<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of During the six months covered by this report, the
Charles T. Bauer, U.S. economy continued to exhibit solid growth
Chairman of the with little or no inflation. Gross domestic
Board of the Fund product grew at a 3.1% annual rate in the third
LETTER APPEARS HERE] quarter of 1997 and a 3.7% annual rate in the
TO OUR final quarter of the year. Sturdy growth is
SHAREHOLDERS expected in the first half of 1998 as well.
Inflation was well controlled, remaining in the 1% to 2% range.
As a result, the Federal Reserve Board (the Fed) kept its key
short-term target, the federal funds rate, at 5.50% throughout
the reporting period.
During the last half of 1997, markets focused on the collapse
in several Asian countries' currencies and the potential effects
on the U.S. economy. As Asian economic turmoil continued, fixed-
income markets rallied in anticipation that the Fed would lower
rates to counteract the dampening effects of the Far East
situation. At the close of the reporting period, the markets were
still waiting for the much-anticipated slowdown, and interest
rates had moved up some as the chance of the Fed's lowering rates
was pushed further into the future.
YOUR INVESTMENT PORTFOLIO
Although the Treasury bill yield curve remained expensive
relative to the federal funds rate target for most of the
reporting period, Short-Term Investments Trust Treasury
TaxAdvantage Portfolio held to its consistent investment
discipline, maintaining a relatively short, laddered portfolio
structure. This structure is used to help ensure the Portfolio's
yield is not unduly influenced by reinvestment rates on any
particular maturity date. The weighted average maturity was held
between 42 days and 60 days during the reporting period to take
advantage of higher rates available on longer maturities. At the
close of the reporting period, the weighted average maturity was
52 days.
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, which provides shareholders with dividends exempt from
state and local income taxation in certain jurisdictions.
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 principal and interest if held to maturity. As with
any money market fund, an investment in Treasury TaxAdvantage
Portfolio is neither insured nor guaranteed by the U.S.
government, the FDIC, or a bank, and there can be no assurance
that the Portfolio will be able to maintain a stable net asset
value of $1.00 per share.
As of February 28, 1998, the Private Investment Class of the
Portfolio offered competitive yields: Its average monthly yield
was 4.86%, and its seven-day yield was 4.87%.
The Portfolio continues to hold the highest credit quality
ratings given by two widely known credit-rating agencies: AAAm-G
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 $35.7
million as of February 28, 1998.
(continued)
<PAGE>
OUTLOOK FOR THE FUTURE
As the reporting period closed, the general expectation was that
the economy would continue to grow at a solid pace of around 3%
and then slow somewhat in the second half of 1998 as the effects
of Asia's difficulties take hold. Inflation was expected to
remain tame and the Fed was expected to hold rates steady for the
foreseeable future. In his late-February testimony to Congress,
Fed Chairman Alan Greenspan noted that the deflationary effects
of turmoil in Asia could offset the inflationary pressures from
strong domestic spending and a tight U.S. labor market.
The Portfolio will continue to maintain a relatively short
maturity structure to take advantage of any sudden rise in market
yields. AIM remains committed to the primary goals of safety,
liquidity and yield in institutional fund management.
We are pleased to send you this report concerning your
investment. We are also committed to customer service and are
ready to respond to your comments about this report and to any
questions you may have. Please contact one of our representatives
at 800-659-1005 if we may be of service.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
2
<PAGE>
SCHEDULE OF INVESTMENTS
February 28, 1998
(Unaudited)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 99.01%
U.S. TREASURY BILLS(a) - 38.15%
5.38% 03/05/98 $ 1,935 $ 1,933,843
- ------------------------------------------------------------------------
5.15% 03/19/98 1,595 1,590,893
- ------------------------------------------------------------------------
5.20% 03/26/98 5,660 5,639,561
- ------------------------------------------------------------------------
5.235% 03/26/98 7,940 7,911,135
- ------------------------------------------------------------------------
4.92% 04/09/98 3,100 3,083,477
- ------------------------------------------------------------------------
5.00% 04/09/98 1,100 1,094,042
- ------------------------------------------------------------------------
4.99% 04/23/98 3,200 3,176,492
- ------------------------------------------------------------------------
5.00% 04/23/98 1,610 1,598,149
- ------------------------------------------------------------------------
5.29% 04/23/98 12,000 11,906,543
- ------------------------------------------------------------------------
5.41% 04/23/98 12,000 11,906,720
- ------------------------------------------------------------------------
5.08% 05/28/98 10,000 9,875,822
- ------------------------------------------------------------------------
5.17% 05/28/98 4,000 3,949,449
- ------------------------------------------------------------------------
63,666,126
- ------------------------------------------------------------------------
U.S. TREASURY NOTES - 60.86%
5.125% 03/31/98 24,000 23,993,608
- ------------------------------------------------------------------------
7.875% 04/15/98 42,400 42,523,819
- ------------------------------------------------------------------------
5.875% 04/30/98 15,000 15,012,723
- ------------------------------------------------------------------------
6.125% 05/15/98 20,000 20,033,144
- ------------------------------------------------------------------------
101,563,294
- ------------------------------------------------------------------------
Total U.S. Treasury Securities 165,229,420
- ------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.01% 165,229,420(b)
- ------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.99% 1,658,530
- ------------------------------------------------------------------------
NET ASSETS -- 100.00% $166,887,950
========================================================================
</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
February 28, 1998
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $165,229,420
- ----------------------------------------------------------------------
Interest receivable 2,423,601
- ----------------------------------------------------------------------
Investment for deferred compensation plan 22,879
- ----------------------------------------------------------------------
Other assets 21,070
- ----------------------------------------------------------------------
Total assets 167,696,970
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 688,656
- ----------------------------------------------------------------------
Deferred compensation 22,879
- ----------------------------------------------------------------------
Accrued administrative services fees 3,884
- ----------------------------------------------------------------------
Accrued advisory fees 18,988
- ----------------------------------------------------------------------
Accrued distribution fees 6,284
- ----------------------------------------------------------------------
Accrued transfer agent fees 8,418
- ----------------------------------------------------------------------
Accrued trustees' fees 905
- ----------------------------------------------------------------------
Accrued operating expenses 59,006
- ----------------------------------------------------------------------
Total liabilities 809,020
- ----------------------------------------------------------------------
NET ASSETS $166,887,950
======================================================================
NET ASSETS:
Institutional Class $131,168,415
======================================================================
Private Investment Class $ 35,719,535
======================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 130,991,915
======================================================================
Private Investment Class 35,671,472
======================================================================
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 six months ended February 28, 1998
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $6,514,912
- -----------------------------------------------------------------
EXPENSES:
Advisory fees 246,727
- -----------------------------------------------------------------
Custodian fees 8,008
- -----------------------------------------------------------------
Administrative services fees 22,591
- -----------------------------------------------------------------
Trustees' fees and expenses 4,829
- -----------------------------------------------------------------
Transfer agent fees 22,091
- -----------------------------------------------------------------
Distribution fees (Note 2) 95,828
- -----------------------------------------------------------------
Other 22,737
- -----------------------------------------------------------------
Total expenses 422,811
- -----------------------------------------------------------------
Less: Fee waivers (126,529)
- -----------------------------------------------------------------
Net expenses 296,282
- -----------------------------------------------------------------
Net investment income 6,218,630
- -----------------------------------------------------------------
Net realized gain on sales of investments 23,259
- -----------------------------------------------------------------
Net increase in net assets resulting from operations $6,241,889
=================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended February 28, 1998 and the year ended August 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 28, AUGUST 31,
1998 1997
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,218,630 $ 19,242,512
- ---------------------------------------------------------------------------
Net realized gain on sales of investments 23,259 77,371
- ---------------------------------------------------------------------------
Net increase in net assets resulting from
operations 6,241,889 19,319,883
- ---------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (5,292,347) (16,879,485)
- ---------------------------------------------------------------------------
Private Class (926,283) (2,363,027)
- ---------------------------------------------------------------------------
Share transactions-net (130,698,089) (159,710,741)
- ---------------------------------------------------------------------------
Net increase (decrease) in net assets (130,674,830) (159,633,370)
- ---------------------------------------------------------------------------
NET ASSETS:
Beginning of period 297,562,780 457,196,150
- ---------------------------------------------------------------------------
End of period $ 166,887,950 $ 297,562,780
===========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest 166,663,387 $ 297,361,476
- ---------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 224,563 201,304
- ---------------------------------------------------------------------------
$ 166,887,950 $ 297,562,780
===========================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1998
(Unaudited)
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.
Information presented in these financial statements pertains only to the
Treasury TaxAdvantage Portfolio (the "Portfolio") with the assets, liabilities
and operations of each portfolio accounted for separately. 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 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 these
financial statements and the reported amount of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio's securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter assumes a
constant amortization to maturity of any discount or premium.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
discounts on investments, is accrued daily. Dividends to shareholders are
declared daily and are paid on the first business day of the following
month.
C. Federal Income Taxes - The Portfolio intends to comply with the requirements
of the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses - Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated between 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 $250 million 0.20%
- ----------------------------------------
Over $250 million to $500 million 0.15%
- ----------------------------------------
Over $500 million 0.10%
- ----------------------------------------
</TABLE>
During the six months ended February 28, 1998, AIM voluntarily waived advisory
fees of $78,615.
The Portfolio, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Portfolio. During the six months ended February 28,
1998, the Portfolio reimbursed AIM $22,591 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
7
<PAGE>
approved the appointment of AFS as transfer agent of the Fund effective
December 29, 1997. During the six months ended February 28, 1998, the Portfolio
paid AFS $3,094 for such services. Prior to the effective date of this
agreement with AFS, the Portfolio paid A I M Institutional Fund Services, Inc.
$8,009 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 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 Fund 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 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 six months
ended February 28, 1998, the Private Investment Class paid $47,914 as
compensation under the Plan. FMC waived fees of $47,914 for the same period.
Certain officers and trustees of the Trust are officers of AIM, FMC and AFS.
During the six months ended February 28 ,1998, the Portfolio paid legal fees
of $2,246 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 six months ended February 28, 1998 and
the year ended August 31, 1997 were as follows:
<TABLE>
<CAPTION>
FEBRUARY 28, 1998 AUGUST 31, 1997
--------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- -------------- --------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 466,433,092 $ 466,433,092 1,249,698,433 $1,249,698,433
- -----------------------------------------------------------------------------------
Private Investment
Class 177,835,415 177,835,415 274,981,089 274,981,089
- -----------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 165,873 165,873 425,111 425,111
- -----------------------------------------------------------------------------------
Private Investment
Class 346,095 346,095 479,712 479,712
- -----------------------------------------------------------------------------------
Reacquired:
Institutional Class (593,683,210) (593,683,210) (1,399,155,040) (1,399,155,040)
- -----------------------------------------------------------------------------------
Private Investment
Class (181,795,354) (181,795,354) (286,140,046) (286,140,046)
- -----------------------------------------------------------------------------------
Net increase
(decrease) (130,698,089) $(130,698,089) (159,710,741) $ (159,710,741)
- ------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding for the six months ended February 28, 1998, each of the years
in the two-year period ended August 31, 1997 and the period December 21, 1994
(date sales commenced) through August 31, 1995.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 28, ------------------------
1998 1997 1996 1995
------------ ------- ------- ------
<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 0.02 0.05 0.05 0.04
- ---------------------------------- ------- ------- ------- ------
Less distributions:
Dividends from net investment
income (0.02) (0.05) (0.05) (0.04)
- ---------------------------------- ------- ------- ------- ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------- ------- ------- ------- ------
Total return 4.95%(a) 4.87% 4.93% 5.32%(a)
- ---------------------------------- ------- ------- ------- ------
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $35,720 $39,312 $49,978 $5,423
- ---------------------------------- ------- ------- ------- ------
Ratio of expenses to average net
assets(b) 0.45%(c) 0.45% 0.45% 0.45%(a)
- ---------------------------------- ------- ------- ------- ------
Ratio of net investment income to
average net assets(d) 4.83%(c) 4.75% 4.72% 5.21%(a)
- ---------------------------------- ------- ------- ------- ------
</TABLE>
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.76% (annualized), 0.74%, 0.85% and 1.02% (annualized) for the periods
1998-1995, respectively.
(c) Ratios are annualized and based on average net assets of $38,648,771.
(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 4.52% (annualized), 4.46%, 4.32% and 4.64% (annualized)
for the periods 1998-1995, respectively.
9
<PAGE>
<TABLE>
<S> <C>
TRUSTEES
Charles T. Bauer Robert H. Graham Short-Term
Bruce L. Crockett John F. Kroeger Investments Trust
Owen Daly II Lewis F. Pennock (STIT)
Jack M. Fields Ian W. Robinson
Carl Frischling Louis S. Sklar
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 SEMI-
Melville B. Cox Vice President Investment ANNUAL
Karen Dunn Kelley Vice President Class REPORT
J. Abbott Sprague Vice President
P. Michelle Grace Assistant Secretary
Nancy L. Martin Assistant Secretary FEBRUARY 28, 1998
Ofelia M. Mayo Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
Mary J. Benson Assistant Treasurer
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046
(800) 347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, TX 77046
(800) 659-1005
CUSTODIAN
The Bank of New York
90 Washington Street, 11th Floor
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO 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
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>
