<PAGE> 1
TAX-FREE INVESTMENTS CO.
CASH RESERVE PORTFOLIO
PRIVATE INVESTMENT CLASS
Supplement dated December 16, 1996
to the Prospectus dated July 29, 1996,
as supplemented November 5, 1996
APPROVAL OF NEW ADVISORY, ADMINISTRATIVE SERVICES AND DISTRIBUTION AGREEMENTS
On December 11, 1996, the Board of Directors (the "Board") of Tax-Free
Investments Co. (the "Company") approved a new investment advisory agreement,
subject to shareholder approval, 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 Board has also approved a new administrative services agreement
with AIM and a new distribution agreement with Fund Management Company. The
terms of the new investment advisory agreement have been changed to provide for
a separate administrative services agreement, pursuant to which AIM will be
reimbursed for the cost of providing fund accounting services that are
currently reimbursed pursuant to the investment advisory agreement. The
proposed new administrative services agreement provides that AIM may be
reimbursed or compensated for providing other administrative services to the
Fund, as the Board may from time to time determine are appropriate. Payments
to AIM under the new administrative services agreement for fund accounting
services will be the same as payments currently made by the Company to AIM for
fund accounting services pursuant to the existing investment advisory
agreement. Additional provisions of the new investment advisory agreement are
set forth in the Statement of Additional Information. No change is anticipated
in the investment advisory or other personnel responsible for the Fund as a
result of these new agreements.
The Board has approved these new agreements because the Company's
corresponding existing agreements will terminate upon the consummation of the
proposed merger of A I M Management Group Inc., the parent of AIM, into a
subsidiary of INVESCO plc. INVESCO plc and its subsidiaries are an independent
investment management group engaged in institutional investment management and
retail mutual fund businesses in the United States, Europe and the Pacific
region. It is contemplated that the merger will occur on February 28, 1997.
Provided that the Fund's shareholders approve the new investment advisory
agreement at the Annual Meeting and the merger is consummated, the new
investment advisory agreement with respect to the Fund, as well as the new
administrative services and distribution agreements, will automatically become
effective as of the closing of the merger.
PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT POLICIES
The Board has unanimously approved the elimination of and changes to
certain fundamental investment policies of the Fund subject to shareholder
approval. Shareholders will be asked to approve these changes at the Annual
Meeting. If approved, they will become effective on March 1, 1997.
The Fund is currently generally prohibited from investing in other
investment companies. The Board has approved the elimination of this
prohibition, and the amendment to other fundamental investment policies related
to investment in other investment companies. The elimination of the
fundamental investment policy that prohibits the Fund from investing in other
investment companies and the proposed amendments to the related fundamental
investment policies would permit investment in other investment companies to
the extent permitted by the Investment Company Act of 1940, and rules and
regulations thereunder, and, if applicable, exemptive orders granted by the
Securities and Exchange Commission.
<PAGE> 2
Reference is made to Investment Restriction No. (1) of the Fund, set
forth on page 8 of the Company's Prospectus related to Private Investment
Class. The Board of Directors has approved a change to Investment Restriction
No. (1) of the Fund. In the event shareholders approve the proposed change,
Investment Restriction No. (1) will read in full as follows:
(1) with respect to 75% of its total assets, purchase securities
of any issuer (except obligations of the U.S. Government, its
agencies or instrumentalities, including any Municipal
Securities guaranteed by the U.S. Government) if as a result
of such purchase more than 5% of the Fund's total net assets
would be invested in securities of such issuer except as
permitted by Rule 2a-7 of the 1940 Act as amended from time to
time and except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law
or exemptive order.
For additional information regarding the proposed changes described
above, see the Company's Statement of Additional Information related to Private
Investment Class, dated July 29, 1996, as supplemented December 16, 1996.
2
