<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 (a) OF THE SECURITIES EXCHANGE ACT
OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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TAX-FREE INVESTMENTS CO.
(For its Series Portfolio:
Cash Reserve Portfolio)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined:
- - --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
CASH RESERVE PORTFOLIO
TAX-FREE INVESTMENTS CO.
11 Greenway Plaza, Suite 100
Houston, TX 77046
June 17, 1998
Dear Shareholder:
The proxy statement and accompanying proxy card which follow this letter
ask the shareholders of the Cash Reserve Portfolio (the "Portfolio") of Tax-Free
Investments Co. ("TFIC") to approve changes to certain fundamental investment
policies of the Portfolio, as more fully set forth in the proxy statement.
These changes are being proposed for three reasons: (1) to make the
fundamental investment policies of the Portfolio consistent with recent changes
to the Federal statutes and regulations governing money market funds, (2) to
make such policies reflect more accurately the types of money market instruments
available in the marketplace and (3) to eliminate fundamental investment
policies that were previously required by state securities regulators and that
are no longer applicable to the Portfolio.
After careful consideration, the Board of Directors of TFIC has unanimously
approved these proposals and recommends that you read the enclosed materials
carefully and then vote FOR all proposals.
Your vote is important. Please take a moment now to sign and return your
proxy card in the enclosed postage paid return envelope.
Thank you for your cooperation and continued support.
Sincerely,
/s/ CHARLES T. BAUER
------------------------
Charles T. Bauer
Chairman
<PAGE>
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YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN
ENCLOSED YOU WILL FIND A PROXY CARD RELATING TO THE FUND. PLEASE INDICATE
YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND
RETURN IT IN THE ENVELOPE PROVIDED. IF YOU SIGN, DATE AND RETURN A PROXY CARD
BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" ALL THE
PROPOSALS INDICATED ON THE CARD. IN ORDER TO ASSURE THAT THE REQUISITE NUMBER
OF SHARES ARE REPRESENTED AT THE SPECIAL MEETING, WE ASK YOUR COOPERATION IN
MAILING YOUR PROXY CARD PROMPTLY. UNLESS PROXY CARDS ARE SIGNED BY THE
APPROPRIATE PERSONS AS INDICATED IN THE INSTRUCTIONS BELOW, THEY WILL NOT BE
VOTED.
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INSTRUCTIONS FOR SIGNING A PROXY CARD
The following general rules for signing a proxy card may be of assistance
to you and avoid the time and expense involved in validating your vote if you
fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration.
For example,
Registration Valid Signature
------------ ---------------
Trust Accounts
(1) ABC Trust Account...................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78.... Jane B. Doe
Partnership Accounts
(1) The XYZ Partnership.................... Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership... Jane B. Smith, General Partner
Custodian or Estate Accounts
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr.
UGMA/UTMA.............................. John B. Smith
(2) Estate of John B. Smith................ John B. Smith, Jr., Executor
Corporate Accounts
(1) ABC Corp............................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp............................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer...... John Doe
(4) ABC Corp. Profit Sharing Plan.......... John Doe, Treasurer
<PAGE>
CASH RESERVE PORTFOLIO
TAX-FREE INVESTMENTS CO.
11 Greenway Plaza, Suite 100, Houston, Texas 77046
--------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 17, 1998
-------------------------------------------
TO THE SHAREHOLDERS:
A special meeting of shareholders of the Cash Reserve Portfolio (the
"Portfolio") of Tax-Free Investments Co. ("TFIC") will be held on Friday, July
17, 1998 at 3:00 p.m. local time at 11 Greenway Plaza, Suite 100, Houston, Texas
77046, for the following purposes:
(1) To approve a proposed change to the Portfolio's fundamental
investment policy regarding issuer diversification.
(2) To approve a proposed change to the Portfolio's fundamental
investment policy regarding industry concentration.
(3) To approve the proposed elimination of the Portfolio's fundamental
investment policy regarding investing in illiquid securities.
(4) To approve the proposed elimination of that portion of a fundamental
investment policy of the Portfolio that permits the Portfolio to purchase Stand-
By Commitments.
(5) To approve the proposed elimination of certain fundamental investment
policies of the Portfolio which are no longer required under state securities
laws.
(6) To transact such other business as may properly come before the
meeting.
Shareholders of record of the Portfolio at the close of business on June 5,
1998 are entitled to vote at the special meeting and any adjournments. If you
attend the special meeting, you may vote your shares in person. If you expect
to attend the special meeting in person, please notify TFIC by calling
1-800-952-3502. If you do not expect to attend the special meeting, please fill
in, date, sign and return the proxy card in the enclosed envelope which requires
no postage if mailed in the United States.
It is important that you return your signed proxy card promptly so that a
quorum may be assured.
June 17, 1998
Charles T. Bauer
Chairman of the Board of Directors
<PAGE>
CASH RESERVE PORTFOLIO
TAX-FREE INVESTMENTS CO.
11 Greenway Plaza, Suite 100, Houston, Texas 77046
--------------------------------------------
PROXY STATEMENT
-------------------------------------------
The accompanying proxy is solicited by the Board of Directors of Tax-Free
Investments Co. ("TFIC"), on behalf of the Cash Reserve Portfolio (the
"Portfolio"), in connection with the special meeting of shareholders of the
Portfolio to be held at the offices of TFIC, 11 Greenway Plaza, Suite 100,
Houston, Texas 77046 at 3:00 p.m. local time on Friday, July 17, 1998 (the
"Special Meeting"). A shareholder can revoke the proxy prior to its use by
appearing at the Special Meeting and voting in person, by giving written notice
of such revocation to the Secretary of TFIC, or by returning a subsequently
dated proxy. If you expect to attend the Special Meeting in person, please
notify TFIC by calling 1-800-952-3502.
All shareholders of the Portfolio, regardless of class, will vote on
identical proposals in connection with the Special Meeting and will be affected
equally by the results of the Special Meeting.
Upon the request of any shareholder, the Portfolio will furnish, without
charge, a copy of the Portfolio's annual report for its most recent fiscal year
together with any subsequent semi-annual report. All requests should be
directed to A I M Advisors, Inc. ("AIM") at 1-800-347-4246.
VOTING
At the Special Meeting, shareholders of record of the Portfolio at the
close of business on June 5, 1998 (the "Record Date") will be entitled to vote
one vote per share on the proposals set forth herein, with proportional votes
for fractional shares. The Portfolio had 1,116,066,941 shares outstanding on
the Record Date. It is expected that this proxy statement (the "proxy
statement") and the accompanying proxy will be first sent to shareholders on or
about June 17, 1998.
The favorable vote of the holders of a "majority of outstanding voting
securities" of the Portfolio, as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), is required to approve each of the proposals set
forth in this proxy statement. Under the 1940 Act, a "majority of the
outstanding voting securities" of the Portfolio means the lesser of (a) the vote
of holders of 67% or more of the voting shares of the Portfolio present in
person or
<PAGE>
by proxy at the Special Meeting, if the holders of more than 50% of the
outstanding voting shares of the Portfolio are present in person or by proxy, or
(b) the vote of the holders of more than 50% of the outstanding voting shares of
the Portfolio.
The Board of Directors of TFIC has named Charles T. Bauer, Chairman, Robert
H. Graham, President, and Carol F. Relihan, Secretary, of TFIC as proxies.
Unless specific instructions are given to the contrary in the accompanying
proxy, the proxies will vote FOR each of the proposals to change or eliminate
the specified fundamental investment policies of the Portfolio.
Abstentions and broker non-votes (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other person entitled to vote shares on a particular matter with
respect to which the broker or nominee does not have discretionary power) with
respect to any proposal will be counted for purposes of determining whether a
quorum is present at the Special Meeting. Abstentions and broker non-votes do
not count as votes cast but have the same effect as casting a vote against
proposals that require the vote of a majority of the shares present at the
Special Meeting, provided a quorum is present.
The Board of Directors of TFIC currently knows of no other matters to be
presented at the Special Meeting. If any other matters properly come before the
Special Meeting, the proxies will vote in accordance with their best judgment.
The proxies may propose to adjourn the meeting to permit further solicitation of
proxies or for other purposes. Any such adjournment will require the
affirmative vote of a majority of the votes cast.
BACKGROUND
The Portfolio has adopted numerous fundamental investment policies which
restrict the types of securities the Portfolio may purchase. Since the adoption
of these policies, Congress passed legislation that preempts the substantive
regulation of mutual funds by state securities regulators and the United States
Securities and Exchange Commission ("SEC") amended various rules adopted under
the 1940 Act that govern money market mutual funds such as the Portfolio. In
addition, since the adoption of these policies, the types of securities
available in the marketplace for purchase by tax-exempt funds have changed.
In response to these changes, the Board of Directors of TFIC has proposed
revisions to certain of the Portfolio's fundamental investment policies. These
revisions are designed to modernize the Portfolio's policies and, in some
instances, to provide AIM with greater flexibility in managing the Portfolio.
AIM does not believe, however, that the approval and implementation of these
revisions will result in any material change to the manner in which it manages
the Portfolio.
The proposed revisions to certain of the Portfolio's fundamental investment
policies may not be implemented without shareholder approval. The Board of
Directors is therefore
2
<PAGE>
soliciting approval of shareholders of these proposed revisions. If the
proposed revisions are approved by shareholders, the revisions will be effective
July 24, 1998.
PROPOSAL 1
PROPOSED CHANGE TO THE PORTFOLIO'S FUNDAMENTAL INVESTMENT POLICY REGARDING
ISSUER DIVERSIFICATION
INTRODUCTION. The Board of Directors of TFIC proposes to change the
Portfolio's fundamental investment policy regarding issuer diversification (the
"Diversification Policy").
CURRENT POLICY. The Portfolio's current Diversification Policy provides that
the Portfolio will not:
"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
Portfolio'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 Portfolio may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order[.]"
PROPOSED CHANGE. The Board of Directors of TFIC proposes to change the
Diversification Policy to provide that the Portfolio will not:
"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[.]"
REASONS FOR THE PROPOSED CHANGE. The Portfolio is classified as a diversified
company for purposes of the 1940 Act. As a money market fund, the Portfolio
satisfies the requirements for being so classified by complying with the
diversification provisions of Rule 2a-7. That Rule permits the Portfolio to
value its assets using the amortized cost method, provided the Portfolio
satisfies numerous conditions set forth in the Rule.
Rule 2a-7 sets forth two different diversification requirements: one
applicable to the issuer of municipal securities ( provided that such securities
are not subject to a demand
3
<PAGE>
feature or a guarantee), and one applicable to municipal securities with demand
features or guarantees.
The issuer diversification requirement provides that the Portfolio may not
invest in the securities of any issuer if, as a result, more than 5% of its
total assets would be invested in securities issued by such issuer. If the
securities are subject to a demand feature or guarantee, however, they are not
subject to this requirement.
The diversification requirement applicable to municipal securities subject
to a demand feature or guarantee provides that, with respect to 75% of its total
assets, the Portfolio may not invest more than 10% of its total assets in
securities issued by or subject to demand features or guarantees from the same
entity. A demand feature permits the Portfolio to sell a municipal security at
approximately its amortized cost value plus accrued interest at specified
intervals upon no more than 30 days' notice. A guarantee includes a letter of
credit, bond insurance and an unconditional demand feature (provided the demand
feature is not provided by the issuer of the security.)
AIM manages the Portfolio so that it is in compliance with both the
Diversification Policy and the diversification requirements of Rule 2a-7.
Nevertheless, AIM has proposed and the Board of Directors has approved, subject
to shareholder approval, revising the Diversification Policy so that it is more
general. This revised Policy is designed to permit the Portfolio to adhere to
the diversification requirements of the 1940 Act or rules and regulations
thereunder, or any exemptive orders or other exemptive relief, whatever they are
or may become, in order to avoid submitting repeated amendments of this Policy
to a shareholder vote each time any of the foregoing changes. AIM does not
believe that the approval and implementation of the proposed change to the
Diversification Policy will result in any material change to the manner in which
it manages the Portfolio.
RECOMMENDATION. The Board of Directors of TFIC recommends that you vote FOR the
proposal to change the Portfolio's Diversification Policy.
PROPOSAL 2
PROPOSED CHANGE TO THE PORTFOLIO'S FUNDAMENTAL INVESTMENT POLICY REGARDING
INDUSTRY CONCENTRATION
INTRODUCTION. The Board of Directors of TFIC proposes to change the
Portfolio's fundamental investment policy regarding industry concentration (the
"Concentration Policy").
CURRENT POLICY. The Portfolio's current Concentration Policy provides that the
Portfolio will not:
4
<PAGE>
"purchase any securities which would cause more than 25% of the value of
the Portfolio's total net assets at the time of such purchase to be
invested in: (i) securities of one or more issuers conducting their
principal activities in the same state, (ii) securities, the interest on
which is paid from revenues of projects with similar characteristics, or
(iii) industrial development bonds issued by issuers in the same industry;
provided that there is no limit with respect to investments in U.S.
Treasury Bills, other obligations issued or guaranteed by the U.S.
Government and its agencies or instrumentalities, certificates of deposit
and guarantees of Municipal Securities by banks[.]"
PROPOSED CHANGE. The Board of Directors of TFIC proposes to change the
Concentration Policy to provide that the Portfolio will not:
"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[.]"
REASONS FOR PROPOSED CHANGE. All mutual funds must state their concentration
policy (whether they intend to invest more than 25% of their assets in
securities issued by issuers conducting their business in the same industry or
group of industries). This statement of policy is not applicable to investments
in tax-exempt securities issued by governments or their political subdivisions.
Nevertheless, the SEC requires that a tax-exempt fund include appropriate
disclosure in its prospectus ("Supplemental Disclosure") if more than 25% of the
fund's assets are invested in (1) securities whose issuers are located in the
same state, (2) securities the interest upon which is paid from revenues of
similar projects, or (3) industrial revenue bonds. This Supplemental Disclosure
may be set forth as a non-fundamental policy of a fund.
The Portfolio currently includes this Supplemental Disclosure as part of
its Concentration Policy. The Board of Directors has approved changing the
Portfolio's Concentration Policy to eliminate the Supplemental Disclosure as a
fundamental policy and to clarify the types of securities that are outside the
scope of the Concentration Policy. These changes are designed to give AIM, the
Portfolio's adviser, greater flexibility in managing the Portfolio and the
ability to take advantage of investment opportunities that arise from time to
time. These changes will also clarify that there is no limit on the percentage
of the Portfolio's assets that are issued or guaranteed by banks or are subject
to financial guarantee insurance.
In the event the shareholders approve the proposed change to the
Portfolio's Concentration Policy, the Fund will be subject to the following non-
fundamental investment policies:
5
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"The Portfolio does not intend to purchase securities of an issuer if,
after giving effect to such purchase, 25% or more of the value of the
Portfolio's total assets would be invested in securities of one or more
issuers conducting their principal activities in the same state. The
Portfolio may invest 25% or more of its total assets in industrial
development bonds.
The Portfolio does not intend to purchase securities of an issuer if, after
giving effect to such purchase, 25% or more of the value of the Portfolio's
total assets would be invested in securities the interest on which is paid
from revenues of projects with similar characteristics. This policy
applies to industrial development bonds as well as other tax-exempt
securities. This policy shall not apply, however, in the event such
securities are subject to a guarantee. With respect to securities that are
subject to a guarantee, the Portfolio does not intend to purchase any such
security if, after giving effect to such purchase, 25% or more of its total
assets would be invested in securities issued or guaranteed by entities in
a particular industry. Securities issued or guaranteed by a bank or
subject to financial guaranty insurance are not subject to this policy."
These non-fundamental policies could be changed by the Board of Directors
in the future without shareholder approval.
RECOMMENDATION. The Board of Directors of the Portfolio recommends that you
vote FOR the proposal to change the Portfolio's Concentration Policy.
PROPOSAL 3
PROPOSED ELIMINATION OF THE PORTFOLIO'S INVESTMENT POLICY REGARDING INVESTING IN
ILLIQUID SECURITIES AS A FUNDAMENTAL POLICY
INTRODUCTION. The Board of Directors of TFIC proposes to eliminate the
Portfolio's investment policy regarding investing in illiquid securities (the
"Liquidity Policy") as a fundamental policy.
CURRENT POLICY. The Portfolio's current Liquidity Policy provides that the
Portfolio will not:
"invest more than 10% of the value of its net assets in illiquid
securities, including repurchase agreements with remaining maturities in
excess of seven days."
PROPOSED CHANGE. The Board of Directors has approved, subject to shareholder
approval, the elimination of this Policy as a fundamental investment policy. If
the shareholders approve this proposal, the Portfolio instead will be governed
by an identical non-fundamental investment policy.
6
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REASONS FOR PROPOSED CHANGE. The SEC requires a money market fund to limit its
investment in illiquid securities to no more than 10% of its net assets but does
not require such limitation to be a fundamental policy. Eliminating the
Liquidity Policy as a fundamental investment policy and instead adopting an
identical non-fundamental investment policy will have no effect on the Portfolio
since no substantive changes are being made to this policy.
This non-fundamental investment policy may be modified by the Board of
Directors without shareholder approval. As a result, the proposed change
provides the Board of Directors with increased flexibility to react promptly to
changes in the marketplace, changes in the law or other factors which
necessitate a revision of the Portfolio's investment policy.
RECOMMENDATIONS. The Board of Directors recommends that you vote FOR the
proposal to eliminate the Portfolio's Liquidity Policy as a fundamental
investment policy.
PROPOSAL 4
PROPOSED ELIMINATION OF THAT PORTION OF A FUNDAMENTAL INVESTMENT POLICY THAT
PERMITS THE PURCHASE OF STAND-BY COMMITMENTS
INTRODUCTION. The Board of Directors proposes to eliminate that portion of a
fundamental investment policy of the Portfolio that permits the Portfolio to
purchase Stand-By Commitments (such portion, the "Stand-By Commitment Policy").
CURRENT POLICY. The Portfolio currently has a fundamental investment policy
that provides that the Portfolio will not:
"purchase or sell puts, calls, straddles, spreads or combinations thereof,
except that the Portfolio may purchase Stand-By Commitments[.]"
PROPOSED CHANGE. The Board of Directors proposes to change this investment
policy by eliminating the phrase "except that the Portfolio may purchase Stand-
By Commitments" so that this Policy provides that the Portfolio will not:
"purchase or sell puts, calls, straddles, spreads or combinations
thereof[.]"
REASONS FOR THE PROPOSED CHANGE. Stand-By Commitments are no longer commonly
available in the marketplace. As a result, it is no longer necessary or
appropriate to permit their purchase as a part of a fundamental investment
policy.
RECOMMENDATION. The Board of Directors recommends that you vote FOR the
proposal to eliminate the Stand-By Commitment Policy from the Portfolio's
fundamental investment policy.
7
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PROPOSAL 5
PROPOSED ELIMINATION OF CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF THE PORTFOLIO
WHICH ARE NO LONGER REQUIRED UNDER STATE SECURITIES LAWS
INTRODUCTION. Certain state regulators historically imposed limitations on the
types of securities mutual funds could acquire. These limitations necessitated
the adoption of the following fundamental investment policies by the Portfolio
which relate to:
1. the imposition of a history of operations requirement on industrial
development bonds (the "IDB History Policy");
2. the purchase of securities of an issuer in which directors and
officers of TFIC or AIM also hold a beneficial interest (the "D & O
Ownership Policy"); and
3. the purchase or sale by the Portfolio of interests in oil, gas
or other mineral exploration or development programs (the "Oil
and Gas Policy").
The National Securities Markets Improvement Act of 1996 preempted substantive
regulation of mutual funds by state securities regulators. As a consequence,
the Portfolio is no longer required to retain these fundamental investment
policies. The Board of Directors has therefore approved the elimination of
these policies, subject to shareholder approval. The current text of each of
these fundamental investment policies and the reasons for their proposed
elimination are discussed below.
(A) THE IDB HISTORY POLICY
CURRENT POLICY. The Portfolio's IDB History Policy provides that the
Portfolio will not:
"purchase any industrial development bond, if, as a result of such
purchase, more than 5% of the Portfolio's total assets would be
invested in the securities of issuers, which, together with their
predecessors, have been in business for less than three years[.]"
PROPOSED CHANGE. The Board of Directors proposes to eliminate the IDB
History Policy in its entirety.
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REASONS FOR PROPOSED CHANGE. The Board of Directors has concluded
that the Portfolio should be permitted to invest any portion of its assets
that AIM deems appropriate in industrial development bonds issued by
issuers that, together with their predecessors, have been in business for
less than three years. Notwithstanding this additional flexibility, the
Portfolio may not invest in any such security unless AIM determines that
the security presents minimal credit risk and otherwise satisfies the
Portfolio's investment policies and Rule 2a-7 under the 1940 Act.
(B) THE D & O OWNERSHIP POLICY
CURRENT POLICY. The Portfolio's D & O Ownership Policy provides that
the Portfolio will not:
"purchase or retain securities of an issuer if, to the knowledge of
[TFIC], the directors and officers of [TFIC], and the directors and
officers of AIM, each of whom owns more than 1/2 of 1% of such
securities, together own more than 5% of the securities of such
issuer[.]"
PROPOSED CHANGE. The Board of Directors proposes to eliminate the
D & O Ownership Policy in its entirety.
REASONS FOR PROPOSED CHANGE. The Board of Directors has concluded
that the D & O Ownership Policy is not necessary to protect the interests
of the Portfolio or its shareholders because AIM, TFIC and their respective
officers and directors are already subject to various statutory
restrictions with respect to related-party or affiliated transactions which
act to protect the interests of the Portfolio and its shareholders. In
addition, there is nothing inherently disadvantageous to the Portfolio or
its shareholders in investing in securities of an issuer that are also held
by related parties or affiliates. The possibility exists, however, that the
interests of the Portfolio and of the officers and directors of TFIC and
AIM who own securities also held by the Portfolio may not coincide, raising
the possibility of a conflict of interest in such officers' and directors'
management of the Portfolio. The Board of Directors believes, however,
that any such possible conflict is adequately addressed by the statutory
restrictions discussed above.
(C) THE OIL AND GAS POLICY
CURRENT POLICY. The Portfolio's Oil and Gas Policy provides that the
Portfolio will not:
"purchase or sell commodities or commodity futures contracts or
interests in oil, gas or other mineral exploration or development
programs."
PROPOSED CHANGE. The Board of Directors proposes to change this
fundamental investment policy by eliminating the phrase "or interests in
oil, gas or
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other mineral exploration or development programs" so that this policy will
provide that the Portfolio will not:
"purchase or sell commodities or commodity futures contracts."
REASONS FOR PROPOSED CHANGE. The Board of Directors has determined
that it is not necessary for the Portfolio to retain the Oil and Gas Policy
and has approved its elimination, subject to shareholder approval. Even if
shareholders approve the elimination of this Policy, the Portfolio may not
invest in any security the purchase of which would have been prohibited by
the Oil and Gas Policy without AIM first determining that the security
presents minimal credit risk and otherwise satisfies the Portfolio's
investment policies and Rule 2a-7 under the 1940 Act.
RECOMMENDATIONS. The Board of Directors recommends that you vote FOR the
proposal to eliminate the fundamental investment policies of the Portfolio set
forth in this Proposal 5.
APPROVAL OF PROPOSAL 5. As indicated on the proxy card accompanying this proxy
statement, shareholders may approve this Proposal 5 in its entirety or,
alternately, disapprove the proposed changes to one or more of the specific
fundamental investment policies listed herein, while still approving the other
proposed changes. If any of the changes contemplated by this Proposal 5 are not
approved by the shareholders of the Portfolio, the related existing fundamental
investment policies will continue in effect for the Portfolio.
GENERAL INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. To the
best knowledge of TFIC, the names and addresses of the record holders of 5% or
more of the outstanding shares of TFIC as of the Record Date, and the amount of
the outstanding shares owned of record by such holders are set forth below.
TFIC has no knowledge of shares held beneficially.
<TABLE>
<CAPTION>
Shares of Record
Name and Address Owned as of Percent
Portfolio (Class) of Record Owners June 5, 1998 of Class
- - ----------------- ---------------- ---------------- --------
<S> <C> <C> <C>
Cash Reserve Portfolio Nationsbank Texas 223,677,977.03 21.42%
Institutional Cash 1401 Elm Street, 11th Floor
Reserve Shares P.O. Box 8310000
Dallas, TX 75202
Trust Company Bank of Georgia 133,724,683.82 12.81%
303 Peachtree
14th Floor Proxy Dept.
Atlanta, GA 30348
</TABLE>
10
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<TABLE>
<CAPTION>
Shares of Record
Name and Address Owned as of Percent
Portfolio (Class) of Record Owners June 5, 1998 of Class
- - ----------------- ---------------- ---------------- --------
<S> <C> <C> <C>
Chase Bank of Texas fbo 89,888,853.76 8.61%
Obie and Co.
Chase Bank Texas N.A.
811 Rusk, 18th Floor
Houston, TX 77002
Frost National Bank TX 81,348,572.38 7.79%
100 W. Houston
San Antonio, TX 78205
Nationsfund 71,858,000.00 6.88%
The Bank of New York
90 Washington Street
New York, NY 10286
First Trust/VAR & Co. 70,498,806.00 6.75%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Cash Reserve Portfolio
Private Investment The Bank of New York 29,343,808.56 40.78%
Class One Wall Street, 5th Floor
New York, NY 10286
Frost National Bank 18,091,526.44 25.14%
100 W. Washington
San Antonio, TX 78299
First National Bank of Chicago 8,139,541.51 11.31%
Mail Suite 0126
Chicago, IL 60670
Oppenheimer & Co., Inc. 6,091,591.89 8.47%
World Financial Center
Oppenheimer Tower
New York, NY 10281
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C> <C>
New Haven Savings Bank Trust Dept. 5,637,589.00 7.84%
P.O. Box 302
Trust Department
New Haven, CT 06502
</TABLE>
As of the Record Date, none of the directors or the chief executive officer
of TFIC beneficially owned shares of any class of the Portfolio, other than
Charles T. Bauer, the Chairman and a director of TFIC. Mr. Bauer beneficially
owned on such date, with sole investment and voting power, 28,782,584 shares of
the Institutional Class of the Portfolio, representing approximately 2.76% of
the outstanding shares of such class.
PROXY SOLICITATION. Officers of TFIC may engage in the solicitation of
proxies for the Special Meeting. Such persons will not be compensated for such
efforts. TFIC expects to solicit proxies principally by mail, but TFIC may also
solicit proxies by telephone, facsimile or personal interview. TFIC may also
reimburse firms and others for their expenses in forwarding solicitation
materials to the beneficial owners of the shares of TFIC. TFIC has engaged the
services of Shareholder Communications Corporation to assist it in the
tabulation of proxies for the Special Meeting. All costs of the proxy
solicitation will be borne by TFIC.
PROPOSALS OF SHAREHOLDERS. As a general matter, TFIC does not hold regular
annual meetings of shareholders. Any shareholder who wishes to submit proposals
for consideration at a meeting of shareholders of the Portfolio should send such
proposal to TFIC at the address set forth on the first page of this proxy
statement. To be considered for presentation at a shareholders' meeting,
proposals must be received a reasonable time before a solicitation is made and
must comply with applicable law.
OTHER BUSINESS. The management knows of no business to be presented to the
Special Meeting other than the matters set forth in this proxy statement.
By order of the Board of Directors
Charles T. Bauer
Chairman of the Board of Directors
June 17, 1998
12
<PAGE>
CASH RESERVE PORTFOLIO
TAX-FREE INVESTMENTS CO.
SPECIAL MEETING OF SHAREHOLDERS
JULY 17, 1998
This proxy is being solicited by the Board of Directors of Tax-Free
Investments Co. ("TFIC"), on behalf of the Cash Reserve Portfolio (the
"Portfolio"). The undersigned hereby appoints as proxies Charles T. Bauer,
Chairman, Robert H. Graham, President, and Carol F. Relihan, Secretary, of
TFIC, and each of them (with full power of substitution) to vote for the
undersigned all shares of common stock of the undersigned in the Portfolio at
the special meeting of Shareholders to be held at the offices of TFIC, 11
Greenway Plaza, Suite 100, Houston, Texas 77046 at 3:00 p.m. local time on
Friday, July 17, 1998, and any adjournment thereof (the "Special Meeting"), with
all the power the undersigned would have if personally present. The shares
represented by this proxy will be voted as instructed. Unless indicated to the
contrary, this proxy shall be deemed to grant authority to vote "FOR" all
proposals set forth below with discretionary power to vote upon such other
business as may properly come before the Special Meeting.
The Board of Directors recommends that you vote FOR the following
proposals:
(1) Approval of a change to the Portfolio's fundamental investment policy
regarding issuer diversification.
For: [_] Against: [_] Abstain: [_]
(2) Approval of a change to the Portfolio's fundamental investment policy
regarding industry concentration.
For: [_] Against: [_] Abstain: [_]
(3) Approval of the elimination of the Portfolio's fundamental
investment policy regarding investment in illiquid securities.
For: [_] Against: [_] Abstain: [_]
(4) Approval of the elimination of that portion of a fundamental
investment policy of the Portfolio that permits the Portfolio to
purchase Stand-By Commitments.
For: [_] Against: [_] Abstain: [_]
Page 1 of 2
<PAGE>
(5) Approval of the elimination of the following fundamental investment
policies of the Portfolio which are no longer required under state
securities laws:
(a) the elimination of the fundamental investment policy that imposes
a history of operations requirement on industrial development bonds;
(b) the elimination of the fundamental investment policy that
prohibits the purchase of securities of an issuer in which directors
and officers of TFIC and A I M Advisors, Inc. also hold a beneficial
interest; and
(c) the elimination of that portion of a fundamental investment policy
that prohibits the purchase or sale by the Portfolio of interests in
oil, gas or other mineral exploration or development programs.
For: [_] Against: [_] Abstain: [_]
[_] To vote against the proposed elimination of one or more
of the specific fundamental investment policies set forth in this
Proposal 5, PLACE AN "X" IN THE BOX AT LEFT and indicate the letter(s)
(as listed above) of the fundamental investment policies you do not
want to change on the line below (any fundamental investment policy
not indicated by letter on the line below will be voted "FOR" its
elimination).
- - --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. Please date and sign this proxy below and return
it promptly in the enclosed envelope.
For the general rules on the proper method of signing this card, please
refer to the Instructions for Signing a Proxy Card which accompany the proxy
statement to which this proxy is attached. Unless this proxy is signed and
dated by the appropriate person, it will not be voted.
Date: Signature:
------------------------------- ------------------------------
Date: Signature:
------------------------------- ------------------------------
(Joint Owners)
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