30, 1996 201 TABLE OF CONTENTS
PAGE ---- Introduction....................................................... 3 General Information about the Trust................................ 3 The Trust and Its Shares...................................... 3 Trustees and Officers......................................... 4 Remuneration of Trustees...................................... 7 Investment Advisor............................................ 8 Administrative Services....................................... 9 Expenses...................................................... 9 Banking Regulations........................................... 10 Transfer Agent and Custodian.................................. 10 Reports....................................................... 10 Principal Holders of Securities............................... 11 Purchases and Redemptions.......................................... 13 Net Asset Value Determination................................. 13 Distribution Agreement........................................ 14 Distribution Plan............................................. 14 Performance Information....................................... 14 Suspension of Redemption Rights............................... 15 Investment Program and Restrictions................................ 15 Investment Program............................................ 15 Eligible Securities........................................... 15 Investment Restrictions....................................... 16 Other Investment Policies..................................... 17 Portfolio Transactions............................................. 17 Tax Matters........................................................ 18 Qualifications as a Regulated Investment Company.............. 18 Excise Tax on Regulated Investment Companies.................. 19 Portfolio Distributions....................................... 19 Sale or Redemption of Shares.................................. 19 Foreign Shareholders.......................................... 20 Effect of Future Legislation; State and Local Tax Considerations............................................... 20 Financial Statements............................................... FS-1
2 202 INTRODUCTION The Treasury TaxAdvantage Portfolio (the "Portfolio") is an investment portfolio of Short-Term Investments Trust (the "Trust"), a mutual fund. The rules and regulations of the United States Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors certain information concerning the activities of the fund being considered for investment. This information is included in the Institutional Class Prospectus dated December 30, 1996 and the Private Investment Class Prospectus dated December 30, 1996 (each a "Prospectus"). Copies of each Prospectus and additional copies of this Statement of Additional Information may be obtained without charge by writing the principal distributor of the Trust's shares, Fund Management Company ("FMC"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 or by calling (800) 659-1005. Investors must receive a Prospectus before they invest. This Statement of Additional Information is intended to furnish prospective investors with additional information concerning each class of the Portfolio. Some of the information required to be in this Statement of Additional Information is also included in each Prospectus; and, in order to avoid repetition, reference will be made to sections of the applicable Prospectus. Additionally, each Prospectus and this Statement of Additional Information omit certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted from each Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. GENERAL INFORMATION ABOUT THE TRUST THE TRUST AND ITS SHARES The Trust is an open-end, diversified, management series investment company which was originally organized as a corporation under the laws of the State of Maryland on January 24, 1977, but which had no operations prior to November 10, 1980. The Trust was reorganized as a business trust under the laws of the Commonwealth of Massachusetts on December 31, 1986. The Trust was again reorganized as a business trust under the laws of the State of Delaware on October 15, 1993. A copy of the Agreement and Declaration of Trust ("Declaration of Trust") establishing the Trust is on file with the SEC. On October 15, 1993, the Portfolio succeeded to the assets and assumed the liabilities of the Treasury TaxAdvantage Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the Trust and STIC. All historical financial and other information contained in this Statement of Additional Information for periods prior to October 15, 1993 relating to the Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the corresponding class thereof). Shares of beneficial interest of the Trust are redeemable at the net asset value thereof at the option of the shareholder or at the option of the Trust in certain circumstances. For information concerning the methods of redemption and the rights of share ownership, investors should consult the Prospectus under the captions "General Information" and "Redemption of Shares." The Trust offers on a continuous basis shares representing an interest in one of two portfolios: the Portfolio and the Treasury Portfolio (together, the "Portfolios"). The Portfolio consists of the following two classes of shares: Institutional Class and Private Investment Class. Each class of shares is sold pursuant to a separate prospectus and this joint Statement of Additional Information. The Treasury Portfolio consists of the following five classes of shares: Cash Management Class, Institutional Class, Personal Investment Class, Private Investment Class and Resource Class. Each such class has different shareholder qualifications and bears expenses differently. This Statement of Additional Information relates to the shares of each class of the Portfolio. Shares of the five classes of the Treasury Portfolio are offered pursuant to separate prospectuses and a separate statement of additional information. Shares of beneficial interest of the Trust will be redeemable at the net asset value thereof at the option of the shareholder or at the option of the Trust in certain circumstances. For information concerning the methods of redemption and the rights of share ownership, investors should consult the Prospectus under the caption "Redemption of Shares." As used in the Prospectus, the term "majority of the outstanding shares" of the Trust, a particular portfolio or a particular class means, respectively, the vote of the lesser of (i) 67% or more of the shares of the Trust, such portfolio or such class present at a meeting of the Trust's shareholders, if the holders of more than 50% of the outstanding shares of the Trust, such portfolio or such class are present or represented by proxy, or (ii) more than 50% of the outstanding shares of the Trust, such portfolio or such class. Shareholders of the Trust do not have cumulative voting rights. Therefore the holders of more than 50% of the outstanding shares of all series or classes voting together for election of trustees may elect all of the members of the Board of Trustees and in such event, the remaining holders cannot elect any members of the Board of Trustees. The Declaration of Trust provides for the perpetual existence of the Trust. The Trust, either Portfolio and any class thereof, however, may be terminated at any time, upon the recommendation of the Board of Trustees, by vote of a majority of the out- 3 203 standing shares of the Trust, such Portfolio and such class, respectively; provided, however that the Board of Trustees may terminate, without such shareholder approval, the Trust, either Portfolio and any class thereof with respect to which there are fewer than 100 shares outstanding. The Declaration of Trust permits the trustees to issue an unlimited number of full and fractional shares, of $.01 par value, of each class of shares of beneficial interest of the Trust. The Board of Trustees may establish additional series or classes of shares from time to time without shareholder approval. Additional information concerning the rights of share ownership is set forth in the prospectus applicable to each such class or portfolio of shares of the Trust. The assets received by the Trust for the issue or sale of shares of each class relating to a portfolio and all income, earnings, profits, losses and proceeds therefrom, subject only to the rights of creditors, will be allocated to that portfolio, and constitute the underlying assets of that portfolio. The underlying assets of each portfolio will be segregated and will be charged with the expenses with respect to that portfolio and with a share of the general expenses of the Trust. While certain expenses of the Trust will be allocated to the separate books of account of each portfolio, certain other expenses may be legally chargeable against the assets of the entire Trust. Under Delaware law, shareholders of a Delaware business trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations, however, there is a remote possibility that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. However, the Declaration of Trust disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Declaration of Trust provides for indemnification out of the Trust's property for all losses and expenses of any shareholder of the Trust held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which the Trust would be unable to meet its obligations and wherein the complaining party was held not to be bound by the disclaimer. The Declaration of Trust further provides that the trustees will not be liable for errors of judgment or mistakes of fact or law. However, nothing in the Declaration of Trust protects a trustee against any liability to which a trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. The Declaration of Trust provides for indemnification by the Trust of the trustees and the officers of the Trust except with respect to any matter as to which any such person did not act in good faith in the reasonable belief that his action was in or not opposed to the best interests of the Trust. Such person may not be indemnified against any liability to the Trust or to the Trust's shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. The Declaration of Trust also authorizes the purchase of liability insurance on behalf of trustees and officers. As described in the Prospectus, the Trust will not normally hold annual shareholders' meetings. At such time as less than a majority of the trustees have been elected by the shareholders, the trustees then in office will call a shareholders' meeting for the election of trustees. In addition, trustees may be removed from office by a written consent signed by the holders of two-thirds of the outstanding shares of the Trust and filed with the Trust's custodian or by a vote of the holders of two-thirds of the outstanding shares at a meeting duly called for the purpose, which meeting shall be held upon written request of the holders of not less than 10% of the outstanding shares of the Trust. TRUSTEES AND OFFICERS The trustees and officers of the Trust and their principal occupations during the last five years are set forth below. Unless otherwise indicated, the address of each trustee and officer is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. *CHARLES T. BAUER, Trustee and Chairman (77) Director, Chairman and Chief Executive Officer, A I M Management Group Inc.; and Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company. - --------------- *A trustee who is an "interested person" of the Trust and A I M Advisors, Inc., as defined in the Investment Company Act of 1940, as amended (the "1940 Act"). 4 204 BRUCE L. CROCKETT, Trustee (52) 906 Frome Lane McLean, VA 22102 Formerly, Director, President and Chief Executive Officer, COMSAT Corporation (Includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video Enterprises, COMSAT RSI and COMSAT International Ventures). Previously, President and Chief Operating Officer, COMSAT Corporation; President, World Systems Division, COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (each of the COMSAT companies listed above is an international communication, information and entertainment-distribution services company). OWEN DALY II, Trustee (72) 6 Blythewood Road Baltimore, MD 21210 Director, Cortland Trust Inc. (investment company). Formerly, Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental General Insurance Company; and Chairman of the Board of Equitable Bancorporation. **CARL FRISCHLING, Trustee (59) 919 Third Avenue New York, NY 10022 Partner, Kramer, Levin, Naftalis & Frankel (law firm). Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner, Spengler Carlson Gubar Brodsky & Frischling (law firm). *ROBERT H. GRAHAM, Trustee and President (50) Director, President and Chief Operating Officer, A I M Management Group Inc.; Director and President, A I M Advisors, Inc.; and Director and Senior Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company. JOHN F. KROEGER, Trustee (72) 37 Pippins Way Morristown, NJ 07960 Director, Flag Investors International Fund, Inc., Flag Investors Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc., Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund, Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell & Stockel Associates, Inc. (consulting firm). LEWIS F. PENNOCK, Trustee (54) 6363 Woodway, Suite 825 Houston, TX 77057 Attorney in private practice in Houston, Texas. IAN W. ROBINSON, Trustee (73) 183 River Drive Tequesta, FL 33469 Formerly, Executive Vice President and Chief Financial Officer, Bell Atlantic Management Services, Inc. (provider of centralized management services to telephone companies); Executive Vice President, Bell Atlantic Corporation (parent of seven telephone companies); and Vice President and Chief Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone Company. - --------------- *A trustee who is an "interested person" of the Trust and A I M Advisors, Inc., as defined in the Investment Company Act of 1940, as amended (the "1940 Act"). **A trustee who is an "interested person" of the Trust, as defined in the 1940 Act. 5 205 LOUIS S. SKLAR, Trustee (57) Transco Tower, 50th Floor 2800 Post Oak Blvd. Houston, TX 77056 Executive Vice President, Development and Operations, Hines Interests Limited Partnership (real estate development). *JOHN J. ARTHUR, Senior Vice President and Treasurer (52) Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice President and Treasurer, A I M Management Group Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management Company. GARY T. CRUM, Senior Vice President (49) Director and President, A I M Capital Management, Inc.; Director and Senior Vice President, A I M Management Group Inc. and A I M Advisors, Inc.; and Director, A I M Distributors, Inc. *CAROL F. RELIHAN, Senior Vice President and Secretary (42) Senior Vice President, General Counsel and Secretary, A I M Advisors, Inc.; Vice President, General Counsel and Secretary, A I M Management Group Inc.; Vice President and General Counsel, Fund Management Company; and Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc. DANA R. SUTTON, Vice President and Assistant Treasurer (37) Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant Vice President and Assistant Treasurer, Fund Management Company. MELVILLE B. COX, Vice President (53) Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services, Inc., and Fund Management Company. Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary, Charles Schwab Family of Funds and Schwab Investments; Chief Compliance Officer, Charles Schwab Investment Management, Inc.; and Vice President, Integrated Resources Life Insurance Co. and Capitol Life Insurance Co. KAREN DUNN KELLEY, Vice President (36) Senior Vice President, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. J. ABBOTT SPRAGUE, Vice President (41) Director and President, A I M Institutional Fund Services, Inc. and Fund Management Company; Director and Senior Vice President, A I M Advisors, Inc.; and Senior Vice President, A I M Fund Services, Inc. and A I M Management Group Inc. The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee, and the Nominating and Compensation Committee. The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman), Pennock and Robinson. The Audit Committee is responsible for meeting with the Trust's auditors to review audit procedures and results and to consider any matters arising from an audit to be brought to the attention of the trustees as a whole with respect to the Trust's fund accounting or its internal accounting controls, or for considering such matters as may from time to time be set forth in a charter adopted by the Board of Trustees and such committee. The members of the Investments Committee are Messrs. Bauer, Crockett, Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible for reviewing portfolio compliance, brokerage allocation, portfolio investment pricing issues, interim dividend and distribution issues, or considering such matters as may from time to time be set forth in a charter adopted by the Board of Trustees and such committee. - --------------- *Mr. Arthur and Ms. Relihan are married to each other. 6 206 The members of the Nominating and Compensation Committee are Messrs. Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and Compensation Committee is responsible for considering and nominating individuals to stand for election as trustees who are not interested persons as long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act, reviewing from time to time the compensation payable to the disinterested trustees, or considering such matters as may from time to time be set forth in a charter adopted by the Board of Trustees and such committee. All of the Trust's trustees also serve as directors or trustees of some or all of the other investment companies managed or advised by A I M Advisors, Inc. ("AIM") or distributed and administered by FMC. All of the Trust's executive officers hold similar offices with some or all of such investment companies. REMUNERATION OF TRUSTEES Each trustee is reimbursed for expenses incurred in connection with each meeting of the Board of Trustees or any committee thereof. Each trustee who is not an officer of the Trust is compensated for his services according to a fee schedule which recognizes the fact that such trustee also serves as a director or trustee of other regulated investment companies managed, administered or distributed by AIM or its affiliates (the "AIM Funds"). Each such trustee receives a fee, allocated among the AIM Funds for which he serves as a director or trustee, which consists of an annual retainer component and a meeting fee component. Set forth below is information regarding compensation paid or accrued for each trustee of the Trust:
RETIREMENT AGGREGATE BENEFITS TOTAL COMPENSATION ACCRUED COMPENSATION FROM BY ALL FROM ALL TRUSTEE TRUST(1) AIM FUNDS(2) AIM FUNDS(3) ------- ------------ ------------ ------------ Charles T. Bauer.................................... $ 0 $ 0 $ 0 Bruce L. Crockett................................... 4,823 3,655 57,750 Owen Daly II........................................ 5,708 18,662 58,125 Carl Frischling..................................... 5,560 11,323 57,250(4) Robert H. Graham.................................... 0 0 0 John F. Kroeger..................................... 5,345 22,313 58,125 Lewis F. Pennock.................................... 4,705 5,067 58,125 Ian W. Robinson..................................... 4,841 15,381 56,750 Louis S. Sklar...................................... 5,613 6,632 57,250
- --------------- (1) The total amount of compensation deferred by all Trustees of the Trust during the fiscal year ended August 31, 1996, including interest earned thereon, was $20,310. (2) During the fiscal year ended August 31, 1996, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $25,775. Data reflects compensation for the calendar year ended December 31, 1995. (3) Each serves as a Director or Trustee of a total of 10 AIM Funds. Data reflects total compensation for the calendar year ended December 31, 1995. (4) See also page 8 regarding fees earned by Mr. Frischling's law firm. AIM Funds Retirement Plan for Eligible Directors/Trustees Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Trustees. Pursuant to the Plan, the normal retirement date is the date on which the eligible trustee has attained age 65 and has completed at least five years of continuous service with one or more of the AIM Funds. Each eligible trustee is entitled to receive an annual benefit from the AIM Funds commencing on the first day of the calendar quarter coincident with or following his date of retirement equal to 75% of the retainer paid or accrued by the AIM Funds for such trustee during the twelve-month period immediately preceding the trustee's retirement (including amounts deferred under separate agreement between the AIM Funds and the trustee) for the number of such trustee's years of service (not in excess of 10 years of service) completed with respect to any of the AIM Funds. Such benefit is payable to each eligible trustee in quarterly installments. If an eligible trustee dies after attaining the normal retirement date but before receipt of any benefits under the Plan commences, the trustee's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased trustee, for no more than ten years beginning the first day of the calendar quarter following the date of the trustee's death. Payments under the Plan are not secured or funded by any AIM Fund. 7 207 Set forth below is a table that shows the estimated annual benefits payable to an eligible director upon retirement assuming various compensation and years of service classifications. The estimated credited years of service for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 9, 9, 19, 18, 14, 9, and 6 years, respectively. ESTIMATED BENEFITS UPON RETIREMENT
ANNUAL COMPENSATION PAID BY ALL AIM FUNDS NUMBER OF YEARS OF SERVICE ----------------------------------------- WITH THE AIM FUNDS $55,000 $60,000 $65,000 - -------------------------- ------- ------- ------- 10..................................... $41,250 $45,000 $48,750 9..................................... $37,125 $40,500 $43,875 8..................................... $33,000 $36,000 $39,000 7..................................... $28,875 $31,500 $34,125 6..................................... $24,750 $27,000 $29,250 5..................................... $20,625 $22,500 $24,375
Deferred Compensation Agreements Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this paragraph only, the "deferring trustees") have each executed a Deferred Compensation Agreement (collectively, the "Agreements"). Pursuant to the Agreements, the deferring trustees may elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the deferring trustees may select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the deferring trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of five years beginning on the date the deferring trustee's retirement benefits commence under the Plan. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the deferring trustee's termination of service as a trustee of the Trust. If a deferring trustee dies prior to the distribution of amounts in his deferral account, the balance of the deferral account will be distributed to his designated beneficiary in a single lump sum payment as soon as practicable after such deferring trustee's death. The Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the deferring trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation. The Portfolio paid legal fees of $3,900 for the year ended August 31, 1996 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board of Trustees. Carl Frischling, a trustee of the Trust, is a member of that firm. INVESTMENT ADVISOR A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the investment advisor of the Portfolio pursuant to a Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory Agreement"). AIM was organized in 1976, and together with its affiliates advises or manages 41 investment company portfolios. As of November 14, 1996, the total assets of the investment company portfolios managed or advised by AIM and its affiliates were approximately $61.1 billion. Pursuant to the terms of the Advisory Agreement, AIM manages the investment of the assets of the Portfolio. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment policies for the Portfolio. Any investment program undertaken by AIM will at all times be subject to the policies and control of the Trust's Board of Trustees. AIM shall not be liable to the Trust or to its shareholders for any act or omission by AIM or for any loss sustained by the Trust or its shareholders except in the case of willful misfeasance, bad faith, gross negligence or reckless disregard of duty. AIM and the Trust have adopted a Code of Ethics which requires investment personnel (a) to pre-clear all personal securities transactions, (b) to file reports regarding such transactions, and (c) to refrain from personally engaging in (i) short-term trading of a security, (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security, and (iii) transactions involving securities being considered for investment by an AIM Fund. The Code also prohibits investment personnel from purchasing securities in an initial public offering. Personal trading reports are reviewed periodically by AIM, and the Board of Trustees reviews annually such reports (including information on any substantial violations of the Code). Violations of the Code may result in censure, monetary penalties, suspension or termination of employment. As compensation for its services with respect to the Portfolio, AIM receives a monthly fee which is calculated by applying the following annual rates to the average daily net assets of the Portfolio:
NET ASSETS RATE -------------------------------------------------------------- ---- First $250 million............................................ .20% Over $250 million to $500 million............................. .15% Over $500 million............................................. .10%
8 208 The Advisory Agreement requires AIM to reduce its fee to the extent required to satisfy any expense limitations imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale. Pursuant to the Advisory Agreement between the Trust and AIM currently in effect, AIM received fees (net of fee waivers, if any) from the Trust for the fiscal years ended August 31, 1996, 1995 and 1994, with respect to the Portfolio in the amounts of $675,795, $596,449 and $640,698, respectively. For the fiscal years ended August 31, 1996, 1995 and 1994, AIM waived fees with respect to the Portfolio in the amounts of $116,126, $117,100 and $131,042, respectively. The Advisory Agreement provides, that, upon the request of the Board of Trustees, AIM may perform or arrange for the performance of certain additional services on behalf of the Portfolio which are not required by the Advisory Agreement. AIM may receive reimbursement or reasonable compensation for certain additional services, as may be agreed upon by AIM and the Board of Trustees, based upon a finding by the Board of Trustees that the provision of such services would be in the best interest of the Portfolio and its shareholders. The Board of Trustees has made such a finding and, accordingly, has entered into a Master Administrative Services Agreement under which AIM will provide the additional services described below under the caption "Administrative Services." The Advisory Agreement was approved for its initial term by the Board of Trustees on July 19, 1993. The Advisory Agreement will continue in effect until June 30, 1997 and from year to year thereafter provided that it is specifically approved at least annually by the Trust's Board of Trustees and the affirmative vote of a majority of the trustees who are not parties to the Advisory Agreement or "interested persons" of any such party by votes cast in person at a meeting called for such purpose. The Trust or AIM may terminate the Advisory Agreement on 60 days' notice without penalty. The Advisory Agreement terminates automatically in the event of its assignment, as defined in the 1940 Act. AIM is a wholly-owned subsidiary of A I M Management Group Inc. ("AIM Management"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. All of the directors and certain of the officers of AIM are also executive officers of the Trust and their affiliations are shown under "Trustees and Officers." The address of each director and officer of AIM is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046. FMC is a registered broker-dealer and a wholly-owned subsidiary of AIM. FMC acts as distributor of the shares of the Portfolio. ADMINISTRATIVE SERVICES AIM also provides certain services pursuant to a Master Administrative Services Agreement dated as of October 18, 1993 between AIM and the Trust (the "Administrative Services Agreement"). Under the Administrative Services Agreement, AIM performs accounting and other administrative services for the Portfolio. As full compensation for the performance of such services, AIM is reimbursed for any personnel and other costs (including applicable office space, facilities and equipment) of furnishing the services of a principal financial officer of the Trust and of persons working under his supervision for maintaining the financial accounts and books and records of the Trust, including calculation of the Portfolio's daily net asset value, and preparing tax returns and financial statements for the Portfolio. The method of calculating such reimbursements must be annually approved, and the amounts paid will be periodically reviewed, by the Trust's Board of Trustees. Under the Administrative Services Agreement, AIM was reimbursed for the fiscal years ended August 31, 1996, 1995 and 1994, in the amounts of $30,056, $42,823 and $31,534, respectively, for fund accounting services for the Portfolio. Under the terms of a Transfer Agency and Service Agreement, dated September 16, 1994, as amended, July 1, 1995, between the Trust and A I M Institutional Fund Services, Inc. ("AIFS"), a registered transfer agent and wholly-owned subsidiary of AIM, as well as under previous agreements, AIFS received $33,534 and $10,913 for the fiscal years ended August 31, 1996 and 1995, respectively, for the provision of certain shareholder services for the Trust. EXPENSES In addition to fees paid to AIM pursuant to the Agreement and the expenses reimbursed to AIM under the Administrative Services Agreement, the Trust also pays or causes to be paid all other expenses of the Trust, including, without limitation: the charges and expenses of any registrar, any custodian or depository appointed by the Trust for the safekeeping of its cash, portfolio securities and other property, and any transfer, dividend or accounting agent or agents appointed by the Trust; brokers' commissions chargeable to the Trust in connection with portfolio securities transactions to which the Trust is a party; all taxes, including securities issuance and transfer taxes, and fees payable by the Trust to federal, state or other governmental agencies; the costs and expenses of engraving or printing of certificates representing shares of the Trust; all costs and expenses in connection with the registration and maintenance of registration of the Trust and its shares with the SEC and various states and 9 209 other jurisdictions (including filing and legal fees and disbursements of counsel); the costs and expenses of printing, including typesetting, and distributing prospectuses and statements of additional information of the Trust and supplements thereto to the Trust's shareholders; all expenses of shareholders' and trustees' meetings and of preparing, printing and mailing of prospectuses, proxy statements and reports to shareholders; fees and travel expenses of trustees and trustee members of any advisory board or committee; all expenses incident to the payment of any dividend, distribution, withdrawal or redemption, whether in shares or in cash; charges and expenses of any outside service used for pricing of the Trust's shares; charges and expenses of legal counsel, including counsel to the trustees of the Trust who are not "interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of independent accountants in connection with any matter relating to the Trust; membership dues of industry associations; interest payable on Trust borrowings; postage; insurance premiums on property or personnel (including officers and trustees) of the Trust which inure to its benefit; and extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs and any indemnification related thereto). FMC bears the expenses of printing and distributing prospectuses and statements of additional information (other than those prospectuses and statements of additional information distributed to existing shareholders of the Trust) and any other promotional or sales literature used by FMC or furnished by FMC to purchasers or dealers in connection with the public offering of the Trust's shares. Expenses of the Trust which are not directly attributable to the operations of any class of shares or portfolio of the Trust are prorated among all classes of the Trust. Expenses of the Trust except those listed in the next sentence are prorated among all classes of such Portfolio. Distribution and service fees, transfer agency fees and shareholder recordkeeping fees which are directly attributable to a specific class of shares are charged against the income available for distribution as dividends to the holders of such shares. BANKING REGULATIONS The Glass-Steagall Act and other applicable laws, among other things, generally prohibit federally chartered or supervised banks from engaging in the business of underwriting, selling or distributing securities, but permit banks to make shares of mutual funds available to their customers and to perform administrative and shareholder servicing functions. However, judicial or administrative decisions or interpretations of such laws, as well as changes in either federal or state statutes or regulations relating to the permissible activities of banks or their subsidiaries or affiliates, could prevent a bank from continuing to perform all or a part of its servicing activities. If a bank were prohibited from so acting, shareholder clients of such bank would be permitted to remain shareholders of the Trust and alternate means for continuing the servicing of such shareholders would be sought. In such event, changes in the operation of the Trust might occur and shareholders serviced by such bank might no longer be able to avail themselves of any automatic investment or other services then being provided by such bank. It is not expected that shareholders would suffer any adverse financial consequences as a result of any of these occurrences. In addition, state securities laws on this issue may differ from the interpretations of federal law expressed herein and certain banks and financial institutions may be required to register as dealers pursuant to state law. TRANSFER AGENT AND CUSTODIAN The Bank of New York ("BONY") acts as custodian for the portfolio securities and cash of the Portfolio. BONY receives such compensation from the Trust for its services in such capacity as is agreed to from time to time by BONY and the Trust. The address of BONY is 90 Washington Street, 11th Floor, New York, New York 10286. A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as transfer agent for the shares of each class of the Portfolio and receives an annual fee from the Trust for its services in such capacity in the amount of .007% of average daily net assets of the Trust, payable monthly. Such compensation may be changed from time to time as is agreed to by A I M Institutional Fund Services, Inc. and the Trust. REPORTS The Trust furnishes shareholders with semi-annual reports containing information about the Trust and its operations, including a schedule of investments held in the Portfolio and its financial statements. The annual financial statements are audited by the Trust's independent auditors. The Board of Trustees has selected KPMG Peat Marwick LLP, NationsBank Building, 700 Louisiana, Houston, Texas 77002, as the independent auditors to audit the financial statements and review the tax returns of the Portfolio. 10 210 PRINCIPAL HOLDERS OF SECURITIES TREASURY PORTFOLIO To the best of the knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of any class of the Portfolio as of December 1, 1996, and the percentage of such shares owned by such shareholders as of such date are as follows: CASH MANAGEMENT CLASS
PERCENT NAME AND ADDRESS OWNED OF OF RECORD OWNER RECORD ONLY(a) ---------------- -------------- The Bank of New York........................................................... 68.64%b 4 Fisher Lane White Plains, NY 10603 Fund Services Associates....................................................... 22.85% 11835 West Olympic Boulevard Suite 205 Los Angeles, CA 90064
INSTITUTIONAL CLASS
PERCENT NAME AND ADDRESS OWNED OF OF RECORD OWNER RECORD ONLY(a) ---------------- -------------- Trust Company Bank............................................................. 10.66% P.O. Box 105504 Atlanta, GA 30348 Victoria Bank & Trust.......................................................... 8.76% One O'Connor Plaza 6th Fl. Victoria, TX 77902 Liberty Registration Co. of Oklahoma........................................... 7.46% P.O. Box 25848 Oklahoma City, OK 73125 U.S. Bank of Washington....................................................... 7.31% P.O. Box 3168 Portland, OR 97208 NationsBank Texas.............................................................. 6.32% P.O. Box 831000 Dallas, TX 75283-1000 Wachovia Bank and Trust........................................................ 5.85% P.O. Box 3075 Winston-Salem, NC 27150 SunTrust Bank.................................................................. 5.67% P.O. Box 105504 Atlanta, GA 30308 FRNCO.......................................................................... 5.47% P.O. Box 939 Rogers, AR 72757-0939 Key Trust Company.............................................................. 5.02% 4900 Tiedman Cleveland, OH 44101-5971
- --------------- (a) The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. (b) A shareholder who holds more than 25% of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. 11 211 PERSONAL INVESTMENT CLASS
PERCENT NAME AND ADDRESS OWNED OF OF RECORD OWNER RECORD ONLY(a) ---------------- -------------- Cullen/Frost Discount Brokers............................................ 64.64%(b) P.O. Box 2358 San Antonio, TX 78299 The Bank of New York..................................................... 26.55%(b) 4 Fisher Lane White Plains, NY 10603 Kinco & Co............................................................... 6.88% c/o RNB Securities 1 Hanson Pl., Lower Level Brooklyn, NY 11243
PRIVATE INVESTMENT CLASS
PERCENT NAME AND ADDRESS OWNED OF OF RECORD OWNER RECORD ONLY(a) ---------------- -------------- Liberty Bank and Trust Co. of Tulsa, N.A. ............................... 45.06%(b) P.O. Box 25848 Oklahoma City, OK 73125 First Trust/VAR & Co..................................................... 19.67% 180 E. 5th Street St. Paul, MN 55101 Huntington Capital Corp.................................................. 17.05% 41 S. High St., 9th Floor Columbus, Ohio 43287 The Bank of New York..................................................... 6.25% 4 Fisher Lane White Plains, NY 10603
RESOURCE CLASS
PERCENT NAME AND ADDRESS OWNED OF OF RECORD OWNER RECORD ONLY(a) ---------------- -------------- Corestates Capital Markets............................................... 63.59%(b) 1345 Chestnut Street Philadelphia, PA 19101 Mellon Bank.............................................................. 35.27%(b) Three Mellon Center, Room 3840 Pittsburgh, PA 15259-0001
- --------------- (a) The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. (b) A shareholder who holds more than 25% of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. 12 212 TREASURY TAXADVANTAGE PORTFOLIO To the best of the knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of any class of the Treasury TaxAdvantage Portfolio as of December 1, 1996, and the percentage of such shares owned by such shareholders as of such date are as follows: INSTITUTIONAL CLASS
PERCENT NAME AND ADDRESS OWNED OF OF RECORD OWNER RECORD ONLY(a) ---------------- -------------- First Trust/VAR & Co. ............................................. 33.57%(b) 180 East 5th Street St. Paul, MN 55101 Peoples Two Ten Company............................................ 19.12% c/o Summit Bank Trust Operations, 7th Floor P.O. Box 821 Hackensack, NJ 07602 Boatmen's Trust Company............................................ 11.22% 100 North Broadway St. Louis, MO 63101 Liberty Registration Co. of Oklahoma............................... 10.02% P.O. Box 25848 Oklahoma City, OK 73125
PRIVATE INVESTMENT CLASS
PERCENT NAME AND ADDRESS OWNED OF OF RECORD OWNER RECORD ONLY(a) ---------------- -------------- First National Bank of Chicago..................................... 61.27%(b) Mail Suite 0126 Chicago, IL 60670-0126 The Bank of New York............................................... 19.76% 4 Fisher Lane White Plains, NY 10603 Huntington Capital Corp............................................ 18.82% 41 S. High St., 9th Floor Columbus, OH 43287
- --------------- (a) The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. (b) A shareholder who holds more than 25% of the outstanding shares of a class may be presumed to be in "control" of such class of shares, as defined in the 1940 Act. Shares shown as beneficially owned by the above institutions are those shares for which the institutions possessed or shared voting or investment power with respect to such shares on behalf of their underlying accounts. To the best of the knowledge of the Trust, as of December 1, 1996, the trustees and officers of the Trust beneficially owned less than 1% of each class of the Trust's outstanding shares. PURCHASES AND REDEMPTIONS NET ASSET VALUE DETERMINATION Shares of the Portfolio are sold at the net asset value of such shares. Shareholders may at any time redeem all or a portion of their shares at net asset value. The investor's price for purchases and redemptions will be the net asset value next determined following the receipt of an order to purchase or a request to redeem shares. The valuation of the portfolio instruments based upon their amortized cost and the concomitant maintenance of the net asset value per share of $1.00 for the Portfolio is permitted in accordance with applicable rules and regulations of the SEC, including Rule 2a-7, which require the Trust to adhere to certain conditions. These rules require that the Fund maintain a dollar-weighted average portfolio maturity of 90 days or less for the Portfolio, purchase only instruments having remaining maturities of 397 days or less and invest only in securities determined by the Board of Trustees to be of high quality with minimal credit risk. 13 213 The Board of Trustees is required to establish procedures designed to stabilize, to the extent reasonably practicable, the Trust's price per share at $1.00 for the Portfolio as computed for the purpose of sales and redemptions. Such procedures include review of the Portfolio's portfolio holdings by the Board of Trustees, at such intervals as they may deem appropriate, to determine whether the net asset value calculated by using available market quotations or other reputable sources for the Portfolio deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to existing holders of the Portfolio's shares. In the event the Board of Trustees determines that such a deviation exists for the Portfolio, it will take such corrective action as the Board of Trustees deems necessary and appropriate with respect to the Portfolio, including the sale of portfolio instruments prior to maturity to realize capital gains or losses or to shorten the average portfolio maturity; the withholding of dividends; redemption of shares in kind; or the establishment of a net asset value per share by using available market quotations. DISTRIBUTION AGREEMENT The Trust has entered into a Master Distribution Agreement dated as of October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor of the shares of each class of the Portfolio. The address of FMC is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. See "General Information About the Trust -- Trustees and Officers" and "-- Investment Advisor" for information as to the affiliation of certain trustees and officers of the Trust with FMC, AIM and AIM Management. The Distribution Agreement provides that FMC has the exclusive right to distribute shares of each class of the Portfolio either directly or through other broker-dealers. The Distribution Agreement also provides that FMC will pay promotional expenses, including the incremental costs of printing prospectuses and statements of additional information, annual reports and other periodic reports for distribution to persons who are not shareholders of the Trust and the costs of preparing and distributing any other supplemental sales literature. FMC has not undertaken to sell any specified number of shares of the Portfolio. FMC does not receive any fees with respect to the shares of the Institutional Class pursuant to the Distribution Agreement. The Distribution Agreement will remain in effect until June 30, 1997, and it will continue in effect from year to year thereafter only if such continuation is specifically approved at least annually by the Trust's Board of Trustees and the affirmative vote of the trustees who are not parties to the Distribution Agreement or "interested persons" of any such party by votes cast in person at a meeting called for such purpose. A prior distribution agreement between the Trust and FMC, with terms substantially the same as those of the Distribution Agreement, was in effect through October 15, 1993. The Trust or FMC may terminate the Distribution Agreement on sixty days' written notice without penalty. The Distribution Agreement will terminate automatically in the event of its "assignment," as defined in the 1940 Act. DISTRIBUTION PLAN The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Plan, the Trust may enter into Shareholder Service Agreements ("Service Agreements") with selected broker-dealers, banks, other financial institutions or their affiliates. Such firms may receive from the Portfolio compensation for servicing investors as beneficial owners of the shares of the Private Investment Class of the Portfolio. These services may include among other things: (i) answering customer inquiries regarding the shares of the class and the Portfolio; (ii) assisting customers in changing dividend options, account designations and addresses; (iii) performing sub-accounting; (iv) establishing and maintaining shareholder accounts and records; (v) processing purchase and redemption transactions; (vi) automatic investment in the shares of the class of customer cash account balances; (vii) providing periodic statements showing a customer's account balance and integrating such statements with those of other transactions and balances in the customer's other accounts serviced by such firm; (viii) arranging for bank wires; and (ix) such other services as the Trust may request on behalf of the shares of the class, to the extent such firms are permitted to engage in such services by applicable statute, rule or regulation. The Plan may only be used for the purposes specified above and as stated in the Plan. Expenses may not be carried over from year to year. For the fiscal year ended August 31, 1996, FMC received compensation pursuant to the Plan in the amount of $52,922, or an amount equal to 0.25% of the average daily net assets of the Private Investment Class. With respect to the Private Investment Class, all of such amount was paid to dealers and financial institutions and none of such compensation was retained by FMC. FMC is a wholly-owned subsidiary of AIM, a wholly-owned subsidiary of AIM Management. Charles T. Bauer, a Trustee and Chairman of the Trust, owns shares of AIM Management and Robert H. Graham, a Trustee and President of the Trust, also owns shares of AIM Management. PERFORMANCE INFORMATION As stated under the caption "Yield Information" in the Prospectus, yield information for the shares of each class of the Portfolio may be obtained by calling the Trust at (800) 659-1005. The current yield quoted will be the net average annualized yield 14 214 for an identified period, such as seven days or a month. Current yield will be computed by assuming that an account was established with a single share (the "Single Share Account") on the first day of the period. To arrive at the quoted yield, the net change in the value of that Single Share Account for the period (which would include dividends accrued with respect to the share, and dividends declared on shares purchased with dividends accrued and paid, if any, but would not include realized gains and losses or unrealized appreciation or depreciation) will be multiplied by 365 and then divided by the number of days in the period, with the resulting figure carried to the nearest hundredth of one percent. The Trust may also furnish a quotation of effective yield that assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the average annualized yield for the period, which will be computed by compounding the unannualized current yield for the period by adding 1 to the unannualized current yield, raising the sum to a power equal to 365 divided by the number of days in the period, and then subtracting 1 from the result. For the seven-day period ended August 31, 1996, the current yield and the effective yield (which assumes the reinvestment of dividends for a 365-day year and a return for the entire year equal to the annualized current yield for the period) for the Institutional Class were 5.04% and 5.16% and for the Private Investment Class were 4.79% and 4.90%, respectively. These performance numbers are quoted for illustration purposes only. Performance numbers for any other seven-day period may be substantially different from those quoted above. The Trust may compare the performance of a class or the performance of securities in which it may invest to: - IBC/Donoghue's Money Fund Averages, which are average yields of various types of money market funds that include the effect of compounding distributions; - other mutual funds, especially those with similar investment objectives. These comparisons may be based on data published by IBC/Donoghue's Money Fund Report of Holliston, Massachusetts or by Lipper Analytical Services, Inc., a widely recognized independent service located in Summit, New Jersey, which monitors the performance of mutual funds; - yields on other money market securities or averages of other money market securities as reported by the Federal Reserve Bulletin, by TeleRate, a financial information network, or by Bloomberg, a financial information firm; and - other fixed-income investments such as Certificates of Deposit (CDs). The principal value and interest rate of CDs and money market securities are fixed at the time of purchase whereas a class' yield will fluctuate. Unlike some CDs and certain other money market securities, money market mutual funds are not insured by the FDIC. Investors should give consideration to the quality and maturity of the Portfolio's securities when comparing investment alternatives. The Trust may reference the growth and variety of money market mutual funds and AIM's innovation and participation in the industry. SUSPENSION OF REDEMPTION RIGHTS The right of redemption may be suspended or the date of payment upon redemption may be postponed when (a) trading on the New York Stock Exchange is restricted, as determined by applicable rules and regulations of the SEC, (b) the New York Stock Exchange is closed for other than customary weekend or holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of the Portfolio not reasonably practicable. INVESTMENT PROGRAM AND RESTRICTIONS INVESTMENT PROGRAM The Portfolio seeks to achieve its objective by investing in high grade money market instruments. The money market instruments in which the Portfolio invests are considered to carry very little risk and accordingly may not have as high a yield as that available on money market instruments of lesser quality. The Portfolio invests exclusively in direct obligations of the U.S. Treasury, which include Treasury bills, notes and bonds. ELIGIBLE SECURITIES The Portfolio limits its investments to direct U.S. Treasury obligations. These securities are "Eligible Securities" as defined in Rule 2a-7. Rule 2a-7 limits securities that may be purchased by money market funds to "Eligible Securities," and defines an "Eligible Security" as follows: (i) a security with a remaining maturity of 397 calendar days or less that has received a short-term rating (or that has been issued by an issuer that is rated with respect to a class of short-term debt obligations, or any debt obli- 15 215 gation within that class, that is comparable in priority and security with the security) by the Requisite NRSROs1 in one of the two highest rating categories for short-term debt obligations (within which there may be sub-categories or gradations indicating relative standing); or (ii) a security: (A) that at the time of issuance had a remaining maturity of more than 397 calendar days but that has a remaining maturity of 397 calendar days or less, and (B) whose issuer has received from the Requisite NRSROs a rating, with respect to a class of debt obligations (or any within that class) that is now comparable in priority and security with the security, in one of the two highest rating categories (within which there may be sub-categories or gradations indicating relative standing); or (iii) an Unrated Security that is of comparable quality to a security meeting the requirements of paragraphs (a)(9)(i) or (ii) of this section, as determined by the money market fund's board of trustees; provided, however, that: (A) the board of trustees may base its determination that a Standby Commitment that is not a Demand Feature is an Eligible Security upon a finding that the issuer of the commitment presents a minimal risk of default; and (B) a security that at the time of issuance had a remaining maturity of more than 397 calendar days but that has a remaining maturity of 397 calendar days or less and that is an unrated security is not an Eligible Security if the security has received a long-term rating from any NRSRO that is not within the NRSRO's three highest long-term rating categories (within which there may be sub-categories or gradations indicating relative standing). The securities purchased by the Portfolio, which are limited to those issued by the U.S. Treasury, are considered to be in the highest ratings category for short-term debt obligations. INVESTMENT RESTRICTIONS As a matter of fundamental policy which may not be changed without a majority vote of shareholders of the Portfolio (as that term is defined under "General Information about the Trust -- The Trust and its Shares"), the Portfolio may not: (1) concentrate more than 25% of the value of its total assets in the securities of one or more issuers conducting their principal business activities in the same industry, provided that there is no limitation with respect to investments in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities and bank instruments, such as CDs, bankers' acceptances, time deposits and bank repurchase agreements; (2) borrow money or issue senior securities except (a) for temporary or emergency purposes (e.g., in order to facilitate the orderly sale of portfolio securities or to accommodate abnormally heavy redemption requests), the Portfolio may borrow money from banks or obtain funds by entering into reverse repurchase agreements, and (b) to the extent that entering into commitments to purchase securities in accordance with the Portfolio's investment program may be considered the issuance of senior securities, provided that the Portfolio will not purchase portfolio securities while borrowings in excess of 5% of its total assets are outstanding; (3) mortgage, pledge or hypothecate any assets except to secure permitted borrowings and except for reverse repurchase agreements and then only in an amount up to 33 1/3% of the value of its total assets at the time of borrowing or entering into a reverse repurchase agreement; (4) make loans of money or securities other than (a) through the purchase of debt securities in accordance with the Portfolio's investment program, (b) by entering into repurchase agreements and (c) by lending portfolio securities to the extent permitted by law or regulation; (5) underwrite securities issued by any other person, except to the extent that the purchase of securities and the later disposition of such securities in accordance with the Portfolio's investment program may be deemed an underwriting; - --------------- 1 "Requisite NRSRO" shall mean (a) any two nationally recognized statistical rating organizations that have issued a rating with respect to a security or class of debt obligations of an issuer, or (b) if only one NRSRO has issued a rating with respect to such security or class of debt obligations of an issuer at the time the fund purchases or rolls over the security, that NRSRO. At present the NRSROs are: Standard & Poor's Corp., ("S&P"), Moody's Investors Service, Inc., ("Moody's"), Duff and Phelps, Inc., Fitch Investors Services, Inc. and, with respect to certain types of securities, IBCA Limited and its affiliate, IBCA Inc. Subcategories or gradations in ratings (such as a "+" or "-") do not count as rating categories. 16 216 (6) invest in real estate, except that the Portfolio may purchase and sell securities secured by real estate or interests therein or issued by issuers which invest in real estate or interests therein; (7) purchase or sell commodities or commodity futures contracts, purchase securities on margin, make short sales or invest in puts or calls; (8) invest in any obligation not payable as to principal and interest in United States currency; or (9) acquire for value the securities of any other investment company, except in connection with a merger, consolidation, reorganization or acquisition of assets. On December 11, 1996, the Board of Trustees of the Trust approved, subject to shareholder approval, the elimination of Investment Restriction No. (9) of the Trust, indicated above. Shareholders of the Trust will be asked to approve the change at an annual meeting of shareholders to be held on February 7, 1997. In the event shareholders approve the proposed change, Investment Restriction No. (9) will no longer apply. If approved, the change will become effective as of March 1, 1997. OTHER INVESTMENT POLICIES The Portfolio does not intend to invest in companies for the purpose of exercising control or management. The Portfolio may also lend its portfolio securities in amounts up to 33 1/3% of its total assets to financial institutions in accordance with the investment restrictions of the Portfolio. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned, or of delay in recovering the securities loaned, or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers deemed by AIM to be of good standing and only when, in AIM's judgment, the income to be earned from the loans justifies the attendant risks. None of the foregoing policies is fundamental. PORTFOLIO TRANSACTIONS AIM is responsible for decisions to buy and sell securities for the Portfolio, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Portfolio are usually principal transactions, the Portfolio incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid and asked prices. The Portfolio does not seek to profit from short-term trading, and will generally (but not always) hold portfolio securities to maturity, but AIM may seek to enhance the yield of the Portfolio by taking advantage of yield disparities or other factors that occur in the money markets. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure or if such disposition is believed to be advisable due to other circumstances or conditions. The amortized cost method of valuing portfolio securities requires that the Portfolio maintain an average weighted portfolio maturity of ninety days or less. Thus, there is likely to be relatively high portfolio turnover, but since brokerage commissions are not normally paid on money market instruments, the high rate of portfolio turnover is not expected to have a material effect on the net income or expenses of the Portfolio. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the execution and prices offered by more than one dealer are comparable, AIM may, in its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by AIM to be beneficial to the Portfolio's investment program. Certain research services furnished by dealers may be useful to AIM with respect to clients other than the Portfolio. Similarly, any research services received by AIM through placement of portfolio transactions of other clients may be of value to AIM in fulfilling its obligations to the Portfolio. AIM is of the opinion that the material received is beneficial in supplementing AIM's research and analysis, and, therefore, it may benefit the Portfolio by improving the quality of AIM's investment advice. The advisory fees paid by the Portfolio are not reduced because AIM receives such services. From time to time, the Trust may sell a security, or purchase a security from an AIM Fund or another investment account advised by AIM or A I M Capital Management, Inc. ("AIM Capital") when such transactions comply with applicable rules and regulations and are deemed consistent with the investment objective(s) and policies of the investment accounts advised by AIM or AIM Capital. Procedures pursuant to Rule 17a-7 under the 1940 Act regarding transactions between investment accounts advised by AIM or AIM Capital have been adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. Although such transactions may result in custodian, tax or other related expenses, no brokerage commissions or other direct transaction costs are generated by transactions among the investment accounts advised by AIM or AIM Capital. Provisions of the 1940 Act and rules and regulations thereunder have been construed to prohibit the Trust from purchasing securities or instruments from, or selling securities or instruments to, any holder of 5% or more of the voting securities of any 17 217 investment company managed or advised by AIM. The Trust has obtained an order of exemption from the SEC which permits the Trust to engage in certain transactions with such 5% holder, if the Trust complies with conditions and procedures designed to ensure that such transactions are executed at fair market value and present no conflicts of interest. AIM and its affiliates manage several other investment accounts, some of which may have objectives similar to the Portfolio's. It is possible that at times identical securities will be acceptable for one or more of such investment accounts. However, the position of each account in the securities of the same issue may vary and the length of time that each account may choose to hold its investment in the securities of the same issue may likewise vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Portfolio and one or more of these accounts and is considered at or about the same time, transactions in such securities will be allocated in good faith among such accounts, in accordance with applicable laws and regulations, in order to obtain the best net price and most favorable execution. The allocation and combination of simultaneous securities purchases on behalf of the Portfolio will be made in the same way that such purchases are allocated among or combined with those of other AIM accounts. Simultaneous transactions could adversely affect the ability of the Portfolio to obtain or dispose of the full amount of a security which it seeks to purchase or sell. Under the 1940 Act, persons affiliated with the Trust are prohibited from dealing with the Portfolios as principal in any purchase or sale of securities unless an exemptive order allowing such transactions is obtained from the SEC. Furthermore, the 1940 Act prohibits the Trust from purchasing a security being publicly underwritten by a syndicate of which persons affiliated with the Trust are a member except in accordance with certain conditions. These conditions may restrict the ability of the Portfolio to purchase money market obligations being publicly underwritten by such a syndicate, and the Portfolio may be required to wait until the syndicate has been terminated before buying such securities. At such time, the market price of the securities may be higher or lower than the original offering price. A person affiliated with the Trust may, from time to time, serve as placement agent or financial advisor to an issuer of money market obligations and be paid a fee by such issuer. The Portfolio may purchase such money market obligations directly from the issuer, provided that the purchase made in accordance with procedures adopted by the Trust's Board of Trustees and any such purchases are reviewed at least quarterly by the Trust's Board of Trustees and a determination is made that all such purchases were effected in compliance with such procedures, including a determination that the placement fee or other remuneration paid by the issuer to the person affiliated with the Trust was fair and reasonable in relation to the fees charged by others performing similar services. During the fiscal year ended August 31, 1996, no securities or instruments were purchased by the Portfolio from issuers who paid placement fees or other compensation to a broker affiliated with the Portfolio. TAX MATTERS The following is only a summary of certain additional tax considerations generally affecting the Portfolio and its shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Portfolio or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning. QUALIFICATION AS A REGULATED INVESTMENT COMPANY The Portfolio has elected to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a regulated investment company, the Portfolio is not subject to federal income tax on the portion of its net investment income (i.e., taxable interest, dividends and other taxable ordinary income, net of expenses) and capital gain net income (i.e., the excess of capital gains over capital losses) that it distributes to shareholders, provided that it distributes at least 90% of its investment company taxable income (i.e., net investment income and the excess of net short-term capital gain over net long-term capital loss) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Distributions by the Portfolio made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gains for the taxable year and can therefore satisfy the Distribution Requirement. In addition to satisfying the Distribution Requirement, a regulated investment company must (1) derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies (to the extent such currency gains are directly related to the regulated investment company's principal business of investing in stock or securities) and other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies (the "Income Requirement"); and (2) derive less than 30% of its gross income (exclusive of certain gains on designated hedging transactions that are offset by realized or unrealized losses on offsetting positions) from the sale or other disposition of stock, securities or foreign currencies (or options, futures or forward contracts thereon) held for less than three months (the "Short-Short Gain Test"). However, foreign currency gains, including those derived from options, futures and forward contracts, will not be characterized as Short-Short Gain if they are directly related to the regulated investment company's prin- 18 218 cipal business of investing in stock or securities (or options or futures thereon). Because of the Short-Short Gain Test, the Portfolio may have to limit the sale of appreciated securities that it has held for less than three months. However, the Short-Short Gain Test will not prevent the Portfolio from disposing of investments at a loss, since the recognition of a loss before the expiration of the three-month holding period is disregarded. Interest (including original issue discount) received by the Portfolio at maturity or upon the disposition of a security held for less than three months will not be treated as gross income derived from the sale or other disposition of a security within the meaning of the Short-Short Gain Test. However, income that is attributable to realized market appreciation will be treated as gross income from the sale or other disposition of securities for this purpose. In addition to satisfying the requirements described above, the Portfolio must satisfy an asset diversification test in order to qualify for tax purposes as a regulated investment company. Under this test, at the close of each quarter of the Portfolio's taxable year, at least 50% of the value of the Portfolio's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Portfolio has not invested more than 5% of the value of the Portfolio's total assets in securities of such issuer and as to which the Portfolio does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any other issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Portfolio controls and which are engaged in the same or similar trades or businesses. If for any taxable year the Portfolio does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of the Portfolio's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends received deduction in the case of corporate shareholders. EXCISE TAX ON REGULATED INVESTMENT COMPANIES A 4% non-deductible excise tax is imposed on a regulated investment company that fails to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income for the one-year period ended on October 31 of such calendar year (or, at the election of a regulated investment company having a taxable year ending November 30 or December 31, for its taxable year (a "taxable year election")). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. The Portfolio intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, investors should note that the Portfolio may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability. PORTFOLIO DISTRIBUTIONS The Portfolio anticipates distributing substantially all of its investment company taxable income for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they will not qualify for the 70% dividends received deduction for corporations. Distributions by the Portfolio will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of the Portfolio. Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date. Ordinarily, shareholders are required to take distributions by the Portfolio into account in the year in which the distributions are made. However, distributions declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Portfolio) on December 31 of such calendar year if such distributions are actually made in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year. The Portfolio will be required in certain cases to withhold and remit to the U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and the proceeds of redemption of shares, paid to any shareholder (1) who has provided either an incorrect tax identification number or no number at all, (2) who is subject to backup withholding by the Internal Revenue Service for failure to report the receipt of interest or dividend income properly, or (3) who has failed to certify to the Portfolio that it is not subject to backup withholding or that it is a corporation or other "exempt recipient." SALE OR REDEMPTION OF SHARES A shareholder will recognize gain or loss on the sale or redemption of shares of a class in an amount equal to the difference between the proceeds of the sale or redemption and the shareholder's adjusted tax basis in the shares. All or a portion of any 19 219 loss so recognized may be disallowed if the shareholder purchases other shares of the class within 30 days before or after the sale or redemption. In general, any gain or loss arising from (or treated as arising from) the sale or redemption of shares of a class will be considered capital gain or loss and will be long-term capital gain or loss if the shares were held for longer than one year. However, any capital loss arising from the sale or redemption of shares held for six months or less will be treated as a long-term capital loss to the extent of the amount of capital gain dividends received on such shares. For this purpose, the special holding period rules of Code Section 246(c)(3) and (4) generally will apply in determining the holding period of shares. FOREIGN SHAREHOLDERS Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from the Portfolio is "effectively connected" with a U.S. trade or business carried on by such shareholder. If the income from the Portfolio is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, dividends and distributions (other than capital gains dividends) will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the dividend or distribution. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gains realized on the sale of shares of a class, capital gain dividends and amounts retained by the Portfolio that are designated as undistributed capital gains. If the income from the Portfolio is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends and any gains realized upon the sale of shares of the Portfolio will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic corporations. In the case of foreign noncorporate shareholders, the Portfolio may be required to withhold U.S. federal income tax at a rate of 31% on distributions that are otherwise exempt from withholding tax unless such shareholders furnish the Portfolio with proper notification of their foreign status. The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisers with respect to the particular tax consequences to them of an investment in the Portfolio, including the applicability of foreign taxes. EFFECT OF FUTURE LEGISLATION; STATE AND LOCAL TAX CONSIDERATIONS The foregoing general discussion of U.S. federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on December 30, 1996. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Rules of state and local taxation of ordinary income dividends and capital gain dividends from regulated investment companies often differ from the rules for U.S. federal income taxation described above. It is anticipated that the ordinary income dividends paid by the Portfolio from net investment income will be exempt from state and local personal and, in some cases, corporate income taxes in many states. Shareholders are urged to consult their tax advisers as to the consequences of these and other state and local tax rules affecting their investment in the Portfolio. 20 220 FINANCIAL STATEMENTS FS-1 221 TREASURY TAXADVANTAGE PORTFOLIO INSTITUTIONAL CLASS SCHEDULE OF INVESTMENTS August 31, 1996
MATURITY PAR (000) VALUE U.S. TREASURY SECURITIES - 99.76% U.S. TREASURY BILLS(a) - 69.58% 5.215% 09/17/96 $ 49,680 $49,579,246 - ----------------------------------------------------------------- 5.05% 09/19/96 2,984 2,976,465 - ----------------------------------------------------------------- 5.04% 09/19/96 7,000 6,982,360 - ----------------------------------------------------------------- 5.045% 09/19/96 4,670 4,658,220 - ----------------------------------------------------------------- 5.065% 09/26/96 12,800 12,754,978 - ----------------------------------------------------------------- 5.095% 09/26/96 9,765 9,730,450 - ----------------------------------------------------------------- 5.06% 09/26/96 22,915 22,834,479 - ----------------------------------------------------------------- 5.145% 10/03/96 44,995 44,789,224 - ----------------------------------------------------------------- 5.10% 10/03/96 1,405 1,398,631 - ----------------------------------------------------------------- 5.095% 10/03/96 540 537,555 - ----------------------------------------------------------------- 5.115% 10/03/96 1,820 1,811,725 - ----------------------------------------------------------------- 5.095% 10/03/96 3,000 2,986,413 - ----------------------------------------------------------------- 5.155% 10/24/96 19,525 19,376,819 - ----------------------------------------------------------------- 5.175% 10/24/96 20,025 19,872,434 - ----------------------------------------------------------------- 5.18% 10/24/96 2,380 2,361,850 - ----------------------------------------------------------------- 5.01% 11/07/96 23,000 22,785,544 - ----------------------------------------------------------------- 4.975% 11/07/96 4,200 4,161,112 - ----------------------------------------------------------------- 5.00% 11/07/96 11,185 11,080,917 - ----------------------------------------------------------------- 4.995% 11/07/96 5,200 5,151,660 - ----------------------------------------------------------------- 5.02% 11/14/96 13,000 12,865,854 - ----------------------------------------------------------------- 5.04% 11/14/96 5,300 5,245,092 - ----------------------------------------------------------------- 5.06% 11/14/96 8,000 7,916,791 - ----------------------------------------------------------------- 5.01% 11/21/96 12,250 12,111,912 - ----------------------------------------------------------------- 5.02% 11/21/96 4,700 4,646,914 - ----------------------------------------------------------------- 5.03% 11/21/96 14,415 14,251,858 - ----------------------------------------------------------------- 5.06% 11/21/96 2,200 2,174,953 - ----------------------------------------------------------------- 5.095% 11/29/96 13,235 13,068,292 - ----------------------------------------------------------------- 318,111,748 - -----------------------------------------------------------------
FS-2 222
MATURITY PAR (000) VALUE US. TREASURY SECURITIES - (continued) U.S. TREASURY NOTES - 30.18% 8.00% 10/15/96 $42,475 $ 42,605,929 - ---------------------------------------------------------------------------- 6.875% 10/31/96 40,500 40,589,317 - ---------------------------------------------------------------------------- 7.25% 11/15/96 24,505 24,593,717 - ---------------------------------------------------------------------------- 7.50% 12/31/96 30,000 30,209,989 - ---------------------------------------------------------------------------- 137,998,952 - ---------------------------------------------------------------------------- Total U.S. Treasury Securities 456,110,700 - ---------------------------------------------------------------------------- TOTAL INVESTMENTS -- 99.76% 456,110,700(b) - ---------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES -- 0.24% 1,085,450 - ---------------------------------------------------------------------------- NET ASSETS -- 100.00% $457,196,150 ============================================================================
(a) U.S. Treasury bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Portfolio. (b) Also represents cost for federal income tax purposes. See Notes to Financial Statements. FS-3 223 STATEMENT OF ASSETS AND LIABILITIES August 31, 1996 ASSETS: Investments, at value (amortized cost) $456,110,700 - ---------------------------------------------------------------------- Cash 4,084 - ---------------------------------------------------------------------- RECEIVABLES FOR: Interest 3,140,128 - ---------------------------------------------------------------------- Reimbursement from advisor 4,800 - ---------------------------------------------------------------------- Investments sold 49,603,992 - ---------------------------------------------------------------------- Investment for deferred compensation plan 13,600 - ---------------------------------------------------------------------- Other assets 11,168 - ---------------------------------------------------------------------- Total assets 508,888,472 - ---------------------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 49,579,246 - ---------------------------------------------------------------------- Dividends 1,966,957 - ---------------------------------------------------------------------- Deferred compensation 13,600 - ---------------------------------------------------------------------- Accrued advisory fees 55,963 - ---------------------------------------------------------------------- Accrued distribution fees 10,833 - ---------------------------------------------------------------------- Accrued transfer agent fees 3,541 - ---------------------------------------------------------------------- Accrued trustees' fees 1,297 - ---------------------------------------------------------------------- Accrued administrative services fees 2,545 - ---------------------------------------------------------------------- Accrued operating expenses 58,340 - ---------------------------------------------------------------------- Total liabilities 51,692,322 - ---------------------------------------------------------------------- NET ASSETS $457,196,150 ====================================================================== NET ASSETS: Institutional Class $407,218,040 ====================================================================== Private Investment Class $ 49,978,110 ====================================================================== Shares of beneficial interest, $.01 par value per share: Institutional Class 407,107,656 ====================================================================== Private Investment Class 49,964,561 ====================================================================== NET ASSET VALUE PER SHARE: Net asset value, offering and redemption price per share $ 1.00 ======================================================================
See Notes to Financial Statements. FS-4 224 STATEMENT OF OPERATIONS For the year ended August 31, 1996 INVESTMENT INCOME: Interest income $23,434,439 - -------------------------------------------------------------------------- EXPENSES: Advisory fees 791,921 - -------------------------------------------------------------------------- Custodian fees 30,033 - -------------------------------------------------------------------------- Administrative services fees 30,056 - -------------------------------------------------------------------------- Trustees' fees and expenses 9,082 - -------------------------------------------------------------------------- Transfer agent fees 34,495 - -------------------------------------------------------------------------- Distribution fees (Note 2) 52,922 - -------------------------------------------------------------------------- Other 140,352 - -------------------------------------------------------------------------- Total expenses 1,088,861 - -------------------------------------------------------------------------- Less expenses assumed by advisor (141,726) - -------------------------------------------------------------------------- Net expenses 947,135 - -------------------------------------------------------------------------- Net investment income 22,487,304 - -------------------------------------------------------------------------- Net realized gain on sales of investments 55,902 - -------------------------------------------------------------------------- Net increase in net assets resulting from operations $22,543,206 ==========================================================================
STATEMENT OF CHANGES IN NET ASSETS For the years ended August 31, 1996 and 1995
1996 1995 ------------ ------------ OPERATIONS: Net investment income $ 22,487,304 $ 20,447,888 - ---------------------------------------------------------------------------- Net realized gain on sales of investments 55,902 24,806 - ---------------------------------------------------------------------------- Net increase in net assets resulting from operations 22,543,206 20,472,694 - ---------------------------------------------------------------------------- Distributions to shareholders from net investment income (22,487,304) (20,447,888) - ---------------------------------------------------------------------------- Distributions to shareholders from net realized gains on investments -- (12,244) - ---------------------------------------------------------------------------- Share transactions-net 57,341,150 (4,095,169) - ---------------------------------------------------------------------------- Net increase (decrease) in net assets 57,397,052 (4,082,607) - ---------------------------------------------------------------------------- NET ASSETS: Beginning of period 399,799,098 403,881,705 - ---------------------------------------------------------------------------- End of period $457,196,150 $399,799,098 ============================================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $457,072,217 $399,731,067 - ---------------------------------------------------------------------------- Undistributed net realized gain on sales of investments 123,933 68,031 - ---------------------------------------------------------------------------- $457,196,150 $399,799,098 ============================================================================
See Notes to Financial Statements. FS-5 225 NOTES TO FINANCIAL STATEMENTS August 31, 1996 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES Short-Term Investments Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end series, diversified management investment company. The Fund is organized as a Delaware business trust consisting of two different portfolios, each of which offers separate series of shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio, with the assets, liabilities and operations of each portfolio accounted for separately. Information presented in these financial statements pertains only to the Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio consists of two different classes of shares: the Institutional Class and the Private Investment Class. Matters affecting each class are voted on exclusively by such shareholders. The Portfolio is a money market fund whose investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The following is a summary of the significant accounting policies followed by the Portfolio in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of these financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations - The Portfolio invests only in securities which have maturities of 397 days or less. The securities are valued on the basis of amortized cost which approximates market value. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. B. Securities Transactions, Investment Income and Distributions - Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income, adjusted for amortization of premiums and discounts on investments, is accrued daily. Dividends to shareholders are declared daily and are paid on the first business day of the following month. C. Federal Income Taxes - The Portfolio intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Expenses - Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to more than one class, e.g., advisory fees, are allocated between them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM receives a monthly fee with respect to the Portfolio calculated by applying a monthly rate, based upon the following annual rates, to the average daily net assets of the Portfolio:
Net Assets RATE - -------------------------------------------------------------------------- First $250 million 0.20% - -------------------------------------------------------------------------- Over $250 million to $500 million 0.15% - -------------------------------------------------------------------------- Over $500 million 0.10% - --------------------------------------------------------------------------
The Fund has entered into a master distribution agreement with Fund Management Company ("FMC") for the distribution of shares of the Institutional Class and the Private Investment Class. The Company has also adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the Private Investment Class. The Plan provides that the Private Investment Class may pay up to a 0.50% maximum annual rate of the Private Investment Class' average daily net assets. Of this amount, the Fund may pay an asset-based sales charge to FMC and the Portfolio may pay a service fee of 0.25% of the average daily net assets of the Private Investment Class to selected banks, broker- dealers and other financial institutions who offer continuing personal shareholder services to their customers who purchase and own shares of the Private Investment Class. Any amounts not paid as a service fee under such Plan would constitute an asset-based sales charge. The Plan also FS-6 226 imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Portfolio with respect to the Private Investment Class. During the year ended August 31, 1996, the Private Investment Class paid $52,922 as compensation under the Plan. AIM will, if necessary, reduce its fee for any fiscal year to the extent required so that the amount of ordinary expenses of the Portfolio (excluding interest, taxes, brokerage commissions and extraordinary expenses) paid or incurred by the Portfolio for such fiscal year does not exceed the applicable expense limitations imposed by the state securities regulations in any state in which the Portfolio's shares are qualified for sale. During the year ended August 31, 1996, AIM voluntarily waived advisory fees of $116,126 on the Portfolio and assumed expenses of $25,600. The Portfolio, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain costs incurred in providing accounting services to the Portfolio. During the year ended August 31, 1996, the Portfolio reimbursed AIM $30,056 for such services. During the year ended August 31, 1996, the Portfolio paid A I M Institutional Fund Services, Inc. ("AIFS") $33,534 pursuant to a shareholder and transfer agency services agreement. Certain officers and trustees of the Fund are officers and directors of AIM, FMC and AIFS. The Portfolio paid legal fees of $3,900 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board of Trustees. A member of that firm is a trustee of the Fund. NOTE 3-TRUSTEES' FEES Trustees' fees represent remuneration paid or accrued to each trustee who is not an "interested person" of AIM. The Fund may invest trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan. NOTE 4-SHARE INFORMATION Changes in shares outstanding for the years ended August 31, 1996 and 1995 were as follows:
1996 1995 ------------------------------- ------------------------------- SHARES AMOUNT SHARES AMOUNT -------------- --------------- -------------- --------------- Sold: Institutional Class 1,931,081,349 $ 1,931,081,349 1,566,228,552 $ 1,566,228,552 - ----------------------------------------------------------------------------------------- Private Investment Class* 173,175,235 173,175,235 29,762,798 29,762,798 - ----------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Institutional Class 279,901 279,901 255,484 255,484 - ----------------------------------------------------------------------------------------- Private Investment Class* 215,983 215,983 211,779 211,779 - ----------------------------------------------------------------------------------------- Reacquired: Institutional Class (1,918,562,346) (1,918,562,346) (1,576,001,520) (1,576,001,520) - ----------------------------------------------------------------------------------------- Private Investment Class* (128,848,972) (128,848,972) (24,552,262) (24,552,262) - ----------------------------------------------------------------------------------------- Net increase (decrease) 57,341,150 $ 57,341,150 (4,095,169) $ (4,095,169) =========================================================================================
* The Private Investment Class commenced operations on December 21, 1994. FS-7 227 NOTE 5-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a share outstanding of the Institutional Class during each of the years in the six-year period ended August 31, 1996 and the period August 17, 1990 (date operations commenced) through August 31, 1990.
1996 1995 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- -------- ------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------- -------- -------- -------- -------- -------- -------- ------- Income from investment operations: Net investment income 0.05 0.05 0.03 0.03 0.04 0.07 0.003 - ----------------------- -------- -------- -------- -------- -------- -------- ------- Less distributions: Dividends from net investment income (0.05) (0.05) (0.03) (0.03) (0.04) (0.07) (0.003) - ----------------------- -------- -------- -------- -------- -------- -------- ------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======================= ======== ======== ======== ======== ======== ======== ======= Total return 5.19% 5.35% 3.29% 2.96% 4.32% 6.70% 7.79%(a) ======================= ======== ======== ======== ======== ======== ======== ======= Ratios/supplemental data: Net assets, end of period (000s omitted) $407,218 $394,376 $403,882 $434,693 $573,283 $403,846 $16,201 ======================= ======== ======== ======== ======== ======== ======== ======= Ratio of expenses to average net assets 0.20%(b)(c) 0.20%(c) 0.20%(c) 0.20% 0.17%(e) 0.14%(e) 0.10%(e) ======================= ======== ======== ======== ======== ======== ======== ======= Ratio of net investment income to average net assets 5.06%(b)(d) 5.21%(d) 3.23%(d) 2.93% 4.16%(f) 6.16%(f) 7.74%(f) ======================= ======== ======== ======== ======== ======== ======== =======
(a) Annualized. (b) Ratios are based on average net assets of $424,432,042. (c) Ratios of expenses to average net assets prior to waiver of advisory fees were 0.23% for the periods 1996-1994, respectively. Ratios are annualized for periods less than one year. (d) Ratios of net investment income to average net assets prior to waiver of advisory fees were 5.04%, 5.18% and 3.20% for the periods 1996-1994, respectively. Ratios are annualized for periods less than one year. (e) Ratios of expenses to average net assets prior to waiver of advisory fees and/or expense reimbursements were 0.21%, 0.25% and 1.24% for the periods 1992-1990, respectively. Ratios are annualized for periods less than one year. (f) Ratios of net investment income to average net assets prior to waiver of advisory fees and/or expense reimbursements were 4.13%, 6.04% and 6.60% for the periods 1992-1990, respectively. Ratios are annualized for periods less than one year. FS-8 228 INDEPENDENT AUDITORS' REPORT To the Board of Trustees and Shareholders Short-Term Investments Trust: We have audited the accompanying statement of assets and liabilities of the Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments Trust), including the schedule of investments, as of August 31, 1996, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the six-year period then ended and the period August 17, 1990 (date operations commenced) through August 31, 1990. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 1996, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Treasury TaxAdvantage Portfolio as of August 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the six-year period then ended and the period August 17, 1990 (date operations commenced) through August 31, 1990 in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Houston, Texas October 4, 1996 FS-9 229 TREASURY TAXADVANTAGE PORTFOLIO PRIVATE INVESTMENT CLASS SCHEDULE OF INVESTMENTS August 31, 1996
MATURITY PAR (000) VALUE U.S. TREASURY SECURITIES - 99.76% U.S. TREASURY BILLS(a) - 69.58% 5.215% 09/17/96 $ 49,680 $49,579,246 - ----------------------------------------------------------------- 5.05% 09/19/96 2,984 2,976,465 - ----------------------------------------------------------------- 5.04% 09/19/96 7,000 6,982,360 - ----------------------------------------------------------------- 5.045% 09/19/96 4,670 4,658,220 - ----------------------------------------------------------------- 5.065% 09/26/96 12,800 12,754,978 - ----------------------------------------------------------------- 5.095% 09/26/96 9,765 9,730,450 - ----------------------------------------------------------------- 5.06% 09/26/96 22,915 22,834,479 - ----------------------------------------------------------------- 5.145% 10/03/96 44,995 44,789,224 - ----------------------------------------------------------------- 5.10% 10/03/96 1,405 1,398,631 - ----------------------------------------------------------------- 5.095% 10/03/96 540 537,555 - ----------------------------------------------------------------- 5.115% 10/03/96 1,820 1,811,725 - ----------------------------------------------------------------- 5.095% 10/03/96 3,000 2,986,413 - ----------------------------------------------------------------- 5.155% 10/24/96 19,525 19,376,819 - ----------------------------------------------------------------- 5.175% 10/24/96 20,025 19,872,434 - ----------------------------------------------------------------- 5.18% 10/24/96 2,380 2,361,850 - ----------------------------------------------------------------- 5.01% 11/07/96 23,000 22,785,544 - ----------------------------------------------------------------- 4.975% 11/07/96 4,200 4,161,112 - ----------------------------------------------------------------- 5.00% 11/07/96 11,185 11,080,917 - ----------------------------------------------------------------- 4.995% 11/07/96 5,200 5,151,660 - ----------------------------------------------------------------- 5.02% 11/14/96 13,000 12,865,854 - ----------------------------------------------------------------- 5.04% 11/14/96 5,300 5,245,092 - ----------------------------------------------------------------- 5.06% 11/14/96 8,000 7,916,791 - ----------------------------------------------------------------- 5.01% 11/21/96 12,250 12,111,912 - ----------------------------------------------------------------- 5.02% 11/21/96 4,700 4,646,914 - ----------------------------------------------------------------- 5.03% 11/21/96 14,415 14,251,858 - ----------------------------------------------------------------- 5.06% 11/21/96 2,200 2,174,953 - ----------------------------------------------------------------- 5.095% 11/29/96 13,235 13,068,292 - ----------------------------------------------------------------- 318,111,748 - -----------------------------------------------------------------
FS-10 230
MATURITY PAR (000) VALUE US. TREASURY SECURITIES - (continued) U.S. TREASURY NOTES - 30.18% 8.00% 10/15/96 $42,475 $ 42,605,929 - ---------------------------------------------------------------------------- 6.875% 10/31/96 40,500 40,589,317 - ---------------------------------------------------------------------------- 7.25% 11/15/96 24,505 24,593,717 - ---------------------------------------------------------------------------- 7.50% 12/31/96 30,000 30,209,989 - ---------------------------------------------------------------------------- 137,998,952 - ---------------------------------------------------------------------------- Total U.S. Treasury Securities 456,110,700 - ---------------------------------------------------------------------------- TOTAL INVESTMENTS -- 99.76% 456,110,700(b) - ---------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES -- 0.24% 1,085,450 - ---------------------------------------------------------------------------- NET ASSETS -- 100.00% $457,196,150 ============================================================================
(a) U.S. Treasury bills are traded on a discount basis. In such cases the interest rate shown represents the rate of discount paid or received at the time of purchase by the Portfolio. (b) Also represents cost for federal income tax purposes. See Notes to Financial Statements. FS-11 231 STATEMENT OF ASSETS AND LIABILITIES August 31, 1996 ASSETS: Investments, at value (amortized cost) $456,110,700 - ---------------------------------------------------------------------- Cash 4,084 - ---------------------------------------------------------------------- Receivables For: Interest 3,140,128 - ---------------------------------------------------------------------- Reimbursement from advisor 4,800 - ---------------------------------------------------------------------- Investments sold 49,603,992 - ---------------------------------------------------------------------- Investment for deferred compensation plan 13,600 - ---------------------------------------------------------------------- Other assets 11,168 - ---------------------------------------------------------------------- Total assets 508,888,472 - ---------------------------------------------------------------------- LIABILITIES: Payables For: Investments purchased 49,579,246 - ---------------------------------------------------------------------- Dividends 1,966,957 - ---------------------------------------------------------------------- Deferred compensation 13,600 - ---------------------------------------------------------------------- Accrued advisory fees 55,963 - ---------------------------------------------------------------------- Accrued distribution fees 10,833 - ---------------------------------------------------------------------- Accrued transfer agent fees 3,541 - ---------------------------------------------------------------------- Accrued trustees' fees 1,297 - ---------------------------------------------------------------------- Accrued administrative services fees 2,545 - ---------------------------------------------------------------------- Accrued operating expenses 58,340 - ---------------------------------------------------------------------- Total liabilities 51,692,322 - ---------------------------------------------------------------------- NET ASSETS $457,196,150 ====================================================================== NET ASSETS: Institutional Class $407,218,040 ====================================================================== Private Investment Class $ 49,978,110 ====================================================================== Shares of beneficial interest, $.01 par value per share: Institutional Class 407,107,656 ====================================================================== Private Investment Class 49,964,561 ====================================================================== NET ASSET VALUE PER SHARE: Net asset value, offering and redemption price per share $ 1.00 ======================================================================
See Notes to Financial Statements. FS-12 232 STATEMENT OF OPERATIONS For the year ended August 31, 1996 INVESTMENT INCOME: Interest income $23,434,439 - ------------------------------------------------------------------ EXPENSES: Advisory fees 791,921 - ------------------------------------------------------------------ Custodian fees 30,033 - ------------------------------------------------------------------ Administrative services fees 30,056 - ------------------------------------------------------------------ Trustees' fees and expenses 9,082 - ------------------------------------------------------------------ Transfer agent fees 34,495 - ------------------------------------------------------------------ Distribution fees (Note 2) 52,922 - ------------------------------------------------------------------ Other 140,352 - ------------------------------------------------------------------ Total expenses 1,088,861 - ------------------------------------------------------------------ Less expenses assumed by advisor (141,726) - ------------------------------------------------------------------ Net expenses 947,135 - ------------------------------------------------------------------ Net investment income 22,487,304 - ------------------------------------------------------------------ Net realized gain on sales of investments 55,902 - ------------------------------------------------------------------ Net increase in net assets resulting from operations $22,543,206 ==================================================================
See Notes to Financial Statements. FS-13 233 STATEMENT OF CHANGES IN NET ASSETS For the years ended August 31, 1996 and 1995
1996 1995 ------------ ------------ OPERATIONS: Net investment income $ 22,487,304 $ 20,447,888 - ---------------------------------------------------------------------------- Net realized gain on sales of investments 55,902 24,806 - ---------------------------------------------------------------------------- Net increase in net assets resulting from operations 22,543,206 20,472,694 - ---------------------------------------------------------------------------- Distributions to shareholders from net investment income (22,487,304) (20,447,888) - ---------------------------------------------------------------------------- Distributions to shareholders from net realized gains on investments -- (12,244) - ---------------------------------------------------------------------------- Share transactions-net 57,341,150 (4,095,169) - ---------------------------------------------------------------------------- Net increase (decrease) in net assets 57,397,052 (4,082,607) - ---------------------------------------------------------------------------- NET ASSETS: Beginning of period 399,799,098 403,881,705 - ---------------------------------------------------------------------------- End of period $457,196,150 $399,799,098 ============================================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $457,072,217 $399,731,067 - ---------------------------------------------------------------------------- Undistributed net realized gain on sales of investments 123,933 68,031 - ---------------------------------------------------------------------------- $457,196,150 $399,799,098 ============================================================================
See Notes to Financial Statements. FS-14 234 NOTES TO FINANCIAL STATEMENTS August 31, 1996 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES Short-Term Investments Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end series, diversified management investment company. The Fund is organized as a Delaware business trust consisting of two different portfolios, each of which offers separate series of shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio, with the assets, liabilities and operations of each portfolio accounted for separately. Information presented in these financial statements pertains only to the Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio consists of two different classes of shares: the Institutional Class and the Private Investment Class. Matters affecting each class are voted on exclusively by such shareholders. The Portfolio is a money market fund whose investment objective is the maximization of current income to the extent consistent with the preservation of capital and the maintenance of liquidity. The following is a summary of the significant accounting policies followed by the Portfolio in the preparation of its financial statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of these financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Security Valuations - The Portfolio invests only in securities which have maturities of 397 days or less. The securities are valued on the basis of amortized cost which approximates market value. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium. B. Securities Transactions, Investment Income and Distributions - Securities transactions are accounted for on a trade date basis. Realized gains or losses are computed on the basis of specific identification of the securities sold. Interest income, adjusted for amortization of premiums and discounts on investments, is accrued daily. Dividends to shareholders are declared daily and are paid on the first business day of the following month. C. Federal Income Taxes - The Portfolio intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Expenses - Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses which are applicable to more than one class, e.g., advisory fees, are allocated between them. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM receives a monthly fee with respect to the Portfolio calculated by applying a monthly rate, based upon the following annual rates, to the average daily net assets of the Portfolio:
Net Assets RATE - ------------------------------------------------------------------------------ First $250 million 0.20 - ------------------------------------------------------------------------------ Over $250 million to $500 million 0.15 - ------------------------------------------------------------------------------ Over $500 million 0.10 - ------------------------------------------------------------------------------
The Fund has entered into a master distribution agreement with Fund Management Company ("FMC") for the distribution of shares of the Institutional Class and the Private Investment Class. The Company has also adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the Private Investment Class. The Plan provides that the Private Investment Class may pay up to a 0.50% maximum annual rate of the Private Investment Class' average daily net assets. Of this amount, the Fund may pay an asset-based sales charge to FMC and the Portfolio may pay a service fee of 0.25% of the average daily net assets of the Private Investment Class to selected banks, broker- dealers and other financial institutions who offer continuing personal shareholder services to their customers who purchase and own shares of the Private Investment Class. Any amounts not paid as a service fee under such Plan would constitute an asset-based sales charge. The Plan also FS-15 235 imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Portfolio with respect to the Private Investment Class. During the year ended August 31, 1996, the Private Investment Class paid $52,922 as compensation under the Plan. AIM will, if necessary, reduce its fee for any fiscal year to the extent required so that the amount of ordinary expenses of the Portfolio (excluding interest, taxes, brokerage commissions and extraordinary expenses) paid or incurred by the Portfolio for such fiscal year does not exceed the applicable expense limitations imposed by the state securities regulations in any state in which the Portfolio's shares are qualified for sale. During the year ended August 31, 1996, AIM voluntarily waived advisory fees of $116,126 on the Portfolio and assumed expenses of $25,600. The Portfolio, pursuant to a master administrative services agreement with AIM, has agreed to reimburse AIM for certain costs incurred in providing accounting services to the Portfolio. During the year ended August 31, 1996, the Portfolio reimbursed AIM $30,056 for such services. During the year ended August 31, 1996, the Portfolio paid A I M Institutional Fund Services, Inc. ("AIFS") $33,534 pursuant to a shareholder and transfer agency services agreement. Certain officers and trustees of the Fund are officers and directors of AIM, FMC and AIFS. The Portfolio paid legal fees of $3,900 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board of Trustees. A member of that firm is a trustee of the Fund. NOTE 3-TRUSTEES' FEES Trustees' fees represent remuneration paid or accrued to each trustee who is not an "interested person" of AIM. The Fund may invest trustees' fees, if so elected by a trustee, in mutual fund shares in accordance with a deferred compensation plan. NOTE 4-SHARE INFORMATION Changes in shares outstanding for the years ended August 31, 1996 and 1995 were as follows:
1996 1995 ------------------------------- ------------------------------- SHARES AMOUNT SHARES AMOUNT -------------- --------------- -------------- --------------- Sold: Institutional Class 1,931,081,349 $ 1,931,081,349 1,566,228,552 $ 1,566,228,552 - ----------------------------------------------------------------------------------------- Private Investment Class* 173,175,235 173,175,235 29,762,798 29,762,798 - ----------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Institutional Class 279,901 279,901 255,484 255,484 - ----------------------------------------------------------------------------------------- Private Investment Class* 215,983 215,983 211,779 211,779 - ----------------------------------------------------------------------------------------- Reacquired: Institutional Class (1,918,562,346) (1,918,562,346) (1,576,001,520) (1,576,001,520) - ----------------------------------------------------------------------------------------- Private Investment Class* (128,848,972) (128,848,972) (24,552,262) (24,552,262) - ----------------------------------------------------------------------------------------- Net increase (decrease) 57,341,150 $ 57,341,150 (4,095,169) $ (4,095,169) ==========================================================================================
* The Private Investment Class commenced operations on December 21, 1994. FS-16 236 NOTE 5-FINANCIAL HIGHLIGHTS Shown below are the condensed financial highlights for a share outstanding of the Private Investment Class for the year ended August 31, 1996 and the period December 21, 1994 (date operations commenced) through August 31, 1995.
1996 1995 ------- ------ Net asset value, beginning of period $ 1.00 $ 1.00 - ------------------------------------------------------- ------- ------ Income from investment operations: Net investment income 0.05 0.04 - ------------------------------------------------------- ------- ------ Less distributions: Dividends from net investment income (0.05) (0.04) - ------------------------------------------------------- ------- ------ Net asset value, end of period $ 1.00 $ 1.00 ======================================================= ======= ====== Total return 4.93% 5.32%(a) ======================================================= ======= ====== Ratios/supplemental data: Net assets, end of period (000s omitted) $49,978 $5,423 ======================================================= ======= ====== Ratio of expenses to average net assets(b) 0.45%(c) 0.45%(a) ======================================================= ======= ====== Ratio of net investment income to average net assets(b) 4.72%(c) 5.21%(a) ======================================================= ======= ======
(a) Annualized. (b) After waiver of advisory fees, distribution fees and expense reimbursements. Ratios of expenses and net investment income to average net assets prior to waivers and expense reimbursements were 0.85% and 4.32% for 1996 and 1.02% and 4.64% for 1995. (c) Ratios are based on average net assets of $21,111,080. FS-17 237 INDEPENDENT AUDITORS' REPORT To the Board of Trustees and Shareholders Short-Term Investments Trust: We have audited the accompanying statement of assets and liabilities of the Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments Trust), including the schedule of investments, as of August 31, 1996, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for the year then ended and the period December 21, 1994 (date operations commenced) through August 31, 1995. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 1996, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Treasury TaxAdvantage Portfolio as of August 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for the year then ended and the period December 21, 1994 (date operations commenced) through August 31, 1995 in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP KPMG Peat Marwick LLP Houston, Texas October 4, 1996 FS-18 238 PART C OTHER INFORMATION Item 24. (a) Financial Statements 1. Treasury Portfolio - Cash Management Class In Part A: Financial Highlights as of August 31, 1996 (audited) In Part B: (1) Independent Auditors' Report (2) Financial Statements as of August 31, 1996 (audited) In Part C: None 2. Treasury Portfolio - Institutional Class In Part A: Financial Highlights as of August 31, 1996 (audited) In Part B: (1) Independent Auditors' Report (2) Financial Statements as of August 31, 1996 (audited) In Part C: None 3. Treasury Portfolio - Personal Investment Class In Part A: Financial Highlights as of August 31, 1996 (audited) In Part B: (1) Independent Auditors' Report (2) Financial Statements as of August 31, 1996 (audited) In Part C: None 4. Treasury Portfolio - Private Investment Class In Part A: Financial Highlights as of August 31, 1996 (audited) In Part B: (1) Independent Auditors' Report (2) Financial Statements as of August 31, 1996 (audited) In Part C: None 5. Treasury Portfolio - Resource Class In Part A: Financial Highlights as of August 31, 1996 (audited) In Part B: (1) Independent Auditors' Report (2) Financial Statements as of August 31, 1996 (audited) In Part C: None
C-1 239 6. Treasury TaxAdvantage Portfolio - Institutional Class In Part A: Financial Highlights as of August 31, 1996 (audited) In Part B: (1) Independent Auditors' Report (2) Financial Statements as of August 31, 1996 (audited) In Part C: None 7. Treasury TaxAdvantage Portfolio - Private Investment Class In Part A: Financial Highlights as of August 31, 1996 (audited) In Part B: (1) Independent Auditors' Report (2) Financial Statements as of August 31, 1996 (audited) In Part C: None (b) Exhibits
Exhibit Number Description - ------ ------------------------------------------------------------- (1) - (a) Certificate of Trust of Registrant was filed as an exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and is filed electronically herewith. (b) Agreement and Declaration of Trust of Registrant was filed as an exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (c) First Amendment, dated September 11, 1993, to the Registrant's Agreement and Declaration of Trust was filed as an exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (d) Second Amendment, dated August 4, 1994, to the Registrant's Agreement and Declaration of Trust was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (e) Third Amendment, dated September 19, 1995, to the Registrant's Agreement and Declaration of Trust is filed herewith electronically. (2) - (a) By-Laws of Registrant was filed as an exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (b) Amendment to the By-Laws of Registrant, adopted December 2, 1993, was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference.
C-2 240
Exhibit Number Description - ------ ------------------------------------------------------------- (c) Second Amendment to the By-Laws of Registrant, dated March 14, 1995, is filed electronically herewith. (3) - Certain Voting Trust Agreements - None. (4) - (a) Form of Specimen Certificate representing shares of the Treasury TaxAdvantage Portfolio was filed as an Exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and is hereby incorporated by reference. (b) Form of Specimen Certificate representing shares of the Institutional Class of the Treasury Portfolio was filed as an Exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and is hereby incorporated by reference. (c) Form of Specimen Certificate representing shares of the Personal Investment Class of the Treasury Portfolio was filed as an Exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and is hereby incorporated by reference. (d) Form of Specimen Certificate representing shares of the Private Investment Class of the Treasury Portfolio was filed as an Exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and is hereby incorporated by reference. (e) Form of Specimen Certificate representing shares of the Cash Management Class of the Treasury Portfolio was filed as an Exhibit to Registrant's Post-Effective Amendment No. 26 on October 15, 1993, and is hereby incorporated by reference. (f) Form of Specimen Certificate representing shares of the Private Investment Class of the Treasury TaxAdvantage Portfolio was filed as an Exhibit to Registrant's Post-Effective Amendment No. 27 on November 14, 1994, and is hereby incorporated by reference. (g) Form of Specimen Certificate representing shares of the Resource Class of the Treasury Portfolio was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (5) - (a) Master Investment Advisory Agreement, dated October 18, 1993, between A I M Advisors, Inc. and Registrant with respect to the Treasury Portfolio and the Treasury TaxAdvantage Portfolio was filed as an Exhibit to Registrant's Post-Effective Amendment No. 27, on November 14, 1994, and is filed electronically herewith. (6) - (a) Master Distribution Agreement, dated October 18, 1993, between Fund Management Company and Registrant with respect to the Treasury and Treasury TaxAdvantage Portfolio was filed as an Exhibit to Registrant's Post-Effective Amendment No. 27 on November 14, 1994, and was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (b) Amendment No. 1, dated December 8, 1994, to Master Distribution Agreement, dated October 18, 1993, between Fund Management Company and Registrant was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference.
C-3 241
Exhibit Number Description - ------ ------------------------------------------------------------- (c) Amendment No. 2, dated September 19, 1995, to the Master Distribution Agreement, dated October 18, 1993, between Fund Management Company and Registrant is filed herewith electronically. (7) - (a) Retirement Plan for Eligible Directors/Trustees was filed as an exhibit to Registrant's Post-Effective Amendment No. 27 on November 14, 1994, and is filed electronically herewith. (b) Form of Deferred Compensation Agreement was filed as an exhibit to Registrant's Post-Effective Amendment No. 27 on November 14, 1994, and is hereby filed electronically herewith (8) - (a) Custodian Agreement, dated October 15, 1993, between The Bank of New York and Registrant, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 27 on November 14, 1994 and is filed electronically herewith. (b) Amendment, dated July 30, 1996, to the Custodian Agreement, dated October 15, 1993, between The Bank of New York and Registrant is filed electronically herewith. (9) - (a) Transfer Agency and Service Agreement, dated September 16, 1994, between A I M Institutional Fund Services, Inc. and Registrant was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (b) Amendment No. 1, dated July 1, 1996, to the Transfer Agency and Service Agreement, dated September 16, 1994, between A I M Institutional Fund Services, Inc. and Registrant was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (c) Master Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc. and Registrant was filed as an exhibit to Registrant's Post-Effective Amendment No. 27 on November 14, 1994, and was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 28 on November 13, 1995, and is hereby incorporated by reference. (d) Amendment No. 1, dated November 2, 1995, to the Master Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc. and Registrant is filed electronically herewith. (10) - (a) Opinion of Ballard Spahr Andrews & Ingersoll was filed as an exhibit to Registrant's Rule 24f-2 Notice for the fiscal year ending August 31, 1996. (11) - (a) Consent of Ballard Spahr Andrews & Ingersoll is filed electronically herewith. (b) Consent of KPMG Peat Marwick LLP is filed electronically herewith. (12) - Other Financial Statements - None. (13) - Agreement Concerning Initial Capitalization - None. (14) - Retirement Plans - None.
C-4 242
Exhibit Number Description - ------ ------------------------------------------------------------- (15) - (a) Master Distribution Plan pursuant to Rule 12b-1, effective as of August 6, 1993, as amended as of December 8, 1994, as further amended as of September 19, 1995, and as further amended as of December 5, 1995, and related forms of agreement with respect to the Personal Investment Class, Private Investment Class, Resource Class and the Cash Management Class of the Treasury Portfolio and the Private Investment Class of the Treasury TaxAdvantage Portfolio is filed electronically herewith. (16) - Schedules of Yield and Performance Quotations were filed as an exhibit to Registrant's Post-Effective Amendment No. 14 on October 31, 1988, and are hereby incorporated by reference. (18) - Multiple Class (Rule 18f-3) Plan is filed electronically herewith. (27) - Financial Data Schedule is filed electronically herewith. Item 25. Persons Controlled by or under Common Control with Registrant -------------------------------------------------------------
Furnish a list or diagram of all persons directly or indirectly controlled by or under common control with the Registrant and as to each such person indicate (1) if a company, the state or other sovereign power under the laws of which it is organized, and (2) the percentage of voting securities owned or other basis of control by the person, if any, immediately controlling it. None Item 26. Number of Holders of Securities State in substantially the tabular form indicated, as of a specified date within 90 days prior to the date of filing, the number of record holders of each class of securities of the Registrant.
Number of Record Holders Title Class December 1, 1996 ------------------------ ---------------- Treasury Portfolio Cash Management Class 9 Institutional Class 67 Personal Investment Class 5 Private Investment Class 12 Resource Class 5 Treasury TaxAdvantage Portfolio Institutional Class 19 Private Investment Class 5
Item 27. Indemnification State the general effect of any contract, arrangements or statute under which any director, officer, underwriter or affiliated person of the Registrant is insured or indemnified in any manner against any liability which may be incurred in such capacity, other than insurance provided by any director, officer, affiliated person or underwriter for their own protection. C-5 243 Under the terms of the Registrant's Agreement and Declaration of Trust, the Registrant may indemnify any person who was or is a trustee, officer or employee of the Registrant to the maximum extent permitted by law; provided, however, that any such indemnification (unless ordered by a court) shall be made by the Registrant only as authorized in the specific case upon a determination that indemnification of such persons is proper in the circumstances. Such determination shall be made (i) by the Board of Trustees, by a majority vote of a quorum which consists of trustees who are neither "interested persons" of the Registrant, as defined in Section 2(a)(19) of the Investment Company Act of 1940, nor parties to the proceeding, or (ii) if the required quorum is not obtainable or, if a quorum of such trustees so directs, by independent legal counsel in a written opinion. No indemnification will be provided by the Registrant to any trustee or officer of the Registrant for any liability to the Registrant or shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of duty. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Insurance coverage is provided under a joint Mutual Fund & Investment Advisory Professional and Directors & Officers Liability Policy, issued by ICI Mutual Insurance Company with a $15,000,000 limit of liability. Item 28. Business and Other Connections of Investment Advisor Describe any other business, profession, vocation or employment of a substantial nature in which each investment advisor of the Registrant, and each director, officer or partner of any such investment advisor, is or has been, at any time during the past two fiscal years, engaged for his own account or in the capacity of director, officer, employee, partner, or trustee. See each Statement of Additional Information, Part B under headings "General Information About the Trust - Investment Advisor" and "- Trustees and Officers" for information concerning A I M Advisors, Inc. Item 29. Principal Underwriters (a) Fund Management Company, the Registrant's principal underwriter of all of its shares also acts as a principal underwriter to the following investment companies: AIM Equity Funds, Inc. (Institutional Classes) AIM Investment Securities Funds (Limited Maturity Treasury Portfolio - Institutional Shares) Short-Term Investments Co. Tax-Free Investments Co. (b) The following table sets forth information with respect to each director, officer or partner of Fund Management Company: C-6 244
Name and Principal Position and Offices Position and Offices Business Address* with Principal Underwriter with Registrant - ---------------- -------------------------- --------------- Charles T. Bauer Chairman of the Board of Chairman Directors and Director William H. Kleh Director None J. Abbott Sprague President & Director Vice President Robert H. Graham Senior Vice President & Director President Mark D. Santero Senior Vice President None John J. Arthur Vice President & Treasurer Senior Vice President & Treasurer Jesse H. Cole Vice President None Melville B. Cox Vice President & Chief Vice President Compliance Officer Carol F. Relihan Vice President Senior Vice President & & General Counsel Secretary Stephen I. Winer Vice President, Assistant Secretary Assistant General Counsel & Assistant Secretary Nancy A. Beck Assistant Vice President None David E. Hessel Assistant Vice President, None Assistant Treasurer & Controller Jeffrey L. Horne Assistant Vice President None Robert Morris Assistant Vice President None Margaret A. Reilly Assistant Vice President None Dana R. Sutton Assistant Vice President & Vice President & Assistant Assistant Treasurer Treasurer Nicholas D. White Assistant Vice President None
- ----------------------------------- * 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 C-7 245
Name and Principal Position and Offices Position and Offices Business Address* with Principal Underwriter with Registrant - ---------------- -------------------------- --------------- David L. Kite Assistant General Counsel & Assistant Secretary Assistant Secretary Nancy L. Martin Assistant General Counsel & Assistant Secretary Assistant Secretary Ofelia M. Mayo Assistant General Counsel & Assistant Secretary Assistant Secretary Samuel D. Sirko Assistant General Counsel & Assistant Secretary Assistant Secretary Kathleen J. Pflueger Secretary Assistant Secretary
(c) Not Applicable Item 30. Location of Accounts and Records With respect to each account, book or other document required to be maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder, furnish the name and address of each person maintaining physical possession of each such account, book or other document. A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, will maintain physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained by the Custodian, The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286; and the Transfer Agent and Dividend Paying Agent, A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173. Item 31. Management Services Furnish summary of the substantive provisions of management related service contract not discussed in Part I of this Form (because the contract was not believed to be material to a purchaser of securities of Registrant) under which services are provided to the Registrant, indicating the parties to the contract, the total dollars paid and by whom, for the last three fiscal years. None. Item 32. Undertakings (a) None (b) None. - ----------------------------------- * 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 C-8 246 (c) The Registrant undertakes to furnish each person to whom a prospectus is delivered with a copy of the applicable Portfolio's latest annual report to shareholders, upon request and without charge. C-9 247 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Houston, Texas on the 17th day of December, 1996. Registrant: SHORT-TERM INVESTMENTS TRUST By: /s/ Robert H. Graham ---------------------------- Robert H. Graham, President Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE ---------- ----- ---- /s/ Charles T. Bauer Chairman & Trustee December 17, 1996 ---------------------- (Charles T. Bauer) /s/ Robert H. Graham Trustee & President ---------------------- (Principal Executive Officer) December 17, 1996 (Robert H. Graham) /s/ Bruce L. Crockett Trustee December 17, 1996 ----------------------- (Bruce L. Crockett) /s/ Owen Daly II Trustee December 17, 1996 ------------------------- (Owen Daly II) /s/ Carl Frischling Trustee December 17, 1996 ------------------------- (Carl Frischling) /s/ John F. Kroeger Trustee December 17, 1996 ----------------------- (John F. Kroeger) /s/ Lewis F. Pennock Trustee December 17, 1996 ---------------------- (Lewis F. Pennock) /s/ Ian W. Robinson Trustee December 17, 1996 ---------------------- (Ian W. Robinson) /s/ Louis S. Sklar Trustee December 17, 1996 ------------------------- (Louis S. Sklar) /s/ John J. Arthur Senior Vice President & ------------------------- Treasurer (Principal Financial December 17, 1996 (John J. Arthur) and Accounting Officer)
248 INDEX TO EXHIBITS
Exhibit Number ------ 1(a) Certificate of Trust of Registrant 1(e) Third Amendment to Agreement and Declaration of Trust, dated September 19, 1995. 2(c) Second Amendment to the By-Laws of Registrant, dated March 14, 1995 5(a) Master Investment Advisory Agreement, dated October 18, 1993, between A I M Advisors, Inc. and Registrant 6(c) Amendment No. 2, dated September 19, 1995, to Master Distribution Agreement, dated October 18, 1993, between Fund Management Company and Registrant 7(a) Retirement Plan for Eligible Directors/Trustees 7(b) Form of Deferred Compensation Agreement 8(a) Custodian Agreement, dated October 15, 1993, between The Bank of New York and Registrant 8(b) Amendment, dated July 30, 1996, to the Custodian Agreement, dated October 15, 1993, between The Bank of New York and Registrant 9(d) Amendment No. 1, dated November 2, 1995, to Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc. and Registrant 11(a) Consent of Ballard Spahr Andrews & Ingersoll 11(b) Consent of KPMG Peat Marwick LLP 15(a) Master Distribution Plan and related forms of agreement 18 Multiple Class (Rule 18f-3) Plan 27 Financial Data Schedule
10 EX-99.B1.A 2 CERTIFICATE OF TRUST OF REGISTRANT 1 EXHIBIT 1(a) STATE OF DELAWARE OFFICE OF THE SECRETARY OF STATE -------------------------------- I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF BUSINESS TRUST OF "SHORT-TERM INVESTMENTS TRUST" FILED IN THIS OFFICE ON THE FIFTH DAY OF MAY, A.D. 1993, AT 11:05 O'CLOCK A.M. * * * * * * * * * * [SEAL] /s/ WILLIAM T. QUILLEN -------------------------------------- William T. Quillen, Secretary of State AUTHENTICATION: *4095244 DATE: 10/12/1993 2 CERTIFICATE OF TRUST OF SHORT-TERM INVESTMENTS TRUST This Certificate of Trust is being duly executed and filed on behalf of the business trust formed hereby by the undersigned, all of the trustees of the Trust, to form a business trust pursuant to the Delaware Business Trust Act (12 Del. C. S 3801 et seq.). ARTICLE I The name of the business trust formed hereby is "Short-Term Investments Trust" (the "Trust"). ARTICLE II The Trust is, or will become prior to or within 180 days following the first issuance of beneficial interests, a registered investment company under the Investment Company Act of 1940, as amended (15 U.S.C. SS 80a-1 et seq.). ARTICLE III The address of the registered office of the Trust in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. ARTICLE IV The address of the registered agent for service of process on the Trust in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of the registered agent at such address is The Corporation Trust Company. ARTICLE V The Trust Instrument relating to the Trust provides for the issuance of one or more series of shares of beneficial interest in the Trust. Separate and distinct records shall be maintained by the Trust for each series and the assets associated solely with any such series shall be held and accounted for separately from the assets of the Trust associated solely with any other series. As provided in the Trust Instrument, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the Trust generally. 3 ARTICLE VI This Certificate of Trust shall become effective upon filing in the Office of the Secretary of State of Delaware. IN WITNESS WHEREOF, the undersigned have executed this Certificate of Trust as of this 5th day of May. SHORT-TERM INVESTMENTS TRUST (THE "TRUST") /s/ WILLIAM H. KLEH ---------------------------- William H. Kleh, as Trustee /s/ CHARLES T. BAUER ---------------------------- Charles T. Bauer, as Trustee /s/ ROBERT H. GRAHAM ---------------------------- Robert H. Graham, as Trustee 4 STATE OF DELAWARE OFFICE OF THE SECRETARY OF STATE I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THAT THE CERTIFICATE OF BUSINESS TRUST OF THE "SHORT-TERM INVESTMENTS TRUST", WAS RECEIVED AND FILED IN THIS OFFICE THE FIFTH DAY OF MAY, A.D. 1993, AT 11:05 O'CLOCK A.M. AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE ONLY CERTIFICATES ON RECORD OF THE AFORESAID BUSINESS TRUST. AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID BUSINESS TRUST IS DULY FORMED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL EXISTENCE NOT HAVING BEEN CANCELED SO FAR AS THE RECORDS OF THIS OFFICE SHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS. * * * * * * * * * * [SEAL] /s/ WILLIAM T. QUILLEN -------------------------------------- William T. Quillen, Secretary of State AUTHENTICATION: *4100458 DATE: 10/14/1993 EX-99.B1.E 3 3RD AMEND. TO AGREEMENT AND DECLARATION OF TRUST 1 EXHIBIT 1(e) THIRD AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF SHORT-TERM INVESTMENTS TRUST THIS THIRD AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF SHORT-TERM INVESTMENTS TRUST (the "Amendment") is entered into as of the 19th day of September, 1995, among Charles T. Bauer, Bruce L. Crockett, Owen Daly, II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F. Pennock, Ian W. Robinson, Louis S. Sklar, as trustees, and each person who became or becomes a shareholder in accordance with the terms set forth in that certain Agreement and Declaration of Trust of Short-Term Investments Trust entered into as of May 5, 1993, as amended (the "Agreement"). WHEREAS, Section 9.7 of the Agreement authorizes the Trustees without shareholder vote to amend or otherwise supplement the Agreement by making an amendment; and WHEREAS, at a meeting duly called and held on the 19th day of September, 1995, the Trustees have resolved to amend the Agreement as hereinafter set forth. NOW, THEREFORE, the Trustees hereby amend the Agreement as herein set forth below: 1. Capitalized terms not specifically defined in this Amendment shall have the meanings ascribed to them in the Agreement. 2. Section 2.3 of the Agreement is hereby deleted in its entirety and the following new Section 2.3 is hereby substituted in lieu thereof: "Section 2.3 Establishment of Portfolios and Classes. The Trust shall be divided into two Portfolios, the Treasury Portfolio and the Treasury TaxAdvantage Portfolio. The Treasury Portfolio shall contain five Classes, the Institutional Class, the Private Investment Class, the Personal Investment Class, the Cash Management Class and the Resource Class. The Treasury TaxAdvantage Portfolio shall contain two Classes, the Institutional Class and the Private Investment Class. The Treasury Portfolio, the Treasury TaxAdvantage Portfolio and their respective Classes as set forth in this Section 2.3 are collectively referred to as the "Portfolios". The establishment and designation of any other Portfolio or Class thereof, or, subject to Section 6.1 hereof, any change to the Portfolios, shall be effective upon the adoption by a majority of the then Trustees of a resolution which sets forth such establishment, designation or change." 3. With the exception of the amendment to Section 2.3 of the Agreement as set forth in paragraph 2 of this Amendment, the Agreement, as amended, shall in all other respects remain in full force and effect. 4. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Amendment. 2 IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the Trust, have executed this Third Amendment to Agreement and Declaration of Trust of Short-Term Investments Trust as of the date first above written. /s/ CHARLES T. BAUER /s/ BRUCE L. CROCKETT - ----------------------- ---------------------------- Charles T. Bauer Bruce L. Crockett Trustee Trustee /s/ OWEN DALY, II /s/ CARL FRISCHLING - ----------------------- ---------------------------- Owen Daly, II Carl Frischling Trustee Trustee /s/ ROBERT H. GRAHAM /s/ JOHN F. KROEGER - ----------------------- ---------------------------- Robert H. Graham John F. Kroeger Trustee Trustee /s/ LEWIS F. PENNOCK /s/ IAN W. ROBINSON - ----------------------- ---------------------------- Lewis F. Pennock Ian W. Robinson Trustee Trustee /s/ LOUIS S. SKLAR - ----------------------- Louis S. Sklar Trustee
[THIS IS THE SIGNATURE PAGE FOR THE THIRD AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF SHORT-TERM INVESTMENTS TRUST] 2 EX-99.B2.C 4 2ND AMEND. TO BY-LAWS OF REGISTRANT 1 EXHIBIT 2(c) SHORT-TERM INVESTMENTS TRUST SECOND AMENDMENT, DATED MARCH 14, 1995, TO BY-LAWS Article IV, Section 1 of the By-Laws of Short-Term Investments Trust is hereby amended by deleting the sixth sentence of such Section, by redesignating the fourth and fifth sentences of such Section as the sixth and seventh sentences, and by deleting the third sentence of such Section and by adding thereto three new sentences as the third, fourth and fifth sentence of such Section, which sentences shall read in full as follows: "At all meetings of the stockholders, every stockholder of record entitled to vote thereat shall be entitled to vote at such meeting either in person or by written proxy signed by the stockholder or by his duly authorized attorney in fact. A stockholder may duly authorize such attorney in fact through written, electronic, telephonic, computerized, facsimile, telecommunication, telex or oral communication or by any other form of communication. Unless a proxy provides otherwise, such proxy is not valid more than eleven months after its date." EX-99.B5.A 5 MASTER INVESTMENT ADVISORY AGREEMENT 1 EXHIBIT 5(a) SHORT-TERM INVESTMENTS TRUST MASTER INVESTMENT ADVISORY AGREEMENT THIS AGREEMENT is made this 18th day of October, 1993, by and between Short-Term Investments Trust, a Delaware trust (the "Company") 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, consisting of multiple series of investment portfolios; 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 operates as a "series company" as contemplated by Rule 18f-2 under the 1940 Act and is authorized to issue shares of beneficial interest (the "Shares") in separate series with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Company's Agreement and Declaration of Trust authorizes the Board of Trustees of the Company to issue an unlimited number of shares of beneficial interest of the Company and to establish additional series or classes of shares from time to time and, as of the date of this Agreement, the Company's Board of Trustees has authorized the issuance of two series of shares representing interests in two investment portfolios: the Treasury Portfolio (Institutional Class, Personal Investment Class, Private Investment Class and Cash Management Class) and the Treasury TaxAdvantage Portfolio (Institutional Class) (such portfolios and any other portfolios hereafter added to the Company being referred to collectively herein as the "Portfolios"); NOW THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt whereof is hereby acknowledged, the parties hereto agree as follows: 1. ADVISORY SERVICES. The Advisor shall act as investment advisor for each Portfolio and shall, in such capacity, supervise all aspects of the Portfolios' operations, including the investment and reinvestment of the cash, securities or other properties comprising each Portfolio's assets, subject at all times to the policies and control of the Company's Board of Trustees. The Advisor shall give the Company and the Portfolios the benefit of its best judgment, efforts and facilities in rendering its services as investment advisor. 2. INVESTMENT ANALYSIS AND IMPLEMENTATION. In carrying out its duties under Section 1 hereof, the Advisor shall: (a) supervise all aspects of the operations of the Portfolios; (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 Company or the Portfolios, and whether concerning the individual issuers whose securities are included in the assets of the Portfolios or the activities in which such issuers engage, or with respect to securities which the Advisor considers desirable for inclusion in the Portfolios. (c) determine which issuers and securities shall be represented in the Portfolios and regularly report thereon to the Company's Board of Trustees; and (d) formulate and implement continuing programs for the purchases and sales of the securities of such issuers, and regularly report thereon to the Company's Board of Trustees; and take, on behalf of the Company and the Portfolios, all actions which appear to the Company and the Portfolios 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 of the Portfolios. 3. DELEGATION OF RESPONSIBILITIES. Subject to the approval of the Board of Trustees and the shareholders of the Portfolios, the Advisor may delegate to a sub-advisor certain of its duties enumerated in Section 2 hereof, provided that the Advisor shall continue to supervise the performance of any such sub-advisor. 1 2 4. CONTROL BY BOARD OF TRUSTEES. 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 Company, shall at all times be subject to any directives of the Board of Trustees of the Company. 5. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In performing its duties hereunder, 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 relating to the Portfolios, 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 Agreement and Declaration of Trust of the Company, 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 or federal law. 6. BROKER-DEALER RELATIONSHIPS. The Advisor shall be responsible for all decisions to buy and sell securities for the Portfolios, broker-dealer selection, and negotiation of brokerage commission rates. The Advisor's primary consideration in effecting a security transaction shall be execution at the most favorable price. In selecting a broker-dealer to execute each particular transaction, the Advisor shall take the following into consideration: the best net price available; the reliability, integrity and financial condition of the broker-dealer; the size of and difficulty in executing the order; and the value of the expected contribution of the broker-dealer to the investment performance of the Portfolios on a continuing basis. Accordingly, the price to a Portfolio 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 portfolio execution services offered. Subject to such policies as the Board of Trustees 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 a Portfolio to pay a broker or dealer that provides brokerage and research services to the Advisor an amount of commission for effecting a portfolio 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 overall responsibilities of the Advisor with respect to such Portfolio, other Portfolios of the Company, and other clients of the Advisor as to which the Advisor exercises investment discretion. The Advisor is further authorized to allocate the orders placed on behalf of the Portfolios to brokers and dealers who also provide research or statistical material, or other services to the Portfolios or the Advisor. Such allocation shall be in such amounts and proportions as the Advisor shall determine, and the Advisor shall report on said allocations regularly to the Board of Trustees of the Company, indicating the brokers to whom such allocations have been made and the basis therefor. 7. COMPENSATION. The Company shall pay the Advisor as compensation for services rendered hereunder, an annual fee, payable monthly, as set forth in Appendix A to this Agreement. The Company acknowledges that the Advisor may from time to time pay a fee to any sub-advisor engaged pursuant to Section 3 of this Agreement, according to a fee schedule set forth in the applicable sub-advisory agreement. The average daily net asset value of the Portfolios shall be determined in the manner set forth in the Agreement and Declaration of Trust and registration statement relating to the Portfolios, as amended from time to time. 8. ADDITIONAL SERVICES. Upon the request of the Company's Board of Trustees, the Advisor may perform (or arrange for the performance of) certain accounting, shareholder servicing or other administrative services on behalf of the Portfolios which are not required by this Agreement. Such services will be performed on behalf of the Portfolios, and the Advisor may receive from the Portfolios such reimbursement for costs or reasonable compensation for such services as may be agreed upon between the Advisor and the Company's Board of Trustees based on a finding by the Board of Trustees, that the provision of such services by the Advisor is in the best interests of a Portfolio and its shareholders. Payment or assumption by the Advisor of any Portfolio expense that the Advisor is not otherwise required to pay or assume under this Agreement shall not relieve the Advisor of any of its 2 3 obligations to such Portfolio nor obligate the Advisor to pay or assume any similar Portfolio expense on any subsequent occasion. Such additional services may include, but are not limited to: (a) the services of a principal financial officer of the Company (including related office space, facilities and equipment) whose normal duties consist of maintaining the financial accounts and books and records of the Company and the Portfolios, including the review and calculation of daily net asset value and the preparation of tax returns; the services (including related office space, facilities and equipment) of any of the personnel operating under the direction of such principal financial officer; (b) the services of staff to respond to shareholder inquiries concerning the status of their accounts; providing assistance to shareholders in exchanges among the mutual funds managed or advised by the Advisor; changing account designations or changing addresses; assisting in the purchase or redemption of shares; supervising the operations of the custodian, transfer agent(s) or dividend disbursing agent(s) for the Portfolios; or otherwise providing services to shareholders of the Portfolios; and (c) such other administrative services as may be furnished from time to time by the Advisor to the Company or a Portfolio at the request of the Company's Board of Trustees. 9. EXPENSES OF THE PORTFOLIO. All of the ordinary business expenses incurred in the operations of a Portfolio and the offering of its shares shall be borne by the Portfolios unless specifically provided otherwise in this Agreement. These expenses borne by the Portfolios include but are not limited to 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, expenses of registering and qualifying shares for sale, expenses relating to trustees 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 Portfolios in connection with membership in investment company organizations and the cost of printing copies of prospectuses and statements of additional information distributed to the Portfolios' shareholders. 10. EXPENSE LIMITATION. If, for any fiscal year of the Company, the total of all ordinary business expenses of the Portfolios, including all investment advisory fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses, such as litigation costs, would exceed the applicable expense limitations imposed by state securities regulations in any state in which the Portfolios' shares are qualified for sale, as such limitations may be raised or lowered from time to time, the aggregate of all such investment advisory fees shall be reduced by the amount of such excess. The amount of any such reduction to be borne by the Advisor shall be deducted from the monthly investment advisory fee otherwise payable to the Advisor during such fiscal year. If required pursuant to such state securities regulations, the Advisor will, not later than the last day of the first month of the next succeeding fiscal year, reimburse the Portfolios for any such annual operating expenses (after reduction of all investment advisory fees in excess of such limitation). For the purposes of this Section, the term "fiscal year" shall exclude the portion of the current fiscal year which shall have elapsed prior to the date hereof and shall include the portion of the then current fiscal year which shall have elapsed at the date of termination of this Agreement. The application of expense limitations shall be applied to each Portfolio of the Company separately unless the laws or regulations of any state shall require that the expense limitations be imposed with respect to the Company as a whole. 11. NON-EXCLUSIVITY. The services of the Advisor to the Company and the Portfolios are not to be deemed to be exclusive, and the Advisor shall be free to render investment advisory and administrative or other services to others (including other investment companies) and to engage in other activities. It is understood and agreed that officers or directors of the Advisor may serve as officers or trustees of the Company, and that officers or trustees 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. 12. TERM AND APPROVAL. This Agreement shall become effective if approved by the shareholders of the Portfolios, and if so approved, this Agreement shall thereafter continue in force and effect until June 30, 1994, 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 Company's Board of Trustees or (ii) by the vote of "a majority of the outstanding voting securities" of each Portfolio (as defined in Section 2(a)(42) of the 1940 Act); and 3 4 (b) by the affirmative vote of a majority of the trustees of the Company 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 trustees), by votes cast in person at a meeting specifically called for such purpose. 13. TERMINATION. This Agreement may be terminated as to any Portfolio at any time, without the payment of any penalty, by vote of the Company's Board of Trustees or by vote of a majority of such Portfolio's outstanding voting securities, or by the Advisor, on sixty (60) days' written notice to the other party. The notice provided for herein may be waived by either party. This Agreement shall automatically terminate in the event of its "assignment" (as defined under Section 2(a)(4) of the 1940 Act). 14. LIABILITY OF ADVISOR AND INDEMNIFICATION. 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, any Portfolio or to any shareholder of any Portfolio 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. 15. LIABILITY OF SHAREHOLDERS. Copies of the Agreement and Declaration of Trust establishing the Company are on file with the Secretary of State of the State of Delaware, and 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 stockholders of private corporations for profit. 16. NOTICES. Any notices under this Agreement shall be in writing, addressed and delivered or mailed postage paid to the other party at such address as such other 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 Eleven Greenway Plaza, Suite 1919, Houston, Texas, 77046. 17. 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 any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission 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 Securities and Exchange Commission, 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. 18. LICENSE AGREEMENT. The Company shall be entitled to use the names "Treasury Portfolio and Treasury TaxAdvantage Portfolio" to designate its classes of shares only so long as A I M Advisors, Inc. serves as investment manager or advisor to the Portfolios. 4 5 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. SHORT-TERM INVESTMENTS TRUST Attest: (a Delaware Trust) /s/ NANCY L. MARTIN By: /s/CHARLES T. BAUER - ---------------------- ---------------------------- Assistant Secretary President (SEAL) A I M ADVISORS, INC. Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM - ---------------------- ---------------------------- Assistant Secretary President (SEAL) 5 6 APPENDIX A TO MASTER INVESTMENT ADVISORY AGREEMENT OF SHORT-TERM INVESTMENTS TRUST The Company shall pay the Advisor as full compensation for all services rendered and all facilities furnished hereunder, a management fee for each Portfolio by applying the following annual rates to the average daily net assets of each Portfolio for the calendar year, computed in the manner used for the determination of the offering price of shares of the Portfolio.
TREASURY PORTFOLIO Net Assets Rate - ---------- ---- First $300 million.................................. 0.15% Over $300 million up to and including $1.5 billion.. 0.06% Over $1.5 billion................................... 0.05% TREASURY TAXADVANTAGE PORTFOLIO New Assets Rate - ---------- ---- First $250 million.................................. 0.20% Over $250 million up to an including $500 million... 0.15% Over $500 million................................... 0.10%
6 EX-99.B6.C 6 AMEND. #2 TO MASTER DISTRIBUTION AGREEMENT 1 EXHIBIT 6(c) AMENDMENT NO. 2 MASTER DISTRIBUTION AGREEMENT The Master Distribution Agreement (the "Agreement"), dated October 18, 1993, as amended December 8, 1994, by and between Short-Term Investments Trust, a Delaware business trust, and Fund Management Company, a Texas corporation, is hereby amended as follows: Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following: "APPENDIX A Treasury Portfolio Institutional Class Personal Investment Class Private Investment Class Cash Management Class Resource Class Treasury TaxAdvantage Portfolio Institutional Class Private Investment Class" All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. Dated: September 19, 1995 SHORT-TERM INVESTMENTS TRUST Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM --------------------------- --------------------------- Assistant Secretary President (SEAL) FUND MANAGEMENT COMPANY Attest: /s/ STEPHEN I. WINER By: /s/ J. ABBOTT SPRAGUE --------------------------- --------------------------- Assistant Secretary President (SEAL) EX-99.B7.A 7 RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES 1 EXHIBIT 7(a) AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES Effective as of March 8, 1994 As Restated September 18, 1995 2 AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES TABLE OF CONTENTS Page ---- ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION . . . . . . . . . 1 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1 (a) Accrued Benefit . . . . . . . . . . . . . . . . . . . 1 (b) Actuary . . . . . . . . . . . . . . . . . . . . . . . 1 (c) Administrator . . . . . . . . . . . . . . . . . . . . 1 (d) AIM Funds . . . . . . . . . . . . . . . . . . . . . . 1 (e) Board of Directors . . . . . . . . . . . . . . . . . 1 (f) Code . . . . . . . . . . . . . . . . . . . . . . . . 2 (g) Compensation . . . . . . . . . . . . . . . . . . . . 2 (h) Deferred Retirement Date . . . . . . . . . . . . . . 2 (i) Director . . . . . . . . . . . . . . . . . . . . . . 2 (j) Disability . . . . . . . . . . . . . . . . . . . . . 2 (k) Effective Date . . . . . . . . . . . . . . . . . . . 2 (l) Fund . . . . . . . . . . . . . . . . . . . . . . . . 2 (m) Normal Retirement Date . . . . . . . . . . . . . . . 2 (n) Participant . . . . . . . . . . . . . . . . . . . . . 2 (o) Plan . . . . . . . . . . . . . . . . . . . . . . . . 2 (p) Plan Year . . . . . . . . . . . . . . . . . . . . . . 2 (q) Retirement . . . . . . . . . . . . . . . . . . . . . 2 (r) Retirement Benefit . . . . . . . . . . . . . . . . . 3 (s) Service . . . . . . . . . . . . . . . . . . . . . . . 3 (t) Year of Service . . . . . . . . . . . . . . . . . . . 3 1.2 Plurals and Gender . . . . . . . . . . . . . . . . . . . . . . 3 1.3 Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . 3 1.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE II PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 4 2.1 Commencement of Participation . . . . . . . . . . . . . . . . 4 2.2 Termination of Participation . . . . . . . . . . . . . . . . . 4 2.3 Resumption of Participation . . . . . . . . . . . . . . . . . 4 2.4 Determination of Eligibility . . . . . . . . . . . . . . . . . 4 -i- 3 Page ---- ARTICLE III BENEFITS UPON RETIREMENT AND OTHER TERMINATION OF SERVICE. . . . . . . . . . . . . . . . . 4 3.1 Retirement. . .. . . . . . . . . . . . . . . . . . . . . . . . 4 3.2 Termination of Service Before Retirement . . . . . . . . . . . 5 3.3 Termination of Service by Reason of Death. . . . . . . . . . . 5 3.4 Benefits Calculated in the Aggregate for all of the AIM Funds. 5 ARTICLE IV DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . 5 4.1 Death Prior to Commencement of Benefits . . . . . . . . . . . 5 4.2 Death Subsequent to Commencement of Benefits . . . . . . . . 5 4.3 Death of Spouse . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE V SUSPENSION OF BENEFITS, ETC. . . . . . . . . . . . . . 6 5.1 Suspension of Benefits Upon Resumption of Service . . . . . . 6 5.2 Payments Due Missing Persons . . . . . . . . . . . . . . . . . 6 ARTICLE VI ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . 7 6.1 Appointment of Administrator . . . . . . . . . . . . . . . . . 7 6.2 Powers and Duties of Administrator . . . . . . . . . . . . . . 7 6.3 Action by Administrator . . . . . . . . . . . . . . . . . . . 8 6.4 Participation by Administrators . . . . . . . . . . . . . . . 8 6.5 Agents and Expenses. . . . . . . . . . . . . . . . . . . . . . 8 6.6 Allocation of Duties . . . . . . . . . . . . . . . . . . . . . 8 6.7 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 9 6.8 Administrator's Action Conclusive . . . . . . . . . . . . . . 9 6.9 Records and Reports . . . . . . . . . . . . . . . . . . . . . 9 6.10 Information from the AIM Funds . . . . . . . . . . . . . . . . 9 6.11 Reservation of Rights by Boards of Directors . . . . . . . . . 9 6.12 Liability and Indemnification. . . . . . . . . . . . . . . . . 9 ARTICLE VII AMENDMENTS AND TERMINATION . . . . . . . . . . . . . . 10 7.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 10 7.2 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 10 8.1 Rights of Creditors . . . . . . . . . . . . . . . . . . . . . 10 8.2 Liability Limited. . . . . . . . . . . . . . . . . . . . . . . 11 8.3 Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . 11 8.4 Cooperation of Parties . . . . . . . . . . . . . . . . . . . . 11 8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 11 8.6 Nonguarantee of Directorship . . . . . . . . . . . . . . . . . 12 8.7 Counsel . . . . . . . . . . . . . . . .. . . . . . . . . . . . 12 8.8 Spendthrift Provision . . . . . . . . . . . . . . . . . . . . 12 8.9 Forfeiture for Cause . . . . . . . . . . . . . . . . . . . . . 12 -ii- 4 Page ---- ARTICLE IX CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . 12 9.1 Notice of Denial . . . . . . . . . . . . . . . . . . . . . . . 12 9.2 Right to Reconsideration . . . . . . . . . . . . . . . . . . . 13 9.3 Review of Documents. . . . . . . . . . . . . . . . . . . . . . 13 9.4 Decision by Administrator. . . . . . . . . . . . . . . . . . . 13 9.5 Notice by Administrator. . . . . . . . . . . . . . . . . . . . 13 -iii- 5 AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES PREAMBLE Effective as of March 8, 1994, the regulated investment companies managed, administered and/or distributed by AIM Advisors, Inc. or its affiliates (the "AIM Funds") have adopted THE AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES (the "Plan") for the benefit of each of the directors and trustees of each of the AIM Funds who is not an employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates. As the Plan does not benefit any employees of the AIM Funds, it is not intended to be classified as an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION ------------------------------------ 1.1 Definitions. ------------ Unless a different meaning is plainly implied by the context, the following terms as used in this Plan shall have the following meanings: (a) "Accrued Benefit" shall mean, as of any date prior to a Participant's Normal Retirement Date, his Retirement Benefit commencing on his Normal Retirement Date, but based upon his Compensation and Years of Service computed as of such date of determination. (b) "Actuary" shall mean the independent actuary selected by the Administrator. (c) "Administrator" shall mean the administrative committee provided for in Article VI. (d) "AIM Funds" shall mean the regulated investment companies managed, administered or distributed by A I M Advisors, Inc. or its affiliates. (e) "Board of Directors" shall mean the Board of Directors of each of the AIM Funds. 6 (f) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. (g) "Compensation" shall mean, for any Director, the amount of the retainer paid or accrued by the AIM Funds for such Director during the twelve month period immediately preceding the Director's Retirement, including amounts deferred under a separate agreement between the AIM Funds and the Director. The amount of such retainer Compensation shall be as determined by the Administrator. (h) "Deferred Retirement Date" shall mean the first day of the month coincident with or next following the date on which a Participant terminated Service after his Normal Retirement Date. (i) "Director" shall mean an individual who is a director or trustee of one or more of the AIM Funds which have adopted the Plan but who is not an employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates. (j) "Disability" shall mean the inability of the Participant to participate in meetings of the Board of Directors, either in person or by telephone, for a period of at least nine (9) months. (k) "Effective Date" shall mean March 8, 1994. (l) "Fund" shall mean an AIM Fund which has adopted this Plan. (m) "Normal Retirement Date" shall mean, the date on which a Participant has both attained age 65 (or at least age 55 in the event of the Director's termination of Service by reason of death or Disability) and has completed at least five continuous and non-forfeited Years of Service (and thirty months of Service with one or more of the AIM Funds). (n) "Participant" shall mean a Director who has met all of the eligibility requirements of the Plan and who is currently included in the Plan as provided in Article II hereof. (o) "Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees" as described herein or as hereafter amended from time to time. (p) "Plan Year" shall mean the calendar year. (q) "Retirement" shall mean a Director's termination of his active Service with the AIM Funds on or after his Normal Retirement Date, due to his death, Disability, or voluntary or involuntary termination of his Service. (r) "Retirement Benefit" shall mean the benefit described under Section 3.1 hereof. -2- 7 (s) "Service" shall mean an individual's serving as a Director of one or more of the AIM Funds. Furthermore, any unbroken service provided by a Participant (i) to an AIM Fund immediately prior to its being managed or administered by A I M Advisors, Inc. (or any of its affiliates) or (ii) to a predecessor of an AIM Fund immediately prior to its being merged into such AIM Fund, will be taken into account in determining such Participant's Years of Service, subject to all restrictions and other forfeiture provisions contained herein. (t) "Year of Service" shall mean a twelve consecutive month period of Service. For all purposes in this Plan, if a Participant's Service terminates prior to his Retirement, he shall forfeit credit for all Years of Service completed prior to such termination unless (a) he again becomes a Director and (b) the number of Years of Service he accumulated prior to such termination exceeded the number of years in which he did not serve as a Director. 1.2 Plurals and Gender. Where appearing in the Plan, the masculine gender shall include the feminine and neuter genders, and the singular shall include the plural, and vice versa, unless the context clearly indicates a different meaning. 1.3 Directors/Trustees. Where appropriate, the term "director" shall refer to "trustee", "directorship" shall refer to "trusteeship" and "Board of Directors" shall refer to "Board of Trustees." 1.4 Headings. The headings and sub-headings in this Plan are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof. 1.5 Severability. In case any provision of this Plan shall be held illegal or void, such illegality or invalidity shall not affect the remaining provisions of this Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein. -3- 8 ARTICLE II PARTICIPATION ------------- 2.1 Commencement of Participation. ------------------------------ Each Director shall become a Participant hereunder on the date his directorship of one or more of the AIM Funds commences. 2.2 Termination of Participation. ----------------------------- After commencement or resumption of his participation, a Director shall remain a Participant until the earliest of the following dates: (a) His actual Retirement date; (b) His date of death; (c) The date on which he otherwise incurs a termination of Service; or (d) The effective date of the termination of the Plan. 2.3 Resumption of Participation. ---------------------------- Any Participant whose Service terminates and who thereafter again becomes a Director shall resume participation immediately upon again becoming a Director except that, as provided in Section 1.1(t) hereof, if his Service is terminated prior to his Normal Retirement Date, for all purposes of this Plan he shall forfeit credit for all Years of Service completed prior to such termination of his Service. 2.4 Determination of Eligibility. ----------------------------- The Administrator shall determine the eligibility of Directors in accordance with the provisions of this Article. ARTICLE III BENEFITS UPON ------------- RETIREMENT AND OTHER TERMINATION OF SERVICE ------------------------------------------- 3.1 Retirement. ----------- Upon Retirement a Participant shall be entitled to receive an annual benefit from the AIM Funds commencing on the first day of the calendar quarter coincident with or next following his date of Retirement, payable in quarterly installments for a period of no more than -4- 9 ten (10) years (or, if less, the number of his Years of Service) equal to seventy-five percent (75%) of his Compensation. 3.2 Termination of Service Before Retirement. ----------------------------------------- In the event that a Participant's Service terminates by reason of death, Disability or removal by the Board for cause (as defined in Section 8.9) prior to his Normal Retirement Date, he shall not be entitled to receive any benefits hereunder. If a Participant's Service terminates for any other reason and he has accumulated at least five (5) continuous and non-forfeited Years of Service, he shall be entitled to receive his Accrued Benefit determined as of such date of termination. 3.3 Termination of Service by Reason of Death. ------------------------------------------ No benefits will be paid under this Plan with respect to a Participant after his death other than as provided in Article IV. 3.4 Benefits Calculated in the Aggregate for all of the AIM Funds. -------------------------------------------------------------- With respect to each Participant, the benefits payable hereunder shall be based on the aggregate Compensation paid by the AIM Funds and on the Participant's non-forfeited Years of Service. Each Fund's share of the obligation to provide such benefits shall be determined by use of accounting methods adopted by the Administrator. ARTICLE IV DEATH BENEFITS -------------- 4.1 Death Prior to Commencement of Benefits. ---------------------------------------- In the event of a Participant's death subsequent to his Normal Retirement Date, but prior to the commencement of his Retirement Benefits under Article III hereof, the surviving spouse (if any) of such Participant shall be entitled to receive a quarterly survivor's benefit for a period of no more than ten (10) years (or, if less, the number of the Participant's Years of Service) beginning on the first day of the calendar quarter next following the date of the Participant's death equal to fifty percent (50%) of the amount of the quarterly installments of Retirement Benefits that would have been paid to the Participant under Sections 3.1 or 3.2 hereof had his Retirement occurred on his date of death. 4.2 Death Subsequent to Commencement of Benefits. --------------------------------------------- In the event a Participant dies after the commencement of his Retirement Benefit under Article III, but prior to the cessation of the payment of such Retirement Benefits, the surviving spouse (if any) of such Participant shall be entitled to receive survivor's benefits equal to fifty percent (50%) of the amount of the annual Retirement Benefit payable to the Participant -5- 10 under Article III hereunder, paid at such times, and for such period, as such Retirement Benefit would have continued to have been paid to the Participant had he not died. 4.3 Death of Spouse. ---------------- (a) In the event a Participant is not survived by a spouse, no benefits will be paid hereunder upon the Participant's death. (b) If a deceased Participant's surviving spouse dies while receiving survivor's benefits hereunder, any installments not paid at the time of the surviving spouse's death shall be forfeited. ARTICLE V SUSPENSION OF BENEFITS, ETC. ---------------------------- 5.1 Suspension of Benefits Upon Resumption of Service. -------------------------------------------------- In the case of a Participant who, at a time when he is receiving Retirement Benefits under Article III of this Plan, resumes Service with any AIM Fund, such Retirement Benefits shall be suspended until his subsequent Retirement, termination of Service or death. Subject to the Years of Service limitations of Section 3.1 hereof, in the event of his Retirement or termination of Service following such a suspension, the quarterly amount of his remaining Retirement Benefits shall thereafter be adjusted, if appropriate, to reflect any additional Years of Service completed by, or a higher rate of Compensation received by, such Participant. 5.2 Payments Due Missing Persons. ----------------------------- The Administrator shall make a reasonable effort to locate all persons entitled to benefits (including Retirement Benefits and survivor's benefits for spouses) under the Plan; however, notwithstanding any provisions of this Plan to the contrary, if, after a period of 5 years from the date any of such benefits first become due, any such persons entitled to benefits have not been located, their rights under the Plan shall stand suspended. Before this provision becomes operative, the Administrator shall send a certified letter to all such persons (if any) at their last known address advising them that their benefits under the Plan shall be suspended. Any such suspended amounts shall be held by the AIM Funds for a period of 3 additional years (or a total of 8 years from the time the benefits first became payable) and thereafter such amounts shall be forfeited. -6- 11 ARTICLE VI ADMINISTRATOR ------------- 6.1 Appointment of Administrator. ----------------------------- This Plan shall be administered by the Nominating and Compensation Committees of the Boards of Directors of the AIM Funds. The members of such committees are not "interested persons" (within the meaning of Section 2(a)(19) of the Investment Company Act of 1940) of any of the AIM Funds. The term "Administrator" as used in this Plan shall refer to the members of such committees, either individually or collectively, as appropriate. 6.2 Powers and Duties of Administrator. ----------------------------------- Except as provided below, the Administrator shall have the following duties and responsibilities in connection with the administration of this Plan: (a) To promulgate and enforce such rules, regulations and procedures as shall be proper for the efficient administration of the Plan; (b) To determine all questions arising in the administration, interpretation and application of the Plan, including questions of eligibility and of the status and rights of Participants and any other persons hereunder; (c) To decide any dispute arising hereunder; provided, however, that no Administrator shall participate in any matter involving any questions relating solely to his own participation or benefits under this Plan; (d) To advise the Boards of Directors of the AIM Funds regarding the known future need for funds to be available for distribution; (e) To correct defects, supply omissions and reconcile inconsistencies to the extent necessary to effectuate the Plan; (f) To compute the amount of benefits and other payments which shall be payable to any Participant or surviving spouse in accordance with the provisions of the Plan and to determine the person or persons to whom such benefits shall be paid; (g) To make recommendations to the Boards of Directors of the AIM Funds with respect to proposed amendments to the Plan; (h) To file all reports with government agencies, Participants and other parties as may be required by law, whether such reports are initially the obligation of the AIM Funds, or the Plan; -7- 12 (i) To engage the Actuary of the Plan and to cause the liabilities of the Plan to be evaluated by the Actuary; and (j) To have all such other powers as may be necessary to discharge its duties hereunder. 6.3 Action by Administrator. ------------------------ The Administrator may elect a Chairman and Secretary from among its members and may adopt rules for the conduct of its business. A majority of the members then serving shall constitute a quorum for the transacting of business. All resolutions or other action taken by the Administrator shall be by vote of a majority of those present at such meeting and entitled to vote. Resolutions may be adopted or other action taken without a meeting upon written consent signed by at least a majority of the members. All documents, instruments, orders, requests, directions, instructions and other papers shall be executed on behalf of the Administrator by either the Chairman or the Secretary of the Administrator, if any, or by any member or agent of the Administrator duly authorized to act on the Administrator's behalf. 6.4 Participation by Administrators. -------------------------------- No Administrator shall be precluded from becoming a Participant in the Plan if he would be otherwise eligible, but he shall not be entitled to vote or act upon matters or to sign any documents relating specifically to his own participation under the Plan, except when such matters or documents relate to benefits generally. If this disqualification results in the lack of a quorum, then the Boards of Directors, by majority vote of the members of a majority of such Boards of Directors (a "Majority Vote"), shall appoint a sufficient number of temporary Administrators, who shall serve for the sole purpose of determining such a question. 6.5 Agents and Expenses. -------------------- The Administrator may employ agents and provide for such clerical, legal, actuarial, accounting, medical, advisory or other services as it deems necessary to perform its duties under this Plan. The cost of such services and all other expenses incurred by the Administrator in connection with the administration of the Plan shall be allocated to each Fund pursuant to the method utilized under Section 3.4 hereof with respect to costs related to benefit accruals. For purposes of the preceding sentence, if an individual serves as a Director for more than one Fund, he shall be deemed to be a separate Director for each such Fund in determining the aggregate number of Directors of the AIM Funds. 6.6 Allocation of Duties. --------------------- The duties, powers and responsibilities reserved to the Administrator may be allocated among its members so long as such allocation is pursuant to written procedures adopted by the Administrator, in which case no Administrator shall have any liability, with respect to any duties, powers or responsibilities not allocated to him, for the acts or omissions of any other Administrator. -8- 13 6.7 Delegation of Duties. --------------------- The Administrator may delegate any of its duties to employees of A I M Advisors, Inc. or any of its affiliates or to any other person or firm, provided that the Administrator shall prudently choose such agents and rely in good faith on their actions. 6.8 Administrator's Action Conclusive. ---------------------------------- Any action on matters within the discretion of the Administrator shall be final and conclusive. 6.9 Records and Reports. -------------------- The Administrator shall maintain adequate records of its actions and proceedings in administering this Plan and shall file all reports and take all other actions as it deems appropriate in order to comply with any federal or state law. 6.10 Information from the AIM Funds. ------------------------------- The AIM Funds shall promptly furnish all necessary information to the Administrator to permit it to perform its duties under this Plan. The Administrator shall be entitled to rely upon the accuracy and completeness of all information furnished to it by the AIM Funds, unless it knows or should have known that such information is erroneous. 6.11 Reservation of Rights by Boards of Directors. --------------------------------------------- When rights are reserved in this plan to the Boards of Directors, such rights shall be exercised only by Majority Vote of the Boards of Directors, except where the Boards of Directors, by unanimous written resolution, delegate any such rights to one or more persons or to the Administrator. Subject to the rights reserved to the Boards of Directors as set forth in this Plan, no member of the Boards of Directors shall have any duties or responsibilities under this Plan, except to the extent he shall be acting in the capacity of an Administrator. 6.12 Liability and Indemnification. ------------------------------ (a) The Administrator shall perform all duties required of it under this Plan in a prudent manner. The Administrator shall not be responsible in any way for any action or omission of the AIM Funds or their employees in the performance of their duties and obligations as set forth in this Plan. The Administrator also shall not be responsible for any act or omission of any of its agents provided that such agents were prudently chosen by the Administrator and that the Administrator relied in good faith upon the action of such agents. (b) Except for its own gross negligence, willful misconduct or willful breach of the terms of this Plan, the Administrator shall be indemnified and held harmless by the AIM Funds against any and all liability, loss, damages, cost and expense which may arise, occur by reason of, or be based upon, any matter connected with or related to this Plan or its -9- 14 administration (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending any litigation, commenced or threatened, or in settlement of any such claim). ARTICLE VII AMENDMENTS AND TERMINATION -------------------------- 7.1 Amendments. ----------- The Boards of Directors reserve the right at any time and from time to time, and retroactively if deemed necessary or appropriate by them, to amend in whole or in part by Majority Vote any or all of the provisions of this Plan, provided that: (a) No amendment shall make it possible for any part of a Participant's or former Participant's Retirement Benefit to be used for, or diverted to, purposes other than for the exclusive benefit of such Participant or surviving spouse, except to the extent otherwise provided in this Plan; (b) No amendment may reduce any Participant's or former Participant's Retirement Benefit as of the effective date of the amendment; Amendments may be made in the form of Board of Directors' resolutions or separate written document. 7.2 Termination. ------------ Except as provided below, the Boards of Directors reserve the right to terminate this Plan at any time by Majority Vote by giving to the Administrator notice in writing of such desire to terminate. The Plan shall terminate upon the date of receipt of such notice and the rights of all Participants to their Retirement Benefits (determined as of the date the Plan is terminated) shall become payable upon the effective date of the termination of the Plan in quarterly installments or in an actuarially equivalent lump sum as determined by the Administrator. ARTICLE VIII MISCELLANEOUS ------------- 8.1 Rights of Creditors. -------------------- (a) The Plan is unfunded. Neither the Participants nor any other persons shall have any interest in any fund or in any specific asset or assets of any of the AIM Funds by -10- 15 reason of any Accrued or Retirement Benefit hereunder, nor any rights to receive distribution of any Retirement Benefit except and as to the extent expressly provided hereunder. (b) The Accrued and Retirement Benefits of each Participant are unsecured and shall be subject to the claims of the general creditors of the AIM Funds. 8.2 Liability Limited. ------------------ Neither the AIM Funds, the Administrator, nor any agents, employees, officers, directors or shareholders of any of them, nor any other person shall have any liability or responsibility with respect to this Plan, except as expressly provided herein. 8.3 Incapacity. ----------- If the Administrator shall receive evidence satisfactory to it that a Participant or surviving spouse entitled to receive any benefit under the Plan is, at the time when such benefit becomes payable, physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of such Participant or surviving spouse and that no guardian, committee or other representative of the estate of such Participant or surviving spouse shall have been duly appointed, the Administrator may make payment of such benefit otherwise payable to such Participant or surviving spouse to such other person or institution, and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit. 8.4 Cooperation of Parties. ----------------------- All parties to this Plan and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Plan or any of its provisions. 8.5 Governing Law. -------------- All rights under the Plan shall be governed by and construed in accordance with rules of Federal law applicable to such plans and, to the extent not preempted, by the laws of the State of Texas without regard to principles of conflicts of law. No action shall be brought by or on behalf of any Participant for or with respect to benefits due under this Plan unless the person bringing such action has timely exhausted the Plan's claim review procedure. Any such action must be commenced within three years. This three-year period shall be computed from the earlier of (a) the date a final determination denying such benefit, in whole or in part, is issued under the Plan's claim review procedure or (b) the date such individual's cause of action first accrued. Any dispute, controversy or claim arising out of or in connection with this Plan (including the applicability of this arbitration provision) and not resolved pursuant to the Plan's claim review procedure shall be determined and settled by arbitration conducted by the American Arbitration Association ("AAA") in the County and State of the Funds' principal place of business and in accordance with the then existing rules, regulations, practices and procedures of the AAA. Any award in such arbitration shall be final, conclusive and binding upon the -11- 16 parties to the arbitration and may be enforced by either party in any court of competent jurisdiction. Each party to the arbitration will bear its own costs and fees (including attorney's fees). 8.6 Nonguarantee of Directorship. ----------------------------- Nothing contained in this Plan shall be construed as a guaranty or right of any Participant to be continued as a Director of one or more of the AIM Funds (or of a right of a Director to any specific level of Compensation) or as a limitation of the right of the AIM Funds to remove any of its directors. 8.7 Counsel. -------- The Administrator may consult with legal counsel, who may be counsel for one or more of the Boards of Directors of the AIM Funds and for the Administrator, with respect to the meaning or construction of this Plan, its obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel. 8.8 Spendthrift Provision. ---------------------- A Participant's interest in his Accrued Benefit or Retirement Benefit may not be transferred, alienated, assigned nor become subject to execution, garnishment or attachment, and any attempt to do so will render benefits hereunder immediately forfeitable. 8.9 Forfeiture for Cause. --------------------- Notwithstanding any other provision of this Plan to the contrary, any benefits to which a Participant (or his surviving spouse) may otherwise be entitled hereunder will be forfeited in the event the Administrator, in its sole discretion, determines that a Participant's termination of Service is due to such Participant's willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Director. ARTICLE IX CLAIMS PROCEDURE ---------------- 9.1 Notice of Denial. ----------------- If a Participant is denied any Retirement Benefit (or a surviving spouse is denied a survivor's benefit) under this Plan, either in total or in an amount less than the full Retirement Benefit to which he would normally be entitled, the Administrator shall advise the Participant (or surviving spouse) in writing of the amount of his Retirement Benefit (or survivor's benefit), if any, and the specific reasons for the denial. The Administrator shall also furnish the Participant (or surviving spouse) at that time with a written notice containing: -12- 17 (a) A specific reference to pertinent Plan provisions. (b) A description of any additional material or information necessary for the Participant (or surviving spouse) to perfect his claim, if possible, and an explanation of why such material or information is needed. (c) An explanation of the Plan's claim review procedure. 9.2 Right to Reconsideration. ------------------------- Within 60 days of receipt of the information stated in Section 9.1 above, the Participant (or surviving spouse) shall, if he desires further review, file a written request for reconsideration with the Administrator. 9.3 Review of Documents. -------------------- So long as the Participant's (or surviving spouse's) request for review is pending (including the 60 day period in 9.2 above), the Participant (or surviving spouse) or his duly authorized representative may review pertinent Plan documents and may submit issues and comments in writing to the Administrator. 9.4 Decision by Administrator. -------------------------- A final and binding decision shall be made by the Administrator within 60 days of the filing by the Participant (or surviving spouse) of his request for reconsideration, provided, however, that if the Administrator, in its discretion, feels that a hearing with the Participant (or surviving spouse) or his representative present is necessary or desirable, this period shall be extended an additional 60 days. 9.5 Notice by Administrator. ------------------------ The Administrator's decision shall be conveyed to the Participant (or surviving spouse) in writing and shall include specific reasons for the provisions on which the decision is based. -13- EX-99.B7.B 8 FORM OF DEFERRED COMPENSATION AGREEMENT 1 EXHIBIT 7(b) THE AIM GROUP OF FUNDS DEFERRED COMPENSATION PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES 2 DEFERRED COMPENSATION AGREEMENT SUMMARY Your Deferred Compensation Agreement (the "Agreement") allows you to defer some or all of your annual trustee's fees otherwise payable by the Funds. Deferred fees are deemed invested in certain mutual funds selected by you. The deferral is pre-tax, and the deferred amount and the credited gains, losses and income are not subject to tax until paid out to you. Your deferrals (and investment experience) are posted to a bookkeeping account maintained by the Funds in your name. In order for you to enjoy the tax deferral, the payments due under the Agreement will be paid from the Funds' general assets, and you are considered a general unsecured creditor of the Funds; you may not transfer your right to receive payments under the Agreement to any other person, nor may you pledge that right to secure any debt or other obligation; finally, an election to defer must be made in writing before the first day of the calendar year for which the fees are earned (the "Election Date") and elections can be changed only prospectively, effective for the next calendar year. An important change has been made to your Agreement to give you greater flexibility to select the time of payment of amounts that you defer: for amounts previously deferred and for future elections you now designate a specific Payment Date. PAYMENT DATE ELECTION Deferred fees (and the income, gains and losses credited during the deferral period) will be paid out in a single sum in cash within 30 days of the Payment Date elected for that deferral. (For payments in connection with your termination of service as a trustee, see below.) Deferrals must be for a minimum three year period (unless the your retirement date under the Retirement Plan is earlier). Thus, the Payment Date may be the first day of any calendar quarter that follows the third anniversary of the applicable Election Date or your retirement date. For your first Payment Date election that applies to previously deferred fees, the Election Date is considered to be January 1, 1996. Thus, fees previously deferred and fees payable for the calendar year beginning January 1, 1996 may be deferred to the first day of any calendar quarter in any year from 1999. EXTENDING A PAYMENT DATE One year prior to any Payment Date, you will have a one-time opportunity to extend that Date, provided that the additional period of deferral satisfies the requirements described above. 3 TERMINATION OF SERVICE Upon your death, your account under the Agreement will be paid out in a single sum in cash as soon as practicable. Payment will be made to your designated Beneficiary or Beneficiaries or to your estate if there is no surviving Beneficiary. Upon termination of your service as trustee for any reason other than death or your retirement (as defined in the Retirement Plan), your account will be paid to you as a single sum (or in installments if you had elected that method) in cash within three months following the end of the fiscal year in which you terminate, regardless of the Payment Dates you elected. 4 ARTICLE Page ------- ---- 1. Definitions of Terms and Construction 1 2. Period During Which Compensation Deferrals are Permitted 2 3. Compensation Deferrals 2 4. Distributions from Deferral Account 4 5. Amendments and Termination 5 6. Miscellaneous 5 DEFERRED COMPENSATION AGREEMENT ------------------------------- AGREEMENT, made on this __ day of _______, 19__, by and between the registered open-end investment companies listed on Appendix A hereto (the "Funds"), and ________________________________________________________________ (the "Director") residing at ___________________________________________________. WHEREAS, the Funds and the Director have entered into agreements pursuant to which the Director will serve as a director/trustee of the Funds; and WHEREAS, the Funds and the Director have previously entered into an additional agreement whereby the Funds will provide to the Director a vehicle under which the Director can defer receipt of directors' fees payable by the Funds and now desire to amend and restate such agreement. NOW, THEREFORE, in consideration of the mutual covenants and obligations set forth in this Agreement, the Funds and the Director hereby agree as follows: 1. DEFINITION OF TERMS AND CONSTRUCTION ------------------------------------ 1.1 Definitions. Unless a different meaning is plainly implied by the context, the following terms as used in this Agreement shall have the following meanings: (a) "Beneficiary" shall mean such person or persons designated pursuant to Section 4.3 hereof to receive benefits after the death of the Director. (b) "Boards of Directors" shall mean the respective Boards of Directors of the Funds. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. (d) "Compensation" shall mean the amount of directors' fees paid by each of the Funds to the Director during a Deferral Year prior to reduction for Compensation Deferrals made under this Agreement. (e) "Compensation Deferral" shall mean the amount or amounts of the Director's Compensation deferred under the provisions of Section 3 of this Agreement. -1- 6 (f) "Deferral Accounts" shall mean the accounts maintained to reflect the Director's Compensation Deferrals made pursuant to Section 3 hereof and any other credits or debits thereto. (g) "Deferral Year" shall mean each calendar year during which the Director makes, or is entitled to make, Compensation Deferrals under Section 3 hereof. (h) "Retirement" shall have the same meaning as set forth under the Retirement Plan. (i) "Retirement Plan" shall mean the "AIM Funds Retirement Plan for Eligible Directors/Trustees." (j) "Valuation Date" shall mean the last business day of each calendar year and any other day upon which the Funds makes valuations of the Deferral Accounts. 1.2 Plurals and Gender. Where appearing in this Agreement the singular shall include the plural and the masculine shall include the feminine, and vice versa, unless the context clearly indicates a different meaning. 1.3 Directors and Trustees. Where appearing in this Agreement, "Director" shall also refer to "Trustee" and "Board of Directors" shall also refer to "Board of Trustees." 1.4 Headings. The headings and sub-headings in this Agreement are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof. 1.5 Separate Agreement for Each Fund. This Agreement is drafted, and shall be construed, as a separate agreement between the Director and each of the Funds. 2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED -------------------------------------------------------- 2.1 Commencement of Compensation Deferrals. The Director may elect, on a form provided by, and submitted to, the Presidents of the respective Funds, to commence Compensation Deferrals under Section 3 hereof for the period beginning on the later of (i) the date this Agreement is executed or (ii) the date such form is submitted to the Presidents of the Funds. 2.2 Termination of Deferrals. The Director shall not be eligible to make Compensation Deferrals after the earliest of the following dates: (a) The date on which he ceases to serve as a Director of all of the Funds; or (b) The effective date of the termination of this Agreement. -2- 7 3. COMPENSATION DEFERRALS ---------------------- 3.1 Compensation Deferral Elections. (a) On or prior to the first day of any Deferral Year, the Director may elect, on the form described in Section 2.1 hereof, to defer the receipt of all or a portion of his Compensation for such Deferral Year. Such writing shall set forth the amount of such Compensation Deferral (in whole percentage amounts). Such election shall continue in effect for all subsequent Deferral Years unless it is canceled or modified as provided below. (b) Compensation Deferrals shall be withheld from each payment of Compensation by the Funds to the Director based upon the percentage amount elected by the Director under Section 3.1(a) hereof. (c) The Director may cancel or modify the amount of his Compensation Deferrals on a prospective basis by submitting to the Presidents of the Funds a revised Compensation Deferral election form. Such change will be effective as of the first day of the Deferral Year following the date such revision is submitted to the Presidents of the Funds. 3.2 Valuation of Deferral Account. (a) Each Fund shall establish a bookkeeping Deferral Account to which will be credited an amount equal to the Director's Compensation Deferrals under this Agreement made with respect to Compensation earned from each such Fund. Compensation Deferrals shall be allocated to the Deferral Accounts on the first business day following the date such Compensation Deferrals are withheld from the Director's Compensation. As of the date of this Agreement, the Deferral Accounts also shall be credited with the amounts credited to the Director under each other outstanding elective deferred compensation agreement entered into by and between the Funds and the Director which is superseded by this Agreement pursuant to Section 6.11 hereof. The Deferral Accounts shall be debited to reflect any distributions from such Accounts. Such debits shall be allocated to the Deferral Accounts as of the date such distributions are made. (b) As of each Valuation Date, income, gain and loss equivalents (determined as if the Deferral Accounts are invested in the manner set forth under Section 3.3, below) attributable to the period following the next preceding Valuation Date shall be credited to and/or deducted from the Director's Deferral Accounts. 3.3 Investment of Deferral Account Balances. (a) (1) The Director may select, from various options made available by the Funds, the investment media in which all or part of his Deferral Accounts shall be deemed to be invested. -3- 8 (2) The Director shall make an investment designation on a form provided by the Presidents of the Funds which shall remain effective until another valid direction has been made by the Director as herein provided. The Director may amend his investment designation as of the end of each calendar quarter by giving written direction to the Presidents of the Funds at least thirty (30) days prior to the end of such calendar quarter. A timely change to a Director's investment designation shall become effective on the first day of the calendar quarter following receipt by the Presidents of the Funds. (3) The investment media deemed to be made available to the Director, and any limitation on the maximum or minimum percentages of the Director's Deferral Accounts that may be invested any particular medium, shall be the same as from time-to-time communicated to the Director by the Presidents of the Funds. (b) Except as provided below, the Director's Deferral Accounts shall be deemed to be invested in accordance with his investment designations, provided such designations conform to the provisions of this Section. If - (1) the Director does not furnish the Presidents of the Funds with complete, written investment instructions, or (2) the written investment instructions from the Director are unclear, then the Director's election to make Compensation Deferrals hereunder shall be held in abeyance and have no force or effect until such time as the Director shall provide the Presidents of the Funds with complete investment instructions. Notwithstanding the above, the Boards of Directors, in their sole discretion, may disregard the Director's election and determine that all Compensation Deferrals shall be deemed to be invested in a fund determined by the Boards of Directors. In the event that any fund under which any portion of the Director's Deferral Accounts is deemed to be invested ceases to exist, such portion of the Deferral Accounts thereafter shall be held in the successor to such fund, subject to subsequent deemed investment elections. The Fund shall provide an annual statement to the Director showing such information as is appropriate, including the aggregate amount in the Deferral Accounts, as of a reasonably current date. -4- 9 4. DISTRIBUTIONS FROM DEFERRAL ACCOUNTS ------------------------------------ 4.1 Payment Date and Methods. (a) Designation of Date. Each deferral direction given pursuant to Section 3.1 shall include designation of the Payment Date for the value of the amount deferred. Such Payment Date shall be the first day of any calendar quarter, subject to the limitation set forth in paragraph 4.1(c). (b) Extension Date. One year before the Payment Date initially designated pursuant to paragraph 4.1(a) above, the Participant may irrevocably elect to extend such Payment Date to the first day of any calendar quarter, subject to the limitation set forth in paragraph 4.1(c). (c) Limitation. The Director shall select a Payment Date (or extended Payment Date) that is no sooner than the earlier of (i) the January 1 that follows the third anniversary of the Participant's deferral election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the year after the Participant's Retirement. (d) Methods of Payment. Distributions from the Director's Deferral Accounts shall be paid in cash. A Participant may elect, at the time a Payment Date is selected, to receive the amount which will become payable as of such Payment Date in generally equal quarterly installments over a period not to exceed ten (10) years. Except as may be elected pursuant to this paragraph, all amounts becoming payable under this Plan shall be paid in a single sum. (e) Irrevocability. Except as provided in paragraph 4.1(b), a designation of a Payment Date and an election of installment payments shall be irrevocable; provided, however, that payment shall be made or begin on a different date as follows: (1) Upon the Director's death, payment shall be made in accordance with Section 4.2, (2) Upon the Director's ceasing to serve as a director of all of the Funds for reasons other than death or Retirement, payment shall be made or begin within three months after the end of the calendar year in which such termination occurs in accordance with the method elected by the Director pursuant to paragraph 4.1(d), except that the Boards of Directors, in their sole discretion, may accelerate the distribution of such Deferral Accounts, (3) Upon termination of this Agreement, payment shall be made in accordance with Section 5.2, and (4) In the event of the liquidation, dissolution or winding up of a Fund or the distribution of all or substantially all of a Fund's assets and property relating to one or -5- 10 more series of its shares to the shareholders of such series (for this purpose a sale, conveyance or transfer of a Fund's assets to a trust, partnership, association or corporation in exchange for cash, shares or other securities with the transfer being made subject to, or with the assumption by the transferee of, the liabilities of the Fund shall not be deemed a termination of the Fund or such a distribution), all unpaid balances of the Deferral Accounts related to such Fund as of the effective date thereof shall be paid in a lump sum on such effective date. 4.2 Death Prior to Complete Distribution of Deferral Accounts. Upon the death of the Director prior to the commencement of the distribution of the amounts credited to his Deferral Accounts, the balance of such Accounts shall be distributed to his Beneficiary in a lump sum as soon as practicable after the Director's death. In the event of the death of the Director after the commencement of such distribution, but prior to the complete distribution of his Deferral Accounts, the balance of the amounts credited to his Deferral Accounts shall be distributed to his Beneficiary over the remaining period during which such amounts were distributable to the Director under Section 4.1 hereof. Notwithstanding the above, the Boards of Directors, in their sole discretion, may accelerate the distribution of the Deferral Accounts. 4.3 Designation of Beneficiary. For purposes of Section 4.2 hereof, the Director's Beneficiary shall be the person or persons so designated by the Director in a written instrument submitted to the Presidents of the Funds. In the event the Director fails to properly designate a Beneficiary, his Beneficiary shall be the person or persons in the first of the following classes of successive preference Beneficiaries surviving at the death of the Director: the Director's (1) surviving spouse or (2) estate. 4.4 Payments Due Missing Persons. The Funds shall make a reasonable effort to locate all persons entitled to benefits under this Agreement. However, notwithstanding any provisions of this Agreement to the contrary, if, after a period of five (5) years from the date such benefit shall be due, any such persons entitled to benefits have not been located, their rights under this Agreement shall stand suspended. Before this provision becomes operative, the Funds shall send a certified letter to all such persons to their last known address advising them that their benefits under this Agreement shall be suspended. Any such suspended amounts shall be held by the Funds for a period of three (3) additional years (or a total of eight (8) years from the time the benefits first become payable) and thereafter, if unclaimed, such amounts shall be forfeited. 5. AMENDMENTS AND TERMINATION -------------------------- 5.1 Amendments. (a) The Funds and the Director may, by a written instrument signed by, or on behalf of, such parties, amend this Agreement at any time and in any manner. -6- 11 (b) The Funds reserve the right to amend, in whole or in part, and in any manner, any or all of the provisions of this Agreement by action of their Boards of Directors for the purposes of complying with any provision of the Code or any other technical or legal requirements, provided that: (1) No such amendment shall make it possible for any part of the Director's Deferral Accounts to be used for, or diverted to, purposes other than for the exclusive benefit of the Director or his Beneficiaries, except to the extent otherwise provided in this Agreement; and (2) No such amendment may reduce the amount of the Director's Deferral Accounts as of the effective date of such amendment. 5.2 Termination. The Director and the Funds may, by written instrument signed by, or on behalf of, such parties, terminate this Agreement at any time. In the event of the termination of this Agreement, the Boards of Directors, in their sole discretion, may choose to pay out the Director's Deferral Accounts prior to the designated Payment Dates. Otherwise, following a termination of the Plan, such Accounts shall continue to be maintained in accordance with the provisions of this Plan until the time they are paid out. 6. MISCELLANEOUS. -------------- 6.1 Rights of Creditors. (a) This Agreement is unfunded. Neither the Director nor any other persons shall have any interest in any specific asset or assets of the Funds by reason of any Deferral Accounts hereunder, nor any rights to receive distribution of his Deferral Accounts except and as to the extent expressly provided hereunder. The Funds shall not be required to purchase, hold or dispose of any investments pursuant to this Agreement; however, if in order to cover their obligations hereunder the Funds elect to purchase any investments the same shall continue for all purposes to be a part of the general assets and property of the Funds, subject to the claims of their general creditors and no person other than the Funds shall by virtue of the provisions of this Agreement have any interest in such assets other than an interest as a general creditor. (b) The rights of the Director and the Beneficiaries to the amounts held in the Deferral Accounts are unsecured and shall be subject to the creditors of the Funds. With respect to the payment of amounts held under the Deferral Accounts, the Director and his Beneficiaries have the status of unsecured creditors of the Funds. This Agreement is executed on behalf of the Funds by an officer, or other representative, of the Funds as such and not individually. Any obligation of the Funds hereunder shall be an unsecured obligation of the Funds and not of any other person. -7- 12 6.2 Agents. The Funds may employ agents and provide for such clerical, legal, actuarial, accounting, advisory or other services as it deems necessary to perform their duties under this Agreement. The Funds shall bear the cost of such services and all other expenses they incur in connection with the administration of this Agreement. 6.3 Liability and Indemnification. Except for their own gross negligence, willful misconduct or willful breach of the terms of this Agreement, the Funds shall be indemnified and held harmless by the Director against liability or losses occurring by reason of any act or omission of the Funds or any other person. 6.4 Incapacity. If the Funds shall receive evidence satisfactory to them that the Director or any Beneficiary entitled to receive any benefit under the Agreement is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of the Director or Beneficiary and that no guardian, committee or other representative of the estate of the Director or Beneficiary shall have been duly appointed, the Funds may make payment of such benefit otherwise payable to the Director or Beneficiary to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the minor or a trust company), and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit. 6.5 Cooperation of Parties. All parties to this Agreement and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Agreement or any of its provisions. 6.6 Governing Law. This Agreement is made and entered into in the State of Texas and all matters concerning its validity, construction and administration shall be governed by the laws of the State of Texas. 6.7 Nonguarantee of Directorship. Nothing contained in this Agreement shall be construed as a contract or guarantee of the right of the Director to be, or remain as, a director of any of the Funds or to receive any, or any particular rate of, Compensation from any of the Funds. 6.8 Counsel. The Funds may consult with legal counsel with respect to the meaning or construction of this Agreement, their obligations or duties hereunder or with respect to any action or proceeding or any question of law, and they shall be fully protected with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel. 6.9 Spendthrift Provision. The Director's and Beneficiaries' interests in the Deferral Accounts may not be anticipated, sold, encumbered, pledged, mortgaged, charged, transferred, -8- 13 alienated, assigned nor become subject to execution, garnishment or attachment and any attempt to do so by any person shall render the Deferral Accounts immediately forfeitable. 6.10 Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or mailed by United States registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight delivery service providing for a signed return receipt, addressed to the Director at the home address set forth in the Funds' records and to the Funds at the address set forth on the first page of this Agreement, provided that all notices to the Funds shall be directed to the attention of the Presidents of the Funds or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 6.11 Entire Agreement. This Agreement contains the entire understanding between the Funds and the Director with respect to the payment of non-qualified elective deferred compensation by the Fund to the Director. Effective as of the date hereof, this Agreement replaces, and supersedes, all other non-qualified elective deferred compensation agreements by and between the Director and the Funds. 6.12 Interpretation of Agreement. Interpretations of, and determinations (including factual determinations) related to, this Agreement made by the Funds in good faith, including any determinations of the amounts of the Deferral Accounts, shall be conclusive and binding upon all parties; and the Funds shall not incur any liability to the Director for any such interpretation or determination so made or for any other action taken by it in connection with this Agreement in good faith. 6.13 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the Funds and their successors and assigns and to the Director and his heirs, executors, administrators and personal representatives. 6.14 Severability. In the event any one or more provisions of this Agreement are held to be invalid or unenforceable, such illegality or unenforceability shall not affect the validity or enforceability of the other provisions hereof and such other provisions shall remain in full force and effect unaffected by such invalidity or unenforceability. 6.15 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. -9- 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. The Funds ________________________ By:_________________________ Witness Name: Title: ________________________ ____________________________ Witness Director -10- 15 APPENDIX A ---------- AIM EQUITY FUNDS, INC. AIMS FUNDS GROUP AIM INTERNATIONAL FUNDS, INC. AIM INVESTMENT SECURITIES FUNDS AIM STRATEGIC INCOME FUND, INC. AIM SUMMIT FUND, INC. AIM TAX-EXEMPT FUNDS, INC. AIM VARIABLE INSURANCE FUNDS, INC. SHORT-TERM INVESTMENTS CO. SHORT-TERM INVESTMENTS TRUST TAX-FREE INVESTMENTS CO. 16 DEFERRED COMPENSATION AGREEMENT DEFERRAL ELECTION FORM ------------------------------- TO: Presidents of the AIM Funds FROM: DATE: With respect to the Deferred Compensation agreement (the "Agreement") dated as of ________________ by and between the undersigned and the AIM Funds, I hereby make the following elections: Deferral of Compensation ------------------------ Starting with Compensation to be paid to me with respect to services provided by me to the AIM Funds after the date this election Form is received by the AIM Funds, I hereby elect that ______ percent (_____%) of my Compensation (as defined under the Agreement) be reduced and that the Fund establish a bookkeeping account credited with amounts equal to the amount so reduced (the "Deferral Account"). The Deferral Account shall be further credited with income equivalents as provided under the Agreement. I understand that this election will remain in effect with respect to Compensation I earn in subsequent years unless I modify or revoke it. I further understand that such modification or revocation will be effective only prospectively and will apply commencing with the Compensation I earn in the calendar year that begins after the change is received by you. Payment Date ------------ I hereby designate ________ 1 (select the first month in any calendar quarter) in the year ______ (select a year that is at least four years after the year this election is made) as the Payment Date for the amounts credited to my Deferral Account pursuant to the election made above. If my Retirement (as defined in the Agreement) occurs sooner, I o do o do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement. Payment Method -------------- I hereby elect to receive the amounts credited to my Deferral Account in (check one) o a single payment in cash o annual installments for a period of ____ (select no more than 10 years) -12- 17 beginning within 30 days following the payment date selected above. I understand that the amounts credited to my Deferral Account shall remain the general assets of the AIM Funds and that, with respect to the payment of such amounts, I am merely a general creditor of the AIM Funds. I may not sell, encumber, pledge, assign or otherwise alienate the amounts credited to my Deferral Account. I hereby agree that the terms of the Agreement are incorporated herein and are made a part hereof. Dated as of the day and year first above written. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ -13- 18 DEFERRED COMPENSATION AGREEMENT INVESTMENT DIRECTION FORM ------------------------------- TO: Presidents of the AIM Funds FROM: DATE: With respect to the Deferred Compensation Agreement (the "Agreement") dated as of ________________ by and between the undersigned and the AIM Funds, I hereby elect that my Deferral Account under the Agreement be considered to be invested as follows (in multiples of 10%): AIM WEINGARTEN FUND ____________% AIM CONSTELLATION FUND ____________% AIM HIGH YIELD FUND ____________% AIM INTERNATIONAL EQUITY FUND ____________% AIM AGGRESSIVE GROWTH EQUITY FUND __________% AIM LIMITED MATURITY TREASURY SHARES FUND __________% AIM VALUE FUND _____________% AIM MONEY MARKET FUND ___________% AIM BALANCED FUND ____________% AIM CHARTER FUND _____________% I acknowledge that I may amend this Investment Agreement in the manner, and at such time, as permitted under the Agreement. Furthermore, I acknowledge that, pursuant to Section 3.3(b) of the Agreement, the Fund has reserved the right to disregard the elections made above to consider my Deferral Account to be deemed to be invested in a fund of its choosing. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ 19 DEFERRED COMPENSATION AGREEMENT BENEFICIARY DESIGNATION FORM ------------------------------- TO: Presidents of the AIM Funds FROM: DATE: With respect to the Deferred Compensation Agreement (the "Agreement") dated as of _____________ by and between the undersigned and the AIM Funds, I hereby make the following beneficiary designations: I. Primary Beneficiary ------------------- I hereby appoint the following as my Primary Beneficiary(ies) to receive at my death the amounts credited to my Deferral Account under the Agreement. In the event I am survived by more than one Primary Beneficiary, such Primary Beneficiaries shall share equally in such amounts unless I indicate otherwise on an attachment to this form: _________________________________________________________________ Name Relationship _________________________________________________________________ Address _________________________________________________________________ City State Zip 20 II. Secondary Beneficiary --------------------- In the event I am not survived by any Primary Beneficiary, I hereby appoint the following as Secondary Beneficiary(ies) to receive death benefits under the Agreement. In the event I am survived by more than one Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless I indicate otherwise on an attachment to this form: _________________________________________________________________ Name Relationship _________________________________________________________________ Address _________________________________________________________________ City State Zip I understand that I may revoke or amend the above designations at any time. I further understand that if I am not survived by a Primary or Secondary Beneficiary, my Beneficiary shall be as set forth under the Agreement. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ -2- 21 INITIAL PAYMENT DATE ELECTION FORM FOR PREVIOUSLY DEFERRED COMPENSATION ------------------------------------ TO: Presidents of the AIM Funds FROM: DATE: With respect to the Deferred Compensation agreement (the "Agreement") dated as of ________________ by and between the undersigned and the AIM Funds, pursuant to which I have previously elected to defer Compensation, I hereby designate ________ 1 (select the first month in any calendar quarter) in the year ______ (select a year that is at least four years after the year this election is made) as the Payment Date for the amounts previously credited to my Deferral Account and amounts subsequently credited thereto. If my Retirement (as defined in the Agreement) occurs sooner, I o do o do not (check the appropriate box) want payment of such amounts to commence effective the January 1 following my Retirement. I understand that amounts credited to my Deferral Account may be paid to me prior to the Payment Date as provided in the Agreement. I understand that I may amend this Investment Agreement in the manner, and at such time, as permitted under the Agreement. WITNESS: DIRECTOR: _________________________ ______________________________ WITNESS: RECEIVED: _________________________ AIM Funds By:___________________________ Date:_________________________ -3- EX-99.B8.A 9 CUSTODIAN AGREEMENT - THE BANK OF NEW YORK 1 EXHIBIT 8(a) ASSIGNMENT AND ACCEPTANCE OF ASSIGNMENT OF CUSTODY AGREEMENT DATED OCTOBER 15, 1993 SHORT-TERM INVESTMENTS CO., a Massachusetts business trust, on behalf of its Prime Portfolio, Treasury Portfolio, Limited Maturity Treasury Portfolio, and Treasury TaxAdvantage Portfolio, ("ASSIGNOR") does hereby assign all of its rights and obligations under the Custody Agreement dated June 16, 1987, as amended, between ASSIGNOR and The Bank of New York (the "Custody Agreement") to SHORT-TERM INVESTMENTS CO., a Maryland corporation, on behalf of its Prime Portfolio, to SHORT-TERM INVESTMENTS TRUST, a Delaware business trust, on behalf of its Treasury Portfolio and Treasury TaxAdvantage Portfolio, and to AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust, on behalf of its Limited Maturity Treasury Portfolio (individually, an "ASSIGNEE" and collectively, the "ASSIGNEES"). ASSIGNEE does hereby accept this assignment and warrants that: a. ASSIGNEE is a trust/corporation duly organized and existing and in good standing under the laws in which it is duly organized. b. ASSIGNEE is empowered under applicable laws and by its Charter and By-Laws to enter into and perform the Custody Agreement. c. All corporate proceedings required by said Charter and By-Laws have been taken to authorize ASSIGNEE to enter into and perform the Custody Agreement. d. ASSIGNEE is an open-end, diversified management investment company registered under the Investment Company Act of 1940, as amended. e. A registration statement under the Securities Act of 1933, as amended on behalf of ASSIGNEE'S shares if currently effective and will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all ASSIGNEE'S shares being offered for sale. 2 IN WITNESS WHEREOF the Parties have caused this Assignment and Acceptance thereof to be executed as of this 19th day of Oct., 1994. SHORT-TERM INVESTMENTS CO. (A Massachusetts business trust) ASSIGNOR Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER -------------------------------- ---------------------------------- Title: Asst. Secretary Title: Chairman CEO -------------------------------- ------------------------------- SHORT-TERM INVESTMENTS CO. (a Maryland corporation) ASSIGNEE Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER -------------------------------- ---------------------------------- Title: Asst. Secretary Title: Chairman CEO -------------------------------- ------------------------------- SHORT-TERM INVESTMENTS CO. (a Delaware business trust) ASSIGNEE Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER -------------------------------- ---------------------------------- Title: Asst. Secretary Title: Chairman CEO -------------------------------- ------------------------------- AIM INVESTMENT SECURITIES FUNDS (a Delaware business trust) ASSIGNEE Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER -------------------------------- ---------------------------------- Title: Asst. Secretary Title: Chairman CEO -------------------------------- ------------------------------- 3 CONSENT TO ASSIGNMENT THE BANK OF NEW YORK By: ILLEGIBLE -------------------------------- Title: Senior Vice President -------------------------------- Attest: /s/ JOSEPH F. KEENAN -------------------------------- Title: Assistant Vice President -------------------------------- 4 [THE BANK OF NEW YORK LETTERHEAD] DOMESTIC CUSTODIAN FEE SCHEDULE FOR SHORT TERM INVESTMENT COMPANY PRIME, TREASURY & LIMITED MATURITY PORTFOLIOS SAFEKEEPING/INCOME COLLECTION/REPORTING VIA LASER 1/2 of a basis point per annum on the first $9 billion in aggregate net assets of all the portfolios' securities. 3/8 of a basis point on the excess. SECURITY TRANSACTION CHARGES $ 6 - Book-Entry settlements - DTC/FRB/PTC $25 - Physicals, options, and futures $ 5 - Futures maintenance margins FED WIRE CHARGES $8 - Per manually initiated transaction $4 - Per micro/CA$H initiated transaction OUT-OF-POCKET EXPENSES None APPROVED BY: /s/ ROBERT H. GRAHAM ----------------------- DATE: January 1, 1992 --------------------- 5 SECOND AMENDED AND RESTATED CUSTODY AGREEMENT --------------------------- Agreement made as of this 16th day of June,1987, between SHORT-TERM INVESTMENTS CO., a Massachusetts business trust organized and existing under the laws of the Commonwealth of Texas, having its principal office and place of business at Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046 (hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to do a banking business, having its principal office and place of business at 48 Wall Street, New York, New York 10015 (hereinafter called the "Custodian"). W I T N E S S E T H: that for and in consideration of the mutual promises hereinafter set forth the Fund and the Custodian agree as follows: ARTICLE I DEFINITIONS Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings: 1. "Authorized Person" shall be deemed to include any person, whether or not such person is an Officer or employee of the Fund, duly authorized by the Board of Trustees of the Fund to give Oral Instructions and Written Instructions on behalf of the Fund and listed in the Certificate annexed hereto as Appendix A or such other Certificate as may be received by the Custodian from time to time. 2. "Book-Entry System" shall mean the Federal Reserve/Treasury book- entry system for United States and federal agency securities, its successor or successors and its nominee or nominees. 6 3. "Call Option" shall mean an exchange traded option with respect to Securities other than Stock Index Options, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying Securities. 4. "Certificate" shall mean any notice, instruction, or other instrument in writing, authorized or required by this Agreement to be given to the Custodian which is actually received by the Custodian and signed on behalf of the Fund by any two Officers. 5. "Clearing Member" shall mean a registered broker-dealer which is a clearing member under the rules of O.C.C. and a member of a national securities exchange qualified to act as a custodian for an investment company, or any broker-dealer reasonably believed by the Custodian to be such a clearing member. 6. "Collateral Account" shall mean a segregated account so denominated which is specifically allocated to a Series and pledged to the Custodian as security for, and in consideration of, the Custodian's issuance of (a) any Put Option guarantee letter or similar document described in paragraph 8 of Article V herein, or (b) any receipt described in Article V or VIII herein. 7. "Covered Call Option" shall mean an exchange traded option entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying Securities (excluding Futures Contracts) which are owned by the writer thereof and subject to appropriate restrictions. 8. "Depository" shall mean The Depository Trust Company ("DTC"), a clearing agency registered with the Securities and Exchange Commission, its successor or successors and its nominee or nominees. The term "Depository" shall further mean and include any other person authorized to act as a depository under the Investment Company Act of 1940, its successor or successors and its nominee or nominees,, specifically identified in a certified copy of a resolution of the Fund's Board of Trustees specifically approving deposits therein by the Custodian. 9. "Financial Futures Contract" shall mean the firm commitment to buy or sell fixed income securities including, without limitation, U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of deposit, and Eurodollar certificates of deposit, during a specified month at an agreed upon price. - 2 - 7 10. "Futures Contract" shall mean a Financial Futures Contract and/or Stock Index Futures Contracts. 11. "Futures Contract Option" shall mean an option with respect to a Futures Contract. 12. "Margin Account" shall mean a segregated account in the name of a broker, dealer, futures commission merchant, or a Clearing Member, or in the name of the Fund for the benefit of a broker, dealer, futures commission merchant, or Clearing Member, or otherwise, in accordance with an agreement between the Fund, the Custodian and a broker, dealer, futures commission merchant or a Clearing Member (a "Margin Account Agreement), separate and distinct from the custody account, in which certain Securities and/or money of the Fund shall be deposited and withdrawn from time to time in connection with such transactions as the Fund may from time to time determine. Securities held in the Book-Entry System or the Depository shall be deemed to have been deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting an appropriate entry in its books and records. 13. "Money Market Security" shall be deemed to include, without limitation, certain Reverse Repurchase Agreements, debt obligations issued or guaranteed as to interest and principal by the government of the United States or agencies or instrumentalities thereof, any tax, bond or revenue anticipation note issued by any state or municipal government or public authority, commercial paper, certificates of deposit and bankers' acceptances, repurchase agreements with respect to the same and bank time deposits, where the purchase and sale of such securities normally requires settlement in federal funds on the same day as such purchase or sale. 14. "O.C.C." shall mean the Options Clearing Corporation, a clearing agency registered under Section 17A of the Securities Exchange Act of 1934, its successor or successors, and its nominee or nominees. 15. "Officers" shall be deemed to include the President, any Vice President, the Secretary, the Clerk, the Treasurer, the Controller, any Assistant Secretary, any Assistant Clerk, any Assistant Treasurer, and any other person or persons, whether or not any such other person is an officer of the Fund, duly authorized by the Board of Trustees of the Fund to execute any Certificate, instruction, notice or other instrument on behalf of the Fund and listed in the Certificate annexed hereto as Appendix B or such - 3 - 8 other Certificate as may be received by the Custodian from time to time. 16. "Option" shall mean a Call option, Covered Call option, Stock Index option and/or a Put Option. 17. "Oral Instructions" shall mean verbal instructions actually received by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person. 18. "Put Option" shall mean an exchange traded option with respect to Securities other than Stock Index Options, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and tender of the specified underlying Securities, to sell such Securities to the writer thereof for the exercise price. 19. "Reverse Repurchase Agreement" shall mean an agreement pursuant to which the Fund sells Securities and agrees to repurchase such Securities at a described or specified date and price. 20. "Security" shall be deemed to include, without limitation, Money Market Securities, Call Options, Put Options, Stock Index Options, Stock Index Futures Contracts, Stock Index Futures Contract Options, Financial Futures Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements, common stocks and other securities having characteristics similar to common stocks, preferred stocks, debt obligations issued by state or municipal governments and by public authorities, (including, without limitation, general obligation bonds, revenue bonds and industrial bonds and industrial development bonds), bonds, debentures, notes, mortgages or other obligations, and any certificates, receipts, warrants or other instruments representing rights to receive, purchase, sell or subscribe for the same, or evidencing or representing any other rights or interest therein, or any property or assets. 21. "Senior Security Account" shall mean an account maintained and specifically allocated to a Series under the terms of this Agreement as a segregated account, by recordation or otherwise, within the custody account in which certain Securities and/or other assets of the Fund specifically allocated to such Series shall be deposited and withdrawn from time to time in accordance with Certificates received by the Custodian in connection with such transactions as the Fund may from time to time determine. - 4 - 9 22. "Series" shall mean the various portfolios, if any, of the Fund as described from time to time in the current and effective prospectus for the Fund. 23. "Shares" shall mean the shares of beneficial interest of the Fund, each of which is in the case of a Fund having Series allocated to a particular Series. 24. "Stock Index Futures Contract" shall mean a bilateral agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to a specified dollar amount times the difference between the value of a particular stock index at the close of the last business day of the contract and the price at which the futures contract is originally struck. 25. "Stock Index Option" shall mean an exchange traded option entitling the holder, upon timely exercise, to receive an amount of cash determined by reference to the difference between the exercise price and the value of the index on the date of exercise. 26. "Written Instructions" shall mean written communications actually received by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person by telex or any other such system whereby the receiver of such communications is able to verify by codes or otherwise with a reasonable degree of certainty the identity of the sender of such communication. ARTICLE II APPOINTMENT OF CUSTODIAN 1. The Fund hereby constitutes and appoints the Custodian as custodian of the Securities and moneys at any time owned by the Fund during the period of this Agreement. 2. The Custodian hereby accepts appointment as such custodian and agrees to perform the duties thereof as hereinafter set forth. - 5 - 10 ARTICLE III CUSTODY OF CASH AND SECURITIES 1. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, the Fund will deliver or cause to be delivered to the Custodian all Securities and all moneys owned by it, at any time during the period of this Agreement, and shall specify with respect to such Securities and money the Series to which the same are specifically allocated. The Custodian shall segregate, keep and maintain the assets of the Series separate and apart. The Custodian will not be responsible for any Securities and moneys not actually received by it. The Custodian will be entitled to reverse any credits made on the Fund's behalf where such credits have been previously made and moneys are not finally collected. The Fund shall deliver to the Custodian a certified resolution of the Board of Trustees of the Fund, substantially in the form of Exhibit A hereto, approving, authorizing and instructing the Custodian on a continuous and on-going basis to deposit in the Book-Entry System all Securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated and to utilize the Book-Entry System to the extent possible in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities collateral. Prior to a deposit of Securities specifically allocated to a Series in the Depository, the Fund shall deliver to the Custodian a certified resolution of the Board of Trustees of the Fund, substantially in the form of Exhibit B hereto, approving, authorizing and instructing the Custodian on a continuous and ongoing basis until instructed to the contrary by a Certificate actually received by the Custodian to deposit in the Depository all Securities specifically allocated to such Series eligible for deposit therein, and to utilize the Depository to the extent possible with respect to such Securities in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities collateral. Securities and moneys deposited in either the Book-Entry System or the Depository will be represented in accounts which include only assets held by the Custodian for customers, including, but not limited to, accounts in which the Custodian acts in a fiduciary or representative capacity and will be specifically allocated on the Custodian's books to the separate account for the applicable Series. Prior to the Custodian's accepting, utilizing and acting with respect to Clearing Member confirmations for Options and transac- - 6 - 11 tions in Options for a Series as provided in this Agreement, the Custodian shall have received a certified resolution of the Fund's Board of Trustees, substantially in the form of Exhibit C hereto, approving, authorizing and instructing the Custodian on a continuous and on-going basis, until instructed to the contrary by a Certificate actually received by the Custodian, to accept, utilize and act in accordance with such confirmations as provided in this Agreement with respect to such Series. 2. The Custodian shall establish and maintain separate accounts, in the name of each Series, and shall credit to the separate account for each Series all moneys received by it for the account of the Fund with respect to such Series. Money credited to a separate account for a Series shall be disbursed by the Custodian only: (a) As hereinafter provided; (b) Pursuant to Certificates setting forth the name and address of the person to whom the payment is to be made, the Series account from which payment is to be made, and the purpose for which payment is to be made; or (c) In payment of the fees and in reimbursement of the expenses and liabilities of the Custodian attributable to such Series. 3. Promptly after the close of business on each day the Custodian shall furnish the Fund with confirmations and a summary, on a per Series basis, of all transfers to or from the account of the Fund for a Series, either hereunder or with any co-custodian or sub-custodian appointed in accordance with this Agreement during said day. Where Securities are transferred to the account of the Fund for a Series, the Custodian shall also by book-entry or otherwise identify as belonging to such Series a quantity of Securities in a fungible bulk of Securities registered in the name of the Custodian (or its nominee) or shown on the Custodian's account on the books of the Book-Entry System or the Depository. At least monthly and from time to time, the Custodian shall furnish the Fund with a detailed statement, on a per Series basis, of the Securities and moneys held by the Custodian for the Fund. 4. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, all Securities held by the Custodian hereunder, which are issued or issuable only in bearer form, except such Securities as are held in the Book-Entry System, shall be held by the Custodian in that form; all other Securities held hereunder may be registered in the name of the Fund, in the name of any duly appointed - 7 - 12 registered nominee of the Custodian as the Custodian may from time to time determine, or in the name of the Book-Entry System or the Depository or their successor or successors, or their nominee or nominees. The Fund agrees to furnish to the Custodian appropriate instruments to enable the Custodian to hold or deliver in proper form for transfer, or to register in the name of its registered nominee or in the name of the Book-Entry System or the Depository any Securities which it may hold hereunder and which may from time to time be registered in the name of the Fund. The Custodian shall hold all such Securities specifically allocated to a Series which are not held in the Book- Entry System or in the Depository in a separate account in the name of such Series physically segregated at all times from those of any other person or persons. 5. Except as otherwise provided in this Agreement and unless otherwise instructed to the contrary by a Certificate, the Custodian by itself, or through the use of the Book-Entry System or the Depository with respect to Securities held hereunder and therein deposited, shall with respect to all Securities held for the Fund hereunder in accordance with preceding paragraph 4: (a) Collect all income due or payable; (b) Present for payment and collect the amount payable upon such Securities which are called, but only if either (i) the Custodian receives a written notice of such call, or (ii) notice of such call appears in one or more of the publications listed in Appendix C annexed hereto, which may be amended at any time by the Custodian without the prior notification or consent of the Fund; (c) Present for payment and collect the amount payable upon all Securities which mature; (d) Surrender Securities in temporary form for definitive Securities; (e) Execute, as custodian, any necessary declarations or certificates of ownership under the Federal Income Tax Laws or the laws or regulations of any other taxing authority now or hereafter in effect; and (f) Hold directly, or through the Book-Entry System or the Depository with respect to Securities therein deposited, for the account of a Series, all rights and similar securities issued with respect to any Securities held by the Custodian for such Series hereunder. - 8 - 13 6. Upon receipt of a Certificate and not otherwise, the Custodian, directly or through the use of the Book-Entry System or the Depository, shall: (a) Execute and deliver to such persons as may be designated in such Certificate proxies, consents, authorizations, and any other instruments whereby the authority of the Fund as owner of any Securities held by the Custodian hereunder for the Series specified in such Certificate may be exercised; (b) Deliver any Securities held by the Custodian hereunder for the Series specified in such Certificate in exchange for other Securities or cash issued or paid in connection with the liquidation, reorganization, refinancing, merger, consolidation or recapitalization of any corporation, or the exercise of any conversion privilege and receive and hold hereunder specifically allocated to such Series any cash or other Securities received in exchange; (c) Deliver any Securities held by the Custodian hereunder for the Series specified in such Certificate to any protective committee, reorganization committee or other person in connection with the reorganization, refinancing, merger, consolidation, recapitalization or sale of assets of any corporation, and receive and hold hereunder specifically allocated to such Series such certificates of deposit, interim receipts or other instruments or documents as may be issued to it to evidence such delivery; (d) Make such transfers or exchanges of the assets of the Series specified in such Certificate, and take such other steps as shall be stated in such Certificate to be for the purpose of effectuating any duly authorized plan of liquidation, reorganization, merger, consolidation or recapitalization of the Fund; and (e) Present for payment and collect the amount payable upon Securities not described in preceding paragraph 5(b) of this Article which may be called as specified in the Certificate. 7. Notwithstanding any provision elsewhere contained herein, the Custodian shall not be required to obtain possession of any instrument or certificate representing any Futures Contract, any Option, or any Futures Contract Option until after it shall have determined, or shall have received a Certificate from the Fund stating, that any such instruments or certificates are available. The Fund shall deliver to the Custodian such a Certificate no later than the business day preceding the availability of any such instrument - 9 - 14 or certificate. Prior to such availability, the Custodian shall comply with Section 17(f) of the Investment Company Act of 1940, as amended, in connection with the purchase, sale, settlement, closing out or writing of Futures Contracts, Options, or Futures Contract Options by making payments or deliveries specified in Certificates received by the Custodian in connection with any such purchase, sale, writing, settlement or closing out upon its receipt from a broker, dealer, or futures commission merchant of a statement or confirmation reasonably believed by the Custodian to be in the form customarily used by brokers, dealers, or future commission merchants with respect to such Futures Contracts, Options, or Futures Contract Options, as the case may be, confirming that such Security is held by such broker, dealer or futures commission merchant, in book-entry form or otherwise, in the name of the Custodian (or any nominee of the Custodian) as custodian for the Fund, provided, however, that payments to or deliveries from the Margin Account shall be made in accordance with the terms and conditions of the Margin Account Agreement. Whenever any such instruments or certificates are available, the Custodian shall, notwithstanding any provision in this Agreement to the contrary, make payment for any Futures Contract, Option, or Futures Contract Option for which such instruments or such certificates are available only against the delivery to the Custodian of such instrument or such certificate, and deliver any Future Contract, Option or Futures Contract Option for which such instruments or such instruments or such certificates are available only against receipt by the Custodian of payment therefor. Any such instrument or certificate delivered to the Custodian shall be held by the Custodian hereunder in accordance with, and subject to, the provisions of this Agreement. ARTICLE IV PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN OPTIONS, FUTURES CONTRACTS AND FUTURES CONTRACT OPTIONS 1. Promptly after each purchase of Securities by the Fund, other than a purchase of an Option, a Futures Contract, or a Futures Contract Option, the Fund shall deliver to the Custodian (i) with respect to each purchase of Securities which are not Money Market Securities, a Certificate, and (ii) with respect to each purchase of Money Market Securities, a Certificate, Oral Instructions or Written Instructions, specifying with respect to each such purchase: - 10 - 15 (a) the Series to which such Securities are to be specifically allocated; (b) the name of the issuer and the title of the Securities; (c) the number of shares or the principal amount purchased and accrued interest, if any; (d) the date of purchase and settlement; (e) the purchase price per unit; (f) the total amount payable upon such purchase; (g) the name of the person from whom or the broker through whom the purchase was made, and the name of the clearing broker, if any; and (h) the name of the broker to whom payment is to be made. The Custodian shall, upon receipt of Securities purchased by or for the Fund, pay to the broker specified in the Certificate out of the moneys held for the account of such Series the total amount payable upon such purchase, provided that the same conforms to the total amount payable as set forth in such Certificate, Oral Instructions or Written Instructions. 2. Promptly after each sale of Securities by the Fund, other than a sale of any Option, Futures Contract, Futures Contract Option, or any Reverse Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect to each sale of Securities which are not Money Market Securities, a Certificate, and (ii) with respect to each sale of Money Market Securities, a Certificate, Oral Instructions or Written Instructions, specifying with respect to each such sale: (a) the Series to which such Securities were specifically allocated; (b) the name of the issuer and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest, if any; (d) the date of sale; (e) the sale price per unit; (f) the total amount payable to the Fund upon such sale; (g) the name of the broker through whom or the person to whom the sale was made, and the name of the clearing broker, if any; and (h) the name of the broker to whom the Securities are to be delivered. The Custodian shall deliver the Securities specifically allocated to such Series to the broker specified in the Certificate upon the total amount payable to the Fund upon such sale, provided that the same conforms to the total amount payable as set forth in such Certificate, Oral Instructions or Written Instructions. ARTICLE V OPTIONS 1. Promptly after the purchase of any Option by the Fund, the Fund shall deliver to the Custodian a Certificate specifying with respect to each Option purchased: (a) the - 11 - 16 Series to which such Option is specifically allocated; (b) the type of Option (put or call); (c) the name of the issuer and the title and number of shares subject to such Option or, in the case of a Stock Index Option, the stock index to which such option relates and the number of Stock Index Options purchased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the total amount payable by the Fund in connection with such purchase; (h) the name of the Clearing Member through whom such Option was purchased; and (i) the name of the broker to whom payment is to be made. The Custodian shall pay, upon receipt of a Clearing Member's statement confirming the purchase of such Option held by such Clearing Member for the account of the Custodian (or any duly appointed and registered nominee of the Custodian) as custodian for the Fund, out of moneys held for the account of the Series to which such Option is to be specifically allocated, the total amount payable upon such purchase to the Clearing Member through whom the purchase was made, provided that the same conforms to the total amount payable as set forth in such Certificate. 2. Promptly after the sale of any Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to each such sale: (a) the Series to which such option was specifically allocated; (b) the type of Option (put or call); (c) the name of the issuer and the title and number of shares subject to such Option or, in the case of a Stock Index Option, the stock index to which such Option relates and the number of Stock Index Options sold; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the Clearing Member through whom the sale was made. The Custodian shall consent to the delivery of the Option sold by the Clearing Member which previously supplied the confirmation described in preceding paragraph 1 of this Article with respect to such Option against payment to the Custodian of the total amount payable to the Fund, provided that the same conforms to the total amount payable as set forth in such Certificate. 3. Promptly after the exercise by the Fund of any Call Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Call Option: (a) the Series to which such Call Option was specifically allocated; (b) the name of the issuer and the title and number of shares subject to the Call Option; (c) the expiration date; (d) the date of exercise and settlement; (e) the exercise price per share; (f) the total amount to be paid by the - 12 - 17 Fund upon such exercise; and (g) the name of the Clearing Member through whom such Call option was exercised. The Custodian shall, upon receipt of the Securities underlying the Call Option which was exercised, pay out of the moneys held for the account of the Series to which such Call Option was specifically allocated the total amount payable to the Clearing Member through whom the Call Option was exercised, provided that the same conforms to the total amount payable as set forth in such Certificate. 4. Promptly after the exercise by the Fund of any Put option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Put Option: (a) the Series to which such Put option was specifically allocated; (b) the name of the issuer and the title and number of shares subject to the Put Option; (c) the expiration date; (d) the date of exercise and settlement; (e) the exercise price per share; (f) the total amount to be paid to the Fund upon such exercise; and (g) the name of the Clearing Member through whom such Put option was exercised. The Custodian shall, upon receipt of the amount payable upon the exercise of the Put Option, deliver or direct the Depository to deliver the Securities specifically allocated to such Series, provided the same conforms to the amount payable to the Fund as set forth in such Certificate. 5. Promptly after the exercise by the Fund of any Stock Index Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Stock Index Option: (a) the Series to which such Stock Index Option was specifically allocated; (b) the type of Stock Index Option (put or call); (c) the number of options being exercised; (d) the stock index to which such option relates; (e) the expiration date; (f) the exercise price; (g) the total amount to be received by the Fund in connection with such exercise; and (h) the Clearing Member from whom such payment is to be received. 6. Whenever the Fund writes a Covered Call Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Covered Call Option: (a) the Series for which such Covered Call option was written; (b) the name of the issuer and the title and number of shares for which the Covered Call Option was written and which underlie the same; (c) the expiration date; (d) the exercise price; (e) the premium to be received by the Fund; (f) the date such Covered Call Option was written; and (g) the name of the Clearing Member through whom the premium is to be received. The Custodian shall deliver or cause to - 13 - 18 be delivered, in exchange for receipt of the premium specified in the Certificate with respect to such Covered Call Option, such receipts as are required in accordance with the customs prevailing among Clearing Members dealing in Covered Call Options and shall impose, or direct the Depository to impose, upon the underlying Securities specified in the Certificate specifically allocated to such Series such restrictions as may be required by such receipts. Notwithstanding the foregoing, the Custodian has the right, upon prior written notification to the Fund, at any time to refuse to issue any receipts for Securities in the possession of the Custodian and not deposited with the Depository underlying a Covered Call Option. 7. Whenever a Covered Call Option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a Certificate instructing the Custodian to deliver, or to direct the Depository to deliver, the Securities subject to such Covered Call Option and specifying: (a) the Series for which such Covered Call Option was written; (b) the name of the issuer and the title and number of shares subject to the Covered Call Option; (c) the Clearing Member to whom the underlying Securities are to be delivered; and (d) the total amount payable to the Fund upon such delivery. Upon the return and/or cancellation of any receipts delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver, or direct the Depository to deliver, the underlying Securities as specified in the Certificate for the amount to be received as set forth in such Certificate. 8. Whenever the Fund writes a Put Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Put Option: (a) the Series for which such Put option was written; (b) the name of the issuer and the title and number of shares for which the Put Option is written and which underlie the same; (c) the expiration date; (d) the exercise price; (e) the premium to be received by the Fund; (f) the date such Put Option is written; (g) the name of the Clearing Member through whom the premium is to be received and to whom a Put Option guarantee letter is to be delivered; (h) the amount of cash, and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Senior Security Account for such Series; and (i) the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited into the Collateral Account for such Series. The Custodian shall, after making the deposits into the Collateral Account specified in the Certificate, issue a Put Option guarantee letter substantially in the form utilized by the Custodian - 14 - 19 on the date hereof, and deliver the same to the Clearing Member specified in the Certificate against receipt of the premium specified in said Certificate. Notwithstanding the foregoing, the Custodian shall be under no obligation to issue any Put option guarantee letter or similar document if it is unable to make any of the representations contained therein. 9. Whenever a Put option written by the Fund and described in the preceding paragraph is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Put Option was written; (b) the name of the issuer and title and number of shares subject to the Put Option; (c) the Clearing Member from whom the underlying Securities are to be received; (d) the total amount payable by the Fund upon such delivery; (e) the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be withdrawn from the Collateral Account for such Series and (f) the amount of cash and/or the amount and kind of Securities, specifically allocated to such Series, if any, to be withdrawn from the Senior Security Account. Upon the return and/or cancellation of any Put Option guarantee letter or similar document issued by the Custodian in connection with such Put Option, the Custodian shall pay out of the moneys held for the account of the Series to which such Put Option was specifically allocated the total amount payable to the Clearing Member specified in the Certificate as set forth in such Certificate, and shall make the withdrawals specified in such Certificate. 10. Whenever the Fund writes a Stock Index Option the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Stock Index Option: (a) the Series for which such Stock Index Option was written; (b) whether such Stock Index Option is a put or a call (c) the number of options written; (d) the stock index to which such Option relates; (e) the expiration date; (f) the exercise price; (g) the Clearing Member through whom such Option was written; (h) the premium to be received by the Fund; (i) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Senior Security Account for such Series; (j) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Collateral Account for such Series; and (k) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in a Margin Account, and the name in which such account is to be or has been established. The Custodian shall, upon receipt of the premium specified in the Certificate, make - 15 - 20 the deposits, if any, into the Senior Security Account specified in the Certificate, and either (1) deliver such receipts, if any, which the Custodian has specifically agreed to issue, which are in accordance with the customs prevailing among Clearing members in Stock Index Options and make the deposits into the Collateral Account specified in the Certificate, or (2) make the deposits into the Margin Account specified in the Certificate. 11. Whenever a Stock Index Option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Stock Index Option: (a) the Series for which such Stock Index Option was written; (b) such information as may be necessary to identify the Stock Index Option being exercised; (c) the Clearing Member through whom such Stock Index Option is being exercised; (d) the total amount payable upon such exercise, and whether such amount is to be paid by or to the Fund; (e) the amount of cash and/or amount and kind of Securities, if any, to be withdrawn from the Margin Account; and (f) the amount of cash and/or amount and kind of Securities, if any, to be withdrawn from the Senior Security Account for such Series; and the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Collateral Account for such Series. Upon the return and/or cancellation of the receipt, if any, delivered pursuant to the preceding paragraph of this Article, the Custodian shall pay out of the moneys held for the account of the Series to which such Stock Index Option was specifically allocated to the Clearing Member specified in the Certificate the total amount payable, if any, as specified therein. 12. Whenever the Fund purchases any option identical to a previously written Option described in paragraphs, 6, 8 or 10 of this Article in a transaction expressly designated as a "Closing Purchase Transaction" in order to liquidate its position as a writer of an option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to the option being purchased: (a) that the transaction is a Closing Purchase Transaction; (b) the Series for which the Option was written; (c) the name of the issuer and the title and number of shares subject to the option, or, in the case of a Stock Index Option, the stock index to which such Option relates and the number of Options held; (d) the exercise price; (e) the premium to be paid by the Fund; (f) the expiration date; (g) the type of Option (put or call) (h) the date of such purchase; (i) the name of the Clearing Member to whom the premium is to be paid; and (j) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Collateral Account, a - 16 - 21 specified Margin Account, or the Senior Security Account for such Series. Upon the Custodian's payment of the premium and the return and/or cancellation of any receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with respect to the option being liquidated through the Closing Purchase Transaction, the Custodian shall remove, or direct the Depository to remove, the previously imposed restrictions on the Securities underlying the Call Option. 13. Upon the expiration, exercise or consummation of a Closing Purchase Transaction with respect to, any Option purchased or written by the Fund and described in this Article, the Custodian shall delete such Option from the statements delivered to the Fund pursuant to paragraph 3 Article III herein, and upon the return and/or cancellation of any receipts issued by the Custodian, shall make such withdrawals from the Collateral Account, and the Margin Account and/or the Senior Security Account as may be specified in a Certificate received in connection with such expiration, exercise, or consummation. ARTICLE VI FUTURES CONTRACTS 1. Whenever the Fund shall enter into a Futures Contract, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Futures Contract, (or with respect to any number of identical Futures Contract(s)): (a) the Series for which the Futures Contract is being entered; (b) the category of Futures Contract (the name of the underlying stock index or financial instrument); (c) the number of identical Futures Contracts entered into; (d) the delivery or settlement date of the Futures Contract(s); (e) the date the Futures Contract(s) was (were) entered into and the maturity date; (f) whether the Fund is buying (going long) or selling (going short) on such Futures Contract(s); (g) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in the Senior Security Account for such Series; (h) the name of the broker, dealer, or futures commission merchant through whom the Futures Contract was entered into; and (i) the amount of fee or commission, if any, to be paid and the name of the broker, dealer, or futures commission merchant to whom such amount is to be paid. The Custodian shall make the deposits, if any, to the Margin Account in accordance with the terms and conditions of the Margin Account Agreement. The Custodian shall make payment out of the moneys specifically allocated to such - 17 - 22 Series of the fee or commission, if any, specified in the Certificate and deposit in the Senior Security Account for such Series the amount of cash and/or the amount and kind of Securities specified in said Certificate. 2. (a) Any variation margin payment or similar payment required to be made by the Fund to a broker, dealer, or futures commission merchant with respect to an outstanding Futures Contract, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. (b) Any variation margin payment or similar payment from a broker, dealer, or futures commission merchant to the Fund with respect to an outstanding Futures Contract, shall be received and dealt with by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 3. Whenever a Futures Contract held by the Custodian hereunder is retained by the Fund until delivery or settlement is made on such Futures Contract, the Fund shall deliver to the Custodian a Certificate specifying: (a) the Futures Contract and the Series to which the same relates; (b) with respect to a Stock Index Futures Contract, the total cash settlement amount to be paid or received, and with respect to a Financial Futures Contract, the Securities and/or amount of cash to be delivered or received; (c) the broker, dealer, or futures commission merchant to or from whom payment or delivery is to be made or received; and (d) the amount of cash and/or Securities to be withdrawn from the Senior Security Account for such Series. The Custodian shall make the payment or delivery specified in the Certificate, and delete such Futures Contract from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein. 4. Whenever the Fund shall enter into a Futures Contract to offset a Futures Contract held by the Custodian hereunder, the Fund shall deliver to the Custodian a Certificate specifying: (a) the items of information required in a Certificate described in paragraph 1 of this Article, and (b) the Futures Contract being offset. The Custodian shall make payment out of the money specifically allocated to such Series of the fee or commission, if any, specified in the Certificate and delete the Futures Contract being offset from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein, and make such withdrawals from the Senior Security Account for such Series as may be specified in such Certificate. The withdrawals, if any, to be made from the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. -18- 23 ARTICLE VII FUTURES CONTRACT OPTIONS 1. Promptly after the purchase of any Futures Contract Option by the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Futures Contract Option: (a) the Series to which such option is specifically allocated; (b) the type of Futures Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option purchased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the amount of premium to be paid by the Fund upon such purchase; (h) the name of the broker or futures commission merchant through whom such option was purchased; and (i) the name of the broker, or futures commission merchant, to whom payment is to be made. The Custodian shall pay out of the moneys specifically allocated to such Series the total amount to be paid upon such purchase to the broker or futures commissions merchant through whom the purchase was made, provided that the same conforms to the amount set forth in such Certificate. 2. Promptly after the sale of any Futures Contract option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such sale: (a) Series to which such Futures Contract Option was specifically allocated; (b) the type of Future Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the broker of futures commission merchant through whom the sale was made. The Custodian shall consent to the cancellation of the Futures Contract Option being closed against payment to the Custodian of the total amount payable to the Fund, provided the same conforms to the total amount payable as set forth in such Certificate. 3. Whenever a Futures Contract option purchased by the Fund pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Futures Contract - 19 - 24 Option was specifically allocated; (b) the particular Futures Contract option (put or call) being exercised; (c) the type of Futures Contract underlying the Futures Contract Option; (d) the date of exercise; (e) the name of the broker or futures commission merchant through whom the Futures Contract Option is exercised; (f) the net total amount, if any, payable by the Fund; (g) the amount, if any, to be received by the Fund; and (h) the amount of cash and/or the amount and kind of Securities to be deposited in the Senior Security Account for such Series. The Custodian shall make, out of the moneys and Securities specifically allocated to such Series, the payments, if any, and the deposits, if any, into the Senior Security Account as specified in the Certificate. The deposits, if any, to be made to the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 4. Whenever the Fund writes a Futures Contract Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Futures Contract option: (a) the Series for which such Futures Contract Option was written; (b) the type of Futures Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option; (d) the expiration date; (e) the exercise price; (f) the premium to be received by the Fund; (g) the name of the broker or futures commission merchant through whom the premium is to be received; and (h) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in the Senior Security Account for such Series. The Custodian shall, upon receipt of the premium specified in the Certificate, make out of the moneys and Securities specifically allocated to such Series the deposits into the Senior Security Account, if any, as specified in the Certificate. The deposits, if any, to be made to the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 5. Whenever a Futures Contract option written by the Fund which is a call is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Futures Contract Option was specifically allocated; (b) the particular Futures Contract Option exercised; (c) the type of Futures Contract underlying the Futures Contract Option; (d) the name of the broker or futures commission merchant through whom such Futures Contract option was exercised; (e) the net total amount, if any, payable to the Fund upon such exercise; (f) the net total amount, if any, payable by the Fund upon such exer- - 20 - 25 cise; and (g) the amount of cash and/or the amount and kind of Securities to be deposited in the Senior Security Account for such Series. The Custodian shall, upon its receipt of the net total amount payable to the Fund, if any, specified in such Certificate make the payments, if any, and the deposits, if any, into the Senior Security Account as specified in the Certificate. The deposits, if any, to be made to the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 6. Whenever a Futures Contract Option which is written by the Fund and which is a put is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Option was specifically allocated; (b) the particular Futures Contract Option exercised; (c) the type of Futures Contract underlying such Futures Contract Option; (d) the name of the broker or futures commission merchant through whom such Futures Contract Option is exercised; (e) the net total amount, if any, payable to the Fund upon such exercise; (f) the net total amount, if any, payable by the Fund upon such exercise; and (g) the amount and kind of Securities and/or cash to be withdrawn from or deposited in, the Senior Security Account for such Series, if any. The Custodian shall, upon its receipt of the net total amount payable to the Fund, if any, specified in the Certificate, make out of the moneys and Securities specifically allocated to such Series, the payments, if any, and the deposits, if any, into the Senior Security Account as specified in the Certificate. The deposits to and/or withdrawals from the Margin Account, if any, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 7. Whenever the Fund purchases any Futures Contract Option identical to a previously written Futures Contract Option described in this Article in order to liquidate its position as a writer of such Futures Contract Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to the Futures Contract Option being purchased: (a) the Series to which such Option is specifically allocated; (b) that the transaction is a closing transaction; (c) the type of Future Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Option Contract; (d) the exercise price; (e) the premium to be paid by the Fund; (f) the expiration date; (g) the name of the broker or futures commission merchant to whom the premium is to be paid; and (h) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Senior Security Account for such Series. The Custodian shall effect the - 21 - 26 withdrawals from the Senior Security Account specified in the Certificate. The withdrawals, if any, to be made from the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 8. Upon the expiration, exercise, or consummation of a closing transaction with respect to, any Futures Contract Option written or purchased by the Fund and described in this Article, the Custodian shall (a) delete such Futures Contract Option from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in the case of an exercise such deposits into the Senior Security Account as may be specified in a Certificate. The deposits to and/or withdrawals from the Margin Account, if any, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 9. Futures Contracts acquired by the Fund through the exercise of a Futures Contract Option described in this Article shall be subject to Article VI hereof. ARTICLE VIII SHORT SALES 1. Promptly after any short sales by any Series of the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series for which such short sale was made; (b) the name of the issuer and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest or dividends, if any; (d) the dates of the sale and settlement; (e) the sale price per unit; (f) the total amount credited to the Fund upon such sale, if any, (g) the amount of cash and/or the amount and kind of Securities, if any, which are to be deposited in a Margin Account and the name in which such Margin Account has been or is to be established; (h) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in a Senior Security Account, and (i) the name of the broker through whom such short sale was made. The Custodian shall upon its receipt of a statement from such broker confirming such sale and that the total amount credited to the Fund upon such sale, if any, as specified in the Certificate is held by such broker for the account of the Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a receipt or make the deposits into the Margin Account and the Senior Security Account specified in the Certificate. - 22 - 27 2. In connection with the closing-out of any short sale, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such closing-out: (a) the Series for which such transaction is being made; (b) the name of the issuer and the title of the Security; (c) the number of shares or the principal amount, and accrued interest or dividends, if any, required to effect such closing-out to be delivered to the broker; (d) the dates of closing-out and settlement; (e) the purchase price per unit; (f) the net total amount payable to the Fund upon such closing-out; (g) the net total amount payable to the broker upon such closing-out; (h) the amount of cash and the amount and kind of Securities to be withdrawn, if any, from the Margin Account; (i) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Senior Security Account; and (j) the name of the broker through whom the Fund is effecting such closing-out. The Custodian shall, upon receipt of the net total amount payable to the Fund upon such closing-out, and the return and/ or cancellation of the receipts, if any, issued by the Custodian with respect to the short sale being closed-out, pay out of the moneys held for the account of the Fund to the broker the net total amount payable to the broker, and make the withdrawals from the Margin Account and the Senior Security Account, as the same are specified in the Certificate. ARTICLE IX REVERSE REPURCHASE AGREEMENTS 1. Promptly after the Fund enters a Reverse Repurchase Agreement with respect to Securities and money held by the Custodian hereunder, the Fund shall deliver to the Custodian a Certificate or in the event such Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral Instructions, or Written Instructions specifying: (a) the Series for which the Reverse Repurchase Agreement is entered; (b) the total amount payable to the Fund in connection with such Reverse Repurchase Agreement and specifically allocated to such Series; (c) the broker or dealer through or with whom the Reverse Repurchase Agreement is entered; (d) the amount and kind of Securities to be delivered by the Fund to such broker or dealer; (e) the date of such Reverse Repurchase Agreement; and (f) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such series to be deposited in a Senior Security - 23 - 28 Account for such Series in connection with such Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total amount payable to the Fund specified in the Certificate, Oral Instructions, or Written Instructions make the delivery to the broker or dealer, and the deposits, if any, to the Senior Security Account, specified in such Certificate, Oral Instructions, or Written Instructions. 2. Upon the termination of a Reverse Repurchase Agreement described in preceding paragraph 1 of this Article, the Fund shall promptly deliver a Certificate or, in the event such Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral Instructions, or Written Instructions to the Custodian specifying: (a) the Reverse Repurchase Agreement being terminated and the Series for which same was entered; (b) the total amount payable by the Fund in connection with such termination; (c) the amount and kind of Securities to be received by the Fund and specifically allocated to such Series in connection with such termination; (d) the date of termination; (e) the name of the broker or dealer with or through whom the Reverse Repurchase Agreement is to be terminated; and (f) the amount of cash and/or the amount and kind of Securities to be withdrawn from the Senior Securities Account for such Series. The Custodian shall, upon receipt of the amount and kind of Securities to be received by the Fund specified in the Certificate, Oral Instructions, or Written Instructions, make the payment to the broker or dealer, and the withdrawals, if any, from the Senior Security Account, specified in such Certificate; Oral Instructions, or Written Instructions. ARTICLE X LOAN OF PORTFOLIO SECURITIES OF THE FUND 1. Promptly after each loan of portfolio Securities specifically allocated to a Series held by the Custodian hereunder, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan: (a) the Series to which the loaned Securities are specifically allocated; (b) the name of the issuer and the title of the Securities, (c) the number of shares or the principal amount loaned, (d) the date of loan and delivery, (e) the total amount to be delivered to the Custodian against the loan of the Securities, including the amount of cash collateral and the premium, if any, separately identified, and (f) the name of the broker, dealer, or financial institution to which the loan was made. The - 24 - 29 Custodian shall deliver the Securities thus designated to the broker, dealer or financial institution to which the loan was made upon receipt of the total amount designated as to be delivered against the loan of Securities. The Custodian may accept payment in connection with a delivery otherwise than through the Book-Entry System or Depository only in the form of a certified or bank cashier's check payable to the order of the Fund or the Custodian drawn on New York Clearing House funds and may deliver Securities in accordance with the customs prevailing among dealers in securities. 2. Promptly after each termination of the loan of Securities by the Fund, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan termination and return of Securities: (a) the Series to which the loaned Securities are specifically allocated; (b) the name of the issuer and the title of the Securities to be returned, (c) the number of shares or the principal amount to be returned, (d) the date of termination, (e) the total amount to be delivered by the Custodian (including the cash collateral for such Securities minus any offsetting credits as described in said Certificate), and (f) the name of the broker, dealer, or financial institution from which the Securities will be returned. The Custodian shall receive all Securities returned from the broker, dealer, or financial institution to which such Securities were loaned and upon receipt thereof shall pay, out of the moneys held for the account of the Fund, the total amount payable upon such return of Securities as set forth in the Certificate. ARTICLE XI CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY ACCOUNTS, AND COLLATERAL ACCOUNTS 1. The Custodian shall, from time to time, make such deposits to, or withdrawals from, a Senior Security Account as specified in a Certificate received by the Custodian. Such Certificate shall specify the Series for which such deposit or withdrawal is to be made, and the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited in, or withdrawn from, such Senior Security Account for such Series. In the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and the number of shares or the principal amount of any particular Securities to be - 25 - 30 deposited by the Custodian into, or withdrawn from, a Senior Securities Account, the Custodian shall be under no obligation to make any such deposit or withdrawal and shall so notify the Fund. 2. The Custodian shall make deliveries or payments from a Margin Account to the broker, dealer, futures commission merchant or Clearing Member in whose name, or for whose benefit, the account was established as specified in the Margin Account Agreement. 3. Amounts received by the Custodian as payments or distributions with respect to Securities deposited in any Margin Account shall be dealt with in accordance with the terms and conditions of the Margin Account Agreement. 4. The Custodian shall have a continuing lien and security interest in and to any property at any time held by the Custodian in any Collateral Account described herein. In accordance with applicable law the Custodian may enforce its lien and realize on any such property whenever the Custodian has made payment or delivery pursuant to any Put Option guarantee letter or similar document or any receipt issued hereunder by the Custodian. In the event the Custodian should realize on any such property net proceeds which are less than the Custodian's obligations under any Put Option guarantee letter or similar document or any receipt, such deficiency shall be a debt owed the Custodian by the Fund within the scope of Article XIV herein. 5. On each business day the Custodian shall furnish the Fund with a statement with respect to each Margin Account in which money or Securities are held specifying as of the close of business on the previous business day: (a) the name of the Margin Account; (b) the amount and kind of Securities held therein; and (c) the amount of money held therein. The Custodian shall make available upon request to any broker, dealer, or futures commission merchant specified in the name of a Margin Account a copy of the statement furnished the Fund with respect to such Margin Account. 6. Promptly after the close of business on each business day in which cash and/or Securities are maintained in a Collateral Account for any Series, the Custodian shall furnish the Fund with a Statement with respect to such Collateral Account specifying the amount of cash and/or the amount and kind of Securities held therein. No later than the close of business next succeeding the delivery to the Fund of such statement, the Fund shall furnish to the - 26 - 31 Custodian a Certificate or Written Instructions specifying the then market value of the Securities described in such statement. In the event such then market value is indicated to be less than the Custodian's obligation with respect to any outstanding Put Option guarantee letter or similar document, the Fund shall promptly specify in a Certificate the additional cash and/or Securities to be deposited in such Collateral Account to eliminate such deficiency. ARTICLE XII PAYMENT OF DIVIDENDS OR DISTRIBUTIONS 1. The Fund shall furnish to the Custodian a copy of the resolution of the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, either (i) setting forth with respect to the Series specified therein the date of the declaration of a dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Dividend Agent and any sub-dividend agent or co- dividend agent of the Fund on the payment date, or (ii) authorizing with respect to the Series specified therein the declaration of dividends and distributions on a daily basis and authorizing the Custodian to rely on Oral Instructions, Written Instructions or a Certificate setting forth the date of the declaration of such dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Dividend Agent on the payment date. 2. Upon the payment date specified in such resolution, Oral Instructions, Written Instructions or Certificate, as the case may be, the Custodian shall pay out of the moneys held for the account of each Series the total amount payable to the Dividend Agent, and any sub-dividend agent or co- dividend agent of the Fund with respect to such Series. - 27 - 32 ARTICLE XIII SALE AND REDEMPTION OF SHARES 1. Whenever the Fund shall sell any Shares, it shall deliver to the Custodian a Certificate duly specifying: (a) The Series, the number of Shares sold, trade date, and price; and (b) The amount of money to be received by the Custodian for the sale of such Shares and specifically allocated to the separate account in the name of such Series. 2. Upon receipt of such money from the Transfer Agent, the Custodian shall credit such money to the separate account in the name of the Series for which such money was received. 3. Upon issuance of any Shares of any Series described in the foregoing provisions of this Article, the Custodian shall pay, out of the money held for the account of such Series, all original issue or other taxes required to be paid by the Fund in connection with such issuance upon the receipt of a Certificate specifying the amount to be paid. 4. Except as provided hereinafter, whenever the Fund desires the Custodian to make payment out of the money held by the Custodian hereunder in connection with a redemption of any Shares, it shall furnish to the Custodian a Certificate specifying: (a) The number and Series of Shares redeemed; and (b) The amount to be paid for such Shares. 5. Upon receipt from the Transfer Agent of an advice setting forth the Series and number of Shares received by the Transfer Agent for redemption and that such Shares are in good form for redemption, the Custodian shall make payment to the Transfer Agent out of the moneys held in the separate account in the name of the Series the total amount specified in the Certificate issued pursuant to the foregoing paragraph 4 of this Article. 6. Notwithstanding the above provisions regarding the redemption of any Shares, whenever any Shares are redeemed pursuant to any check redemption privilege which may from time to time be offered by the Fund, the Custodian, unless - 28 - 33 otherwise instructed by a Certificate, shall, upon receipt of an advice from the Fund or its agent setting forth that the redemption is in good form for redemption in accordance with the check redemption procedure, honor the check presented as part of such check redemption privilege out of the moneys held in the separate account of the Series of the Shares being redeemed. ARTICLE XIV OVERDRAFTS OR INDEBTEDNESS 1. If the Custodian should in its sole discretion advance funds on behalf of any Series which results in an overdraft because the moneys held by the Custodian in the separate account for such Series shall be insufficient to pay the total amount payable upon a purchase of Securities specifically allocated to such Series, as set forth in a Certificate, Oral Instructions, or Written Instructions or which results in an overdraft in the separate account of such Series for some other reason, or if the Fund is for any other reason indebted to the Custodian with respect to a Series (except a borrowing for investment or for temporary or emergency purposes using Securities as collateral pursuant to a separate agreement and subject to the provisions of paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to be a loan made by the Custodian to the Fund for such Series payable on demand and shall bear interest from the date incurred at a rate per annum (based on a 360-day year for the actual number of days involved) equal to 1/2% over Custodian's prime commercial lending rate in effect from time to time, such rate to be adjusted on the effective date of any change in such prime commercial lending rate but in no event to be less than 6% per annum. In addition, the Fund hereby agrees that the Custodian shall have a continuing lien and security interest in and to any property specifically allocated to such Series at any time held by it for the benefit of such Series or in which the Fund may have an interest which is then in the Custodian's possession or control or in possession or control of any third party acting in the Custodian's behalf. The Fund authorizes the Custodian, in its sole discretion, at any time to charge any such overdraft or indebtedness together with interest due thereon against any balance of account standing to such Series' credit on the Custodian's books. 2. The Fund will cause to be delivered to the Custodian by any bank (including, if the borrowing is pur- - 29 - 34 suant to a separate agreement, the Custodian) from which it borrows money for investment or for temporary or emergency purposes using Securities held by the Custodian hereunder as collateral for such borrowings, a notice or undertaking in the form currently employed by any such bank setting forth the amount which such bank will loan to the Fund against delivery of a stated amount of collateral. The Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such borrowing: (a) the Series to which such borrowing relates; (b) the name of the bank, (c) the amount and terms of the borrowing, which may be set forth by incorporating by reference an attached promissory note, duly endorsed by the Fund, or other loan agreement, (d) the time and date, if known, on which the loan is to be entered into, (e) the date on which the loan becomes due and payable, (f) the total amount payable to the Fund on the borrowing date, (g) the market value of Securities to be delivered as collateral for such loan, including the name of the issuer, the title and the number of shares or the principal amount of any particular Securities, and (h) a statement specifying whether such loan is for investment purposes or for temporary or emergency purposes and that such loan is in conformance with the Investment Company Act of 1940 and the Fund's prospectus. The Custodian shall deliver on the borrowing date specified in a Certificate the specified collateral and the executed promissory note, if any, against delivery by the lending bank of the total amount of the loan payable, provided that the same conforms to the total amount payable as set forth in the Certificate. The Custodian may, at the option of the lending bank, keep such collateral in its possession, but such collateral shall be subject to all rights therein given the lending bank by virtue of any promissory note or loan agreement. The Custodian shall deliver such Securities as additional collateral as may be specified in a Certificate to collateralize further any transaction described in this paragraph. The Fund shall cause all Securities released from collateral status to be returned directly to the Custodian, and the Custodian shall receive from time to time such return of collateral as may be tendered to it. In the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and number of shares or the principal amount of any particular Securities to be delivered as collateral by the Custodian, the Custodian shall not be under any obligation to deliver any Securities. - 30 - 35 ARTICLE XV CONCERNING THE CUSTODIAN 1. Except as hereinafter provided, neither the Custodian nor its nominee shall be liable for any loss or damage, including counsel fees, resulting from its action or omission to act or otherwise, either hereunder or under any Margin Account Agreement, except for any such loss or damage arising out of its own negligence or willful misconduct. The Custodian may, with respect to questions of law arising hereunder or under any Margin Account Agreement, apply for and obtain the advice and opinion of counsel to the Fund or of its own counsel, at the expense of the Fund, and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice or opinion. The Custodian shall be liable to the Fund for any loss or damage resulting from the use of the Book-Entry System or any Depository arising by reason of any negligence, misfeasance or willful misconduct on the part of the Custodian or any of its employees or agents. 2. Without limiting the generality of the foregoing, the Custodian shall be under no obligation to inquire into, and shall not be liable for: (a) The validity of the issue of any Securities purchased, sold, or written by or for the Fund, the legality of the purchase, sale or writing thereof, or the propriety of the amount paid or received therefor; (b) The legality of the sale or redemption of any Shares, or the propriety of the amount to be received or paid therefor; (c) The legality of the declaration or payment of any dividend by the Fund; (d) The legality of any borrowing by the Fund using Securities as collateral; (e) The legality of any loan of portfolio Securities, nor shall the Custodian be under any duty or obligation to see to it that any cash collateral delivered to it by a broker, dealer, or financial institution or held by it at any time as a result of such loan of portfolio Securities of the Fund is adequate collateral for the Fund against any loss it might sustain as a result of such loan. The Custodian specifically, but not by way of limitation, shall not be under any duty or obligation periodically to check or notify the Fund that the amount of such cash collateral held by it for the Fund is sufficient collateral for the Fund, 36 but such duty or obligation shall be the sole responsibility of the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer or financial institution to which portfolio Securities of the Fund are lent pursuant to Article XIV of this Agreement makes payment to it of any dividends or interest which are payable to or for the account of the Fund during the period of such loan or at the termination of such loan, provided, however, that the Custodian shall promptly notify the Fund in the event that such dividends or interest are not paid and received when due; or (f) The sufficiency or value of any amounts of money and/or Securities held in any Margin Account, Senior Security Account, Exempt Account or Collateral Account in connection with transactions by the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer, futures commission merchant or Clearing Member makes payment to the Fund of any variation margin payment or similar payment which the Fund may be entitled to receive from such broker, dealer, futures commission merchant or Clearing Member, to see that any payment received by the Custodian from any broker, dealer, futures commission merchant or Clearing Member is the amount the Fund is entitled to receive, or to notify the Fund of the Custodian's receipt or non-receipt of any such payment. 3. The Custodian shall not be liable for, or considered to be the Custodian of, any money, whether or not represented by any check, draft, or other instrument for the payment of money, received by it on behalf of the Fund until the Custodian actually receives and collects such money directly or by the final crediting of the account representing the Fund's interest at the Book-Entry System or the Depository. 4. The Custodian shall have no responsibility and shall not be liable for ascertaining or acting upon any calls, conversions, exchange, offers, tenders, interest rate changes or similar matters relating to Securities held in the Depositary, unless the Custodian shall have actually received timely notice from the Depositary. In no event shall the Custodian have any responsibility or liability for the failure of the Depositary to collect, or for the late collection or late crediting by the Depositary of any amount payable upon Securities deposited in the Depositary which may mature or be redeemed, retired, called or otherwise become payable. However, upon receipt of a Certificate from the Fund of an overdue amount on Securities held in the Depositary the Custodian shall make a claim against the Depositary on behalf of the Fund, except that the Custodian - 32 - 37 shall not be under any obligation to appear in, prosecute or defend any action suit or proceeding in respect to any Securities held by the Depositary which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required. 5. The Custodian shall not be under any duty or obligation to take action to effect collection of any amount due to the Fund from the Transfer Agent of the Fund nor to take any action to effect payment or distribution by the Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer Agent of the Fund in accordance with this Agreement. 6. The Custodian shall not be under any duty or obligation to take action to effect collection of any amount, if the Securities upon which such amount is payable are in default, or if payment is refused after due demand or presentation, unless and until (i) it shall be directed to take such action by a Certificate and (ii) it shall be assured to its satisfaction of reimbursement of its costs and expenses in connection with any such action. 7. The Custodian may appoint one or more banking institutions as Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as Co- Custodian or Co-Custodians including, but not limited to, banking institutions located in foreign countries, of Securities and moneys at any time owned by the Fund, upon such terms and conditions as may be approved in a Certificate or contained in an agreement executed by the Custodian, the Fund and the appointed institution. 8. The Custodian shall not be under any duty or obligation (a) to ascertain whether any Securities at any time delivered to, or held by it, for the account of the Fund and specifically allocated to a Series are such as properly may be held by the Fund or such Series under the provisions of its then current prospectus, or (b) to ascertain whether any transactions by the Fund, whether or not involving the Custodian, are such transactions as may properly be engaged in by the Fund. 9. The Custodian shall be entitled to receive and the Fund agrees to pay to the Custodian all out-of-pocket expenses and such compensation as may be agreed upon from time to time between the Custodian and the Fund. The Custodian may charge such compensation and any expenses with respect to a Series incurred by the Custodian in the performance of its - 33 - 38 duties pursuant to such agreement against any money specifically allocated to such Series. Unless and until the Fund instructs the Custodian by a Certificate to apportion any loss, damage, liability or expense among the Series in a specified manner, the Custodian shall also be entitled to charge against any money held by it for the account of a Series such Series' pro rata share (based on such Series net asset value at the time of the charge to the aggregate net asset value of all Series at that time) of the amount of any loss, damage, liability or expense, including counsel fees, for which it shall be entitled to reimbursement under the provisions of this Agreement. The expenses for which the Custodian shall be entitled to reimbursement hereunder shall include, but are not limited to, the expenses of sub-custodians and foreign branches of the Custodian incurred in settling outside of New York City transactions involving the purchase and sale of Securities of the Fund. 10. The Custodian shall be entitled to rely upon any Certificate, notice or other instrument in writing received by the Custodian and reasonably believed by the Custodian to be a Certificate. The Custodian shall be entitled to rely upon any Oral Instructions and any Written Instructions actually received by the Custodian hereinabove provided for. The Fund agrees to forward to the Custodian a Certificate or facsimile thereof confirming such Oral Instructions or Written Instructions in such manner so that such Certificate or facsimile thereof is received by the Custodian, whether by hand delivery, telecopier or other similar device, or otherwise, by the close of business of the same day that such Oral Instructions or Written Instructions are given to the Custodian. The Fund agrees that the fact that such confirming instructions are not received by the Custodian shall in no way affect the validity of the transactions or enforceability of the transactions hereby authorized by the Fund. The Fund agrees that the Custodian shall incur no liability to the Fund in acting upon Oral Instructions or Written Instructions given to the Custodian hereunder concerning such transactions provided such instructions reasonably appear to have been received from an Authorized Person. 11. The Custodian shall be entitled to rely upon any instrument, instruction or notice received by the Custodian and reasonably believed by the Custodian to be given in accordance with the terms and conditions of any Margin Account Agreement. Without limiting the generality of the foregoing, the Custodian shall be under no duty to inquire into, and shall not be liable for, the accuracy of any statements or representations contained in any such instrument or other notice including, without limitation, any specification of any amount to be paid to a broker, dealer, futures commission merchant or Clearing Member. - 34 - 39 12. The books and records pertaining to the Fund which are in the possession of the Custodian shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the Investment Company Act of 1940, as amended, and other applicable securities laws and rules and regulations. The Fund, or the Fund's authorized representatives, shall have access to such books and records during the Custodian's normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by the Custodian to the Fund or the Fund's authorized representative, and the Fund shall reimburse the Custodian its expenses of providing such copies. Upon reasonable request of the Fund, the Custodian shall provide in hard copy or on micro-film, whichever the Custodian elects, any records included in any such delivery which are maintained by the Custodian on a computer disc, or are similarly maintained, and the Fund shall reimburse the Custodian for its expenses of providing such hard copy or micro-film. 13. The Custodian shall provide the Fund with any report obtained by the Custodian on the system of internal accounting control of the Book-Entry System, the Depository, or O.C.C., and with such reports on its own systems of internal accounting control as the Fund may reasonably request from time to time. 14. The Fund agrees to indemnify the Custodian against and save the Custodian harmless from all liability, claims, losses and demands whatsoever, including attorney's fees, howsoever arising or incurred because of or in connection with the Custodian's payment or non-payment of checks pursuant to paragraph 6 of Article XIII as part of any check redemption privilege program of the Fund, except for any such liability, claim, loss and demand arising out of the Custodian's own negligence or willful misconduct. 15. Subject to the foregoing provisions of this Agreement, the Custodian may deliver and receive Securities, and receipts with respect to such Securities, and arrange for payments to be made and received by the Custodian in accordance with the customs prevailing from time to time among brokers or dealers in such Securities. 16. The Custodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied in this Agreement against the Custodian. - 35 - 40 ARTICLE XVI TERMINATION 1. Either of the parties hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be not less than ninety (90) days after the date of giving of such notice. In the event such notice is given by the Fund, it shall be accompanied by a copy of a resolution of the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, electing to terminate this Agreement and designating a successor custodian or custodians, each of which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. In the event such notice is given by the Custodian, the Fund shall, on or before the termination date, deliver to the Custodian a copy of a resolution of the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, designating a successor custodian or custodians. In the absence of such designation by the Fund, the Custodian may designate a successor custodian which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon the date set forth in such notice this Agreement shall terminate, and the Custodian shall upon receipt of a notice of acceptance by the successor custodian on that date deliver directly to the successor custodian all Securities and moneys then owned by the Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled. 2. If a successor custodian is not designated by the Fund or the Custodian in accordance with the preceding paragraph, the Fund shall upon the date specified in the notice of termination of this Agreement and upon the delivery by the Custodian of all Securities (other than Securities held in the Book-Entry System which cannot be delivered to the Fund) and moneys then owned by the Fund be deemed to be its own custodian and the Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement, other than the duty with respect to Securities held in the Book Entry System which cannot be delivered to the Fund to hold such Securities hereunder in accordance with this Agreement. - 36 - 41 ARTICLE XVII MISCELLANEOUS 1. Annexed hereto as Appendix A is a Certificate signed by two of the present Officers of the Fund under its seal, setting forth the names and the signatures of the present Authorized Persons. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event that any such present Authorized Person ceases to be an Authorized Person or in the event that other or additional Authorized Persons are elected or appointed. Until such new Certificate shall be received, the Custodian shall be fully protected in acting under the provisions of this Agreement upon Oral Instructions or signatures of the present Authorized Persons as set forth in the last delivered Certificate. 2. Annexed hereto as Appendix B is a Certificate signed by two of the present Officers of the Fund under its seal, setting forth the names and the signatures of the present Officers of the Fund. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event any such present Officer ceases to be an Officer of the Fund, or in the event that other or additional Officers are elected or appointed. Until such new Certificate shall be received, the Custodian shall be fully protected in acting under the provisions of this Agreement upon the signatures of the Officers as set forth in the last delivered Certificate. 3. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Custodian, shall be sufficiently given if addressed to the Custodian and mailed or delivered to it at its offices at 90 Washington Street, New York, New York 10015, or at such other place as the Custodian may from time to time designate in writing. 4. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Fund shall be sufficiently given if addressed to the Fund and mailed or delivered to it at its office at the address for the Fund first above written, or at such other place as the Fund may from time to time designate in writing. 5. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties with the same formality as this Agreement and approved by a resolution of the Board of Trustees of the Fund. - 37 - 42 6 This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of the Custodian, or by the Custodian without the written consent of the Fund, authorized or approved by a resolution of the Fund's Board of Trustees. 7. This Agreement shall be construed in accordance with the laws of the State of New York. 8. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. 9. A copy of the Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund; provided, however, that the Declaration of Trust of the Fund provides that the assets of a particular Series of the Fund shall under no circumstances be charged with liabilities attributable to any other Series of the Fund and that all persons extending credit to, or contracting with or having any claim against a particular Series of the Fund shall look only to the assets of that particular Series for payment of such credit, contract or claim. - 38 - 43 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective Officers, thereunto duly authorized and their respective seals to be hereunto affixed, as of the day and year first above written. SHORT-TERM INVESTMENTS CO. By: /s/ ROBERT H. GRAHAM ------------------------ Attest: /s/ WILLIAM H. KLEH - -------------------- THE BANK OF NEW YORK By: ILLEGIBLE ----------------- Attest: ILLEGIBLE - -------------------- - 39 - 44 APPENDIX A I, Robert H. Graham, Executive Vice President and I, William H. Kleh, Vice President and Secretary of SHORT-TERM INVESTMENTS CO., a Massachusetts business trust (the "Fund"), do hereby certify that: The following individuals have been duly authorized by the Board of Trustees of the Fund in conformity with the Fund's Declaration of Trust and By- Laws to give Oral Instructions and Written Instructions on behalf of the Fund, and the signatures set forth opposite their respective names are their true and correct signatures: NAME SIGNATURE Charles T. Bauer /s/ CHARLES T. BAUER President -------------------------------- Robert H. Graham /s/ ROBERT H. GRAHAM Executive Vice President -------------------------------- Gary T. Crum /s/ GARY T. CRUM Vice President -------------------------------- Harold F. McElraft /s/ HAROLD F. MCELRAFT Vice President and Treasurer -------------------------------- J. Abbott Sprague /s/ J. ABBOTT SPRAGUE Vice President -------------------------------- Gary V. Beauchamp /s/ GARY V. BEAUCHAMP Vice President -------------------------------- William H. Kleh /s/ WILLIAM H. KLEH Vice President and Secretary -------------------------------- ALEX m. CICCONE /s/ ALEX M. CICCONE Vice President -------------------------------- (SEAL) Dated this 23rd day of June 1987 /s/ ROBERT H. GRAHAM -------------------------------- Robert H. Graham /s/ WILLIAM H. KLEH -------------------------------- William H. Kleh 45 APPENDIX B I, Robert H. Graham, Executive Vice President and I, William H. Kleh, Vice President and Secretary of SHORT-TERM INVESTMENTS CO., a Massachusetts business trust (the "Fund"), do hereby certify that: The following individuals serve in the following positions with the Fund and each has been duly elected or appointed by the Board of Trustees of the Fund to each such position and qualified therefor in conformity with the Fund's Declaration of Trust and By-Laws, and the signatures set forth opposite their respective names are their true and correct signatures: NAME SIGNATURE Charles T. Bauer /s/ CHARLES T. BAUER President --------------------------------- Robert H. Graham /s/ ROBERT H. GRAHAM Executive Vice President --------------------------------- Gary T. Crum /s/ GARY T. CRUM Vice President --------------------------------- Harold F. McElraft /s/ HAROLD F. MCELRAFT Vice President and Treasurer --------------------------------- J. Abbott Sprague /s/ J. ABBOTT SPRAGUE Vice President --------------------------------- Gary V. Beauchamp /s/ GARY V. BEAUCHAMP Vice President --------------------------------- William H. Kleh /s/ WILLIAM H. KLEH Vice President and Secretary --------------------------------- Alex M. Ciccone /s/ ALEX M. CICCONE Vice President --------------------------------- Ray Walther /s/ RAY WALTHER Assistant Treasurer --------------------------------- 46 NAME SIGNATURE Carol F. Relihan /s/ CAROL F. RELIHAN Assistant Secretary --------------------------------------- Pauletta P. Cohn /s/ PAULETTA P. COHN Assistant Secretary --------------------------------------- Nancy L. Martin /s/ NANCY L. MARTIN Assistant Secretary --------------------------------------- (SEAL) Dated this 23rd day of June, 1987 /s/ ROBERT H. GRAHAM --------------------------------------- Robert H. Graham /s/ WILLIAM H. KLEH --------------------------------------- William H. Kleh -2- 47 APPENDIX C I, , an Assistant Vice President with THE BANK OF NEW YORK do hereby designate the following publications: The Bond Buyer Depository Trust Company Notices Financial Daily Card Service New York Times Standard & Poor's Called Bond Record Wall Street Journal 48 EXHIBIT A CERTIFICATION The undersigned, hereby certifies that he or she is the duly elected and acting of SHORT-TERM INVESTMENTS CO., a Massachusetts business trust (the "Fund"), and further certifies that the following resolution was adopted by the Board of Trustees of the Fund at a meeting duly held on , 1987, at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof. RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of , 1987,(the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis to deposit in the Book-Entry System, as defined in the Custody Agreement,all securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated, and to utilize the Book-Entry System to the extent possible in connection with its performance thereunder, including, without limitation, in connection with settlements of purchases and sales of securities, loans of securities, and deliveries and returns of securities collateral. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of , as of the day of , 1987. --------------------------- 49 EXHIBIT B CERTIFICATION The undersigned, , hereby certifies that he or she is the duly elected and acting of SHORT-TERM INVESTMENTS CO., a Massachusetts business Trust (the "Fund"), and further certifies that the following resolution was adopted by the Board of Trustees of the Fund at a meeting duly held on , 1987, at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof. RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of , 1987, (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis until such time as it receives a Certificate, as defined in the Custody Agreement, to the contrary to deposit in the Depository, as defined in the Custody Agreement, all securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated, and to utilize the Depository to the extent possible in connection with its performance thereunder, including, without limitation, in connection with settlements of purchases and sales of securities, loans of securities, and deliveries and returns of securities collateral. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of , as of the day of , 1987. --------------------- 50 EXHIBIT C CERTIFICATION The undersigned, , hereby certifies that he or she is the duly elected and acting of SHORT-TERM INVESTMENTS CO., a Massachusetts business trust (the "Fund"), and further certifies that the following resolution was adopted by the Board of Trustees of the Fund at a meeting duly held on , 1987, at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof. RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of , 1987, (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis until such time as it receives a Certificate, as defined in the Custody Agreement, to the contrary, to accept, utilize and act with respect to Clearing Member confirmations for Options and transaction in Options, regardless of the Series to which the same are specifically allocated, as such terms are defined in the Custody Agreement, as provided in the Custody Agreement. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of , as of the day of , 1987. ---------------------- EX-99.B8.B 10 AMEND. TO CUSTODIAN AGMT. - THE BANK OF NEW YORK 1 EXHIBIT 8(b) [BANK OF NEW YORK LETTERHEAD] July 30, 1996 Mr Robert H. Graham President AIM Funds Group - AIM Municipal Bond Fund AIM Investment Securities Funds AIM Tax-Exempt Funds, Inc. Short-Term Investments Co. Short-Term Investments Trust Tax-Free Investments Co. 11 Greenway Plaza, Suite 1919 Houston, Texas 77046 Dear Mr. Graham Upon reviewing the existing Terminal Link Amendment dated May 17, 1993, we have noted that originally the process called for The Bank of New York receiving data transmissions directly from AIM, and not via a third party. Now that DST is involved and will be acting as an intermediary there is a need to modify the Terminal Link Amendment. It is our understanding that the new methodology for receiving data transmissions from DST via NDM software line utilized NDM's Secure-Point-of-Entry security. This process calls for the issuance of a Security ID by DST for AIM's sole use. This security ID along with DST's specific NDM node name will identify each transmission sent to the Bank. Internally, the Bank has pre-set an associated security ID that will allow the data transmission to be processed according to the method pre-selected for the AIM Funds. Both the AIM Security ID and the DST name node must match to what the Bank expects to receive before the file is accepted and processed. In light of how far along all parties are in this project, and in order to not detain its implementation due to legal considerations, we ask that you please acknowledge receipt of this letter as confirmation of AIM's understanding of the process until such time as the new Terminal Link Amendment is drafted. We would like to thank you and your staff for your time and cooperation throughout this project. 2 Mr. Robert Graham July 30, 1996 Page 2 It is understood that this Amendment applies to the Custodian Agreements between The Bank of New York and the entities listed below: AIM Funds Group - AIM Municipal Bond Fund (Dated of Agreement: October 19, 1995) AIM Investment Securities Funds (Date of Agreement: June 16, 1987) AIM Tax-Exempt Funds, Inc. (Date of Agreement: October 19, 1995) Short-Term Investments Co. (Date of Agreement: June 16, 1987) Short-Term Investments Trust (Date of Agreement: June 16, 1987) Tax-Free Investments Co. (Date of Agreement: October 19, 1995) Sincerely, /s/ MAYRA ADONNINO Mayra Adonnino Vice President Relationship Management Acknowledged by: /s/ ROBERT H. GRAHAM - --------------------------- Robert H. Graham Date: July 30, 1996 MA/df cc: M. Yamaguchi P. Holland S. Grunston EX-99.B9.D 11 AMEND. #1 TO ADMINISTRATIVE SERVICES AGREEMENT 1 EXHIBIT 9(d) AMENDMENT NO. 1 MASTER ADMINISTRATIVE SERVICES AGREEMENT The Master Administrative Services Agreement (the "Agreement"), dated October 18, 1993, by and between Short-Term Investments Trust, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation, is hereby amended as follows: Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following: "SHORT-TERM INVESTMENTS TRUST APPENDIX A TO MASTER ADMINISTRATIVE SERVICES AGREEMENT Treasury Portfolio Institutional Class Personal Investment Class Private Investment Class Cash Management Class Resource Class Treasury TaxAdvantage Portfolio Institutional Class Private Investment Class All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. Dated: November 2 , 1995 --------------------- SHORT-TERM INVESTMENTS TRUST Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM -------------------------- -------------------------- Assistant Secretary President (SEAL) A I M ADVISORS, INC. Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM -------------------------- -------------------------- Assistant Secretary President (SEAL) EX-99.B11.A 12 CONSENT OF BALLARD SPAHR ANDREWS & INGERSOLL 1 EXHIBIT 11(a) CONSENT OF COUNSEL SHORT-TERM INVESTMENTS TRUST We hereby consent to the use of our name and to the references to our firm under the caption "General Information - - Legal Counsel" in the Prospectuses for each class of the Treasury Portfolio and each class of the Treasury TaxAdvantage Portfolio, and under the caption "Miscellaneous Information - - Legal Matters" in the Statements of Additional Information for each class of said Portfolios, all of which form a part of Post-Effective Amendment No. 29 to the Registration Statement of Short-Term Investments Trust on Form N-1A under the Securities Act of 1933 (Reg. No. 2-58287). /s/ BALLARD SPAHR ANDREWS & INGERSOLL ------------------------------------- Ballard Spahr Andrews & Ingersoll Philadelphia, Pennsylvania December 30, 1996 EX-99.B11.B 13 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 11(b) INDEPENDENT AUDITORS' CONSENT ----------------------------- The Board of Trustees Short-Term Investments Trust We consent to the use of our reports on the Treasury Portfolio and Treasury TaxAdvantage Portfolio (portfolios of Short- Term Investments Trust) dated October 4, 1996 included herein and to the references to our firm under the headings "Financial Highlights" in the Prospectuses and "Reports" in the Statements of Additional Information. /s/ KPMG PEAT MARWICK LLP ------------------------- KPMG Peat Marwick LLP Houston, Texas December 4, 1996 EX-99.B15.A 14 MASTER DISTRIBUTION PLAN 1 EXHIBIT 15(a) MASTER DISTRIBUTION PLAN PURSUANT TO RULE 12b-1 OF SHORT-TERM INVESTMENTS TRUST WHEREAS, Short-Term Investments Trust (the "Trust") is engaged in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the shares of beneficial interest of the Trust may be divided into a number of separate series, including the Treasury Portfolio (hereinafter referred to as the "Portfolios"); and WHEREAS, the Treasury Portfolio is comprised of a Personal Investment Class, a Private Investment Class and a Cash Management Class ("Retail Shares") and an institutional class, and Retail Shares are offered to customers through certain banks and broker-dealers that may offer special shareholder services to such customers; and WHEREAS, the Trust desires to adopt, on behalf of the series of beneficial interest set forth in Appendix A attached hereto (the "Shares"), a Plan pursuant to Rule 12b-1 under the Act with respect to the Shares, and the trustees of the Trust have determined that there is a reasonable likelihood that adoption of this Plan will benefit the Trust, the Treasury Portfolio and the holders of the Shares; and WHEREAS, the Trust has employed A I M Advisors, Inc. ("AIM") as its investment advisor with respect to the Treasury Portfolio to supply investment advice; and WHEREAS, the Trust on behalf of the Treasury Portfolio has entered into a Master Distribution Agreement (the "Distribution Agreement") designating a principal distributor of the Shares (the "Distributor"). NOW THEREFORE, the Trust hereby adopts, on behalf of the Treasury Portfolio, the following terms constituting a Plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Classes of Shares set forth in Appendix A: 1. The Trust may act as a distributor of the Shares of which the Trust is the issuer, pursuant to Rule 12b-1 under the 1940 Act, according to the terms of this Distribution Plan (the "Plan"). 2. Amounts set forth in Appendix A may be expended when and if authorized in advance by the Trust's Board of Trustees. Such amounts may be used to finance any activity which is primarily intended to result in the sale of the Shares, including, but not limited to, expenses of organizing and conducting sales seminars, advertising programs, finders fees, printing of prospectuses and statements of additional information (and supplements thereto) and reports for other than existing shareholders, preparation and distribution of advertising material -1- 2 and sales literature, supplemental payments to the Distributor and the costs of administering the Plan. All amounts expended pursuant to the Plan shall be paid (i) to the Distributor, as an asset-based sales charge, and (ii) as a service fee to certain broker-dealers, banks, and other financial institutions ("Service Providers") who offer continuing personal shareholder services to their customers who invest in the Shares, and who have entered into Shareholder Service Agreements substantially in the form of Exhibit A hereto. The maximum shareholder service fee payable to any Service Provider shall not exceed twenty-five one hundredths of one percent (0.25%) per annum. Amounts paid under the Plan that are not paid as service fees shall be deemed to be asset-based sales charges. The activities, the payment of which by the Trust are intended to be within the scope of the Plan, shall include, but not necessarily be limited to, payments to the Distributor for its distribution-related activities and to Service Providers as asset-based sales charges or as a service fee in respect of the Shares owned by shareholders with whom such Service Provider has a shareholder servicing relationship. Shareholder servicing may include, among other things: (i) answering client inquiries regarding the Shares and the Treasury Portfolio; (ii) assisting clients in changing dividend options, account designations and addresses; (iii) performing sub-accounting; (iv) establishing and maintaining shareholder accounts and records; (v) processing purchase and redemption transactions; (vi) automatic investment in Shares of customer cash account balances; (vii) providing periodic statements showing a customer's account balance and integrating such statements with those of other transactions and balances in the customer's other accounts serviced by such firm; (viii) arranging for bank wires; and (ix) such other services as the Trust may request on behalf of the Shares, to the extent such firms are permitted to engage in such services by applicable statute, rule or regulation. 3. No additional payments are to be made by the Trust on behalf of the Treasury Portfolio with respect to the Shares as a result of the Plan other than the payments such Portfolio is otherwise obligated to make (i) to AIM pursuant to the Master Investment Advisory Agreement and (ii) for the expenses otherwise incurred by the Treasury Portfolio and the Trust on behalf of the Shares in the normal conduct of the Treasury Portfolio's business pursuant to the Master Investment Advisory Agreement. However, to the extent any payments by the Trust on behalf of the Treasury Portfolio to AIM or such Portfolio's shareholder servicing and transfer agent; by AIM to any Service Providers pursuant to any Shareholder Service Agreement; or, generally, by the Trust on behalf of the Treasury Portfolio to any party for the Treasury Portfolio's operating expenses, are deemed to be payments for the financing of any activity primarily intended to result in the sale of the Treasury Portfolio's shares within the context of Rule 12b-1 under the 1940 Act, then such payments shall be deemed to be made pursuant to the Plan as set forth herein. 4. Notwithstanding any of the foregoing, while the Plan is in effect, the following terms and provisions will apply: -2- 3 a. The officers of the Trust shall report quarterly in writing to the Board of Trustees on the amounts and purpose of payments for any of the activities in paragraph 1 and shall furnish the Board of Trustees with such other information as the Board may reasonably request in connection with such payments in order to enable the Board to make an informed determination of the nature and value of such expenditures. b. The Plan shall continue in effect for a period of more than one year from the date written below only so long as such continuance is specifically approved at least annually by the Trust's Board of Trustees, including the non-interested trustees, by vote cast in person at a meeting called for the purpose of voting on the Plan. c. The Plan may be terminated with respect to any class of Shares at any time by vote of a majority of the non-interested trustees or by vote of a majority of the outstanding voting securities of the applicable class of Shares, on not more than sixty (60) days' written notice to any other party to the Plan. d. The Plan may not be amended to materially increase the amount to be spent hereunder or to permit the Trust on behalf of the Treasury Portfolio to make payments for distribution other than to the Distributor or with respect to a Shareholder Service Agreement or without approval by the holders of the applicable class of Shares, and all material amendments to the Plan shall be approved by vote of the dis-interested trustees cast in person at a meeting called for the purpose of voting on such amendment. e. So long as the Plan is in effect, the selection and nomination of the Trust's dis-interested trustees shall be committed to the discretion of such dis-interested trustees. 5. This Plan shall be subject to the laws of the State of Texas and shall be interpreted and construed to further promote the operation of the Trust as an open-end investment company. As used herein the terms "Net Asset Value," "Offering Price," "Investment Company," "Open-End Investment Company," "Assignment," "Principal Underwriter," "Interested Person," "Parent," "Affiliated Person," and "Majority of the Outstanding Voting Securities" shall have the meanings set forth in the Securities Act of 1933, as amended, or the 1940 Act, and the rules and regulations thereunder. 6. Nothing herein shall be deemed to protect the parties to any Shareholder Service Agreement entered into pursuant to this Plan against any liability to the Trust or its shareholders to which they would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of their duties hereunder, or by reason of their reckless disregard of their obligations and duties hereunder. -3- 4 IN WITNESS WHEREOF, the undersigned has executed this document as constituting a Plan pursuant to Rule 12b-1. SHORT-TERM INVESTMENTS TRUST By: /s/ ROBERT H. GRAHAM ------------------------ President Plan effective as of August 6, 1993, as amended as of December 8, 1994, as further amended as of September 19, 1995, and as further amended as of December 5, 1995. -4- 5 APPENDIX A TO MASTER DISTRIBUTION PLAN OF SHORT-TERM INVESTMENTS TRUST The Trust shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for each Class as designated below, a Distribution Fee* determined by applying the annual rate set forth below as to each Class to the average daily net asset value of the Class for the plan year, computed in a manner used for the determination of the offering price of shares of the Class.
TREASURY PORTFOLIO ANNUAL RATE ------------------ ----------- Personal Investment Class 0.75% Private Investment Class 0.50% Resource Class 0.20% Cash Management Class 0.10% TREASURY TAXADVANTAGE PORTFOLIO ANNUAL RATE ------------------------------- ----------- Private Investment Class 0.50%
------------------------------------- * The Distribution Fee is payable apart from the sales charge, if any, as stated in the current prospectus for the applicable Class. The amount of the Distribution Fee is subject to any applicable limitations imposed from time to time by applicable Rules of the National Association of Securities Dealers, Inc. -5- 6 FUND MANAGEMENT COMPANY SHAREHOLDER SERVICE AGREEMENT [LOGO APPEARS HERE] Fund Management Company (BROKER-DEALERS AND BANKS) _________, 19_____ Fund Management Company 11 Greenway Plaza, Suite 1919 Houston, Texas 77046-1173 Gentlemen: We desire to enter into an Agreement with Fund Management Company ("FMC") as agent on behalf of the funds listed on Schedule A hereto (the "Funds"), for the provision of continuing personal shareholder services to our clients who are shareholders of, and/or the administration of accounts in, the Funds. We understand that this Shareholder Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds, under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is subject to applicable rules of the National Association of Securities Dealers, Inc. ("NASD"). This Agreement defines the services to be provided by us for which we are to receive payments pursuant to the Plan. The Plan and the Agreement have been approved by a majority of the directors or trustees of the applicable Fund in accordance with the requirements of Rule 12b-1. The terms and conditions of this Agreement will be as follows: 1. We will provide continuing personal shareholder services and/or administrative support services to our customers who may from time to time beneficially own shares of the Funds, including but not limited to, answering routine customer inquiries regarding the Funds, assisting customers in changing dividend options, account designations and addresses, and in enrolling into any of several special investment plans offered in connection with the purchase of the Funds, forwarding sales literature, assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions, investing dividends and capital gains distributions automatically in shares of the Funds and providing such other services as FMC or the customer may reasonably request, and you will pay us a fee periodically. We represent that we will accept payment of fees hereunder only so long as we continue to provide such services. 2. Shares of the Funds purchased by us on behalf of our clients may be registered in our name or the name of our nominee. The client will be the beneficial owner of the shares of the Funds purchased and held by us in accordance with the client's instructions and the client may exercise all applicable rights of a holder of such Shares. We agree to transmit to FMC in a timely manner, all purchase orders and redemption requests of our clients and to forward to each client all proxy statements, periodic shareholder reports and other communications received from FMC by us on behalf of our clients. FMC on behalf of the Funds agrees to pay all out-of-pocket expenses actually incurred by us in connection with the transfer by us of such proxy statements and reports to our clients as required under applicable law or regulation. 7 Shareholder Service Agreement Page 2 3. We agree to transfer to the Funds' custodian, in a timely manner as set forth in the applicable prospectus, federal funds in an amount equal to the amount of all purchase orders placed by us on behalf of our clients and accepted by FMC. In the event that FMC fails to receive such federal funds on such date (other than through the fault of FMC or the Fund's custodian), we will indemnify the applicable Fund or FMC against any expense (including overdraft charges) incurred by the applicable Fund or FMC as a result of the failure to receive such federal funds. 4. We agree to make available, upon FMC's request, such information relating to our clients who are beneficial owners of Fund shares and their transactions in such shares as may be required by applicable laws and regulations or as may be reasonably requested by FMC. 5. We agree to transfer record ownership of a client's Fund shares to the client promptly upon the request of a client. In addition, record ownership will be promptly transferred to the client in the event that the person or entity ceases to be our client. 6. We acknowledge that if we use AIM LINK(TM) we are solely responsible for the registration of account information for FMC's and A I M Institutional Fund Services, Inc.'s ("AIFS") subaccounting customers through AIM LINK(TM), and that neither FMC, AIFS nor any Fund is responsible for the accuracy of such information; and we will indemnify and hold harmless FMC, AIFS and the Funds for any claims or expenses resulting from the inaccuracy or inadequacy of such information. 7. We will provide such facilities and personnel (which may be all or any part of the facilities currently used in our business, or all or any personnel employed by us) as may be necessary or beneficial in carrying out the purposes of this Agreement. 8. Neither we nor any of our employees or agents are authorized to make any representation to our clients concerning the Funds except those contained in the then current applicable prospectus applicable to the Funds, copies of which will be supplied to us by FMC; and we will have no authority to act as agent for any Fund. Neither a Fund nor A I M Advisors, Inc. ("AIM") will be a party, nor will they be represented as a party, to any agreement that we may enter into with our clients and neither a Fund nor AIM will participate, directly or indirectly, in any compensation that we may receive from our clients in connection with our acting on their behalf with respect to this Agreement. 9. In consideration of the services and facilities described herein, we will receive a maximum annual service fee, payable monthly, as set forth in Schedule A. We understand that this Agreement and the payment of such fees has been authorized and approved by the Board of Directors or Trustees of the applicable Fund, and that the payment of fees hereunder is subject to limitations imposed by the rules of the NASD. Service fees may be remitted to us net of any amounts due and payable to FMC, AIFS or the Funds from us. A schedule of fees relating to subaccounting and administration is attached hereto as Schedule B. 10. FMC reserves the right, at its discretion and without notice, to suspend the sale of any Fund shares or withdraw the sale of shares of a Fund. 11. We represent that our activities on behalf of our clients and pursuant to this Agreement either (i) are not such as to require our registration as a broker-dealer with the Securities and 8 Shareholder Service Agreement Page 3 Exchange Commission (the "SEC") or in the state(s) in which we engage in such activities, or (ii) we are registered as a broker-dealer with the SEC and in the state(s) in which we engage in such activities. 12. If we are a broker-dealer registered with the SEC, we represent that we are a member in good standing of the NASD, and agree to abide by the Rules of Fair Practice of the NASD and all other federal and state rules and regulations that are now or may become applicable to transactions hereunder. Our expulsion from the NASD will automatically terminate this agreement without notice. Our suspension from the NASD or a violation by us of applicable state and federal laws and rules and regulations of authorized regulatory agencies will terminate this agreement effective upon notice received by us from FMC. 13. This Agreement or Schedule A hereto may be amended at any time without our prior consent by FMC, by mailing a copy of an amendment to us at the address set forth below. Such amendment will become effective on the date set forth in such amendment unless we terminate this Agreement within thirty (30) days of our receipt of such amendment. 14. This Agreement may be terminated at any time by FMC on not less than 60 days' written notice to us at our principal place of business. We, on 60 days' written notice addressed to FMC at its principal place of business, may terminate this Agreement. FMC may also terminate this Agreement for cause on violation by us of any of the provisions of this Agreement, said termination to become effective on the date of mailing notice to us of such termination. FMC's failure to terminate for any cause will not constitute a waiver of FMC's right to terminate at a later date for any such cause. This Agreement will terminate automatically in the event of its assignment, the term "assignment" for this purpose having the meaning defined in Section 2(a) (4) of the 1940 Act. 15. All communications to FMC will be sent to it at P.O. Box 4333, Houston, Texas 77210-4333. Any notice to us will be duly given if mailed or telegraphed to us at the address shown on this Agreement. 16. We agree that under this Agreement we will be acting as an independent contractor and not as your employee or agent, nor as an employee or agent of the Funds, and we may not hold ourselves out to any other party as your agent with the authority to bind you or the Funds in any manner. 17. We agree that this Agreement and the arrangement described herein are intended to be non-exclusive and that either of us may enter into similar agreements and arrangements with other parties. 9 Shareholder Service Agreement Page 4 18. This Agreement will become effective as of the date when it is executed and dated below by FMC. This Agreement and all rights and obligations of the parties hereunder will be governed by and construed under the laws of the State of Texas. ----------------------------------------------- (Firm Name) ----------------------------------------------- (Address) ----------------------------------------------- City/State/Zip/County BY: --------------------------------------- Name: ---------------------------------------- Title: --------------------------------------- Dated: --------------------------------------- For administrative convenience, please supply the following information, which may be updated in writing at any time. Wiring instructions for service fees payable by FMC: ----------------------------------------------- (Bank Name) (Bank ABA Number) ----------------------------------------------- (Reference Account Name and Number) Contact person for operational issues: -------------------------- --------------- (Name) (Phone Number) ACCEPTED: FUND MANAGEMENT COMPANY BY: ----------------------------- Name: ----------------------------- Title: ----------------------------- Dated: ----------------------------- 10 Shareholder Service Agreement Page 5 SCHEDULE A
FUNDS FEE - ----- ---- Short-Term Investments Co. - -------------------------- Prime Portfolio - Personal Investment Class .40%* Prime Portfolio - Private Investment Class .25% Prime Portfolio - Resource Class .16% Prime Portfolio - Cash Management Class .08% Liquid Assets Portfolio - Private Investment Class .25% Liquid Assets Portfolio - Cash Management Class .08% Short-Term Investments Trust - ---------------------------- Treasury Portfolio - Personal Investment Class .40%* Treasury Portfolio - Private Investment Class .25% Treasury Portfolio - Resource Class .16% Treasury Portfolio - Cash Management Class .08% Treasury TaxAdvantage Portfolio - Private Investment Class .25% Tax-Free Investments Co. - ------------------------ Cash Reserve Portfolio - Private Investment Class .25%
*Fees in excess of .25% are for services of an administrative nature, as described in Paragraph 1 of this Agreement. 11 Shareholder Service Agreement Page 6 SCHEDULE B SUBACCOUNTING AND ADMINISTRATION FEES We will be assessed a fee, payable monthly, in the amount of ______ basis points of our monthly average net assets managed by your affiliates. As described in the attached Shareholder Service Agreement, we understand that the amount of any service fees remitted to us will be net of any amounts due and payable to FMC, AIFS or the Funds, including the ______ basis points of monthly average net assets related to subaccounting and administration services provided to us by AIFS. EX-99.B18 15 MULTIPLE CLASS (RULE 18F-3) PLAN 1 EXHIBIT 18 MULTIPLE CLASS PLAN OF THE AIM FAMILY OF FUNDS 1. This Multiple Class Plan (the "Plan") adopted in accordance with Rule 18f-3 under the Act shall govern the terms and conditions under which the Funds may issue separate Classes of Shares representing interests in one or more Portfolios of each Fund. 2. Definitions. As used herein, the terms set forth below shall have the meanings ascribed to them below. a. Act - Investment Company Act of 1940, as amended. b. CDSC - contingent deferred sales charge. c. CDSC Period - the period of years following acquisition of Shares during which such Shares may be assessed a CDSC upon redemption. d. Class - a class of Shares of a Fund representing an interest in a Portfolio. e. Class A Shares - shall mean those Shares designated as Class A Shares in the Fund's organizing documents, as well as those Shares deemed to be Class A Shares for purposes of this Plan. f. Class B Shares - shall mean those Shares designated as Class B Shares in the Fund's organizing documents. g. Class C Shares - shall mean those Shares designated as Class C Shares in the Fund's organizing documents, as well as those Shares deemed to be Class C Shares for purposes of this Plan. h. Directors - the directors or trustees of a Fund. i. Distribution Expenses - expenses incurred in activities which are primarily intended to result in the distribution and sale of Shares as defined in a Plan of Distribution and/or agreements relating thereto. j. Distribution Fee - a fee paid by a Fund to the Distributor to compensate the Distributor for Distribution Expenses. k. Distributor - A I M Distributors, Inc. or Fund Management Company, as applicable. l. Fund - those investment companies advised by A I M Advisors, Inc. which have adopted this Plan. 1 2 m. Institutional Shares - shall mean Shares of a Fund representing an interest in a Portfolio offered for sale to institutional customers as may be approved by the Directors from time to time and as set forth in the Fund's prospectus. n. Plan of Distribution - Any plan adopted under Rule 12b-1 under the Act with respect to payment of a Distribution Fee. o. Portfolio - a series of the Shares of a Fund constituting a separate investment portfolio of the Fund. p. Service Fee - a fee paid to financial intermediaries for the ongoing provision of personal services to Fund shareholders and/or the maintenance of shareholder accounts. q. Share - a share of common stock of or beneficial interest in a Fund, as applicable. 3. Allocation of Income and Expenses. a. Distribution and Service Fees - Each Class shall bear directly any and all Distribution Fees and/or Service Fees payable by such Class pursuant to a Plan of Distribution adopted by the Fund with respect to such Class. b. Transfer Agency and Shareholder Recordkeeping Fees - Each Class shall bear directly the transfer agency and other shareholder recordkeeping fees attributable to that Class. c. Allocation of Other Expenses - Each Class shall bear proportionately all other expenses incurred by a Fund based on the relative net assets attributable to each such Class. d. Allocation of Income, Gains and Losses - The Portfolio will allocate income and realized and unrealized capital gains and losses to a Class based on the relative net assets of each Class; provided, however, that if permitted by Rule 18f-3 under the Act, as amended, the Portfolio may allocate its income on the basis of settled shares in the manner described in Rule 18f-3 under the Act, as amended. e. Waiver and Reimbursement of Expenses - A Portfolio's adviser, underwriter or any other provider of services to the Portfolio may waive or reimburse the expenses of a particular Class or Classes. 4. Distribution and Servicing Arrangements. The distribution and servicing arrangements identified below will apply for the following Classes offered by a Fund with respect to a Portfolio. The provisions of the Fund's prospectus describing the distribution and servicing arrangements in detail are incorporated herein by this reference. a. Class A Shares. Class A Shares shall be offered at net asset value plus a front-end sales charge as approved from time to time by the Directors and set forth in the Fund's prospectus, may be reduced or eliminated for certain money market fund shares, for larger purchases, under a combined purchase privilege, under a right of 2 3 accumulation, under a letter of intent or for certain categories of purchasers as permitted by Rule 22(d) of the Act and as set forth in the Fund's prospectus. Class A Shares that are not subject to a front-end sales charge as a result of the foregoing shall be subject to a CDSC for the CDSC Period set forth in Section 5(a) of this Plan if so provided in the Fund's prospectus. The offering price of Shares subject to a front-end sales charge shall be computed in accordance with Rule 22c-1 and Section 22(d) of the Act and the rules and regulations thereunder. Class A Shares shall be subject to ongoing Service Fees and/or Distribution Fees approved from time to time by the Directors and set forth in the Fund's prospectus. Although shares of AIM Limited Maturity Treasury Shares, AIM Tax-Exempt Bond Fund of Connecticut, AIM Tax- Exempt Cash Fund and AIM Tax-Free Intermediate Shares are not designated as "Class A" they are substantially similar to Class A Shares as defined herein and shall be deemed to be Class A Shares for the purposes of this Plan. b. Class B Shares. Class B Shares shall be (1) offered at net asset value, (2) subject to a CDSC for the CDSC Period set forth in Section 5(b), (3) subject to ongoing Service Fees and Distribution Fees approved from time to time by the Directors and set forth in the Fund's prospectus and (4) converted to Class A Shares eight years from the end of the calendar month in which the shareholder's order to purchase was accepted as set forth in the Fund's prospectus. c. Class C Shares. Class C Shares shall be (1) offered at net asset value and (2) subject to ongoing Service Fees approved from time to time by the Directors and set forth in the Fund's prospectus. d. Institutional Shares. Institutional Shares shall be (1) offered at net asset value, (2) offered only to certain categories of institutional customers as approved from time to time by the Directors and as set forth in the Fund's prospectus and (3) may be subject to ongoing Service Fees and/or Distribution Fees as approved from time to time by the Directors and set forth in the Fund's prospectus. 5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do not incur a front-end sales charge and of Class B Shares as follows: a. Class A Shares. The CDSC Period for Class A Shares shall be 18 months. The CDSC Rate shall be as set forth in the Fund's prospectus, the relevant portions of which are incorporated herein by this reference. No CDSC shall be imposed on Class A Shares unless so provided in a Fund's prospectus. b. Class B Shares. The CDSC Period for the Class B Shares shall be six years. The CDSC Rate for the Class B Shares shall be as set forth in the Fund's prospectus, the relevant portions of which are incorporated herein by this reference. c. Method of Calculation. The CDSC shall be assessed on an amount equal to the lesser of the then current market value or the cost of the Shares being redeemed. No sales charge shall be imposed on increases in the net asset value of the Shares being redeemed above the initial purchase price. No CDSC shall be assessed on Shares derived from reinvestment of dividends or capital gains distributions. The order in which Shares are to be redeemed when not all of such Shares would be 3 4 subject to a CDSC shall be determined by the Distributor in accordance with the provisions of Rule 6c-10 under the Act. d. Waiver. The Distributor may in its discretion waive a CDSC otherwise due upon the redemption of Shares and disclosed in the Fund's prospectus or statement of additional information and, for the Class A Shares, as allowed under Rule 6c-10 under the Act. 6. Exchange Privileges. Exchanges of Shares shall be permitted between Funds as follows: a. Class A Shares may be exchanged for Class A Shares of another Portfolio, subject to certain limitations set forth in the Fund's prospectus as it may be amended from time to time, relevant portions of which are incorporated herein by this reference. b. Class B Shares may be exchanged for Class B Shares of another Portfolio at their relative net asset value. c. Class C Shares may be exchanged for Class A Shares of any other Portfolio. d. Depending upon the Portfolio from which and into which an exchange is being made and when the shares were purchased, shares being acquired in an exchange may be acquired at their offering price, at their net asset value or by paying the difference in sales charges, as disclosed in the Fund's prospectus and statement of additional information. e. CDSC Computation. The CDSC payable upon redemption of Class A Shares and Class B Shares subject to a CDSC shall be computed in the manner described in the Fund's prospectus. 7. Service and Distribution Fees. The Service Fee and Distribution Fee applicable to any Class shall be those set forth in the Fund's prospectus, relevant portions of which are incorporated herein by this reference. All other terms and conditions with respect to Service Fees and Distribution Fees shall be governed by the Plan of Distribution adopted by the Fund with respect to such fees and Rule 12b-1 of the Act. 8. Conversion of Class B Shares. a. Shares Received upon Reinvestment of Dividends and Distributions - Shares purchased through the reinvestment of dividends and distributions paid on Shares subject to conversion shall be treated as if held in a separate sub-account. Each time any Shares in a Shareholder's account (other than Shares held in the sub-account) convert to Class A Shares, a proportionate number of Shares held in the sub- account shall also convert to Class A Shares. b. Conversions on Basis of Relative Net Asset Value - All conversions shall be effected on the basis of the relative net asset values of the two Classes without the imposition of any sales load or other charge. 4 5 c. Amendments to Plan of Distribution for Class A Shares - If any amendment is proposed to the Plan of Distribution under which Service Fees and Distribution Fees are paid with respect to Class A Shares of a Fund that would increase materially the amount to be borne by those Class A Shares, then no Class B Shares shall convert into Class A Shares of that Fund until the holders of Class B Shares of that Fund have also approved the proposed amendment. If the holders of such Class B Shares do not approve the proposed amendment, the Directors of the Fund and the Distributor shall take such action as is necessary to ensure that the Class voting against the amendment shall convert into another Class identical in all material respects to Class A Shares of the Fund as constituted prior to the amendment. 9. This Plan shall not take effect until a majority of the Directors of a Fund, including a majority of the Directors who are not interested persons of the Fund, shall find that the Plan, as proposed and including the expense allocations, is in the best interests of each Class individually and the Fund as a whole. 10. This Plan may not be amended to materially change the provisions of this Plan unless such amendment is approved in the manner specified in Section 9 above. 5 EX-27.1 16 FDS - STIT TREASURY PORT. - CASH MGMT. CLASS
6 This schedule contains summary financial information for the Short-Term Investments Trust Treasury Portfolio-Cash Management Class for the year ended August 31, 1996. 0000205007 SHORT-TERM INVESTMENTS TRUST 13 TREASURY PORTFOLIO-CASH MANAGEMENT CLASS 12-MOS AUG-31-1996 AUG-31-1996 3885231938 3885231938 9950056 199121 0 3895381115 0 0 191489975 191489975 0 3703242819 3703242819 3259810478 0 0 648321 0 0 3703891140 0 198959801 0 (5611587) 193348214 490127 0 193838341 0 (193348214) 0 0 23478756059 23061744286 26420568 443922468 0 158194 0 0 2227788 0 5725087 547363692 1.00 0.05 0 0 (0.05) 0 1.00 0.17 0 0
EX-27.2 17 FDS - STIT TREASURY PORT. - INSTITUTIONAL CLASS
6 This schedule contains summary financial information for the Short-Term Investments Trust Treasury Portfolio-Institutional Class for the year ended August 31, 1996. 0000205007 SHORT-TERM INVESTMENTS TRUST 2 TREASURY PORTFOLIO-INSTITUTIONAL CLASS 12-MOS AUG-31-1996 AUG-31-1996 3885231938 3885231938 9950056 199121 0 3895381115 0 0 191489975 191489975 0 3703242819 3703242819 3259810478 0 0 648321 0 0 3703891140 0 198959801 0 (5611587) 193348214 490127 0 193838341 0 (193348214) 0 0 23478756059 23061744286 26420568 443922468 0 158194 0 0 2227788 0 5725087 2499257005 1.00 0.05 0 0 (0.05) 0 1.00 0.09 0 0
EX-27.3 18 FDS - STIT TREASURY PORT. - PERSONAL INVEST. CLASS
6 This schedule contains summary financial information for the Short-Term Investments Trust Treasury Portfolio-Personal Investment Class for the year ended August 31, 1996. 0000205007 SHORT-TERM INVESTMENTS TRUST 12 TREASURY PORTFOLIO-PERSONAL INVESTMENT CLASS 12-MOS AUG-31-1996 AUG-31-1996 3885231938 3885231938 9950056 199121 0 3895381115 0 0 191489975 191489975 0 3703242819 3703242819 3259810478 0 0 648321 0 0 3703891140 0 198959801 0 (5611587) 193348214 490127 0 193838341 0 (193348214) 0 0 23478756059 23061744286 26420568 443922468 0 158194 0 0 2227788 0 5726087 142591904 1.00 0.05 0 0 (0.05) 0 1.00 0.59 0 0
EX-27.4 19 FDS - STIT TREASURY PORT. - PRIVATE INVEST. CLASS
6 This schedule contains summary financial information for the Short-Term Investments Trust Treasury Portfolio-Private Investment Class for the year ended August 31, 1996. 0000205007 SHORT-TERM INVESTMENTS TRUST 11 TREASURY PORTFOLIO-PRIVATE INVESTMENT CLASS 12-MOS AUG-31-1996 AUG-31-1996 3885231938 3885231938 9950056 199121 0 3895381115 0 0 191489975 191489975 0 3703242819 3703242819 3259810478 0 0 648321 0 0 3703891140 0 198959801 0 (5611587) 193348214 490127 0 193838341 0 (193348214) 0 0 23478756059 23061744286 26420568 443922468 0 158194 0 0 2227788 0 5725087 407231329 1.00 0.05 0 0 (0.05) 0 1.00 0.39 0 0
EX-27.5 20 FDS - STIT TREASURY PORT. - RESOURCE CLASS
6 This schedule contains summary financial information for the Short-Term Investments Trust Treasury Portfolio-Resource Class for the twelve month period ended August 31, 1996. 0000205007 SHORT-TERM INVESTMENTS TRUST 15 TREASURY PORTFOLIO-RESOURCE CLASS 12-MOS AUG-31-1996 AUG-31-1996 3885231938 3885231938 9950056 199121 0 3895381115 0 0 191489975 191489975 0 3703242819 3703242819 3259810478 0 0 648321 0 0 3703891140 0 198959801 0 (5611587) 193348214 490127 0 193838341 0 (193348214) 0 0 23478756059 23061744286 26420568 443922468 0 158194 0 0 2227788 0 5725087 41695963 1.00 0.03 0 0 (0.03) 0 1.00 0.25 0 0
EX-27.6 21 FDS - STIT TREASURY TAX-ADV. - INSTITUTIONAL CLASS
6 This schedule contains summary financial information for the Short-Term Investments Trust Treasury Tax-Advantage Portfolio-Institutional Class for the year ended August 31, 1996. 0000205007 SHORT-TERM INVESTMENTS TRUST 007 TREASURY TAX-ADVANTAGE PORTFOLIO-INSTITUTIONAL CLASS 12-MOS AUG-31-1996 AUG-31-1996 456110700 456110700 52748920 28852 0 508888472 49479246 0 2113076 51692322 0 457072217 457072217 399731067 0 0 123933 0 0 457196150 0 23434439 0 (947135) 22487304 55902 0 22543206 0 (22487304) 0 0 2104256584 2047411318 495884 57397052 0 68031 0 0 791921 0 1088861 424432042 1.00 0.05 0 0 (0.05) 0 1.00 0.20 0 0
EX-27.7 22 FDS - STIT TREASURY TAX-ADV. - PRIVATE CLASS
6 This schedule contains summary financial information for the Short-Term Investments Trust Treasury Tax-Advantage Portfolio-Private Class for the year ended August 31, 1996. 0000205007 SHORT-TERM INVESTMENTS TRUST 14 TREASURY TAX-ADVANTAGE PORTFOLIO-PRIVATE CLASS 12-MOS AUG-31-1996 AUG-31-1996 456110700 456110700 52748920 28852 0 508888472 49579246 0 2113076 51692322 0 457072217 457072217 399731067 0 0 123933 0 0 457196150 0 23434439 0 (947135) 22487304 55902 0 22543206 0 (22487304) 0 0 2107256584 2047411318 495884 57397052 0 68031 0 0 791921 0 1088861 21111080 1.00 0.05 0 0 (0.05) 0 1.00 0.45 0 0
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