SHORT TERM INVESTMENTS TRUST, 497, 1998-09-03

SHORT TERM INVESTMENTS TRUST
497, 1998-09-03

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<PAGE> 1
SHORT-TERM
INVESTMENTS TRUST

Prospectus
- --------------------------------------------------------------------------------

GOVERNMENT The Government & Agency Portfolio is a money market
& AGENCY fund whose investment objective is the maximization of
PORTFOLIO current income to the extent consistent with the
preservation of capital and the maintenance of
liquidity. The Government & Agency Portfolio seeks to
achieve its objective by investing in direct
obligations of the U.S. Treasury and other securities
issued or guaranteed as to principal and interest by
the U.S. Government or by its agencies or
instrumentalities, as well as repurchase agreements
secured by such obligations. The instruments purchased
INSTITUTIONAL by the Government & Agency Portfolio will have
CLASS maturities of 397 days or less.

The Government & Agency Portfolio is a series
SEPTEMBER 1, 1998 portfolio of Short-Term Investments Trust (the
"Trust"), an open-end diversified series management
investment company. This Prospectus relates solely to
the Institutional Class of the Government & Agency
Portfolio, a class of shares designed to be a
convenient vehicle in which institutions, particularly
banks, acting for themselves or in a fiduciary,
advisory, agency, custodial or other similar capacity
can invest in a diversified money market fund.

THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT
A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN
SHARES OF THE INSTITUTIONAL CLASS OF THE GOVERNMENT &
AGENCY PORTFOLIO AND SHOULD BE READ AND RETAINED FOR
FUTURE REFERENCE. A STATEMENT OF ADDITIONAL
INFORMATION, DATED SEPTEMBER 1, 1998, HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION THE
("SEC") AND IS HEREBY INCORPORATED BY REFERENCE. A
COPY OF THE STATEMENT OF ADDITIONAL INFORMATION IS
ATTACHED HERETO. THE SEC MAINTAINS A WEB SITE AT
HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY
REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST.

THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE
TRUST'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. THERE CAN BE NO ASSURANCE THAT THE GOVERNMENT &
AGENCY PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.

[LOGO APPEARS HERE]

Fund Management Company

11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 2
SUMMARY

THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE

The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Institutional Class (the "Class") of the
Government & Agency Portfolio (the "Portfolio"). The Portfolio is a money market
fund which invests in direct obligations of the U.S. Treasury and other
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities, as well as repurchase
agreements secured by such obligations. The instruments purchased by the
Portfolio will have maturities of 397 days or less. The investment objective of
the Portfolio is the maximization of current income to the extent consistent
with the preservations of capital and the maintenance of liquidity.

Pursuant to separate prospectuses, the Trust also offers shares of other
classes of shares of beneficial interest of the Portfolio: Private Investment
Class, Cash Management Class and Resource Class, representing an interest in the
Portfolio. Such classes have different distribution arrangements and are
designed for institutional and other categories of investors. The Trust also
offers shares of two classes of the Treasury TaxAdvantage Portfolio and shares
of five classes of the Treasury Portfolio, each pursuant to a separate
prospectus. The portfolios of the Trust are referred to collectively as the
"Portfolios."

Because the Trust declares dividends on a daily basis, shares of each class of
the Portfolio have the same net asset value (proportionate interest in the net
assets of the Portfolio) and bear equally those expenses, such as the advisory
fee, that are allocated to the Portfolio as a whole. All classes of the
Portfolio share a common investment objective and portfolio of investments.
However, different classes of the Portfolio have different shareholder
qualifications and are separately allocated certain class expenses, such as
those associated with the distribution of their shares. Therefore, each class
will have a different dividend payment and a different yield.

INVESTORS IN THE CLASS

The Class is designed to be a convenient and economical vehicle in which
institutions, particularly banks, acting for themselves or in a fiduciary,
advisory, agency, custodial or other similar capacity can invest short-term cash
reserves. Although shares of the Class may not be purchased by individuals
directly, institutions may purchase shares for accounts maintained by
individuals. See "Suitability for Investors."

PURCHASE OF SHARES

Shares of the Class are sold at net asset value without a sales charge. The
minimum initial investment in the Class is $1,000,000. There is no minimum
amount for subsequent investments. Payment for shares of the Class purchased
must be in federal funds or other funds immediately available to the Portfolio.
See "Purchase of Shares."

REDEMPTION OF SHARES

Redemptions may be made without charge at net asset value. Payment for
redeemed shares of the Class for which redemption orders are received prior to
5:00 p.m. Eastern time will normally be made in federal funds on the same day.
See "Redemption of Shares."

DIVIDENDS

The net income of each Portfolio is declared as a dividend daily to
shareholders of record immediately after 5:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless the shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 6:00 p.m. Eastern time on that day.
See "Dividends."

NET ASSET VALUE

The Trust uses the amortized cost method of valuing the securities held by the
Portfolio and rounds the per share net asset value to the nearest whole cent.
Accordingly, the net asset value per share of the Portfolio will normally remain
constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED
BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value."

INVESTMENT ADVISOR

A I M Advisors, Inc. ("AIM") serves as the Portfolio's investment advisor and
receives a fee based on the Portfolio's average daily net assets. AIM is
primarily engaged in the business of acting as manager or advisor to investment
companies. Under an Administrative Services Agreement, AIM may be reimbursed by
the Trust for its costs of performing certain accounting and

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other administrative services for the Trust. See "Management of the
Trust -- Investment Advisor" and "-- Administrative Services." Under a Transfer
Agency and Service Agreement, A I M Fund Services, Inc., ("Transfer Agent"),
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement,
and shareholder services to the Trust. See "General Information -- Transfer
Agent and Custodian."

DISTRIBUTOR

Fund Management Company ("FMC") acts as the exclusive distributor of the
Trust's shares. FMC does not receive any fee for distribution services from the
Trust. See "Purchase of Shares."

SPECIAL RISK CONSIDERATIONS

The Portfolio may borrow money and may invest in repurchase agreements and
purchase securities for delayed delivery. Accordingly, an investment in the
Portfolio may entail somewhat different risks from an investment in an
investment company that does not engage in such practices. There can be no
assurance that the Portfolio will be able to maintain a stable net asset value
of $1.00 per share. See "Investment Program."

The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
Logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos and La Familia AIM de Fondos and Design are registered
service marks and Invest With Discipline and AIM Bank Connection are service
marks of A I M Management Group Inc.

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TABLE OF FEES AND EXPENSES

<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum sales load imposed on purchases (as a percentage
of offering price)..................................... None
Maximum sales load on reinvested dividends (as a
percentage of offering price).......................... None
Deferred sales load (as a percentage of original purchase
price or redemption proceeds, as applicable)........... None
Redemption fees (as a percentage of amount redeemed, if
applicable)............................................ None
Exchange fee.............................................. None
ANNUAL PORTFOLIO OPERATING EXPENSES -- INSTITUTIONAL
CLASS**
(as a percentage of average net assets)
Management fees (after fee waivers)***.................... 0.00%
12b-1 fees................................................ None
Other expenses*** (estimated):
Custodian fees......................................... 0.01%
Other.................................................. 0.09%
------
Total other expenses (after expense
reimbursements)***................................ 0.10%
-------------
Total portfolio operating expenses -- Institutional
Class***............................................... 0.10%
=============
</TABLE>

- ---------------

* Beneficial owners of shares of the Class should consider the effect of any
charges imposed by their bank or other financial institution for various
services.

** The expenses set forth in the table are based on estimated average net
assets of $200,000,000 during the Portfolio's current fiscal period.

*** If no fees were being waived or reimbursed, Management fees, Total other
expenses and Total portfolio operating expenses would have been 0.10%,
0.11%, and 0.21%, respectively.

EXAMPLE

An investor would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period.

<TABLE>
<S> <C>
1 year..................................................... $1
3 years.................................................... $3
</TABLE>

The Table of Fees and Expenses is designed to assist an investor in
understanding the various costs and expenses that an investor in the Class will
bear directly or indirectly. (For more complete descriptions of the various
costs and expenses, see "Management of the Trust" below.) The "Total portfolio
operating expenses -- Institutional Class" figure is based upon costs and the
estimated size of the Class and fees to be charged for the current fiscal
period. The Other expenses figure is based upon estimated costs and the
estimated size of the Class and the Portfolio and estimated fees to be charged
for the current fiscal year. Thus, actual expenses may be greater or less than
such estimates. The Table of Fees and Expenses reflects a voluntary waiver of
management fees for the Class. Future waivers of fees (if any) may vary from the
figures reflected in the Table of Fees and Expenses. To the extent any service
providers assume expenses of the Class, such assumption of expenses will have
the effect of lowering the Class' overall expense ratio and increasing its yield
to investors.

The example in the Table of Fees and Expenses assumes that all dividends and
distributions are reinvested and that the amounts listed under "Annual Portfolio
Operating Expenses -- Institutional Class" remain the same in the years shown.

The example shown in the above table is based on the amounts listed under
"Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO
BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESSER THAN THOSE SHOWN.

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SUITABILITY FOR INVESTORS

The Class is intended for use primarily by institutions, particularly banks,
acting for themselves or in a fiduciary, advisory, agency, custodial or other
similar capacity. The Class is designed to be a convenient and economical
vehicle in which such institutions can invest short-term cash reserves. Shares
of the Class may not be purchased directly by individuals, although institutions
may purchase shares for accounts maintained by individuals. Prospective
investors should determine if an investment in the Class is consistent with the
objectives of an account and with applicable state and federal laws and
regulations.

An investment in the Class may relieve the institution of many of the
investment and administrative burdens encountered when investing in money market
instruments directly. These include: selection of portfolio investments;
surveying the market for the best price at which to buy and sell; valuation of
portfolio securities; selection and scheduling of maturities; receipt, delivery
and safekeeping of securities; and portfolio record keeping. It is anticipated
that most investors will perform their own sub-accounting. To assist these
institutions, information concerning the dividends declared by the Portfolios on
any particular day will normally be available by 6:00 p.m. Eastern time on that
day.

Investors in the Class have the opportunity to receive a somewhat higher yield
than might be obtainable through direct investment in money market instruments
and enjoy the benefits of same-day liquidity. Generally, higher interest rates
can be obtained on the purchase of very large blocks of money market
instruments. Of course, any such relative increase in interest rates may be
offset to some extent by the operating expenses of the Class. However, these
expenses are expected to be relatively small due primarily to the following
factors: the Class will have a small number of shareholders who do not need many
of the services provided by other money market investment companies, thereby
resulting in lower transfer agent fees and costs for printing reports and proxy
statements; sales of the shares of the Class to institutions acting for
themselves or in a fiduciary capacity are exempt from the registration
requirements of most state securities laws, thereby resulting in reduced state
registration fees; and the relatively low investment advisory fee paid to AIM.

INVESTMENT PROGRAM

INVESTMENT OBJECTIVE

The investment objective of the Portfolio is the maximization of current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity. The Portfolio seeks to achieve its objective by
investing in direct obligations of the U.S. Treasury and other securities issued
or guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, as well as repurchase agreements secured by such
obligations. The money market instruments in which the Portfolio invests are
considered to carry very little risk and accordingly may not have as high a
yield as that available on money market instruments of lesser quality. The
Portfolio consists exclusively of money market instruments which have maturities
of 397 days or less from the date of purchase (except that securities subject to
repurchase agreements may have longer maturities).

INVESTMENT POLICIES

The Portfolio invests in direct obligations of the U.S. Treasury, which
include Treasury bills, notes and bonds, and repurchase agreements relating to
such securities. In addition, the Portfolio invests in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, and repurchase agreements relating to such
securities. Such obligations are collectively referred to as "Money Market
Obligations". Under normal circumstances, the Portfolio will invest at least 65%
of its total assets in Money Market Obligations. The Portfolio may also engage
in certain investment practices described below. The market values of the money
market instruments held by the Portfolio will be affected by changes in the
yields available on similar securities. If yields have increased since a
security was purchased, the market value of such security will generally have
decreased. Conversely, if yields have decreased, the market value of such
security will generally have increased.

Money Market Obligations

GOVERNMENT OBLIGATIONS. The Portfolio may invest in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities. Such obligations may by supported (a) by the full
faith and credit of the U.S. Treasury (as in the case of Government National
Mortgage Association Certificates), (b) by the right of the issuer to borrow
from the U.S. Treasury (as in the case of obligations of the Federal Home Loan
Bank), (c) by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality (as in the case of the Federal
National Mortgage Association), or (d) only by the credit of the agency or
instrumentality itself (as in the case of obligations of the Federal Farm Credit
Bank). No assurance can be given that the U.S. Government will provide financial
support to such U.S. Government sponsored agencies or instrumentalities in the
future and it is not obligated by law to renew, grant or extend future financial
support.

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<PAGE> 6

REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities described
above and which at the date of purchase are "First Tier" securities as defined
in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time.
A repurchase agreement is an instrument under which the Portfolio acquires
ownership of a debt security and the seller agrees, at the time of the sale, to
repurchase the obligation at a mutually agreed-upon time and price, thereby
determining the yield during the Portfolio's holding period. Repurchase
transactions are limited to a term not to exceed 365 days. The Portfolio may
enter into repurchase agreements only with institutions believed by the Trust's
Board of Trustees to present minimal credit risk. With regard to repurchase
transactions, in the event of a bankruptcy or other default of a seller of a
repurchase agreement (such as the seller's failure to repurchase the obligation
in accordance with the terms of the agreement), the Portfolio could experience
both delays in liquidating the underlying securities and losses, including: (a)
a possible decline in the value of the underlying security during the period
while the Portfolio seeks to enforce its rights thereto, (b) possible subnormal
levels of income and lack of access to income during this period, and (c)
expenses of enforcing its rights. Repurchase agreements are considered to be
loans under the Investment Company Act of 1940, as amended (the "1940 Act").

Investment Practices

BORROWING MONEY. The Portfolio may borrow money with respect to its portfolio
securities in amounts up to 10% of the value of its total assets at the time of
borrowing. The Portfolio will borrow money solely for temporary or defensive
purposes, such as to facilitate the orderly sale of portfolio securities or to
accommodate abnormally heavy redemption requests should they occur.

PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's
investments, AIM may indicate to dealers or issuers its interest in acquiring
certain securities for the Portfolio for settlement beyond a customary
settlement date. In some cases, the Portfolio may agree to purchase such
securities at stated prices and yields. In such cases, such securities are
considered "delayed delivery" securities when traded in the secondary market.
Since this is done to facilitate the acquisition of portfolio securities and is
not for the purpose of investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount of funds available for
investment on the settlement date. Until the settlement date, liquid assets of
the Portfolio with a dollar value sufficient at all times to make payment for
the delayed delivery securities will be segregated. The total amount of
segregated liquid assets may not exceed 25% of the Portfolio's total assets. The
delayed delivery securities, which will not begin to accrue interest until the
settlement date, will be recorded as an asset of the Portfolio and will be
subject to the risks of market value fluctuations. The purchase price of the
delayed delivery securities will be recorded as a liability of the Portfolio
until settlement. Absent extraordinary circumstances, the Portfolio's right to
acquire delayed delivery securities will not be divested prior to the settlement
date.

ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.

PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term
trading and will generally hold portfolio securities to maturity, but AIM may
seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money markets. For example,
market conditions frequently result in similar securities trading at different
prices. AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. Securities held by the Portfolio will be disposed of prior to
maturity if an earlier disposition is deemed desirable by AIM to meet redemption
requests. In addition, AIM will continually monitor the creditworthiness of
issuers whose securities are held by the Portfolio, and securities held by the
Portfolio may be disposed of prior to maturity as a result of a revised credit
evaluation of the issuer or other circumstances or considerations. The
Portfolio's policy of investing in securities with maturities of 397 days or
less will result in high portfolio turnover. Since brokerage commissions are not
normally paid on investments of the type made by the Portfolio, the high
turnover rate should not adversely affect the Portfolio's net income.

INVESTMENT IN OTHER INVESTMENT COMPANIES. The Portfolio is permitted to invest
in other investment companies to the extent permitted by the 1940 Act, the rules
and regulations thereunder and, if applicable, exemptive orders granted by the
SEC.

The investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.

INVESTMENT RESTRICTIONS

The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal regulatory
limitations. These restrictions are designed to minimize certain risks
associated with investing in

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specified types of securities or engaging in certain transactions and to limit
the amount of the Portfolio's assets which may be concentrated in any specific
industry or issuer. The most significant of these restrictions provide that the
Portfolio will not:

(1) purchase the securities of any issuer if, as a result, the
Portfolio would fail to be a diversified company within the meaning of the
1940 Act, the rules and regulations promulgated thereunder, as such
statute, rules and regulations are amended from time to time; provided,
however, that the Portfolio may purchase securities of other investment
companies to the extent permitted by the 1940 Act and the rules and
regulations promulgated thereunder (as such statute, rules and regulations
are amended from time to time) or to the extent permitted by exemptive
order or other similar relief; or

(2) concentrate 25% or more of its total assets in the securities of
issuers in a particular industry; provided, however, that securities issued
or guaranteed by banks or subject to financial guaranty insurance are not
subject to this limitation; and provided further, that securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities and
tax-exempt securities issued by state and local governments and their
political subdivisions, are not included within this restriction.

The foregoing investment restrictions of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) are matters of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.

In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which govern the operations of money market funds,
and may be more restrictive than the policies described herein. A description of
further investment restrictions applicable to the Portfolio is contained in the
Statement of Additional Information.

PURCHASE OF SHARES

Shares of the Class are sold on a continuing basis at their net asset value
next determined after an order has been received by the Portfolio. As discussed
below, the Trust reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks or
other institutions may charge a record keeping, account maintenance or other fee
to their customers, and beneficial holders of the shares of the Class should
consult with the institutions maintaining their accounts to obtain a schedule of
applicable fees. To facilitate the investment of proceeds of purchase orders,
the investors are urged to place their orders as early in the day as possible.
Purchase orders will be accepted for execution on the day the order is placed,
provided that the order is properly submitted and received by the Transfer Agent
prior to 5:00 p.m. Eastern time on a business day of the Portfolio. Purchase
orders received after such time will be processed at the next day's net asset
value. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK--Registered Trademark-- Remote, a personal
computer application software product.

A "Business Day" of the Portfolio is any day on which both the Federal Reserve
Bank of New York and The Bank of New York, the Trust's custodian bank, are open
for business. The Portfolio, however, reserves the right to change the time for
which purchase and redemption requests must be submitted to the Portfolio for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays. It is expected that The Bank of New York and the Federal Reserve Bank
of New York will be closed during the next twelve months on Saturdays and
Sundays, and on the observed holidays of New Year's Day, Martin Luther King,
Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.

Subject to the conditions stated above and the Trust's right to reject any
purchase order, orders will be accepted (a) when payment for shares of the Class
purchased is received by The Bank of New York, the Trust's custodian bank, in
the form described below and notice of such order is provided to the Transfer
Agent, or (b) at the time the order is placed, if the Portfolio is assured of
payment. Shares of the Class purchased by orders which are accepted prior to
5:00 p.m. Eastern time will earn the dividend declared on the date of purchase.

Payments for shares of the Class purchased must be in the form of federal
funds or other funds immediately available to the Portfolio. Federal Reserve
wires should be sent as early as possible in order to facilitate crediting to
the shareholder's account. Any funds received with respect to an order which is
not accepted by the Trust and any funds received for which an order has not been
received will be returned to the sending institution. An order to purchase
shares must specify that it is for the purchase of "Shares of the Institutional
Class of the Treasury Portfolio," otherwise any funds received will be returned
to the sending institution.

The minimum initial investment in the Class is $1,000,000. Institutions may be
requested to maintain separate Master Accounts in the shares of the Class held
by the institution (a) for its own account, for the account of other
institutions and for

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accounts for which the institution acts as a fiduciary, and (b) for accounts for
which the institution acts in some other capacity. An institution's Master
Account(s) and sub-accounts in the shares of the Class may be aggregated for the
purpose of the minimum investment requirement. No minimum amount is required for
subsequent investments in the Portfolio nor are minimum balances required. Prior
to the initial purchase of shares of the Class, an Account Application must be
completed and sent to the Transfer Agent, P.O. Box 4497, Houston, Texas
77210-4497. Account Applications may be obtained from the Transfer Agent. Any
changes made to the information provided in the Account Application must be made
in writing or by completing a new form and providing it to the Transfer Agent.

Banks will be required to certify to the Trust that they comply with
applicable state law regarding registration as broker-dealers, or that they are
exempt from such registration.

The Trust reserves the right in its sole discretion to withdraw all or any
part of the offering made by this Prospectus or to reject any purchase order.

Any request for correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the institution for
an amount equal to the overdraft charge incurred by the Portfolio.

REDEMPTION OF SHARES

A shareholder may redeem any or all of its shares of the Class at the net
asset value next determined after receipt of the redemption request in proper
form by the Trust. Redemption requests with respect to the Class may also be
made via AIM LINK--Registered Trademark-- Remote. Normally, the net asset value
per share of the Portfolio will remain constant at $1.00. See "Net Asset Value."
Redemption requests with respect to shares of the Class are normally made by
calling the Trust.

Payment for redeemed shares of the Class is normally made by Federal Reserve
wire to the commercial bank account designated in the institution's Account
Application, but may be remitted by check upon request by a shareholder. If a
redemption request is received by the Transfer Agent prior to 5:00 p.m. Eastern
time on a Business Day of the Portfolio, the redemption will be effected at the
net asset value next determined on such day and the shares of the Class to be
redeemed will not receive the dividend declared on the effective date of the
redemption. If a redemption request is received by the Transfer Agent after 5:00
p.m. Eastern time or on other than a Business Day of the Portfolio, the
redemption will be effected at the net asset value of the Portfolio determined
as of 5:00 p.m. Eastern time on the next Business Day of the Portfolio, and the
proceeds of such redemption will normally be wired on the effective day of the
redemption. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.

A shareholder may change the bank account designated to receive redemption
proceeds by written notice to the Trust. The authorized signature on the notice
must be guaranteed by a commercial bank or a trust company. Additional
documentation may be required when deemed appropriate by the Trust or the
Transfer Agent.

Shareholders may request a redemption by telephone. Neither the Transfer Agent
nor FMC will be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the Account Application if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures for
verification of telephone transactions may include recordings of telephone
transactions (maintained for six months), and mailings of confirmations promptly
after the transaction. If a shareholder is unable to reach the Transfer Agent by
telephone, he may also request redemptions by telegraph or use overnight courier
services to expedite redemptions by mail, which will be effective on the
Business Day received by the Transfer Agent as long as such request is received
prior to 5:00 p.m. Eastern time.

Payment for shares of the Class redeemed by mail and payment for telephone
redemptions in amounts of less than $1,000 may be made by check mailed within
seven days after receipt of the redemption request in proper form. The Trust may
make payment for telephone redemptions in excess of $1,000 by check when it is
considered to be in the Portfolio's best interest to do so.

The Board of Trustees of the Trust may redeem shares if it determines in its
sole discretion that failure to so redeem may have materially adverse
consequences to the shareholders of the Trust.

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<PAGE> 9

Any request for correction to a redemption transaction of Portfolio shares
must be submitted in writing to the Transfer Agent as described above in
"Purchase of Shares."

DIVIDENDS

Dividends from the net income of the Portfolio are declared daily to
shareholders of record of each class of the Portfolio as of immediately after
5:00 p.m. Eastern time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 p.m. Eastern time. The dividend accrued
and paid for each class will consist of (a) income of the Portfolio, the
allocation of which is based upon such class's pro rata share of the total
outstanding shares representing an interest in the Portfolio, less (b) Portfolio
expenses, such as custodian fees, trustees' fees, accounting and legal expenses,
based upon such class' pro rata share of the net assets of the Portfolio, less
(c) expenses directly attributable to such class, such as distribution expenses,
if any, and transfer agency fees. Although realized gains and losses on the
assets of the Portfolio are reflected in its net asset value, they are not
expected to be of an amount which would affect its $1.00 per share net asset
value for purposes of purchases and redemptions. See "Net Asset Value."
Distributions from net realized short-term gains may be declared and paid yearly
or more frequently. See "Taxes." The Portfolio does not expect to realize any
long-term capital gains or losses.

All dividends declared during a month will normally be paid by wire transfer.
Payment will normally be made on the first business day of the following month.
A shareholder may elect to have all dividends automatically reinvested in
additional full and fractional shares of the Class at the net asset value as of
5:00 p.m. Eastern time on the last Business Day of the month. Such election, or
any revocation thereof, must be made in writing by the institution to the
Transfer Agent, P.O. Box 4497, Houston, Texas 77210-4497 and will become
effective with dividends paid after its receipt by the Transfer Agent. If a
shareholder redeems all the shares of the Class in its account at any time
during the month, all dividends declared through the date of redemption are paid
to the shareholder along with the proceeds of the redemption.

The Portfolio uses its best efforts to maintain its net asset value per share
of the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset
Value." Should the Trust incur or anticipate any unusual expense, loss or
depreciation which could adversely affect the income or net asset value of the
Portfolio, the Trust's Board of Trustees would at that time consider whether to
adhere to the present dividend policy described above or to revise it in light
of the then prevailing circumstances. For example, under such unusual
circumstances, the Board of Trustees might reduce or suspend the daily dividend
in order to prevent to the extent possible the net asset value per share of the
Portfolio from being reduced below $1.00. Thus, such expenses, losses or
depreciation may result in a shareholder receiving no dividends for the period
during which it held its shares of the Class and cause such a shareholder to
receive upon redemption a price per share lower than the shareholder's original
cost.

TAXES

The policy of the Portfolio is to distribute to its shareholders at least 90%
of its investment company taxable income for each year and consistent therewith
to meet the distribution requirements of Part I of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The Portfolio also intends to
meet the distribution requirements imposed by the Code in order to avoid the
imposition of a 4% excise tax. The Portfolio intends to distribute at least 98%
of its net investment income for the calendar year and at least 98% of its net
realized capital gains, if any, for the period ending on October 31. The
Portfolio also intends to meet the other requirements of Subchapter M, including
the requirements with respect to diversification of assets and sources of
income, so that the Portfolio will pay no taxes on net investment income and net
realized capital gains paid to shareholders.

Dividends paid by the Portfolio are subject to taxation as of the date of
payment, whether received by shareholders in cash or shares of the Class. The
Code provides an exception to this general rule: if the Portfolio declares a
dividend in October, November or December to shareholders of record in such
months and pays the dividend during January of the next year, a shareholder will
be treated for tax purposes as having received the dividend on December 31 of
the year in which it is declared rather than in January when it is paid. It is
anticipated that no portion of distributions will be eligible for the dividends
received deduction for corporations. Dividends paid by the Portfolio from its
net investment income and short-term capital gains are taxable to shareholders
at ordinary income tax rates.

The Portfolio will be treated as a separate corporation for purposes of
determining taxable income, distribution requirements and other requirements of
Subchapter M. Therefore, the Portfolio may not offset its gains against the
losses of the other portfolio of the Trust and each portfolio of the Trust must
specifically comply with all the provisions of the Code.

Distributions and transactions referred to in the preceding paragraphs may be
subject to state, local or foreign taxes, and the treatment thereof may differ
from the federal income tax consequences discussed herein. Shareholders are
advised to consult with their own tax advisors concerning the application of
state, local or foreign taxes.

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<PAGE> 10

Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or the
Transfer Agent.

NET ASSET VALUE

The net asset value per share of the Portfolio is determined daily as of 5:00
p.m. Eastern time on each Business Day of the Portfolio. Net asset value per
share is determined by dividing the value of the Portfolio's securities, cash
and other assets (including interest accrued but not collected) less all of its
liabilities (including accrued expenses and dividends payable), by the number of
shares outstanding of the Portfolio and rounding the resulting per share net
asset value to the nearest one cent.

The securities of the Portfolio are valued on the basis of amortized cost
pursuant to rules promulgated by the SEC applicable to money market funds. 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,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price the Portfolio would receive if the security were sold.
During such periods, the daily yield on shares of the Portfolio, computed as
described in "Purchases and Redemptions -- Performance Information" in the
Statement of Additional Information, may differ somewhat from an identical
computation made by an investment company with identical investments utilizing
available indications as to market value to value its portfolio securities.

YIELD INFORMATION

Yield information for the Class can be obtained by calling the Trust at (800)
659-1005. Yields will fluctuate from time to time and are not necessarily
indicative of future results. Accordingly, the yield information may not provide
a basis for comparison with investments which pay a fixed rate of interest for a
stated period of time. Yield is a function of the type and quality of the
Portfolio's investments, the Portfolio's maturity and the operating expense
ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should
be carefully considered by the investor before making an investment in the
Portfolio.

To assist banks and other institutions performing their own subaccounting,
same day information as to the daily dividend per share for the Portfolio to
eight decimal places and current yield normally will be available by 6:00 p.m.
Eastern time.

From time to time and in its discretion, AIM or its affiliates may waive all
or a portion of its advisory fees and/or assume certain expenses of the
Portfolio. Such a practice will have the effect of increasing the Portfolios'
yield and total return.

REPORTS TO SHAREHOLDERS

The Trust will furnish shareholders with semi-annual reports containing
information about the Portfolio and its operations, including a list of the
investments held by the Portfolio and financial statements. The annual financial
statements will be audited by the Trust's independent auditors.

Unless otherwise requested by the shareholder, each shareholder will be
provided with a written confirmation for each transaction. Institutions
establishing sub-accounts will receive a written confirmation for each
transaction in a sub-account. Duplicate confirmations may be transmitted to the
beneficial owner of the sub-account if requested by the institution. The
institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

The overall management of the business and affairs of the Trust is vested with
its Board of Trustees. The Board of Trustees approves all significant agreements
between the Trust and persons or companies furnishing services to the Trust,
including agreements with the Trust's investment advisor, distributor, custodian
and transfer agent. The day-to-day operations of the Trust are delegated to the
Trust's officers and to AIM, subject always to the objectives and policies of
the Trust and to the general supervision of the Trust's Board of Trustees.
Information concerning the Board of Trustees may be found in the Statement of
Additional Information. Certain trustees and officers of the Trust are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.

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<PAGE> 11

For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."

INVESTMENT ADVISOR

A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor for the Portfolio pursuant to a Master Investment
Advisory Agreement dated as of February 28, 1997, as amended, (the "Advisory
Agreement"). AIM, organized in 1976, together with its subsidiaries, manages or
advises over 90 investment company portfolios encompassing a broad range of
investment objectives. Certain of the directors and officers of AIM are also
trustees or executive officers of the Fund. AIM is a wholly owned subsidiary of
AIM Management. AIM Management is a holding company engaged in the financial
services business. AIM Management is an indirect, wholly owned subsidiary of
AMVESCAP PLC, a publicly-traded holding company that, through its subsidiaries,
engages in the business of investment management on an international basis.

Pursuant to the terms of the Advisory Agreement, AIM manages the investment of
the Portfolio's assets and obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. For such services, AIM is entitled to receive a maximum fee from the
Portfolio calculated at the annual rate of 0.10% on all net assets.

ADMINISTRATIVE SERVICES

The Trust has entered into a Master Administrative Services Agreement dated as
of February 28, 1997, as amended, with AIM (the "Administrative Services
Agreement"), pursuant to which AIM has agreed to provide or arrange for the
provision of certain accounting and other administrative services to the
Portfolio, including the services of a principal financial officer of the Trust
and related staff. As compensation to AIM for its services under the
Administrative Services Agreement, the Portfolio may reimburse AIM for expenses
incurred by AIM in connection with such services.

EXPENSES

In addition to fees paid to AIM pursuant to the Advisory Agreement and the
expenses reimbursed to AIM under the Administrative Services Agreement, the
Trust also pays or causes to be paid all other expenses of the Trust, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Trust for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Trust; brokers' commissions chargeable to the Trust in
connection with portfolio securities transactions to which the Trust is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Trust to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Trust; all costs and expenses in connection with the registration and
maintenance of registration of the Trust and its shares with the SEC and various
states and other jurisdictions (including filing and legal fees and
disbursements of counsel); the costs and expenses of printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Trust and supplements thereto to the Trust's shareholders;
all expenses of shareholders' and trustees' meetings and of preparing, printing
and mailing of prospectuses, proxy statements and reports to shareholders; fees
and travel expenses of trustees and trustee members of any advisory board or
committee; all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside service used for pricing of the Trust's shares; charges and expenses
of legal counsel, including counsel to the trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of
independent accountants in connection with any matter relating to the Trust;
membership dues of industry associations; interest payable on Trust borrowings;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Trust which inure to its benefit; and extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto). FMC bears the expenses of
printing and distributing prospectuses and statements of additional information
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Trust) and any other promotional or
sales literature used by FMC or furnished by FMC to purchasers or dealers in
connection with the public offering of the Trust's shares.

Expenses of the Trust which are not directly attributable to the operations of
any portfolio of the Trust are allocated among all portfolios of the Trust.
Distribution expenses of the Portfolio which are directly attributable to a
specific class of shares are charged against the income available for
distribution as dividends to the holders of such shares. All other expenses of
the Portfolio are allocated among all classes of shares of the Portfolio.

11
<PAGE> 12

FEE WAIVERS

AIM or its affiliates may in its discretion from time to time agree to waive
voluntarily all or any portion of its advisory fee and/or assume certain
expenses of the Portfolio but will retain its ability to be reimbursed for such
fee or expenses prior to the end of each fiscal year.

DISTRIBUTOR

The Trust has entered into a Master Distribution Agreement dated as of
February 28, 1997, as amended, (the "Distribution Agreement") with FMC, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
exclusive distributor of the shares of the Class. The address of FMC is 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Certain trustees and
officers of the Trust are affiliated with FMC. The Distribution Agreement
provides that FMC has the exclusive right to distribute shares of the Trust
either directly or through other broker-dealers. FMC is the distributor of
several of the mutual funds managed or advised by AIM.

PORTFOLIO TRANSACTIONS

AIM is responsible for decisions to buy and sell securities for the
Portfolios, broker-dealer selection and negotiation of commission rates. Since
purchases and sales of portfolio securities by the Portfolio are usually
principal transactions, the Portfolio incurs little or no brokerage commissions.
Portfolio securities are normally purchased directly from the issuer or from a
market maker for the securities. In the event the Portfolio purchases securities
traded over-the-counter, the Portfolio deals directly with dealers who make
markets in the securities involved, except when better prices are available
elsewhere. Portfolio transactions placed through dealers who are primary market
makers are effected at net prices without commissions, but which include
compensation in the form of a mark up or mark down. The Portfolio may also
purchase securities from underwriters at prices which include a concession paid
by the issuer to the underwriter.

AIM's primary consideration in effecting a security transaction is to obtain
the best net price and the most favorable execution of the order. To the extent
that the executions and prices offered by more than one dealer are comparable,
AIM may, in its discretion, effect transactions with dealers that furnish
statistical, research or other information or services which are deemed by AIM
to be beneficial to the Portfolio's investment programs. Certain research
services furnished by dealers may be useful to clients of AIM other than the
Portfolio. Similarly, any research services received by AIM through placement of
portfolio transactions of other clients may be of value to AIM in fulfilling its
obligations to the Portfolio.

GENERAL INFORMATION

ORGANIZATION AND DESCRIPTION OF SHARES

The Trust is a Delaware business trust. The Trust was originally incorporated
in Maryland on January 24, 1977, but had no operations prior to November 10,
1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts
business trust; and effective October 15, 1993, the Trust was reorganized as a
Delaware business trust. Shares of beneficial interest of the Trust are divided
into eleven classes of which four, including the Class, represent interests in
the Portfolio, five classes represent interests in the Treasury Portfolio and
two classes represent interest in the Treasury TaxAdvantage Portfolio. Each
class of shares has a par value of $.01 per share. The other classes of the
Trust may have different sales charges and other expenses which may affect
performance. An investor may obtain information concerning the Trust's other
classes by contacting FMC.

All shares of the Trust have equal rights with respect to voting, except that
the holders of shares of a particular portfolio or class will have the exclusive
right to vote on matters pertaining solely to that portfolio or class. For
example, holders of shares of a particular portfolio will have the exclusive
right to vote on any investment advisory agreement or investment restriction
that relates only to such portfolio. In addition, if a portfolio is divided into
various classes, holders of shares of a particular class will have the exclusive
right to vote on any matter, such as distribution arrangements, which relates
solely to such class. The holders of shares of the Portfolio have distinctive
rights with respect to dividends and redemption which are more fully described
in this Prospectus. In the event of liquidation or termination of the Trust,
holders of shares of each portfolio will receive pro rata, subject to the rights
of creditors, (a) the proceeds of the sale of the assets held in the respective
portfolio to which such shares relate, less (b) the liabilities of the Trust
attributable or allocated to the respective portfolio based on the liquidation
value of the portfolio. Fractional shares of each portfolio have the same rights
as full shares to the extent of their proportionate interest.

There will not normally be annual shareholders' meetings. Shareholders may
remove trustees from office by votes cast at a meeting of shareholders called
solely for such purpose or by written consent. A meeting of shareholders for the
sole purpose of considering removal of a trustee shall be called at the request
of the holders of 10% or more of the Trust's outstanding shares.

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<PAGE> 13

There are no preemptive or conversion rights applicable to any of the Trust's
shares. The Trust's shares, when issued, will be fully paid and non-assessable.
The Board of Trustees may create additional portfolios of the Trust without
shareholder approval.

TRANSFER AGENT AND CUSTODIAN

The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497, acts as
transfer agent for the shares of the Class.

LEGAL COUNSEL

The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon legal matters for
the Trust.

SHAREHOLDER INQUIRIES

Shareholder inquiries concerning the status of an account should be directed
to the Trust at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may
be made by calling (800) 659-1005.

YEAR 2000 COMPLIANCE PROJECT

In providing services to the AIM Funds, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the AIM Funds provide the AIM Funds and their
shareholders.

To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are under-taking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.

OTHER INFORMATION

This Prospectus sets forth basic information that investors should know about
the Trust and the Portfolio prior to investing. A Statement of Additional
Information has been filed with the SEC. Copies of the Statement of Additional
Information are available upon request and without charge by writing or calling
the Trust or FMC. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted herein, may be obtained from the SEC by paying the
charges prescribed under its rules and regulations.

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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 15
APPENDIX

STATEMENT OF
ADDITIONAL INFORMATION

SHORT-TERM INVESTMENTS TRUST

GOVERNMENT & AGENCY PORTFOLIO

(CASH MANAGEMENT CLASS)

(INSTITUTIONAL CLASS)

(PRIVATE INVESTMENT CLASS)

(RESOURCE CLASS)

11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(800) 659-1005

---------------------

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF EACH OF THE ABOVE NAMED
FUNDS,
COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 100, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 659-1005

---------------------

STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 1, 1998
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE GOVERNMENT &
AGENCY PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED SEPTEMBER 1, 1998
INSTITUTIONAL CLASS PROSPECTUS DATED SEPTEMBER 1, 1998
RESOURCE CLASS PROSPECTUS DATED SEPTEMBER 1, 1998
AND PRIVATE INVESTMENT CLASS PROSPECTUS DATED SEPTEMBER 1, 1998

A-1
<PAGE> 16

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Introduction................................................ A-3
General Information about the Trust......................... A-3
The Trust and Its Shares............................... A-3
Management.................................................. A-5
Trustees and Officers.................................. A-5
Remuneration of Trustees............................... A-7
Investment Advisor..................................... A-9
Administrative Services................................ A-10
Expenses............................................... A-10
Banking Regulations.................................... A-11
Transfer Agent and Custodian........................... A-11
Reports................................................ A-11
Fee Waivers............................................ A-11
Principal Holders of Securities........................ A-12
Purchases and Redemptions................................... A-14
Net Asset Value Determination.......................... A-15
Distribution Agreement................................. A-15
Distribution Plan...................................... A-15
Performance Information................................ A-16
Investment Program and Restrictions......................... A-17
Investment Program..................................... A-17
Eligible Securities.................................... A-17
Investment Restrictions................................ A-17
Portfolio Transactions and Brokerage........................ A-18
General Brokerage Policy............................... A-18
Allocation of Portfolio Transactions................... A-18
Section 28(e) Standards................................ A-19
Tax Matters................................................. A-20
Qualification as a Regulated Investment Company........ A-20
Excise Tax on Regulated Investment Companies........... A-20
Portfolio Distributions................................ A-20
Sale or Redemption of Shares........................... A-21
Foreign Shareholders................................... A-21
Effect of Future Legislation; Local Tax
Considerations........................................ A-21
Financial Statements........................................ None
</TABLE>

A-2
<PAGE> 17

INTRODUCTION

The Government & Agency Portfolio (the "Portfolio") is an investment portfolio
of Short-Term Investments Trust (the "Trust"), a mutual fund. The rules and
regulations of the United States Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the fund being considered for investment. This
information is included in the Cash Management Class Prospectus dated September
1, 1998, the Institutional Class Prospectus dated September 1, 1998, the Private
Investment Class Prospectus dated September 1, 1998 and the Resource Class
Prospectus dated September 1, 1998 (each a "Prospectus"). Additional copies of
each Prospectus and this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Trust's shares, Fund
Management Company ("FMC"), 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, or by calling (800) 659-1005. Investors must receive a Prospectus
before they invest.

This Statement of Additional Information is intended to furnish prospective
investors with additional information concerning each class of the Portfolio.
Some of the information required to be in this Statement of Additional
Information is also included in each Prospectus; and, in order to avoid
repetition, reference will be made to sections of the applicable Prospectus.
Additionally, each Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from each
Prospectus and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.

GENERAL INFORMATION ABOUT THE TRUST

THE TRUST AND ITS SHARES

The Trust is an open-end diversified management series investment company
which was originally organized as a corporation under the laws of the State of
Maryland on January 24, 1977, but which had no operations prior to November 10,
1980. The Trust was reorganized as a business trust under the laws of the
Commonwealth of Massachusetts on December 31, 1986. The Trust was again
reorganized as a business trust under the laws of the State of Delaware on
October 15, 1993. A copy of the Agreement and Declaration of Trust (the
"Declaration of Trust") establishing the Trust is on file with the SEC. Shares
of beneficial interest of the Trust are redeemable at the net asset value
thereof at the option of the shareholder or at the option of the Trust in
certain circumstances. For information concerning the methods of redemption and
the rights of share ownership, investors should consult each Prospectus under
the caption "General Information" and "Redemption of Shares."

The Trust offers on a continuous basis shares representing an interest in one
of three portfolios: the Portfolio, the Treasury Portfolio and the Treasury
TaxAdvantage Portfolio (together, the "Portfolios"). The Portfolio consists of
the following four classes of shares: Cash Management Class, Institutional
Class, Private Investment Class and Resource Class. Each class of shares is sold
pursuant to a separate Prospectus and this joint Statement of Additional
Information. Each such class has different shareholder qualifications and bears
expenses differently. This Statement of Additional Information relates to each
class of the Portfolio. The classes of the Treasury Portfolio and Treasury
TaxAdvantage Portfolio are offered pursuant to separate prospectuses and a
separate statement of additional information.

Shares of beneficial interest of the Trust will be redeemable at the net asset
value thereof at the option of the shareholder or at the option of the Trust in
certain circumstances. For information concerning the methods of redemption and
the rights of share ownership, investors should consult the Prospectus under the
captions "Redemption of Shares."

As used in the Prospectus, the term "majority of the outstanding shares" of
the Trust, a particular portfolio or a particular class means, respectively, the
vote of the lesser of (a) 67% or more of the shares of the Trust, such portfolio
or such class present at a meeting of the Trust's shareholders, if the holders
of more than 50% of the outstanding shares of the Trust, such portfolio or such
class are present or represented by proxy, or (b) more than 50% of the
outstanding shares of the Trust, such portfolio or such class.

Shareholders of the Trust do not have cumulative voting rights. Therefore the
holders of more than 50% of the outstanding shares of all series or classes
voting together for election of trustees may elect all of the members of the
Board of Trustees and in such event, the remaining holders cannot elect any
members of the Board of Trustees.

The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust, each of its Portfolios and any class thereof, however, may be
terminated at any time, upon the recommendation of the Board of Trustees, by
vote of a majority of the outstanding shares of the Trust, such Portfolio and
such class, respectively; provided, however, that the Board of Trustees may
terminate, with such shareholder approval, the Trust, each of its Portfolios and
any class thereof with respect to which there are fewer than 100 holders of
record.

A-3
<PAGE> 18

The Declaration of Trust permits the trustees to issue an unlimited number of
full and fractional shares, of $.01 par value, of each class of shares of
beneficial interest of the Trust. The Board of Trustees may establish additional
series or classes of shares from time to time without shareholder approval.
Additional information concerning the rights of share ownership is set forth in
the prospectus applicable to each such class or series of shares of the Trust.

The assets received by the Trust for the issue or sale of shares of each class
relating to a portfolio and all income, earnings, profits, losses and proceeds
therefrom, subject only to the rights of creditors, will be allocated to that
portfolio, and constitute the underlying assets of that portfolio. The
underlying assets of each portfolio will be segregated and will be charged with
the expenses with respect to that portfolio and with a share of the general
expenses of the Trust. While certain expenses of the Trust will be allocated to
the separate books of account of each portfolio, certain other expenses may be
legally chargeable against the assets of the entire Trust.

Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations, however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Trust to the extent the courts of another state which does
not recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the Declaration of Trust
disclaims shareholder liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Trust or the trustees to all
parties, and each party thereto must expressly waive all rights of action
directly against shareholders of the Trust. The Declaration of Trust provides
for indemnification out of the Trust's property for all losses and expenses of
any shareholder of the Trust held liable on account of being or having been a
shareholder. Thus, the risk of a shareholder incurring financial loss due to
shareholder liability is limited to circumstances in which the Trust would be
unable to meet its obligations and wherein the complaining party was held not to
be bound by the disclaimer.

The Declaration of Trust further provides that the trustees will not be liable
for errors of judgment or mistakes of fact or law. However, nothing in the
Declaration of Trust protects a trustee against any liability to which a trustee
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. The Declaration of Trust provides for indemnification by the Trust of
the trustees and the officers of the Trust except with respect to any matter as
to which any such person did not act in good faith in the reasonable belief that
his action was in or not opposed to the best interests of the Trust. Such person
may not be indemnified against any liability to the Trust or to the Trust's
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Declaration of Trust also authorizes
the purchase of liability insurance on behalf of trustees and officers.

As described in the Prospectus, the Trust will not normally hold annual
shareholders' meetings. At such time as less than a majority of the trustees
have been elected by the shareholders, the trustees then in office will call a
shareholders' meeting for the election of trustees. In addition, trustees may be
removed from office by a written consent signed by the holders of two-thirds of
the outstanding shares of the Trust and filed with the Trust's custodian or by a
vote of the holders of two-thirds of the outstanding shares at a meeting duly
called for that purpose, which meeting shall be held upon written request of the
holders of not less than 10% of the outstanding shares of the Trust.

A-4
<PAGE> 19

MANAGEMENT

TRUSTEES AND OFFICERS

The trustees and officers of the Trust and their principal occupations during
at least the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
*CHARLES T. BAUER (79) Trustee and Chairman of the Board of Directors, A I M Management
Chairman Group Inc., A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company; and
Vice Chairman and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) Trustee Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer,
McLean, VA 22102 COMSAT Corporation; and Chairman, Board of Governors
of INTELSAT (international communications company).
- -----------------------------------------------------------------------------------------------------------------------
OWEN DALY II (74) Trustee Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
- -----------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (63) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Baltimore, MD 21201 of Directors and President, Mercantile-Safe Deposit
Trust Co.; and President, Mercantile Bankshares.
- -----------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (46) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
8810 Will Clayton Parkway trading company) and Twenty First Century Group, Inc.
Jetero Plaza, Suite E (a governmental affairs company). Formerly, Member of
Humble, TX 77338 the U.S. House of Representatives.
- -----------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

- ---------------

* A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.

** A trustee who is an "interested person" of the Trust as defined in the 1940
Act.

A-5
<PAGE> 20

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and
Fund Management Company; and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (55) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (75) Trustee Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management Services,
Tequesta, FL 33469 Inc. (provider of centralized management services to
telephone companies); Executive Vice President, Bell
Atlantic Corporation (parent of seven telephone
companies); and Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and
Diamond State Telephone Company.
- -----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (59) Trustee Executive Vice President, Development and Operations,
Transco Tower, 50th Floor Hines Interests Limited Partnership (real estate
2800 Post Oak Blvd. development).
Houston, TX 77056
- -----------------------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and Treasurer, A I M
President and Advisors, Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Senior Vice President, A I M
Management Group Inc., A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (43) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Vice President,
Secretary General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; General Counsel and Vice
President, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund Controller, A I M Advisors,
and Assistant Inc.; and Assistant Vice President and Assistant
Treasurer Treasurer, Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

- ---------------

* A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.

*** Mr. Arthur and Ms. Relihan are married to each other.

A-6
<PAGE> 21

- ---------------

*** Mr. Arthur and Ms. Relihan are married to each other.

The standing committees of the Board of Trustees are the Audit Committee, the
Investments Committee, and the Nominating and Compensation Committee.

The members of the Audit Committee are Messrs. Crockett, Daly, Dunn, Fields,
Frischling, Pennock, Robinson (Chairman) and Sklar. The Audit Committee is
responsible for meeting with the Trust's auditors to review audit procedures and
results and to consider any matters arising from an audit to be brought to the
attention of the trustees as a whole with respect to the Trust's fund accounting
or its internal accounting controls, or for considering such matters as may from
time to time be set forth in a charter adopted by the Board of Trustees and such
committee.

The members of the Investments Committee are Messrs. Bauer, Crockett, Daly,
Dunn, Fields, Frischling, Pennock, Robinson and Sklar (Chairman). The
Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, or considering such matters as may from time to time be set
forth in a charter adopted by the Board of Trustees and such committee.

The members of the Nominating and Compensation Committee are Messrs. Crockett
(Chairman), Daly, Dunn, Fields, Pennock, Robinson and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating individuals
to stand for election as trustees who are not interested persons as long as the
Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act,
reviewing from time to time the compensation payable to the disinterested
trustees, or considering such matters as may from time to time be set forth in a
charter adopted by the Board of Trustees and such committee.

All of the Trust's trustees also serve as directors or trustees of some or all
of the other investment companies managed or advised by A I M Advisors, Inc.
("AIM"). All of the Trust's executive officers hold similar offices with some or
all of such investment companies.

REMUNERATION OF TRUSTEES

Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board of Trustees or any committee thereof. Each trustee who is
not an officer of the Trust is compensated for his services according to a fee
schedule which recognizes the fact that such trustee also serves as a director
or trustee of other regulated investment companies managed, administered or
distributed by AIM or its affiliates (the "AIM Funds"). Each such trustee
receives a fee, allocated among the AIM Funds for which he serves as a director
or trustee, which consists of an annual retainer component and a meeting fee
component.

A-7
<PAGE> 22

Set forth below is information regarding compensation paid or accrued for each
trustee of the Trust:

<TABLE>
<CAPTION>
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM BY ALL FROM ALL
TRUSTEE TRUST(1) AIM FUNDS(2) AIM FUNDS(3)
------- ------------ ------------ ------------
<S> <C> <C> <C>
Charles T. Bauer.................................. $ 0 $ 0 $ 0
Bruce L. Crockett................................. 4,880 67,774 84,000
Owen Daly II...................................... 4,879 103,542 84,000
Edward K. Dunn, Jr.(4)............................ 0 0 0
Jack Fields....................................... 2,466 0 71,000
Carl Frischling................................... 4,880 96,520 84,000(5)
Robert H. Graham.................................. 0 0 0
John F. Kroeger................................... 4,879 94,132 82,500
Lewis F. Pennock.................................. 4,879 55,777 84,000
Ian W. Robinson................................... 4,880 85,912 84,000
Louis S. Sklar.................................... 4,815 84,370 83,500
</TABLE>

- ---------------

(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended August 31, 1997, including interest earned
thereon, was $23,027.

(2) During the fiscal year ended August 31, 1997, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $30,214.
Data reflects compensation for the calendar year ended December 31, 1997.

(3) Each serves as a Director or Trustee of a total of twelve registered
investment companies advised by AIM (comprised of over 45 portfolios). Data
reflects total compensation for the calendar year ended December 31, 1997.

(4) Mr. Dunn did not serve as a Trustee during the calendar year ending December
31, 1997.

(5) The Trust paid the law firm of Kramer, Levin, Naftalis & Frankel $13,565 in
legal fees for services provided to the Trust during the fiscal year ended
August 31, 1997. Mr. Frischling, a trustee of the Trust, is a partner in
such firm.

AIM Funds Retirement Plan for Eligible Directors/Trustees

Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible trustee has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
AIM Funds"). Each eligible trustee is entitled to receive an annual benefit from
the Applicable AIM Funds commencing on the first day of the calendar quarter
coincident with or following his date of retirement equal to 75% of the retainer
paid or accrued by the Applicable AIM Funds for such trustee during the
twelve-month period immediately preceding the trustee's retirement (including
amounts deferred under a separate agreement between the Applicable AIM Funds and
the trustee) for the number of such trustee's years of service (not in excess of
10 years of service) completed with respect to any of the Applicable AIM Funds.
Such benefit is payable to each eligible trustee in quarterly installments. If
an eligible trustee dies after attaining the normal retirement date but before
receipt of any benefits under the Plan commences, the trustee's surviving spouse
(if any) shall receive a quarterly survivor's benefit equal to 50% of the amount
payable to the deceased trustee, for no more than ten years beginning the first
day of the calendar quarter following the date of the trustee's death. Payments
under the Plan are not secured or funded by any Applicable AIM Fund.

A-8
<PAGE> 23

Set forth below is a table that shows the estimated annual benefits payable to
an eligible trustee upon retirement assuming a specified level of compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Pennock, Robinson and
Sklar are 10, 10, 0, 0, 20, 16, 10 and 8 years, respectively.

ESTIMATED ANNUAL BENEFITS UPON RETIREMENT

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
NUMBER OF
YEARS OF
SERVICE WITH
APPLICABLE ANNUAL RETAINER PAID BY ALL AIM FUNDS
AIM FUNDS $80,000
<S> <C>
- ------------------------------------------------------------------------------------
10 $60,000
- ------------------------------------------------------------------------------------
9 $54,000
- ------------------------------------------------------------------------------------
8 $48,000
- ------------------------------------------------------------------------------------
7 $42,000
- ------------------------------------------------------------------------------------
6 $36,000
- ------------------------------------------------------------------------------------
5 $30,000
- ------------------------------------------------------------------------------------
</TABLE>

Deferred Compensation Agreements

Messrs. Daly, Frischling, Robinson and Sklar (for purposes of this paragraph
only, the "deferring trustees") have each executed a Deferred Compensation
Agreement (collectively, the "Agreements"). Pursuant to the Agreements, the
deferring trustees may elect to defer receipt of up to 100% of their
compensation payable by the Trust, and such amounts are placed into a deferral
account. Currently, the deferring trustees may select various AIM Funds in which
all or part of their deferral accounts shall be deemed to be invested.
Distributions from the deferring trustees' deferral accounts will be paid in
cash, generally in equal quarterly installments over a period of five (5) or ten
(10) years (depending on the Agreement) beginning on the date the deferring
trustee's retirement benefits commence under the Plan. The Trust's Board of
Trustees, in its sole discretion, may accelerate or extend the distribution of
such deferral accounts after the deferring trustee's termination of service as a
trustee of the Trust. If a deferring trustee dies prior to the distribution of
amounts in his deferral account, the balance of the deferral account will be
distributed to his designated beneficiary in a single lump sum payment as soon
as practicable after such deferring trustee's death. The Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the deferring trustees have the status of unsecured creditors of the
Trust and of each other AIM Fund from which they are deferring compensation.

INVESTMENT ADVISOR

A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor of the Portfolio pursuant to a Master Investment
Advisory Agreement dated as of February 28, 1997 (the "Advisory Agreement"). AIM
was organized in 1976, and together with its subsidiaries advises or manages
over 90 investment company portfolios encompassing a broad range of investment
objectives.

Pursuant to the terms of the Advisory Agreement, AIM manages the investment of
the assets of the Portfolio. AIM obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. Any investment program undertaken by AIM will at all times be subject
to the policies and control of the Trust's Board of Trustees. AIM shall not be
liable to the Trust or to its shareholders for any act or omission by AIM or for
any loss sustained by the Trust or its shareholders except in the case of
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.

AIM and the Trust have adopted a Code of Ethics which requires investment
personnel (a) to pre-clear all personal securities transactions, (b) to file
reports regarding such transactions, and (c) to refrain from personally engaging
in (i) short-term trading of a security, (ii) transactions involving a security
within seven days of an AIM Fund transaction involving the same security, and
(iii) transactions involving securities being considered for investment by an
AIM Fund. The Code also prohibits investment personnel from purchasing
securities in an initial public offering. Personal trading reports are reviewed
periodically by AIM, and the Board of Trustees reviews annually such reports
(including information on any substantial violations of the Code). Violations of
the Code may result in censure, monetary penalties, suspension or termination of
employment.

As compensation for its services with respect to the Portfolio, AIM receives a
monthly fee which is calculated by applying a maximum annual rate of 0.10% to
the average daily net assets of the Portfolio.

A-9
<PAGE> 24

The Advisory Agreement provides that, upon the request of the Board of
Trustees, AIM may perform or arrange for the performance of certain additional
services on behalf of the Portfolio which are not required by the Advisory
Agreement. AIM may receive reimbursement or reasonable compensation for such
additional services, as may be agreed upon by AIM and the Board of Trustees,
based upon a finding by the Board of Trustees that the provision of such
services would be in the best interest of the Portfolio and its shareholders.
The Board of Trustees has made such a finding and, accordingly, has entered into
a Master Administrative Services Agreement under which AIM will provide the
additional services described below under the caption "Administrative Services."

The Advisory Agreement was approved for its initial term by the Board of
Trustees on July 19, 1993. The Advisory Agreement will continue in effect until
February 28, 1999, and from year to year thereafter, provided that it is
specifically approved at least annually by the Trust's Board of Trustees and the
affirmative vote of a majority of the trustees who are not parties to the
Advisory Agreement or "interested persons" of any such party by votes cast in
person at a meeting called for such purpose. The Trust or AIM may terminate the
Advisory Agreement on 60 days' notice without penalty. The Advisory Agreement
terminates automatically in the event of its assignment, as defined in the 1940
Act.

AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management"), a holding company that has been engaged in the financial service
businesses since 1976. The address of AIM is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173. AIM Management is an indirect wholly owned subsidiary
of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail fund business in the United
States, Europe and the Pacific Region. Certain of the directors and officers of
AIM are also executive officers of the Trust and their affiliations are shown
under "Trustees and Officers." The address of each director and officer of AIM
is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.

FMC is a registered broker-dealer and wholly owned subsidiary of AIM. FMC acts
as distributor of the Shares.

ADMINISTRATIVE SERVICES

AIM also acts as the Portfolio's administrator pursuant to a Master
Administrative Services Agreement dated as of February 28, 1997 between AIM and
the Trust (the "Administrative Services Agreement").

Under the Administrative Services Agreement, AIM performs accounting and other
administrative services for the Portfolio. As full compensation for the
performance of such services, AIM is reimbursed for any personnel and other
costs (including applicable office space, facilities and equipment) of
furnishing the services of a principal financial officer of the Trust and of
persons working under his supervision for maintaining the financial accounts and
books and records of the Trust, including calculation of the Portfolio's daily
net asset value, and preparing tax returns and financial statements for the
Portfolio. The method of calculating such reimbursements must be annually
approved, and the amounts paid will be periodically reviewed, by the Trust's
Board of Trustees.

Under the terms of a Transfer Agency and Service Agreement, dated December 29,
1997, between the Trust and A I M Fund Services, Inc. ("AFS"), a registered
transfer agent and wholly owned subsidiary of AIM, AFS receives a fee for the
provision of certain shareholder services for the Portfolio.

EXPENSES

ship dues of industry associations; interest payable on Trust borrowings;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Trust which inure to its benefit; and extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto). FMC bears the expenses of
printing and distributing prospectuses and statements of additional information
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Trust) and any other promotional or
sales literature used by FMC or furnished by FMC to purchasers or dealers in
connection with the public offering of the Trust's shares.

Expenses of the Trust which are not directly attributable to the operations of
any portfolio of the Trust are allocated among all portfolios of the Trust.
Distribution expenses of the Portfolio directly attributable to a specific class
of shares are charged against the income available for distribution as dividends
to the holders of such shares. All other expenses of the Portfolio are allocated
among all classes of shares of the Portfolio.

BANKING REGULATIONS

The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit federally chartered or supervised banks from engaging in the
business of underwriting, selling or distributing securities, but permit banks
to make shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries or affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a bank
were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the Trust and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the Trust might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or other
services then being provided by such bank. It is not expected that shareholders
would suffer any adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may differ from
the interpretations of federal law expressed herein and certain banks and
financial institutions may be required to register as dealers pursuant to state
law.

TRANSFER AGENT AND CUSTODIAN

The Bank of New York ("BONY") acts as custodian for the portfolio securities
and cash of the Portfolio. BONY receives such compensation from the Trust for
its services in such capacity as is agreed to from time to time by BONY and the
Trust. The address of BONY is 90 Washington Street, 11th Floor, New York, New
York 10286.

A I M Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497, acts as
transfer agent for the shares of each class of the Portfolio and will receive an
estimated annual fee from the Trust for its services in such capacity in the
amount of 0.015% of average daily net assets of the Trust, payable monthly. Such
compensation may be changed from time to time as is agreed to by AFS and the
Trust.

REPORTS

The Trust will furnish shareholders with semi-annual reports containing
information about the Trust and its operations, including a schedule of
investments held in the Portfolio and its financial statements. The annual
financial statements will be audited by the Trust's independent auditors. The
Board of Trustees has selected KPMG Peat Marwick LLP, 700 Louisiana, Houston,
Texas 77002, as the independent auditors to audit the financial statements and
review the tax returns of the Portfolio.

FEE WAIVERS

AIM or its affiliates may, from time to time, agree to waive voluntarily all
or any portion of its fees or reimburse the Portfolio for certain of its
expenses. Such waivers or reimbursements may be discontinued at any time.

A-11
<PAGE> 26
PRINCIPAL HOLDERS OF SECURITIES

GOVERNMENT & AGENCY PORTFOLIO

AIM provided the initial capitalization of the Cash Management Class,
Institutional Class, Private Investment Class and Resource Class ("Class(es)")
of the Government & Agency Portfolio and, accordingly, as of the date of this
Statement of Additional Information, owned all the outstanding shares of
beneficial interest of each Class of the Portfolio. Each Class of the Portfolio
expects that the sale of its shares to the public pursuant to the Prospectus
will promptly reduce the percentage of such shares owned by AIM to less than 1%
of the total shares outstanding of each Class.

TREASURY PORTFOLIO

To the best of the knowledge of the Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of any class of the Portfolio as
of June 1, 1998, and the percentage of such shares owned by such shareholders as
of such date are as follows:

CASH MANAGEMENT CLASS

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
Oppenheimer & Co., Inc.................................... 38.7%
World Financial Center
Oppenheimer Tower
New York, NY 10281
The Bank of New York...................................... 19.3%
One Wall Street
New York, NY 10286
The Bank of New York...................................... 7.5%
One Wall Street
New York, NY 10286
Rural Cellular Corporation................................ 7.4%
3905 Dakota St. SW
Alexandria, MN 56308
</TABLE>

INSTITUTIONAL CLASS

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
Obie & Co................................................. 9.3%
P.O. Box 2558
Houston, TX 77252-2558
Trust Company Bank........................................ 7.8%
Center 3131
P.O. Box 105504
Atlanta, GA 30348
First Trust/VAR & Co...................................... 7.4%
Funds Control Suite 0404
180 E. 5th Street
St. Paul, MN 55101
Weststar Bank Trust Dept.................................. 7.2%
P.O. Box 1156
Bartlesville, OK 74005-1156
City of New York Deferred Compensation Plan............... 6.9%
40 Rector Street, 3rd Floor
New York, NY 10006
</TABLE>

- ---------------

(a) The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.

A-12
<PAGE> 27
PRIVATE INVESTMENT CLASS

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
The Bank of New York...................................... 33.0%
One Wall Street
New York, NY 10286
First Trust/VAR & Co...................................... 8.9%
Funds Control Suite 0404
180 E. 5th Street
St. Paul, MN 55101
New Haven Savings Bank Trust Department................... 6.7%
P.O. Box 302
New Haven, CT 06502
Bank of the West.......................................... 5.5%
P.O. Box 1121
San Jose, CA
</TABLE>

RESOURCE CLASS

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
First Union Capital Markets............................... 70.6%
8739 Research Drive
Charlotte,NC 28262-0675
Mellon Bank............................................... 22.9%
P.O. Box 710
Pittsburgh, PA 15259-0001
</TABLE>

- ---------------
(a) The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.

A-13
<PAGE> 28
TREASURY TAXADVANTAGE PORTFOLIO

To the best of the knowledge of the Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of any class of the Treasury
TaxAdvantage Portfolio as of June 1, 1998, and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
First Trust/VAR & Co...................................................... 26.2%
Funds Control Suite 0404
180 East 5th Street
St. Paul, MN 55101
Peoples Two Ten Company................................................. 17.3%
c/o Summit Bank
Trust Operations, 7th Floor
P.O. Box 821
Hackensack, NJ 07602
Frost National Bank TX.................................................. 6.0%
c/o Frost
P.O. Box 2479
San Antonio, TX 78298-2479
</TABLE>

PRIVATE INVESTMENT CLASS

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
The Bank of New York..................................................... 33.7%
One Wall Street
New York, NY 10286
Ohio Dept. of Commerce Div............................................. 22.8%
775 High St., 20th Floor
Columbus, OH 43266
First National Bank of Chicago......................................... 22.7%
Mail Suite 0126
Chicago, IL 60670-0126
First Union Capital Markets............................................ 18.6%
8739 Research Drive
Charlotte, NC 28262-0675
</TABLE>

- ---------------

(a) The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.

Shares shown as beneficially owned by the above institutions are those shares
for which the institutions possessed or shared voting or investment power with
respect to such shares on behalf of their underlying accounts.

To the best of the knowledge of the Trust, as of June 1, 1998, the trustees
and officers of the Trust beneficially owned less than 1% of each class of the
Trust's outstanding shares with respect to the Treasury and Treasury
TaxAdvantage Portfolio.

PURCHASES AND REDEMPTIONS

A complete description of the manner by which shares of a particular class may
be purchased, redeemed or exchanged appears in the Prospectus under the heading
"Purchase of Shares."

The right of redemption may be suspended or the date of payment postponed when
(a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined
by applicable rules and regulations of the SEC, (b) the NYSE is closed for other
than customary weekend and holiday closings, (c) the SEC has by order permitted
such suspension, or (d) an emergency as determined by the SEC exists making
disposition of portfolio securities or the valuation of the net assets of the
Fund not reasonably practicable.

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<PAGE> 29
purchase and redemption requests must be submitted to the Portfolio for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.

NET ASSET VALUE DETERMINATION

Shares of the Portfolio are sold at net asset value. Shareholders may at any
time redeem all or a portion of their shares at net asset value. The investor's
price for purchases and redemptions will be the net asset value next determined
following the receipt of an order to purchase or a request to redeem shares.

The valuation of the portfolio instruments based upon their amortized cost and
the concomitant maintenance of the net asset value per share of $1.00 for the
Portfolio is permitted in accordance with applicable rules and regulations of
the SEC, which require the Trust to adhere to certain conditions. The Portfolio
will invest only in "Eligible Securities" as defined in Rule 2a-7 of the 1940
Act, which the Board of Trustees has determined present minimal credit risks.
Rule 2a-7 also requires, among other things, that the Portfolio maintain a
dollar-weighted average portfolio maturity of 90 days or less and purchase only
U.S. dollar-denominated instruments having remaining maturities of 397 calendar
days or less.

The Board of Trustees is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Trust's price per share at
$1.00 for the Portfolio as computed for the purpose of sales and redemptions.
Such procedures include review of the Portfolio's portfolio holdings by the
Board of Trustees, at such intervals as they may deem appropriate, to determine
whether the net asset value calculated by using available market quotations or
other reputable sources for the Portfolio deviates from $1.00 per share and, if
so, whether such deviation may result in material dilution or is otherwise
unfair to existing holders of the Portfolio's shares. In the event the Board of
Trustees determines that such a deviation exists for the Portfolio, it will take
such corrective action as the Board of Trustees deems necessary and appropriate
with respect to the Portfolio, including the sales of portfolio instruments
prior to maturity to realize capital gains or losses or to shorten the average
portfolio maturity; the withholding of dividends; redemption of shares in kind;
or the establishment of a net asset value per share by using available market
quotations.

DISTRIBUTION AGREEMENT

The Trust has entered into a Master Distribution Agreement dated as of
February 28, 1997, as amended, (the "Distribution Agreement") with FMC, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
exclusive distributor of the shares of each class of the Portfolio. The address
of FMC is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. See "General
Information About the Trust -- Trustees and Officers" and "-- Investment
Advisor" for information as to the affiliation of certain trustees and officers
of the Trust with FMC, AIM and AIM Management.

The Distribution Agreement provides that FMC has the exclusive right to
distribute shares of each class of the Portfolio either directly or through
other broker-dealers. The Distribution Agreement also provides that FMC will pay
promotional expenses, including the incremental costs of printing prospectuses
and statements of additional information, annual reports and other periodic
reports for distribution to persons who are not shareholders of the Trust and
the costs of preparing and distributing any other supplemental sales literature.
FMC has not undertaken to sell any specified number of shares of the Portfolio.

The Distribution Agreement will remain in effect until June 30, 1999, and it
will continue in effect from year to year thereafter only if such continuation
is specifically approved at least annually by the Trust's Board of Trustees and
the affirmative vote of the trustees who are not parties to the Distribution
Agreement or "interested persons" of any such party by votes cast in person at a
meeting called for such purpose. The Trust or FMC may terminate the Distribution
Agreement on 60 days' written notice without penalty. The Distribution Agreement
will terminate automatically in the event of its "assignment," as defined in the
1940 Act.

DISTRIBUTION PLAN

The Trust has adopted a Master Distribution Plan, as amended, (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Plan, the Trust may
enter into Shareholder Service Agreements ("Service Agreements") with selected
broker-dealers, banks, other financial institutions or their affiliates. Such
firms may receive from the Portfolio compensation for servicing investors as
beneficial owners of the shares of the Cash Management Class, Private Investment
Class and Resource Class of the Portfolio. These services may include among
other things: (a) answering customer inquiries regarding the shares of the class
and the Portfolio; (b) assisting customers in changing dividend options, account
designations and addresses; (c) performing sub-accounting; (d) establishing and
maintaining shareholder accounts and records; (e) processing purchase and
redemption transactions; (f) automatic investment in the shares of the class of
customer cash account balances; (g) providing periodic statements showing a
customer's account balance and integrating such statements with those of other
transactions and balances in the customer's other accounts serviced by such
firm; (h) arranging for bank wires; and (i) such other services as the Trust may
request on behalf of the shares of the class, to the extent such firms are
permitted to engage in such services by applicable statute, rule or regulation.
The Plan may only be used for the purposes specified above and as stated in the
Plan. Expenses may not be carried over from year to year.

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<PAGE> 30
FMC is a wholly owned subsidiary of AIM, a wholly owned subsidiary of AIM
Management. Charles T. Bauer, a Trustee and Chairman of the Trust, owns shares
of AIM Management and Robert H. Graham, a Trustee and President of the Trust,
also owns shares of AIM Management.

PERFORMANCE INFORMATION

As stated under the caption "Yield Information" in the Prospectus, yield
information for the shares of each class of the Portfolio may be obtained by
calling the Trust at (800) 659-1005. The current yield quoted will be the net
average annualized yield for an identified period, such as seven days or a
month. Current yield will be computed by assuming that an account was
established with a single share (the "Single Share Account") on the first day of
the period. To arrive at the quoted yield, the net change in the value of that
Single Share Account for the period (which would include dividends accrued with
respect to the share, and dividends declared on shares purchased with dividends
accrued and paid, if any, but would not include realized gains and losses or
unrealized appreciation or depreciation and income other than investment income)
will be multiplied by 365 and then divided by the number of days in the period,
with the resulting figure carried to the nearest hundredth of one percent. The
Trust may also furnish a quotation of effective yield that assumes the
reinvestment of dividends for a 365-day year and a return for the entire year
equal to the average annualized yield for the period, which will be computed by
compounding the unannualized current yield for the period by adding 1 to the
unannualized current yield, raising the sum to a power equal to 365 divided by
the number of days in the period, and then subtracting 1 from the result.

The Trust may compare the performance of a class or the performance of
securities in which it may invest to:

- IBC/Donoghue's Money Fund Averages, which are average yields of
various types of money market funds that include the effect of compounding
distributions;

- other mutual funds, especially those with similar investment
objectives. These comparisons may be based on data published by
IBC/Donoghue's Money Fund Report of Holliston, Massachusetts or by Lipper
Analytical Services, Inc., a widely recognized independent service located
in Summit, New Jersey, which monitors the performance of mutual funds;

- yields on other money market securities or averages of other money
market securities as reported by the Federal Reserve Bulletin, by TeleRate,
a financial information network, or by Bloomberg, a financial information
firm; and

- other fixed-income investments such as Certificates of Deposit
("CDs").

The principal value and interest rate of CDs and money market securities are
fixed at the time of purchase whereas a class's yield will fluctuate. Unlike
some CDs and certain other money market securities, money market mutual funds
are not insured by the FDIC. Investors should give consideration to the quality
and maturity of the portfolio securities of the respective investment companies
when comparing investment alternatives.

The Trust may reference the growth and variety of money market mutual funds
and AIM's innovation and participation in the industry.

A-16
<PAGE> 31

INVESTMENT PROGRAM AND RESTRICTIONS

INVESTMENT PROGRAM

The Portfolio seeks to achieve its objective by investing in high grade money
market instruments. The money market instruments in which the Portfolio invests
are considered to carry very little risk and accordingly may not have as high a
yield as that available on money market instruments of lesser quality. The
Portfolio invests in direct obligations of the U.S. Treasury, which include
Treasury bills, notes and bonds and repurchase agreements relating to such
securities. In addition, the Portfolio invests in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, and repurchase agreements relating to such
securities. Under normal circumstances, the Portfolio will invest at least 65%
of its total assets in the foregoing securities. The Portfolio may also borrow
money with respect to its portfolio securities in amounts up to 10% of the value
of its total assets at the time of borrowing or entering into a repurchase
agreement. The Portfolio will only borrow money for temporary or emergency
purposes to facilitate the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests should they occur.

As set forth in the Prospectus, the Portfolio will limit its purchases of
securities to U.S. dollar-denominated securities which are "First Tier"
securities, as such term is defined from time to time in Rule 2a-7 under the
1940 Act. A First Tier Security is generally a security that: (i) has received a
short-term rating, or is subject to a guarantee that has received a short-term
rating, or, in either case, is issued by an issuer with a short-term rating from
the Requisite NRSROs in the highest short-term rating category for debt
obligations; (ii) is an unrated security that the Portfolio's investment adviser
has determined is of comparable quality to a rated security described in (i);
(iii) is a security issued by a registered investment company that is a money
market fund; or (iv) is a Government security. The term "Requisite NRSROs" means
(a) any two nationally recognized statistical rating organizations that have
issued a rating with respect to a security or class of debt obligations of an
issuer, or (b) if only one NRSRO has issued a rating with respect to such
security or issuer at the time the Portfolio acquires the security, the NRSRO.
At present, the NRSROs are; Standard & Poor's Corp.; Moody's Investors Services,
Inc.; Thomson Bankwatch, One; Duff and Phelps, Inc.; Fitch Investors Services,
Inc. and; with regard to certain types of securities, IBCA Ltd and its
subsidiary; IBCA, Inc. Subcategories or gradations in ratings (such as "+" or
"-") do not count as rating categories.

INVESTMENT RESTRICTIONS

As a matter of fundamental policy which may not be changed without a majority
vote of shareholders of the Portfolio (as that term is defined under "General
Information about the Trust -- The Trust and its Shares"), the Portfolio may
not:

(3) borrow money or issue senior securities except (a) for temporary
or emergency purposes (e.g., in order to facilitate the orderly sale of
portfolio securities to accommodate abnormally heavy redemption requests),
the Portfolio may borrow money from banks, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities, provided that the Portfolio will not purchase portfolio
securities while borrowings in excess of 5% of its total assets are
outstanding;

(4) mortgage, pledge or hypothecate any assets except to secure
permitted borrowings and then only in an amount up to 33 1/3% of the value
of its total assets at the time of borrowing;

(5) make loans of money or securities other than (a) through the
purchase of debt securities in accordance with the Portfolio's investment
program, and (b) by entering into repurchase agreements;

(6) underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of such
securities in accordance with the Portfolio's investment program may be
deemed an underwriting;

(7) invest in real estate, except that the Portfolio may purchase and
sell securities secured by real estate or interests therein or issued by
issuers which invest in real estate or interests therein;

(8) purchase or sell commodities or commodity futures contracts,
purchase securities on margin, make short sales or invest in puts or calls;
or

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<PAGE> 32

(9) invest in any obligation not payable as to principal and interest
in United States currency.

As a non-fundamental investment policy the Portfolio does not intend to invest
in companies for the purpose of exercising control or management, except that
the Portfolio may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order.

PORTFOLIO TRANSACTIONS

GENERAL BROKERAGE POLICY

AIM makes decisions to buy and sell securities for the Portfolio, selects
broker-dealers, effects the Portfolio's investment portfolio transactions,
allocates brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. Since purchases and sales of portfolio
securities by the Portfolio are usually principal transactions, the Portfolio
incurs little or no brokerage commissions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate (as applicable). While AIM seeks reasonable competitive commission rates,
the Portfolio may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.

In the event the Portfolio purchases securities traded in over-the-counter
markets, the Portfolio deals directly with dealers who make markets in the
securities involved, except when better prices are available elsewhere.
Portfolio transactions placed through dealers who are primary market makers are
effected at net prices without commissions, but which include compensation in
the form of a mark up or mark down.

AIM may determine target levels of commission business with various brokers on
behalf of its clients (including the Portfolio) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Portfolio and other mutual funds advised by AIM or A I M Capital Management,
Inc. (collectively, the "AIM Funds") in particular, including sales of the
Portfolio and of the other AIM Funds. In connection with (3) above, the
Portfolio's trades may be executed directly by dealers which sell shares of the
AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.

AIM will seek, whenever possible, to recapture for the benefit of a Portfolio
any commissions, fees, brokerage or similar payments paid by the Portfolio on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of the Portfolio's securities in a tender
or exchange offer.

The Portfolio may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Portfolio provided the conditions of an exemptive order
received by the Portfolio from the SEC are met. In addition, the Portfolio may
purchase or sell a security from or to another AIM Fund provided the Portfolio
follows procedures adopted by the Board of Directors/Trustees of the various AIM
Funds, including the Trust. These inter-fund transactions do not generate
brokerage commissions but may result in custodial fees or taxes or other related
expenses.

The Portfolio does not seek to profit from short-term trading, and will
generally (but not always) hold portfolio securities to maturity, but AIM may
seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money markets. For example,
market conditions frequently result in similar securities trading at different
prices. AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. The amortized cost method of valuing portfolio securities requires
that the Portfolio maintain an average weighted portfolio maturity of ninety
days or less. Thus, there is likely to be relatively high portfolio turnover,
but since brokerage commissions are not normally paid on money market
instruments, the high rate of portfolio turnover is not expected to have a
material effect on the net income or expenses of the Portfolio. The Portfolio's
policy of investing in securities with maturities of 397 days or less will
result in high portfolio turnover. Since brokerage commissions are not normally
paid on investments of the type made by the Portfolio, the high turnover rate
should not adversely affect the Portfolio's net income.

ALLOCATION OF PORTFOLIO TRANSACTIONS

AIM and its affiliates manage several other investment accounts. Some of these
accounts may have investment objectives similar to the Portfolio. Occasionally,
identical securities will be appropriate for investment by the Portfolio and by
another fund or one or more of these investment accounts. However, the position
of each account in the same securities and the length of time that each account
may hold its investment in the same securities may vary. The timing and amount
of purchase by each account will also be determined by its cash position. If the
purchase or sale of securities is consistent with the investment policies of the
Portfolio and one or more of these accounts, and is considered at or about the
same time, AIM will fairly allocate

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<PAGE> 33

transactions in such securities among the Portfolio and these accounts. AIM may
combine such transactions, in accordance with applicable laws and regulations,
to obtain the most favorable execution. Simultaneous transactions could,
however, adversely affect the Portfolio's ability to obtain or dispose of the
full amount of a security which it seeks to purchase or sell.

Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Portfolio. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.

SECTION 28(e) STANDARDS

Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under
certain circumstances, lawfully may cause an account to pay a higher commission
than the lowest available. Under Section 28(e), AIM must make a good faith
determination that the commissions paid are "reasonable in relation to the value
of the brokerage and research services provided . . . viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and appropriately assist AIM in the
performance of its investment decision-making responsibilities. Accordingly, in
recognition of research services provided to it, a Fund may pay a broker higher
commissions than those available from another broker.

Research services received from broker-dealers supplement AIM's own research
(and the research of its affiliates), and may include the following types of
information: statistical and background information on the U.S. and foreign
economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.

The outside research assistance is useful to AIM since the broker-dealers used
by AIM tend to follow a broader universe of securities and other matters than
AIM's staff can follow. In addition, the research provides AIM with a diverse
perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or advised
by AIM or by its affiliates. Some broker-dealers may indicate that the provision
of research services is dependent upon the generation of certain specified
levels of commissions and underwriting concessions by AIM's clients, including
the Portfolio. However, the Portfolio is not under any obligation to deal with
any broker-dealer in the execution of transactions in portfolio securities.

In some cases, the research services are available only from the broker-dealer
providing them. In other cases, the research services may be obtainable from
alternative sources in return for cash payments. AIM believes that the research
services are beneficial in supplementing AIM's research and analysis and that
they improve the quality of AIM's investment advice. The advisory fee paid by
the Portfolio is not reduced because AIM receives such services. However, to the
extent that AIM would have purchased research services had they not been
provided by broker-dealers, the expenses to AIM could be considered to have been
reduced accordingly.

Under the 1940 Act, certain persons affiliated with the Trust are prohibited
from dealing with the Portfolios as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained from
the SEC. Furthermore, the 1940 Act prohibits the Trust from purchasing a
security being publicly underwritten by a syndicate of which certain persons
affiliated with the Trust are members except in accordance with certain
conditions. These conditions may restrict the ability of the Portfolio to
purchase money market obligations being publicly underwritten by such a
syndicate, and the Portfolio may be required to wait until the syndicate has
been terminated before buying such securities. At such time, the market price of
the securities may be higher or lower than the original offering price. A person
affiliated with the Trust may, from time to time, serve as placement agent or
financial advisor to an issuer of money market obligations and be paid a fee by
such issuer. The Portfolio may purchase such money market obligations directly
from the issuer, provided that the purchase made in accordance with procedures
adopted by the Trust's Board of Trustees and any such purchases are reviewed at
least quarterly by the Trust's Board of Trustees and a determination is made
that all such purchases were effected in compliance with such procedures,
including a determination that the placement fee or other remuneration paid by
the issuer to the person affiliated with the Trust was fair and reasonable in
relation to the fees charged by others performing similar services.

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<PAGE> 34

TAX MATTERS

The following is only a summary of certain additional tax considerations
generally affecting the Portfolio and its shareholders that are not described in
the Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Portfolio or its shareholders, and the discussion here and in
the Prospectus is not intended as a substitute for careful tax planning.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY

The Portfolio has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, the Portfolio is not subject to federal income tax
on the portion of its net investment income (i.e., taxable interest, dividends
and other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) for the taxable year
(the "Distribution Requirement"), and satisfies certain other requirements of
the Code that are described below. Distributions by the Portfolio made during
the taxable year or, under specified circumstances, within twelve months after
the close of the taxable year, will be considered distributions of income and
gains for the taxable year and can therefore satisfy the Distribution
Requirement.

In addition to satisfying the Distribution Requirement, a regulated investment
company (a) must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement"); and (b) must satisfy an asset
diversification test in order to qualify for tax purposes as a regulated
investment company (the "Asset Diversification Test"). Under the Asset
Diversification Test, at the close of each quarter of a fund's taxable year, at
least 50% of the value of a fund's assets must consist of cash and cash items,
U.S. Government securities, securities of other regulated investment companies,
and securities of other issuers (as to which a fund has not invested more than
5% of the value of a fund's total assets in securities of such issuer and as to
which a fund does not hold more than 10% of the outstanding voting securities of
such issuer), and no more than 25% of the value of its total assets may be
invested in the securities of any other issuer (other than U.S. Government
securities and securities of other regulated investment companies), or in two or
more issuers which a fund controls and which are engaged in the same or similar
trades or businesses.

If, for any taxable year the Portfolio does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Portfolio's current and accumulated
earnings and profits. Such distributions generally will be eligible for the
dividends received deduction in the case of corporate shareholders.

EXCISE TAX ON REGULATED INVESTMENT COMPANIES

A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.

The Portfolio intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that the Portfolio may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.

PORTFOLIO DISTRIBUTIONS

The Portfolio anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will not qualify for the 70% dividends received deduction
for corporations.

Distributions by the Portfolio will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Portfolio. Shareholders receiving a distribution in the
form of additional shares will be treated as receiving a distribution in an
amount equal to the fair market value of the shares received, determined as of
the reinvestment date.

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<PAGE> 35

Ordinarily, shareholders are required to take distributions by the Portfolio
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Portfolio) on December
31 of such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year
in accordance with the guidance that has been provided by the Internal Revenue
Service.

SALE OR REDEMPTION OF SHARES

A shareholder will recognize gain or loss on the sale or redemption of shares
of a class in an amount equal to the difference between the proceeds of the sale
or redemption and the shareholder's adjusted tax basis in the shares. All or a
portion of any loss so recognized may be disallowed if the shareholder purchases
other shares of the class within 30 days before or after the sale or redemption.
In general, any gain or loss arising from (or treated as arising from) the sale
or redemption of shares of a class will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than
one year. Under the Taxpayer Relief Act of 1997, the Internal Revenue Service is
authorized to issue appropriate regulations that will enable shareholders to
determine the tax rates applicable to such recognized long-term capital gain.
However, any capital loss arising from the sale or redemption of shares held for
six months or less will be treated as a long-term capital loss to the extent of
the amount of capital gain dividends received on such shares. For this purpose,
the special holding period rules of Code Section 246(c)(3) and (4) generally
will apply in determining the holding period of shares.

FOREIGN SHAREHOLDERS

Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder"), depends on whether the income from the Portfolio is
"effectively connected" with a U.S. trade or business carried on by such
shareholder.

If the income from the Portfolio is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, dividends and
distributions (other than capital gains dividends) will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount
of the dividend or distribution. Such a foreign shareholder would generally be
exempt from U.S. federal income tax on gains realized on the sale of shares of a
class, capital gain dividends and amounts retained by the Portfolio that are
designated as undistributed capital gains.

If the income from the Portfolio is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends and any gains realized upon the sale of shares of the
Portfolio will be subject to U.S. federal income tax at the rates applicable to
U.S. citizens or domestic corporations.

In the case of foreign noncorporate shareholders, the Portfolio may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
that are otherwise exempt from withholding tax unless such shareholders furnish
the Portfolio with proper notification of their foreign status.

The tax consequences to a foreign shareholder entitled to claim the benefits
of an applicable tax treaty may be different from those described herein.
Foreign shareholders are urged to consult their own tax advisers with respect to
the particular tax consequences to them of an investment in the Portfolio,
including the applicability of foreign taxes.

EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS

The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on June 2,
1998. Future legislative or administrative changes or court decisions may
significantly change the conclusions expressed herein, and any such changes or
decisions may have a retroactive effect with respect to the transactions
contemplated herein.

Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. Shareholders are urged to
consult their tax advisers as to the consequences of these and other state and
local tax rules affecting investment in the Trust.

A-21
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SHORT-TERM INVESTMENTS TRUST PROSPECTUS
11 Greenway Plaza, Suite 100 September 1, 1998
Houston, Texas 77046-1173 SHORT-TERM
(800) 659-1005 INVESTMENTS TRUST
---------------------
INVESTMENT ADVISOR
A I M ADVISORS, INC. GOVERNMENT & AGENCY PORTFOLIO
11 Greenway Plaza, Suite 100 ---------------------
Houston, Texas 77046-1173
(713) 626-1919 INSTITUTIONAL CLASS
TABLE OF CONTENTS
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 PAGE
(800) 659-1005 Summary........................ 2
Table of Fees and Expenses..... 4
AUDITORS Suitability For Investors...... 5
KPMG PEAT MARWICK LLP Investment Program............. 5
700 Louisiana Purchase of Shares............. 7
Houston, Texas 77002 Redemption of Shares........... 8
Dividends...................... 9
CUSTODIAN Taxes.......................... 9
THE BANK OF NEW YORK Net Asset Value................ 10
90 Washington Street Yield Information.............. 10
11th Floor Reports to Shareholders........ 10
New York, New York 10286 Management of the Trust........ 10
General Information............ 12
TRANSFER AGENT Appendix....................... A-1
A I M FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497

==================================== ========================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
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