<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of During the six months covered by this report,
Charles T. Bauer, the U.S. economy continued to exhibit solid
Chairman of the growth with little or no inflation. Gross
LETTER Board of The Fund domestic product grew at a 3.1% annual rate in
TO OUR APPEARS HERE] the third quarter of 1997 and a 3.7% annual rate
SHAREHOLDERS in the final quarter of the year. Sturdy growth
is expected in the first half of 1998 as well. Inflation was well
controlled, remaining in the 1% to 2% range. As a result, the
Federal Reserve Board (the Fed) kept its key short-term target,
the federal funds rate, at 5.50% throughout the reporting period.
During the last half of 1997, markets focused on the collapse
in several Asian countries' currencies and the potential effects
on the U.S. economy. As Asian economic turmoil continued, fixed-
income markets rallied in anticipation that the Fed would lower
rates to counteract the dampening effects from the Far East
situation. At the close of the reporting period, the markets were
still waiting for the much-anticipated slowdown, and interest
rates had moved up some as the chance of the Fed's lowering rates
was pushed further into the future.
Average Seven-Day
Yield as of 2/28/98 Monthly Yield Yield
Liquid Assets Portfolio
Cash Management Class 5.49% 5.53%
IBC Money Fund Averages(TM) -
First-Tier Institutions Only 5.31% 5.33%
IBC Money Fund Averages(TM) -
Total Institutions Only 5.22% 5.26%
YOUR INVESTMENT PORTFOLIO
Through a combination of short-term cash management vehicles and
selective use of longer maturities to add yield, Short-Term
Investments Co. Liquid Assets Portfolio continued to provide
attractive returns. Weighted average maturity (WAM) was
relatively short for much of the period because of concern that
the Fed might raise interest rates. But as rate increases became
less likely with the downturn in Asian economies, WAM was
lengthened to the 25- to 35-day range. At the close of the
period, WAM was 28 days.
As of February 28, 1998, performance of the Cash Management
Class of the Portfolio compared very favorably with performance
reported for comparative indexes, as shown in the table.
During the period, the Portfolio was assigned a AAAm credit
quality rating, the highest rating given by Standard & Poor's
Corporation, the widely known credit-rating agency.
Net assets of the Cash Management Class stood at $325.29
million as of February 28, 1998, up from $83.50 million as of
August 31, 1997.
The Liquid Assets 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. Using a barbell maturity structure,
portfolio management emphasizes superior credit quality in
purchasing money market securities such as commercial paper and
selected repurchase agreement securities. As with any
(continued)
<PAGE>
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.
OUTLOOK FOR THE FUTURE
As the reporting period closed, the general expectation was that
the economy would continue to grow at a solid pace of around 3%
and then slow somewhat in the second half of 1998 as the effects
of Asia's difficulties take hold. Inflation was expected to
remain tame and the Fed was expected to hold rates steady for the
foreseeable future. In his late-February testimony to Congress,
Fed Chairman Alan Greenspan noted that the deflationary effects
of turmoil in Asia could offset the inflationary pressures from
strong domestic spending and a tight U.S. labor market.
The Portfolio will continue to maintain a relatively short
maturity structure to take advantage of any sudden rise in market
yields. AIM remains committed to the primary goals of safety,
liquidity and yield in institutional fund management.
We are pleased to send you this report concerning your
investment. 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>
SCHEDULE OF INVESTMENTS
February 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 26.42%(a)
BASIC INDUSTRIES - 6.26%
CHEMICALS - 2.50%
Du Pont (E.I.) de Nemours and Co.
5.40% 06/08/98 $ 25,000 $ 24,628,750
- -----------------------------------------------------------------------
Henkel Corp.
5.38% 07/02/98 19,000 18,650,748
- -----------------------------------------------------------------------
5.38% 07/06/98 27,000 26,487,555
- -----------------------------------------------------------------------
5.405% 07/16/98 20,000 19,588,619
- -----------------------------------------------------------------------
5.39% 07/21/98 28,000 27,404,705
- -----------------------------------------------------------------------
116,760,377
- -----------------------------------------------------------------------
METAL MINING - 3.76%
Rio Tinto America, Inc.
5.40% 04/15/98 23,100 22,944,075
- -----------------------------------------------------------------------
5.42% 05/01/98 22,000 21,797,954
- -----------------------------------------------------------------------
5.44% 05/01/98 23,300 23,085,226
- -----------------------------------------------------------------------
5.41% 05/05/98 22,000 21,785,103
- -----------------------------------------------------------------------
5.41% 07/28/98 24,000 23,462,607
- -----------------------------------------------------------------------
5.36% 08/07/98 25,000 24,408,167
- -----------------------------------------------------------------------
5.41% 08/12/98 18,000 17,556,380
- -----------------------------------------------------------------------
U.S. Borax, Inc.
5.48% 04/08/98 7,000 6,959,509
- -----------------------------------------------------------------------
5.48% 04/09/98 5,600 5,566,754
- -----------------------------------------------------------------------
5.44% 04/17/98 8,000 7,943,182
- -----------------------------------------------------------------------
175,508,957
- -----------------------------------------------------------------------
Total Basic Industries 292,269,334
- -----------------------------------------------------------------------
CAPITAL GOODS - 3.35%
ELECTRICAL EQUIPMENT - 2.45%
Hitachi America, Ltd.
5.42% 06/24/98 25,000 24,567,152
- -----------------------------------------------------------------------
5.49% 06/26/98 30,000 29,464,725
- -----------------------------------------------------------------------
5.40% 07/15/98 15,000 14,694,000
- -----------------------------------------------------------------------
5.40% 07/20/98 16,250 15,906,313
- -----------------------------------------------------------------------
Siemens Capital Corp.
5.35% 05/13/98 30,000 29,674,542
- -----------------------------------------------------------------------
114,306,732
- -----------------------------------------------------------------------
MACHINERY - 0.90%
Caterpillar Financial Services Corp.
5.38% 07/20/98 25,000 24,473,208
- -----------------------------------------------------------------------
5.45% 08/24/98 18,000 17,520,400
- -----------------------------------------------------------------------
41,993,608
- -----------------------------------------------------------------------
Total Capital Goods 156,300,340
- -----------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
CONSUMER DURABLES - 0.74%
AUTOMOBILE - 0.74%
Ford Motor Credit Co.
5.49% 04/08/98 $25,000 $ 24,855,125
- -----------------------------------------------------------------------
General Motors Acceptance Corp.
5.42% 06/24/98 10,000 9,826,861
- -----------------------------------------------------------------------
Total Consumer Durables 34,681,986
- -----------------------------------------------------------------------
CONSUMER SERVICES - 0.52%
BROADCAST MEDIA - 0.52%
Scripps (E.W.) Co.
5.42% 06/16/98 25,000 24,597,264
- -----------------------------------------------------------------------
Total Consumer Services 24,597,264
- -----------------------------------------------------------------------
ENERGY - 0.71%
OIL & GAS (INTEGRATED) - 0.71%
Petrofina Delaware, Inc.
5.45% 06/24/98 8,175 8,032,675
- -----------------------------------------------------------------------
Shell 96
5.81% 03/11/98 25,000 25,000,000
- -----------------------------------------------------------------------
Total Energy 33,032,675
- -----------------------------------------------------------------------
FINANCIAL - 14.84%
ASSET-BACKED SECURITIES - 7.45%
Asset Securitization Cooperative Corp.
5.43% 05/08/98 25,000 24,743,582
- -----------------------------------------------------------------------
5.46% 05/14/98 25,000 24,719,417
- -----------------------------------------------------------------------
5.41% 06/15/98 25,000 24,601,764
- -----------------------------------------------------------------------
Delaware Funding Corp.
5.53% 03/06/98 20,185 20,169,497
- -----------------------------------------------------------------------
5.44% 04/20/98 32,584 32,337,810
- -----------------------------------------------------------------------
5.47% 05/13/98 25,000 24,722,701
- -----------------------------------------------------------------------
Falcon Asset Securitization Corp.
5.50% 04/01/98 4,800 4,777,266
- -----------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.47% 05/12/98 25,000 24,726,500
- -----------------------------------------------------------------------
5.50% 05/20/98 37,550 37,091,056
- -----------------------------------------------------------------------
5.43% 06/02/98 7,800 7,690,586
- -----------------------------------------------------------------------
5.40% 06/17/98 20,000 19,676,000
- -----------------------------------------------------------------------
5.43% 07/15/98 4,925 4,823,972
- -----------------------------------------------------------------------
Receivables Capital Corp.
5.66% 03/13/98 50,000 49,905,666
- -----------------------------------------------------------------------
Sheffield Receivables Corp.
5.52% 03/06/98 23,250 23,232,175
- -----------------------------------------------------------------------
5.48% 03/09/98 25,000 24,969,556
- -----------------------------------------------------------------------
348,187,548
- -----------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
BROKERAGE/INVESTMENTS - 2.11%
Credit Suisse First Boston, Inc.
5.49% 06/04/98 $ 25,000 $ 24,637,813
- -----------------------------------------------------------------------------
Salomon Smith Barney Holdings Inc.
5.42% 06/08/98 25,000 24,627,375
- -----------------------------------------------------------------------------
5.41% 07/01/98 25,000 24,541,652
- -----------------------------------------------------------------------------
Smith Barney Holdings, Inc.
5.43% 05/01/98 25,000 24,769,979
- -----------------------------------------------------------------------------
98,576,819
- -----------------------------------------------------------------------------
INSURANCE (PROPERTY & CASUALTY) - 0.42%
A.I. Credit Corp.
5.40% 06/05/98 20,000 19,712,000
- -----------------------------------------------------------------------------
LEASING COMPANIES - 0.53%
International Lease Finance Corp.
5.41% 06/05/98 25,000 24,639,333
- -----------------------------------------------------------------------------
PERSONAL CREDIT - 0.53%
AVCO Financial Services, Inc.
5.43% 06/17/98 25,000 24,592,750
- -----------------------------------------------------------------------------
MULTIPLE INDUSTRY - 3.80%
General Electric Capital Corp.
5.43% 04/08/98 25,000 24,856,708
- -----------------------------------------------------------------------------
5.43% 04/27/98 30,000 29,742,075
- -----------------------------------------------------------------------------
5.45% 05/13/98 30,000 29,668,458
- -----------------------------------------------------------------------------
5.41% 06/12/98 35,000 34,458,249
- -----------------------------------------------------------------------------
5.39% 07/07/98 15,346 15,051,903
- -----------------------------------------------------------------------------
5.38% 08/14/98 25,000 24,379,806
- -----------------------------------------------------------------------------
5.38% 08/17/98 20,000 19,494,878
- -----------------------------------------------------------------------------
177,652,077
- -----------------------------------------------------------------------------
Total Financial 693,360,527
- -----------------------------------------------------------------------------
Total Commercial Paper 1,234,242,126
- -----------------------------------------------------------------------------
BANK NOTES - 0.54%
Wachovia Bank, N.A.
5.52% 08/10/98 25,000 25,000,000
- -----------------------------------------------------------------------------
COMMERCIAL PAPER TRUST CERTIFICATES - 4.28%
Citibank, N.A.
5.785%(b) 12/28/98 200,000 200,000,000
- -----------------------------------------------------------------------------
MASTER NOTE AGREEMENTS - 17.76%
Goldman Sachs Group (The), L.P.
5.625%(e) 04/20/98 241,690 241,690,000
- -----------------------------------------------------------------------------
Merrill Lynch Mortgage Capital Inc.
5.9875%(f) 08/17/98 $227,000 227,000,000
- -----------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
MASTER NOTE AGREEMENTS - (continued)
Morgan (J.P.) Securities Inc.
5.7575%(g) 04/06/98 213,000 $ 213,000,000
- ---------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.
5.7875%(h) 05/26/98 148,000 148,000,000
- ---------------------------------------------------------------------------------
Total Master Note Agreements 829,690,000
- ---------------------------------------------------------------------------------
MEDIUM TERM NOTES - 0.54%
Associates Corp. of North America
5.48%(i) 03/02/98 25,000 24,999,949
- ---------------------------------------------------------------------------------
TAXABLE MUNICIPAL BONDS - 0.53%
Jacksonville Health Facilities Authority
(Charity Obligations Group); Refunding
Hospital Series C Revenue Bond
5.65%(c)(d) 08/15/19 25,000 25,000,000
- ---------------------------------------------------------------------------------
U.S. TREASURY BILLS - 0.51%(j)
5.155% 02/04/99 25,000 23,782,847
- ---------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 2,362,714,922
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 49.63%(k)
BZW Securities Inc.
5.68%(l) 03/02/98 200,000 200,000,000
- ---------------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
5.69%(m) -- 180,000 180,000,000
- ---------------------------------------------------------------------------------
Chase Securities Inc.
5.70%(n) 03/02/98 100,000 100,000,000
- ---------------------------------------------------------------------------------
Deutsche Morgan Grenfell Inc.
5.70%(o) -- 188,000 188,000,000
- ---------------------------------------------------------------------------------
Dresdner Kleinwort Benson North America LLC
5.70%(p) 03/02/98 190,000 190,000,000
- ---------------------------------------------------------------------------------
Goldman, Sachs & Co.
5.65%(q) 03/02/98 20,697 20,697,402
- ---------------------------------------------------------------------------------
5.69%(r) 03/02/98 500,000 500,000,000
- ---------------------------------------------------------------------------------
Greenwich Capital Markets, Inc.
5.70%(s) 03/02/98 135,000 135,000,000
- ---------------------------------------------------------------------------------
HSBC Securities, Inc.
5.69%(t) 03/02/98 335,000 335,000,000
- ---------------------------------------------------------------------------------
Nesbitt Burns Securities Inc.
5.68%(u) -- 70,000 70,000,000
- ---------------------------------------------------------------------------------
UBS Securities LLC
5.69%(v) 03/02/98 400,000 400,000,000
- ---------------------------------------------------------------------------------
Total Repurchase Agreements 2,318,697,402
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.21% 4,681,412,324(w)
=================================================================================
OTHER ASSETS LESS LIABILITIES - (0.21)% (9,847,585)
=================================================================================
NET ASSETS - 100.00% $4,671,564,739
=================================================================================
</TABLE>
6
<PAGE>
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) Variable rate trust certificates representing an interest in a trust
(comprised of eligible debt obligations) entitling the Portfolio to receive
variable rate interest. The Fund has the right, upon seven calendar days'
notice to the trustee, to put its certificates to the trust at par value
plus accrued interest. Because variable rate trust certificates involve a
trust and a third party put feature, they involve complexities and
potential risks that may not be present where the debt obligation is owned
directly. Rate shown is the rate in effect on 02/28/98.
(c) Demand security; payable upon demand by the Fund with usually no more than
seven calendar days' notice. Interest rates are redetermined periodically.
Rate shown is in effect on 02/28/98.
(d) Secured by a letter of credit.
(e) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon seven business days' prior written notice to
the issuer. Interest rates on master notes are redetermined periodically.
Rate shown is the rate in effect on 02/28/98.
(f) 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 02/28/98.
(g) 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
02/28/98.
(h) Master Note Purchase Agreement may be terminated by either party upon three
business days' prior written 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 02/28/98.
(i) Interest rates are redetermined daily. Rate shown is the rate in effect on
02/28/98.
(j) U.S. Treasury bills are traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(k) 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.
(l) Joint repurchase agreement entered into 02/27/98 with a maturing value of
$400,189,333. Collateralized by $409,970,000 U.S. Government obligations,
0% to 6.789% due 03/11/98 to 02/15/08 with an aggregate market value at
02/28/98 of $408,000,678.
(m) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $352,495,740 U.S. Government obligations, 0% to 9.50% due
06/01/01 to 11/01/37 with an aggregate market value at 02/28/98 of
$207,443,485.
(n) Entered into 02/27/98 with a maturing value of $100,047,500. Collateralized
by $271,705,896 U.S. Government obligations, 0% to 5.549% due 12/01/15 to
04/01/34 with an aggregate market value at 02/28/98 of $102,001,169.
(o) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $333,842,602 U.S. Government Agency obligations, 5.50% to
9.50% due 09/01/00 to 11/01/35 and by $57,411,000 U.S. Treasury
obligations, 8.75% to 12.00% due 08/15/00 to 05/15/05 with an aggregate
market value at 02/28/98 of $204,000,559.
(p) Joint repurchase agreement entered into 02/27/98 with a maturing value of
$300,142,500. Collateralized by $623,931,078 U.S. Government obligations,
0% to 7.00% due 10/01/00 to 04/01/37 with an aggregate market value at
02/28/98 of $306,001,633.
(q) Joint repurchase agreement entered into 02/27/98 with a maturing value of
$500,235,417. Collateralized by $435,439,000 U.S. Government obligations,
0% to 8.75% due 06/11/98 to 02/15/21 with an aggregate market value at
02/28/98 of $510,499,348.
(r) Entered into 02/27/98 with a maturing value of $500,237,083. Collateralized
by $699,482,121 U.S. Government obligations, 6.191% to 7.955% due 09/01/12
to 05/01/34 with an aggregate market value at 02/28/98 of $510,000,000.
7
<PAGE>
(s) Joint repurchase agreement entered into 02/27/98 with a maturing value of
$200,095,000. Collateralized by $369,760,075 U.S. Government obligations,
6.00% to 9.50% due 02/01/99 to 02/01/28 with an aggregate market value at
02/28/98 of $204,002,966.
(t) Joint repurchase agreement entered into 02/27/98 with a maturing value of
$400,189,667. Collateralized by $720,411,549 U.S. Government obligations,
0% due 12/01/17 to 07/01/37 with an aggregate market value at 02/28/98 of
$408,003,242.
(u) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $79,053,000 U.S. Government obligations, 0% to 8.335% due
03/04/98 to 04/01/36 with an aggregate market value at 02/28/98 of
$76,500,233.
(v) Entered into 02/27/98 with a maturing value of $400,189,667. Collateralized
by $495,850,000 U.S. Government obligations, 0% to 8.115% due 04/15/98 to
04/15/14 with an aggregate market value at 02/28/98 of $408,005,263.
(w) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1998
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $2,362,714,922
- ------------------------------------------------------------------------
Repurchase agreements 2,318,697,402
- ------------------------------------------------------------------------
Interest receivable 7,530,415
- ------------------------------------------------------------------------
Investment for deferred compensation plan 42,400
- ------------------------------------------------------------------------
Other assets 488,804
- ------------------------------------------------------------------------
Total assets 4,689,473,943
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 17,479,895
- ------------------------------------------------------------------------
Deferred compensation 42,400
- ------------------------------------------------------------------------
Accrued administrative services fees 6,369
- ------------------------------------------------------------------------
Accrued advisory fees 148,158
- ------------------------------------------------------------------------
Accrued distribution fees 47,111
- ------------------------------------------------------------------------
Accrued transfer agent fees 47,150
- ------------------------------------------------------------------------
Accrued operating expenses 138,121
- ------------------------------------------------------------------------
Total liabilities 17,909,204
- ------------------------------------------------------------------------
NET ASSETS $4,671,564,739
========================================================================
NET ASSETS:
Institutional Class $4,180,780,144
========================================================================
Cash Management Class $ 325,292,618
========================================================================
Private Investment Class $ 72,747,467
========================================================================
MSTC Cash Reserves Class $ 92,744,510
========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Institutional Class 4,181,502,981
========================================================================
Cash Management Class 325,348,861
========================================================================
Private Investment Class 72,760,044
========================================================================
MSTC Cash Reserves Class 92,760,545
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended February 28, 1998
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $112,477,098
- -------------------------------------------------------------------
EXPENSES:
Advisory
fees 2,964,525
- -------------------------------------------------------------------
Custodian fees 124,309
- -------------------------------------------------------------------
Administrative services fees 34,515
- -------------------------------------------------------------------
Distribution fees (Note 2) 345,720
- -------------------------------------------------------------------
Directors' fees and expenses 20,140
- -------------------------------------------------------------------
Transfer agent fees 208,188
- -------------------------------------------------------------------
Other 208,595
- -------------------------------------------------------------------
Total expenses 3,905,992
- -------------------------------------------------------------------
Less: Fee waivers (2,150,876)
- -------------------------------------------------------------------
Net expenses 1,755,116
- -------------------------------------------------------------------
Net investment income 110,721,982
- -------------------------------------------------------------------
Net realized gain on sales of investments 572,713
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $111,294,695
===================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended February 28, 1998 and the year ended August 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 28, AUGUST 31,
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $110,721,982 $ 158,747,907
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 572,713 352,792
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 111,294,695 159,100,699
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (101,446,318) (149,604,986)
- ----------------------------------------------------------------------------
Cash Management Class (5,157,145) (4,717,164)
- ----------------------------------------------------------------------------
Private Investment Class (1,759,654) (2,931,782)
- ----------------------------------------------------------------------------
MSTC Cash Reserves Class (2,358,865) (1,493,975)
- ----------------------------------------------------------------------------
Capital stock transactions -- net 648,781,668 1,934,913,244
- ----------------------------------------------------------------------------
Net increase in net assets 649,354,381 1,935,266,036
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 4,022,210,358 2,086,944,322
- ----------------------------------------------------------------------------
End of period $4,671,564,739 $4,022,210,358
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,672,372,431 $4,023,590,763
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investment securities (807,692) (1,380,405)
- ----------------------------------------------------------------------------
$4,671,564,739 $4,022,210,358
============================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1998
(Unaudited)
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 Liquid Assets Portfolio (the
"Portfolio") with the assets, liabilities and operations of each portfolio
accounted for separately. The Portfolio consists of four different classes of
shares: the Institutional Class, the Cash Management Class, the Private
Investment Class and the MSTC Cash Reserves 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 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. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio's 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 $1,380,405 (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 - Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class 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 investment advisory
agreement, AIM receives a monthly fee with respect to the Portfolio at the
annual rate of 0.15% of the average daily net assets of the Portfolio. During
the six months ended February 28, 1998, AIM voluntarily waived fees of
$2,066,023 on the Portfolio.
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 six months ended February 28,
1998, the Portfolio reimbursed AIM $34,515 for such services.
The Portfolio, pursuant to a transfer agency and service agreement, has agreed
to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Portfolio. On September 20, 1997, the Board of
Directors of the Fund approved the appointment of AFS as transfer agent of the
Fund effective December 29, 1997. During the six months ended February 28,
1998, the Portfolio paid AFS $68,590 for such services. Prior to the effective
date of the agreement with AFS, the Portfolio paid A I M Institutional Fund
Services, Inc. $139,598 pursuant to a transfer agency and shareholder services
agreement for the period September 1, 1997 through December 28, 1997.
12
<PAGE>
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund has adopted a master distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Cash Management Class and the MSTC Cash Reserves Class of
the Portfolio. The Plan provides that the Private Investment Class, Cash
Management Class and the MSTC Cash Reserves Class pay FMC up to a maximum
annual rate of 0.50%, 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 0.25%, 0.10%
and 0.20% of the average daily net assets, respectively, of each of the Private
Investment Class, the Cash Management Class and the MSTC Cash Reserves 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 Cash Management Class or the
MSTC Cash Reserves Class. Any amounts not paid as a service fee under such Plan
would constitute an asset-based sales charge. During the six months ended
February 28, 1998, the Private Investment Class, the Cash Management Class and
the MSTC Cash Reserves Class paid $99,350, $74,480 and $87,037, respectively,
as compensation under the Plan. FMC waived fees of $84,853 for the same period.
Certain officers and directors of the Fund are officers of AIM, FMC, and AFS.
During the six months ended February 28, 1998, the Portfolio paid legal fees
of $5,546 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 six months ended February 28, 1998 and the
year ended August 31, 1997 were as follows:
<TABLE>
<CAPTION>
FEBRUARY 28, 1998 AUGUST 31, 1997
--------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 45,463,806,396 $ 45,463,806,396 78,261,661,500 $78,261,661,500
- ---------------------------------------------------------------------------------------------
Cash Management Class 1,384,247,161 1,384,247,161 1,034,402,514 1,034,402,514
- ---------------------------------------------------------------------------------------------
Private Investment
Class 247,070,595 247,070,595 342,644,258 342,644,258
- ---------------------------------------------------------------------------------------------
MSTC Cash Reserves
Class* 798,776,982 798,776,982 408,898,275 408,898,275
- ---------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 15,471,939 15,471,939 20,480,836 20,480,836
- ---------------------------------------------------------------------------------------------
Cash Management Class 3,193,250 3,193,250 2,312,729 2,312,729
- ---------------------------------------------------------------------------------------------
Private Investment
Class 1,638,523 1,638,523 2,744,701 2,744,701
- ---------------------------------------------------------------------------------------------
MSTC Cash Reserves
Class* 2,253,002 2,253,002 1,184,333 1,184,333
- ---------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (45,086,433,287) (45,086,433,287) (76,483,889,456) (76,483,889,456)
- ---------------------------------------------------------------------------------------------
Cash Management Class (1,145,606,722) (1,145,606,722) (1,006,454,600) (1,006,454,600)
- ---------------------------------------------------------------------------------------------
Private Investment
Class (246,829,233) (246,829,233) (319,526,727) (319,526,727)
- ---------------------------------------------------------------------------------------------
MSTC Cash Reserves
Class* (788,806,938) (788,806,938) (329,545,119) (329,545,119)
- ---------------------------------------------------------------------------------------------
Net increase 648,781,668 $ 648,781,668 1,934,913,244 $ 1,934,913,244
=============================================================================================
</TABLE>
* The MSTC Cash Reserves Class commenced sales on September 23, 1996.
13
<PAGE>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Cash Management Class
capital stock outstanding during the six months ended February 28, 1998, the
year ended August 31, 1997 and the period January 17, 1996 (date sales
commenced) through August 31, 1996.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 28, ----------------
1998 1997 1996
------------ ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- ------- -------
Income from investment operations:
Net investment income 0.03 0.05 0.03
- ------------------------------------------ -------- ------- -------
Less distributions:
Dividends from net investment income (0.03) (0.05) (0.03)
- ------------------------------------------ -------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
========================================== ======== ======= =======
Total return 5.61%(a) 5.50% 5.36%(a)
========================================== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $325,293 $83,487 $53,209
========================================== ======== ======= =======
Ratio of expenses to average net assets(b) 0.15%(c) 0.15% 0.10%(a)
========================================== ======== ======= =======
Ratio of net investment income to average
net assets(d) 5.54%(c) 5.38% 5.27%(a)
========================================== ======== ======= =======
</TABLE>
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.26% (annualized), 0.28% and 0.34% (annualized) for the periods 1998-1996,
respectively.
(c) Ratios are annualized and based on average net assets of $187,741,896.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.43% (annualized), 5.25% and 5.03% (annualized) for
the periods 1998-1996, respectively.
14
<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 M. 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 Liquid Assets
Gary T. Crum Sr. Vice President Portfolio
Carol F. Relihan Sr. Vice President & Secretary ----------------------------------------
Dana R. Sutton Vice President & Assistant Treasurer Cash SEMI-
Melville B. Cox Vice President Management ANNUAL
Karen Dunn Kelley Vice President Class REPORT
J. Abbott Sprague Vice President
P. Michelle Grace Assistant Secretary
Nancy L. Martin Assistant Secretary FEBRUARY 28, 1998
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, LLP
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 Fund Services, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
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>
