<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of As the six-month period covered by this report
Charles T. Bauer, was closing, the U.S. economy continued to move
Chairman of the ahead at a brisk pace. During the final quarter
LETTER Board of The Fund of 1998, the economy grew at its fastest rate in
TO OUR APPEARS HERE] two and a half years. Total gross domestic
SHAREHOLDERS product (GDP) growth for 1998 was 3.9%.
There was a different story overseas. Throughout the second half
of 1998, the global economy continued to experience economic
turmoil, financial instability and increased credit concerns.
Certain regions, particularly Asia, Russia and Latin America,
remained in a severe downturn.
As a result of this global meltdown, the U.S. Federal Open
Market Committee of the Federal Reserve Board (the Fed) reduced
the federal funds rate from 5.5% to 4.75% in three steps between
September and November. The discount rate was also reduced from 5%
to 4.5%. Interest rates were lowered, not to stimulate an already
strong U.S. economy, but to minimize the impact of the
international economic crises upon the U.S. economy and to
decrease volatility and calm the financial markets. In the United
States and Europe, financial markets were very volatile, but the
underlying economies continued surprisingly strong growth.
The yield on the one-year Treasury bill, which was as high as
5.32% in early July, dropped to 4.37% in early December as an
increase in the one-year Treasury bill's price caused its yield to
decline. The price increase was a result of investors' demand for
Treasuries in a "flight to quality" environment resulting from the
international crises and credit concerns.
YOUR INVESTMENT PORTFOLIO
Through a combination of short-term cash management vehicles and
selective use of a longer maturity schedule for higher yields, the
Portfolio continued to provide attractive returns. Weighted
average maturity (WAM) was held at a moderate length for much of
the period due to the concern derived from increased volatility
experienced in the fourth quarter of 1998. The WAM remained in the
20- to 35-day range. At the close of the period, the WAM was 34
days. The Portfolio will continue to maintain a relatively short
maturity structure to take advantage of any sudden rise in market
yields.
Using this strategy, the Cash Management Class of the Portfolio
outperformed its comparative indexes as of February 28, 1999, as
shown in the table.
The Portfolio holds the highest credit quality ratings given by
three widely known credit-rating agencies. It continues to be
rated AAAm by Standard & Poor's Corporation and Aaa by Moody's
Investors Service, Inc.
Yields as of 2/28/99
<TABLE>
<CAPTION>
Average Seven-Day
Monthly Yield Yield
<S> <C> <C>
Liquid Assets Portfolio
Cash Management Class 4.80% 4.82%
IBC Money Fund Averages(TM) -
First-Tier Institutions Only 4.66% 4.65%
IBC Money Fund Averages(TM) -
Total Institutions Only 4.53% 4.55%
</TABLE>
(continued)
<PAGE>
In addition, shortly after the reporting period closed, the
Portfolio received the highest rating, AAA, granted by Fitch IBCA.
These ratings are historical and are based on an analysis of the
Portfolio's credit quality, composition, management and weekly
portfolio reviews. With the addition of the AAA Fitch rating, AIM
became the only multi-fund complex to have all of its
institutional money market portfolios given the highest rating by
three different rating agencies.
Net assets of the Cash Management Class stood at $887.48 million
at the close of the reporting period, up from $655.98 million six
months earlier.
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. An investment in a money market fund is not
insured or guaranteed by the Federal Deposit Insurance Corporation
or any other government agency. Although a money market fund seeks
to preserve the value of your investment at $1.00 per share, it is
possible to lose money investing in the fund.
OUTLOOK FOR THE FUTURE
Statistics released shortly after the close of the reporting
period showed that employment gains have exceeded expectations and
wage inflation has been virtually non-existent. This caused
interest rates to drop, another indication the U.S. economy
continues to benefit from the unusual combination of strong growth
and low inflation.
As 1998 ended, there was speculation the Fed might decrease
interest rates even more. However, this view changed abruptly with
the release of stronger-than-expected adjusted December and
January economic numbers during the first quarter of 1999. These
numbers and other factors led many to speculate about the Fed
changing course and raising short-term rates again. We believe it
is unlikely such a move would be made soon because inflation
remains negligible despite robust economic growth. For the 12
months ended February 1999, producer prices were up just 0.5%, and
prices for intermediate goods actually fell during February 1999.
Retail sales growth and other economic indicators led to estimated
annualized GDP growth of 4.6% for the first quarter of 1999.
We are pleased to send you this 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>
SCHEDULE OF INVESTMENTS
February 28, 1999
(Unaudited)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 51.57%(a)
BASIC INDUSTRIES - 2.65%
CHEMICALS - 1.20%
Henkel Corp.
5.32% 03/01/99 $ 17,000 $ 17,000,000
- ----------------------------------------------------------------------------
4.81% 05/10/99 38,000 37,644,594
- ----------------------------------------------------------------------------
4.81% 05/11/99 20,000 19,810,272
- ----------------------------------------------------------------------------
4.81% 06/16/99 10,000 9,857,036
- ----------------------------------------------------------------------------
84,311,902
- ----------------------------------------------------------------------------
METAL MINING - 1.45%
Rio Tinto America, Inc.
4.81% 05/07/99 32,500 32,209,062
- ----------------------------------------------------------------------------
4.81% 05/13/99 30,000 29,707,392
- ----------------------------------------------------------------------------
U.S. Borax, Inc.
4.81% 04/09/99 28,000 27,854,096
- ----------------------------------------------------------------------------
4.81% 05/07/99 13,000 12,883,625
- ----------------------------------------------------------------------------
102,654,175
- ----------------------------------------------------------------------------
Total Basic Industries 186,966,077
- ----------------------------------------------------------------------------
CAPITAL GOODS - 0.70%
COMPUTER & OFFICE EQUIPMENT - 0.35%
International Business Machines Corp.
4.80% 06/16/99 25,000 24,643,333
- ----------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.35%
Hitachi America, Ltd.
4.82% 03/30/99 25,000 24,902,930
- ----------------------------------------------------------------------------
Total Capital Goods 49,546,263
- ----------------------------------------------------------------------------
CONSUMER DURABLES - 11.55%
AUTOMOBILE - 11.55%
Daimler-Chrysler North America Holding
Corp.
5.02% 03/18/99 25,000 24,940,736
- ----------------------------------------------------------------------------
4.78% 05/13/99 14,471 14,330,736
- ----------------------------------------------------------------------------
4.77% 06/11/99 50,000 49,324,250
- ----------------------------------------------------------------------------
4.80% 06/11/99 30,000 29,592,000
- ----------------------------------------------------------------------------
4.75% 06/16/99 25,000 24,647,049
- ----------------------------------------------------------------------------
4.88% 06/16/99 25,000 24,637,389
- ----------------------------------------------------------------------------
4.76% 06/18/99 23,000 22,668,519
- ----------------------------------------------------------------------------
4.75% 06/23/99 25,000 24,623,958
- ----------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
CONSUMER DURABLES - (continued)
AUTOMOBILE - (CONTINUED)
Ford Motor Credit Co.
4.87% 03/01/99 $ 250,000 $ 250,000,000
- --------------------------------------------------------------------------
4.80% 04/15/99 25,000 24,850,000
- --------------------------------------------------------------------------
4.80% 05/07/99 25,000 24,776,666
- --------------------------------------------------------------------------
General Motors Acceptance Corp.
4.93% 03/01/99 50,000 50,000,000
- --------------------------------------------------------------------------
4.99% 03/01/99 100,000 100,000,000
- --------------------------------------------------------------------------
4.95% 04/01/99 50,000 49,786,779
- --------------------------------------------------------------------------
4.99% 04/01/99 100,000 99,570,143
- --------------------------------------------------------------------------
Total Consumer Durables 813,748,225
- --------------------------------------------------------------------------
CONSUMER NON-DURABLES - 1.24%
BEVERAGES - 0.38%
Diageo Capital plc
4.80% 06/18/99 27,000 26,607,600
- --------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 0.42%
Colgate-Palmolive Co.
5.02% 04/06/99 9,600 9,551,808
- --------------------------------------------------------------------------
4.82% 04/27/99 20,000 19,847,367
- --------------------------------------------------------------------------
29,399,175
- --------------------------------------------------------------------------
PUBLISHING - 0.44%
McGraw-Hill Inc.
5.12% 03/10/99 31,400 31,359,808
- --------------------------------------------------------------------------
Total Consumer Non-Durables 87,366,583
- --------------------------------------------------------------------------
CONSUMER SERVICES - 1.75%
ENTERTAINMENT (MISCELLANEOUS) - 0.35%
Walt Disney Co. (The)
4.99% 03/05/99 25,000 24,986,139
- --------------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 1.40%
Johnson & Johnson
4.77% 05/26/99 14,000 13,840,470
- --------------------------------------------------------------------------
4.78% 06/25/99 31,000 30,522,531
- --------------------------------------------------------------------------
4.79% 06/25/99 30,000 29,536,967
- --------------------------------------------------------------------------
4.79% 07/21/99 25,000 24,528,146
- --------------------------------------------------------------------------
98,428,114
- --------------------------------------------------------------------------
Total Consumer Services 123,414,253
- --------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
ENERGY - 1.65%
OIL & GAS (INTEGRATED) - 1.65%
Mobil Australia Finance Co. Inc.
4.80% 06/29/99 $ 31,792 $ 31,283,328
- -------------------------------------------------------------------------
Shell 96
4.90% 05/05/99 39,100 39,100,000
- -------------------------------------------------------------------------
4.90% 06/11/99 45,750 45,750,000
- -------------------------------------------------------------------------
Total Energy 116,133,328
- -------------------------------------------------------------------------
FINANCIAL - 32.03%
ASSET BACKED SECURITIES - 21.02%
Bavaria TRR Corp.
5.20% 03/02/99 30,000 29,995,666
- -------------------------------------------------------------------------
Centric Capital Corp.
5.06% 03/05/99 10,150 10,144,294
- -------------------------------------------------------------------------
5.15% 03/23/99 10,000 9,968,528
- -------------------------------------------------------------------------
5.00% 03/30/99 14,700 14,640,792
- -------------------------------------------------------------------------
5.00% 04/05/99 25,000 24,878,472
- -------------------------------------------------------------------------
4.85% 04/06/99 25,000 24,878,750
- -------------------------------------------------------------------------
5.06% 04/08/99 7,000 6,962,612
- -------------------------------------------------------------------------
5.06% 04/16/99 6,000 5,961,206
- -------------------------------------------------------------------------
5.06% 04/21/99 5,000 4,964,159
- -------------------------------------------------------------------------
4.85% 04/23/99 20,000 19,857,194
- -------------------------------------------------------------------------
4.81% 05/04/99 26,600 26,372,541
- -------------------------------------------------------------------------
4.82% 05/05/99 35,000 34,695,403
- -------------------------------------------------------------------------
4.85% 05/07/99 20,000 19,819,472
- -------------------------------------------------------------------------
4.81% 05/14/99 30,000 29,703,383
- -------------------------------------------------------------------------
Clipper Receivables Corp.
4.89% 04/15/99 25,000 24,847,187
- -------------------------------------------------------------------------
Corporate Asset Funding Co.
4.76% 05/11/99 50,000 49,530,611
- -------------------------------------------------------------------------
Delaware Funding Corp.
5.15% 03/11/99 30,000 29,957,084
- -------------------------------------------------------------------------
4.83% 05/12/99 25,000 24,758,500
- -------------------------------------------------------------------------
Edison Asset Securitization, L.L.C.
5.15% 03/22/99 25,000 24,924,896
- -------------------------------------------------------------------------
4.84% 03/30/99 50,000 49,805,055
- -------------------------------------------------------------------------
4.83% 03/31/99 30,000 29,879,250
- -------------------------------------------------------------------------
5.20% 04/21/99 20,000 19,852,667
- -------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET BACKED SECURITIES - (CONTINUED)
Edison Asset Securitization, L.L.C. -
(continued)
4.85% 04/30/99 $ 25,000 $ 24,797,917
- ---------------------------------------------------------------------------
4.85% 05/19/99 35,000 34,627,493
- ---------------------------------------------------------------------------
4.84% 05/24/99 26,100 25,805,244
- ---------------------------------------------------------------------------
4.86% 05/25/99 30,000 29,655,750
- ---------------------------------------------------------------------------
4.79% 05/28/99 19,901 19,667,981
- ---------------------------------------------------------------------------
4.87% 06/30/99 25,000 24,590,785
- ---------------------------------------------------------------------------
4.79% 07/14/99 50,000 49,101,875
- ---------------------------------------------------------------------------
4.85% 08/10/99 15,673 15,330,937
- ---------------------------------------------------------------------------
Falcon Asset Securitization Corp.
4.85% 03/26/99 35,000 34,882,118
- ---------------------------------------------------------------------------
4.85% 03/30/99 25,000 24,902,326
- ---------------------------------------------------------------------------
4.83% 04/19/99 20,000 19,868,517
- ---------------------------------------------------------------------------
Mont Blanc Capital Corp.
5.25% 03/05/99 28,000 27,983,666
- ---------------------------------------------------------------------------
5.15% 03/11/99 25,000 24,964,236
- ---------------------------------------------------------------------------
4.85% 03/26/99 39,000 38,868,646
- ---------------------------------------------------------------------------
4.90% 04/13/99 25,000 24,853,681
- ---------------------------------------------------------------------------
Monte Rosa Capital Corp.
4.84% 03/26/99 43,000 42,855,472
- ---------------------------------------------------------------------------
Preferred Receivables Funding Corp.
4.88% 03/16/99 25,500 25,448,150
- ---------------------------------------------------------------------------
4.83% 06/29/99 9,740 9,583,186
- ---------------------------------------------------------------------------
4.87% 08/25/99 9,900 9,662,953
- ---------------------------------------------------------------------------
Quincy Capital Corp.
4.84% 05/17/99 34,429 34,072,583
- ---------------------------------------------------------------------------
Riverwoods Funding Corp.
4.83% 03/30/99 40,000 39,844,367
- ---------------------------------------------------------------------------
4.85% 04/19/99 33,000 32,782,154
- ---------------------------------------------------------------------------
Sheffield Receivables Corp.
4.93% 03/02/99 25,000 24,996,577
- ---------------------------------------------------------------------------
5.28% 03/05/99 30,000 29,982,400
- ---------------------------------------------------------------------------
4.84% 03/30/99 40,000 39,844,045
- ---------------------------------------------------------------------------
4.84% 03/31/99 43,000 42,826,567
- ---------------------------------------------------------------------------
Three Rivers Funding Corp.
4.88% 03/16/99 40,000 39,918,667
- ---------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET BACKED SECURITIES - (CONTINUED)
Variable Funding Corp.
5.05% 03/10/99 $ 16,659 $ 16,637,968
- --------------------------------------------------------------------------
4.87% 03/15/99 50,000 49,905,306
- --------------------------------------------------------------------------
4.85% 04/05/99 25,000 24,882,118
- --------------------------------------------------------------------------
4.83% 04/20/99 22,000 21,852,417
- --------------------------------------------------------------------------
4.80% 05/10/99 35,000 34,673,333
- --------------------------------------------------------------------------
4.83% 07/15/99 26,252 25,772,988
- --------------------------------------------------------------------------
1,481,840,145
- --------------------------------------------------------------------------
BANKS (DOMESTIC) - 2.12%
Bank of America,
4.84% 06/10/99 25,000 24,660,528
- --------------------------------------------------------------------------
4.83% 06/22/99 30,000 29,545,175
- --------------------------------------------------------------------------
First Chicago Financial Corp.
4.80% 05/13/99 25,000 24,756,667
- --------------------------------------------------------------------------
4.80% 05/14/99 11,000 10,891,467
- --------------------------------------------------------------------------
4.82% 05/14/99 25,000 24,752,305
- --------------------------------------------------------------------------
4.81% 06/14/99 35,000 34,508,979
- --------------------------------------------------------------------------
149,115,121
- --------------------------------------------------------------------------
BANKS-(FOREIGN )- 1.18%
UBS Finance (Delaware) Inc.
4.82% 06/09/99 35,000 34,531,389
- --------------------------------------------------------------------------
4.86% 08/09/99 30,000 29,347,950
- --------------------------------------------------------------------------
4.90% 08/09/99 20,000 19,561,722
- --------------------------------------------------------------------------
83,441,061
- --------------------------------------------------------------------------
BROKER DEALER - 0.98%
Credit Suisse First Boston Inc.
4.82% 04/20/99 15,000 14,899,583
- --------------------------------------------------------------------------
4.83% 06/08/99 25,000 24,667,938
- --------------------------------------------------------------------------
4.83% 07/12/99 30,000 29,464,675
- --------------------------------------------------------------------------
69,032,196
- --------------------------------------------------------------------------
BUSINESS CREDIT - 0.35%
National Rural Utilities Cooperative
Finance
4.85% 04/26/99 25,000 24,811,389
- --------------------------------------------------------------------------
INSURANCE (OTHER) - 1.03%
Marsh & McLennan Co., Inc.
5.08% 03/10/99 30,000 29,961,900
- --------------------------------------------------------------------------
5.10% 03/22/99 25,000 24,925,625
- --------------------------------------------------------------------------
4.80% 04/15/99 18,100 17,991,400
- --------------------------------------------------------------------------
72,878,925
- --------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
FINANCIAL-MISCELLANEOUS - 0.27%
International Lease Finance Corp.
4.72% 07/20/99 $ 19,000 $ 18,648,753
- --------------------------------------------------------------------------
FINANCIAL-MULTIPLE INDUSTRY - 5.08%
General Electric Capital Corp.
4.95% 03/03/99 25,000 24,993,125
- --------------------------------------------------------------------------
4.77% 03/19/99 25,000 24,940,375
- --------------------------------------------------------------------------
5.00% 03/19/99 25,000 24,937,500
- --------------------------------------------------------------------------
5.05% 04/06/99 25,000 24,873,750
- --------------------------------------------------------------------------
5.03% 04/19/99 20,000 19,863,072
- --------------------------------------------------------------------------
5.06% 04/27/99 15,000 14,879,825
- --------------------------------------------------------------------------
4.92% 05/14/99 25,000 24,747,167
- --------------------------------------------------------------------------
4.76% 06/07/99 30,000 29,611,267
- --------------------------------------------------------------------------
4.76% 06/16/99 25,000 24,646,306
- --------------------------------------------------------------------------
4.83% 06/30/99 13,000 12,788,956
- --------------------------------------------------------------------------
4.77% 08/11/99 10,000 9,784,025
- --------------------------------------------------------------------------
4.75% 08/19/99 25,000 24,435,937
- --------------------------------------------------------------------------
4.88% 08/25/99 25,000 24,400,166
- --------------------------------------------------------------------------
4.80% 08/26/99 25,000 24,406,667
- --------------------------------------------------------------------------
4.84% 09/29/99 25,000 24,287,444
- --------------------------------------------------------------------------
4.81% 11/03/99 25,000 24,174,951
- --------------------------------------------------------------------------
357,770,533
- --------------------------------------------------------------------------
Total Financial 2,257,538,123
- --------------------------------------------------------------------------
Total Commercial Paper (Cost
$3,634,712,852) 3,634,712,852
- --------------------------------------------------------------------------
BANK NOTES - 0.57%
First Union National Floater
5.13% (Cost $40,000,000)(b) 11/23/99 40,000 40,000,000
- --------------------------------------------------------------------------
CERTIFICATE OF DEPOSIT - 0.35%
UBS AG
5.24% (Cost $24,985,530) 03/01/00 25,000 24,985,530
- --------------------------------------------------------------------------
COMMERCIAL PAPER TRUST CERTIFICATES -
3.55%
Citibank, N.A.
5.12%(c) (Cost $250,000,000) 12/28/99 250,000 250,000,000
- --------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
MASTER NOTE AGREEMENTS - 18.90%
Goldman Sachs Group, L.P.
5.08%(d) 04/19/99 $300,000 $ 300,000,000
- ---------------------------------------------------------------------------------
Liquid Asset Backed Securities Trust
4.94%(d) 11/26/99 275,189 275,188,590
- ---------------------------------------------------------------------------------
Merrill Lynch Mortgage Capital Inc.
5.16%(e) -- 30,000 30,000,000
- ---------------------------------------------------------------------------------
5.16%(e) 08/16/99 377,000 377,000,000
- ---------------------------------------------------------------------------------
Morgan (J.P) Securities Inc.
4.95%(f) 05/03/99 205,000 205,000,000
- ---------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.
4.98%(g) 05/24/99 145,000 145,000,000
- ---------------------------------------------------------------------------------
Total Master Note Agreements (Cost
$1,332,188,590) 1,332,188,590
- ---------------------------------------------------------------------------------
MEDIUM TERM NOTES - 0.71%
Ford Motor Credit Co.
5.34%(b) (Cost $50,019,778) 04/19/99 50,000 50,019,778
- ---------------------------------------------------------------------------------
REVENUE BONDS - 1.48%
Belk, Inc.; Variable Rate Demand Revenue
Bonds
4.95%(h)(i) 07/01/08 60,000 60,000,000
- ---------------------------------------------------------------------------------
BMC Special Care Facilities; Variable Rate
Demand Revenue Bonds
4.95%(h)(i) 11/15/29 20,000 20,000,000
- ---------------------------------------------------------------------------------
Jacksonville Health Facilities Authority
(Charity Obligations Group);
Refunding Hospital Series C Revenue Bonds(h)(i)
4.95% 08/15/19 24,700 24,700,000
- ---------------------------------------------------------------------------------
Total Revenue Bonds (Cost $104,700,000) 104,700,000
- ---------------------------------------------------------------------------------
TIME DEPOSITS - 9.65%
Chase Manhattan Delaware
4.88% 03/01/99 250,000 250,000,000
- ---------------------------------------------------------------------------------
Deutsche Bank Cayman Time Deposit
4.88% 03/01/99 80,000 80,000,000
- ---------------------------------------------------------------------------------
Norwest Bank Minnesota
4.88% 03/01/99 150,000 150,000,000
- ---------------------------------------------------------------------------------
SunTrust Bank, Atlanta
4.88% 03/01/99 200,000 200,000,000
- ---------------------------------------------------------------------------------
Total Time Deposits (Cost $680,000,000) 680,000,000
- ---------------------------------------------------------------------------------
Total Investments, excluding repurchase
agreements 6,116,606,750
- ---------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS(j) - 15.93%
Barclays Capital Inc.
4.85%(k) 03/01/99 $109,287 $ 109,287,156
- ----------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
4.85%(l) - 250,000 250,000,000
- ----------------------------------------------------------------------------
Chase Securities, Inc.
4.80%(m) 03/15/99 120,000 120,000,000
- ----------------------------------------------------------------------------
Credit Suisse First Boston Corp.
4.875%(n) 03/01/99 343,427 343,426,659
- ----------------------------------------------------------------------------
Deutsche Bank Securities Inc.
4.85(o) - 200,000 200,000,000
- ----------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale
4.85%(p) - 100,000 100,000,000
- ----------------------------------------------------------------------------
Total Repurchase Agreements (Cost
$1,122,713,815) 1,122,713,815
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 102.71% 7,239,320,565(q)
- ----------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (2.71%) (191,059,176)
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $7,048,261,389
============================================================================
</TABLE>
(a) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(b) Interest rates are redetermined daily. Rate shown is the rate in effect on
02/28/99.
(c) 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 02/28/99.
(d) 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 02/28/99.
(e) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon one business days' notice. Interest rates on
master notes are redetermined periodically. Rate shown is the rate in
effect on 02/28/99.
(f) 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
02/28/99.
(g) 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 02/28/99.
(h) 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 02/28/99.
(i) Secured by a letter of credit.
(j) 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.
(k) Joint repurchase agreement entered into 02/26/99 with a maturing value of
$214,575,392. Collateralized by $217,012,000 U.S. Government obligations,
0% to 8.50% due 03/10/99 to 10/15/08 with an aggregate market value at
02/28/99 of $218,778,541.
(l) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates are redetermined daily. Collateralized by
$254,081,689 U.S. Government obligations, 0% to 9.08% due 09/01/01 to
02/01/29 with an aggregate market value at 02/28/99 of $259,163,325.
(m) Term repurchase agreement entered into 02/10/99 with a maturity date of
03/15/99, however, either party may terminate the agreement as of any
business day not less than one business day after receipt of written notice
from the terminating party. Collateralized by $200,853,333 U.S. Government
obligations, 6.00% to 7.00% due 02/12/12 to 03/01/29 with an aggregate
market value at 02/28/99 of $204,003,233.
(n) Joint repurchase agreement entered into 02/26/99 with a maturing value of
$500,203,125. Collateralized by $527,960,000 U.S. Government obligations,
4.90% to 7.85% due 01/14/00 to 02/25/09 with an aggregate market value at
02/28/99 of $524,499,525.
(o) Open repurchase agreement entered into 02/26/99. Collateralized by
$210,287,271 U.S. Government obligations, 6% due 02/01/29 with an aggregate
market value at 02/28/99 of $204,000,000.
(p) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates are redetermined daily. Collateralized by
$91,830,596 U.S. Government Obligations, 6.00% to 8.50% due 12/15/22 to
01/15/29 with an aggregate market value at 02/28/99 of $102,000,000.
(q) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $6,116,606,750
- ------------------------------------------------------------------------
Repurchase agreements 1,122,713,815
- ------------------------------------------------------------------------
Interest receivable 8,841,699
- ------------------------------------------------------------------------
Investment for deferred compensation plan 58,131
- ------------------------------------------------------------------------
Other assets 216,871
- ------------------------------------------------------------------------
Total assets 7,248,437,266
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 174,342,452
- ------------------------------------------------------------------------
Dividends 24,987,580
- ------------------------------------------------------------------------
Deferred compensation 58,131
- ------------------------------------------------------------------------
Accrued administrative services fees 9,716
- ------------------------------------------------------------------------
Accrued advisory fees 302,102
- ------------------------------------------------------------------------
Accrued distribution fees 101,368
- ------------------------------------------------------------------------
Accrued transfer agent fees 67,839
- ------------------------------------------------------------------------
Accrued operating expenses 306,689
- ------------------------------------------------------------------------
Total liabilities 200,175,877
- ------------------------------------------------------------------------
NET ASSETS $7,048,261,389
========================================================================
NET ASSETS:
Institutional Class $5,869,046,581
========================================================================
Cash Management Class $ 887,482,663
========================================================================
Private Investment Class $ 229,777,485
========================================================================
Resource Class $ 61,954,660
========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Institutional Class 5,869,017,009
========================================================================
Cash Management Class 887,455,938
========================================================================
Private Investment Class 229,778,901
========================================================================
Resource Class 61,966,755
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended February 28, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $146,268,180
- -------------------------------------------------------------------
EXPENSES:
Advisory
fees 4,215,316
- -------------------------------------------------------------------
Custodian fees 116,020
- -------------------------------------------------------------------
Administrative services fees 55,010
- -------------------------------------------------------------------
Distribution fees (Note 2) 739,214
- -------------------------------------------------------------------
Directors' fees and expenses 22,744
- -------------------------------------------------------------------
Transfer agent fees 286,662
- -------------------------------------------------------------------
Other 364,980
- -------------------------------------------------------------------
Total expenses 5,799,946
- -------------------------------------------------------------------
Less: Fee waivers (2,873,184)
- -------------------------------------------------------------------
Net expenses 2,926,762
- -------------------------------------------------------------------
Net investment income 143,341,418
- -------------------------------------------------------------------
Net realized gain on sales of investments 672,251
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $144,013,669
===================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended February 28, 1999 and year ended August 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 28, AUGUST 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 143,341,418 $231,962,632
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 672,251 750,940
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 144,013,669 232,713,572
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (121,518,628) (207,681,074)
- ----------------------------------------------------------------------------
Cash Management Class (17,031,592) (16,114,306)
- ----------------------------------------------------------------------------
Private Investment Class (3,244,868) (3,506,724)
- ----------------------------------------------------------------------------
Resource Class (1,546,330) (4,660,528)
- ----------------------------------------------------------------------------
Capital stock transactions -- net (See Note
4) 3,137,975,474 (113,347,634)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets 3,138,647,725 (112,596,694)
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,909,613,664 4,022,210,358
- ----------------------------------------------------------------------------
End of period $7,048,261,389 $3,909,613,664
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $7,048,218,603 $3,910,243,129
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investment securities 42,786 (629,465)
- ----------------------------------------------------------------------------
$7,048,261,389 $3,909,613,664
============================================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1999
(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 currently offers six different classes
of shares: the Institutional Class, the Cash Management Class, the Private
Investment Class, the Personal Investment Class, the Reserve 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 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 $629,465 (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, 1999, AIM voluntarily waived fees of
$2,669,700.
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,
1999, the Portfolio reimbursed AIM $55,010 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. During the six months ended February 28,
1999, the Portfolio paid AFS $281,066 for such services.
13
<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, the
Reserve Class, and the Resource Class of the Portfolio. The Plan provides that
the Private Investment Class, the Personal Investment Class, the Cash
Management Class, the Reserve Class, and the Resource Class pay up to a 0.50%,
0.75%, 0.10%, 1.00%, and 0.20%, respectively, maximum annual rate 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, Personal Investment Class, and the Reserve 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, the Reserve 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 six months ended February 28, 1999, the Private Investment
Class, the Cash Management Class, and the Resource Class paid $204,189,
$269,430, and $62,111, respectively, as compensation under the Plan. FMC waived
fees of $203,484 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, 1999, the Portfolio paid legal fees
of $53,645 for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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 - SHARE INFORMATION
Changes in shares outstanding during the six months ended February 28, 1999 and
the year ended August 31, 1998 were as follows:
<TABLE>
<CAPTION>
FEBRUARY 28, 1999 AUGUST 31, 1998
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 65,193,465,215 $ 65,193,465,215 93,828,246,640 $ 93,828,246,640
- ----------------------------------------------------------------------------------------------
Cash Management Class 5,243,241,927 5,243,241,927 4,263,088,877 4,263,088,877
- ----------------------------------------------------------------------------------------------
Private Investment
Class 1,040,326,676 1,040,326,676 427,983,177 427,983,177
- ----------------------------------------------------------------------------------------------
Resource* 707,363,526 707,363,526 1,649,842,930 1,649,842,930
- ----------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 14,063,868 14,063,868 38,210,037 38,210,037
- ----------------------------------------------------------------------------------------------
Cash Management Class 12,271,973 12,271,973 10,309,246 10,309,246
- ----------------------------------------------------------------------------------------------
Private Investment
Class 1,626,592 1,626,592 3,283,004 3,283,004
- ----------------------------------------------------------------------------------------------
Resource* 1,664,604 1,664,604 4,593,118 4,593,118
- ----------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (62,436,584,809) (62,436,584,809) (94,557,041,875) (94,557,041,875)
- ----------------------------------------------------------------------------------------------
Cash Management Class (5,024,094,920) (5,024,094,920) (3,700,876,338) (3,700,876,338)
- ----------------------------------------------------------------------------------------------
Private Investment
Class (882,244,600) (882,244,600) (432,076,106) (432,076,106)
- ----------------------------------------------------------------------------------------------
Resource* (733,124,578) (733,124,578) (1,648,910,344) (1,648,910,344)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) 3,137,975,474 $ 3,137,975,474 (113,347,634) $ (113,347,634)
==============================================================================================
</TABLE>
* The MSTC Cash Reserve Class changed names to the Resource Class on October 1,
1998.
14
<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, 1999, each
of the years in the two year period ended August 31, 1998 and the period
January 17, 1996 (date sales commenced) through August 31, 1996.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 28, --------------------------
1999 1998 1997 1996
------------ -------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------- -------- -------- ------- -------
Income from investment
operations:
Net investment income 0.03 0.06 0.05 0.03
- -------------------------------- -------- -------- ------- -------
Less distributions:
Dividends from net investment
income (0.03) (0.06) (0.05) (0.03)
- -------------------------------- -------- -------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
================================ ======== ======== ======= =======
Total return 2.54% 5.66% 5.50% 3.32%
================================ ======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $887,483 $655,975 $83,487 $53,209
================================ ======== ======== ======= =======
Ratio of expenses to average net
assets(a) 0.16%(b) 0.16% 0.15% 0.10%(c)
================================ ======== ======== ======= =======
Ratio of net investment income
to average net assets(d) 5.04%(b) 5.51% 5.38% 5.27%(c)
================================ ======== ======== ======= =======
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.27% (annualized), 0.28%, 0.28% and 0.34% (annualized) for the periods
1999-1996, respectively.
(b) Ratios are annualized and based on average net assets of $679,158,999.
(c) Annualized.
(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 4.93% (annualized), 5.39%, 5.25% and 5.03% (annualized)
for the periods 1999-1996, respectively.
15
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS
<S> <C>
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham Short-Term
Owen Daly II Prema Mathai-Davis Investments Co.
Edward K. Dunn, Jr. Lewis F. Pennock (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 Liquid
Dana R. Sutton Vice President & Assistant Treasurer Assets
Melville B. Cox Vice President Portfolio
Karen Dunn Kelley Vice President ----------------------------------------
J. Abbott Sprague Vice President Cash SEMI-
Mary J. Benson Assistant Vice President & Assistant Treasurer Management ANNUAL
Sheri Morris Assistant Vice President & Assistant Treasurer Class REPORT
Renee A. Friedli Assistant Secretary
P. Michelle Grace Assistant Secretary
Jeffrey H. Kupor Assistant Secretary
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary FEBRUARY 28, 1999
Lisa A. Moss Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
(800) 347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
(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 LLP
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 APPEARS HERE]
to persons who have received a current prospectus. Fund Management Company
</TABLE>
LAP-SAR-3
