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TAX-FREE INVESTMENTS CO.
CASH RESERVE PORTFOLIO
PRIVATE INVESTMENT CLASS
Supplement dated December 16, 1996
to the Statement of Additional Information dated July 29, 1996
APPROVAL OF NEW ADVISORY AGREEMENTS
On December 11, 1996, the Board of Directors of the Company (the
"Board") approved, subject to shareholder approval, a new investment advisory
agreement between A I M Advisors, Inc. ("AIM") and the Company, with respect to
the Cash Reserve Portfolio (the "Portfolio"). Shareholders will be asked to
approve the new investment advisory agreement at an annual meeting of
shareholders to be held on February 7, 1997 (the "Annual Meeting"). The new
advisory agreement provides that AIM's services to the Company are not
exclusive and that AIM may act as investment advisor to others. AIM is
required to comply with all applicable laws, and AIM will not be liable to the
Company in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties under the agreement. The new
advisory agreement provides that AIM may delegate its responsibilities to a
sub-advisor, subject to the approval of the Board and the shareholders. The
new advisory agreement permits AIM to allocate brokerage to broker-dealers that
provide AIM with research services and provides that AIM may consider how such
services benefit the Company or AIM's other investment advisory clients in
evaluating the reasonableness of commissions changed by such broker-dealers.
The new advisory agreement also permits AIM to consider research services
provided to a sub-advisor in allocating brokerage.
PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT POLICIES
On December 11, 1996, the Board approved, subject to shareholder
approval, the elimination of or changes to certain fundamental investment
policies of the Cash Reserve Portfolio (the "Portfolio") related to investment
in other investment companies. Shareholders of the Portfolio will be asked to
approve these changes at the Annual Meeting. If approved, these changes will
become effective as of March 1, 1997.
Reference is made to Investment Restriction Nos. (5) and (6) of the
Portfolio, set forth on page A-24 of the Company's Statement of Additional
Information related to Private Investment Class. The Board of Directors has
approved the elimination of Investment Restriction No. (5) and a change to
Investment Restriction No. (6) of the Portfolio. In the event shareholders
approve the proposed changes, effective as of March 1, 1997, Investment
Restriction No. (5) will no longer apply and Investment Restriction No. (6)
will read in full as follows:
(6) invest in companies for the purpose of exercising control,
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive
order.
