<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of Mr. We are pleased to report that during the fiscal
Charles T. Bauer, year ended August 31, 1996, the Treasury
Chairman of the TaxAdvantage Portfolio of Short-Term Investments
LETTER Board of The Fund Trust continued to provide stability and a
TO OUR APPEARS HERE] competitive money market yield while a major
SHAREHOLDERS shift in the direction of interest rates took
place.
As the economy weakened in the latter half of 1995, the Federal
Reserve Board pushed interest rates lower to help cushion the
slowdown. The federal funds target rate was lowered in December and
again in January, and then held unchanged from the end of January
through the August 31 close of the Portfolio's fiscal year. The
federal funds target, which serves as a benchmark for other short-
term rates, remained at 5.25%. However, short-term markets were
volatile as opinions shifted regarding the next move in rates. As
economic growth revived, concerns about possible wage inflation
surfaced. Credit markets anticipated a tightening by the Fed,
driving interest rates higher.
YOUR INVESTMENT PORTFOLIO
The Treasury TaxAdvantage Portfolio maintained its investment
discipline in this changing environment. The Portfolio seeks to
maximize current income to the extent consistent with preservation
of capital and maintenance of liquidity. It purchases only direct
obligations of the U.S. Treasury. As 1996 unfolded, the Portfolio
was able to enhance yield as the yield curve became more positively
sloped and Treasury TaxAdvantage Portfolio managers purchased
securities strategically farther out in maturity. The weighted
average maturity was 53 days at the close of the fiscal year.
Government securities, such as U.S. Treasury bills and bonds,
offer a high degree of safety and are guaranteed as to timely
payment of principal and interest when held to maturity. Treasury
TaxAdvantage Portfolio shares are not insured and their yield will
vary with market conditions. There can be no assurance that the
Portfolio will be able to maintain a net asset value of $1.00 per
share.
As of August 31, the close of the Portfolio's fiscal year,
average monthly yield for the Private Investment Class was 4.78%;
seven-day yield was 4.79%. Net assets of the Private Investment
Class stood near $50 million.
The Portfolio continues to hold an AAAm-G credit quality rating,
the highest given by Standard & Poor's Corporation, a widely known
credit rating agency. The AAAm-G rating is historical and is based
on an annual analysis of Treasury TaxAdvantage Portfolio's credit
quality, composition, management, and weekly portfolio reviews.
OUTLOOK FOR THE FUTURE
As the reporting period closed, the economic outlook was for
continued growth with some slowing from the strong second quarter of
1996. The economy expanded at an annualized rate of 4.7% during the
second quarter of 1996. The extent of the slowdown would help
determine whether the Fed raised interest rates to pre-empt
inflationary pressures, and opinion about the likelihood of a rate
rise was divided. Forecasters who thought Fed policy would remain
unchanged until after November's elections were proven correct
September 24, 1996, when Fed chose to leave the federal funds rate
at 5.25%. Because the weighted average maturity of the Portfolio is
relatively short, Treasury TaxAdvantage Portfolio can respond
quickly to changes in the interest rate environment.
We are pleased to send you this report concerning your
investment. AIM is committed to customer service and to the primary
goals of safety, liquidity and yield in institutional fund
management. We are ready to respond to your comments about this
report and to any questions you may have. Please contact one of our
representatives at 800-659-1005 if we may be of service.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE>
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 99.76%
U.S. TREASURY BILLS(a) - 69.58%
5.215% 09/17/96 $ 49,680 $49,579,246
- -----------------------------------------------------------------
5.05% 09/19/96 2,984 2,976,465
- -----------------------------------------------------------------
5.04% 09/19/96 7,000 6,982,360
- -----------------------------------------------------------------
5.045% 09/19/96 4,670 4,658,220
- -----------------------------------------------------------------
5.065% 09/26/96 12,800 12,754,978
- -----------------------------------------------------------------
5.095% 09/26/96 9,765 9,730,450
- -----------------------------------------------------------------
5.06% 09/26/96 22,915 22,834,479
- -----------------------------------------------------------------
5.145% 10/03/96 44,995 44,789,224
- -----------------------------------------------------------------
5.10% 10/03/96 1,405 1,398,631
- -----------------------------------------------------------------
5.095% 10/03/96 540 537,555
- -----------------------------------------------------------------
5.115% 10/03/96 1,820 1,811,725
- -----------------------------------------------------------------
5.095% 10/03/96 3,000 2,986,413
- -----------------------------------------------------------------
5.155% 10/24/96 19,525 19,376,819
- -----------------------------------------------------------------
5.175% 10/24/96 20,025 19,872,434
- -----------------------------------------------------------------
5.18% 10/24/96 2,380 2,361,850
- -----------------------------------------------------------------
5.01% 11/07/96 23,000 22,785,544
- -----------------------------------------------------------------
4.975% 11/07/96 4,200 4,161,112
- -----------------------------------------------------------------
5.00% 11/07/96 11,185 11,080,917
- -----------------------------------------------------------------
4.995% 11/07/96 5,200 5,151,660
- -----------------------------------------------------------------
5.02% 11/14/96 13,000 12,865,854
- -----------------------------------------------------------------
5.04% 11/14/96 5,300 5,245,092
- -----------------------------------------------------------------
5.06% 11/14/96 8,000 7,916,791
- -----------------------------------------------------------------
5.01% 11/21/96 12,250 12,111,912
- -----------------------------------------------------------------
5.02% 11/21/96 4,700 4,646,914
- -----------------------------------------------------------------
5.03% 11/21/96 14,415 14,251,858
- -----------------------------------------------------------------
5.06% 11/21/96 2,200 2,174,953
- -----------------------------------------------------------------
5.095% 11/29/96 13,235 13,068,292
- -----------------------------------------------------------------
318,111,748
- -----------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
US. TREASURY SECURITIES - (continued)
U.S. TREASURY NOTES - 30.18%
8.00% 10/15/96 $42,475 $ 42,605,929
- ----------------------------------------------------------------------------
6.875% 10/31/96 40,500 40,589,317
- ----------------------------------------------------------------------------
7.25% 11/15/96 24,505 24,593,717
- ----------------------------------------------------------------------------
7.50% 12/31/96 30,000 30,209,989
- ----------------------------------------------------------------------------
137,998,952
- ----------------------------------------------------------------------------
Total U.S. Treasury Securities 456,110,700
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.76% 456,110,700(b)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.24% 1,085,450
- ----------------------------------------------------------------------------
NET ASSETS -- 100.00% $457,196,150
- ----------------------------------------------------------------------------
</TABLE>
(a) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(b) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $456,110,700
- ----------------------------------------------------------------------
Cash 4,084
- ----------------------------------------------------------------------
Receivables For:
Interest 3,140,128
- ----------------------------------------------------------------------
Reimbursement from advisor 4,800
- ----------------------------------------------------------------------
Investments sold 49,603,992
- ----------------------------------------------------------------------
Investment for deferred compensation plan 13,600
- ----------------------------------------------------------------------
Other assets 11,168
- ----------------------------------------------------------------------
Total assets 508,888,472
- ----------------------------------------------------------------------
LIABILITIES:
Payables For:
Investments purchased 49,579,246
- ----------------------------------------------------------------------
Dividends 1,966,957
- ----------------------------------------------------------------------
Deferred compensation 13,600
- ----------------------------------------------------------------------
Accrued advisory fees 55,963
- ----------------------------------------------------------------------
Accrued distribution fees 10,833
- ----------------------------------------------------------------------
Accrued transfer agent fees 3,541
- ----------------------------------------------------------------------
Accrued trustees' fees 1,297
- ----------------------------------------------------------------------
Accrued administrative services fees 2,545
- ----------------------------------------------------------------------
Accrued operating expenses 58,340
- ----------------------------------------------------------------------
Total liabilities 51,692,322
- ----------------------------------------------------------------------
NET ASSETS $457,196,150
======================================================================
NET ASSETS:
Institutional Class $407,218,040
======================================================================
Private Investment Class $ 49,978,110
======================================================================
Shares of beneficial interest, $.01 par value per share:
Institutional Class 407,107,656
======================================================================
Private Investment Class 49,964,561
======================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
======================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $23,434,439
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 791,921
- ------------------------------------------------------------------
Custodian fees 30,033
- ------------------------------------------------------------------
Administrative services fees 30,056
- ------------------------------------------------------------------
Trustees' fees and expenses 9,082
- ------------------------------------------------------------------
Transfer agent fees 34,495
- ------------------------------------------------------------------
Distribution fees (Note 2) 52,922
- ------------------------------------------------------------------
Other 140,352
- ------------------------------------------------------------------
Total expenses 1,088,861
- ------------------------------------------------------------------
Less expenses assumed by advisor (141,726)
- ------------------------------------------------------------------
Net expenses 947,135
- ------------------------------------------------------------------
Net investment income 22,487,304
- ------------------------------------------------------------------
Net realized gain on sales of investments 55,902
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $22,543,206
==================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,487,304 $ 20,447,888
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 55,902 24,806
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 22,543,206 20,472,694
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (22,487,304) (20,447,888)
- ----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains on investments -- (12,244)
- ----------------------------------------------------------------------------
Share transactions-net 57,341,150 (4,095,169)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets 57,397,052 (4,082,607)
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 399,799,098 403,881,705
- ----------------------------------------------------------------------------
End of period $457,196,150 $399,799,098
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $457,072,217 $399,731,067
- ----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 123,933 68,031
- ----------------------------------------------------------------------------
$457,196,150 $399,799,098
============================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Trust (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 Delaware business trust
consisting of two different portfolios, each of which offers separate series of
shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio, with
the assets, liabilities and operations of each portfolio accounted for
separately. Information presented in these financial statements pertains only
to the Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio
consists of two different classes of shares: the Institutional Class and the
Private Investment Class. Matters affecting each class are voted on exclusively
by such shareholders. The Portfolio is a money market fund whose investment
objective is the maximization of current income to the extent consistent with
the preservation of capital and the maintenance of liquidity.
The following is a summary of the significant accounting policies followed by
the Portfolio in the preparation of its financial statements. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of these financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
A. Security Valuations - The Portfolio invests only in securities which have
maturities of 397 days or less. The securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter assumes a
constant amortization to maturity of any discount or premium.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
discounts on investments, is accrued daily. Dividends to shareholders are
declared daily and are paid on the first business day of the following
month.
C. Federal Income Taxes - The Portfolio intends to comply with the requirements
of the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to more
than one class, e.g., advisory fees, are allocated between them.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM
receives a 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 $250 million 0.20%
- ----------------------------------------
Over $250 million to $500 million 0.15%
- ----------------------------------------
Over $500 million 0.10%
- ----------------------------------------
</TABLE>
The Fund has entered into a master distribution agreement with Fund Management
Company ("FMC") for the distribution of shares of the Institutional Class and
the Private Investment Class. The Company has also adopted a distribution plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the
Private Investment Class. The Plan provides that the Private Investment Class
may pay up to a 0.50% maximum annual rate of the Private Investment Class'
average daily net assets. Of this amount, the Fund may pay an asset-based sales
charge to FMC and the Portfolio may pay a service fee of 0.25% of the average
daily net assets of the Private Investment 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. Any amounts not paid as a service fee under such Plan
would constitute an asset-based sales charge. The Plan also
7
<PAGE>
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 the Private
Investment Class. During the year ended August 31, 1996, the Private Investment
Class paid $52,922 as compensation under the Plan.
AIM will, if necessary, reduce its fee for any fiscal year to the extent
required so that the amount of ordinary expenses of the Portfolio (excluding
interest, taxes, brokerage commissions and extraordinary expenses) paid or
incurred by the Portfolio for such fiscal year does not exceed the applicable
expense limitations imposed by the state securities regulations in any state in
which the Portfolio's shares are qualified for sale. During the year ended
August 31, 1996, AIM voluntarily waived advisory fees of $116,126 on the
Portfolio and assumed expenses of $25,600.
The Portfolio, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Portfolio. During the year ended August 31, 1996,
the Portfolio reimbursed AIM $30,056 for such services. During the year ended
August 31, 1996, the Portfolio paid A I M Institutional Fund Services, Inc.
("AIFS") $33,534 pursuant to a shareholder and transfer agency services
agreement.
Certain officers and trustees of the Fund are officers and directors of AIM,
FMC and AIFS.
The Portfolio paid legal fees of $3,900 for services rendered by Kramer,
Levin, Naftalis & Frankel as counsel to the Board of Trustees. A member of that
firm is a trustee of the Fund.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of AIM. The Fund may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-SHARE INFORMATION
Changes in shares outstanding for the years ended August 31, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 1,931,081,349 $ 1,931,081,349 1,566,228,552 $ 1,566,228,552
- -----------------------------------------------------------------------------------------
Private Investment
Class* 173,175,235 173,175,235 29,762,798 29,762,798
- -----------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 279,901 279,901 255,484 255,484
- -----------------------------------------------------------------------------------------
Private Investment
Class* 215,983 215,983 211,779 211,779
- -----------------------------------------------------------------------------------------
Reacquired:
Institutional Class (1,918,562,346) (1,918,562,346) (1,576,001,520) (1,576,001,520)
- -----------------------------------------------------------------------------------------
Private Investment
Class* (128,848,972) (128,848,972) (24,552,262) (24,552,262)
- -----------------------------------------------------------------------------------------
Net increase (decrease) 57,341,150 $ 57,341,150 (4,095,169) $ (4,095,169)
==========================================================================================
</TABLE>
* The Private Investment Class commenced operations on December 21, 1994.
8
<PAGE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Private Investment Class for the year ended August 31, 1996 and the period
December 21, 1994 (date operations commenced) through August 31, 1995.
<TABLE>
<CAPTION>
1996 1995
------- ------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
- ------------------------------------------------------- ------- ------
Income from investment operations:
Net investment income 0.05 0.04
- ------------------------------------------------------- ------- ------
Less distributions:
Dividends from net investment income (0.05) (0.04)
- ------------------------------------------------------- ------- ------
Net asset value, end of period $ 1.00 $ 1.00
======================================================= ======= ======
Total return 4.93% 5.32%(a)
======================================================= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $49,978 $5,423
======================================================= ======= ======
Ratio of expenses to average net assets(b) 0.45%(c) 0.45%(a)
======================================================= ======= ======
Ratio of net investment income to average net assets(b) 4.72%(c) 5.21%(a)
======================================================= ======= ======
</TABLE>
(a) Annualized.
(b) After waiver of advisory fees, distribution fees and expense
reimbursements. Ratios of expenses and net investment income to average net
assets prior to waivers and expense reimbursements were 0.85% and 4.32% for
1996 and 1.02% and 4.64% for 1995.
(c) Ratios are based on average net assets of $21,111,080.
9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders
Short-Term Investments Trust:
We have audited the accompanying statement of assets and liabilities of the
Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1996, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for the year then ended and the period December
21, 1994 (date operations commenced) through August 31, 1995. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996, by correspondence with the custodian and brokers. 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
Treasury TaxAdvantage Portfolio as of August 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
the year then ended and the period December 21, 1994 (date operations
commenced) through August 31, 1995 in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
10
<PAGE>
This page intentionally left blank
11
<PAGE>
<TABLE>
<S> <C>
TRUSTEES
Charles T. Bauer John F. Kroeger Short-Term
Bruce L. Crockett Lewis F. Pennock Investments Trust
Owen Daly II Ian W. Robinson (STIT)
Carl Frischling Louis S. Sklar
Robert H. Graham
OFFICERS
Charles T. Bauer Chairman
Robert H. Graham President Treasury
John J. Arthur Sr. Vice President & Treasurer TaxAdvantage
Gary T. Crum Sr. Vice President Portfolio
Carol F. Relihan Sr. Vice President & Secretary -----------------------------------------------------
Dana R. Sutton Vice President & Assistant Treasurer Private ANNUAL
Melville B. Cox Vice President Investment REPORT
Karen Dunn Kelley Vice President Class
J. Abbott Sprague Vice President
P. Michelle Grace Assistant Secretary
David L. Kite Assistant Secretary AUGUST 31, 1996
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
Mary J. Benson Assistant Treasurer
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
(800) 347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 1919
Houston, TX 77046
(800) 659-1005
CUSTODIAN
The Bank of New York
90 Washington Street, 11th Floor
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO TRUSTEES
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
TRANSFER AGENT
A I M Institutional Fund Services, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
AUDITORS
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
This report may be distributed only to current shareholders or [LOGO APPEARS HERE]
to persons who have received a current prospectus. FUND MANAGEMENT COMPANY
</TABLE>
