<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of As the Portfolio's fiscal year end approached,
Charles T. Bauer, the U.S. economy was starting to display the
Chairman of the negative effects of spreading worldwide
LETTER Board of The Fund economic turmoil. What began as an isolated
TO OUR APPEARS HERE] currency devaluation in Thailand in July 1997
SHAREHOLDERS 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.
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 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 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 Treasury bill yields continued to drop significantly below the
federal funds target, the Portfolio's managers increased their
exposure to the repurchase agreement market and looked more
selectively out the curve. With little reason to extend it to
pick up yield, the weighted average maturity (WAM) was kept in
the 22- to 34-day range. Employing a barbell structure, the
portfolio managers were able to take advantage of the higher-
yielding overnight market while looking for strategic
opportunities farther out the yield curve. At close of the fiscal
year, the Portfolio's WAM was 27 days.
<TABLE>
<CAPTION>
Yields as of 8/31/98
Average Seven-Day
Monthly Yield Yield
<S> <C> <C>
Treasury Portfolio
Private Investment Class 5.19% 5.23%
IBC Money Fund Averages(TM) -
U.S. Treasury &
Repurchase Agreements 4.85% 4.90%
IBC Money Fund Averages(TM) -
Government Only/Institutions Only 5.10% 5.13%
</TABLE>
(continued)
<PAGE>
Using this strategy, the Private Investment Class of the
Portfolio outperformed its comparative indexes as of August 31,
1998, as shown in Table 1.
The Portfolio continues to hold 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 Private Investment Class stood at $360.3
million at the close of the fiscal year.
The Treasury Portfolio seeks to maximize current income to the
extent consistent with preservation of capital and maintenance of
liquidity. It invests exclusively in direct obligations of the
U.S. Treasury and repurchase agreements secured by such
obligations. Government securities, such as U.S. Treasury bills
and bonds, offer a high degree of safety and are guaranteed as to
the timely payment of interest and principal and interest if held
to maturity. As with any money market fund, an investment in
Treasury Portfolio is neither insured nor guaranteed by the U.S.
government, the FDIC, or a bank, and there can be no assurance
the Portfolio will be able to maintain a stable net asset value
of $1.00 per share.
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. The
Portfolio will continue to maintain its relatively short maturity
structure, remaining flexible to take advantage of any sudden
market moves.
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 if we may be
of service.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
2
<PAGE>
SCHEDULE OF INVESTMENTS
August 31, 1998
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 13.05%
U.S. TREASURY BILLS(a) - 4.25%
5.245% 12/10/98 $ 50,000 $ 49,271,528
- ---------------------------------------------------------------------------
5.125% 02/04/99 50,000 48,889,583
- ---------------------------------------------------------------------------
5.135% 04/29/99 50,000 48,288,333
- ---------------------------------------------------------------------------
5.173% 04/29/99 50,000 48,275,833
- ---------------------------------------------------------------------------
5.15% 05/27/99 25,000 24,041,528
- ---------------------------------------------------------------------------
218,766,805
- ---------------------------------------------------------------------------
U.S. TREASURY NOTES - 8.80%
6.00% 09/30/98 50,000 50,013,521
- ---------------------------------------------------------------------------
5.75% 12/31/98 50,000 50,056,102
- ---------------------------------------------------------------------------
6.375% 01/15/99 125,000 125,389,622
- ---------------------------------------------------------------------------
6.25% 03/31/99 25,000 25,099,746
- ---------------------------------------------------------------------------
6.75% 06/30/99 150,000 151,536,559
- ---------------------------------------------------------------------------
6.375% 07/15/99 50,000 50,383,358
- ---------------------------------------------------------------------------
452,478,908
- ---------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost
$671,245,713) 671,245,713
- ---------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 671,245,713
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENTS(b) - 86.42%
B.T. Securities Corp.
5.80%(c) -- 250,000 250,000,000
- ---------------------------------------------------------------------------
Barclays Capital Inc.
5.78%(d) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
5.80%(e) -- 250,000 250,000,000
- ---------------------------------------------------------------------------
CIBC Oppenheimer Corp.
5.78%(f) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Credit Suisse First Boston Corp.
5.80%(g) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Deutsche Morgan Grenfell Inc.
5.80%(h) -- 800,000 800,000,000
- ---------------------------------------------------------------------------
Deutsche Morgan Grenfell Inc.
5.80%(i) 09/01/98 300,000 300,000,000
- ---------------------------------------------------------------------------
Goldman, Sachs & Co.
5.78%(j) 09/01/98 500,000 500,000,000
- ---------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - (Continued)
Greenwich Capital Markets, Inc.
5.80%(k) 09/01/98 $250,000 $ 250,000,000
- ------------------------------------------------------------------------------
HSBC Securities, Inc.
5.78%(l) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
J.P. Morgan Securities Inc.
5.78%(m) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Merrill Lynch Government Securities, Inc.
5.80%(n) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Morgan Stanley & Co. Inc.
5.79%(o) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Warburg Dillon Read LLC
5.79%(p) 09/01/98 345,779 345,778,648
- ------------------------------------------------------------------------------
Total Repurchase Agreements (Cost
$4,445,778,648) 4,445,778,648
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.47% 5,117,024,361(q)
- ------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.53% 27,209,803
- ------------------------------------------------------------------------------
NET ASSETS -- 100.00% $5,144,234,164
==============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(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) 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.
(c) 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.
(d) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $251,907,000 U.S. Government obligations, 3.625% to 5.375% due 07/31/00
to 07/15/02 with an aggregate market value at 08/31/98 of $255,001,457.
(e) 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.
(f) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $244,175,000 U.S. Government obligations, 5.375% to 7.00% due 12/31/99
to 07/15/06 with an aggregate market value at 08/31/98 of $255,002,569.
(g) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $761,518,000 U.S. Government obligations, 0% to 9.125% due 05/15/99 to
02/15/20 with an aggregate market value at 08/31/98 of $258,228,014.
(h) Open repurchase agreement. Either party may terminate the agreement upon
demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $747,659,000 U. S. Government obligations, 4.75% to
12.50% due 10/31/98 to 11/15/16 with an aggregate market value at 08/31/98
of $816,001,319.
(i) Entered into 08/31/98 with a maturing value of $300,048,333. Collateralized
by $249,951,000 U.S. Government obligations, 5.25% to 14.00% due 08/15/03
to 02/15/23 with an aggregate market value at 08/31/98 of $306,001,371.
(j) Entered into 08/31/98 with a maturing value of $500,080,278. Collateralized
by $389,385,000 U.S. Government obligations, 5.125% to 12.75% due 09/30/98
to 02/15/27 with an aggregate market value at 08/31/98 of $510,503,342.
4
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS - (CONTINUED)
(k) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $248,093,000 U.S. Government obligations, 5.50% to 5.625% due 12/31/02
to 08/15/28 with an aggregate market value at 08/31/98 of $255,000,827.
(l) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $237,607,000 U.S. Government obligations, 6.00% to 9.00% due 08/15/99 to
11/15/27 with an aggregate market value at 08/31/98 of $255,004,329.
(m) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $227,527,000 U.S. Government obligations, 0% to 12.75% due 09/17/98 to
08/15/28 with an aggregate market value at 08/31/98 of $255,000,985.
(n) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $622,995,000 U.S. Government obligations, 0% due 05/15/05 to 02/15/24
with an aggregate market value at 08/31/98 of $255,001,523.
(o) Entered into 08/31/98 with a maturing value of $250,040,208. Collateralized
by $247,284,000 U.S. Government obligations, 5.375% to 5.75% due 07/31/00
to 11/30/02 with an aggregate market value at 08/31/98 of $255,308,242.
(p) 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 04/15/28 with an aggregate market
value at 08/31/98 of $1,020,108,316.
(q) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $ 671,245,713
- ------------------------------------------------------------------------
Repurchase agreements 4,445,778,648
- ------------------------------------------------------------------------
Receivables for:
Investments sold 47,702,222
- ------------------------------------------------------------------------
Interest receivable 6,315,744
- ------------------------------------------------------------------------
Investment for deferred compensation plan 82,793
- ------------------------------------------------------------------------
Other assets 68,410
- ------------------------------------------------------------------------
Total assets 5,171,193,530
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 25,813,818
- ------------------------------------------------------------------------
Deferred compensation 82,793
- ------------------------------------------------------------------------
Accrued administrative services fees 9,609
- ------------------------------------------------------------------------
Accrued advisory fees 275,392
- ------------------------------------------------------------------------
Accrued distribution fees 456,303
- ------------------------------------------------------------------------
Accrued transfer agent fees 79,567
- ------------------------------------------------------------------------
Accrued trustees' fees 4,209
- ------------------------------------------------------------------------
Accrued operating expenses 237,675
- ------------------------------------------------------------------------
Total liabilities 26,959,366
- ------------------------------------------------------------------------
NET ASSETS $5,144,234,164
========================================================================
NET ASSETS:
Institutional Class $2,988,374,938
========================================================================
Private Investment Class $ 360,307,220
========================================================================
Personal Investment Class $ 405,800,587
========================================================================
Cash Management Class $ 933,790,915
========================================================================
Resource Class $ 455,960,504
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 2,987,867,418
========================================================================
Private Investment Class 360,260,819
========================================================================
Personal Investment Class 405,742,920
========================================================================
Cash Management Class 933,641,495
========================================================================
Resource Class 455,898,901
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
STATEMENT OF OPERATIONS
For the year ended August 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 291,070,704
- -----------------------------------------------------------------------------
EXPENSES:
Advisory fees 3,026,608
- -----------------------------------------------------------------------------
Custodian fees 253,600
- -----------------------------------------------------------------------------
Administrative services fees 102,543
- -----------------------------------------------------------------------------
Trustees' fees and expenses 34,137
- -----------------------------------------------------------------------------
Transfer agent fees 579,287
- -----------------------------------------------------------------------------
Distribution fees (Note 2) 6,312,198
- -----------------------------------------------------------------------------
Other 406,649
- -----------------------------------------------------------------------------
Total expenses 10,715,022
- -----------------------------------------------------------------------------
Less: Fee waivers (2,009,722)
- -----------------------------------------------------------------------------
Net expenses 8,705,300
- -----------------------------------------------------------------------------
Net investment income 282,365,404
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 17,887
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 282,383,291
=============================================================================
</TABLE>
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 $ 282,365,404 $ 236,779,733
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 17,887 215,978
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 282,383,291 236,995,711
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (171,162,611) (153,610,717)
- -----------------------------------------------------------------------------
Private Investment Class (20,105,302) (20,120,440)
- -----------------------------------------------------------------------------
Personal Investment Class (18,031,165) (11,733,992)
- -----------------------------------------------------------------------------
Cash Management Class (55,954,060) (41,058,376)
- -----------------------------------------------------------------------------
Resource Class (17,112,266) (10,256,208)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains -- (59,575)
- -----------------------------------------------------------------------------
Share transactions-net (See Note 4) (116,572,228) 1,556,740,962
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets (116,554,341) 1,556,897,365
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,260,788,505 3,703,891,140
- -----------------------------------------------------------------------------
End of period $5,144,234,164 $5,260,788,505
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $5,143,411,553 $5,259,983,781
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 822,611 804,724
- -----------------------------------------------------------------------------
$5,144,234,164 $5,260,788,505
=============================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1998
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 three different portfolios, each of which offers separate series
of shares: the Treasury Portfolio, the Government & Agency Portfolio and the
Treasury TaxAdvantage Portfolio. The Government & Agency Portfolio commenced
operations on September 1, 1998. Information presented in these financial
statements pertains only to the Treasury Portfolio (the "Portfolio"), with the
assets, liabilities and operations of each portfolio being 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 investment 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.
D. Expenses - Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses are allocated
among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master 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 $300 million 0.15%
- ----------------------------------------
Over $300 million to $1.5 billion 0.06%
- ----------------------------------------
Over $1.5 billion 0.05%
- ----------------------------------------
</TABLE>
8
<PAGE>
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 Fund reimbursed AIM $102,543 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
Trustees 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 $366,571 for such services. Prior to the effective date of
the agreement with AFS, the Portfolio paid A I M Institutional Fund Services,
Inc. $212,716 pursuant to a transfer agency and shareholder services agreement
for the period September 1, 1997 through December 28, 1997.
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 pay up to a 0.50%, 0.75%, 0.10%, 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 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 $1,159,606, $1,803,733,
$826,277 and $512,860, respectively, as compensation under the Plan. FMC waived
fees of $2,009,722 for the same period. Certain officers and trustees of the
Trust are officers of AIM, FMC and AFS.
During the year ended August 31, 1998, the Portfolio paid legal fees of
$15,485 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.
9
<PAGE>
NOTE 4-SHARE INFORMATION
Changes in shares outstanding 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 18,385,087,568 $18,385,087,568 15,820,439,672 $ 15,820,439,672
- --------------------------------------------------------------------------------------------
Private Investment
Class 1,991,337,616 1,991,337,616 2,377,066,232 2,377,066,232
- --------------------------------------------------------------------------------------------
Personal Investment
Class 3,949,434,631 3,949,434,631 2,585,293,225 2,585,293,225
- --------------------------------------------------------------------------------------------
Cash Management Class 6,742,292,291 6,742,292,291 4,354,698,981 4,354,698,981
- --------------------------------------------------------------------------------------------
Resource Class 2,712,585,402 2,712,585,402 2,558,140,941 2,558,140,941
- --------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 34,740,376 34,740,376 15,531,436 15,531,436
- --------------------------------------------------------------------------------------------
Private Investment
Class 5,517,795 5,517,795 3,858,592 3,858,592
- --------------------------------------------------------------------------------------------
Personal Investment
Class 16,025,048 16,025,048 9,897,559 9,897,559
- --------------------------------------------------------------------------------------------
Cash Management Class 20,427,201 20,427,201 12,944,226 12,944,226
- --------------------------------------------------------------------------------------------
Resource Class 15,915,270 15,915,270 9,274,277 9,274,277
- --------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (18,839,453,624) (18,839,453,624) (14,763,510,184) (14,763,510,184)
- --------------------------------------------------------------------------------------------
Private Investment
Class (2,099,963,668) (2,099,963,668) (2,270,031,466) (2,270,031,466)
- --------------------------------------------------------------------------------------------
Personal Investment
Class (3,882,639,209) (3,882,639,209) (2,465,181,087) (2,465,181,087)
- --------------------------------------------------------------------------------------------
Cash Management Class (6,658,189,744) (6,658,189,744) (4,328,020,236) (4,328,020,236)
- --------------------------------------------------------------------------------------------
Resource Class (2,509,689,181) (2,509,689,181) (2,363,661,206) (2,363,661,206)
- --------------------------------------------------------------------------------------------
Net increase (decrease) (116,572,228) $ (116,572,228) 1,556,740,962 $ 1,556,740,962
============================================================================================
</TABLE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class 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 0.05 0.05 0.05 0.05 0.03
- ------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- ------------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================= ======== ======== ======== ======== ========
Total return 5.33% 5.16% 5.25% 5.34% 3.22%
========================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $360,307 $463,441 $352,537 $394,585 $412,716
========================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets(a) 0.38%(b) 0.39% 0.39% 0.40% 0.38%
========================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(c) 5.20%(b) 5.05% 5.14% 5.23% 3.26%
========================= ======== ======== ======== ======== ========
</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
0.58%, 0.59%, 0.59%, 0.60% and 0.60% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $386,535,328.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.00%, 4.85%, 4.94%, 5.03% and 3.05% for the periods
1998-1994, respectively.
10
<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 Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1998, and the related
statement of operations for the year then ended, the statements 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 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 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
11
<PAGE>
<TABLE>
<CAPTION>
TRUSTEES
<S> <C>
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham Short-Term
Owen Daly II Lewis F. Pennock Investments Trust
Edward K. Dunn, Jr. Ian W. Robinson (STIT)
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 Treasury Portfolio
Karen Dunn Kelley Vice President ----------------------------------------
J. Abbott Sprague Vice President Private ANNUAL
Renee A. Friedli Assistant Secretary Investment REPORT
P. Michelle Grace Assistant Secretary Class
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 TRUSTEES
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>
