<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of Mixed signals from a vigorous economy were the
Charles T. Bauer, chief focus for fixed-income markets during most
Chairman of the of the past year. Although the Federal Reserve
LETTER Board of The Fund Board (the Fed) raised interest rates only once
TO OUR APPEARS HERE] during the fiscal year covered by this report,
SHAREHOLDERS the period was marked by considerable
fluctuation in the money markets.
In March 1997, the Fed raised the key short-term target, namely
the federal funds rate, from 5.25% to 5.50%. That action was in
response to concern about the inflationary potential of strong
economic growth during the last quarter of 1996 and the first
quarter of 1997. Short-term yields rose as markets anticipated
another increase in interest rates at the Fed's next meeting in
May.
But when signs of a slowing economy appeared, the Fed decided
not to raise rates further in May. Money market yields fell
significantly, reflecting changed expectations of near-term
interest rate stability. In fact, the federal funds rate remained
unchanged from March through Short-Term Investments Co. Prime
Portfolio's August 31 fiscal year-end.
The economy continued to display considerable resilience,
growing at a 3.3% annual rate during the second quarter of 1997.
Though there were no outward signs of inflation, the extension of
a strong growth pattern heightened uncertainty about Fed policy,
and that led to increased volatility in the money markets.
YOUR INVESTMENT PORTFOLIO
As of August 31, 1997, performance of the Institutional Class of
the Portfolio compared very favorably with performance reported
for comparative indexes, as shown in Table 1.
The Institutional Class also ranked near the top in its Lipper
category of comparable institutional money market funds for the
one-, three-, five-, and 10-year periods ended August 31, 1997,
as shown in Table 2.
<TABLE>
<CAPTION>
Table 1: Yields as of 8/31/97
Average Seven-Day
Monthly Yield Yield
<S> <C> <C> <C>
Prime Portfolio
Institutional Class 5.53% 5.56%
IBC Money Fund Averages(TM) -
First-Tier Institutional Only 5.32% 5.33%
IBC Money Fund Averages(TM) -
Total Institutional Only 5.23% 5.25%
- -----------------------------------------------------------------------------------------
Table 2: Lipper Rankings as of 8/31/97
# of Funds in
Prime Portfolio Institutional Money Percentile
Period Rank Market Category Rank
1 Year 15 169 9%
3 Years 7 133 6%
5 Years 4 85 4%
10 Years 4 31 13%
15 Years 1 12 8%
Fund percentage rankings are based on total returns and are vs. all
institutional money market funds tracked by Lipper Analytical Services, Inc.,
excluding sales charges and including fees and expenses. Lipper Analytical
Services, Inc. is an independent mutual fund performance monitor. Past
performance cannot guarantee comparable future results.
- -----------------------------------------------------------------------------------------
</TABLE>
(continued)
<PAGE>
This excellent record can be attributed to the Portfolio's
disciplined approach of maintaining a laddered 60-day maximum
maturity schedule. This structure enabled the Portfolio to
respond to higher interest rates more quickly than funds with
longer maturity structures. The Portfolio's weighted average
maturity was maintained in the 15- to 20-day range, during the
fiscal year. At the close of the fiscal year, the weighted
average maturity stood at 18 days.
The Prime 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. 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.
The Portfolio holds the highest credit quality ratings given by
two widely known credit-rating agencies: AAAm from Standard &
Poor's Corporation and Aaa from Moody's Investors Service, Inc.
The ratings are historical and are based on an analysis of the
Portfolio's credit quality, composition, management, and weekly
portfolio reviews.
Net assets of the Institutional Class stood at $5.59 billion as
of August 31, 1997, up from $5.26 billion as of August 31, 1996.
OUTLOOK FOR THE FUTURE
As the reporting period closed, the general expectation was that
the economy would continue to grow at a sustainable annual pace
of 2% to 3% and that inflation would remain under control.
However, underlying strength in various economic indicators,
including consumer spending and capital expenditures by
companies, signals the potential for faster growth, which could
trigger higher short-term rates later this year. This uncertainty
could cause interest rates to remain volatile through the close
of 1997.
The Portfolio will continue to maintain a relatively short
maturity structure, remaining flexible to take advantage of any
sudden rise in market yields or further rate increases by the
Fed.
We are pleased to send you this report concerning your
investment. AIM remains committed to the primary goals of safety,
liquidity and yield in institutional fund management. We also are
committed to customer service and 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
2
<PAGE>
AVERAGE MONTHLY YIELD COMPARISON
12 months ended 8/31/97 (Yields are average monthly yields for the
month-ends shown)
<TABLE>
<CAPTION>
IBC Money Fund Averages(TM) - IBC Money Fund Averages(TM) - Short-Term Investments Co.
Total Institutions Only First Tier Institutions Only Prime Portfolio Institutional Class
<S> <C> <C> <C>
9/96 5.01% 5.10% 5.31%
5.00 5.09 5.28
11/96 5.04 5.10 5.30
5.04 5.11 5.35
1/97 5.12 5.12 5.34
5.01 5.10 5.28
3/97 5.04 5.11 5.31
5.14 5.22 5.43
5/97 5.17 5.28 5.51
5.20 5.32 5.55
7/97 5.20 5.32 5.53
8/97 5.20 5.32 5.53
</TABLE>
WEIGHTED AVERAGE MATURITY COMPARISON
12 months ended 8/31/97
<TABLE>
<CAPTION>
IBC Money Fund Averages(TM) IBC Money Fund Averages(TM)- Short-Term Investments Co.
Total Institutions Only First Tier Institutions Only Prime Portfolio Institutional Class
<S> <C> <C> <C>
9/96 45 45 13
47 47 22
11/96 46 48 18
46 47 17
1/97 45 47 19
44 49 21
3/97 45 49 16
46 48 17
5/97 47 48 16
47 48 17
7/97 48 50 23
8/97 48 49 18
</TABLE>
Source: IBC Financial Data, Inc. IBC Money Fund Report--Registered Trademark--
for weighted average maturities; IBC Money Fund Insight--Registered Trademark--
for average monthly yields.
3
<PAGE>
SCHEDULE OF INVESTMENTS
August 31, 1997
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 78.34%(a)
BASIC INDUSTRY - 3.14%
CHEMICALS - 0.29%
Bayer Corp.
5.50% 09/09/97 $ 20,000 $ 19,975,578
- ----------------------------------------------------------------------
METAL MINING - 0.58%
U.S. Borax, Inc.
5.51% 10/24/97 20,000 19,837,761
- ----------------------------------------------------------------------
5.54% 10/28/97 20,000 19,824,567
- ----------------------------------------------------------------------
39,662,328
- ----------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 2.27%
Weyerhaeuser Co.
5.50% 09/25/97 33,000 32,879,000
- ----------------------------------------------------------------------
Weyerhaeuser Real Estate Co.
5.48% 09/04/97 18,000 17,991,780
- ----------------------------------------------------------------------
5.50% 09/19/97 15,000 14,958,750
- ----------------------------------------------------------------------
5.52% 09/22/97 50,000 49,839,000
- ----------------------------------------------------------------------
5.50% 10/01/97 20,000 19,908,333
- ----------------------------------------------------------------------
5.50% 10/02/97 20,000 19,905,278
- ----------------------------------------------------------------------
155,482,141
- ----------------------------------------------------------------------
Total Basic Industry 215,120,047
- ----------------------------------------------------------------------
BUSINESS SERVICES - 1.09%
COMPUTER SOFTWARE & SERVICES - 1.09%
First Data Corp.
5.50% 09/03/97 30,000 29,990,833
- ----------------------------------------------------------------------
5.51% 09/23/97 25,000 24,915,820
- ----------------------------------------------------------------------
5.50% 10/21/97 20,000 19,847,222
- ----------------------------------------------------------------------
Total Business Services 74,753,875
- ----------------------------------------------------------------------
CAPITAL GOODS - 4.39%
COMPUTERS & OFFICE EQUIPMENT - 0.59%
Electronic Data Systems Corp.
5.50% 09/08/97 40,000 39,957,222
- ----------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.25%
Siemens Capital Corp.
5.47% 09/30/97 15,000 14,933,904
- ----------------------------------------------------------------------
Sony Capital Corp.
5.52% 09/12/97 50,000 49,915,743
- ----------------------------------------------------------------------
5.50% 10/03/97 30,000 29,853,333
- ----------------------------------------------------------------------
5.52% 10/07/97 30,000 29,834,400
- ----------------------------------------------------------------------
5.50% 10/09/97 30,000 29,825,833
- ----------------------------------------------------------------------
154,363,213
- ----------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
CAPITAL GOODS - (continued)
MACHINERY - 1.55%
Deere (John) Capital Corp.
5.49% 09/24/97 $ 25,000 $ 24,912,313
- ------------------------------------------------------------------
Dover Corp.
5.50% 09/23/97 23,000 22,922,694
- ------------------------------------------------------------------
5.55% 10/07/97 33,000 32,816,850
- ------------------------------------------------------------------
5.55% 10/10/97 26,000 25,843,675
- ------------------------------------------------------------------
106,495,532
- ------------------------------------------------------------------
Total Capital Goods 300,815,967
- ------------------------------------------------------------------
CONSUMER DURABLES - 10.12%
AUTOMOBILE - 10.12%
Daimler-Benz North America Corp.
5.52% 09/19/97 27,000 26,925,480
- ------------------------------------------------------------------
5.48% 09/23/97 35,000 34,882,789
- ------------------------------------------------------------------
5.50% 10/03/97 25,000 24,877,778
- ------------------------------------------------------------------
5.52% 10/08/97 15,000 14,914,900
- ------------------------------------------------------------------
5.50% 10/14/97 50,000 49,671,528
- ------------------------------------------------------------------
5.51% 10/20/97 25,000 24,812,507
- ------------------------------------------------------------------
5.54% 10/22/97 30,000 29,764,550
- ------------------------------------------------------------------
Ford Motor Credit Co.
5.49% 09/26/97 50,000 49,809,375
- ------------------------------------------------------------------
5.49% 09/30/97 100,000 99,557,750
- ------------------------------------------------------------------
5.49% 10/06/97 50,000 49,733,125
- ------------------------------------------------------------------
Hertz Corp.
5.50% 09/12/97 50,000 49,915,972
- ------------------------------------------------------------------
5.50% 09/17/97 35,000 34,914,444
- ------------------------------------------------------------------
5.50% 10/03/97 35,000 34,828,889
- ------------------------------------------------------------------
Toyota Motor Credit Corp.
5.49% 09/15/97 25,000 24,946,625
- ------------------------------------------------------------------
5.50% 09/19/97 50,000 49,862,500
- ------------------------------------------------------------------
5.48% 09/22/97 20,000 19,936,066
- ------------------------------------------------------------------
5.48% 09/26/97 35,000 34,866,806
- ------------------------------------------------------------------
5.49% 10/03/97 20,000 19,902,400
- ------------------------------------------------------------------
5.50% 10/10/97 20,000 19,880,833
- ------------------------------------------------------------------
Total Consumer Durables 694,004,317
- ------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
CONSUMER NONDURABLES - 6.26%
BEVERAGES - 1.85%
Brown-Forman Corp.
5.50% 09/16/97 $ 11,100 $ 11,074,562
- ---------------------------------------------------------------------------
PepsiCo, Inc
5.47% 09/11/97 49,000 48,925,547
- ---------------------------------------------------------------------------
5.47% 09/17/97 50,000 49,878,444
- ---------------------------------------------------------------------------
5.52% 10/03/97 17,000 16,916,587
- ---------------------------------------------------------------------------
126,795,140
- ---------------------------------------------------------------------------
DRUGS - 2.01%
Abbott Laboratories
5.46% 09/18/97 25,000 24,935,542
- ---------------------------------------------------------------------------
Eli Lilly & Co.
5.48% 09/08/97 30,000 29,968,033
- ---------------------------------------------------------------------------
Pfizer Inc.
5.49% 09/09/97 43,000 42,947,540
- ---------------------------------------------------------------------------
5.48% 09/29/97 40,000 39,829,511
- ---------------------------------------------------------------------------
137,680,626
- ---------------------------------------------------------------------------
FOOD PROCESSING - 1.33%
Campbell Soup Co.
5.49% 09/24/97 22,000 21,922,835
- ---------------------------------------------------------------------------
Heinz (H.J.) Co.
5.48% 09/16/97 15,000 14,965,750
- ---------------------------------------------------------------------------
5.50% 09/22/97 29,200 29,106,317
- ---------------------------------------------------------------------------
5.47% 09/29/97 26,000 25,889,384
- ---------------------------------------------------------------------------
91,884,286
- ---------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 0.30%
Kimberly-Clark Corp.
5.48% 09/22/97 20,500 20,434,468
- ---------------------------------------------------------------------------
PUBLISHING (NEWSPAPERS) - 0.44%
Gannett Co., Inc.
5.50% 09/05/97 30,000 29,981,667
- ---------------------------------------------------------------------------
PUBLISHING (EXCLUDING NEWSPAPERS) - 0.33%
Donnelley (R.R.) & Sons Company
5.50% 09/03/97 22,500 22,493,125
- ---------------------------------------------------------------------------
Total Consumer Nondurables 429,269,312
- ---------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
ENERGY - 1.65%
OIL & GAS - 1.65%
ARCO Coal Australia Inc.
5.50% 09/17/97 $ 24,856 $ 24,795,241
- ------------------------------------------------------------------------
Exxon Imperial U.S., Inc.
5.47% 09/11/97 38,325 38,266,767
- ------------------------------------------------------------------------
Koch Industries, Inc.
5.46% 09/10/97 50,000 49,931,750
- ------------------------------------------------------------------------
Total Energy 112,993,758
- ------------------------------------------------------------------------
FINANCIAL - 47.23%
ASSET-BACKED SECURITIES - 24.21%
Asset Securitization Cooperative Corp.
5.51% 09/16/97 30,000 29,931,125
- ------------------------------------------------------------------------
5.53% 09/23/97 60,000 59,797,234
- ------------------------------------------------------------------------
5.52% 09/24/97 30,000 29,894,200
- ------------------------------------------------------------------------
5.53% 09/26/97 40,000 39,846,389
- ------------------------------------------------------------------------
5.49% 09/29/97 40,000 39,829,200
- ------------------------------------------------------------------------
Ciesco, L.P.
5.52% 09/10/97 20,000 19,972,400
- ------------------------------------------------------------------------
Clipper Receivables Corp.
5.52% 09/30/97 50,000 49,777,667
- ------------------------------------------------------------------------
Corporate Asset Funding Co., Inc.
5.52% 09/10/97 50,000 49,931,000
- ------------------------------------------------------------------------
5.52% 09/25/97 50,000 49,816,000
- ------------------------------------------------------------------------
5.54% 10/07/97 50,000 49,723,000
- ------------------------------------------------------------------------
Delaware Funding Corp.
5.53% 09/11/97 17,080 17,053,763
- ------------------------------------------------------------------------
5.52% 09/12/97 40,363 40,294,921
- ------------------------------------------------------------------------
5.50% 09/22/97 35,887 35,771,863
- ------------------------------------------------------------------------
Eiger Capital Corp.
5.53% 09/03/97 25,089 25,081,292
- ------------------------------------------------------------------------
Falcon Asset Securitization Corp.
5.52% 09/18/97 30,094 30,015,555
- ------------------------------------------------------------------------
5.53% 10/21/97 40,000 39,692,778
- ------------------------------------------------------------------------
Matterhorn Capital Corp.
5.52% 09/23/97 25,000 24,915,667
- ------------------------------------------------------------------------
5.53% 09/23/97 25,530 25,443,723
- ------------------------------------------------------------------------
Monte Rosa Capital Corp.
5.55% 09/02/97 14,952 14,949,695
- ------------------------------------------------------------------------
5.52% 09/04/97 10,000 9,995,400
- ------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET-BACKED SECURITIES - (CONTINUED)
Monte Rosa Capital Corp. - (continued)
5.55% 09/04/97 $ 25,000 $ 24,988,438
- ------------------------------------------------------------------------
5.54% 09/05/97 22,071 22,057,414
- ------------------------------------------------------------------------
5.51% 09/16/97 30,000 29,931,125
- ------------------------------------------------------------------------
5.51% 09/19/97 40,000 39,889,800
- ------------------------------------------------------------------------
5.52% 09/24/97 30,000 29,894,200
- ------------------------------------------------------------------------
5.54% 09/25/97 33,500 33,376,273
- ------------------------------------------------------------------------
5.52% 10/08/97 33,000 32,812,780
- ------------------------------------------------------------------------
5.54% 10/09/97 34,138 33,938,369
- ------------------------------------------------------------------------
5.56% 10/10/97 40,000 39,759,067
- ------------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.52% 09/10/97 30,850 30,807,427
- ------------------------------------------------------------------------
5.53% 09/10/97 31,625 31,581,278
- ------------------------------------------------------------------------
5.55% 10/08/97 50,000 49,714,792
- ------------------------------------------------------------------------
5.54% 10/15/97 25,200 25,029,368
- ------------------------------------------------------------------------
Receivables Capital Corp.
5.53% 09/05/97 19,483 19,471,030
- ------------------------------------------------------------------------
5.54% 09/05/97 30,000 29,981,533
- ------------------------------------------------------------------------
5.50% 09/09/97 25,000 24,969,444
- ------------------------------------------------------------------------
5.52% 09/11/97 30,133 30,086,796
- ------------------------------------------------------------------------
5.53% 09/12/97 50,000 49,915,514
- ------------------------------------------------------------------------
5.53% 09/15/97 9,735 9,714,064
- ------------------------------------------------------------------------
5.52% 09/16/97 30,000 29,931,000
- ------------------------------------------------------------------------
5.54% 09/22/97 25,000 24,919,208
- ------------------------------------------------------------------------
5.51% 10/16/97 45,706 45,391,200
- ------------------------------------------------------------------------
5.53% 10/23/97 30,210 29,968,689
- ------------------------------------------------------------------------
Sheffield Receivables Corp.
5.54% 09/17/97 23,400 23,342,384
- ------------------------------------------------------------------------
5.52% 09/18/97 27,900 27,827,274
- ------------------------------------------------------------------------
5.54% 09/18/97 44,400 44,283,844
- ------------------------------------------------------------------------
5.50% 09/29/97 19,750 19,665,514
- ------------------------------------------------------------------------
5.52% 09/29/97 27,200 27,083,221
- ------------------------------------------------------------------------
5.52% 09/30/97 50,000 49,777,667
- ------------------------------------------------------------------------
5.54% 10/08/97 40,000 39,772,244
- ------------------------------------------------------------------------
5.54% 10/14/97 28,000 27,814,718
- ------------------------------------------------------------------------
1,659,428,547
- ------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL--(continued)
BANKING - 0.73%
Bank of America
5.50% 09/15/97 $ 50,000 $ 49,893,056
- ------------------------------------------------------------------------------
BROKERAGE/INVESTMENTS - 9.46%
Bear, Stearns & Co. Inc.
5.51% 09/09/97 50,000 49,938,778
- ------------------------------------------------------------------------------
5.53% 09/29/97 30,000 29,870,967
- ------------------------------------------------------------------------------
5.52% 10/27/97 25,000 24,785,333
- ------------------------------------------------------------------------------
CS First Boston, Inc.
5.52% 09/09/97 20,000 19,975,467
- ------------------------------------------------------------------------------
5.52% 09/11/97 40,000 39,938,667
- ------------------------------------------------------------------------------
Goldman, Sachs & Co.
5.54% 09/05/97 50,000 49,969,222
- ------------------------------------------------------------------------------
Morgan (J.P.) Securities, Inc.
5.50% 09/15/97 30,000 29,935,833
- ------------------------------------------------------------------------------
5.50% 09/29/97 50,000 49,786,111
- ------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.
5.50% 09/02/97 50,000 49,992,361
- ------------------------------------------------------------------------------
Smith Barney Inc.
5.50% 09/03/97 50,000 49,984,722
- ------------------------------------------------------------------------------
5.49% 09/04/97 50,000 49,977,125
- ------------------------------------------------------------------------------
5.49% 09/05/97 30,000 29,981,700
- ------------------------------------------------------------------------------
5.51% 09/15/97 25,000 24,946,431
- ------------------------------------------------------------------------------
5.51% 09/16/97 50,000 49,885,208
- ------------------------------------------------------------------------------
5.52% 09/17/97 50,000 49,877,334
- ------------------------------------------------------------------------------
5.52% 10/02/97 20,000 19,904,933
- ------------------------------------------------------------------------------
5.53% 10/09/97 30,000 29,824,883
- ------------------------------------------------------------------------------
648,575,075
- ------------------------------------------------------------------------------
BUSINESS CREDIT - 0.92%
CIT Group Holdings, Inc.
5.50% 09/25/97 50,000 49,816,667
- ------------------------------------------------------------------------------
National Rural Utilities Cooperative Finance
Corp.
5.48% 09/19/97 13,000 12,964,380
- ------------------------------------------------------------------------------
62,781,047
- ------------------------------------------------------------------------------
INSURANCE - 1.61%
Metlife Funding, Inc.
5.47% 09/16/97 35,287 35,206,575
- ------------------------------------------------------------------------------
5.51% 10/03/97 25,596 25,470,636
- ------------------------------------------------------------------------------
Prudential Funding Corp.
5.49% 09/02/97 50,000 49,992,375
- ------------------------------------------------------------------------------
110,669,586
- ------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL--(continued)
LEASING COMPANIES - 1.54%
International Lease Finance Corp.
5.49% 09/08/97 $ 73,000 $ 72,922,073
- -------------------------------------------------------------------
5.50% 10/06/97 32,500 32,326,215
- -------------------------------------------------------------------
105,248,288
- -------------------------------------------------------------------
PERSONAL CREDIT - 5.86%
American Express Credit Corp.
5.48% 09/18/97 50,000 49,870,611
- -------------------------------------------------------------------
5.48% 09/30/97 75,000 74,668,917
- -------------------------------------------------------------------
5.52% 10/27/97 40,000 39,656,533
- -------------------------------------------------------------------
Associates Corp. of North America
5.62% 09/02/97 40,000 39,993,756
- -------------------------------------------------------------------
5.52% 09/08/97 25,000 24,973,167
- -------------------------------------------------------------------
5.50% 09/24/97 50,000 49,824,305
- -------------------------------------------------------------------
AVCO Financial Services, Inc.
5.51% 09/24/97 35,000 34,876,790
- -------------------------------------------------------------------
5.49% 09/26/97 45,000 44,828,438
- -------------------------------------------------------------------
5.51% 10/22/97 43,000 42,664,349
- -------------------------------------------------------------------
401,356,866
- -------------------------------------------------------------------
MISCELLANEOUS - 0.36%
USAA Capital Corp.
5.48% 09/04/97 25,000 24,988,583
- -------------------------------------------------------------------
MULTIPLE INDUSTRY - 2.54%
General Electric Capital Corp.
5.625% 09/02/97 25,000 24,996,094
- -------------------------------------------------------------------
5.52% 09/04/97 50,000 49,977,000
- -------------------------------------------------------------------
5.50% 10/03/97 50,000 49,755,555
- -------------------------------------------------------------------
5.52% 10/27/97 50,000 49,570,667
- -------------------------------------------------------------------
174,299,316
- -------------------------------------------------------------------
Total Financial 3,237,240,364
- -------------------------------------------------------------------
RETAIL - 1.16%
DEPARTMENT STORES - 1.16%
Penney (J.C.) Funding Corp.
5.48% 09/12/97 30,000 29,949,767
- -------------------------------------------------------------------
5.50% 09/26/97 50,000 49,809,028
- -------------------------------------------------------------------
Total Retail 79,758,795
- -------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
UTILITIES - 2.57%
TELEPHONE - 2.57%
GTE Funding Inc.
5.52% 09/02/97 $ 24,403 $ 24,399,258
- ----------------------------------------------------------------------------
5.52% 09/03/97 20,000 19,993,867
- ----------------------------------------------------------------------------
5.52% 09/04/97 13,975 13,968,571
- ----------------------------------------------------------------------------
SBC Communications Capital Corp.
5.47% 09/10/97 30,000 29,958,975
- ----------------------------------------------------------------------------
5.48% 09/15/97 28,000 27,940,329
- ----------------------------------------------------------------------------
5.49% 09/19/97 25,000 24,931,375
- ----------------------------------------------------------------------------
5.49% 09/25/97 35,000 34,871,900
- ----------------------------------------------------------------------------
Total Utilities 176,064,275
- ----------------------------------------------------------------------------
OTHER - 0.73%
DIVERSIFIED - 0.73%
Cargill Inc.
5.47% 09/23/97 25,000 24,916,430
- ----------------------------------------------------------------------------
5.48% 10/17/97 25,000 24,824,945
- ----------------------------------------------------------------------------
Total Other 49,741,375
- ----------------------------------------------------------------------------
Total Commercial Paper 5,369,762,085
- ----------------------------------------------------------------------------
MASTER NOTE AGREEMENTS - 2.56%
Goldman Sachs Group, L.P.
5.625%(b) 10/20/97 71,000 71,000,000
- ----------------------------------------------------------------------------
Merrill Lynch Mortgage Capital Inc.
5.9875%(c) 08/17/98 102,600 102,600,000
- ----------------------------------------------------------------------------
Morgan (J.P.) Securities, Inc.
5.7875%(d) 10/06/97 2,000 2,000,000
- ----------------------------------------------------------------------------
Total Master Note Agreements 175,600,000
- ----------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 5,545,362,085
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 19.56%(e)
Bear, Stearns & Co. Inc.
5.625%(f) -- 60,000 60,000,000
- ----------------------------------------------------------------------------
CIBC Wood Gundy Securities Corp.
5.62%(g) 09/02/97 60,000 60,000,000
- ----------------------------------------------------------------------------
Dean Witter Reynolds Inc.
5.52%(h) 09/02/97 100,000 100,000,000
- ----------------------------------------------------------------------------
Deutche Bank Securities Corp.
5.64%(i) -- 60,000 60,000,000
- ----------------------------------------------------------------------------
Dresdner Securities (USA), Inc.
5.62%(j) 09/02/97 60,000 60,000,000
- ----------------------------------------------------------------------------
Goldman, Sachs & Co.
5.56%(k) 09/02/97 226,100 226,100,475
- ----------------------------------------------------------------------------
5.61%(l) 09/02/97 204,394 204,394,082
- ----------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEEMENTS - (continued)
Greenwich Capital Markets, Inc.
5.62%(m) 09/02/97 $160,000 $ 160,000,000
- ----------------------------------------------------------------------------
HSBC Securities, Inc.
5.64%(n) 09/02/97 85,000 85,000,000
- ----------------------------------------------------------------------------
SBC Capital Markets, Inc.
5.62%(o) 09/02/97 85,000 85,000,000
- ----------------------------------------------------------------------------
Smith Barney Inc.
5.61%(p) -- 40,000 40,000,000
- ----------------------------------------------------------------------------
5.61%(q) 09/02/97 200,000 200,000,000
- ----------------------------------------------------------------------------
Total Repurchase Agreements 1,340,494,557
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.46% 6,885,856,642(r)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (0.46%) (31,146,008)
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $6,854,710,634
============================================================================
</TABLE>
(a) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(b) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon seven business days' prior written notice.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on 08/31/97.
(c) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon two business days' notice. Interest rates on
master notes are redetermined periodically. Rate shown is the rate in
effect on 08/31/97.
(d) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon seven days' notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
08/31/97.
(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) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates are redetermined daily. Collateralized by
$268,177,242 U.S. Government obligations, 0% to 11.50% due 02/01/01 to
09/01/27 with an aggregate market value at 08/31/97 of $208,921,813.
(g) Joint repurchase agreement entered into 08/29/97 with a maturing value of
$200,124,889. Collateralized by $200,585,000 U.S. Government obligations,
5.53% to 7.93% due 02/02/98 to 07/30/07 with an aggregate market value at
08/31/97 of $204,002,656.
(h) Repurchase agreement entered into 08/29/97 with a maturing value of
$100,061,333. Collateralized by $145,600,000 U.S. Government obligations,
0% to 8.55% due 09/04/97 to 06/15/44 with an aggregate market value at
08/31/97 of $102,000,401.
(i) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates are redetermined daily. Collateralized by
$243,062,487 U.S. Government obligations, 0% to 9.00% due 11/24/97 to
08/20/27 with an aggregate market value at 08/31/97 of $204,000,923.
(j) Joint repurchase agreement entered into 08/29/97 with a maturing value of
$200,124,889. Collateralized by $356,015,498 U.S. Government obligations,
0% to 7.778% due 07/01/01 to 02/01/37 with an aggregate market value at
08/31/97 of $204,000,810.
(k) Joint repurchase agreement entered into 08/29/97 with a maturing value of
$750,463,333. Collateralized by $698,212,000 U.S. Government obligations,
4.75% to 14.00% due 02/28/98 to 08/15/25 with an aggregate market value at
08/31/97 of $765,753,716.
(l) Joint repurchase agreement entered into 08/29/97 with a maturing value of
$400,249,333. Collateralized by $403,862,867 U.S. Government obligations,
5.901% to 8.117% due 12/01/17 to 01/01/35 with an aggregate market value at
08/31/97 of $408,000,001.
12
<PAGE>
(m) Joint repurchase agreement entered into 08/29/97 with a maturing value of
$300,187,333. Collateralized by $299,652,416 U.S. Government obligations,
5.50% to 10.00% due 09/01/00 to 06/01/27 with an aggregate market value at
08/31/97 of $306,000,589.
(n) Joint repurchase agreement entered into 08/29/97 with a maturing value of
$300,188,000. Collateralized by $340,004,979 U.S. Government obligations,
0% to 9.00% due 04/15/98 to 11/01/35 with an aggregate market value at
08/31/97 of $306,000,024.
(o) Joint repurchase agreement entered into 08/29/97 with a maturing value of
$300,187,333. Collateralized by $304,538,273 U.S. Government obligations,
6.029% to 9.00% due 06/01/09 to 09/01/36 with an aggregate market value at
08/31/97 of $307,989,473.
(p) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates are redetermined daily. Collateralized by
$124,224,000 U.S. Government obligations, 0% to 8.28% due 03/12/99 to
01/10/25 with an aggregate market value at 08/31/97 of $102,000,492.
(q) Repurchase agreement entered into 08/29/97 with a maturing value of
$200,124,667. Collateralized by $370,666,000 U.S. Government obligations,
0% to 10.70% due 11/24/97 to 07/15/43 with an aggregate market value at
08/31/97 of $204,000,310.
(r) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $5,545,362,085
- ------------------------------------------------------------------------
Repurchase agreements 1,340,494,557
- ------------------------------------------------------------------------
Interest receivable 1,248,628
- ------------------------------------------------------------------------
Investment for deferred compensation plan 79,009
- ------------------------------------------------------------------------
Other assets 961,282
- ------------------------------------------------------------------------
Total assets 6,888,145,561
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 32,767,074
- ------------------------------------------------------------------------
Deferred compensation 79,009
- ------------------------------------------------------------------------
Accrued advisory fees 333,910
- ------------------------------------------------------------------------
Accrued distribution fees 189,175
- ------------------------------------------------------------------------
Accrued transfer agent fees 53,683
- ------------------------------------------------------------------------
Accrued operating expenses 12,076
- ------------------------------------------------------------------------
Total liabilities 33,434,927
- ------------------------------------------------------------------------
NET ASSETS $6,854,710,634
========================================================================
NET ASSETS:
Institutional Class $5,593,043,187
========================================================================
Private Investment Class $ 235,446,842
========================================================================
Personal Investment Class $ 97,215,227
========================================================================
Cash Management Class $ 767,304,427
========================================================================
Resource Class $ 161,700,951
========================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Institutional Class 5,593,048,358
========================================================================
Private Investment Class 235,447,059
========================================================================
Personal Investment Class 97,215,317
========================================================================
Cash Management Class 767,305,136
========================================================================
Resource Class 161,701,102
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
STATEMENT OF OPERATIONS
For the year ended August 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $393,373,373
- -------------------------------------------------------------------
EXPENSES:
Advisory fees 4,007,070
- -------------------------------------------------------------------
Custodian fees 283,138
- -------------------------------------------------------------------
Administrative services fees 114,738
- -------------------------------------------------------------------
Directors' fees and expenses 44,129
- -------------------------------------------------------------------
Transfer agent fees 645,673
- -------------------------------------------------------------------
Filing fees 548,666
- -------------------------------------------------------------------
Distribution fees (Note 2) 2,633,445
- -------------------------------------------------------------------
Other 482,093
- -------------------------------------------------------------------
Total expenses 8,758,952
- -------------------------------------------------------------------
Less: Fee waivers and expense reimbursements (855,442)
- -------------------------------------------------------------------
Net expenses 7,903,510
- -------------------------------------------------------------------
Net investment income 385,469,863
- -------------------------------------------------------------------
Net realized gain on sales of investments 2,155
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $385,472,018
===================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 385,469,863 $ 281,830,371
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 2,155 3,560
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 385,472,018 281,833,931
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (334,619,312) (246,851,973)
- ----------------------------------------------------------------------------
Private Investment Class (11,638,406) (9,968,819)
- ----------------------------------------------------------------------------
Personal Investment Class (4,703,034) (5,550,980)
- ----------------------------------------------------------------------------
Cash Management Class (28,088,448) (16,317,285)
- ----------------------------------------------------------------------------
Resource Class (6,420,663) (3,141,314)
- ----------------------------------------------------------------------------
Capital stock transactions-net 702,760,124 1,950,864,683
- ----------------------------------------------------------------------------
Net increase in net assets 702,762,279 1,950,868,243
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 6,151,948,355 4,201,080,112
- ----------------------------------------------------------------------------
End of period $6,854,710,634 $6,151,948,355
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $6,854,716,972 $6,151,956,848
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investments (6,338) (8,493)
- ----------------------------------------------------------------------------
$6,854,710,634 $6,151,948,355
============================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
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"), with assets, liabilities and operations of each portfolio
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 is a money market fund whose 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 - Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses are allocated among the classes.
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>
During the year ended August 31, 1997, AIM voluntarily reimbursed expenses of
$4,400.
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, 1997,
the Portfolio reimbursed AIM $114,738 for such services.
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, 1997, the Portfolio paid AIFS $645,673 for such services. On
September 19, 1997, the Board of Directors of the Fund approved the appointment
of A I M Fund Services, Inc. ("AFS") as transfer agent of the Fund to be
effective in late 1997 or early 1998.
16
<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 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. 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 each class. During the year ended
August 31, 1997, the Private Investment Class, the Personal Investment Class,
the Cash Management Class and the Resource Class paid $684,755, $480,510,
$421,577 and $195,561, respectively, as compensation under the Plan. FMC waived
fees of $851,042 for the same period. Certain officers and directors of the
Fund are officers of AIM, FMC, AIFS and AFS.
During the year ended August 31, 1997, the Portfolio paid legal fees of
$19,291 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of 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 may invest 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, 1997 and 1996 were
as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 77,017,818,307 $77,017,818,307 47,809,368,885 $47,809,368,885
- --------------------------------------------------------------------------------
Private Investment
Class 1,686,727,915 1,686,727,915 1,712,695,255 1,712,695,255
- --------------------------------------------------------------------------------
Personal Investment
Class 1,399,754,929 1,399,754,929 976,763,335 976,763,335
- --------------------------------------------------------------------------------
Cash Management Class 6,007,746,062 6,007,746,062 2,572,268,560 2,572,268,560
- --------------------------------------------------------------------------------
Resource Class* 2,959,856,289 2,959,856,289 1,501,999,293 1,501,999,293
- --------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 20,826,765 20,826,765 8,231,944 8,231,944
- --------------------------------------------------------------------------------
Private Investment
Class 6,892,975 6,892,975 6,300,025 6,300,025
- --------------------------------------------------------------------------------
Personal Investment
Class 4,636,763 4,636,763 5,517,924 5,517,924
- --------------------------------------------------------------------------------
Cash Management Class 19,021,334 19,021,334 12,713,851 12,713,851
- --------------------------------------------------------------------------------
Resource Class* 3,857,837 3,857,837 892,705 892,705
- --------------------------------------------------------------------------------
Reacquired:
Institutional Class (76,710,204,729) (76,710,204,729) (46,305,697,661) (46,305,697,661)
- --------------------------------------------------------------------------------
Private Investment
Class (1,667,619,183) (1,667,619,183) (1,663,828,112) (1,663,828,112)
- --------------------------------------------------------------------------------
Personal Investment
Class (1,419,820,390) (1,419,820,390) (969,266,851) (969,266,851)
- --------------------------------------------------------------------------------
Cash Management Class (5,766,709,619) (5,766,709,619) (2,272,214,579) (2,272,214,579)
- --------------------------------------------------------------------------------
Resource Class* (2,860,025,131) (2,860,025,131) (1,444,879,891) (1,444,879,891)
- --------------------------------------------------------------------------------
Net increase 702,760,124 $ 702,760,124 1,950,864,683 $ 1,950,864,683
===========================================================================================
</TABLE>
* The Resource Class commenced operations on January 16, 1996.
17
<PAGE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding of the Institutional Class during each of the years in the five-
year period ended August 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
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 0.06 0.04 0.03
- ----------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.06) (0.04) (0.03)
- ----------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ========== ========== ========== ========== ==========
Total return 5.54% 5.64% 5.80% 3.64% 3.20%
======================= ========== ========== ========== ========== ==========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $5,593,043 $5,264,601 $3,752,693 $4,080,753 $4,349,945
======================= ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets 0.09%(a) 0.09% 0.09% 0.08% 0.07%
======================= ========== ========== ========== ========== ==========
Ratio of net investment
income to
average net assets 5.40%(a) 5.48% 5.64% 3.58% 3.15%
======================= ========== ========== ========== ========== ==========
</TABLE>
(a) Ratios are based on average net assets of $6,200,589,926.
18
<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, 1997, 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. 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, 1997 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, 1997, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 3, 1997
================================================================================
SUPPLEMENTAL PROXY INFORMATION -- SHAREHOLDER MEETING
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of the Fund was held on February 7, 1997.
The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Fund and AIM.
(3) To approve the elimination of the fundamental investment policy prohibiting
or restricting investments in other investment companies and/or the
amendment of certain related fundamental investment policies.
(4) Ratification of KPMG Peat Marwick LLP as independent accountants for the
Fund's fiscal year ending August 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES WITHHOLD/
DIRECTOR/MATTER VOTES FOR AGAINST ABSTENTIONS
--------------- ------------- ---------- -----------
<C> <S> <C> <C> <C>
(1) Charles T. Bauer................... 7,945,747,161 N/A 623,551
Bruce L. Crockett.................. 7,945,747,161 N/A 623,551
Owen Daly II....................... 7,945,747,161 N/A 623,551
Carl Frischling.................... 7,945,747,161 N/A 623,551
Robert H. Graham................... 7,945,747,161 N/A 623,551
John F. Kroeger.................... 7,945,747,161 N/A 623,551
Lewis F. Pennock................... 7,945,747,161 N/A 623,551
Ian W. Robinson.................... 7,945,747,161 N/A 623,551
Louis S. Sklar..................... 7,945,747,161 N/A 623,551
(2) Approval of new Investment Advisory
Agreement (Portfolio only)......... 6,351,840,396 2,167,538 1,614,393
(3) Elimination of policy restricting
investments in other investment
companies (Portfolio only)......... 6,245,360,455 69,900,356 11,288,044
(4) KPMG Peat Marwick LLP.............. 7,944,484,460 691,022 1,195,229
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
DIRECTORS
Charles T. Bauer Robert H. Graham Short-Term
Bruce L. Crockett John F. Kroeger Investments Co.
Owen Daly II Lewis F. Pennock (STIC)
Jack Fields Ian W. Robinson
Carl Frischling Louis S. Sklar
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 Institutional ANNUAL
Melville B. Cox Vice President Class REPORT
Karen Dunn Kelley Vice President
J. Abbott Sprague Vice President
P. Michelle Grace Assistant Secretary
Nancy L. Martin Assistant Secretary AUGUST 31, 1997
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 100
Houston, TX 77046
(800) 347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 100
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 100
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 APEARS HERE]
to persons who have received a current prospectus. FUND MANAGEMENT COMPANY
</TABLE>
