<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of As the Portfolio's fiscal year end
Charles T. Bauer, approached, the U.S. economy was starting to
Chairman of the display the negative effects of spreading
LETTER Board of The Fund worldwide economic turmoil. What began as an
TO OUR APPEARS HERE] isolated currency devaluation in Thailand in
SHAREHOLDERS July 1997 eventually spread to most of Asia
and then to Russia and Latin America, but until this summer, the
European and U.S. economies had appeared immune to "Asian
contagion." As it became apparent that domestic banks and
corporations could suffer significantly from their overseas
exposure, a sharp sell-off in global equities began. The
uncertainty and turmoil could lead to deteriorating consumer
confidence and negatively affect economic growth for the
foreseeable future. The extent of the slowdown is still unknown,
but many forecasters are looking at the possibility of a
recession for the first time in eight years.
The U.S. gross domestic product grew at an annualized rate of
1.8% in the second quarter of 1998, the slowest rate since the
first quarter of 1995. While this was attributed to special
factors like the strike at General Motors, growth is not expected
to rebound much because of the ongoing world economic crises. As
the stock market dropped and the political crisis in Washington
continued to unfold, markets began to look to the Federal Reserve
Board (the Fed) to provide some calm by lowering interest rates.
The Fed had kept the federal funds rate target at 5.50% since
March of 1997. As concern over foreign economies grew, more
capital sought the safety and stability of the U.S. Treasury
markets, pushing interest rates lower across the yield curve.
This flight to quality drove yields of all Treasuries across the
maturity spectrum below the 5.50% federal funds target. Yields on
one-year Treasury bills dropped dramatically, to 4.62% from
almost 5.50% in March 1998.
For most of the fiscal year, the Fed was focused on the
strength of the domestic economy and hence was more apt to raise
rates to counteract incipient inflationary pressures. As it
became clear that world economic crises would be more serious
than originally thought, the Fed shifted its focus to providing
liquidity and supporting markets by considering lowering rates.
Fixed income markets anticipated several easings. It appeared to
be only a matter of time before the Fed endorsed the markets'
movements by lowering the federal funds target. After the close
of the fiscal year, the Fed did so twice, first at its
<TABLE>
<CAPTION>
Table 1: Yields as of 8/31/98
Average Seven-Day
Monthly Yield Yield
<S> <C> <C>
Prime Portfolio
Institutional Class 5.56% 5.59%
IBC Money Fund Averages(TM) -
First-Tier Institutions Only 5.28% 5.28%
IBC Money Fund Averages(TM) -
Total Institutions Only 5.18% 5.20%
- --------------------------------------------------------------------------------
Table 2: Lipper Rankings as of 8/31/98
Prime Portfolio # of Funds in
Institutional Class Institutional Money Percentile
Period Rank Market Category Rank
1 Year 5 189 3%
5 Years 3 95 3%
10 Years 6 42 14%
Fund percentage rankings are based on cumulative 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>
regular meeting on September 29 and then in an unusual inter-
meeting move on October 15, placing the short-term target at
5.00%.
YOUR INVESTMENT PORTFOLIO
As of August 31, 1998, 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 of the Portfolio also maintained its high ranking among its
peer groups, as shown in Table 2.
The excellent record can be attributed to the Portfolio's
disciplined approach of maintaining a laddered 60-day maximum
maturity schedule. This structure allows the Portfolio to respond
to higher interest rate levels more quickly than funds with
longer maturity structures and is also an attractive style to
take advantage of higher yields over quarter ends and other
special situations that arise during market turbulence.
The Portfolio's weighted average maturity (WAM) was maintained
in the 15- to 25-day range during the fiscal year. At the close
of the fiscal year the WAM stood at 19 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 $5.84 billion as
of August 31, 1998, up from $5.59 billion as of August 31, 1997.
OUTLOOK FOR THE FUTURE
As the fiscal year ended, the economy was expected to slow
considerably as foreign economic turmoil and slower consumer
spending could push the annualized economic growth rate into the
1% to 2% range. Interest rates had dropped notably, and fixed
income markets expected the Fed to lower short-term rates before
1998 ends. The Portfolio will continue to maintain a WAM in the
15- to 25-day range to remain flexible and be able to react
quickly to any sudden interest rate changes.
We are pleased to send you this annual report on your
investment. AIM is committed to the primary goals of safety,
liquidity and yield in institutional fund management. We are also
committed to customer service and are ready to respond to your
comments about this report. If you have any questions, please
contact one of our representatives at 800-659-1005. We are happy
to be of service.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
2
<PAGE>
AVERAGE MONTHLY YIELD COMPARISON
12 months ended 8/31/98 (Yields are monthly yields for the month-ends shown.)
<TABLE>
<CAPTION>
SEPT OCT NOV DEC JAN FEB MAR APR MAY JUNE JULY AUG
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Yield
Short-Term Investment Co.
Prime Portfolio 5.53 5.53 5.57 5.38 5.65 5.52 5.53 5.54 5.52 5.55 5.56 5.56
Institutional Class
IBC Money Fund Averages(TM) - 5.31 5.30 5.33 5.40 5.38 5.31 5.29 5.27 5.26 5.28 5.28 5.28
First-Tier Institutions Only
IBC Money Fund Averages(TM) - 5.21 5.2 5.24 5.9 5.27 5.22 5.21 5.29 5.17 5.18 5.19 5.18
Total Institutions Only
</TABLE>
WEIGHTED AVERAGE MATURITY COMPARISON
12 months ended 8/31/98
<TABLE>
<CAPTION>
SEPT OCT NOV DEC JAN FEB MAR APR MAY JUNE JULY AUG
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Days
Short-Term Investments Co.
Prime Portfolio 17 20 19 15 21 18 21 20 20 19 21 19
Institutional Class
IBC Money Fund Averages(TM) - 49 50 49 46 47 53 51 52 52 52 53 51
First-Tier Institutions Only
IBC Money Fund Averages(TM) - 48 48 41 46 45 49 49 50 49 49 49 47
Total Institutions Only
</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, 1998
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 76.64%(a)
BASIC INDUSTRIES - 5.65%
CHEMICALS - 5.02%
Bayer Corp.
5.50% 09/29/98 $ 25,000 $ 24,893,055
- --------------------------------------------------------------------------
5.51% 10/06/98 47,600 47,345,009
- --------------------------------------------------------------------------
Du Pont (E.I.) de Nemours and Co.
5.51% 09/02/98 25,000 24,996,174
- --------------------------------------------------------------------------
5.54% 09/03/98 30,470 30,460,622
- --------------------------------------------------------------------------
5.51% 09/04/98 21,585 21,575,089
- --------------------------------------------------------------------------
5.51% 09/11/98 30,000 29,954,083
- --------------------------------------------------------------------------
5.52% 09/24/98 50,000 49,823,667
- --------------------------------------------------------------------------
5.50% 09/29/98 25,000 24,893,055
- --------------------------------------------------------------------------
5.51% 09/29/98 22,000 21,905,718
- --------------------------------------------------------------------------
5.51% 10/02/98 25,000 24,881,382
- --------------------------------------------------------------------------
5.51% 10/08/98 22,000 21,875,413
- --------------------------------------------------------------------------
5.50% 10/22/98 25,000 24,805,208
- --------------------------------------------------------------------------
Henkel Corp.
5.51% 09/21/98 25,000 24,923,472
- --------------------------------------------------------------------------
5.51% 09/29/98 21,000 20,910,003
- --------------------------------------------------------------------------
393,241,950
- --------------------------------------------------------------------------
METAL MINING - 0.63%
Rio Tinto America, Inc.
5.51% 09/21/98 50,000 49,846,945
- --------------------------------------------------------------------------
Total Basic Industries 443,088,895
- --------------------------------------------------------------------------
CAPITAL GOODS - 2.46%
COMPUTERS & OFFICE EQUIPMENT - 1.79%
Electronic Data Systems Corp.
5.51% 09/09/98 25,000 24,969,389
- --------------------------------------------------------------------------
5.52% 09/22/98 26,000 25,916,280
- --------------------------------------------------------------------------
Xerox Credit Corp.
5.50% 09/24/98 40,000 39,859,444
- --------------------------------------------------------------------------
5.50% 09/30/98 50,000 49,778,472
- --------------------------------------------------------------------------
140,523,585
- --------------------------------------------------------------------------
MACHINERY - 0.67%
Dover Corp.
5.52% 09/10/98 23,000 22,968,260
- --------------------------------------------------------------------------
5.52% 09/16/98 29,500 29,432,150
- --------------------------------------------------------------------------
52,400,410
- --------------------------------------------------------------------------
Total Capital Goods 192,923,995
- --------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
CONSUMER DURABLES - 3.10%
AUTOMOBILE - 3.10%
Ford Motor Credit Co.
5.50% 09/14/98 $ 50,000 $ 49,900,695
- --------------------------------------------------------------------
5.52% 10/06/98 30,000 29,839,000
- --------------------------------------------------------------------
5.52% 10/07/98 50,000 49,724,000
- --------------------------------------------------------------------
General Motors Acceptance Corp.
5.52% 10/13/98 40,000 39,742,400
- --------------------------------------------------------------------
Toyota Motor Credit Corp.
5.49% 09/28/98 44,000 43,818,830
- --------------------------------------------------------------------
5.52% 09/30/98 30,000 29,866,600
- --------------------------------------------------------------------
Total Consumer Durables 242,891,525
- --------------------------------------------------------------------
CONSUMER NONDURABLES - 4.32%
BEVERAGES - 0.38%
Coca-Cola Co. (The)
5.52% 09/14/98 30,000 29,940,200
- --------------------------------------------------------------------
DRUGS - 1.13%
Abbott Laboratories
5.50% 09/23/98 66,000 65,778,166
- --------------------------------------------------------------------
Novartis Finance Corp.
5.505% 09/01/98 23,000 23,000,000
- --------------------------------------------------------------------
88,778,166
- --------------------------------------------------------------------
FOOD PROCESSING - 1.29%
Campbell Soup Co.
5.50% 09/17/98 20,000 19,951,111
- --------------------------------------------------------------------
Heinz (H.J.) Co.
5.51% 09/10/98 50,000 49,931,125
- --------------------------------------------------------------------
Sara Lee Corp.
5.49% 09/23/98 31,000 30,895,995
- --------------------------------------------------------------------
100,778,231
- --------------------------------------------------------------------
MULTIPLE INDUSTRY - 1.52%
PepsiCo, Inc.
5.49% 09/30/98 40,000 39,823,100
- --------------------------------------------------------------------
5.49% 10/09/98 40,000 39,768,200
- --------------------------------------------------------------------
5.50% 10/09/98 40,000 39,767,778
- --------------------------------------------------------------------
119,359,078
- --------------------------------------------------------------------
Total Consumer Nondurables 338,855,675
- --------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
ENERGY - 1.36%
OIL & GAS - 1.36%
Exxon Imperial U.S., Inc.
5.50% 09/16/98 $ 25,000 $ 24,942,708
- ---------------------------------------------------------------------------
5.49% 10/02/98 31,700 31,550,138
- ---------------------------------------------------------------------------
Koch Industries, Inc.
5.50% 09/30/98 50,000 49,778,472
- ---------------------------------------------------------------------------
Total Energy 106,271,318
- ---------------------------------------------------------------------------
FINANCIAL - 59.75%
ASSET-BACKED SECURITIES - 47.37%
Asset Securitization Cooperative Corp.
5.53% 09/25/98 25,000 24,907,833
- ---------------------------------------------------------------------------
5.54% 09/28/98 50,000 49,792,250
- ---------------------------------------------------------------------------
5.52% 09/29/98 40,000 39,828,267
- ---------------------------------------------------------------------------
5.53% 09/29/98 77,000 76,668,815
- ---------------------------------------------------------------------------
5.55% 10/01/98 50,000 49,768,750
- ---------------------------------------------------------------------------
Centric Capital Corp.
5.54% 09/03/98 20,000 19,993,845
- ---------------------------------------------------------------------------
5.53% 09/14/98 25,000 24,950,076
- ---------------------------------------------------------------------------
5.52% 09/18/98 75,000 74,804,500
- ---------------------------------------------------------------------------
5.53% 09/21/98 33,887 33,782,892
- ---------------------------------------------------------------------------
5.54% 09/28/98 21,000 20,912,745
- ---------------------------------------------------------------------------
5.53% 09/29/98 28,500 28,377,418
- ---------------------------------------------------------------------------
5.54% 10/07/98 30,000 29,833,800
- ---------------------------------------------------------------------------
5.54% 10/16/98 25,000 24,826,875
- ---------------------------------------------------------------------------
Ciesco, L.P.
5.52% 09/24/98 25,000 24,911,833
- ---------------------------------------------------------------------------
Clipper Receivables Corp.
5.52% 09/01/98 50,000 50,000,000
- ---------------------------------------------------------------------------
5.52% 09/03/98 50,000 49,984,667
- ---------------------------------------------------------------------------
5.53% 09/16/98 40,000 39,907,833
- ---------------------------------------------------------------------------
5.52% 09/22/98 50,000 49,839,000
- ---------------------------------------------------------------------------
5.53% 10/01/98 50,000 49,769,583
- ---------------------------------------------------------------------------
5.52% 10/06/98 25,000 24,865,833
- ---------------------------------------------------------------------------
5.52% 10/08/98 37,346 37,134,124
- ---------------------------------------------------------------------------
5.52% 10/09/98 35,000 34,796,067
- ---------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET-BACKED SECURITIES - (CONTINUED)
Corporate Asset Funding Co., Inc.
5.50% 09/04/98 $ 50,000 $ 49,977,083
- ---------------------------------------------------------------------------
5.53% 09/23/98 50,000 49,831,028
- ---------------------------------------------------------------------------
5.52% 10/07/98 25,000 24,862,000
- ---------------------------------------------------------------------------
5.53% 10/16/98 50,000 49,654,375
- ---------------------------------------------------------------------------
Delaware Funding Corp.
5.52% 09/03/98 80,000 79,975,467
- ---------------------------------------------------------------------------
5.52% 09/04/98 40,000 39,981,600
- ---------------------------------------------------------------------------
5.55% 09/11/98 25,000 24,961,458
- ---------------------------------------------------------------------------
5.52% 09/15/98 48,445 48,341,005
- ---------------------------------------------------------------------------
5.54% 09/15/98 40,000 39,913,822
- ---------------------------------------------------------------------------
5.53% 09/18/98 23,202 23,141,411
- ---------------------------------------------------------------------------
5.52% 09/24/98 45,733 45,571,715
- ---------------------------------------------------------------------------
Edison Asset Securitization, L.L.C.
5.53% 09/03/98 28,979 28,970,097
- ---------------------------------------------------------------------------
5.53% 09/08/98 50,000 49,946,236
- ---------------------------------------------------------------------------
5.53% 09/11/98 20,000 19,969,278
- ---------------------------------------------------------------------------
5.53% 09/18/98 30,000 29,921,658
- ---------------------------------------------------------------------------
5.54% 10/05/98 39,000 38,795,943
- ---------------------------------------------------------------------------
5.53% 10/13/98 30,000 29,806,450
- ---------------------------------------------------------------------------
5.54% 10/16/98 18,725 18,595,329
- ---------------------------------------------------------------------------
5.52% 10/23/98 43,933 43,582,708
- ---------------------------------------------------------------------------
Falcon Asset Securitization Corp.
5.53% 09/11/98 25,000 24,961,597
- ---------------------------------------------------------------------------
5.53% 09/14/98 35,000 34,930,107
- ---------------------------------------------------------------------------
5.53% 10/20/98 34,725 34,463,627
- ---------------------------------------------------------------------------
5.53% 10/26/98 20,000 19,831,028
- ---------------------------------------------------------------------------
Fleet Funding Corp.
5.53% 09/01/98 62,933 62,933,000
- ---------------------------------------------------------------------------
5.53% 09/09/98 44,578 44,523,218
- ---------------------------------------------------------------------------
5.55% 09/09/98 74,271 74,179,400
- ---------------------------------------------------------------------------
5.55% 09/14/98 22,805 22,759,295
- ---------------------------------------------------------------------------
5.52% 09/17/98 25,000 24,938,667
- ---------------------------------------------------------------------------
5.53% 09/17/98 40,000 39,901,689
- ---------------------------------------------------------------------------
5.52% 10/02/98 30,000 29,857,400
- ---------------------------------------------------------------------------
5.52% 10/21/98 32,011 31,765,582
- ---------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET-BACKED SECURITIES - (CONTINUED)
Monte Rosa Capital Corp.
5.53% 09/03/98 $ 23,662 $ 23,654,731
- ---------------------------------------------------------------------------
5.53% 09/08/98 25,617 25,589,455
- ---------------------------------------------------------------------------
5.53% 09/11/98 30,000 29,953,917
- ---------------------------------------------------------------------------
5.54% 09/25/98 33,227 33,104,282
- ---------------------------------------------------------------------------
5.54% 10/14/98 86,000 85,430,919
- ---------------------------------------------------------------------------
5.53% 10/14/98 34,388 34,160,858
- ---------------------------------------------------------------------------
5.53% 10/15/98 36,100 35,856,004
- ---------------------------------------------------------------------------
5.54% 10/16/98 50,000 49,653,750
- ---------------------------------------------------------------------------
5.53% 10/23/98 20,000 19,840,244
- ---------------------------------------------------------------------------
5.55% 10/23/98 38,444 38,135,807
- ---------------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.55% 09/10/98 50,000 49,930,625
- ---------------------------------------------------------------------------
5.53% 09/18/98 30,000 29,921,658
- ---------------------------------------------------------------------------
5.52% 09/30/98 25,000 24,888,833
- ---------------------------------------------------------------------------
5.56% 10/02/98 39,650 39,460,165
- ---------------------------------------------------------------------------
Quincy Capital Corp.
5.53% 09/14/98 40,000 39,920,122
- ---------------------------------------------------------------------------
5.53% 09/17/98 40,000 39,901,689
- ---------------------------------------------------------------------------
5.53% 09/18/98 30,000 29,921,658
- ---------------------------------------------------------------------------
5.54% 09/18/98 25,000 24,934,597
- ---------------------------------------------------------------------------
5.54% 10/09/98 40,000 39,766,089
- ---------------------------------------------------------------------------
Receivables Capital Corp.
5.53% 09/11/98 36,130 36,074,500
- ---------------------------------------------------------------------------
5.54% 09/15/98 30,075 30,010,205
- ---------------------------------------------------------------------------
5.53% 10/09/98 40,000 39,766,511
- ---------------------------------------------------------------------------
5.53% 10/16/98 37,183 36,925,972
- ---------------------------------------------------------------------------
Riverwoods Funding Corp.
5.55% 09/01/98 25,000 25,000,000
- ---------------------------------------------------------------------------
5.52% 09/08/98 35,000 34,962,434
- ---------------------------------------------------------------------------
5.52% 09/16/98 30,000 29,931,000
- ---------------------------------------------------------------------------
5.53% 09/17/98 40,000 39,901,689
- ---------------------------------------------------------------------------
5.51% 10/14/98 30,000 29,802,558
- ---------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET-BACKED SECURITIES - (CONTINUED)
Sheffield Receivables Corp.
5.57% 09/02/98 $ 20,000 $ 19,996,905
- -----------------------------------------------------------------------------
5.545% 09/22/98 25,000 24,919,135
- -----------------------------------------------------------------------------
5.54% 09/23/98 25,000 24,915,361
- -----------------------------------------------------------------------------
5.54% 09/25/98 75,000 74,723,000
- -----------------------------------------------------------------------------
5.56% 09/25/98 35,000 34,870,267
- -----------------------------------------------------------------------------
5.565% 09/28/98 40,000 39,833,050
- -----------------------------------------------------------------------------
5.55% 09/28/98 44,609 44,423,315
- -----------------------------------------------------------------------------
5.54% 10/23/98 25,630 25,424,903
- -----------------------------------------------------------------------------
Variable Funding Capital
5.54% 10/05/98 40,000 39,790,711
- -----------------------------------------------------------------------------
5.53% 10/08/98 30,000 29,829,492
- -----------------------------------------------------------------------------
5.54% 10/08/98 40,000 39,772,245
- -----------------------------------------------------------------------------
5.54% 10/13/98 50,000 49,676,833
- -----------------------------------------------------------------------------
5.52% 10/15/98 50,000 49,662,667
- -----------------------------------------------------------------------------
5.53% 10/15/98 50,000 49,662,056
- -----------------------------------------------------------------------------
5.54% 10/15/98 50,000 49,661,444
- -----------------------------------------------------------------------------
5.52% 10/21/98 40,000 39,693,333
- -----------------------------------------------------------------------------
5.53% 10/22/98 40,000 39,686,633
- -----------------------------------------------------------------------------
3,713,441,901
- -----------------------------------------------------------------------------
BROKERAGE/INVESTMENTS - 8.91%
Bear, Stearns & Co. Inc.
5.53% 09/28/98 40,000 39,834,100
- -----------------------------------------------------------------------------
Credit Suisse First Boston Corp.
5.52% 09/02/98 30,000 29,995,400
- -----------------------------------------------------------------------------
5.53% 09/09/98 50,000 49,938,556
- -----------------------------------------------------------------------------
5.52% 09/10/98 40,000 39,944,800
- -----------------------------------------------------------------------------
5.52% 10/19/98 25,000 24,816,000
- -----------------------------------------------------------------------------
Merrill Lynch & Co. Inc.
5.52% 09/04/98 50,000 49,977,000
- -----------------------------------------------------------------------------
5.52% 09/08/98 35,000 34,962,434
- -----------------------------------------------------------------------------
5.53% 09/16/98 40,000 39,907,833
- -----------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.
5.50% 09/09/98 40,000 39,951,111
- -----------------------------------------------------------------------------
5.51% 09/15/98 50,000 49,892,861
- -----------------------------------------------------------------------------
5.51% 09/17/98 50,000 49,877,556
- -----------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
BROKERAGE/INVESTMENTS - (CONTINUED)
Salomon Smith Barney Holdings Inc.
5.53% 09/02/98 $ 80,000 $ 79,987,711
- -------------------------------------------------------------------------
5.53% 09/08/98 50,000 49,946,236
- -------------------------------------------------------------------------
5.53% 09/10/98 50,000 49,930,875
- -------------------------------------------------------------------------
5.53% 10/07/98 30,000 29,834,100
- -------------------------------------------------------------------------
5.53% 10/13/98 40,000 39,741,933
- -------------------------------------------------------------------------
698,538,506
- -------------------------------------------------------------------------
INSURANCE (LIFE) - 1.24%
Metlife Funding, Inc.
5.505% 09/11/98 19,900 19,869,569
- -------------------------------------------------------------------------
5.51% 09/22/98 24,637 24,557,813
- -------------------------------------------------------------------------
5.52% 09/22/98 28,419 28,327,491
- -------------------------------------------------------------------------
Prudential Funding Corp.
5.53% 09/08/98 25,000 24,973,118
- -------------------------------------------------------------------------
97,727,991
- -------------------------------------------------------------------------
PERSONAL CREDIT - 0.64%
Associates Corp. of North America
5.53% 09/24/98 50,000 49,823,347
- -------------------------------------------------------------------------
MISCELLANEOUS - 0.57%
AIG Funding, Inc.
5.50% 09/21/98 25,000 24,923,612
- -------------------------------------------------------------------------
USAA Capital Corporation
5.50% 09/14/98 20,000 19,960,278
- -------------------------------------------------------------------------
44,883,890
- -------------------------------------------------------------------------
MULTIPLE INDUSTRY - 1.02%
American Express Co.
5.52% 09/30/98 30,000 29,866,601
- -------------------------------------------------------------------------
General Electric Capital Corp.
5.52% 09/15/98 50,000 49,892,667
- -------------------------------------------------------------------------
79,759,268
- -------------------------------------------------------------------------
Total Financial 4,684,174,903
- -------------------------------------------------------------------------
Total Commercial Paper (Cost -
$6,008,206,311) 6,008,206,311
- -------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
BANK NOTES - 0.32%
First National Bank, Chicago
5.545% (Cost - $25,000,000) 09/30/98 $ 25,000 $ 25,000,000
- -------------------------------------------------------------------------------
MASTER NOTE AGREEMENTS - 3.98%
Goldman Sachs Group, L.P.
5.656%(b) 10/19/98 42,500 42,500,000
- -------------------------------------------------------------------------------
Merrill Lynch Mortgage Capital Inc.
6.093%(c) 08/17/99 205,500 205,500,000
- -------------------------------------------------------------------------------
Morgan (J.P.) Securities Inc.
5.883%(b) 10/05/98 64,000 64,000,000
- -------------------------------------------------------------------------------
Total Master Note Agreements (Cost -
$312,000,000) 312,000,000
- -------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 6,345,206,311
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 19.50%(d)
B.T. Securities Corp.
5.80%(e) -- 142,000 142,000,000
- -------------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
5.82%(f) -- 170,000 170,000,000
- -------------------------------------------------------------------------------
5.80%(g) -- 50,000 50,000,000
- -------------------------------------------------------------------------------
Chase Securities, Inc.
5.82%(h) 09/01/98 200,000 200,000,000
- -------------------------------------------------------------------------------
CIBC Oppenheimer Corp.
5.82%(i) -- 300,000 300,000,000
- -------------------------------------------------------------------------------
Salomon Smith Barney Inc.
5.82%(j) -- 400,000 400,000,000
- -------------------------------------------------------------------------------
Warburg Dillon Read LLC
5.79%(k) 09/01/98 266,626 266,625,545
- -------------------------------------------------------------------------------
Total Repurchase Agreements (Cost -
$1,528,625,545) 1,528,625,545
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.44% 7,873,831,856(l)
- -------------------------------------------------------------------------------
OTHER LIABILITIES LESS ASSETS - (0.44%) (34,534,013)
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $7,839,297,843
===============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(b) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon seven business days' notice. Interest rates on
master notes are redetermined periodically. Rate shown is the rate in
effect on 08/31/98.
(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 08/31/98.
11
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS:--(CONTINUED)
(d) 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 is at least 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.
(e) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $392,000,000 U.S. Government obligations, 0% to 8.875%
due 08/15/99 to 02/15/19 with an aggregate market value at 08/31/98 of
$402,895,145.
(f) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $403,989,517 U.S. Government obligations, 0% to 9.00% due
01/01/01 to 09/01/33 with an aggregate market value at 08/31/98 of
$206,156,630.
(g) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $951,236,000 U.S. Government obligations, 0% to 11.25%
due 08/15/02 to 08/15/27 with an aggregate market value at 08/31/98 of
$306,453,166.
(h) Entered into 08/31/98 with a maturing value of $200,032,333. Collateralized
by $472,493,303 U.S. Government obligations, 0% to 9.00% due 11/01/99 to
02/01/37 with an aggregate market value at 08/31/98 of $204,002,337.
(i) Open repurchase agreement. Either party may terminate the agreement upon
demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $438,211,831 U.S. Government obligations, 4.50% to 8.50%
due 10/01/00 to 04/01/34 with an aggregate market value at 08/31/98 of
$306,000,000.
(j) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $1,049,866,000 U.S. Government obligations, 0% to 10.70%
due 09/01/98 to 12/15/43 with an aggregate market value at 08/31/98 of
$872,100,776.
(k) Joint repurchase agreement entered into 08/31/98 with a maturing value of
$1,000,160,833. Collateralized by $1,958,825,000 U.S. Government
obligations, 0% to 5.50% due 11/15/98 to 02/15/27 with an aggregate market
value at 08/31/98 of $1,020,108,316.
(l) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
12
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $6,345,206,311
- ------------------------------------------------------------------------
Repurchase agreements 1,528,625,545
- ------------------------------------------------------------------------
Interest receivable 1,435,014
- ------------------------------------------------------------------------
Investment for deferred compensation plan 105,828
- ------------------------------------------------------------------------
Other assets 455,186
- ------------------------------------------------------------------------
Total assets 7,875,827,884
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 35,235,485
- ------------------------------------------------------------------------
Deferred compensation 105,828
- ------------------------------------------------------------------------
Accrued administrative services fees 11,154
- ------------------------------------------------------------------------
Accrued advisory fees 355,420
- ------------------------------------------------------------------------
Accrued distribution fees 306,202
- ------------------------------------------------------------------------
Accrued transfer agent fees 96,800
- ------------------------------------------------------------------------
Accrued operating expenses 419,152
- ------------------------------------------------------------------------
Total liabilities 36,530,041
- ------------------------------------------------------------------------
NET ASSETS $7,839,297,843
========================================================================
NET ASSETS:
Institutional Class $5,843,813,421
========================================================================
Private Investment Class $ 294,811,037
========================================================================
Personal Investment Class $ 140,086,733
========================================================================
Cash Management Class $ 862,207,074
========================================================================
Resource Class $ 698,379,578
========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Institutional Class 5,843,818,199
========================================================================
Private Investment Class 294,811,267
========================================================================
Personal Investment Class 140,086,842
========================================================================
Cash Management Class 862,207,748
========================================================================
Resource Class 698,380,125
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
STATEMENT OF OPERATIONS
For the year ended August 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $433,045,612
- -------------------------------------------------------------------
EXPENSES:
Advisory fees 4,251,522
- -------------------------------------------------------------------
Custodian fees 438,399
- -------------------------------------------------------------------
Administrative services fees 124,103
- -------------------------------------------------------------------
Directors' fees and expenses 36,460
- -------------------------------------------------------------------
Transfer agent fees 816,541
- -------------------------------------------------------------------
Distribution fees (Note 2) 3,842,097
- -------------------------------------------------------------------
Other 1,112,802
- -------------------------------------------------------------------
Total expenses 10,621,924
- -------------------------------------------------------------------
Less: Fee waivers (1,154,715)
- -------------------------------------------------------------------
Net expenses 9,467,209
- -------------------------------------------------------------------
Net investment income 423,578,403
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $423,578,403
===================================================================
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 423,578,403 $ 385,469,863
- ----------------------------------------------------------------------------
Net realized gain on sales of investments -- 2,155
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 423,578,403 385,472,018
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (334,784,531) (334,619,312)
- ----------------------------------------------------------------------------
Private Investment Class (14,188,012) (11,638,406)
- ----------------------------------------------------------------------------
Personal Investment Class (5,889,522) (4,703,034)
- ----------------------------------------------------------------------------
Cash Management Class (49,287,200) (28,088,448)
- ----------------------------------------------------------------------------
Resource Class (19,429,138) (6,420,663)
- ----------------------------------------------------------------------------
Capital stock transactions-net (See Note 4) 984,587,209 702,760,124
- ----------------------------------------------------------------------------
Net increase in net assets 984,587,209 702,762,279
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 6,854,710,634 6,151,948,355
- ----------------------------------------------------------------------------
End of period $7,839,297,843 $6,854,710,634
- ----------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $7,839,304,181 $6,854,716,972
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investments (6,338) (6,338)
- ----------------------------------------------------------------------------
$7,839,297,843 $6,854,710,634
============================================================================
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1998
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 the 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 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 the 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.
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 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>
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, 1998,
the Portfolio reimbursed AIM $124,103 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 year ended August 31, 1998, the
Portfolio paid AFS $464,197 for such services. Prior to the effective date of
the agreement with AFS, the Portfolio paid A I M Institutional Fund Services,
Inc. $227,922 pursuant to a transfer agency and shareholder services agreement
for the period September 1, 1997 through December 28, 1997.
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, 1998, the Private Investment Class, the Personal Investment Class,
the Cash Management Class and the Resource Class paid $809,804, $581,804,
$719,155 and $576,619, respectively, as compensation under the Plan. FMC waived
fees of $1,154,715 for the same period. Certain officers and directors of the
Fund are officers of AIM, FMC and AFS.
During the year ended August 31, 1998, the Portfolio paid legal fees of
$19,923 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, 1998 and 1997 were
as follows.
<TABLE>
<CAPTION>
1998 1997
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 70,953,094,776 $ 70,953,094,776 77,017,818,307 $ 77,017,818,307
- --------------------------------------------------------------------------------------------
Private Investment
Class 2,265,361,261 2,265,361,261 1,686,727,915 1,686,727,915
- --------------------------------------------------------------------------------------------
Personal Investment
Class 1,442,106,992 1,442,106,992 1,399,754,929 1,399,754,929
- --------------------------------------------------------------------------------------------
Cash Management Class 10,266,695,255 10,266,695,255 6,007,746,062 6,007,746,062
- --------------------------------------------------------------------------------------------
Resource Class 5,571,480,416 5,571,480,416 2,959,856,289 2,959,856,289
- --------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 25,834,568 25,834,568 20,826,765 20,826,765
- --------------------------------------------------------------------------------------------
Private Investment
Class 6,616,509 6,616,509 6,892,975 6,892,975
- --------------------------------------------------------------------------------------------
Personal Investment
Class 5,817,504 5,817,504 4,636,763 4,636,763
- --------------------------------------------------------------------------------------------
Cash Management Class 27,781,043 27,781,043 19,021,334 19,021,334
- --------------------------------------------------------------------------------------------
Resource Class 16,446,253 16,446,253 3,857,837 3,857,837
- --------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (70,728,159,503) (70,728,159,503) (76,710,204,729) (76,710,204,729)
- --------------------------------------------------------------------------------------------
Private Investment
Class (2,212,613,562) (2,212,613,562) (1,667,619,183) (1,667,619,183)
- --------------------------------------------------------------------------------------------
Personal Investment
Class (1,405,052,971) (1,405,052,971) (1,419,820,390) (1,419,820,390)
- --------------------------------------------------------------------------------------------
Cash Management Class (10,199,573,686) (10,199,573,686) (5,766,709,619) (5,766,709,619)
- --------------------------------------------------------------------------------------------
Resource Class (5,051,247,646) (5,051,247,646) (2,860,025,131) (2,860,025,131)
- --------------------------------------------------------------------------------------------
Net increase 984,587,209 $ 984,587,209 702,760,124 $ 702,760,124
============================================================================================
</TABLE>
17
<PAGE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Institutional Class
capital stock outstanding during each of the years in the five-year period
ended August 31, 1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<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 0.06 0.05 0.05 0.06 0.04
- ----------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income (0.06) (0.05) (0.05) (0.06) (0.04)
- ----------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ========== ========== ========== ========== ==========
Total return 5.71% 5.54% 5.64% 5.80% 3.64%
======================= ========== ========== ========== ========== ==========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $5,843,813 $5,593,043 $5,264,601 $3,752,693 $4,080,753
======================= ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets 0.09%(a) 0.09% 0.09% 0.09% 0.08%
======================= ========== ========== ========== ========== ==========
Ratio of net investment
income to
average net assets 5.56%(a) 5.40% 5.48% 5.64% 3.58%
======================= ========== ========== ========== ========== ==========
</TABLE>
(a) Ratios are based on average net assets of $6,017,417,344.
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, 1998, 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, 1998 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, 1998, 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 2, 1998
19
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS
<S> <C>
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham Short-Term
Owen Daly II Lewis F. Pennock Investments Co.
Edward K. Dunn, Jr. Ian W. Robinson (STIC)
Jack M. Fields 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
Carol F. Relihan Sr. Vice President & Secretary
Dana R. Sutton Vice President & Assistant Treasurer
Melville B. Cox Vice President Prime Portfolio
Karen Dunn Kelley Vice President ----------------------------------------
J. Abbott Sprague Vice President Institutional ANNUAL
Renee A. Friedli Assistant Secretary Class REPORT
P. Michelle Grace Assistant Secretary
Jeffrey H. Kupor Assistant Secretary
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary AUGUST 31, 1998
Lisa A. Moss 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
AUDITORS
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
This report may be distributed only to current shareholders or [LOGO APPEARS HERE]
to persons who have received a current prospectus. FUND MANAGEMENT COMPANY
</TABLE>
