<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of Mr. We are pleased to report that during the fiscal
Charles T. Bauer, year ended August 31, 1996, the Prime Portfolio
Chairman of the of Short-Term Investments Co. continued to provide
LETTER Board of The Fund stability and a competitive money market yield
TO OUR APPEARS HERE] while a major shift in the direction of interest
SHAREHOLDERS rates took place.
As the U.S. economy weakened in the latter half of 1995, the
Federal Reserve Board pushed interest rates lower to help cushion
the slowdown. The federal funds target rate was lowered in
December and again in January, and then held unchanged from the
end of January through the August 31 close of the Portfolio's
fiscal year. The federal funds target, which serves as a benchmark
for other short-term rates, remained at 5.25%. However, short-term
markets were volatile as opinions shifted regarding the next move
in rates. As economic growth revived, concerns about possible wage
inflation surfaced. Credit markets anticipated a tightening by the
Fed, driving interest rates higher.
YOUR INVESTMENT PORTFOLIO
Prime Portfolio maintained its investment discipline in this
changing environment. The Portfolio seeks to maximize current
income to the extent consistent with preservation of capital and
maintenance of liquidity. It invests in high-grade taxable money
market instruments with maturities of 60 days or less, including
U.S. government obligations, bank obligations, commercial paper,
and selected repurchase agreement securities. Government
securities, such as U.S. Treasury bills and bonds, offer a high
degree of safety and are guaranteed as to the timely payment of
principal and interest if held to maturity. As with any money
market fund, an investment in Prime Portfolio is neither insured
nor guaranteed by the U.S. government, the FDIC or a bank, and
there can be no assurance that the Portfolio will be able to
maintain a stable net asset value of $1.00 per share.
During the reporting period, the Prime Portfolio managers
maintained a weighted average maturity in a range of 13 to 25
days, adjusting the portfolio structure to take advantage of the
changing interest rate environment. As of August 31, 1996, the
close of the fiscal year, the average monthly yield for the
Private Investment Class of the Portfolio was 5.03%. The seven-day
yield for the Private Investment Class of the Portfolio was 5.03%.
Net assets of the Private Investment Class stood at $209 million
at close of the fiscal year.
The Portfolio continues to hold an AAAm credit quality rating,
the highest given by Standard & Poor's Corporation, a widely known
credit rating agency. The AAAm rating is historical and is based
on an annual analysis of the Portfolio's credit quality,
composition, management, and weekly portfolio reviews.
OUTLOOK FOR THE FUTURE
As the reporting period closed, the economic outlook was for
continued growth with some slowing from the strong second quarter
of 1996. During the second quarter of 1996, the economy had
expanded at an annualized rate of 4.7%. The extent of the slowdown
would help determine whether the Fed raised interest rates to pre-
empt inflationary pressures, and opinion about the likelihood of a
rate rise was divided. Forecasters who thought Fed policy would
remain unchanged until after November's elections were proven
correct on September 24, 1996, when the Fed chose to leave the
federal funds rate at 5.25%.
Because the weighted average maturity of the Portfolio is
relatively short, Prime Portfolio can respond quickly to
changes in the interest rate environment. As of the close of the
fiscal year, the portfolio's weighted average maturity was 20
days.
We are pleased to send you this report concerning your
investment. AIM is committed to customer service and to the
primary goals of safety, liquidity and yield in institutional fund
management. We are ready to respond to your comments about this
report and to any questions you may have. Please contact one of
our representatives at 800-659-1005 if we may be of service.
Respectfully submitted,
/s/ CHARLES T BAUER
Charles T. Bauer
Chairman
<PAGE>
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 83.45%(a)
BASIC INDUSTRY - 0.32%
PAPER & FOREST PRODUCTS - 0.32%
Weyerhaeuser Co.
5.29% 10/01/96 $ 20,000 $ 19,911,833
- ------------------------------------------------------------------------
Total Basic Industry 19,911,833
- ------------------------------------------------------------------------
BUSINESS SERVICES - 5.14%
POLLUTION CONTROL SERVICES - 2.42%
Browning-Ferris Industries, Inc.
5.30% 09/16/96 20,000 19,955,834
- ------------------------------------------------------------------------
5.31% 10/11/96 35,000 34,793,500
- ------------------------------------------------------------------------
5.31% 10/15/96 35,000 34,772,850
- ------------------------------------------------------------------------
5.30% 10/16/96 60,000 59,602,500
- ------------------------------------------------------------------------
149,124,684
- ------------------------------------------------------------------------
MISCELLANEOUS - 2.72%
Donnelley (R.R.) & Sons Co.
5.30% 09/17/96 17,850 17,807,954
- ------------------------------------------------------------------------
PHH Corp.
5.28% 09/04/96 20,000 19,991,200
- ------------------------------------------------------------------------
5.28% 09/25/96 50,000 49,824,000
- ------------------------------------------------------------------------
5.28% 10/04/96 30,000 29,854,800
- ------------------------------------------------------------------------
5.26% 10/22/96 50,000 49,627,417
- ------------------------------------------------------------------------
167,105,371
- ------------------------------------------------------------------------
Total Business Services 316,230,055
- ------------------------------------------------------------------------
CAPITAL GOODS - 2.21%
AEROSPACE/DEFENSE - 0.32%
Raytheon Co.
5.32% 09/18/96 20,000 19,949,756
- ------------------------------------------------------------------------
COMPUTERS & OFFICE EQUIPMENT - 1.89%
Electronic Data Systems Corp.
5.29% 10/15/96 20,000 19,870,689
- ------------------------------------------------------------------------
International Business Machines Corp.
5.30% 09/10/96 30,000 29,960,250
- ------------------------------------------------------------------------
Xerox Corp.
5.29% 09/19/96 30,000 29,920,650
- ------------------------------------------------------------------------
5.30% 10/02/96 36,537 36,370,249
- ------------------------------------------------------------------------
116,121,838
- ------------------------------------------------------------------------
Total Capital Goods 136,071,594
- ------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
CONSUMER DURABLES - 4.45%
AUTOMOBILE - 4.29%
Ford Motor Credit Co.
5.37% 09/17/96 $ 50,000 $ 49,880,667
- -------------------------------------------------------------------
5.28% 10/25/96 40,000 39,683,200
- -------------------------------------------------------------------
Toyota Motor Credit Corp.
5.40% 09/05/96 40,000 39,976,000
- -------------------------------------------------------------------
5.40% 09/11/96 40,000 39,940,000
- -------------------------------------------------------------------
5.30% 09/25/96 20,000 19,929,333
- -------------------------------------------------------------------
5.29% 10/07/96 25,000 24,867,750
- -------------------------------------------------------------------
5.24% 10/08/96 25,000 24,865,361
- -------------------------------------------------------------------
5.295% 10/18/96 25,000 24,827,177
- -------------------------------------------------------------------
263,969,488
- -------------------------------------------------------------------
RESIDENTIAL CONSTRUCTION - 0.16%
Weyerhaeuser Real Estate Co.
5.28% 10/04/96 9,800 9,752,568
- -------------------------------------------------------------------
Total Consumer Durables 273,722,056
- -------------------------------------------------------------------
CONSUMER NONDURABLES - 6.44%
BEVERAGES - 0.40%
Coca-Cola Co. (The)
5.23% 10/16/96 25,000 24,836,562
- -------------------------------------------------------------------
DRUGS - 1.70%
Pfizer Inc.
5.27% 09/23/96 10,056 10,023,614
- -------------------------------------------------------------------
5.25% 09/24/96 50,000 49,832,292
- -------------------------------------------------------------------
5.25% 10/03/96 45,000 44,790,000
- -------------------------------------------------------------------
104,645,906
- -------------------------------------------------------------------
FOOD PROCESSING - 2.45%
Heinz (H.J.) Co.
5.29% 09/05/96 10,200 10,194,005
- -------------------------------------------------------------------
5.28% 09/09/96 11,000 10,987,093
- -------------------------------------------------------------------
5.28% 09/24/96 9,278 9,246,702
- -------------------------------------------------------------------
5.28% 10/02/96 29,000 28,868,147
- -------------------------------------------------------------------
5.25% 10/07/96 20,000 19,895,000
- -------------------------------------------------------------------
5.25% 10/08/96 25,000 24,865,104
- -------------------------------------------------------------------
5.27% 10/11/96 12,000 11,929,733
- -------------------------------------------------------------------
5.28% 10/15/96 15,000 14,903,200
- -------------------------------------------------------------------
Nestle Capital Co.
5.24% 09/24/96 20,000 19,933,044
- -------------------------------------------------------------------
150,822,028
- -------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
CONSUMER NONDURABLES - (continued)
HOUSEHOLD PRODUCTS - 1.32%
Colgate-Palmolive Co.
5.37% 09/04/96 $ 41,000 $ 40,981,652
- -------------------------------------------------------------------------
5.27% 09/27/96 40,000 39,847,756
- -------------------------------------------------------------------------
80,829,408
- -------------------------------------------------------------------------
MULTIPLE INDUSTRY - 0.57%
Unilever Capital Co.
5.22% 09/17/96 35,000 34,918,800
- -------------------------------------------------------------------------
Total Consumer Nondurables 396,052,704
- -------------------------------------------------------------------------
ENERGY - 3.93%
OIL & GAS - 3.93%
Koch Industries Inc.
5.36% 09/17/96 13,587 13,554,633
- -------------------------------------------------------------------------
Mobil Australia Finance Co., Inc.
5.41% 09/13/96 78,818 78,675,865
- -------------------------------------------------------------------------
Petrofina Delaware, Inc.
5.29% 09/03/96 25,000 24,992,653
- -------------------------------------------------------------------------
5.38% 09/12/96 25,000 24,958,903
- -------------------------------------------------------------------------
Shell Oil Co.
5.35% 09/03/96 50,000 49,985,139
- -------------------------------------------------------------------------
5.25% 10/16/96 50,000 49,671,875
- -------------------------------------------------------------------------
Total Energy 241,839,068
- -------------------------------------------------------------------------
FINANCIAL - 56.00%
ASSET-BACKED SECURITIES - 25.28%
Asset Securitization Cooperative Corp.
5.45% 09/03/96 70,000 69,978,805
- -------------------------------------------------------------------------
5.40% 09/12/96 50,000 49,917,500
- -------------------------------------------------------------------------
5.38% 09/18/96 40,000 39,898,378
- -------------------------------------------------------------------------
5.30% 10/01/96 25,000 24,889,583
- -------------------------------------------------------------------------
5.28% 10/03/96 30,000 29,859,200
- -------------------------------------------------------------------------
5.29% 10/03/96 26,000 25,877,742
- -------------------------------------------------------------------------
5.26% 10/17/96 25,000 24,831,972
- -------------------------------------------------------------------------
5.26% 10/18/96 50,000 49,656,639
- -------------------------------------------------------------------------
Ciesco, L.P.
5.44% 09/04/96 47,300 47,278,558
- -------------------------------------------------------------------------
5.42% 09/05/96 60,000 59,963,867
- -------------------------------------------------------------------------
5.30% 09/09/96 40,000 39,952,889
- -------------------------------------------------------------------------
5.33% 09/10/96 10,000 9,986,675
- -------------------------------------------------------------------------
5.35% 09/18/96 25,000 24,936,840
- -------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET-BACKED SECURITIES - (CONTINUED)
Clipper Receivables Corp.
5.30% 09/11/96 $ 50,000 $ 49,926,389
- ------------------------------------------------------------------------
5.31% 09/16/96 15,075 15,041,647
- ------------------------------------------------------------------------
5.32% 09/19/96 50,000 49,867,000
- ------------------------------------------------------------------------
5.30% 09/24/96 50,000 49,830,694
- ------------------------------------------------------------------------
5.30% 09/25/96 55,000 54,805,667
- ------------------------------------------------------------------------
5.28% 09/26/96 83,414 83,108,149
- ------------------------------------------------------------------------
5.27% 10/01/96 30,000 29,868,250
- ------------------------------------------------------------------------
5.28% 10/01/96 20,000 19,912,000
- ------------------------------------------------------------------------
Corporate Asset Funding Co., Inc.
5.29% 10/07/96 50,000 49,735,500
- ------------------------------------------------------------------------
Delaware Funding Corp.
5.28% 09/10/96 30,355 30,314,931
- ------------------------------------------------------------------------
5.31% 09/18/96 68,000 67,829,490
- ------------------------------------------------------------------------
5.28% 09/20/96 30,000 29,916,400
- ------------------------------------------------------------------------
5.30% 10/04/96 50,269 50,024,776
- ------------------------------------------------------------------------
5.30% 10/08/96 40,000 39,782,111
- ------------------------------------------------------------------------
5.30% 10/11/96 16,704 16,605,632
- ------------------------------------------------------------------------
5.31% 10/17/96 35,000 34,762,525
- ------------------------------------------------------------------------
Eiger Capital Corp.
5.30% 09/10/96 41,151 41,096,475
- ------------------------------------------------------------------------
5.28% 09/11/96 13,745 13,724,841
- ------------------------------------------------------------------------
5.35% 09/20/96 35,000 34,901,174
- ------------------------------------------------------------------------
5.28% 10/08/96 20,000 19,891,467
- ------------------------------------------------------------------------
5.28% 10/21/96 50,000 49,633,333
- ------------------------------------------------------------------------
5.28% 10/22/96 45,000 44,663,400
- ------------------------------------------------------------------------
Falcon Asset Securitization Corp.
5.30% 09/27/96 67,325 67,067,295
- ------------------------------------------------------------------------
Matterhorn Capital Corp.
5.34% 09/20/96 10,654 10,623,973
- ------------------------------------------------------------------------
5.36% 09/20/96 50,000 49,858,555
- ------------------------------------------------------------------------
5.35% 09/23/96 15,256 15,206,121
- ------------------------------------------------------------------------
5.28% 10/03/96 17,529 17,446,731
- ------------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.45% 09/05/96 22,500 22,486,375
- ------------------------------------------------------------------------
1,554,959,549
- ------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
BROKERAGE/INVESTMENTS - 11.10%
Bear, Stearns & Co. Inc.
5.45% 09/06/96 $ 50,000 $ 49,962,153
- -------------------------------------------------------------------------------
5.31% 10/09/96 50,000 49,719,750
- -------------------------------------------------------------------------------
First Boston Corp. (The)
5.32% 10/07/96 50,000 49,734,000
- -------------------------------------------------------------------------------
Goldman, Sachs & Co.
5.30% 09/03/96 75,000 74,977,917
- -------------------------------------------------------------------------------
Merrill Lynch & Co. Inc.
5.45% 09/06/96 100,000 99,924,305
- -------------------------------------------------------------------------------
5.46% 09/06/96 50,000 49,962,083
- -------------------------------------------------------------------------------
5.30% 10/11/96 30,000 29,823,333
- -------------------------------------------------------------------------------
5.30% 10/15/96 25,000 24,838,056
- -------------------------------------------------------------------------------
5.30% 10/17/96 40,000 39,729,111
- -------------------------------------------------------------------------------
5.28% 10/18/96 50,000 49,655,333
- -------------------------------------------------------------------------------
Morgan Stanley Group, Inc.
5.30% 10/18/96 40,000 39,723,222
- -------------------------------------------------------------------------------
Smith Barney Inc.
5.33% 09/09/96 50,000 49,940,778
- -------------------------------------------------------------------------------
5.38% 09/19/96 50,000 49,865,500
- -------------------------------------------------------------------------------
5.31% 10/08/96 25,000 24,863,563
- -------------------------------------------------------------------------------
682,719,104
- -------------------------------------------------------------------------------
BUSINESS CREDIT - 2.88%
CIT Group Holdings, Inc.
5.40% 09/13/96 50,000 49,910,000
- -------------------------------------------------------------------------------
5.30% 10/03/96 30,000 29,858,667
- -------------------------------------------------------------------------------
5.29% 10/11/96 30,000 29,823,667
- -------------------------------------------------------------------------------
National Rural Utilities Cooperative Finance
Corp.
5.30% 10/03/96 20,000 19,905,778
- -------------------------------------------------------------------------------
5.30% 10/04/96 18,300 18,211,093
- -------------------------------------------------------------------------------
5.29% 10/18/96 10,000 9,930,936
- -------------------------------------------------------------------------------
5.28% 10/25/96 20,000 19,841,600
- -------------------------------------------------------------------------------
177,481,741
- -------------------------------------------------------------------------------
INSURANCE - 2.27%
A.I. Credit Corp.
5.23% 09/26/96 30,000 29,891,042
- -------------------------------------------------------------------------------
5.30% 10/07/96 15,000 14,920,500
- -------------------------------------------------------------------------------
Prudential Funding Corp.
5.38% 09/17/96 50,000 49,880,444
- -------------------------------------------------------------------------------
5.28% 10/07/96 25,000 24,868,000
- -------------------------------------------------------------------------------
5.33% 10/29/96 20,000 19,828,256
- -------------------------------------------------------------------------------
139,388,242
- -------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
PERSONAL CREDIT - 7.49%
Associates Corp. of North America
5.40% 09/23/96 $ 50,000 $ 49,835,000
- --------------------------------------------------------------------
AVCO Financial Services, Inc.
5.30% 10/11/96 35,000 34,793,889
- --------------------------------------------------------------------
Student Loan Corp.
5.30% 10/23/96 25,000 24,808,611
- --------------------------------------------------------------------
5.29% 10/25/96 50,000 49,603,250
- --------------------------------------------------------------------
Transamerica Finance Corp.
5.37% 09/09/96 33,200 33,160,381
- --------------------------------------------------------------------
5.36% 09/19/96 20,000 19,946,400
- --------------------------------------------------------------------
5.35% 09/20/96 10,000 9,971,764
- --------------------------------------------------------------------
5.29% 09/23/96 29,000 28,906,249
- --------------------------------------------------------------------
5.30% 10/02/96 24,000 23,890,467
- --------------------------------------------------------------------
5.30% 10/09/96 10,000 9,944,056
- --------------------------------------------------------------------
5.29% 10/17/96 24,000 23,837,773
- --------------------------------------------------------------------
5.27% 10/18/96 30,000 29,793,592
- --------------------------------------------------------------------
5.26% 10/21/96 75,000 74,452,083
- --------------------------------------------------------------------
5.27% 10/21/96 23,500 23,327,993
- --------------------------------------------------------------------
5.26% 10/22/96 25,000 24,813,708
- --------------------------------------------------------------------
461,085,216
- --------------------------------------------------------------------
MISCELLANEOUS - 4.22%
Hertz Corp. (The)
5.45% 09/06/96 100,000 99,924,305
- --------------------------------------------------------------------
5.30% 10/25/96 25,000 24,801,250
- --------------------------------------------------------------------
International Lease Finance Corp.
5.40% 09/13/96 15,700 15,671,740
- --------------------------------------------------------------------
5.39% 09/18/96 29,000 28,926,187
- --------------------------------------------------------------------
5.35% 09/20/96 50,000 49,858,820
- --------------------------------------------------------------------
5.35% 09/23/96 20,500 20,432,976
- --------------------------------------------------------------------
USAA Capital Corp.
5.30% 09/05/96 20,000 19,988,222
- --------------------------------------------------------------------
259,603,500
- --------------------------------------------------------------------
MULTIPLE INDUSTRY - 2.76%
American Express Credit Co.
5.31% 10/04/96 50,000 49,756,625
- --------------------------------------------------------------------
General Electric Capital Corp.
5.30% 09/04/96 25,000 24,988,959
- --------------------------------------------------------------------
5.35% 09/06/96 95,000 94,929,409
- --------------------------------------------------------------------
169,674,993
- --------------------------------------------------------------------
Total Financial 3,444,912,345
- --------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
RETAIL - 1.64%
DEPARTMENT STORES - 1.30%
Penney (J.C.) Funding Corp.
5.29% 09/16/96 $ 50,000 $ 49,889,792
- -----------------------------------------------------------------------------
5.28% 09/24/96 30,000 29,898,800
- -----------------------------------------------------------------------------
79,788,592
- -----------------------------------------------------------------------------
SPECIALTY STORES - 0.34%
Toys "R" Us, Inc.
5.30% 09/16/96 21,300 21,252,962
- -----------------------------------------------------------------------------
Total Retail 101,041,554
- -----------------------------------------------------------------------------
OTHER - 3.32%
DIVERSIFIED - 3.32%
BTR Dunlop Finance Inc.
5.40% 09/13/96 30,000 29,946,000
- -----------------------------------------------------------------------------
5.38% 09/23/96 50,000 49,835,611
- -----------------------------------------------------------------------------
5.30% 10/01/96 25,000 24,889,583
- -----------------------------------------------------------------------------
5.26% 10/21/96 40,000 39,707,778
- -----------------------------------------------------------------------------
Cargill Financial Services Corp.
5.27% 10/21/96 10,000 9,926,806
- -----------------------------------------------------------------------------
Cargill Inc.
5.28% 10/04/96 25,000 24,879,000
- -----------------------------------------------------------------------------
5.28% 10/07/96 25,000 24,868,000
- -----------------------------------------------------------------------------
Total Other 204,052,778
- -----------------------------------------------------------------------------
Total Commercial Paper 5,133,833,987
- -----------------------------------------------------------------------------
PROMISSORY NOTE AGREEMENT - 0.44%
Goldman Sachs Group (The), L.P.(b)
5.423% 10/25/96 27,000 27,000,000
- -----------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 5,160,833,987
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 16.59%(c)
Daiwa Securities America, Inc.(d)
5.24% 09/03/96 44,115 44,114,604
- -----------------------------------------------------------------------------
Goldman, Sachs & Co.(e)
5.28% 09/03/96 300,000 300,000,000
- -----------------------------------------------------------------------------
HSBC Securities, Inc.
5.27%(f) 09/03/96 36,000 36,000,000
- -----------------------------------------------------------------------------
5.28%(g) 09/03/96 139,336 139,336,009
- -----------------------------------------------------------------------------
Morgan Stanley & Co. Inc.(h)
5.28% 09/03/96 65,000 65,000,000
- -----------------------------------------------------------------------------
Nikko Securities Co., International,
Inc.(i)
5.30% 09/03/96 100,000 100,000,000
- -----------------------------------------------------------------------------
Nomura Securities International, Inc.(j)
5.27% -- 156,000 156,000,000
- -----------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - (continued)
Smith Barney, Inc.(k)
5.28% 09/03/96 $ 84,000 $ 84,000,000
- --------------------------------------------------------------------------
UBS Securities LLC(l)
5.26% 09/03/96 96,000 96,000,000
- --------------------------------------------------------------------------
Total Repurchase Agreements 1,020,450,613
- --------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.48% 6,181,284,600 (m)
- --------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -
(0.48%) (29,336,245)
- --------------------------------------------------------------------------
NET ASSETS - 100.00% $6,151,948,355
==========================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(b) The Portfolio may demand prepayment of note upon seven calendar days'
notice. Interest rates on promissory notes are redetermined periodically.
Rate shown is the rate in effect on August 31, 1996.
(c) Collateral on repurchase agreements, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value as being 102% 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.
(d) 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.
(e) 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.
(f) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$100,058,556. Collateralized by $42,013,000 U.S. Government Agency
obligations, 0% due 10/10/96 to 10/21/96 and $58,016,000 U.S. Treasury
obligations, 6.00% to 8.00% due 07/31/99 to 12/31/99.
(g) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$300,176,000. Collateralized by $476,251,231 U.S. Government Agency
obligations, 0% to 11.00% due 09/03/96 to 07/01/35.
(h) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$200,117,333. Collateralized by $217,553,870 U.S. Government Agency
obligations, 7.50% to 8.00% due 08/01/03 to 04/01/26.
(i) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$300,176,668. Collateralized by $343,795,645 U.S. Government Agency
obligations, 5.834% to 8.00% due 04/01/18 to 09/01/26.
(j) Open joint 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 $336,220,000 U.S.
Government Agency obligations, 0% to 9.40% due 10/11/96 to 06/13/25 and
$2,075,000 U.S. Treasury obligations, 6.25% to 8.875% due 11/15/97 to
08/15/26.
(k) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$200,117,333. Collateralized by $362,167,598 U.S. Government Agency
obligations, 0% to 11.00% due 10/25/99 to 09/01/26 and $18,291,000 U.S.
Treasury obligations, 0% due 11/15/04.
(l) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$200,116,889. Collateralized by $244,875,836 U.S. Government Agency
obligations, 0% to 10.50% due 03/01/02 to 07/01/26.
(m) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $5,160,833,987
- ------------------------------------------------------------------------
Repurchase agreements 1,020,450,613
- ------------------------------------------------------------------------
Interest receivable 431,498
- ------------------------------------------------------------------------
Investment for deferred compensation plan 56,031
- ------------------------------------------------------------------------
Other assets 1,079,694
- ------------------------------------------------------------------------
Total assets 6,182,851,823
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 30,043,232
- ------------------------------------------------------------------------
Deferred compensation 56,031
- ------------------------------------------------------------------------
Accrued advisory fees 319,722
- ------------------------------------------------------------------------
Accrued distribution fees 138,772
- ------------------------------------------------------------------------
Accrued transfer agent fees 85,716
- ------------------------------------------------------------------------
Accrued operating expenses 259,995
- ------------------------------------------------------------------------
Total liabilities 30,903,468
- ------------------------------------------------------------------------
NET ASSETS $6,151,948,355
========================================================================
NET ASSETS:
Institutional Class $5,264,600,762
========================================================================
Private Investment Class $ 209,443,494
========================================================================
Personal Investment Class $ 112,644,595
========================================================================
Cash Management Class $ 507,247,366
========================================================================
Resource Class $ 58,012,138
========================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Institutional Class 5,264,608,015
========================================================================
Private Investment Class 209,445,352
========================================================================
Personal Investment Class 112,644,015
========================================================================
Cash Management Class 507,247,359
========================================================================
Resource Class 58,012,107
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $287,932,532
- -------------------------------------------------------------------
EXPENSES:
Advisory fees 3,007,431
- -------------------------------------------------------------------
Custodian fees 305,946
- -------------------------------------------------------------------
Administrative services fees 126,321
- -------------------------------------------------------------------
Directors' fees and expenses 44,043
- -------------------------------------------------------------------
Transfer agent fees 426,413
- -------------------------------------------------------------------
Distribution fees (Note 2) 1,471,079
- -------------------------------------------------------------------
Other 782,028
- -------------------------------------------------------------------
Total expenses 6,163,261
- -------------------------------------------------------------------
Less expenses assumed by advisor (61,100)
- -------------------------------------------------------------------
Net expenses 6,102,161
- -------------------------------------------------------------------
Net investment income 281,830,371
- -------------------------------------------------------------------
Net realized gain on sales of investments 3,560
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $281,833,931
===================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 281,830,371 $ 241,891,385
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 3,560 --
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 281,833,931 241,891,385
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (281,830,371) (241,891,385)
- ----------------------------------------------------------------------------
Capital stock transactions-net 1,950,864,683 86,066,761
- ----------------------------------------------------------------------------
Net increase in net assets 1,950,868,243 86,066,761
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 4,201,080,112 4,115,013,351
- ----------------------------------------------------------------------------
End of period $6,151,948,355 $4,201,080,112
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $6,151,956,848 $4,201,092,165
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investments (8,493) (12,053)
- ----------------------------------------------------------------------------
$6,151,948,355 $4,201,080,112
============================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Co. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end series diversified management
investment company. The Fund is organized as a Maryland corporation consisting
of two different portfolios, each of which offers separate series of shares:
the Prime Portfolio and the Liquid Assets Portfolio. Information presented in
these financial statements pertains only to the Prime Portfolio (the
"Portfolio"). The assets, liabilities and operations of each portfolio are
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 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 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 sixty 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:
<TABLE>
<CAPTION>
Net Assets RATE
- ----------------------------------------
<S> <C>
First $100 million 0.20%
- ----------------------------------------
Over $100 million to $200 million 0.15%
- ----------------------------------------
Over $200 million to $300 million 0.10%
- ----------------------------------------
Over $300 million to $1.5 billion 0.06%
- ----------------------------------------
Over $1.5 billion 0.05%
- ----------------------------------------
</TABLE>
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 $61,100 during the year ended August 31, 1996.
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 $126,321 for such services. During the year ended
August 31, 1996, the Fund paid A I M Institutional Fund Services, Inc. ("AIFS")
$424,496 pursuant to a shareholder and transfer agency services agreement.
12
<PAGE>
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 may pay FMC up to a maximum annual rate of 0.50%, 0.75%,
0.10% and 0.20%, respectively, of the average daily net assets attributable to
such class. Of this amount, 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 $575,588, $556,024, $242,476 and $96,991,
respectively, as compensation to FMC under the Plan. Certain officers and
directors of the Fund are officers of AIM, FMC and AIFS.
During the year ended August 31, 1996, the Portfolio paid legal fees of
$15,883 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Fund's directors. A member of that firm is a director of the Fund.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Fund invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-CAPITAL STOCK
Changes in capital stock during the years ended August 31, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 47,809,368,885 $47,809,368,885 30,516,627,315 $30,516,627,315
- ------------------------------------------------------------------------------------------
Private Investment
Class 1,712,695,255 1,712,695,255 1,403,913,359 1,403,913,359
- ------------------------------------------------------------------------------------------
Personal Investment
Class 976,763,335 976,763,335 881,857,651 881,857,651
- ------------------------------------------------------------------------------------------
Cash Management Class 2,572,268,560 2,572,268,560 307,521,987 307,521,987
- ------------------------------------------------------------------------------------------
Resource Class* 1,501,999,293 1,501,999,293 -- --
- ------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 8,231,944 8,231,944 3,106,371 3,106,371
- ------------------------------------------------------------------------------------------
Private Investment
Class 6,300,025 6,300,025 4,691,704 4,691,704
- ------------------------------------------------------------------------------------------
Personal Investment
Class 5,517,924 5,517,924 4,299,720 4,299,720
- ------------------------------------------------------------------------------------------
Cash Management Class 12,713,851 12,713,851 896,094 896,094
- ------------------------------------------------------------------------------------------
Resource Class* 892,705 892,705 -- --
- ------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (46,305,697,661) (46,305,697,661) (30,847,783,300) (30,847,783,300)
- ------------------------------------------------------------------------------------------
Private Investment
Class (1,663,828,112) (1,663,828,112) (1,285,160,664) (1,285,160,664)
- ------------------------------------------------------------------------------------------
Personal Investment
Class (969,266,851) (969,266,851) (789,592,898) (789,592,898)
- ------------------------------------------------------------------------------------------
Cash Management Class (2,272,214,579) (2,272,214,579) (114,310,578) (114,310,578)
- ------------------------------------------------------------------------------------------
Resource Class* (1,444,879,891) (1,444,879,891) -- --
- ------------------------------------------------------------------------------------------
Net increase 1,950,864,683 $ 1,950,864,683 86,066,761 $ 86,066,761
==========================================================================================
</TABLE>
* The Resource Class commenced operations on January 16, 1996.
13
<PAGE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the Private
Investment Class outstanding during each of the years in the three-year period
ended August 31, 1996 and the period July 8, 1993 (date operations commenced)
through August 31, 1993.
<TABLE>
<CAPTION>
1996 1995 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------- -------- -------- ------- -------
Income from investment operations:
Net investment income 0.05 0.05 0.03 0.03
- ---------------------------------- -------- -------- ------- -------
Total from investment operations 0.05 0.05 0.03 0.03
- ---------------------------------- -------- -------- ------- -------
Less distributions:
Dividends from net investment
income (0.05) (0.05) (0.03) (0.03)
- ---------------------------------- -------- -------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
================================== ======== ======== ======= =======
Total return 5.32% 5.48% 3.33% 3.24%(a)
================================== ======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $209,443 $154,278 $30,834 $17,857
================================== ======== ======== ======= =======
Ratio of expenses to average net
assets(c) 0.39%(b) 0.39% 0.38% 0.37%(a)
================================== ======== ======== ======= =======
Ratio of net investment income to
average net assets(d) 5.20%(b) 5.50% 3.32% 2.85%(a)
================================== ======== ======== ======= =======
</TABLE>
(a) Annualized.
(b) Ratios are based on average net assets of $191,862,808.
(c) Ratios of expenses to average net assets prior to waiver of distribution
fees and/or expense reimbursements were 0.59%, 0.60%, 1.38% and 0.57% 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 5.00%, 5.29%, 2.32%
and 2.65% for the periods 1996-1993, respectively. Ratios are annualized
for periods less than one year.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Short-Term Investments Co.:
We have audited the accompanying statement of assets and liabilities of the
Prime Portfolio (a series portfolio of Short-Term Investments Co.), 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 July 8, 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. 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
Prime 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 July 8, 1993 (date
operations commenced) through August 31, 1993, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
15
<PAGE>
<TABLE>
<S> <C>
DIRECTORS
Charles T. Bauer John F. Kroeger Short-Term
Bruce L. Crockett Lewis F. Pennock Investments Co.
Owen Daly II Ian W. Robinson (STIC)
Carl Frischling Louis S. Sklar
Robert H. Graham
OFFICERS
Charles T. Bauer Chairman
Robert H. Graham President
John J. Arthur Sr. Vice President & Treasurer
Gary T. Crum Sr. Vice President Prime Portfolio
Carol F. Relihan Sr. Vice President & Secretary -----------------------------------------------------
Dana R. Sutton Vice President & Assistant Treasurer Private ANNUAL
Melville B. Cox Vice President Investment REPORT
Karen Dunn Kelley Vice President Class
J. Abbott Sprague Vice President
P. Michelle Grace Assistant Secretary
David L. Kite Assistant Secretary AUGUST 31, 1996
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
Mary J. Benson Assistant Treasurer
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
(800) 347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 1919
Houston, TX 77046
(800) 659-1005
CUSTODIAN
The Bank of New York
90 Washington Street, 11th Floor
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO DIRECTORS
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
TRANSFER AGENT
A I M Institutional Fund Services, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
AUDITORS
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
This report may be distributed only to current shareholders or [LOGO APPEARS HERE]
to persons who have received a current prospectus. FUND MANAGEMENT COMPANY
</TABLE>
