<PAGE>
[AIM LOGO APPEARS HERE] Dear Shareholder:
[PHOTO of As the fiscal year covered by this report
Charles T. Bauer, opened, financial markets were still in the
Chairman of the grip of the near-meltdown occasioned by 1998's
LETTER Board of The Fund Asian crises. The situation led the Federal
TO OUR APPEARS HERE] Reserve Board (the Fed) to reduce the short-
SHAREHOLDERS term federal funds target rate three times late
in 1998. These Fed moves were not motivated by a slowdown in the
U.S. economy; rather, they represented a strenuous effort to
reestablish liquidity in markets worldwide. The U.S. economy
continued to move ahead at a brisk pace, exhibiting the unusual
combination of strong growth coupled with low inflation.
However, this scenario changed slightly as some monthly
economic indicators showed inflationary tendencies in certain
commodity prices. This and the unwinding of the 1998 global
crisis (evident in the stabilization of the foreign markets)
compelled the Fed to increase short-term interest rates twice
late in the fiscal year. The Fed increased the federal funds rate
25 basis points at both the June 30 and August 24 Federal Open
Market Committee meetings. On August 24, the Fed also increased
the discount rate by 25 basis points to 4.75%. Many investors
felt that part of the Fed's motivation in raising rates before
the fourth quarter was to stabilize the markets pre-emptively.
The Fed has committed to provide as much as $50 billion in cash
to banks at year-end, along with special liquidity facilities so
brokers can finance their inventories.
YOUR INVESTMENT PORTFOLIO
Although the Treasury bill yield curve remained expensive for
most of the year, the portfolio held to its consistent investment
discipline, maintaining a relatively short, laddered portfolio
structure. This structure is used to help ensure that the
portfolio's yield is not duly influenced by reinvestment rates on
any particular maturity date. The weighted average maturity (WAM)
was held between 24 and 59 days during the fiscal year. At the
close of the period, the WAM was 44 days.
This strategy produced competitive yields. As of August 31,
1999, the average monthly yield of the Private Investment Class
was 4.33%; the seven-day yield was 4.35%. Net assets of the
Private Investment Class stood at $45.4 million as of the close
of the reporting period.
The portfolio continues to hold the highest credit-quality
ratings given by the two most widely known credit-rating
agencies: AAAm from Standard & Poor's and Aaa from Moody's. In
addition, the portfolio received the highest rating (AAA) from
Fitch IBCA. These historical ratings 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 has become the largest multi-fund complex to have all
its institutional money market portfolios given the highest
rating by three nationally recognized ratings agencies.
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 provide shareholders with dividends
exempt from state and
(continued)
<PAGE>
local income taxation in certain jurisdictions. Government
securities, such as U.S. Treasury bills and notes, offer a high
degree of safety and guarantee 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 by investing in
the fund.)
OUTLOOK FOR THE FUTURE
Although the U.S. gross domestic product growth rate fell from
2.3% to 1.6% at the end of the second quarter, the expected
annualized growth rate for the third quarter is 3.5%. The last
two Fed rate increases have so far had little effect on the U.S.
economy, which continues full steam ahead. With two more Fed
meetings scheduled in 1999 (November 16 and December 21),
investors are speculating about another Fed tightening. Liquidity
is the primary concern around the Y2K issue. Because no one knows
where the cash will be flowing by year-end, money managers are
dutifully estimating the anticipated high withdrawal volume from
financial institutions. Despite these concerns, another
tightening is still quite possible. Another increase would
position the federal funds target rate exactly where it was
before 1998's international crisis.
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. We are happy
to be of service.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
2
<PAGE>
SCHEDULE OF INVESTMENTS
August 31, 1999
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 98.58%
U.S. TREASURY BILLS(a) - 51.37%
4.50% 09/02/99 $ 3,000 $ 2,999,625
- ------------------------------------------------------------------------
4.55% 09/09/99 9,000 8,990,900
- ------------------------------------------------------------------------
4.15% 09/09/99 9,000 8,991,700
- ------------------------------------------------------------------------
4.17% 09/15/99 4,000 3,991,958
- ------------------------------------------------------------------------
4.28% 09/16/99 8,000 7,985,733
- ------------------------------------------------------------------------
4.18% 09/16/99 9,000 8,984,325
- ------------------------------------------------------------------------
4.70% 09/30/99 5,000 4,981,069
- ------------------------------------------------------------------------
4.63% 10/14/99 5,000 4,972,349
- ------------------------------------------------------------------------
4.45% 10/14/99 4,000 3,978,739
- ------------------------------------------------------------------------
4.65% 10/21/99 2,000 1,987,097
- ------------------------------------------------------------------------
4.67% 10/21/99 4,000 3,974,056
- ------------------------------------------------------------------------
4.64% 11/04/99 7,000 6,942,258
- ------------------------------------------------------------------------
68,779,809
- ------------------------------------------------------------------------
U.S. TREASURY NOTES - 47.21%
5.75% 09/30/99 15,000 15,010,422
- ------------------------------------------------------------------------
7.50% 10/31/99 21,000 21,080,122
- ------------------------------------------------------------------------
5.88% 11/15/99 12,000 12,022,021
- ------------------------------------------------------------------------
7.75% 11/30/99 15,000 15,099,001
- ------------------------------------------------------------------------
63,211,566
- ------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost
$131,991,375) 131,991,375
- ------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.58% 131,991,375(b)
- ------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 1.42% 1,901,915
- ------------------------------------------------------------------------
NET ASSETS -- 100.00% $133,893,290
========================================================================
</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, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $131,991,375
- ----------------------------------------------------------------------
Cash 1,030,187
- ----------------------------------------------------------------------
Interest receivable 1,396,912
- ----------------------------------------------------------------------
Investment for deferred compensation plan 30,090
- ----------------------------------------------------------------------
Other assets 84,606
- ----------------------------------------------------------------------
Total assets 134,533,170
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 552,841
- ----------------------------------------------------------------------
Deferred compensation 30,090
- ----------------------------------------------------------------------
Accrued administrative services fees 4,384
- ----------------------------------------------------------------------
Accrued distribution fees 11,502
- ----------------------------------------------------------------------
Accrued transfer agent fees 4,100
- ----------------------------------------------------------------------
Accrued trustees' fees 1,600
- ----------------------------------------------------------------------
Accrued operating expenses 35,363
- ----------------------------------------------------------------------
Total liabilities 639,880
- ----------------------------------------------------------------------
NET ASSETS $133,893,290
======================================================================
NET ASSETS:
Institutional Class $ 88,516,516
======================================================================
Private Investment Class $ 45,376,774
======================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 88,495,591
======================================================================
Private Investment Class 45,365,668
======================================================================
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, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $6,803,219
- -----------------------------------------------------------------
EXPENSES:
Advisory fees 294,990
- -----------------------------------------------------------------
Custodian fees 9,209
- -----------------------------------------------------------------
Administrative services fees 51,944
- -----------------------------------------------------------------
Trustees' fees and expenses 8,986
- -----------------------------------------------------------------
Transfer agent fees 29,395
- -----------------------------------------------------------------
Distribution fees (Note 2) 250,604
- -----------------------------------------------------------------
Other 124,760
- -----------------------------------------------------------------
Total expenses 769,888
- -----------------------------------------------------------------
Less: Fee waivers (369,484)
- -----------------------------------------------------------------
Net expenses 400,404
- -----------------------------------------------------------------
Net investment income 6,402,815
- -----------------------------------------------------------------
Net realized gain (loss) on sales of investments (10,840)
- -----------------------------------------------------------------
Net increase in net assets resulting from operations $6,391,975
=================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,402,815 $ 10,328,429
- ------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments (10,840) 42,871
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 6,391,975 10,371,300
- ------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Institutional Class (4,317,947) (8,586,021)
- ------------------------------------------------------------------------------
Private Class (2,084,868) (1,742,408)
- ------------------------------------------------------------------------------
Distributions to shareholders from capital gains:
Institutional Class -- (154,304)
- ------------------------------------------------------------------------------
Private Class -- (47,000)
- ------------------------------------------------------------------------------
Share transactions-net (See Note 4) (10,323,072) (153,177,145)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets (10,333,912) (153,335,578)
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 144,227,202 297,562,780
- ------------------------------------------------------------------------------
End of period $133,893,290 $144,227,202
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $133,861,259 $144,184,331
- ------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 32,031 42,871
- ------------------------------------------------------------------------------
$133,893,290 $144,227,202
==============================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
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. Sales of the Personal Investment Class, the Cash Management Class, the
Reserve Class and the Resource Class have not yet commenced. 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 year ended August 31, 1999, AIM waived advisory fees of $244,182.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended August 31, 1999, AIM was
paid $51,944 for such services.
7
<PAGE>
The Fund, 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 Fund. During the year ended August 31, 1999, AFS
was paid $14,110 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 year ended August 31, 1999, the Private Investment Class paid
$125,302 as compensation under the Plan. FMC waived fees of $125,302 for the
same period. Certain officers and trustees of the Trust are officers of AIM,
FMC and AFS.
During the year ended August 31, 1999, the Fund paid legal fees of $3,815 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 to trustees who are 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 years ended August 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 606,748,092 $ 606,748,092 758,084,286 $ 758,084,286
- --------------------------------------------------------------------------------
Private Investment
Class 605,044,466 605,044,466 314,695,955 314,695,955
- --------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 477,705 477,705 368,100 368,100
- --------------------------------------------------------------------------------
Private Investment
Class 1,198,839 1,198,839 774,188 774,188
- --------------------------------------------------------------------------------
Reacquired:
Institutional Class (631,780,898) (631,780,898) (903,477,854) (903,477,854)
- --------------------------------------------------------------------------------
Private Investment
Class (592,011,276) (592,011,276) (323,621,820) (323,621,820)
- --------------------------------------------------------------------------------
Net increase
(decrease) (10,323,072) $ (10,323,072) (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 for each of the years in the four-year period ended August
31, 1999 and the period December 21, 1994 (date sales commenced) through
August 31, 1995.
<TABLE>
<CAPTION>
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 0.04 0.05 0.05 0.05 0.04
- ---------------------------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income (0.04) (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 4.25% 5.04% 4.87% 4.93% 3.69%
============================ ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $45,377 $31,143 $39,312 $49,978 $5,423
============================ ======= ======= ======= ======= ======
Ratio of expenses to average
net assets(a) 0.43%(b) 0.45% 0.45% 0.45% 0.45%(c)
============================ ======= ======= ======= ======= ======
Ratio of net investment
income to average net
assets(d) 4.18%(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
0.85%, 0.78%, 0.74%, 0.85% and 1.02% (annualized) for the periods 1999-
1995, respectively.
(b) Ratios based on average net assets of $50,120,851.
(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 3.77%, 4.47%, 4.46%, 4.32% and 4.64% (annualized) for
the periods 1999-1995, respectively.
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
Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1999, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the 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, 1999, by correspondence with the custodian. 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
Treasury TaxAdvantage Portfolio as of August 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period ended, and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles.
KPMG LLP
October 1, 1999
Houston, Texas
10
<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
Gary T. Crum Sr. Vice President
Carol F. Relihan Sr. Vice President & Secretary
Dana R. Sutton Vice President & Treasurer Treasury
Melville B. Cox Vice President TaxAdvantage
Karen Dunn Kelley Vice President Portfolio
J. Abbott Sprague Vice President -------------------------------------------------
Mary J. Benson Assistant Vice President & Assistant Treasurer Private ANNUAL
Sheri Morris Assistant Vice President & Assistant Treasurer Investment REPORT
Renee A. Friedli Assistant Secretary Class
P. Michelle Grace Assistant Secretary
Jeffrey H. Kupor Assistant Secretary
Nancy L. Martin Assistant Secretary AUGUST 31, 1999
Ofelia M. Mayo Assistant Secretary
Lisa A. Moss Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
800-347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
800-659-1005
CUSTODIAN
The Bank of New York
90 Washington Street, 11th Floor
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO 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
AUDITORS
KPMG LLP
700 Louisiana
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>
TAP-AR-2
