<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 Liquid Assets
Chairman of the Portfolio of Short-Term Investments Co. continued
LETTER Board of The Fund to provide stability and a competitive money market
TO OUR APPEARS HERE] yield while a major shift in the direction of
SHAREHOLDERS interest 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 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
In this changing environment, Liquid Assets Portfolio continued to
emphasize superior credit quality in purchasing money market
securities such as quality commercial paper and selected
repurchase agreement securities. The Portfolio invests solely in
securities rated "First Tier" as defined in Rule 2a-7 under the
Investment Company Act of 1940. Its objective is to provide as
high a level of current income as is consistent with the
preservation of capital and liquidity. As with any money market
fund, your investment in Liquid Assets 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 Liquid Assets Portfolio
managers adjusted the weighted average maturity of the holdings to
take advantage of the changing interest rate environment, and
continued to use a laddered maturity approach to achieve its
strong performance. As of August 31, average monthly yield for the
Private Investment Class was 5.03%; seven-day yield was 5.04%. Net
assets of the Private Investment Class were $44.98 million as the
fiscal year closed.
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 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, Liquid Assets 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 24
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 - 21.61%(a)
CONSUMER DURABLES - 5.32%
AEROSPACE/DEFENSE - 0.48%
Raytheon Co.
5.32% 09/18/96 $ 10,000 $ 9,974,878
- -------------------------------------------------------------------------
AUTOMOBILE - 1.42%
Ford Motor Credit Co.
5.36% 12/03/96 30,000 29,584,600
- -------------------------------------------------------------------------
COMPUTER & OFFICE EQUIPMENT - 2.48%
Xerox Corp.
5.32% 12/18/96 52,600 51,760,504
- -------------------------------------------------------------------------
MACHINERY - 0.94%
Dover Corp.
5.33% 09/23/96 8,041 8,014,809
- -------------------------------------------------------------------------
5.33% 09/24/96 11,796 11,755,831
- -------------------------------------------------------------------------
19,770,640
- -------------------------------------------------------------------------
Total Consumer Durables 111,090,622
- -------------------------------------------------------------------------
CONSUMER NONDURABLES - 0.14%
MULTIPLE INDUSTRY - 0.14%
PepsiCo Inc.
5.05% 09/03/96 3,000 2,999,158
- -------------------------------------------------------------------------
Total Consumer Nondurables 2,999,158
- -------------------------------------------------------------------------
FINANCIAL - 14.40%
ASSET-BACKED SECURITIES - 6.14%
Asset Securitization Cooperative Corp.
5.32% 11/04/96 50,000 49,527,111
- -------------------------------------------------------------------------
Ciesco, L.P.
5.30% 12/02/96 31,300 30,876,059
- -------------------------------------------------------------------------
Clipper Receivables Corp.
5.33% 09/20/96 15,300 15,256,960
- -------------------------------------------------------------------------
Falcon Asset Securitization Corp.
5.33% 09/05/96 10,025 10,019,063
- -------------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.30% 11/25/96 22,700 22,415,935
- -------------------------------------------------------------------------
128,095,128
- -------------------------------------------------------------------------
INSURANCE - 1.43%
Marsh & McLennan Companies Inc.
4.81% 11/01/96 20,000 19,836,994
- -------------------------------------------------------------------------
Prudential Funding Corp.
5.33% 10/29/96 10,000 9,914,128
- -------------------------------------------------------------------------
29,751,122
- -------------------------------------------------------------------------
PERSONAL CREDIT - 1.89%
Household Finance Corp.
5.34% 12/09/96 25,000 24,632,875
- -------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
PERSONAL CREDIT - (CONTINUED)
Transamerica Finance Corp.
5.32% 12/10/96 $ 15,000 $ 14,778,333
- -----------------------------------------------------------------------------
39,411,208
- -----------------------------------------------------------------------------
MISCELLANEOUS - 0.94%
International Lease Finance Corp.
5.35% 12/06/96 20,000 19,714,667
- -----------------------------------------------------------------------------
MULTIPLE INDUSTRY - 4.00%
General Electric Capital Corp.
5.35% 09/06/96 10,000 9,992,569
- -----------------------------------------------------------------------------
5.34% 12/16/96 25,000 24,606,917
- -----------------------------------------------------------------------------
5.38% 02/12/97 50,000 48,774,556
- -----------------------------------------------------------------------------
83,374,042
- -----------------------------------------------------------------------------
Total Financial 300,346,167
- -----------------------------------------------------------------------------
OTHER - 1.75%
DIVERSIFIED - 1.18%
BTR Dunlop Finance Inc.
5.30% 12/19/96 25,000 24,598,819
- -----------------------------------------------------------------------------
MISCELLANEOUS - 0.57%
Cargill Financial Services Corp.
4.95% 10/29/96 12,000 11,904,300
- -----------------------------------------------------------------------------
Total Other 36,503,119
- -----------------------------------------------------------------------------
Total Commercial Paper 450,939,066
- -----------------------------------------------------------------------------
MEDIUM TERM NOTES - 0.96%
General Electric Capital Corp.
5.084% 01/29/97 10,000 10,003,770
- -----------------------------------------------------------------------------
5.138% 01/30/97 10,000 10,005,974
- -----------------------------------------------------------------------------
Total Medium Term Notes 20,009,744
- -----------------------------------------------------------------------------
PROMISSORY AND MASTER NOTE AGREEMENTS -
20.45%
Goldman Sachs Group (The), L.P.
5.423%(b) 10/25/96 173,000 173,000,000
- -----------------------------------------------------------------------------
Morgan (J.P.) Securities Inc.
5.413%(c) 10/09/96 127,000 127,000,000
- -----------------------------------------------------------------------------
Morgan Stanley Group Inc.
5.383%(d) 11/29/96 127,000 127,000,000
- -----------------------------------------------------------------------------
Total Promissory and Master Note
Agreements 427,000,000
- -----------------------------------------------------------------------------
U.S. TREASURY NOTES - 1.20%
6.50% 09/30/96 25,000 25,029,024
- -----------------------------------------------------------------------------
Total U.S. Treasury Notes 25,029,024
- -----------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 922,977,834
- -----------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS -
56.09%(e)
Daiwa Securities America,
Inc.(f)
5.24% 09/03/96 $ 7,446 $ 7,446,003
- ---------------------------------------------------------------
Dean Witter Reynolds
Inc.(g)
5.30% 09/03/96 100,000 100,000,000
- ---------------------------------------------------------------
Goldman, Sachs, & Co.(h)
5.31% 09/03/96 300,000 300,000,000
- ---------------------------------------------------------------
HSBC Securities, Inc(i)
5.28% 09/03/96 104,000 104,000,000
- ---------------------------------------------------------------
Morgan Stanley Group,
Inc.(j)
5.28% 09/03/96 104,000 104,000,000
- ---------------------------------------------------------------
Nesbitt Burns Securities,
Inc.(k)
5.26% -- 104,000 104,000,000
- ---------------------------------------------------------------
Nikko Securities Co.,
Ltd. (l)
5.30% 09/03/96 200,000 200,000,000
- ---------------------------------------------------------------
Nomura Securities
International, Inc.(m)
5.27% -- 93,000 93,000,000
- ---------------------------------------------------------------
Smith Barney, Inc.(n)
5.28% 09/03/96 54,000 54,000,000
- ---------------------------------------------------------------
UBS Securities LLC.(o)
5.26% 09/03/96 104,000 104,000,000
- ---------------------------------------------------------------
Total Repurchase
Agreements 1,170,446,003
- ---------------------------------------------------------------
TOTAL INVESTMENTS -
100.31% 2,093,423,837(p)
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES - (0.31%) (6,479,515)
- ---------------------------------------------------------------
NET ASSETS - 100.00% $2,086,944,322
===============================================================
</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.
Rates shown are the rates in effect on August 31, 1996.
(c) The Portfolio may demand prepayment of notes purchased under the Master
Note Agreement upon seven calendar days' notice. Interest rates on master
notes are redetermined periodically. Rates shown are the rates in effect on
August 31, 1996.
(d) Master Note Purchase Agreement may be terminated by either party upon three
business days' notice, at which time all amounts outstanding under the
notes purchased under the Master Note Agreement will become payable.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on August 31, 1996.
(e) 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.
(f) Joint repurchase agreement entered into on 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.
4
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS-CONTINUED
(g) Entered into on 08/30/96 with a maturing value of $100,058,889.
Collateralized by $148,909,138 U.S. Government Agency obligations, 0% to
9.50% due 02/03/97 to 01/01/31.
(h) Entered into on 08/30/96 with a maturing value of $300,177,000.
Collateralized by $589,000,590 U.S. Government Agency obligations, 5.953%
to 8.00% due 08/01/23 to 05/01/35.
(i) Joint repurchase agreement entered into on 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.
(j) Joint repurchase agreement entered into on 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.
(k) Open joint repurchase agreement entered into on 04/16/96; however either
party may terminate the agreement upon demand. Interests 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 08/15/25.
(l) Joint repurchase agreement entered into on 08/30/96 with a maturing value
of $300,176,666. Collateralized by $343,795,645 U.S. Government Agency
obligations, 5.834% to 8.00% due 04/01/18 to 09/01/26.
(m) Open joint repurchase agreement entered into on 07/16/96; however either
party may terminate the agreement upon demand. Interests 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 by
$2,075,000 U.S. Treasury obligations, 6.25% to 8.875% due 11/15/97 to
08/15/26.
(n) Joint repurchase agreement entered into on 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 by $18,291,000 U.S.
Treasury Bill, due 11/15/04.
(o) Joint repurchase agreement entered into on 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.
(p) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $ 922,977,834
- ------------------------------------------------------------------------
Repurchase agreements 1,170,446,003
- ------------------------------------------------------------------------
Interest receivable 3,398,555
- ------------------------------------------------------------------------
Investment for deferred compensation plan 22,873
- ------------------------------------------------------------------------
Other assets 28,483
- ------------------------------------------------------------------------
Total assets 2,096,873,748
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 9,743,428
- ------------------------------------------------------------------------
Deferred compensation 22,873
- ------------------------------------------------------------------------
Accrued advisory fees 22,846
- ------------------------------------------------------------------------
Accrued distribution fees 13,597
- ------------------------------------------------------------------------
Accrued directors' fees 2,114
- ------------------------------------------------------------------------
Accrued administrative services fees 5,249
- ------------------------------------------------------------------------
Accrued transfer agent fees 16,177
- ------------------------------------------------------------------------
Accrued operating expenses 103,142
- ------------------------------------------------------------------------
Total liabilities 9,929,426
- ------------------------------------------------------------------------
NET ASSETS $2,086,944,322
========================================================================
NET ASSETS:
Institutional Class $1,988,754,678
========================================================================
Cash Management Class $ 53,209,043
========================================================================
Private Investment Class $ 44,980,601
========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Institutional Class 1,990,405,063
========================================================================
Cash Management Class 53,254,529
========================================================================
Private Investment Class 45,017,927
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $99,543,502
- ------------------------------------------------------------------
EXPENSES:
Advisory
fees 2,687,358
- ------------------------------------------------------------------
Custodian fees 72,524
- ------------------------------------------------------------------
Administrative services fees 52,710
- ------------------------------------------------------------------
Distribution fees (Note 2) 65,408
- ------------------------------------------------------------------
Directors' fees and expenses 15,925
- ------------------------------------------------------------------
Filing fees 196,512
- ------------------------------------------------------------------
Transfer agent fees 134,459
- ------------------------------------------------------------------
Other 88,733
- ------------------------------------------------------------------
Total expenses 3,313,629
- ------------------------------------------------------------------
Less expenses assumed by advisor (2,679,024)
- ------------------------------------------------------------------
Net expenses 634,605
- ------------------------------------------------------------------
Net investment income 98,908,897
- ------------------------------------------------------------------
Net realized gain (loss) on sales of investments (1,596,067)
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $97,312,830
==================================================================
</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 $ 98,908,897 $ 92,913,637
- ----------------------------------------------------------------------------
Net realized gain (loss) on sales of
investments (1,596,067) (74,934)
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 97,312,830 92,838,703
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (98,908,897) (92,913,637)
- ----------------------------------------------------------------------------
Capital stock transactions -- net 801,077,731 259,187,785
- ----------------------------------------------------------------------------
Net increase in net assets 799,481,664 259,112,851
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,287,462,658 1,028,349,807
- ----------------------------------------------------------------------------
End of period $2,086,944,322 $1,287,462,658
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $2,088,677,519 $1,287,599,788
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investment securities (1,733,197) (137,130)
- ----------------------------------------------------------------------------
$2,086,944,322 $1,287,462,658
============================================================================
</TABLE>
See Notes to Financial Statements.
7
<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 Liquid Assets Portfolio and the Prime Portfolio. The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Liquid Assets
Portfolio (the "Portfolio"). The Portfolio consists of three different classes
of shares: the Institutional Class, the Private Investment Class and the Cash
Management Class. Matters affecting each class are voted on exclusively by the
shareholders of each class. The Portfolio's objective is to provide as high a
level of current income as is consistent with the preservation of capital and
liquidity.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
A. Security Valuations - The Portfolio invests only in securities which have
maturities of 397 days or less. The securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter assumes a
constant amortization to maturity of any discount or premium.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
discounts on investments, is accrued daily. Dividends to shareholders are
declared daily and are paid on the first business day of the following
month.
C. Federal Income Taxes - The Portfolio intends to comply with the requirements
of the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Portfolio has a capital
loss carryforward of $1,733,197 (which may be carried forward to offset
future taxable gains, if any) which expires, if not previously utilized,
through the year 2004. The Portfolio cannot distribute capital gains to
shareholders until the tax loss carryforwards have been utilized.
D. Expenses - Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses which are applicable to
more than one class, e.g., advisory fees, are allocated among them.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM
receives a fee, paid monthly, with respect to the Portfolio at the annual rate
of 0.15% of the average daily net assets of the Portfolio.
AIM will, if necessary, reduce its fee for any fiscal year to the extent
required so that the amount of ordinary expenses of the Portfolio (excluding
interest, taxes, brokerage commissions and extraordinary expenses) paid or
incurred by the Portfolio for such fiscal year does not exceed the applicable
expense limitations imposed by the state securities regulations in any state in
which the Portfolio's shares are qualified for sale. During the year ended
August 31, 1996, AIM voluntarily waived fees of $2,562,094 on the Portfolio and
voluntarily reimbursed expenses of $116,930.
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 $52,710 for such services.
8
<PAGE>
The Portfolio, pursuant to a transfer agency and service agreement, has agreed
to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Portfolio. During the year ended
August 31, 1996, the Portfolio paid AIFS $133,085 for such services.
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund has adopted a master distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class and the Cash Management Class of the Portfolio. The Plan
provides that the Private Investment Class and Cash Management Class pay FMC up
to a maximum annual rate of 0.50% and 0.10%, respectively, of the average daily
net assets attributable to such class. Of this amount, the Fund may pay an
asset-based sales charge to FMC and the Fund may pay a service fee of 0.25% and
0.10% of the average daily net assets, respectively, of each of the Private
Investment Class and the Cash Management Class, to selected banks, broker-
dealers and other financial institutions who offer continuing personal
shareholder services to their customers who purchase and own shares of the
Private Investment Class or the Cash Management Class. Any amounts not paid as
a service fee under such Plan would constitute an asset-based sales charge.
During the year ended August 31, 1996, the Private Investment Class and the
Cash Management Class accrued as compensation to FMC amounts of $54,941 and
$10,467, respectively, 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 $7,775
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 51,676,611,824 $51,676,611,824 32,408,905,435 $32,408,905,435
- ----------------------------------------------------------------------------------------------
Cash Management Class* 320,121,330 320,121,330 -- --
- ----------------------------------------------------------------------------------------------
Private Investment
Class** 136,803,186 136,803,186 -- --
- ----------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 4,477,681 4,477,681 2,458,920 2,458,920
- ----------------------------------------------------------------------------------------------
Cash Management Class* 283,906 283,906 -- --
- ----------------------------------------------------------------------------------------------
Private Investment
Class** 727,956 727,956 -- --
- ----------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (50,978,284,230) (50,978,284,230) (32,152,176,570) (32,152,176,570)
- ----------------------------------------------------------------------------------------------
Cash Management Class* (267,150,707) (267,150,707) -- --
- ----------------------------------------------------------------------------------------------
Private Investment
Class** (92,513,215) (92,513,215) -- --
- ----------------------------------------------------------------------------------------------
Net increase 801,077,731 $ 801,077,731 259,187,785 $ 259,187,785
==============================================================================================
</TABLE>
* The Cash Management Class commenced operations on January 17, 1996.
** The Private Investment Class commenced operations on February 16, 1996.
9
<PAGE>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of capital stock
outstanding of the Private Investment Class during the period February 16, 1996
(date operations commenced) through August 31, 1996.
<TABLE>
<CAPTION>
AUGUST 31,
1996
----------
<S> <C>
Net asset value, beginning of period $ 1.00
- ---------------------------------------------------- -------
Income from investment operations:
Net investment income 0.03
- ---------------------------------------------------- -------
Less distributions:
Dividends from net investment income (0.03)
- ---------------------------------------------------- -------
Net asset value, end of period $ 1.00
==================================================== =======
Total return 5.10%(a)
==================================================== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $44,981
==================================================== =======
Ratio of expenses to average net assets 0.32%(b)
==================================================== =======
Ratio of net investment income to average net assets 5.04%(b)
==================================================== =======
</TABLE>
(a) Annualized.
(b) After waiver of advisory fees, distribution fees and expense
reimbursements. Ratios are annualized and based on average net assets of
$33,852,756. Annualized ratios of expenses and net investment income to
average net assets prior to waivers and reimbursements are 0.69% and 4.67%,
respectively.
10
<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 Liquid
Assets 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 the period February 16, 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Liquid Assets Portfolio as of August 31, 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
February 16, 1996 (date operations commenced) through August 31, 1996, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
11
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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 Liquid Assets
Gary T. Crum Sr. Vice President 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
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