<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO OF As the six-month period covered by this report
CHARLES T. BAUER, was closing, the U.S. economy continued to move
LETTER CHAIRMAN OF THE ahead at a brisk pace. During the final quarter
TO OUR BOARD OF THE FUND of 1998, the economy grew at its fastest rate
SHAREHOLDERS APPEARS HERE] in two and a half years. Total gross domestic
product (GDP) growth for 1998 was 3.9%.
There was a different story overseas. Throughout the second half of
1998, the global economy continued to experience economic turmoil, financial
instability and increased credit concerns. Certain regions, particularly
Asia, Russia and Latin America, remained in a severe downturn.
As a result of this global meltdown, the U.S. Federal Open Market
Committee of the Federal Reserve Board (the Fed) reduced the federal funds
rate from 5.5% to 4.75% in three steps between September and November. The
discount rate was also reduced from 5% to 4.5%. Interest rates were lowered,
not to stimulate an already strong U.S. economy, but to minimize the impact
of the international economic crises upon the U.S. economy and to decrease
volatility and calm the financial markets. In the United States and Europe,
financial markets were very volatile, but the underlying economies continued
surprisingly strong growth.
The yield on the one-year Treasury bill, which was as high as 5.32%
in early July, dropped to 4.37% in early December as an increase in the
one-year Treasury bill's price caused its yield to decline. The price
increase was a result of investors' demand for Treasuries in a "flight to
quality" environment resulting from the international crises and credit
concerns.
YOUR INVESTMENT PORTFOLIO
Although the Treasury bill yield curve remained expensive compared to the
federal funds rate target for most of the reporting period, the 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. As Treasury bill rates plunged, the portfolio
managers looked to take advantage of relatively cheaper coupon securities to
help add value. The weighted average maturity was held between 28 and 59 days
during the fiscal year. At the close of the period, the weighted average
maturity was 43 days.
This strategy produced competitive yields. As of February 28, 1999,
the average monthly yield of the Private Investment Class of the Portfolio
was 4.04%; the seven-day yield was 4.06%.
The Portfolio holds the highest credit quality ratings given by three
widely known credit-rating agencies. It continues to be rated AAAm by
Standard & Poor's Corporation and Aaa by Moody's Investors Service, Inc. In
addition, shortly after the reporting period closed, the Portfolio received
the highest rating, AAA, granted by Fitch IBCA. These ratings are historical
and are based on an analysis of the Portfolio's credit quality, composition,
management and weekly portfolio reviews. With the addition of the AAA Fitch
rating, AIM became the only multi-fund complex to have all of its
institutional money market portfolios given the highest rating by three
different rating agencies.
(continued)
<PAGE>
Net assets of the Private Investment Class stood at $45.27 million as
of the close of the reporting period, up from $31.14 million six months
earlier.
The Treasury TaxAdvantage 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. An
investment in a money market fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although a
money market fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money investing in the fund.
OUTLOOK FOR THE FUTURE
Statistics released shortly after the close of the reporting period showed
that employment gains have exceeded expectations and wage inflation has been
virtually non-existent. This caused interest rates to drop, another
indication the U.S. economy continues to benefit from the unusual combination
of strong growth and low inflation.
As 1998 ended, there was speculation the Fed might decrease interest
rates even more. However, this view changed abruptly with the release of
stronger-than-expected adjusted December and January economic numbers during
the first quarter of 1999. These numbers and other factors led many to
speculate about the Fed changing course and raising short-term rates again.
We believe it is unlikely such a move would be made soon because inflation
remains negligible despite robust economic growth. For the 12 months ended
February 1999, producer prices were up just 0.5%, and prices for intermediate
goods actually fell during February 1999. Retail sales growth and other
economic indicators led to estimated annualized GDP growth of 4.6% for the
first quarter of 1999.
We are pleased to send you this report on your investment. AIM is committed
to the primary goals of safety, liquidity and yield in institutional fund
management. We are also committed to customer service and are ready to respond
to your comments about this report. If you have any questions, please contact
one of our representatives at 800-659-1005. We are happy to be of service.
Respectfully submitted,
/s/ Charles T. Bauer
Charles T. Bauer
Chairman
2
<PAGE>
SCHEDULE OF INVESTMENTS
February 28, 1999
(Unaudited)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 90.92%
U.S. TREASURY BILLS(a) - 39.44%
4.30% 03/11/99 $12,000 $ 11,985,625
- ------------------------------------------------------------------------
4.355% 03/18/99 4,000 3,991,935
- ------------------------------------------------------------------------
4.40% 04/08/99 3,700 3,682,869
- ------------------------------------------------------------------------
4.38% 04/15/99 7,500 7,458,938
- ------------------------------------------------------------------------
4.74% 04/22/99 21,800 21,658,096
- ------------------------------------------------------------------------
48,777,463
- ------------------------------------------------------------------------
U.S. TREASURY NOTES - 51.48%
6.25% 03/31/99 23,000 23,031,395
- ------------------------------------------------------------------------
7.00% 04/15/99 6,500 6,520,131
- ------------------------------------------------------------------------
6.375% 04/30/99 18,500 18,553,475
- ------------------------------------------------------------------------
6.375% 05/15/99 6,000 6,020,440
- ------------------------------------------------------------------------
6.25% 05/31/99 9,500 9,536,331
- ------------------------------------------------------------------------
63,661,772
- ------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost
$112,439,235) 112,439,235
- ------------------------------------------------------------------------
TOTAL INVESTMENTS -- 90.92% 112,439,235(b)
- ------------------------------------------------------------------------
ASSETS LESS OTHER LIABILITIES -- 9.08% 11,232,246
- ------------------------------------------------------------------------
NET ASSETS -- 100.00% $123,671,481
========================================================================
</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, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $112,439,235
- ----------------------------------------------------------------------
Cash 205,077
- ----------------------------------------------------------------------
Receivables for:
Investments sold 16,000,000
- ----------------------------------------------------------------------
Interest 1,426,176
- ----------------------------------------------------------------------
Investment for deferred compensation plan 28,515
- ----------------------------------------------------------------------
Other assets 24,464
- ----------------------------------------------------------------------
Total assets 130,123,467
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 5,958,920
- ----------------------------------------------------------------------
Dividends 417,430
- ----------------------------------------------------------------------
Deferred compensation 28,515
- ----------------------------------------------------------------------
Accrued administrative services fees 4,191
- ----------------------------------------------------------------------
Accrued advisory fees 9,909
- ----------------------------------------------------------------------
Accrued distribution fees 8,282
- ----------------------------------------------------------------------
Accrued transfer agent fees 6,513
- ----------------------------------------------------------------------
Accrued trustees' fees 1,591
- ----------------------------------------------------------------------
Accrued operating expenses 16,635
- ----------------------------------------------------------------------
Total liabilities 6,451,986
- ----------------------------------------------------------------------
NET ASSETS $123,671,481
======================================================================
NET ASSETS:
Institutional Class $ 78,402,320
======================================================================
Private Investment Class $ 45,269,161
======================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 78,376,849
======================================================================
Private Investment Class 45,254,398
======================================================================
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, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $3,442,336
- -----------------------------------------------------------------
EXPENSES:
Advisory fees 148,136
- -----------------------------------------------------------------
Custodian fees 1,834
- -----------------------------------------------------------------
Administrative services fees 25,653
- -----------------------------------------------------------------
Trustees' fees and expenses 4,369
- -----------------------------------------------------------------
Transfer agent fees 12,650
- -----------------------------------------------------------------
Distribution fees (Note 2) 108,650
- -----------------------------------------------------------------
Other 30,971
- -----------------------------------------------------------------
Total expenses 332,263
- -----------------------------------------------------------------
Less: Fee waivers (128,393)
- -----------------------------------------------------------------
Net expenses 203,870
- -----------------------------------------------------------------
Net investment income 3,238,466
- -----------------------------------------------------------------
Net realized gain (loss) on sales of investments (2,637)
- -----------------------------------------------------------------
Net increase in net assets resulting from operations $3,235,829
=================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended February 28, 1999 and the year ended August 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 28, AUGUST 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,238,466 $ 10,328,429
- ------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments (2,637) 42,871
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 3,235,829 10,371,300
- ------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Institutional Class (2,333,355) (8,586,021)
- ------------------------------------------------------------------------------
Private Class (905,111) (1,742,408)
- ------------------------------------------------------------------------------
Distributions to shareholders from capital gains:
Institutional Class -- (154,304)
- ------------------------------------------------------------------------------
Private Class -- (47,000)
- ------------------------------------------------------------------------------
Share transactions-net (See Note 4) (20,553,084) (153,177,145)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets (20,555,721) (153,335,578)
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 144,227,202 297,562,780
- ------------------------------------------------------------------------------
End of period $123,671,481 $144,227,202
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $123,631,247 $144,184,331
- ------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 40,234 42,871
- ------------------------------------------------------------------------------
$123,671,481 $144,227,202
==============================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1999
(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 three different portfolios, each of which offers separate series
of shares: the Treasury TaxAdvantage Portfolio, the Government & Agency
Portfolio and the Treasury 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 currently offers six different classes
of shares: the Institutional Class, the Private Investment Class, Personal
Investment Class, the Cash Management Class, the Reserve Class and the Resource
Class. Matters affecting each class are voted on exclusively by the
shareholders of each class. The Portfolio is a money market fund whose
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, 1999, AIM voluntarily waived advisory
fees of $74,068.
The Portfolio, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Portfolio. During the six months ended February 28,
1999, the Portfolio reimbursed AIM $25,653 for such services.
7
<PAGE>
The Portfolio, pursuant to a transfer agency and service agreement, has agreed
to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Portfolio. During the six months ended February 28,
1999, the Portfolio paid AFS $6,666 for such services.
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund has adopted a master distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class, the
Reserve Class, and the Resource Class of the Portfolio. The Plan provides that
the Private Investment Class, the Personal Investment Class, the Cash
Management Class, the Reserve Class, and the Resource Class pay up to a 0.50%,
0.75%, 0.10%, 1.00%, and 0.20%, respectively, maximum annual rate of the
average daily net assets attributable to such class. Of this amount, the Fund
may pay an asset-based sales charge to FMC and the Fund may pay a service fee
of (a) 0.25% of the average daily net assets of each of the Private Investment
Class, Personal Investment Class, and the Reserve Class, (b) 0.10% of the
average daily net assets of the Cash Management Class and (c) 0.20% of the
average daily net assets of the Resource Class, to selected banks, broker-
dealers and other financial institutions who offer continuing personal
shareholder services to their customers who purchase and own shares of the
Private Investment Class, the Personal Investment Class, the Cash Management
Class, the Reserve Class, or the Resource Class. Any amounts not paid as a
service fee under such Plan would constitute an asset-based sales charge. The
Plan also imposes a cap on the total amount of sales charges, including asset-
based sales charges, that may be paid by the Portfolio with respect to each
class. During the six months ended February 28, 1999, the Private Investment
Class paid $54,325 as compensation under the Plan. FMC waived fees of $54,325
for the same period. Certain officers and trustees of the Trust are officers of
AIM, FMC and AFS.
During six months ended February 28, 1999, the Portfolio paid legal fees of
$1,252 for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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 during the six months ended February 28, 1999 and
the year ended August 31, 1998 were as follows:
<TABLE>
<CAPTION>
FEBRUARY 28, 1999 AUGUST 31, 1998
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 225,737,623 $225,737,623 758,084,286 $ 758,084,286
- --------------------------------------------------------------------------------
Private Investment
Class 335,050,075 335,050,075 314,695,955 314,695,955
- --------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 286,566 286,566 368,100 368,100
- --------------------------------------------------------------------------------
Private Investment
Class 471,385 471,385 774,188 774,188
- --------------------------------------------------------------------------------
Reacquired:
Institutional Class (260,698,032) (260,698,032) (903,477,854) (903,477,854)
- --------------------------------------------------------------------------------
Private Investment
Class (321,400,701) (321,400,701) (323,621,820) (323,621,820)
- --------------------------------------------------------------------------------
Net increase
(decrease) (20,553,084) $(20,553,084) (153,177,145) $(153,177,145)
================================================================================
</TABLE>
8
<PAGE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during the six months ended February 28, 1999, each of the
years in the three-year period ended August 31, 1998 and the period December
21, 1994 (date sales commenced) through August 31, 1995.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 28, ---------------------------------
1999 1998 1997 1996 1995
------------ ------- ------- ------- ------
<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 0.02 0.05 0.05 0.05 0.04
- -------------------------------------- ------- ------- ------- ------- ------
Total from investment operations 0.02 0.05 0.05 0.05 0.04
- -------------------------------------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.02) (0.05) (0.05) (0.05) (0.04)
- -------------------------------------- ------- ------- ------- ------- ------
Total distributions (0.02) (0.05) (0.05) (0.05) (0.04)
- -------------------------------------- ------- ------- ------- ------- ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====================================== ======= ======= ======= ======= ======
Total return 2.10% 5.04% 4.87% 4.93% 3.69%
====================================== ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $45,269 $31,143 $39,312 $49,978 $5,423
====================================== ======= ======= ======= ======= ======
Ratio of expenses to average net
assets(a) 0.45%(b) 0.45% 0.45% 0.45% 0.45%(c)
====================================== ======= ======= ======= ======= ======
Ratio of net investment income to
average net assets(d) 4.20%(b) 4.80% 4.75% 4.72% 5.21%(c)
====================================== ======= ======= ======= ======= ======
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.80% (annualized), 0.78%, 0.74%, 0.85% and 1.02% (annualized) for the
periods 1999-1995, respectively.
(b) Ratios are annualized and based on average net assets of $43,819,936.
(c) Annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 3.85% (annualized), 4.47%, 4.46%, 4.32% and 4.64%
(annualized) for the periods 1999-1995, respectively.
9
<PAGE>
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10
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
<TABLE>
<CAPTION>
TRUSTEES
<S> <C>
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham Short-Term
Owen Daly II Prema Mathai-Davis Investments Trust
Edward K. Dunn, Jr. Lewis F. Pennock (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 Treasury
Dana R. Sutton Vice President & Assistant Treasurer TaxAdvantage
Melville B. Cox Vice President Portfolio
Karen Dunn Kelley Vice President ----------------------------------------
J. Abbott Sprague Vice President Private SEMI-
Mary J. Benson Assistant Vice President & Assistant Treasurer Investment ANNUAL
Sheri Morris Assistant Vice President & Assistant Treasurer Class REPORT
Renee A. Friedli Assistant Secretary
P. Michelle Grace Assistant Secretary
Jeffrey H. Kupor Assistant Secretary
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary FEBRUARY 28, 1999
Lisa A. Moss Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
INVESTMENT ADVISOR
A I M Advisors, Inc. [LOGO APPEARS HERE]
11 Greenway Plaza, Suite 100 Fund Management Company
Houston, TX 77046-1173
(800) 347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
(800) 659-1005
CUSTODIAN
The Bank of New York
90 Washington Street, 11th Floor
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
TRANSFER AGENT
A I M Fund Services, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
This report may be distributed only to current shareholders or
to persons who have received a current prospectus.
</TABLE>
