SHORT TERM INVESTMENTS CO /TX/, 497, 1998-12-22

SHORT TERM INVESTMENTS CO /TX/
497, 1998-12-22

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<PAGE>

SHORT-TERM
INVESTMENTS CO.

<TABLE> PROSPECTUS
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<S> <C>
PRIME The Prime Portfolio (the "Portfolio") is a money
PORTFOLIO market fund whose investment objective is the
CASH MANAGEMENT maximization of current income to the extent
CLASS consistent with the preservation of capital and the
maintenance of liquidity. The Portfolio seeks to
DECEMBER 18, 1998 achieve its objective by investing in high grade
money market instruments, such as U.S. Government
obligations, bank obligations, commercial instruments
and repurchase agreements. The instruments purchased
by the Portfolio will have maturities of sixty days
or less.

The Portfolio is a series portfolio of Short-Term
Investments Co. (the "Fund"), an open-end,
diversified, series management investment company.
This Prospectus relates solely to the Cash Management
Class of the Portfolio, a class of shares designed to
be a convenient vehicle in which institutional
customers of banks, certain broker-dealers and other
financial institutions 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 CASH MANAGEMENT CLASS OF THE PORTFOLIO
AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER
18, 1998, HAS BEEN FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS
HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE
STATEMENT OF ADDITIONAL INFORMATION WITHOUT CHARGE,
WRITE TO THE ADDRESS BELOW OR CALL (800) 877-7745.
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 FUND.

THE PORTFOLIO'S SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
BANK, AND THE PORTFOLIO'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 PORTFOLIO WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE. SHARES
[LOGO APPEARS HERE] OF THE PORTFOLIO INVOLVE INVESTMENT RISKS, INCLUDING
Fund Management Company THE POSSIBLE LOSS OF PRINCIPAL.

11 Greenway Plaza
Suite 100
Houston, TX 77046-1173

(800) 877-7745
</TABLE>
<PAGE>

SUMMARY

THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE

The Fund is an open-end diversified series management investment company.
This Prospectus relates to the Cash Management Class (the "Class") of the
Portfolio. The Portfolio is a money market fund which invests in money market
instruments, such as U.S. Government obligations, bank obligations, commercial
instruments and repurchase agreements. The instruments purchased by the
Portfolio will have maturities of sixty days or less. 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.

Pursuant to separate prospectuses, the Fund also offers shares of other
classes of common stock of the Fund representing interests in the Portfolio:
the Institutional Class, the Personal Investment Class, the Private Investment
Class, the Reserve Class and the Resource Class. Such classes have different
distribution arrangements and are designed for institutional and other
categories of investors. The Fund also offers shares of classes of another
portfolio, the Liquid Assets Portfolio, each pursuant to a separate prospectus.
Such classes have different distribution arrangements and are designed for
institutional and other categories of investors. The portfolios of the Fund are
referred to collectively as the "Portfolios."

All classes of the Portfolio share a common investment objective and
portfolio of investments. 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. 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 vehicle in which institutional
customers of banks, certain broker-dealers and other financial institutions can
invest in a diversified open-end money market fund.

PURCHASE OF SHARES

Shares of the Class that are offered hereby are sold at net asset value. 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 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
4:00 p.m. Eastern Time will normally be made on the same day. See "Redemption
of Shares."

DIVIDENDS

The net income of the Portfolio is declared as a dividend daily to
shareholders of record immediately after 4:00 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 5:00 p.m. Eastern Time on that
day. See "Dividends."

CONSTANT NET ASSET VALUE

The Portfolio uses the amortized cost method of valuing the securities of 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

2
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AIM may be reimbursed by the Fund for its costs of performing certain
accounting and other administrative services for the Fund. See "Management of
the Fund--Investment Advisor" and "--Administrator." 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 Fund. See "General Information -- Transfer Agent
and Custodian."

DISTRIBUTOR AND DISTRIBUTION PLAN

Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to the Master Distribution Plan, the Fund may pay
up to 0.10% of the average daily net assets of the Portfolio attributable to
the shares of the Class to FMC as well as certain broker-dealers or other
financial institutions as compensation for distribution-related services. See
"Purchase of Shares" and "Management of the Fund--Distribution Plan."

SPECIAL CONSIDERATIONS

The Portfolio may borrow money and enter into reverse repurchase agreements.
The Portfolio may invest in certificates of deposit and time deposits of
foreign branches of major domestic banks and in repurchase agreements. The
Portfolio may purchase delayed delivery or when-issued securities. 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, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.

3
<PAGE>

TABLE OF FEES AND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES -- CASH MANAGEMENT CLASS*
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)................................................................ None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price)....................................................... None
Deferred Sales Load (as a percentage of original purchase price or re-
demption proceeds, as applicable)..................................... None
Redemption Fees (as a percentage of amount redeemed,if applicable)..... None
Exchange Fee........................................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES-- CASH MANAGEMENT CLASS (AS A PER-
CENTAGE OF AVERAGE NET ASSETS)
Management Fees........................................................ 0.06%
12b-1 Fees (after fee waivers)**....................................... 0.08%
Other Expenses......................................................... 0.03%
----
Total Operating Expenses -- Cash Management Class**.................... 0.17%
====
</TABLE>
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* 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.

** Had there been no fee waivers, 12b-1 Fees and Total Operating Expenses would
have been 0.10% and 0.19%, respectively.

EXAMPLE

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

1 year............................. $ 2

3 years............................ $ 5

5 years............................ $10

10 years............................ $22

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--Cash Management Class" remain the same in the
years shown.

THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST
OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

4
<PAGE>

FINANCIAL HIGHLIGHTS

Shown below are the per share data, ratios and supplemental data
(collectively "data") for the four-year period ended August 31, 1998 and for
the period June 30, 1994 (date operations commenced) through August 31, 1994.
The data has been audited by KPMG Peat Marwick LLP, independent auditors, whose
report on the financial statements and the related notes appears in the
Statement of Additional Information.

<TABLE>
<CAPTION>
JUNE 30, 1994
(COMMENCEMENT
OF
OPERATIONS)
TO AUGUST 31,
1998 1997 1996 1995 1994
-------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
Income from investment
operations:
Net investment income. 0.05 0.05 0.05 0.06 0.01
-------- -------- -------- -------- -----
Less distributions:
Dividends from net
investment income.... (0.05) (0.05) (0.05) (0.06) (0.01)
-------- -------- -------- -------- -----
Net asset value, end of
period................. $ 1.00 $ 1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== =====
Total return............ 5.62% 5.45% 5.55% 5.71% 4.34%(a)
======== ======== ======== ======== =====
Ratios/Supplemental
Data:
Net assets, end of
period (000s omitted).. $862,207 $767,304 $507,247 $194,479 $372
======== ======== ======== ======== =====
Ratio of expenses to
average net assets(b).. 0.17%(c) 0.17% 0.17% 0.17% 0.14%(a)
======== ======== ======== ======== =====
Ratio of net investment
income to average net
assets(d).............. 5.48%(c) 5.33% 5.38% 5.69% 4.26%(a)
======== ======== ======== ======== =====
</TABLE>
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(a) Annualized

(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.19%, 0.19%, 0.19%, 0.32%, and 0.67% (annualized) for the periods 1998-
1994, respectively.

(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.46%, 5.31%, 5.36%, 5.54%, and 3.73% (annualized) for
the periods 1998-1994, respectively.

SUITABILITY FOR INVESTORS

The shares of the Class are intended for use primarily by institutional
customers of banks, certain broker-dealers and other financial institutions who
seek a convenient vehicle in which to invest in an open-end diversified money
market fund. It is expected that the shares of the Class may be particularly
suitable investments for corporate cash managers, municipalities or other
public entities. The minimum initial investment is $1,000,000. 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.

Investors in the shares of 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 diversification, economies
of scale and 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 shares of the Class. It is anticipated
that most investors will perform their own sub-accounting; however, sub-
accounting services may be arranged through the Fund for shareholders who
prefer not to perform such services.

5
<PAGE>

INVESTMENT PROGRAM

The investment objective of the Portfolio is deemed to be a matter of
fundamental policy that may not be changed without the approval of a majority
of the Portfolio's shares. The Board of Directors of the Fund reserves the
right to change any of the investment policies, strategies or practices of the
Portfolio, as described in this Prospectus and the Statement of Additional
Information, without shareholder approval, except in those instances where
shareholder approval is expressly required.

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 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 consists exclusively of money
market instruments which have maturities of 60 days or less from the date of
purchase (except for securities subject to repurchase agreements which may have
longer maturities), and normally does not maintain a dollar-weighted average
maturity of its portfolio securities in excess of 40 days.

INVESTMENT POLICIES

The Portfolio may invest in a broad range of government, bank and commercial
obligations and taxable municipal securities that may be available in the money
markets. Such obligations are collectively referred to as "Money Market
Obligations" and include U.S. Treasury obligations, which include Treasury
bills, notes and bonds, and repurchase agreements relating to such securities.
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

The following list of descriptions illustrates the types of Money Market
Obligations in which the Portfolio intends to invest. The list does not purport
to be an exhaustive list of all Money Market Obligations, and the Portfolio
reserves the right to invest in Money Market Obligations other than those
listed below.

COMMERCIAL INSTRUMENTS. The Portfolio intends to invest in commercial
instruments, including commercial paper, master notes and other short-term
corporate instruments, that are denominated in U.S. dollars and which at the
date of purchase are "First Tier" securities as defined in Rule 2a-7 under the
Investment Company Act of 1940 ("1940 Act"), as such Rule may be amended from
time to time. Briefly, "First Tier" securities are securities that are rated in
the highest rating category for short-term debt obligations by two nationally
recognized statistical rating organizations ("NRSROs") or, if only rated by one
NRSRO, are rated in the highest rating category by that NRSRO, or, if unrated,
are determined by the Portfolio's investment advisor (under the supervision of
and pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. Commercial paper
consists of short-term promissory notes issued by corporations. Commercial
paper may be traded in the secondary market after its issuance. Master notes
are demand notes that permit the investment of fluctuating amounts of money at
varying rates of interest pursuant to arrangements with issuers who meet the
quality criteria of the Portfolio. The interest rate on a master note may
fluctuate based upon changes in specified interest rates or be reset
periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master demand notes, if such notes have a
demand feature, the payee may demand payment of the principal amount of the
note upon relatively short notice.

REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities described
above. 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 Fund's
Board of Directors 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 by the Portfolio under the 1940 Act. Repurchase agreements will be
secured by securities eligible under Rule 2a-7 of the 1940 Act. For additional
information, see the Statement of Additional Information.

6
<PAGE>

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 be 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 Student
Loan Marketing Association). 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 to do so by law.

BANK INSTRUMENTS. The Portfolio may invest in certificates of deposit
("CDs"), time deposits and bankers' acceptances of domestic commercial banks
having total assets in excess of $1.5 billion as of the date of their most
recently published financial statements and CDs of other domestic banks that
are fully insured as to principal by the Federal Deposit Insurance Corporation.
CDs represent short-term interest-bearing deposits of commercial banks against
which negotiable certificates bearing stated rates of interest are issued.
Bankers' acceptances are short-term negotiable drafts endorsed by commercial
banks which arise primarily from international commercial transactions.

Investment Practices

BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money
and enter into reverse repurchase agreements 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 reverse repurchase agreement. Reverse repurchase
agreements involve the sale by the Portfolio of a portfolio security at an
agreed-upon price, date and interest payment. The Portfolio will borrow money
or enter into reverse repurchase agreements 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. Reverse
repurchase transactions are limited to a term not to exceed 92 days. The
Portfolio will use reverse repurchase agreements when the interest income to be
earned from the securities that would otherwise have to be liquidated to meet
redemption requests is greater than the interest expense of the reverse
repurchase transaction. The Portfolio will give shareholders notice of its
intent to enter into a reverse repurchase agreement in sufficient time to
permit shareholder redemptions before the Portfolio enters into any reverse
repurchase agreements. Reverse repurchase agreements involve the risk that the
market value of securities retained by the Portfolio in lieu of liquidation may
decline below the repurchase price of the securities sold by the Portfolio
which it is obligated to repurchase. The risk, if encountered, could cause a
reduction in the net asset value of the Portfolio's shares. Reverse repurchase
agreements are considered to be borrowings by the Portfolio under the 1940 Act.

LENDING OF PORTFOLIO SECURITIES. The Portfolio may also lend its portfolio
securities in amounts up to 33 1/3% of its total assets to financial
institutions in accordance with the investment restrictions of the Portfolio.
Such loans would involve risks of delay in receiving additional collateral in
the event the value of the collateral decreased below the value of the
securities loaned or of delay in recovering the securities loaned or even loss
of rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by AIM to be
of good standing and only when, in AIM's judgment, the income to be earned from
the loans justifies the attendant risks.

PURCHASING DELAYED DELIVERY AND WHEN-ISSUED SECURITIES. The Portfolio may
enter into delayed delivery agreements and may purchase securities on a "when-
issued" basis.

Delayed delivery agreements are commitments by the Portfolio to dealers or
issuers to acquire securities beyond the customary settlement date for such
securities. These commitments fix the payment price and interest rate to be
received on the investment. Delayed delivery agreements will not be used as a
speculative or leverage technique. Rather, from time to time, the Portfolio's
investment advisor can anticipate that cash for investment purposes will result
from scheduled maturities of existing portfolio instruments or from net sales
of shares of the Portfolio and may enter into delayed delivery agreements to
assure that the Portfolio will be as fully invested as possible in instruments
meeting its investment objective.

Debt securities are sometimes offered on a "when-issued" basis; that is, the
date for delivery of and payment for the securities is not fixed at the date of
purchase, but is set after the securities are issued (normally within forty-
five days after the date of the transaction). The payment obligation and the
interest rate that will be received on the securities are fixed at the time the
buyer enters into the commitment. The Portfolio will only make commitments to
purchase such debt securities with the intention of actually acquiring the
securities, but the Portfolio may sell these securities before the settlement
date if it is deemed advisable.

7
<PAGE>

If the Portfolio enters into a delayed delivery agreement or purchases a
when-issued security, the Portfolio will direct its custodian bank to segregate
liquid assets (including Money Market Obligations) in an amount equal to its
delayed delivery agreements or when-issued commitments. If the market value of
such securities declines, additional cash or securities will be segregated on a
daily basis so that the market value of the account will equal the amount of
the Portfolio's delayed delivery agreements and when-issued commitments. To the
extent that funds are segregated, they will not be available for new investment
or to meet redemptions. Investment in securities on a when-issued basis and use
of delayed delivery agreements may increase the Portfolio's exposure to market
fluctuation, or may increase the possibility that the Portfolio will incur a
short-term loss, if the Portfolio must engage in portfolio transactions in
order to honor a when-issued commitment or accept delivery of a security under
a delayed delivery agreement. The Portfolio will employ techniques designed to
minimize these risks. No additional delayed delivery agreements or when-issued
commitments will be made by the Portfolio if, as a result, more than 25% of the
Portfolio's net assets would become so committed.

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

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

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 sixty 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 RESTRICTIONS

The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize certain
risks associated with investing in 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) concentrate 25% or more of the value of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and bank instruments such as
CDs, bankers' acceptances, time deposits and bank repurchase agreements;

(2) purchase securities of any one issuer (other than obligations of the
U.S. Government, its agencies or instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Portfolio's total assets
would be invested in such issuer, except as permitted by Rule 2a-7 under the
1940 Act, as such Rule may be 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; or

(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 or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, 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. The Portfolio will not purchase portfolio securities while
borrowings in excess of 5% of its total assets are outstanding.

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.

8
<PAGE>

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 Fund reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks and
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers. Beneficial holders of 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,
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 4:00 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. Shares of the Class
will earn the dividend declared on the effective date of purchase.

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 Fund's custodian bank,
are open for business. It is expected that the Federal Reserve Bank of New York
and The Bank of New York will be closed during the next twelve months on
Saturdays and Sundays and on 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. Further,
the Portfolio reserves the right to change the time for which purchase orders
for shares of the Cash Management Class 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.

Shares of the Class are sold to institutional customers of banks, certain
broker-dealers and other financial institutions (individually an "Institution"
and collectively, "Institutions"). Individuals, corporations, partnerships and
other businesses that maintain qualified accounts at an Institution may invest
in the shares of the Class. Each Institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Class. Such services may include, among other things, establishment and
maintenance of shareholder accounts and records; assistance in processing
purchase and redemption transactions in shares of the Class; providing periodic
statements showing a customer's account balance in shares of the Class;
distribution of Fund proxy statements, annual reports and other communications
to shareholders whose accounts are serviced by the Institution; and such other
services as the Fund may reasonably request. Institutions will be required to
certify to the Fund that they comply with applicable state law regarding
registration as broker-dealers, or that they are exempt from such registration.

Prior to the initial purchase of shares of the Class, an Account Application,
which can be obtained from the Transfer Agent, must be completed and sent to
the Transfer Agent, at P.O. Box 4497, Houston, Texas 77210-4497. 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. An
investor must open an account in the shares of the Class through an Institution
in accordance with the procedures established by such Institution. Each
Institution separately determines the rules applicable to accounts in the
shares of the Class opened with it, including minimum initial and subsequent
investment requirements and the procedures to be followed by investors to
effect purchases of shares of the Class. The minimum initial investment is
$1,000,000, and there is no minimum amount for subsequent purchases of shares
of the Class by an Institution on behalf of its customers. An investor who
proposes to open a Portfolio account with an Institution should consult with a
representative of such Institution to obtain a description of the rules
governing such an account. The Institution holds shares of the Class registered
in its name, as agent for the customer, on the books of the Institution. A
statement with regard to the customer's shares of the Class is supplied to the
customer periodically, and confirmations of all transactions for the account of
the customer are provided by the Institution to the customer promptly upon
request. In addition, the Institution sends to each customer proxies, periodic
reports and other information with regard to the customer's shares of the
Class. The customer's shares of the Class are fully assignable and subject to
encumbrance by the customer.

All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will
be established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
purchase additional shares of the Class directly, except through reinvestment
of dividends and distributions.

Orders for the purchase of shares of the Class are placed by the investor
with the Institution. The Institution is responsible for the prompt
transmission of the order to the Transfer Agent. The Portfolio will normally be
required to make immediate settlement in federal funds (member bank deposits
with a Federal Reserve Bank) for portfolio securities purchased. Accordingly,
payment for shares of the Class purchased by Institutions on behalf of their
customers must be in federal funds. If an investor's order to purchase shares
of the Class is paid for other than in federal funds, the Institution, acting
on behalf of the investor, completes the conversion into federal funds (which
may take two business days), or itself advances federal funds prior to
conversion, and promptly transmits the order and payment in the form of federal
funds to the Transfer Agent.

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<PAGE>

Subject to the conditions stated above and to the Portfolio'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 Fund's custodian bank,
in the form described above 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.

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 Portfolio and any funds
received for which an order has not been received will be returned to the
sending Institution. An order must specify that it is for the purchase of
shares of the "Cash Management Class of the Prime Portfolio," otherwise any
funds received will be returned to the sending Institution.

In the interest of economy and convenience, certificates representing shares
of the Class will not be issued except upon written request. Certificates (in
full shares only) will be issued without charge and may be redeposited at any
time.

The Fund 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.

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 Portfolio. 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 for which
certificates have not been issued are normally made through a customer's
Institution.

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 4:00 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
4:00 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 4:00 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 Fund. 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 Fund 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.

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 Fund 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.

Shares of the Class are not redeemable at the option of the Fund unless the
Board of Directors of the Fund determines in its sole discretion that failure
to so redeem may have materially adverse consequences to the shareholders of
the Fund.

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<PAGE>

DIVIDENDS

Dividends from the net income of the Portfolio are declared daily to
shareholders of record of the Class immediately after 4:00 p.m. Eastern Time on
the day of declaration. Net income for dividend purposes is determined daily as
of 4:00 p.m. Eastern Time. The dividend accrued and paid for the Class will
consist of (a) income of the Portfolio, the allocation of which is based upon
the Class's pro rata share of the total outstanding shares representing an
interest in the Portfolio, less (b) Fund expenses, such as custodian fees,
directors' fees, accounting and legal expenses, based upon the Class's pro rata
share of the net assets of the Portfolio, less (c) expenses directly
attributable to the 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
4:00 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, at 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
at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should
the Fund incur or anticipate any unusual expense, loss or depreciation which
could adversely affect the income or net asset value of the Portfolio, the
Fund's Board of Directors 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 Directors 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 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 in additional 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 Fund and each portfolio of the Fund 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.

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.

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<PAGE>

NET ASSET VALUE

The net asset value per share of the Portfolio is determined daily as of 4:00
p.m. Eastern Time on each business day of the Fund. 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 Fund at (800)
877-7745. 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 an investor before
making an investment in the Portfolio.

For the seven-day period ended August 31, 1998, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the annualized current
yield for the period) were 5.51% and 5.66%, respectively. These yields are
quoted for illustration purposes only. The yields for any other seven-day
period may be substantially different from the yields quoted above.

To assist banks and other institutions performing their own sub-accounting,
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 5:00 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 Portfolio's
yield and total return.

REPORTS TO SHAREHOLDERS

The Fund furnishes 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 are audited by the Fund's independent auditors.

Each shareholder will be provided with a written confirmation by its
Institution for each transaction unless otherwise specified by the shareholder.
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.

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<PAGE>

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

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

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 (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises over 90 investment
company portfolios. AIM is a wholly owned subsidiary of AIM Management, 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 institutional investment
management and retail fund businesses in the United States, Europe and the
Pacific Region.

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. The Advisory Agreement also provides that, upon the request of the
Fund's Board of Directors, AIM may perform (or arrange for the performance of)
certain accounting, shareholder servicing and other administrative services for
the Fund which are not required to be performed by AIM under the Advisory
Agreement. The Advisory Agreement requires AIM to reduce its fee to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Portfolio's shares are
qualified for sale.

For the fiscal year ended August 31, 1998, AIM received fees pursuant to the
Advisory Agreement from the Fund with respect to the Portfolio which
represented 0.06% of the Portfolio's average daily net assets. During such
fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.17%
of the Class's average daily net assets.

ADMINISTRATOR

The Fund has entered into a Master Administrative Services Agreement 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 Fund 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.

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 Fund has entered into a Master Distribution Agreement (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 directors and officers of the Fund are affiliated with FMC and AIM. The
Distribution Agreement provides that FMC has the exclusive right to distribute
shares of the Fund either directly or through other broker-dealers. FMC is the
distributor of several of the mutual funds managed or advised by AIM.

FMC may, from time to time, at its expense, pay a bonus or other
consideration or incentive to dealers or financial institutions who sell a
minimum dollar amount of the shares of the Class during a specific period of
time. In some instances, these incentives may be offered only to certain
dealers or financial institutions who have sold or may sell significant amounts
of shares. The total amount of such additional bonus payments or other
consideration

13
<PAGE>

shall not exceed 0.05% of the net asset value of the shares of the Class sold.
Any such bonus or incentive programs will not change the price paid by
investors for the purchase of shares of the Class or the amount received as
proceeds from such sales. Sales of the shares of the Class may not be used to
qualify for any incentives to the extent that such incentives may be prohibited
by the laws of any jurisdiction.

DISTRIBUTION PLAN

The Fund has adopted a Master Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The Plan provides that the Fund may compensate FMC in
connection with the distribution of shares of the Class in an amount equal to
0.10% on an annualized basis of the average daily net assets of the Portfolio
attributable to the Class. Such amounts may be expended when and if authorized
by the Board of Directors and may be used to finance such distribution-related
services as expenses of organizing and conducting sales seminars, printing of
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature and costs of administering the
Plan.

Of the compensation paid to FMC under the Plan, a service fee may be paid to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the
Class. Payments to FMC would be characterized as an asset-based sales charge
pursuant to the Plan. The Plan also imposes a cap on the total amount of sales
charges, including asset-based sales charges, that may be paid by the Portfolio
with respect to the Class. The Plan does not obligate the Fund to reimburse FMC
for the actual expenses FMC may incur in fulfilling its obligations under the
Plan on behalf of the Class. Thus, under the Plan, even if FMC's actual
expenses exceed the fee payable to FMC thereunder at any given time, the Fund
will not be obligated to pay more than that fee. If FMC's expenses are less
than the fee it receives, FMC will retain the full amount of the fee.

As required by Rule 12b-1 under the 1940 Act, the Plan has been approved by
the Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the 1940 Act) of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan ("Qualified Directors"). In approving the Plan,
the directors considered various factors and determined that there is a
reasonable likelihood that the Plan will benefit the Fund and the shareholders
of the Class.

The Plan requires the officers of the Fund to provide the Board of Directors
at least quarterly with a written report of the amounts expended pursuant to
the Plan and the purposes for which such expenditures were made. The Board of
Directors shall review these reports in connection with their decisions with
respect to the Plan.

The Plan may be terminated by a vote of a majority of the Qualified
Directors, or by a vote of a majority of the shareholders of the outstanding
voting securities of the Class. Any change in the Plan that would increase
materially the distribution expenses paid by the Class requires shareholder
approval; otherwise the Plan may be amended by the Board of Directors,
including a majority of the Qualified Directors, by votes cast in person at a
meeting called for the purpose of voting upon such amendment. As long as the
Plan is in effect, the selection or nomination of the Qualified Directors is
committed to the discretion of the Qualified Directors.

PORTFOLIO TRANSACTIONS AND BROKERAGE

AIM is responsible for decisions to buy and sell securities for the
Portfolio, 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. The purchase price paid to
dealers serving as market makers may include a spread between the bid and asked
prices. 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 program. Certain research
services furnished by dealers may be useful to AIM with respect to clients
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.

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<PAGE>

GENERAL INFORMATION

ORGANIZATION AND DESCRIPTION OF SHARES

The Fund was incorporated in Maryland on May 3, 1993. On October 15, 1993,
the Portfolio succeeded to the assets and assumed the liabilities of the Prime
Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a
Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of
Reorganization between the Fund and STIC. All historical financial and other
information contained in this Prospectus for periods prior to October 15, 1993
relating to the Portfolio is that of the Predecessor Portfolio. Shares of
common stock of the Fund are divided into twelve classes. Six classes,
including the Class, represent interests in the Portfolio, and six classes
represent interests in the Liquid Assets Portfolio. Each class of shares has a
par value of $.001 per share. The other classes of the Fund may have different
sales charges and other expenses which may affect performance. An investor may
obtain information concerning the Fund's other classes by contacting FMC.

All shares of the Fund 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, 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 each 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 Fund, 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 Fund attributable or allocated to the
respective portfolio based on the respective liquidation value of each
portfolio. Fractional shares of each portfolio have the same rights as full
shares to the extent of their proportionate interest.

There are no preemptive or conversion rights applicable to any of the Fund's
shares. The Fund's shares, when issued, will be fully paid and non-assessable.
The Board of Directors may create additional portfolios and classes of the Fund
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 Fund and passes upon certain legal
matters for the Fund.

SHAREHOLDER INQUIRIES

Shareholder inquiries concerning the status of an account should be directed
to the Fund at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may
be made by calling (800) 877-7745.

YEAR 2000 COMPLIANCE PROJECT

In providing services to the Fund, 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 Fund provide the Fund and its shareholders.

To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking 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 reviewed to confirm year 2000
compliance upon installation. No assurance can be given that the Project will
be successful or that the Fund 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 Fund 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 Fund 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.

15
<PAGE>

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

SHORT-TERM INVESTMENTS CO. PROSPECTUS
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 December 18, 1998
(800) 877-7745
SHORT-TERM
INVESTMENT ADVISOR INVESTMENTS CO.
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100 ------------
Houston, Texas 77046-1173
(713) 626-1919 PRIME PORTFOLIO

DISTRIBUTOR ------------
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100 CASH MANAGEMENT CLASS
Houston, Texas 77046-1173
(800) 877-7745 TABLE OF CONTENTS

AUDITORS <TABLE>
KPMG PEAT MARWICK LLP <CAPTION>
700 Louisiana PAGE
Houston, Texas 77002 ----
<S> <C>
CUSTODIAN SUMMARY......................... 2
THE BANK OF NEW YORK TABLE OF FEES AND EXPENSES...... 4
90 Washington Street FINANCIAL HIGHLIGHTS............ 5
11th Floor SUITABILITY FOR INVESTORS....... 5
New York, New York 10286 INVESTMENT PROGRAM.............. 6
PURCHASE OF SHARES.............. 9
TRANSFER AGENT REDEMPTION OF SHARES............ 10
A I M FUND SERVICES, INC. DIVIDENDS....................... 11
P.O. Box 4497 TAXES........................... 11
Houston, Texas 77210-4497 NET ASSET VALUE................. 12
YIELD INFORMATION............... 12
NO PERSON HAS BEEN AUTHORIZED TO GIVE REPORTS TO SHAREHOLDERS......... 12
ANY INFORMATION OR TO MAKE ANY MANAGEMENT OF THE FUND.......... 13
REPRESENTATIONS NOT CONTAINED IN THIS GENERAL INFORMATION............. 15
PROSPECTUS IN CONNECTION WITH THE </TABLE>
OFFERING MADE BY THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE
FUND 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.

- -------------------------------------- -------------------------------------
- -------------------------------------- -------------------------------------
<PAGE>

SHORT-TERM
INVESTMENTS CO.
<TABLE>
<CAPTION>
PROSPECTUS
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
The Prime Portfolio (the "Portfolio") is a money market fund whose investment
PRIME objective is the maximization of current income to the extent consistent with
PORTFOLIO the preservation of capital and the maintenance of liquidity. The Portfolio
seeks to achieve its objective by investing in high grade money market
INSTITUTIONAL instruments, such as U.S. Government obligations, bank obligations, commercial
CLASS instruments and repurchase agreements. The instruments purchased by the
Portfolio will have maturities of sixty days or less.
DECEMBER 18, 1998
The Portfolio is a series portfolio of Short-Term Investments Co. (the
"Fund"), an open-end diversified series management investment company. This
Prospectus relates solely to the Institutional Class of the 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
PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF
ADDITIONAL INFORMATION, DATED DECEMBER 18, 1998, HAS BEEN FILED WITH THE UNITED
STATES 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 FUND.

THE PORTFOLIO'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE PORTFOLIO'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 PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
[LOGO APPEARS HERE] SHARE. SHARES OF THE PORTFOLIO INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
Fund Management Company LOSS OF PRINCIPAL.

11 Greenway Plaza
Suite 100
Houston, TX 77046-1173
(800) 659-1005
</TABLE>
<PAGE>

SUMMARY

THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE

The Fund is an open-end diversified series management investment company.
Pursuant to this Prospectus, the Fund offers shares of the Institutional Class
(the "Class") of the Portfolio at net asset value. The Portfolio is a money
market fund which invests in money market instruments, such as U.S. Government
obligations, bank obligations, commercial instruments and repurchase
agreements. The instruments purchased by the Portfolio will have maturities of
sixty days or less. 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.

Pursuant to separate prospectuses, the Fund also offers shares of other
classes of common stock of the Fund representing interests in the Portfolio:
the Cash Management Class, the Personal Investment Class, the Private
Investment Class, the Reserve Class and the Resource Class. Such classes have
different distribution arrangements and are designed for institutional and
other categories of investors. The Fund also offers shares of classes of
another portfolio, the Liquid Assets Portfolio, each pursuant to a separate
prospectus. Such classes have different distribution arrangements and are
designed for institutional and other categories of investors. The portfolios of
the Fund are referred to collectively as the "Portfolios."

INVESTORS IN THE CLASS

The Class is 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 short-term cash reserves in a
diversified, open-end money market fund.

PURCHASE OF SHARES

Shares of the Class that are offered hereby 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 funds immediately available to the
Portfolio. See "Purchase of Shares."

REDEMPTION OF SHARES

DIVIDENDS

CONSTANT NET ASSET VALUE

The Fund 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

2
<PAGE>

Investment Advisor" and "-- Administrator." 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 Fund. See "General Information--Transfer Agent and Custodian."

DISTRIBUTOR

Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. FMC does not receive any fee for distribution services
from the Fund with respect to the shares of the Class. See "Management of the
Fund--Distributor."

SPECIAL CONSIDERATIONS

3
<PAGE>

TABLE OF FEES AND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES-- INSTITUTIONAL CLASS*
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)................................................................. None
Maximum Sales Load Imposed 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......................................................... 0.06%
12b-1 Fees.............................................................. None
Other Expenses.......................................................... 0.03%
----
Total Operating Expenses -- Institutional Class......................... 0.09%
====
</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.

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
5 years.......................................................... $ 5
10 years......................................................... $12
</TABLE>

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 SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST
OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

4
<PAGE>

FINANCIAL HIGHLIGHTS

Shown below are the per share data, ratios and supplemental data
(collectively, "data") for each of the years in the ten-year period ended
August 31, 1998. The data has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report on the financial statements and the related
notes appears in the Statement of Additional Information.

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from
investment
operations:
Net investment
income......... 0.06 0.05 0.05 0.06 0.04 0.03 0.04 0.07
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Less
distributions:
Dividends from
net investment
income.......... (0.06) (0.05) (0.05) (0.06) (0.04) (0.03) (0.04) (0.07)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net asset value,
end of period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ========== ========== ==========
Total return..... 5.71% 5.54% 5.64% 5.80% 3.64% 3.20% 4.44% 7.11%
========== ========== ========== ========== ========== ========== ========== ==========
Ratios/supplemental
data:
Net assets, end
of period (000s
omitted)......... $5,843,813 $5,593,043 $5,264,601 $3,752,693 $4,080,753 $4,349,945 $3,993,340 $6,108,991
========== ========== ========== ========== ========== ========== ========== ==========
Ratio of expenses
to average net
assets.......... 0.09%(a) 0.09% 0.09% 0.09% 0.08% 0.07% 0.08% 0.07%
========== ========== ========== ========== ========== ========== ========== ==========
Ratio of net
investment
income to
average net
assets.......... 5.56%(a) 5.40% 5.48% 5.64% 3.58% 3.15% 4.43% 6.89%
========== ========== ========== ========== ========== ========== ========== ==========
<CAPTION>
1990 1989
----------- -----------
<S> <C> <C>
Net asset value,
beginning of
period.......... $ 1.00 $ 1.00
Income from
investment
operations:
Net investment
income......... 0.08 0.09
----------- ----------
Less
distributions:
Dividends from
net investment
income.......... (0.08) (0.09)
----------- ----------
Net asset value,
end of period .. $ 1.00 $ 1.00
=========== ==========
Total return..... 8.72% 9.42%
=========== ==========
Ratios/supplemental
data:
Net assets, end
of period (000s
omitted)......... $6,475,123 $7,003,546
=========== ==========
Ratio of expenses
to average net
assets.......... 0.07% 0.08%
=========== ==========
Ratio of net
investment
income to
average net
assets.......... 8.39% 9.07%
=========== ==========
</TABLE>
- ------

(a) Ratios are based on average net assets of $6,017,417,344.

SUITABILITY FOR INVESTORS

The Class is intended for use primarily by institutions, particularly banks,
as a convenient and economical vehicle in which to invest short-term cash
reserves in an open-end diversified money market fund. The minimum initial
investment is $1,000,000. 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.

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 diversification, economies of scale and
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 cost 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. It is anticipated that most investors
will perform their own sub-accounting; however, sub-accounting services may be
arranged through the Fund for shareholders who prefer not to perform such
services.

INVESTMENT PROGRAM

The investment objective of the Portfolio is deemed to be a matter of
fundamental policy that may not be changed without the approval of a majority
of the Portfolio's shares. The Board of Directors of the Fund reserves the
right to change any of the investment policies, strategies or practices of the
Portfolio, as described in this Prospectus and the Statement of Additional
Information without shareholder approval, except in those instances where
shareholder approval is expressly required.

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

5
<PAGE>

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

COMMERCIAL INSTRUMENTS. The Portfolio intends to invest in commercial
instruments, including commercial paper, master notes and other short-term
corporate instruments, that are denominated in U.S. dollars and which at the
date of purchase are "First Tier" securities as defined in Rule 2a-7 under the
Investment Company Act of 1940 ("1940 Act"), as such Rule may be amended from
time to time. Briefly, "First Tier" securities are securities that are rated in
the highest rating category for short-term debt obligations by two nationally
recognized statistical rating organizations ("NRSROs") or, if only rated by one
NRSRO, are rated in the highest rating category by that NRSRO, or, if unrated,
are determined by the Portfolio's investment advisor (under the supervision of
and pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. Commercial paper
consists of short-term promissory notes issued by corporations. Commercial
paper may be traded in the secondary market after its issuance. Master notes
are demand notes that permit the investment of fluctuating amounts of money at
varying rates of interest pursuant to arrangements with issuers who meet the
quality criteria of the Portfolio. The interest rate on a master note may
fluctuate based upon changes in specified interest rates or be reset
periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master notes, if such notes have a demand
feature, the payee may demand payment of the principal amount of the note upon
relatively short notice.

Investment Practices

6
<PAGE>

of portfolio securities or to accommodate abnormally heavy redemption requests
should they occur. Reverse repurchase transactions are limited to a term not to
exceed 92 days. The Portfolio will use reverse repurchase agreements when the
interest income to be earned from the securities that would otherwise have to
be liquidated to meet redemption requests is greater than the interest expense
of the reverse repurchase transaction. The Portfolio will give shareholders
notice of its intent to enter into a reverse repurchase agreement in sufficient
time to permit shareholder redemptions before the Portfolio enters into any
reverse repurchase agreements. Reverse repurchase agreements involve the risk
that the market value of securities retained by the Portfolio in lieu of
liquidation may decline below the repurchase price of the securities sold by
the Portfolio which it is obligated to repurchase. The risk, if encountered,
could cause a reduction in the net asset value of the Portfolio's shares.
Reverse repurchase agreements are considered to be borrowings by the Portfolio
under the 1940 Act.

PURCHASING DELAYED DELIVERY AND WHEN-ISSUED SECURITIES. The Portfolio may
enter into delayed delivery agreements and may purchase securities on a "when-
issued" basis.

If the Portfolio enters into a delayed delivery agreement or purchases a
when-issued security, the Portfolio will direct its custodian bank to segregate
liquid assets (including Money Market Obligations) in an amount equal to its
delayed delivery agreement obligations or when-issued commitments. If the
market value of such securities declines, additional cash or securities will be
segregated on a daily basis so that the market value of the account will equal
the amount of the Portfolio's delayed delivery agreement obligations and when-
issued commitments. To the extent that funds are segregated, they will not be
available for new investment or to meet redemptions. Investment in securities
on a when-issued basis and use of delayed delivery agreements may increase the
Portfolio's exposure to market fluctuation, or may increase the possibility
that the Portfolio will incur a short-term loss, if the Portfolio must engage
in portfolio transactions in order to honor a when-issued commitment or accept
delivery of a security under a delayed delivery agreement. The Portfolio will
employ techniques designed to minimize these risks. No additional delayed
delivery agreements or when-issued commitments will be made by the Portfolio
if, as a result, more than 25% of the Portfolio's net assets would become so
committed.

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 credit
worthiness 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 sixty 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 RESTRICTIONS

7
<PAGE>

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:

(2) purchase securities of any one issuer (other than obligations of the
U.S. Government, its agencies or instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Portfolio's total assets
would be invested in such issuer, except as permitted by Rule 2a-7 under the
1940 Act, as such Rule may be 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; or

(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 or obtain funds by entering into
reverse repurchase agreements, 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. The
Portfolio will not purchase portfolio securities while borrowings in excess
of 5% of its total assets are outstanding.

The Portfolio's investment objective and the three investment restrictions of
the Portfolio set forth above (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. The investment policies described above
under the heading "Investment Policies" may be changed without the affirmative
vote of a majority of the outstanding shares of the Portfolio.

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 Fund reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks and
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers. Beneficial holders of 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,
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 4:00 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 all be made via AIM LINK--Registered Trademark-- Remote,
a personal computer application software product. Shares of the Class will earn
the dividend declared on the effective date of purchase.

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 Fund's custodian bank,
are open for business. It is expected that the Federal Reserve Bank of New York
and The Bank of New York will be closed during the next twelve months on
Saturdays and Sundays and on 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. Further,
the Portfolio reserves the right to change the time for which purchase orders
for shares of the Institutional Class 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.

Subject to the conditions stated above and to the Portfolio'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 Fund'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.

Payment for shares of the Class purchased must be in 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 Portfolio and any funds received for which an order has not been received
will be returned to the sending institution. An order must specify that it is
for the purchase of "Shares of the Institutional Class of the Prime Portfolio,"
otherwise any funds received will be returned to the sending institution.

8
<PAGE>

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 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 with the Portfolio 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, at 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.

In the interest of economy and convenience, certificates representing shares
of the Class will not be issued except upon written request to the Fund.
Certificates (in full shares only) will be issued without charge and may be
redeposited at any time.

The Fund 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.

REDEMPTION OF SHARES

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 4:00 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
4:00 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 4:00 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.

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.

The shares of the Class are not redeemable at the option of the Fund unless
the Board of Directors of the Fund determines in its sole discretion that
failure to so redeem may have materially adverse consequences to the
shareholders of the Fund.

9
<PAGE>

DIVIDENDS

Dividends from the net income of the Portfolio are declared daily to
shareholders of record of the Class immediately after 4:00 p.m. Eastern Time on
the day of declaration. Net income for dividend purposes is determined daily as
of 4:00 p.m. Eastern Time. The dividend accrued and paid for the Class will
consist of (a) income of the Portfolio, the allocation of which is based upon
the Class's pro rata share of the total outstanding shares representing an
interest in the Portfolio, less (b) Fund expenses, such as custodian fees,
directors' fees, accounting and legal expenses, based upon the Class's pro rata
share of the net assets of the Portfolio, less (c) expenses directly
attributable to the 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
4:00 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 at P.O. Box 4497, Houston, TX 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 the net asset value per share
of the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset
Value." Should the Fund incur or anticipate any unusual expense, loss or
depreciation which could adversely affect the income or net asset value of the
Portfolio, the Fund's Board of Directors 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 Directors 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.

10
<PAGE>

NET ASSET VALUE

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 Fund 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.

For the seven-day period ended August 31, 1998, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the annualized current
yield for the period) were 5.59% and 5.74%, respectively. These yields are
quoted for illustration purposes only. The yields for any other seven-day
period may be substantially different from the yields quoted above.

REPORTS TO SHAREHOLDERS

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 monthly 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 FUND

BOARD OF DIRECTORS

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

11
<PAGE>

INVESTMENT ADVISOR

For the fiscal year ended August 31, 1998, AIM received fees pursuant to the
Advisory Agreement with respect to the Portfolio which represented 0.06% of the
Portfolio's average daily net assets. During such fiscal year, the expenses of
the Class, including AIM's fees, amounted to 0.09% of the Class's average daily
net assets.

ADMINISTRATOR

FEE WAIVERS

DISTRIBUTOR

The Fund has entered into a Master Distribution Agreement (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. FMC
does not receive any fee for distribution services from the Fund with respect
to the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173. Certain directors and officers of the Fund are
affiliated with FMC. The Distribution Agreement provides that FMC has the
exclusive right to distribute shares of the Fund either directly or through
other broker-dealers. FMC is the distributor of several of the mutual funds
managed or advised by AIM.

PORTFOLIO TRANSACTIONS AND BROKERAGE

12
<PAGE>

GENERAL INFORMATION

ORGANIZATION AND DESCRIPTION OF SHARES

The Fund was incorporated in Maryland on May 3, 1993. On October 15, 1993,
the Portfolio succeeded to the assets and assumed the liabilities of the Prime
Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a
Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of
Reorganization between the Fund and STIC. All historical financial and other
information contained in this Prospectus for periods prior to October 15, 1993
relating to the Portfolio (or a class thereof) is that of the Predecessor
Portfolio (or the corresponding class thereof). Shares of common stock of the
Fund are divided into twelve classes. Six classes, including the Class,
represent interests in the Portfolio, and six classes represent interests in
the Liquid Assets Portfolio. Each class of shares has a par value of $.001 per
share. The other classes of the Fund may have different sales charges and other
expenses which may affect performance. An investor may obtain information
concerning the Fund's other classes by contacting FMC.

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 Fund and passes upon certain legal
matters for the Fund.

SHAREHOLDER INQUIRIES

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

YEAR 2000 COMPLIANCE PROJECT

OTHER INFORMATION

This Prospectus sets forth basic information that investors should know about
the Fund and the Portfolio prior to investing. A Statement of Additional
Information has been filed with the SEC. The Statement of Additional
Information is attached as Appendix A to this Prospectus. 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.

13
<PAGE>

APPENDIX

STATEMENT OF
ADDITIONAL INFORMATION

SHORT-TERM INVESTMENTS CO.

PRIME PORTFOLIO
(CASH MANAGEMENT CLASS)
(INSTITUTIONAL CLASS)
(PERSONAL INVESTMENT CLASS)
(PRIVATE INVESTMENT CLASS)

(RESERVE 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 CLASSES OF THE PRIME PORTFOLIO, 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 DECEMBER 18, 1998

RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE PRIME
PORTFOLIO: CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 18, 1998, PERSONAL INVESTMENT
CLASS PROSPECTUS DATED DECEMBER 18, 1998, PRIVATE INVESTMENT CLASS PROSPECTUS
DATED DECEMBER 18, 1998, RESERVE CLASS PROSPECTUS DATED DECEMBER 18, 1998 AND
RESOURCE CLASS PROSPECTUS DATED DECEMBER 18, 1998

A-1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction.................................................... A-3
General Information about the Fund.............................. A-3
The Fund and Its Shares....................................... A-3
Directors and Officers........................................ A-4
Remuneration of Directors..................................... A-7
AIM Funds Retirement Plan for Eligible Directors/Trustees..... A-8
Deferred Compensation Agreements.............................. A-8
Investment Advisor............................................ A-8
Administrator................................................. A-10
Expenses...................................................... A-10
Transfer Agent and Custodian.................................. A-10
Reports....................................................... A-11
Fee Waivers................................................... A-11
Principal Holders of Securities............................... A-12
Prime Portfolio............................................... A-12
Liquid Assets Portfolio....................................... A-14
Purchases and Redemptions....................................... A-16
Redemptions in Kind........................................... A-16
Net Asset Value Determination................................. A-16
Distribution Agreement........................................ A-16
Distribution Plan............................................. A-17
Banking Regulations........................................... A-17
Performance Information....................................... A-17
Investment Program and Restrictions............................. A-19
Investment Program............................................ A-19
Eligible Securities........................................... A-19
Commercial Paper Ratings...................................... A-19
Bond Ratings.................................................. A-20
Investment Restrictions....................................... A-21
Portfolio Transactions.......................................... A-22
General Brokerage Policy...................................... A-22
Allocation of Portfolio Transactions.......................... A-23
Section 28(e) Standards....................................... A-23
Tax Matters..................................................... A-24
Qualification as a Regulated Investment Company............... A-24
Excise Tax On Regulated Investment Companies.................. A-24
Portfolio Distributions....................................... A-25
Sale or Redemption of Shares.................................. A-25
Foreign Shareholders.......................................... A-25
Effect of Future Legislation; Local Tax Considerations........ A-26
Financial Statements............................................ FS
</TABLE>

A-2
<PAGE>

INTRODUCTION

The Prime Portfolio (the "Portfolio") is an investment portfolio of Short-
Term Investments Co. (the "Fund"), 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 December 18, 1998, the
Institutional Class Prospectus dated December 18, 1998, the Personal Investment
Class Prospectus dated December 18, 1998, the Private Investment Class
Prospectus dated December 18, 1998, the Reserve Class Prospectus dated December
18, 1998 and the Resource Class Prospectus dated December 18, 1998 (each a
"Prospectus"). Additional copies of each Prospectus and this Statement of
Additional Information may be obtained without charge by writing the
distributor of the Portfolio'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; thus, 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 FUND

THE FUND AND ITS SHARES

The Fund is an open-end, diversified series management investment company
which was organized as a corporation under the laws of the State of Maryland on
May 3, 1993. On October 15, 1993, the Portfolio succeeded to the assets and
assumed the liabilities of the Prime Portfolio (the "Predecessor Portfolio") of
Short-Term Investments Co., a Massachusetts business trust ("STIC"), pursuant
to an Agreement and Plan of Reorganization between the Fund and STIC. All
historical financial and other information contained in this Statement of
Additional Information for periods prior to October 15, 1993 relating to the
Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the
corresponding class thereof). Shares of common stock of the Fund are redeemable
at their net asset value at the option of the shareholder or at the option of
the Fund in certain circumstances. For information concerning the methods of
redemption and the rights of share ownership, investors should consult each
Prospectus under the captions "General Information" and "Redemption of Shares."

The Fund offers on a continuous basis shares representing an interest in one
of two portfolios: the Portfolio and the Liquid Assets Portfolio (together, the
"Portfolios"). The Portfolio consists of the following six classes of shares:
Cash Management Class, Institutional Class, Personal Investment Class, Private
Investment Class, the Reserve Class and the Resource Class. The Liquid Assets
Portfolio consists of six classes of shares. Each class of shares has different
shareholder qualifications and bears expenses differently. This Statement of
Additional Information relates to each class of the Portfolio. The classes of
the Liquid Assets Portfolio are offered pursuant to separate prospectuses and a
separate statement of additional information.

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

Shareholders of the Fund do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of the Fund voting
together for election of directors can elect all of the members of the Board of
Directors of the Fund. In such event, the remaining holders cannot elect any
members of the Board of Directors of the Fund.

The Board of Directors may classify or reclassify any unissued shares of any
class or classes in addition to those already authorized by setting or changing
in any one or more respects, from time to time, prior to the issuance of such
shares, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such shares. Any such classification or
reclassification will comply with the provisions of the Investment Company Act
of 1940, as amended (the "1940 Act").

A-3
<PAGE>

The Charter of the Fund authorizes the issuance of 60 billion shares with a
par value of $.001 each, of which 25 billion shares represent an interest in
the Liquid Assets Portfolio (or class thereof) and 25 billion shares represent
an interest in the Portfolio (or class thereof). A share of a Portfolio (or
class) represents an equal proportionate interest in such Portfolio (or class)
with each other share of that Portfolio (or class) and is entitled to a
proportionate interest in the dividends and distributions from that Portfolio
(or class). Additional information concerning the rights of share ownership is
set forth in each Prospectus.

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

The Charter provides that no director or officer of the Fund shall be liable
to the Fund or its shareholders for money damages, except (i) to the extent
that it is proved that such director or officer actually received an improper
benefit or profit in money, property or services, for the amount of the benefit
or profit in money, property or services actually received, or (ii) to the
extent that a judgment or other final adjudication adverse to such director or
officer is entered in a proceeding based on a finding in the proceeding that
such director's or officer's action, or failure to act, was the result of
active and deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding. The foregoing shall not be construed to protect
or purport to protect any director or officer of the Fund against any liability
to the Fund or its shareholders to which such director or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
office. The Fund shall indemnify and advance expenses to its currently acting
and its former directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The Fund shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law. The Board of
Directors may by By-Law, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents of the Fund to the
fullest extent permitted by the Maryland General Corporation Law.

As described in each Prospectus, the Fund will not normally hold annual
shareholders' meetings. At such time as less than a majority of the directors
have been elected by the shareholders, the directors then in office will call a
shareholders' meeting for the election of directors. Upon written request by
ten or more shareholders who have been such for at least six months and who
hold shares constituting 1% of the outstanding shares, stating that such
shareholders wish to communicate with the other shareholders for the purpose of
obtaining the signatures necessary to demand a meeting to consider removal of a
director, the Fund has undertaken to provide a list of shareholders or to
disseminate appropriate materials (at the expense of the requesting
shareholders).

Except as otherwise disclosed in each Prospectus and in this Statement of
Additional Information, the directors shall continue to hold office and may
appoint their successors.

DIRECTORS AND OFFICERS

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

<TABLE>
<CAPTION>
================================================================================
POSITIONS HELD PRINCIPAL OCCUPATION DURING AT
NAME, ADDRESS AND AGE WITH REGISTRANT LEAST THE PAST 5 YEARS
--------------------- --------------- ------------------------------

- --------------------------------------------------------------------------------
<C> <C> <S>
*CHARLES T. BAUER (79) Director and Chairman Chairman of the Board of
Directors, A I M Management
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.
================================================================================
</TABLE>

- ------
* A director who is an "interested person" of the Fund and AIM as defined in
the 1940 Act.

A-4
<PAGE>

<TABLE>
<CAPTION>
================================================================================
PRINCIPAL OCCUPATION
POSITIONS HELD DURING AT LEAST THE PAST 5
NAME, ADDRESS AND AGE WITH REGISTRANT YEARS
--------------------- --------------- --------------------------

- -------------------------------------------------------------------------------
<C> <C> <S>
BRUCE L. CROCKETT (54) Director Director, ACE Limited
906 Frome Lane (insurance company).
McLean, VA 22102 Formerly, Director,
President and Chief
Executive Officer, COMSAT
Corporation; and Chairman,
Board of Governors of
INTELSAT (international
communications company).

- -------------------------------------------------------------------------------
OWEN DALY II, (74) Director Director, Cortland Trust
Six Blythewood Road Inc. (investment company).
Baltimore, MD 21210 Formerly, Director, CF & I
Steel Corp., Monumental
Life Insurance Company and
Monumental General
Insurance Company; and
Chairman of the Board of
Equitable Bancorporation.

- -------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (63) Director Chairman of the Board of
2 Hopkins Plaza, 20th Floor Directors, Mercantile
Baltimore, MD 21201 Mortgage Corp; Formerly,
Vice Chairman of the Board
of Directors and
President, Mercantile -
Safe Deposit & Trust Co.;
and President, Mercantile
Bankshares.

- -------------------------------------------------------------------------------
JACK M. FIELDS, (46) Director Chief Executive Officer,
8810 Will Clayton Parkway Texana Global, Inc.
Jetero Plaza, Suite E (foreign trading company)
Humble, TX 77338 and Twenty First Century
Group, Inc. (a
governmental affairs
company). Formerly, Member
of the U.S. House of
Representatives.

- -------------------------------------------------------------------------------
**CARL FRISCHLING, (61) Director Partner, Kramer, Levin,
919 Third Avenue Naftalis & Frankel (law
New York, NY 10022 firm). Formerly, Partner,
Reid & Priest (law firm).

- -------------------------------------------------------------------------------
*ROBERT H. GRAHAM, (51) Director and President Director, President and
Chief Executive Officer,
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.

- -------------------------------------------------------------------------------
PREMA MATHAI-DAVIS (48) Director Chief Executive Officer,
350 Fifth Avenue, Suite 301 YWCA of the U.S.A.;
New York, NY 10118 Commissioner, New York
City Department for the
Aging; and Member of the
Board of Directors,
Metropolitan
Transportation Authority
of New York State.

- -------------------------------------------------------------------------------
LEWIS F. PENNOCK, (56) Director Attorney in private
6363 Woodway, Suite 825 practice in Houston,
Houston, TX 77057 Texas.

- -------------------------------------------------------------------------------
IAN W. ROBINSON, (75) Director Formerly, Executive Vice
183 River Drive President and Chief
Tequesta, FL 33469 Financial Officer, Bell
Atlantic Management
Services, 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) Director Executive Vice President,
Transco Tower, 50th Floor Development and
2800 Post Oak Blvd. Operations, Hines
Houston, TX 77056 Interests Limited
Partnership (real estate
development).
================================================================================
</TABLE>

- ------
** A director who is an "interested person" of the Fund as defined in the 1940
Act.
* A director who is an "interested person" of the Fund and AIM as defined in
the 1940 Act.

A-5
<PAGE>

<TABLE>
<CAPTION>
================================================================================
POSITIONS HELD PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE WITH REGISTRANT AT LEAST THE PAST 5 YEARS
--------------------- --------------- ---------------------------

- -------------------------------------------------------------------------------
<C> <C> <S>
***JOHN J. ARTHUR, (54) Senior Vice President Director, Senior Vice
and Treasurer President and Treasurer,
A I M Advisors, Inc.; and
Vice President and
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 President Director and President,
A I M Capital Management,
Inc.; Director and Senior
Vice President, A I M
Management Group Inc. and
A I M Advisors, Inc.; and
Director, A I M
Distributors, Inc. and
AMVESCAP PLC.

- -------------------------------------------------------------------------------
***CAROL F. RELIHAN, (44) Senior Vice President Director, Senior Vice
and Secretary President, General Counsel
and Secretary, A I M
Advisors, Inc.; Vice
President, 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
and Assistant Treasurer Controller, A I M Advisors,
Inc.; and Assistant Vice
President and Assistant
Treasurer, Fund Management
Company.

- -------------------------------------------------------------------------------
MELVILLE B. COX, (55) Vice President Vice President and Chief
Compliance Officer, 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.

- -------------------------------------------------------------------------------
KAREN DUNN KELLEY, (38) Vice President Senior Vice President,
A I M Capital Management,
Inc.; and Vice President,
A I M Advisors, Inc.

- -------------------------------------------------------------------------------
J. ABBOTT SPRAGUE, (43) Vice President Director and President,
Fund Management Company;
Director, A I M Fund
Services, Inc.; and Senior
Vice President, A I M
Advisors, Inc. and A I M
Management Group Inc.
================================================================================
</TABLE>

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

A-6
<PAGE>

The Board of Directors has an Audit Committee, an Investments Committee, and
a 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 Fund'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 directors as a whole with respect to the Fund's fund
accounting or its internal accounting controls, and for considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors 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, and considering such matters as may from time to time be
set forth in a charter adopted by the Board of Directors 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 directors who are not interested persons
as long as the Fund maintains a distribution plan pursuant to Rule 12b-1 under
the 1940 Act, reviewing from time to time the compensation payable to the
disinterested directors, or considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors and such Committee.

All of the Fund's directors 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") or distributed and administered by FMC. Most of the Fund's
executive officers hold similar offices with some or all of such investment
companies.

REMUNERATION OF DIRECTORS

Each director is reimbursed for expenses incurred in connection with each
meeting of the Board of Directors or any Committee attended. The directors of
the Fund who do not serve as officers of the Fund are compensated for their
services according to a fee schedule which recognizes the fact that they also
serve as directors or trustees of certain other regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "AIM
Funds"). Each such director receives a fee, allocated among the AIM Funds for
which he or she serves as a director or trustee, which consists of an annual
retainer component and a meeting fee component.

Set forth below is information regarding compensation paid or accrued for
each director of the Fund:

<TABLE>
<CAPTION>
RETIREMENT TOTAL
AGGREGATE BENEFITS COMPENSATION
COMPENSATION ACCRUED BY ALL FROM ALL
DIRECTOR FROM FUND (1) AIM FUNDS (2) AIM FUNDS (3)
-------- -------------- -------------- --------------
<S> <C> <C> <C>
Charles T. Bauer................... -0- -0- -0-
Bruce L. Crockett.................. $8,165 $ 67,774 $ 84,000
Owen Daly II....................... 8,165 103,542 84,000
Edward K. Dunn, Jr.(4)............. 3,816 -0- -0-
Jack M. Fields..................... 8,165 -0- 70,500
Carl Frischling(5)................. 8,165 96,520 84,000
Robert H. Graham................... -0- -0- -0-
John F. Kroeger(6)................. 7,821 94,132 82,500
Prema Mathai-Davis(4).............. -0- -0- -0-
Lewis F. Pennock................... 8,165 55,777 84,000
Ian W. Robinson.................... 8,029 85,912 84,000
Louis S. Sklar..................... 8,076 84,370 83,500
</TABLE>
- ------

(1) The total amount of compensation deferred by all Directors of the Fund
during the fiscal year ended August 31, 1998, including interest earned
thereon, was $42,336.

(2) During the fiscal year ended August 31, 1998, the total amount of
expenses allocated to the Fund in respect of such retirement benefits was
$77,780. Data reflects compensation earned for the calendar year ended
December 31, 1997.

(3) Each Director serves as a director or trustee of a total of 12 registered
investment companies advised by AIM as of December 31, 1997 (comprised of
over 50 portfolios). Data reflects total compensation for the calendar
year ended December 31, 1997.

(4) Mr. Dunn and Ms. Mathai-Davis were not serving as Directors during the
calendar year ended December 31, 1997.

(5) The Fund paid the law firm of Kramer, Levin, Naftalis & Frankel $19,923
in legal fees for services provided to the Fund during the fiscal year
ended August 31, 1998. Mr. Frischling, a Director of the Fund, is a
partner in such firm.

(6) Mr. Kroeger resigned as a Director of the Fund on June 11, 1998 and on
that date became a consultant to the Fund.

A-7
<PAGE>

AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES

Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (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 Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director 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 director is entitled to receive an annual benefit
from the 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 director 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 director for the number of such Director's years of service
(not in excess of 10 years of service) completed with respect to any of the AIM
Funds. Such benefit is payable to each eligible director in quarterly
installments. If an eligible director dies after attaining the normal
retirement date but before receipt of any benefits under the Plan commences,
the director's surviving spouse (if any) shall receive a quarterly survivor's
benefit equal to 50% of the amount payable to the deceased director, for no
more than ten years beginning the first day of the calendar quarter following
the date of the director's death. Payments under the Plan are not secured or
funded by any AIM Fund.

Set forth below is a table that shows the estimated annual benefits payable
to an eligible director 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, Kroeger,
Pennock, Robinson, Sklar, and Ms. Mathai-Davis are 11, 11, 0, 1, 21, 20, 16,
11, 8 and 0 years, respectively.

ESTIMATED BENEFITS UPON RETIREMENT

<TABLE>
<CAPTION>
NUMBER OF
YEARS OF ANNUAL RETAINER
SERVICE WITH PAID BY ALL
THE AIM FUNDS AIM FUNDS
------------- ---------------
$90,000
-------
<S> <C>
10................................ $67,500
9................................ $60,750
8................................ $54,000
7................................ $47,000
6................................ $40,500
5................................ $33,750
</TABLE>

DEFERRED COMPENSATION AGREEMENTS

Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors elected to defer receipt of 100% of their
compensation payable by the Fund, and such amounts are placed into a deferral
account. Currently, the deferring directors may select various AIM Funds in
which all or part of their deferral account shall be deemed to be invested.
Distributions from the deferring directors' deferral accounts will be paid in
cash, in 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
director's retirement benefits commence under the Plan. The Fund's Board of
Directors, in its sole discretion, may accelerate or extend the distribution of
such deferral accounts after the deferring director's termination of service as
a director of the Fund. If a deferring director 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 director's death. The Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the deferring directors have the status of unsecured creditors of the
Fund and of each other AIM Fund from which they are deferring compensation.

During the fiscal year ended August 31, 1998, $36,460 in directors' fees and
expenses were allocated to the Portfolio.

INVESTMENT ADVISOR

A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-
1173, acts as the Portfolio's investment advisor pursuant to a Master
Investment Advisory Agreement (the "Advisory Agreement").

A-8
<PAGE>

AIM was organized in 1976 and, together with its subsidiaries, advises or
manages over 90 investment company portfolios. 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 services business since 1976, 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173. A I M 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
businesses in the United States, Europe and the Pacific Region. Certain of the
directors and officers of AIM are also executive officers of the Fund and their
affiliations are shown under "Directors and Officers."

AIM and the Fund 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 Directors 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.

Pursuant to the terms of the Advisory Agreement, AIM manages the investment
of the Portfolio's assets. 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 Fund's Board of Directors. AIM shall
not be liable to the Fund or its shareholders for any act or omission by AIM or
for any loss sustained by the Fund or its shareholders except in the case of
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.

As compensation for its services, AIM receives a monthly fee which is
calculated by applying the following annual rates to the average daily net
assets of the Portfolio:

<TABLE>
<CAPTION>
NET ASSETS RATE
---------- ----
<S> <C>
First $100 million.............................................. .20%
Over $100 million to $200 million............................... .15%
Over $200 million to $300 million............................... .10%
Over $300 million to $1.5 billion............................... .06%
Over $1.5 billion............................................... .05%
</TABLE>

The Advisory Agreement requires AIM to reduce its fee to the extent required
to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Portfolio's shares are
qualified for sale.

The Advisory Agreement provides that, upon the request of the Board of
Directors, 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
Directors, based upon a finding by the Board of Directors that the provision of
such services would be in the best interest of the Portfolio and its
shareholders. The Board of Directors has made such a finding and, accordingly,
the Fund has entered into a master administrative services agreement under
which AIM will provide the additional services described below under the
caption "Administrator."

Pursuant to the Advisory Agreement between the Fund and AIM currently in
effect and under an investment advisory agreement in effect prior to February
28, 1997 which provided for the same level of compensation to AIM, AIM received
fees from the Fund for the fiscal years ended August 31, 1998, 1997 and 1996,
with respect to the Portfolio, in the amounts of $4,251,522, $4,007,070 and
$3,007,431, respectively. During the fiscal years ended August 31, 1998, 1997
and 1996 AIM voluntarily waived no advisory fees with respect to the Portfolio.

The Advisory Agreement will continue from year to year, provided that it is
specifically approved at least annually by the Fund's Board of Directors and
the affirmative vote of a majority of the directors 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 Fund or AIM may terminate the
Advisory Agreement on 60 days' written notice without penalty. The Advisory
Agreement terminates automatically in the event of its "assignment," as defined
in the 1940 Act.

A-9
<PAGE>

ADMINISTRATOR

AIM also acts as the Portfolio's administrator pursuant to a Master
Administrative Services Agreement between AIM and the Fund (the "Administrative
Services Agreement").

Under the Administrative Services Agreement, AIM performs, or arranges for
the performance of, accounting and other administrative services for the
Portfolio which are not required to be performed by AIM under the Advisory
Agreement. 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 Fund and of persons working under his supervision for
maintaining the financial accounts and books and records of the Fund, 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 Fund's Board of Directors.

Under the Administrative Services Agreement and under a prior administrative
services agreement which provided for the same level of reimbursement to AIM,
AIM was reimbursed for the fiscal years ended August 31, 1998, 1997 and 1996 in
the amounts of $124,103, $114,738 and $126,321, respectively, for fund
accounting services for the Portfolio.

EXPENSES

Expenses of the Fund include, but are not limited to, fees paid to AIM under
the Advisory Agreement the charges and expenses of any registrar, any custodian
or depositary appointed by the Fund for the safekeeping of cash, portfolio
securities and other property, and any transfer, dividend or accounting agent
or agents appointed by the Fund; brokers' commissions chargeable to the Fund in
connection with portfolio securities transactions to which the Fund is a party;
all taxes, including securities issuance and transfer taxes, and fees payable
by the Fund to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Fund; all costs and expenses in connection with the registration and
maintenance of registration of the Fund and 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 Fund and supplements thereto to the Fund's shareholders; all
expenses of shareholders' and directors' meetings and of preparing, printing
and mailing of prospectuses, proxy statements and reports to shareholders; fees
and travel expenses of directors and director 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 Fund's shares; charges and expenses
of legal counsel, including counsel to the directors of the Fund who are not
"interested persons" (as defined in the 1940 Act) of the Fund or AIM, and of
independent accountants in connection with any matter relating to the Fund,
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
directors) of the Fund 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 Fund) 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 Fund's shares.

Expenses of the Fund which are not directly attributable to the operations of
either of the Portfolios are prorated among all classes of the Fund. Expenses
of the Fund except those listed in the next sentence are prorated among all
classes of such Portfolios. Distribution and service fees, transfer agency fees
and shareholder recordkeeping fees 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.

TRANSFER AGENT AND CUSTODIAN

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

A I M Fund Services, Inc. ("AFS"), a wholly owned subsidiary of AIM, P.O. Box
4497, Houston, Texas 77210-4497, serves as a transfer agent and dividend
disbursing agent for the shares of all classes of the Portfolio and receives an
annual fee from the Fund for its services in such capacity in the amount of
0.009% of average daily net assets of the Portfolio, payable monthly. Such
compensation may be changed from time to time as is agreed to by AFS and the
Fund.

A-10
<PAGE>

REPORTS

The Fund furnishes shareholders with semi-annual reports containing
information about the Fund and its operations, including a schedule of
investments held in the Portfolio and its financial statements. The annual
financial statements are audited by the Fund's independent auditors. The Board
of Directors 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>

PRINCIPAL HOLDERS OF SECURITIES

PRIME PORTFOLIO

To the best of the knowledge of the Fund, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of the Portfolio
as of October 30, 1998, and the percentage of the Portfolio's outstanding
shares owned by such shareholders as of such date are as follows:

<TABLE>
<CAPTION>
PERCENT OWNED
NAME AND ADDRESS OF
OF RECORD OWNER RECORD ONLY (a)
---------------- ----------------
CASH MANAGEMENT CLASS
---------------------
<S> <C>
THE BANK OF NEW YORK......................................... 23.08%
One Wall Street, 5th Floor
New York, NY 10286
BOST & CO. FBO THE KWELM PARTNERSHIP......................... 17.38%
P.O. Box 3198
Pittsburgh, PA 15230
CULLEN/FROST DISCOUNT BROKERS................................ 11.20%
P.O. Box 2358
San Antonio, TX 78299
OPPENHEIMER & CO............................................. 8.98%
Oppenheimer Tower
World Financial Tower
New York, NY 10281
IGT.......................................................... 8.54%
P.O. Box 10120
Reno, NV 89502
MELLON BANK NA............................................... 5.47%
P.O. Box 710
Pittsburgh, PA 15230
FUND SERVICES ASSOCIATES..................................... 5.31%
1875 Century Park East
Los Angeles, CA 90067
<CAPTION>
INSTITUTIONAL CLASS
-------------------
<S> <C>
COMERICA BANK................................................ 9.00%
P.O. Box 75000
Detroit, MI 48275-3455
FIRST TRUST/VAR & CO......................................... 8.45%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
WACHOVIA BANK AND TRUST NA TRUST OPERATIONS.................. 7.13%
P.O. Box 3075 Mc 31051
Winston-Salem, NC 27150
</TABLE>
- ------
(a) The Fund has no knowledge as to whether all or any portion of the shares
of the class owned of record are also owned beneficially.

A-12
<PAGE>

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY (a)
---------------- ----------------
<S> <C>
FROST NATIONAL BANK TX....................................... 7.01%
P.O. Box 2479
San Antonio, TX 78298
TRUST COMPANY BANK........................................... 6.07%
Center 3139
P.O. Box 105504
Atlanta, GA 30348
<CAPTION>
PERSONAL INVESTMENT CLASS
-------------------------
<S> <C>
THE BANK OF NEW YORK......................................... 58.93%
4 Fisher Lane
White Plains, NY 10603
CULLEN/FROST DISCOUNT BROKERS................................ 27.66%
P.O. Box 2358
San Antonio, TX 78299
<CAPTION>
PRIVATE INVESTMENT CLASS
------------------------
<S> <C>
HUNTINGTON CAPITAL CORP ..................................... 33.03%
41 S. High Street, 9th Floor
Columbus, OH 43287
HARRIS TRUST & SAVINGS BANK.................................. 18.27%
111 West Monroe St.
Lower Level East
Chicago, IL 60690
WORLD OMNI MASTER TRUST...................................... 10.22%
111 NW 12th Ave.
Deerfield Beach, FL 33442
FROST NATIONAL BANK TX....................................... 9.65%
P.O. Box 2479
San Antonio, TX 78298-2479
FIRST TRUST.................................................. 7.39%
Funds Control, Suite 0404
180 East Fifth St.
St. Paul, MN 55101
<CAPTION>
RESOURCE CLASS
--------------
<S> <C>
FIRST UNION CAPITAL MARKETS.................................. 41.26%
8739 Research Drive
capital markets
Charlotte, NC 28262-0675
HARRIS METHODIST HEALTH SYSTEM............................... 12.47%
600 East Las Colinas Blvd Ste 1550
Irving, TX 75039
</TABLE>

A-13
<PAGE>

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY (a)
---------------- --------------
<S> <C>
MELLON BANK................................................. 12.46%
P.O. Box 710
Pittsburgh, PA 15230-0710
HAMBRECHT & QUIST LLC....................................... 9.26%
One Bush Street, 10th Floor
San Francisco, CA 94104
HAMBRECHT & QUIST LLC....................................... 8.12%
230 Park Avenue Floor 19
New York, NY 10169
HARRIS METHODIST (TEXAS HEALTH RESOURCES)................... 7.40%
600 East Las Colinas Blvd Ste 1550
Irving, TX 75039
</TABLE>

- ------

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

AIM provided the initial capitalization for the Reserve Class of the
Portfolio, and, accordingly, as of the date of this Statement of Additional
Information, owned all the outstanding shares of such class. The Fund expects
that the sale of shares of such class to the public pursuant to its Prospectus
will promptly reduce the percentage of such shares owned by AIM to less than 1%
of the total shares outstanding of such class.

LIQUID ASSETS PORTFOLIO

To the best of the knowledge of the Fund, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of the Liquid
Assets Portfolio as of October 30, 1998, and the percentage of the Liquid
Assets Portfolio's outstanding shares owned by such shareholders as of such
date are as follows:

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY (a)
---------------- ----------------
CASH MANAGEMENT CLASS
---------------------
<S> <C>
OPPENHEIMER & CO. ........................................... 29.32%
World Financial Center
New York, NY 10281
HAMBRECHT & QUIST LLC........................................ 11.24%
1100 Newport Center Dr. 2nd Floor
Newport Beach, CA 92660
THE BANK OF NEW YORK......................................... 9.49%
One Wall Street, 2nd Floor
New York, NY 10286
</TABLE>
- ------
(a) The Fund has no knowledge as to whether all or any portion of the shares
of the class owned of record are also owned beneficially.

A-14
<PAGE>

<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY (a)
---------------- ----------------
<S> <C>
FUND SERVICES ASSOCIATES, INC................................ 8.79%
1875 Century Park East-Suite 1345
Los Angeles, CA 90067
EVEREN CLEARING CORP......................................... 8.27%
111 East Kilbourn Ave.
Milwaukee, WI 53202
SOUTHWEST BANK OF TEXAS, N.A. 498A1.......................... 7.35%
4400 Post Oak Pkwy
Houston, TX 77027
<CAPTION>
INSTITUTIONAL CLASS
-------------------
<S> <C>
STATE STREET BANK AND TRUST COMPANY.......................... 17.22%
108 Myrtle Street
North Quincy, MA 02171
BZW BARCLAYS GLOBAL INVESTORS, AS AGENT...................... 8.05%
980 9th St. Suite 600
Sacramento, CA 95814
COMERICA BANK................................................ 6.96%
P.O. Box 75000
Detroit, MI 48275
TRUST COMPANY BANK........................................... 5.40%
P.O. Box 105504
Atlanta, GA 30348
PORTICO FUNDS................................................ 5.35%
777 E. Wisc. Ave.
Milwaukee, WI 53202
<CAPTION>
PRIVATE INVESTMENT CLASS
------------------------
<S> <C>
MELLON BANK.................................................. 66.97%
P.O. Box 710
Pittsburgh, PA 15230-0710
CENTRAL CAROLINA BANK AND TRUST CO........................... 14.99%
111 Corcoran Street
Durham, NC 27702
<CAPTION>
RESOURCE CLASS
--------------
<S> <C>
MORGAN STANLEY TRUST COMPANY................................. 98.55%
1 Pierrepont Plaza
Brooklyn, NY 11201
</TABLE>
- ------
(a) The Fund has no knowledge as to whether all or any portion of the shares
of the class owned of record are also owned beneficially.

AIM provided the initial capitalization for the Personal Investment Class and
the Reserve Class of the Liquid Assets Portfolio and, accordingly, as of the
date of this Statement of Additional Information, owned all the outstanding
shares of each such class. The Fund expects that the sale of shares of such
classes to the public pursuant to its Prospectus will promptly reduce the
percentage of such shares owned by AIM to less than 1% of the total shares
outstanding of each such class.

To the best of the knowledge of the Fund, as of October 30, 1998, the
directors and officers of the Fund as a group beneficially owned less than 1%
of each class of either Portfolio's outstanding shares.

A-15
<PAGE>

PURCHASES AND REDEMPTIONS

A complete description of the manner by which shares of a particular class
may be purchased, redeemed or exchanged appears in each 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.

A "business day" of the Portfolio is any day on which commercial banks in the
New York Federal Reserve district 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.

REDEMPTIONS IN KIND

The portfolio will not redeem shares representing an interest in the
Portfolio in kind (i.e. by distributing its portfolio securities).

NET ASSET VALUE DETERMINATION

Shares of each class of the Portfolio are sold at net asset value of such
shares. 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, including Rule 2a-7 under the 1940 Act, which require the Portfolio
to adhere to certain conditions. These rules require that the Portfolio
maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase only instruments having remaining maturities of 397 calendar days or
less and invest only in securities determined by the Board of Directors to be
"Eligible Securities" and to present minimal credit risk to the Portfolio.

The Board of Directors is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Portfolio's price per
share at $1.00 as computed for the purpose of sales and redemptions. Such
procedures include review of the Portfolio's holdings by the Board of
Directors, 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
Directors determines that such a deviation exists, it will take such corrective
action as the Board of Directors deems necessary and appropriate, 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 Fund has entered into a Master Distribution Agreement (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 Fund--Directors and Officers"
and "General Information about the Fund -- Investment Advisor" for information
as to the affiliation of certain directors and officers of the Fund with FMC,
AIM and AIM Management.

The Distribution Agreement provides that FMC has the exclusive right to
distribute the 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
Portfolio 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 continue from year to year provided that it
is specifically approved at least annually by the Fund's Board of Directors and
the affirmative vote of the directors 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 Fund 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.

A-16
<PAGE>

DISTRIBUTION PLAN

The Fund has adopted a Master Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Pursuant to the Plan, the Fund may enter into
Shareholder Service Agreements ("Service Agreements") with selected broker-
dealers, banks, other financial institutions or their affiliates. Such firms
may receive compensation from the Portfolio for servicing investors as
beneficial owners of the shares of the Cash Management Class, Personal
Investment Class, Private Investment Class, Reserve Class and Resource Class of
the Portfolio. These services may include among other things: (i) answering
customer inquiries regarding the shares of these classes and the Portfolio;
(ii) assisting customers in changing dividend options, account designations and
addresses; (iii) performing sub-accounting; (iv) establishing and maintaining
shareholder accounts and records; (v) processing purchase and redemption
transactions; (vi) automatic investment of customer cash accounting balances in
shares of these classes; (vii) 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; (viii) arranging for bank wires; and (ix) such other services as the Fund
may request on behalf of the shares of these classes, 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.

For the fiscal year ended August 31, 1998, FMC received compensation pursuant
to the Plan in the amount of $719,155, or an amount equal to 0.08% of the
average daily net assets of the Cash Management Class, $581,804, or an amount
equal to 0.50% of the average daily net assets of the Personal Investment
Class, $809,804, or an amount equal to 0.30% of the average daily net assets of
the Private Investment Class, and $576,619, or an amount equal to 0.16% of the
average daily net assets of the Resource Class. With respect to the Cash
Management Class, $719,155 of such amount (or an amount equal to 0.08% of the
average daily net assets of the class) was paid to dealers and financial
institutions and $0 (or an amount equal to 0% of the average daily net assets
of the class) was retained by FMC. With respect to the Personal Investment
Class, $461,982 of such amount (or an amount equal to 0.40% of the average
daily net assets of the class) was paid to dealers and financial institutions
and $119,822 (or an amount equal to 0.10% of the average daily net assets of
the class) was retained by FMC. With respect to the Private Investment Class,
$692,373 of such amount (or an amount equal to 0.26% of the average daily net
assets of the class) was paid to dealers and financial institutions and
$117,431 (or an amount equal to 0.04% of the average daily net assets of the
class) was retained by FMC. With respect to the Resource Class, $576,413 of
such amount (or an amount equal to 0.16% of the average daily net assets of the
class) was paid to dealers and financial institutions and $206 (or an amount
equal to 0% of the average daily net assets of the class) was retained by FMC.

During the fiscal years ended August 31, 1998, 1997 and 1996 AIM voluntarily
waived fees with respect to the Portfolio in the amount of $1,154,715, $851,042
and $746,931, respectively.

FMC is a wholly owned subsidiary of AIM, an indirect wholly owned subsidiary
of AMVESCAP PLC. Charles T. Bauer, a Director and Chairman of the Fund and
Robert H. Graham, a Director and President of the Fund, own shares of AMVESCAP
PLC.

BANKING REGULATIONS

The Glass-Steagall Act and other applicable laws or regulations, 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 Fund and alternate
means for continuing the servicing of such shareholders would be sought. In
such event, changes in the operation of the Fund 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.

PERFORMANCE INFORMATION

As stated under the caption "Yield Information" in each Prospectus, yield
information for the shares of each class of the Portfolio may be obtained by
calling the Fund 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

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losses or unrealized appreciation or depreciation) 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 Fund may also furnish a
quotation of effective yield for the Class 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.

For the seven-day period ended August 31, 1998, the current yield and the
effective yield (which assumes the reinvestment of dividends for a 365-day year
and a return for the entire year equal to the annualized current yield for the
period) were 5.51% and 5.66%, for the Cash Management Class, were 5.59% and
5.74%, for the Institutional Class, were 5.09% and 5.22%, for the Personal
Investment Class, were 5.29% and 5.43%, for the Private Investment Class and
were 5.43% and 5.57%, for the Resource Class, respectively. These yields are
quoted for illustration purposes only. The yields for any other seven-day
period may be substantially different from the yields quoted above.

The Portfolio may compare the performance of a particular 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(R) 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 the yield of a class 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 Fund may reference the growth and variety of money market mutual funds
and AIM's innovation and participation in the industry.

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INVESTMENT PROGRAM AND RESTRICTIONS

INVESTMENT PROGRAM

The Portfolio may invest in certificates of deposit ("Eurodollar CDs") and
time deposits ("Eurodollar time deposits") of foreign branches of domestic
banks having total assets of $1.5 billion as of the date of their most recently
published financial statements. Accordingly, an investment in the Portfolio may
involve risks that are different in some respects from those incurred by an
investment company which invests only in debt obligations of U.S. domestic
issuers. Such risks include future political and economic developments, the
possible seizure or nationalization of foreign deposits, the possible
imposition of United Kingdom withholding taxes on interest income payable on
Eurodollar CDs or Eurodollar time deposits, and the possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on
Eurodollar CDs and Eurodollar time deposits.

Rule 2a-7 under the 1940 Act provides that a money market fund shall not
invest more than 5% of its total assets in securities issued by a single
issuer, provided that such a fund may invest more than 5% of its total assets
in the First Tier securities of a single issuer for a period of up to 3
business days after the purchase thereof if the money market fund is a
diversified investment company, provided further, that the fund may not make
more than one investment in accordance with the foregoing proviso at any time.
Under Rule 2a-7, for purposes of determining the percentage of a fund's total
assets that are invested in securities of an issuer, a repurchase agreement
shall be deemed to be an acquisition of the underlying securities, provided
that the obligation of the seller to repurchase the securities from the money
market fund is fully collateralized. To be fully collateralized, the collateral
must, among other things, consist entirely of U.S. Government securities or
securities that, at the time the repurchase agreement is entered into, are
rated in the highest rating category by the Requisite NRSROs. 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, that NRSRO.

The Portfolio may also lend its portfolio securities in amounts up to 33 1/3%
of its total assets to financial institutions in accordance with the investment
restrictions of the Portfolio. Such loans would involve risks of delay in
receiving additional collateral in the event the value of the collateral
decreased below the value of the securities loaned or of delay in recovering
the securities loaned or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will be made only
to borrowers deemed by AIM to be of good standing and only when, in AIM's
judgment, the income to be earned from the loans justifies the attendant risks.

ELIGIBLE SECURITIES

The Fund will invest in "Eligible Securities" as defined in Rule 2a-7 under
the 1940 Act, which the Fund's Board of Directors has determined to present
minimal credit risk.

COMMERCIAL PAPER RATINGS

The following is a description of the factors underlying the commercial paper
ratings of Moody's Investors Service ("Moody's"), Standard & Poor's Rating
Services ("S&P") and Fitch Investors Service, Inc. ("Fitch").

MOODY'S--The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation
of the issuer's products in relation to competition and customer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings
over a period of ten years; (7) financial strength of a parent company and the
relationship which exists with the issuer; and (8) recognition by the
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial paper is rated
P-1, P-2 or P-3.

S&P--Commercial paper rated A-1 by S&P has the following characteristics.
Liquidity ratios are adequate to meet cash requirements. Long-term senior debt
is rated "A" or better, although in some cases "BBB" credits may be allowed.
The issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow have an upward trend with allowance made for unusual
circumstances. Typically, the issuer's industry is well established and the
issuer has a strong position within the industry. The reliability and quality
of management is unquestioned. The relative strength or weakness of the above
factors determine whether the issuer's commercial paper is rated A-1, A-2 or A-
3.

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<PAGE>

FITCH--Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes. The short-term rating places greater emphasis than a long-
term rating on the existence of liquidity necessary to meet the issuer's
obligations in a timely manner. Fitch short-term ratings are as follows:

F-1

Exceptionally Strong Credit Quality. Issues assigned this rating are regarded
as having the strongest degree of assurance for timely payment.

F-2

Very Strong Credit Quality. Issues assigned this rating reflect an assurance
of timely payment only slightly less in degree than issues rated "F-1."

PLUS(+) AND MINUS (-)

Plus and minus signs are used with a rating symbol to indicate the relative
position of a credit within the rating category.

LOC

The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.

BOND RATINGS

The following is a description of the factors underlying the bond ratings of
Moody's, S&P and Fitch.

MOODY'S--The following are the two highest bond ratings of Moody's.

Aaa

Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.

S&P--The following are the two highest bond ratings of S&P.

AAA

Bonds rated AAA are the highest grade obligations. They possess the ultimate
degree of protection as to principal and interest. Market values of bonds rated
AAA move with interest rates, and hence provide the maximum safety on all
counts.

Bonds rated AA also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in small degree. Here, too, prices move
with the long-term money market.

FITCH--Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.

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The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.

Fitch ratings do not reflect any credit enhancement that may be provided by
insurance policies or financial guarantees unless otherwise indicated.

Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

Fitch ratings are not recommendations to buy, sell or hold any security.
Ratings do not comment on the adequacy of market price, the suitability of any
security for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.

Fitch ratings are based on information obtained from issuers, other obligors,
underwriters, their experts, and other sources Fitch believes to be reliable.
Fitch does not audit or verify the truth or accuracy of such information.
Ratings may be changed, suspended, or withdrawn as a result of changes in, or
the unavailability of, information or for other reasons.

AAA

Bonds rated AAA are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.

Bonds rated AA are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1."

INVESTMENT RESTRICTIONS

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

(1) concentrate 25% or more of the value of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and bank instruments, such as
CDs, bankers' acceptances, time deposits and bank repurchase agreements;

(2) purchase securities of any one issuer (other than obligations of the
U.S. Government, its agencies or instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Portfolio's total assets
would be invested in such issuer, except as permitted by Rule 2a-7 under 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;

(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 or obtain funds by entering into
reverse repurchase agreements, 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 except for reverse repurchase agreements and then only in an
amount up to 33 1/3% of the value of its total assets at the time of
borrowing or entering into a reverse repurchase agreement;

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

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(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

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

The following investment policy is not fundamental and may be changed by the
Board of Directors of the Fund without shareholder approval. 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 Fund. 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

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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 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 all 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 Fund's directors 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.

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Under the 1940 Act, certain persons affiliated with the Fund 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 Fund from purchasing a
security being publicly underwritten by a syndicate of which certain persons
affiliated with the Fund 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 Fund 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 Fund's Board of Directors and any such purchases are
reviewed at least quarterly by the Fund's Board of Directors and a
determination is made that all such purchases were effect 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 Fund was fair
and reasonable in relation to the fees charged by others performing similar
services. During the fiscal year ended August 31, 1998, no securities or
instruments were purchased by the Portfolio from issuers who paid placement
fees or other compensation to a broker affiliated with the Portfolio.

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 each 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 each Prospectus is not intended as a substitute for careful 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 (1) 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 (2) 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). 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.

A-24
<PAGE>

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 a class 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.

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.

The Portfolio will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of the ordinary income dividends and capital gain dividends
and, in certain cases, the proceeds of redemption of shares, paid to any
shareholder (1) who has provided either an incorrect tax identification number
or no number at all, (2) who is subject to backup withholding by the Internal
Revenue Service for failure to report the receipt of interest or dividend
income properly, or (3) who has failed to certify to the Fund that it is not
subject to backup withholding or that it is a corporation or other "exempt
recipient."

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. 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.

A-25
<PAGE>

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
December 18, 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 advisors as to the consequences of these and other state and
local tax rules affecting investment in the Fund.

A-26
<PAGE>

FINANCIAL STATEMENTS

FS
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
Short-Term Investments Co.:

We have audited the accompanying statement of assets and liabilities of the
Prime Portfolio (a series portfolio of Short-Term Investments Co.), including
the schedule of investments, as of August 31, 1998, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the four-year period then ended and the
period June 30, 1994 (date sales commenced for the Cash Management Class)
through August 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Prime Portfolio as of August 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the four-year period then ended and the period June 30, 1994 (date sales
commenced for the Cash Management Class) through August 31, 1994, in conformity
with generally accepted accounting principles.

KPMG Peat Marwick LLP

Houston, Texas
October 2, 1998

FS-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
Short-Term Investments Co.:

We have audited the accompanying statement of assets and liabilities of the
Prime Portfolio (a series portfolio of Short-Term Investments Co.), including
the schedule of investments, as of August 31, 1998, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Prime Portfolio as of August 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Houston, Texas
October 2, 1998

FS-2
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
Short-Term Investments Co.:

We have audited the accompanying statement of assets and liabilities of the
Prime Portfolio (a series portfolio of Short-Term Investments Co.), including
the schedule of investments, as of August 31, 1998, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Prime Portfolio as of August 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Houston, Texas

October 9, 1998

FS-3
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
Short-Term Investments Co.:

We have audited the accompanying statement of assets and liabilities of the
Prime Portfolio (a series portfolio of Short-Term Investments Co.), including
the schedule of investments, as of August 31, 1998, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Prime Portfolio as of August 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Houston, Texas

October 9, 1998

FS-4
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
Short-Term Investments Co.:

We have audited the accompanying statement of assets and liabilities of the
Prime Portfolio (a series portfolio of Short-Term Investments Co.), including
the schedule of investments, as of August 31, 1998, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the two-year period then ended and the
period January 16, 1996 (date sales commenced for the Resource Class) through
August 31, 1996. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Prime Portfolio as of August 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the two-year period then ended and the period January 16, 1996 (date sales
commenced for the Resource Class) through August 31, 1996, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

Houston, Texas
October 2, 1998

FS-5
<PAGE>

SCHEDULE OF INVESTMENTS
August 31, 1998

<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 76.64%/(a)/
BASIC INDUSTRIES - 5.65%
CHEMICALS - 5.02%
Bayer Corp.
5.50% 09/29/98 $ 25,000 $ 24,893,055
- --------------------------------------------------------------------------
5.51% 10/06/98 47,600 47,345,009
- --------------------------------------------------------------------------
Du Pont (E.I.) de Nemours and Co.
5.51% 09/02/98 25,000 24,996,174
- --------------------------------------------------------------------------
5.54% 09/03/98 30,470 30,460,622
- --------------------------------------------------------------------------
5.51% 09/04/98 21,585 21,575,089
- --------------------------------------------------------------------------
5.51% 09/11/98 30,000 29,954,083
- --------------------------------------------------------------------------
5.52% 09/24/98 50,000 49,823,667
- --------------------------------------------------------------------------
5.50% 09/29/98 25,000 24,893,055
- --------------------------------------------------------------------------
5.51% 09/29/98 22,000 21,905,718
- --------------------------------------------------------------------------
5.51% 10/02/98 25,000 24,881,382
- --------------------------------------------------------------------------
5.51% 10/08/98 22,000 21,875,413
- --------------------------------------------------------------------------
5.50% 10/22/98 25,000 24,805,208
- --------------------------------------------------------------------------
Henkel Corp.
5.51% 09/21/98 25,000 24,923,472
- --------------------------------------------------------------------------
5.51% 09/29/98 21,000 20,910,003
- --------------------------------------------------------------------------
393,241,950
- --------------------------------------------------------------------------
METAL MINING - 0.63%
Rio Tinto America, Inc.
5.51% 09/21/98 50,000 49,846,945
- --------------------------------------------------------------------------
Total Basic Industries 443,088,895
- --------------------------------------------------------------------------
CAPITAL GOODS - 2.46%
COMPUTERS & OFFICE EQUIPMENT - 1.79%
Electronic Data Systems Corp.
5.51% 09/09/98 25,000 24,969,389
- --------------------------------------------------------------------------
5.52% 09/22/98 26,000 25,916,280
- --------------------------------------------------------------------------
Xerox Credit Corp.
5.50% 09/24/98 40,000 39,859,444
- --------------------------------------------------------------------------
5.50% 09/30/98 50,000 49,778,472
- --------------------------------------------------------------------------
140,523,585
- --------------------------------------------------------------------------
MACHINERY - 0.67%
Dover Corp.
5.52% 09/10/98 23,000 22,968,260
- --------------------------------------------------------------------------
5.52% 09/16/98 29,500 29,432,150
- --------------------------------------------------------------------------
52,400,410
- --------------------------------------------------------------------------
Total Capital Goods 192,923,995
- --------------------------------------------------------------------------
</TABLE>

FS-6
<PAGE>

<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
CONSUMER DURABLES - 3.10%
AUTOMOBILE - 3.10%
Ford Motor Credit Co.
5.50% 09/14/98 $ 50,000 $ 49,900,695
- --------------------------------------------------------------------
5.52% 10/06/98 30,000 29,839,000
- --------------------------------------------------------------------
5.52% 10/07/98 50,000 49,724,000
- --------------------------------------------------------------------
General Motors Acceptance Corp.
5.52% 10/13/98 40,000 39,742,400
- --------------------------------------------------------------------
Toyota Motor Credit Corp.
5.49% 09/28/98 44,000 43,818,830
- --------------------------------------------------------------------
5.52% 09/30/98 30,000 29,866,600
- --------------------------------------------------------------------
Total Consumer Durables 242,891,525
- --------------------------------------------------------------------
CONSUMER NONDURABLES - 4.32%
BEVERAGES - 0.38%
Coca-Cola Co. (The)
5.52% 09/14/98 30,000 29,940,200
- --------------------------------------------------------------------
DRUGS - 1.13%
Abbott Laboratories
5.50% 09/23/98 66,000 65,778,166
- --------------------------------------------------------------------
Novartis Finance Corp.
5.505% 09/01/98 23,000 23,000,000
- --------------------------------------------------------------------
88,778,166
- --------------------------------------------------------------------
FOOD PROCESSING - 1.29%
Campbell Soup Co.
5.50% 09/17/98 20,000 19,951,111
- --------------------------------------------------------------------
Heinz (H.J.) Co.
5.51% 09/10/98 50,000 49,931,125
- --------------------------------------------------------------------
Sara Lee Corp.
5.49% 09/23/98 31,000 30,895,995
- --------------------------------------------------------------------
100,778,231
- --------------------------------------------------------------------
MULTIPLE INDUSTRY - 1.52%
PepsiCo, Inc.
5.49% 09/30/98 40,000 39,823,100
- --------------------------------------------------------------------
5.49% 10/09/98 40,000 39,768,200
- --------------------------------------------------------------------
5.50% 10/09/98 40,000 39,767,778
- --------------------------------------------------------------------
119,359,078
- --------------------------------------------------------------------
Total Consumer Nondurables 338,855,675
- --------------------------------------------------------------------
</TABLE>

FS-7
<PAGE>

<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
ENERGY - 1.36%
OIL & GAS - 1.36%
Exxon Imperial U.S., Inc.
5.50% 09/16/98 $ 25,000 $ 24,942,708
- ---------------------------------------------------------------------------
5.49% 10/02/98 31,700 31,550,138
- ---------------------------------------------------------------------------
Koch Industries, Inc.
5.50% 09/30/98 50,000 49,778,472
- ---------------------------------------------------------------------------
Total Energy 106,271,318
- ---------------------------------------------------------------------------
FINANCIAL - 59.75%
ASSET-BACKED SECURITIES - 47.37%
Asset Securitization Cooperative Corp.
5.53% 09/25/98 25,000 24,907,833
- ---------------------------------------------------------------------------
5.54% 09/28/98 50,000 49,792,250
- ---------------------------------------------------------------------------
5.52% 09/29/98 40,000 39,828,267
- ---------------------------------------------------------------------------
5.53% 09/29/98 77,000 76,668,815
- ---------------------------------------------------------------------------
5.55% 10/01/98 50,000 49,768,750
- ---------------------------------------------------------------------------
Centric Capital Corp.
5.54% 09/03/98 20,000 19,993,845
- ---------------------------------------------------------------------------
5.53% 09/14/98 25,000 24,950,076
- ---------------------------------------------------------------------------
5.52% 09/18/98 75,000 74,804,500
- ---------------------------------------------------------------------------
5.53% 09/21/98 33,887 33,782,892
- ---------------------------------------------------------------------------
5.54% 09/28/98 21,000 20,912,745
- ---------------------------------------------------------------------------
5.53% 09/29/98 28,500 28,377,418
- ---------------------------------------------------------------------------
5.54% 10/07/98 30,000 29,833,800
- ---------------------------------------------------------------------------
5.54% 10/16/98 25,000 24,826,875
- ---------------------------------------------------------------------------
Ciesco, L.P.
5.52% 09/24/98 25,000 24,911,833
- ---------------------------------------------------------------------------
Clipper Receivables Corp.
5.52% 09/01/98 50,000 50,000,000
- ---------------------------------------------------------------------------
5.52% 09/03/98 50,000 49,984,667
- ---------------------------------------------------------------------------
5.53% 09/16/98 40,000 39,907,833
- ---------------------------------------------------------------------------
5.52% 09/22/98 50,000 49,839,000
- ---------------------------------------------------------------------------
5.53% 10/01/98 50,000 49,769,583
- ---------------------------------------------------------------------------
5.52% 10/06/98 25,000 24,865,833
- ---------------------------------------------------------------------------
5.52% 10/08/98 37,346 37,134,124
- ---------------------------------------------------------------------------
5.52% 10/09/98 35,000 34,796,067
- ---------------------------------------------------------------------------
</TABLE>

FS-8
<PAGE>

<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET-BACKED SECURITIES - (CONTINUED)
Corporate Asset Funding Co., Inc.
5.50% 09/04/98 $ 50,000 $ 49,977,083
- ---------------------------------------------------------------------------
5.53% 09/23/98 50,000 49,831,028
- ---------------------------------------------------------------------------
5.52% 10/07/98 25,000 24,862,000
- ---------------------------------------------------------------------------
5.53% 10/16/98 50,000 49,654,375
- ---------------------------------------------------------------------------
Delaware Funding Corp.
5.52% 09/03/98 80,000 79,975,467
- ---------------------------------------------------------------------------
5.52% 09/04/98 40,000 39,981,600
- ---------------------------------------------------------------------------
5.55% 09/11/98 25,000 24,961,458
- ---------------------------------------------------------------------------
5.52% 09/15/98 48,445 48,341,005
- ---------------------------------------------------------------------------
5.54% 09/15/98 40,000 39,913,822
- ---------------------------------------------------------------------------
5.53% 09/18/98 23,202 23,141,411
- ---------------------------------------------------------------------------
5.52% 09/24/98 45,733 45,571,715
- ---------------------------------------------------------------------------
Edison Asset Securitization, L.L.C.
5.53% 09/03/98 28,979 28,970,097
- ---------------------------------------------------------------------------
5.53% 09/08/98 50,000 49,946,236
- ---------------------------------------------------------------------------
5.53% 09/11/98 20,000 19,969,278
- ---------------------------------------------------------------------------
5.53% 09/18/98 30,000 29,921,658
- ---------------------------------------------------------------------------
5.54% 10/05/98 39,000 38,795,943
- ---------------------------------------------------------------------------
5.53% 10/13/98 30,000 29,806,450
- ---------------------------------------------------------------------------
5.54% 10/16/98 18,725 18,595,329
- ---------------------------------------------------------------------------
5.52% 10/23/98 43,933 43,582,708
- ---------------------------------------------------------------------------
Falcon Asset Securitization Corp.
5.53% 09/11/98 25,000 24,961,597
- ---------------------------------------------------------------------------
5.53% 09/14/98 35,000 34,930,107
- ---------------------------------------------------------------------------
5.53% 10/20/98 34,725 34,463,627
- ---------------------------------------------------------------------------
5.53% 10/26/98 20,000 19,831,028
- ---------------------------------------------------------------------------
Fleet Funding Corp.
5.53% 09/01/98 62,933 62,933,000
- ---------------------------------------------------------------------------
5.53% 09/09/98 44,578 44,523,218
- ---------------------------------------------------------------------------
5.55% 09/09/98 74,271 74,179,400
- ---------------------------------------------------------------------------
5.55% 09/14/98 22,805 22,759,295
- ---------------------------------------------------------------------------
5.52% 09/17/98 25,000 24,938,667
- ---------------------------------------------------------------------------
5.53% 09/17/98 40,000 39,901,689
- ---------------------------------------------------------------------------
5.52% 10/02/98 30,000 29,857,400
- ---------------------------------------------------------------------------
5.52% 10/21/98 32,011 31,765,582
- ---------------------------------------------------------------------------
</TABLE>

FS-9
<PAGE>

<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET-BACKED SECURITIES - (CONTINUED)
Monte Rosa Capital Corp.
5.53% 09/03/98 $ 23,662 $ 23,654,731
- ---------------------------------------------------------------------------
5.53% 09/08/98 25,617 25,589,455
- ---------------------------------------------------------------------------
5.53% 09/11/98 30,000 29,953,917
- ---------------------------------------------------------------------------
5.54% 09/25/98 33,227 33,104,282
- ---------------------------------------------------------------------------
5.54% 10/14/98 86,000 85,430,919
- ---------------------------------------------------------------------------
5.53% 10/14/98 34,388 34,160,858
- ---------------------------------------------------------------------------
5.53% 10/15/98 36,100 35,856,004
- ---------------------------------------------------------------------------
5.54% 10/16/98 50,000 49,653,750
- ---------------------------------------------------------------------------
5.53% 10/23/98 20,000 19,840,244
- ---------------------------------------------------------------------------
5.55% 10/23/98 38,444 38,135,807
- ---------------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.55% 09/10/98 50,000 49,930,625
- ---------------------------------------------------------------------------
5.53% 09/18/98 30,000 29,921,658
- ---------------------------------------------------------------------------
5.52% 09/30/98 25,000 24,888,833
- ---------------------------------------------------------------------------
5.56% 10/02/98 39,650 39,460,165
- ---------------------------------------------------------------------------
Quincy Capital Corp.
5.53% 09/14/98 40,000 39,920,122
- ---------------------------------------------------------------------------
5.53% 09/17/98 40,000 39,901,689
- ---------------------------------------------------------------------------
5.53% 09/18/98 30,000 29,921,658
- ---------------------------------------------------------------------------
5.54% 09/18/98 25,000 24,934,597
- ---------------------------------------------------------------------------
5.54% 10/09/98 40,000 39,766,089
- ---------------------------------------------------------------------------
Receivables Capital Corp.
5.53% 09/11/98 36,130 36,074,500
- ---------------------------------------------------------------------------
5.54% 09/15/98 30,075 30,010,205
- ---------------------------------------------------------------------------
5.53% 10/09/98 40,000 39,766,511
- ---------------------------------------------------------------------------
5.53% 10/16/98 37,183 36,925,972
- ---------------------------------------------------------------------------
Riverwoods Funding Corp.
5.55% 09/01/98 25,000 25,000,000
- ---------------------------------------------------------------------------
5.52% 09/08/98 35,000 34,962,434
- ---------------------------------------------------------------------------
5.52% 09/16/98 30,000 29,931,000
- ---------------------------------------------------------------------------
5.53% 09/17/98 40,000 39,901,689
- ---------------------------------------------------------------------------
5.51% 10/14/98 30,000 29,802,558
- ---------------------------------------------------------------------------
</TABLE>

FS-10
<PAGE>

<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
ASSET-BACKED SECURITIES - (CONTINUED)
Sheffield Receivables Corp.
5.57% 09/02/98 $ 20,000 $ 19,996,905
- -----------------------------------------------------------------------------
5.545% 09/22/98 25,000 24,919,135
- -----------------------------------------------------------------------------
5.54% 09/23/98 25,000 24,915,361
- -----------------------------------------------------------------------------
5.54% 09/25/98 75,000 74,723,000
- -----------------------------------------------------------------------------
5.56% 09/25/98 35,000 34,870,267
- -----------------------------------------------------------------------------
5.565% 09/28/98 40,000 39,833,050
- -----------------------------------------------------------------------------
5.55% 09/28/98 44,609 44,423,315
- -----------------------------------------------------------------------------
5.54% 10/23/98 25,630 25,424,903
- -----------------------------------------------------------------------------
Variable Funding Capital
5.54% 10/05/98 40,000 39,790,711
- -----------------------------------------------------------------------------
5.53% 10/08/98 30,000 29,829,492
- -----------------------------------------------------------------------------
5.54% 10/08/98 40,000 39,772,245
- -----------------------------------------------------------------------------
5.54% 10/13/98 50,000 49,676,833
- -----------------------------------------------------------------------------
5.52% 10/15/98 50,000 49,662,667
- -----------------------------------------------------------------------------
5.53% 10/15/98 50,000 49,662,056
- -----------------------------------------------------------------------------
5.54% 10/15/98 50,000 49,661,444
- -----------------------------------------------------------------------------
5.52% 10/21/98 40,000 39,693,333
- -----------------------------------------------------------------------------
5.53% 10/22/98 40,000 39,686,633
- -----------------------------------------------------------------------------
3,713,441,901
- -----------------------------------------------------------------------------
BROKERAGE/INVESTMENTS - 8.91%
Bear, Stearns & Co. Inc.
5.53% 09/28/98 40,000 39,834,100
- -----------------------------------------------------------------------------
Credit Suisse First Boston Corp.
5.52% 09/02/98 30,000 29,995,400
- -----------------------------------------------------------------------------
5.53% 09/09/98 50,000 49,938,556
- -----------------------------------------------------------------------------
5.52% 09/10/98 40,000 39,944,800
- -----------------------------------------------------------------------------
5.52% 10/19/98 25,000 24,816,000
- -----------------------------------------------------------------------------
Merrill Lynch & Co. Inc.
5.52% 09/04/98 50,000 49,977,000
- -----------------------------------------------------------------------------
5.52% 09/08/98 35,000 34,962,434
- -----------------------------------------------------------------------------
5.53% 09/16/98 40,000 39,907,833
- -----------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover &
Co.
5.50% 09/09/98 40,000 39,951,111
- -----------------------------------------------------------------------------
5.51% 09/15/98 50,000 49,892,861
- -----------------------------------------------------------------------------
5.51% 09/17/98 50,000 49,877,556
- -----------------------------------------------------------------------------
</TABLE>

FS-11
<PAGE>

<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
BROKERAGE/INVESTMENTS - (CONTINUED)
Salomon Smith Barney Holdings Inc.
5.53% 09/02/98 $ 80,000 $ 79,987,711
- -------------------------------------------------------------------------
5.53% 09/08/98 50,000 49,946,236
- -------------------------------------------------------------------------
5.53% 09/10/98 50,000 49,930,875
- -------------------------------------------------------------------------
5.53% 10/07/98 30,000 29,834,100
- -------------------------------------------------------------------------
5.53% 10/13/98 40,000 39,741,933
- -------------------------------------------------------------------------
698,538,506
- -------------------------------------------------------------------------
INSURANCE (LIFE) - 1.24%
Metlife Funding, Inc.
5.505% 09/11/98 19,900 19,869,569
- -------------------------------------------------------------------------
5.51% 09/22/98 24,637 24,557,813
- -------------------------------------------------------------------------
5.52% 09/22/98 28,419 28,327,491
- -------------------------------------------------------------------------
Prudential Funding Corp.
5.53% 09/08/98 25,000 24,973,118
- -------------------------------------------------------------------------
97,727,991
- -------------------------------------------------------------------------
PERSONAL CREDIT - 0.64%
Associates Corp. of North America
5.53% 09/24/98 50,000 49,823,347
- -------------------------------------------------------------------------
MISCELLANEOUS - 0.57%
AIG Funding, Inc.
5.50% 09/21/98 25,000 24,923,612
- -------------------------------------------------------------------------
USAA Capital Corporation
5.50% 09/14/98 20,000 19,960,278
- -------------------------------------------------------------------------
44,883,890
- -------------------------------------------------------------------------
MULTIPLE INDUSTRY - 1.02%
American Express Co.
5.52% 09/30/98 30,000 29,866,601
- -------------------------------------------------------------------------
General Electric Capital Corp.
5.52% 09/15/98 50,000 49,892,667
- -------------------------------------------------------------------------
79,759,268
- -------------------------------------------------------------------------
Total Financial 4,684,174,903
- -------------------------------------------------------------------------
Total Commercial Paper (Cost -
$6,008,206,311) 6,008,206,311
- -------------------------------------------------------------------------
</TABLE>

FS-12
<PAGE>

<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
BANK NOTES - 0.32%
First National Bank, Chicago
5.545% (Cost - $25,000,000) 09/30/98 $ 25,000 $ 25,000,000
- -------------------------------------------------------------------------------
MASTER NOTE AGREEMENTS - 3.98%
Goldman Sachs Group, L.P.
5.656%/(b)/ 10/19/98 42,500 42,500,000
- -------------------------------------------------------------------------------
Merrill Lynch Mortgage Capital Inc.
6.093%/(c)/ 08/17/99 205,500 205,500,000
- -------------------------------------------------------------------------------
Morgan (J.P.) Securities Inc.
5.883%/(b)/ 10/05/98 64,000 64,000,000
- -------------------------------------------------------------------------------
Total Master Note Agreements (Cost -
$312,000,000) 312,000,000
- -------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 6,345,206,311
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 19.50%/(d)/
B.T. Securities Corp.
5.80%/(e)/ -- 142,000 142,000,000
- -------------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
5.82%/(f)/ -- 170,000 170,000,000
- -------------------------------------------------------------------------------
5.80%/(g)/ -- 50,000 50,000,000
- -------------------------------------------------------------------------------
Chase Securities, Inc.
5.82%/(h)/ 09/01/98 200,000 200,000,000
- -------------------------------------------------------------------------------
CIBC Oppenheimer Corp.
5.82%/(i)/ -- 300,000 300,000,000
- -------------------------------------------------------------------------------
Salomon Smith Barney Inc.
5.82%/(j)/ -- 400,000 400,000,000
- -------------------------------------------------------------------------------
Warburg Dillon Read LLC
5.79%/(k)/ 09/01/98 266,626 266,625,545
- -------------------------------------------------------------------------------
Total Repurchase Agreements (Cost -
$1,528,625,545) 1,528,625,545
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.44% 7,873,831,856/(l)/
- -------------------------------------------------------------------------------
OTHER LIABILITIES LESS ASSETS - (0.44%) (34,534,013)
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $7,839,297,843
- -------------------------------------------------------------------------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
/(a)/ Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at
the time of purchase by the Portfolio.
/(b)/ The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon seven business days' notice. Interest rates
on master notes are redetermined periodically. Rate shown is the rate in
effect on 08/31/98.
/(c)/ The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon two business days' notice. Interest rates on
master notes are redetermined periodically. Rate shown is the rate in
effect on 08/31/98.

FS-13
<PAGE>

NOTES TO SCHEDULE OF INVESTMENTS:--(CONTINUED)

/(d)/ Collateral on repurchase agreements, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Portfolio upon entering into the repurchase agreement. The collateral is
marked to market daily to ensure its market value is at least 102% of the
sales price of the repurchase agreement. The investments in some
repurchase agreements are through participation in joint accounts with
other mutual funds, private accounts and certain non-registered
investment companies managed by the investment advisor or its affiliates.
/(e)/ Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $392,000,000 U.S. Government obligations, 0% to 8.875%
due 08/15/99 to 02/15/19 with an aggregate market value at 08/31/98 of
$402,895,145.
/(f)/ Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $403,989,517 U.S. Government obligations, 0% to 9.00%
due 01/01/01 to 09/01/33 with an aggregate market value at 08/31/98 of
$206,156,630.
/(g)/ Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $951,236,000 U.S. Government obligations, 0% to 11.25%
due 08/15/02 to 08/15/27 with an aggregate market value at 08/31/98 of
$306,453,166.
/(h)/ Entered into 08/31/98 with a maturing value of $200,032,333.
Collateralized by $472,493,303 U.S. Government obligations, 0% to 9.00%
due 11/01/99 to 02/01/37 with an aggregate market value at 08/31/98 of
$204,002,337.
/(i)/ Open repurchase agreement. Either party may terminate the agreement upon
demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $438,211,831 U.S. Government obligations, 4.50% to
8.50% due 10/01/00 to 04/01/34 with an aggregate market value at 08/31/98
of $306,000,000.
/(j)/ Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $1,049,866,000 U.S. Government obligations, 0% to
10.70% due 09/01/98 to 12/15/43 with an aggregate market value at
08/31/98 of $872,100,776.
/(k)/ Joint repurchase agreement entered into 08/31/98 with a maturing value of
$1,000,160,833. Collateralized by $1,958,825,000 U.S. Government
obligations, 0% to 5.50% due 11/15/98 to 02/15/27 with an aggregate
market value at 08/31/98 of $1,020,108,316.
/(l)/ Also represents cost for federal income tax purposes.

See Notes to Financial Statements.

FS-14
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
August 31, 1998

<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $6,345,206,311
- ------------------------------------------------------------------------
Repurchase agreements 1,528,625,545
- ------------------------------------------------------------------------
Interest receivable 1,435,014
- ------------------------------------------------------------------------
Investment for deferred compensation plan 105,828
- ------------------------------------------------------------------------
Other assets 455,186
- ------------------------------------------------------------------------
Total assets 7,875,827,884
- ------------------------------------------------------------------------

LIABILITIES:
Payables for:
Dividends 35,235,485
- ------------------------------------------------------------------------
Deferred compensation 105,828
- ------------------------------------------------------------------------
Accrued administrative services fees 11,154
- ------------------------------------------------------------------------
Accrued advisory fees 355,420
- ------------------------------------------------------------------------
Accrued distribution fees 306,202
- ------------------------------------------------------------------------
Accrued transfer agent fees 96,800
- ------------------------------------------------------------------------
Accrued operating expenses 419,152
- ------------------------------------------------------------------------
Total liabilities 36,530,041
- ------------------------------------------------------------------------
NET ASSETS $7,839,297,843
- ------------------------------------------------------------------------
NET ASSETS:
Institutional Class $5,843,813,421
- ------------------------------------------------------------------------
Private Investment Class $ 294,811,037
- ------------------------------------------------------------------------
Personal Investment Class $ 140,086,733
- ------------------------------------------------------------------------
Cash Management Class $ 862,207,074
- ------------------------------------------------------------------------
Resource Class $ 698,379,578
- ------------------------------------------------------------------------
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Institutional Class 5,843,818,199
- ------------------------------------------------------------------------
Private Investment Class 294,811,267
- ------------------------------------------------------------------------
Personal Investment Class 140,086,842
- ------------------------------------------------------------------------
Cash Management Class 862,207,748
- ------------------------------------------------------------------------
Resource Class 698,380,125
- ------------------------------------------------------------------------
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
- ------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements.

FS-15
<PAGE>

STATEMENT OF OPERATIONS
For the year ended August 31, 1998

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $433,045,612
- -------------------------------------------------------------------

EXPENSES:
Advisory fees 4,251,522
- -------------------------------------------------------------------
Custodian fees 438,399
- -------------------------------------------------------------------
Administrative services fees 124,103
- -------------------------------------------------------------------
Directors' fees and expenses 36,460
- -------------------------------------------------------------------
Transfer agent fees 816,541
- -------------------------------------------------------------------
Distribution fees (Note 2) 3,842,097
- -------------------------------------------------------------------
Other 1,112,802
- -------------------------------------------------------------------
Total expenses 10,621,924
- -------------------------------------------------------------------
Less: Fee waivers (1,154,715)
- -------------------------------------------------------------------
Net expenses 9,467,209
- -------------------------------------------------------------------
Net investment income 423,578,403
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $423,578,403
- -------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements.

FS-16
<PAGE>

STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1998 and 1997

<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 423,578,403 $ 385,469,863
- ----------------------------------------------------------------------------
Net realized gain on sales of investments -- 2,155
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 423,578,403 385,472,018
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (334,784,531) (334,619,312)
- ----------------------------------------------------------------------------
Private Investment Class (14,188,012) (11,638,406)
- ----------------------------------------------------------------------------
Personal Investment Class (5,889,522) (4,703,034)
- ----------------------------------------------------------------------------
Cash Management Class (49,287,200) (28,088,448)
- ----------------------------------------------------------------------------
Resource Class (19,429,138) (6,420,663)
- ----------------------------------------------------------------------------
Capital stock transactions-net (See Note 4) 984,587,209 702,760,124
- ----------------------------------------------------------------------------
Net increase in net assets 984,587,209 702,762,279
- ----------------------------------------------------------------------------

NET ASSETS:
Beginning of period 6,854,710,634 6,151,948,355
- ----------------------------------------------------------------------------
End of period $7,839,297,843 $6,854,710,634
- ----------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $7,839,304,181 $6,854,716,972
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investments (6,338) (6,338)
- ----------------------------------------------------------------------------
$7,839,297,843 $6,854,710,634
- ----------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements.

FS-17
<PAGE>

NOTES TO FINANCIAL STATEMENTS
August 31, 1998

NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Co. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end series diversified management
investment company. The Fund is organized as a Maryland corporation consisting
of two different portfolios, each of which offers separate series of shares:
the Prime Portfolio and the Liquid Assets Portfolio. Information presented in
these financial statements pertains only to the Prime Portfolio (the
"Portfolio"), with the assets, liabilities and operations of each portfolio
accounted for separately. The Portfolio consists of five different classes of
shares: the Institutional Class, the Private Investment Class, the Personal
Investment Class, the Cash Management Class and the Resource Class. Matters
affecting each class are voted on exclusively by the shareholders of each
class. The Portfolio is a money market fund whose objective is the
maximization of current income to the extent consistent with the preservation
of capital and the maintenance of liquidity.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio's securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter assumes a
constant amortization to maturity of any discount or premium.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
discounts on investments, is accrued daily. Dividends to shareholders are
declared daily and are paid on the first business day of the following
month.
C. Federal Income Taxes - The Portfolio intends to comply with the
requirements of the Internal Revenue Code necessary to qualify as a
regulated investment company and, as such, will not be subject to federal
income taxes on otherwise taxable income (including net realized capital
gains) which is distributed to shareholders. Therefore, no provision for
federal income taxes is recorded in the financial statements.
D. Expenses - Distribution expenses directly attributable to a class of shares
are charged to that class's operations. All other expenses which are
attributable to more than one class are allocated among the classes.

NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, AIM receives a monthly fee with respect to the Portfolio calculated
by applying a monthly rate, based upon the following annual rates, to the
average daily net assets of the Portfolio:

<TABLE>
<CAPTION>
Net Assets RATE
- ----------------------------------------
<S> <C>
First $100 million 0.20%
- ----------------------------------------
Over $100 million to $200 million 0.15%
- ----------------------------------------
Over $200 million to $300 million 0.10%
- ----------------------------------------
Over $300 million to $1.5 billion 0.06%
- ----------------------------------------
Over $1.5 billion 0.05%
- ----------------------------------------
</TABLE>

The Portfolio, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Portfolio. During the year ended August 31, 1998,
the Portfolio reimbursed AIM $124,103 for such services.
The Portfolio, pursuant to a transfer agency and service agreement, has
agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer
agent and shareholder services to the Portfolio. On September 20, 1997, the
Board of Directors of the Fund approved the appointment of AFS as transfer
agent of the Fund effective December 29, 1997. During the year ended August
31, 1998, the Portfolio paid AFS $464,197 for such services. Prior to the
effective date of the agreement with AFS, the Portfolio paid A I M
Institutional Fund Services, Inc. $227,922 pursuant to a transfer agency and
shareholder services agreement for the period September 1, 1997 through
December 28, 1997.

FS-18
<PAGE>

Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund has adopted a master distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class of the Portfolio. The Plan provides that the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class may pay FMC up to a maximum annual rate of 0.50%, 0.75%,
0.10% and 0.20%, respectively, of the average daily net assets attributable to
such class. Of this amount, the Fund may pay an asset-based sales charge to FMC
and the Fund may pay a service fee of (a) 0.25% of the average daily net assets
of each of the Private Investment Class and the Personal Investment Class, (b)
0.10% of the average daily net assets of the Cash Management Class and (c)
0.20% of the average daily net assets of the Resource Class, to selected banks,
broker-dealers and other financial institutions who offer continuing personal
shareholder services to their customers who purchase and own shares of the
Private Investment Class, the Personal Investment Class, the Cash Management
Class or the Resource Class. Any amounts not paid as a service fee under such
Plan would constitute an asset-based sales charge. The Plan also imposes a cap
on the total amount of sales charges, including asset-based sales charges, that
may be paid by the Portfolio with respect to each class. During the year ended
August 31, 1998, the Private Investment Class, the Personal Investment Class,
the Cash Management Class and the Resource Class paid $809,804, $581,804,
$719,155 and $576,619, respectively, as compensation under the Plan. FMC waived
fees of $1,154,715 for the same period. Certain officers and directors of the
Fund are officers of AIM, FMC and AFS.
During the year ended August 31, 1998, the Portfolio paid legal fees of
$19,923 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Fund.

NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Fund may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.

NOTE 4-CAPITAL STOCK
Changes in capital stock during the years ended August 31, 1998 and 1997 were
as follows.

<TABLE>
<CAPTION>
1998 1997
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 70,953,094,776 $ 70,953,094,776 77,017,818,307 $ 77,017,818,307
- --------------------------------------------------------------------------------------------
Private Investment
Class 2,265,361,261 2,265,361,261 1,686,727,915 1,686,727,915
- --------------------------------------------------------------------------------------------
Personal Investment
Class 1,442,106,992 1,442,106,992 1,399,754,929 1,399,754,929
- --------------------------------------------------------------------------------------------
Cash Management Class 10,266,695,255 10,266,695,255 6,007,746,062 6,007,746,062
- --------------------------------------------------------------------------------------------
Resource Class 5,571,480,416 5,571,480,416 2,959,856,289 2,959,856,289
- --------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 25,834,568 25,834,568 20,826,765 20,826,765
- --------------------------------------------------------------------------------------------
Private Investment
Class 6,616,509 6,616,509 6,892,975 6,892,975
- --------------------------------------------------------------------------------------------
Personal Investment
Class 5,817,504 5,817,504 4,636,763 4,636,763
- --------------------------------------------------------------------------------------------
Cash Management Class 27,781,043 27,781,043 19,021,334 19,021,334
- --------------------------------------------------------------------------------------------
Resource Class 16,446,253 16,446,253 3,857,837 3,857,837
- --------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (70,728,159,503) (70,728,159,503) (76,710,204,729) (76,710,204,729)
- --------------------------------------------------------------------------------------------
Private Investment
Class (2,212,613,562) (2,212,613,562) (1,667,619,183) (1,667,619,183)
- --------------------------------------------------------------------------------------------
Personal Investment
Class (1,405,052,971) (1,405,052,971) (1,419,820,390) (1,419,820,390)
- --------------------------------------------------------------------------------------------
Cash Management Class (10,199,573,686) (10,199,573,686) (5,766,709,619) (5,766,709,619)
- --------------------------------------------------------------------------------------------
Resource Class (5,051,247,646) (5,051,247,646) (2,860,025,131) (2,860,025,131)
- --------------------------------------------------------------------------------------------
Net increase 984,587,209 $ 984,587,209 702,760,124 $ 702,760,124
- --------------------------------------------------------------------------------------------
</TABLE>

FS-19
<PAGE>

NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Cash Management Class
capital stock outstanding during each of the years in the four-year period
ended August 31, 1998 and the period June 30, 1994 (date sales commenced)
through August 31, 1994.

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
- ------------------------- -------- -------- -------- -------- -----
Income from investment
operations:
Net investment income 0.05 0.05 0.05 0.06 0.01
- ------------------------- -------- -------- -------- -------- -----
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.06) (0.01)
- ------------------------- -------- -------- -------- -------- -----
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
- ------------------------- -------- -------- -------- -------- -----
Total return 5.62% 5.45% 5.55% 5.71% 4.34%/(a)/
- ------------------------- -------- -------- -------- -------- -----
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $862,207 $767,304 $507,247 $194,479 $372
- ------------------------- -------- -------- -------- -------- -----
Ratio of expenses to
average net assets/(b)/ 0.17%/(c)/ 0.17% 0.17% 0.17% 0.14%/(a)/
- ------------------------- -------- -------- -------- -------- -----
Ratio of net investment
income to average net
assets/(d)/ 5.48%/(c)/ 5.33% 5.38% 5.69% 4.26%/(a)/
- ------------------------- -------- -------- -------- -------- -----
</TABLE>
/(a)/ Annualized.
/(b)/ After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 0.19%, 0.19%, 0.19%, 0.32% and 0.67% (annualized) for the periods
1998-1994, respectively.
/(c)/ Ratios are based on average net assets of $898,943,542.
/(d)/ After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.46%, 5.31%, 5.36%, 5.54% and 3.73% (annualized) for
the periods 1998-1994, respectively.

FS-20
<PAGE>

NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Institutional Class
capital stock outstanding during each of the years in the five-year period
ended August 31, 1998.

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income 0.06 0.05 0.05 0.06 0.04
- ----------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income (0.06) (0.05) (0.05) (0.06) (0.04)
- ----------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- ---------- ---------- ---------- ---------- ----------
Total return 5.71% 5.54% 5.64% 5.80% 3.64%
- ----------------------- ---------- ---------- ---------- ---------- ----------
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $5,843,813 $5,593,043 $5,264,601 $3,752,693 $4,080,753
- ----------------------- ---------- ---------- ---------- ---------- ----------
Ratio of expenses to
average net assets 0.09%/(a)/ 0.09% 0.09% 0.09% 0.08%
- ----------------------- ---------- ---------- ---------- ---------- ----------
Ratio of net investment
income to
average net assets 5.56%/(a)/ 5.40% 5.48% 5.64% 3.58%
- ----------------------- ---------- ---------- ---------- ---------- ----------
</TABLE>
(a) Ratios are based on average net assets of $6,017,417,344.

FS-21
<PAGE>

NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Personal Investment
Class capital stock outstanding during each of the years in the five-year
period ended August 31, 1998.

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- ------- --------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- -------- ------- --------- ------- ------
Income from investment
operations:
Net investment income 0.05 0.05 0.05 0.05 0.03
- ----------------------- -------- ------- --------- ------- ------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- ----------------------- -------- ------- --------- ------- ------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- -------- ------- --------- ------- ------
Total return 5.18% 5.01% 5.11% 5.27% 3.12%
- ----------------------- -------- ------- --------- ------- ------
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $140,087 $97,215 $112,645 $99,630 $3,065
- ----------------------- -------- ------- --------- ------- ------
Ratio of expenses to
average net assets/(a)/ 0.59%/(b)/ 0.59% 0.59% 0.59% 0.58%
- ----------------------- -------- ------- --------- ------- ------
Ratio of net investment
income to average net
assets/(c)/ 5.06%/(b)/ 4.89% 4.99% 5.23% 3.34%
- ----------------------- -------- ------- --------- ------- ------
</TABLE>
/(a)/ After fee waivers and/or expense reimbursement. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 0.84%, 0.84%, 0.89%, 0.86% and 2.39% for the periods 1998-1994,
respectively.
/(b)/ Ratios are based on average net assets of $116,360,840.
/(c)/ After fee waivers and/or expense reimbursement. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.81%, 4.64%, 4.69%, 4.96% and 1.53% for the periods
1998-1994, respectively.

FS-22
<PAGE>

NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Private Investment
Class capital stock outstanding during each of the years in the five-year
period ended August 31, 1998.

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------- -------- -------- -------- -------- -------
Income from investment
operations:
Net investment income 0.05 0.05 0.05 0.05 0.03
- -------------------------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- -------------------------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------- -------- -------- -------- -------- -------
Total return 5.39% 5.21% 5.32% 5.48% 3.33%
- -------------------------- -------- -------- -------- -------- -------
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $294,811 $235,447 $209,443 $154,278 $30,834
- -------------------------- -------- -------- -------- -------- -------
Ratio of expenses to
average net assets/(a)/ 0.39%/(b)/ 0.39% 0.39% 0.39% 0.38%
- -------------------------- -------- -------- -------- -------- -------
Ratio of net investment
income to average net
assets/(c)/ 5.26%/(b)/ 5.10% 5.20% 5.50% 3.32%
- -------------------------- -------- -------- -------- -------- -------
</TABLE>
/(a)/ After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 0.59%, 0.59%, 0.59%, 0.60% and 1.38% for the periods 1998-1994,
respectively.
/(b)/ Ratios are based on average net assets of $269,934,764.
/(c)/ After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.06%, 4.90%, 5.00%, 5.29% and 2.32% for the periods
1998-1994, respectively.

FS-23
<PAGE>

NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Resource Class capital
stock outstanding during each of the years in the two-year period ended August
31, 1998 and the period January 16, 1996 (date sales commenced) through August
31, 1996.

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- -------
Income from investment operations:
Net investment income 0.05 0.05 0.03
- ------------------------------------------ -------- -------- -------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.03)
- ------------------------------------------ -------- -------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- -------
Total return 5.54% 5.36% 5.23%/(a)/
- ------------------------------------------ -------- -------- -------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $698,380 $161,701 $58,012
- ------------------------------------------ -------- -------- -------
Ratio of expenses to average net assets/(b)/ 0.25%/(c)/ 0.25% 0.25%/(a)/
- ------------------------------------------ -------- -------- -------
Ratio of net investment income to average
net assets/(d)/ 5.40%/(c)/ 5.25% 5.18%/(a)/
- ------------------------------------------ -------- -------- -------
</TABLE>
/(a)/ Annualized.
/(b)/ After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursement were
0.29%, 0.29% and 0.29% (annualized) for the periods 1998-1996,
respectively.
/(c)/ Ratios are based on average net assets of $360,386,719.
/(d)/ After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.36%, 5.21% and 5.14% (annualized) for the periods
1998-1996, respectively.

FS-24
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------- ------------------------------------------------------------
- --------------------------------------------------------- ------------------------------------------------------------
<S> <C>

SHORT-TERM INVESTMENTS CO. PROSPECTUS
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 December 18, 1998
(800) 659-1005
SHORT-TERM
INVESTMENT ADVISOR INVESTMENTS CO.
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100 ------------
Houston, Texas 77046-1173
(713) 626-1919 PRIME PORTFOLIO

DISTRIBUTOR ------------
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100 INSTITUTIONAL CLASS
Houston, Texas 77046-1173
(800) 659-1005 TABLE OF CONTENTS

AUDITORS
KPMG PEAT MARWICK LLP PAGE
700 Louisiana ----
Houston, Texas 77002 Summary............................................... 2
Table of Fees and Expenses............................ 4
CUSTODIAN Financial Highlights.................................. 5
THE BANK OF NEW YORK Suitability For Investors............................. 5
90 Washington Street Investment Program.................................... 5
11th Floor Purchase of Shares.................................... 8
New York, New York 10286 Redemption of Shares.................................. 9
Dividends............................................. 10
TRANSFER AGENT Taxes................................................. 10
Net Asset Value....................................... 11
A I M FUND SERVICES, INC. Yield Information..................................... 11
P.O. Box 4497 Reports to Shareholders............................... 11
Houston, Texas 77210-4497 Management of the Fund................................ 11
General Information................................... 13
Appendix.............................................. A-1

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 THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND 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.

- --------------------------------------------------------- ------------------------------------------------------------
- --------------------------------------------------------- ------------------------------------------------------------
</TABLE>
<PAGE>

PROSPECTUS

PERSONAL INVESTMENT CLASS
OF THE
PRIME PORTFOLIO
OF
SHORT-TERM INVESTMENTS CO.
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
(800) 877-4744

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

The Prime Portfolio (the "Portfolio") is a money market fund whose
investment objective is the maximization of current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.
The Portfolio seeks to achieve its objective by investing in high grade money
market instruments such as U.S. Government obligations, bank obligations,
commercial instruments and repurchase agreements. The instruments purchased by
the Portfolio will have maturities of sixty days or less.

The Portfolio is a series portfolio of Short-Term Investments Co. (the
"Fund"), an open-end, diversified, series, management investment company. This
Prospectus relates solely to the Personal Investment Class of the Portfolio, a
class of shares designed to be a convenient vehicle in which customers of
banks, certain broker-dealers and other financial institutions 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 PERSONAL INVESTMENT CLASS OF THE
PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF
ADDITIONAL INFORMATION, DATED DECEMBER 18, 1998, HAS BEEN FILED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY
INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL
INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS BELOW OR CALL (800) 877-4744.
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 FUND.

THE PORTFOLIO'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE PORTFOLIO'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 PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE. SHARES OF THE PORTFOLIO INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.

PROSPECTUS DATED: DECEMBER 18, 1998
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY..................... 2 DIVIDENDS................... 13
TABLE OF FEES AND EXPENSES.. 4 TAXES....................... 14
FINANCIAL HIGHLIGHTS........ 5 NET ASSET VALUE............. 15
SUITABILITY FOR INVESTORS... 6 YIELD INFORMATION........... 15
INVESTMENT PROGRAM.......... 6 REPORTS TO SHAREHOLDERS..... 15
PURCHASE OF SHARES.......... 10 MANAGEMENT OF THE FUND...... 16
REDEMPTION OF SHARES........ 12 GENERAL INFORMATION......... 19
</TABLE>

SUMMARY

THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE

The Fund is an open-end diversified series management investment company.
This Prospectus relates to the Personal Investment Class (the "Class") of the
Portfolio. The Portfolio is a money market fund which invests in money market
instruments, such as U.S. Government obligations, bank obligations, commercial
instruments and repurchase agreements. The instruments purchased by the
Portfolio will have maturities of sixty days or less. 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.

Pursuant to separate prospectuses, the Fund also offers shares of other
classes of common stock of the Fund representing interests in the Portfolio:
the Cash Management Class, the Institutional Class, the Private Investment
Class, the Reserve Class and the Resource Class. Such classes have different
distribution arrangements and are designed for institutional and other
categories of investors. The Fund also offers shares of classes of another
portfolio, the Liquid Assets Portfolio, each pursuant to a separate
prospectus. Such classes have different distribution arrangements and are
designed for institutional and other categories of investors. The portfolios
of the Fund are referred to collectively as the "Portfolios."

All classes of the Portfolio share a common investment objective and
portfolio of investments. 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. 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 vehicle in which customers of
banks, certain broker-dealers and other financial institutions can invest in a
diversified open-end money market fund.

PURCHASE OF SHARES

Shares of the Class that are offered hereby are sold at net asset value. The
minimum initial investment in the Class is $1,000. There is no minimum amount
for subsequent investments. Payment for shares of the Class purchased must be
in funds immediately available to the Portfolio. See "Purchase of Shares."

REDEMPTION OF SHARES

2
<PAGE>

DIVIDENDS

The net income of the Portfolio is declared as a dividend daily to
shareholders of record immediately after 4:00 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 5:00 p.m. Eastern Time on
that day. See "Dividends."

CONSTANT NET ASSET VALUE

The Portfolio uses the amortized cost method of valuing its portfolio
securities and rounds its 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 a separate Master Administrative Services
Agreement, AIM may be reimbursed by the Fund for its costs of performing
certain accounting and other administrative services for the Fund. See
"Management of the Fund--Investment Advisor" and "Administrator." 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 Fund. See "General Information--
Transfer Agent and Custodian."

DISTRIBUTOR AND DISTRIBUTION PLAN

Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to the Master Distribution Plan, the Fund may
pay to FMC as well as certain broker-dealers or other financial institutions
up to 0.75% of the average daily net assets of the Portfolio attributable to
the shares of the Class. Of this amount, up to 0.25% may be for continuing
personal services to shareholders provided by broker-dealers, banks or other
financial institutions and the balance would be deemed an asset-based sales
charge. See "Purchase of Shares" and "Management of the Fund--Distribution
Plan."

SPECIAL CONSIDERATIONS

The Portfolio may borrow money and enter into reverse repurchase agreements.
The Portfolio may invest in certificates of deposit and time deposits of
foreign branches of major domestic banks and in repurchase agreements. The
Portfolio may purchase delayed delivery or when-issued securities.
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, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.

3
<PAGE>

TABLE OF FEES AND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES--PERSONAL INVESTMENT CLASS*
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price).............................................................. None
Maximum Sales Load Imposed 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--PERSONAL INVESTMENT CLASS (AS A
PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees...................................................... 0.06%
12b-1 Fees (after fee waivers)**..................................... 0.50%***
Other Expenses....................................................... 0.03%
----
Total Operating Expenses--Personal Investment Class**................ 0.59%
====
</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.
** Had there been no fee waivers, 12b-1 Fees and Total Operating Expenses
would have been 0.75% and 0.84% respectively.
*** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted under rules of the National Association of Securities
Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is
estimated that it would take a substantial number of years for a
shareholder to exceed such maximum front-end sales charges.

EXAMPLE

An investor in the Class 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............................................................... $ 6
3 years.............................................................. $19
5 years.............................................................. $33
10 years............................................................. $74
</TABLE>

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--Personal Investment Class" remain the same in
the years shown.

THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.

4
<PAGE>

FINANCIAL HIGHLIGHTS

Shown below are the per share data, ratios and supplemental data
(collectively "data") for each of the years in the seven-year period ended
August 31, 1998 and for the period August 8, 1991 (date operations commenced)
through August 31, 1991. The data has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report on the financial statements and the related
notes appears in the Statement of Additional Information.

<TABLE>
<CAPTION>
AUGUST 8,
1991
(COMMENCEMENT
OF
OPERATIONS)
TO AUGUST 31,
1998 1997 1996 1995 1994 1993 1992 1991
-------- ------- -------- ------- ------ ----- ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 $1.00 $ 1.00
-------- ------- -------- ------- ------ ----- ----- -------
Income from investment
operations:
Net investment income. 0.05 0.05 0.05 0.05 0.03 0.03 0.04 0.002
-------- ------- -------- ------- ------ ----- ----- -------
Less distributions:
Dividends from net
investment income.... (0.05) (0.05) (0.05) (0.05) (0.03) (0.03) (0.04) (0.002)
-------- ------- -------- ------- ------ ----- ----- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 $1.00 $ 1.00
======== ======= ======== ======= ====== ===== ===== =======
Total return............ 5.18% 5.01% 5.11% 5.27% 3.12% 2.74% 3.94% 5.02%(d)
======== ======= ======== ======= ====== ===== ===== =======
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted)............. $140,087 $97,215 $112,645 $99,630 $3,065 $ 904 $ 727 $ 270
======== ======= ======== ======= ====== ===== ===== =======
Ratio of expenses to
average net assets(a).. 0.59%(b) 0.59% 0.59% 0.59% 0.58% 0.52% 0.54% 0.80%(d)
======== ======= ======== ======= ====== ===== ===== =======
Ratio of net investment
income to average net
assets(c).............. 5.06%(b) 4.89% 4.99% 5.23% 3.34% 2.71% 3.75% 5.03%(d)
======== ======= ======== ======= ====== ===== ===== =======
</TABLE>
- ----------
(a) After fee waivers and/or expense reimbursement. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.84%, 0.84%, 0.89%, 0.86%, 2.39%, 2.33%, 7.21% and 15.40% for the periods
1998-1991, respectively.
(b) Ratios are based on average net assets of $116,360,840.
(c) After fee waivers and/or expense reimbursement. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were 4.81%, 4.64%, 4.69%, 4.96%, 1.53%, 0.90%, (2.93%) and
(9.57%) for the periods 1998-1991, respectively.
(d) Annualized.

5
<PAGE>

SUITABILITY FOR INVESTORS

The Class is intended for use primarily by customers of banks, certain
broker-dealers and other financial institutions who seek a convenient vehicle
in which to invest in an open-end diversified money market fund. 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. The minimum initial investment is $1,000.

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 diversification, economies of scale and
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. It is anticipated that most investors will
perform their own sub-accounting; however, sub-accounting services may be
arranged through the Fund for shareholders who prefer not to perform such
services.

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 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 consists exclusively of money
market instruments which have maturities of 60 days or less from the date of
purchase (except for securities subject to repurchase agreements which may
have longer maturities), and normally does not maintain a dollar-weighted
average maturity of its portfolio securities in excess of 40 days.

INVESTMENT POLICIES

The Portfolio may invest in a broad range of government, bank and commercial
obligations and taxable municipal securities that may be available in the
money markets. Such obligations are collectively referred to as "Money Market
Obligations" and include U.S. Treasury obligations, which include Treasury
bills, notes and bonds, and repurchase agreements relating to such securities.
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.

6
<PAGE>

Money Market Obligations

The following list of descriptions illustrates the types of Money Market
Obligations in which the Portfolio intends to invest. The list does not
purport to be an exhaustive list of all Money Market Obligations, and the
Portfolio reserves the right to invest in Money Market Obligations other than
those listed below.

COMMERCIAL INSTRUMENTS. The Portfolio intends to invest in commercial
instruments, including commercial paper, master notes and other short-term
corporate instruments, that are denominated in U.S. dollars and which at the
date of purchase are "First Tier" securities as defined in Rule 2a-7 under the
Investment Company Act of 1940 ("1940 Act"), as such Rule may be amended from
time to time. Briefly, "First Tier" securities are securities that are rated
in the highest rating category for short-term debt obligations by two
nationally recognized statistical rating organizations ("NRSROs") or, if only
rated by one NRSRO are rated in the highest rating category by that NRSRO, or,
if unrated, are determined by the Portfolio's investment advisor (under the
supervision of and pursuant to guidelines established by the Board of
Directors) to be of comparable quality to a rated security that meets the
foregoing quality standards, as well as securities issued by a registered
investment company that is a money market fund and U.S. government securities.
Commercial paper consists of short-term promissory notes issued by
corporations. Commercial paper may be traded in the secondary market after its
issuance. Master notes are demand notes that permit the investment of
fluctuating amounts of money at varying rates of interest pursuant to
arrangements with issuers who meet the quality criteria of the Portfolio. The
interest rate on a master note may fluctuate based upon changes in specified
interest rates or be reset periodically according to a prescribed formula or
may be a set rate. Although there is no secondary market in master notes, if
such notes have a demand feature, the payee may demand payment of the
principal amount of the note upon relatively short notice.

REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities
described above. 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 Fund's Board of Directors 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) the expense of enforcing its rights.
Repurchase agreements are considered to be loans by the Portfolio under the
1940 Act. Repurchase agreements will be secured by securities eligible under
Rule 2a-7 of the 1940 Act. For additional information, see the Statement of
Additional Information.

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 be 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
Student Loan Marketing Association). 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 to do so
by law.

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<PAGE>

BANK INSTRUMENTS. The Portfolio may invest in certificates of deposit
("CDs"), time deposits and bankers' acceptances of domestic commercial banks
having total assets in excess of $1.5 billion as of the date of their most
recently published financial statements and CDs of other domestic banks that
are fully insured as to principal by the Federal Deposit Insurance
Corporation. CDs represent short-term interest-bearing deposits of commercial
banks against which negotiable certificates bearing stated rates of interest
are issued. Bankers' acceptances are short-term negotiable drafts endorsed by
commercial banks which arise primarily from international commercial
transactions.

Investment Practices

BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow
money and enter into reverse repurchase agreements 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 reverse repurchase agreement. Reverse
repurchase agreements involve the sale by the Portfolio of a portfolio
security at an agreed-upon price, date and interest payment. The Portfolio
will borrow money or enter into reverse repurchase agreements 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. Reverse repurchase transactions are limited to a term not
to exceed 92 days. The Portfolio will use reverse repurchase agreements when
the interest income to be earned from the securities that would otherwise have
to be liquidated to meet redemption requests is greater than the interest
expense of the reverse repurchase transaction. The Portfolio will give
shareholders notice of its intent to enter into a reverse repurchase agreement
in sufficient time to permit shareholder redemptions before the Portfolio
enters into any reverse repurchase agreements. Reverse repurchase agreements
involve the risk that the market value of securities retained by the Portfolio
in lieu of liquidation may decline below the repurchase price of the
securities sold by the Portfolio which it is obligated to repurchase. The
risk, if encountered, could cause a reduction in the net asset value of the
Portfolio's shares. Reverse repurchase agreements are considered to be
borrowings by the Portfolio under the 1940 Act.

LENDING OF PORTFOLIO SECURITIES. The Portfolio may lend its portfolio
securities in amounts up to 33 1/3% of its total assets to financial
institutions in accordance with the investment restrictions of the Portfolio.
Such loans would involve risks of delay in receiving additional collateral in
the event the value of the collateral decreased below the value of the
securities loaned or of delay in recovering the securities loaned or even loss
of rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by AIM to be
of good standing and only when, in AIM's judgment, the income to be earned
from the loans justifies the attendant risks.

PURCHASING DELAYED DELIVERY AND WHEN-ISSUED SECURITIES. The Portfolio may
enter into delayed delivery agreements and may purchase securities on a "when-
issued" basis.

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<PAGE>

technique. Rather, from time to time, the Portfolio's investment advisor can
anticipate that cash for investment purposes will result from scheduled
maturities of existing portfolio instruments or from net sales of shares of
the Portfolio and may enter into delayed delivery agreements to assure that
the Portfolio will be as fully invested as possible in instruments meeting its
investment objective.

Debt securities are sometimes offered on a "when-issued" basis; that is, the
date for delivery of and payment for the securities is not fixed at the date
of purchase, but is set after the securities are issued (normally within
forty-five days after the date of the transaction). The payment obligation and
the interest rate that will be received on the securities are fixed at the
time the buyer enters into the commitment. The Portfolio will only make
commitments to purchase such debt securities with the intention of actually
acquiring the securities, but the Portfolio may sell these securities before
the settlement date if it is deemed advisable.

If the Portfolio enters into a delayed delivery agreement or purchases a
when-issued security, the Portfolio will direct its custodian bank to
segregate liquid assets (including Money Market Obligations) in an amount
equal to its delayed delivery agreement obligations or when-issued
commitments. If the market value of such securities declines, additional cash
or securities will be segregated on a daily basis so that the market value of
the account will equal the amount of the Portfolio's delayed delivery
agreement obligations and when-issued commitments. To the extent that funds
are segregated, they will not be available for new investment or to meet
redemptions. Investments in securities on a when-issued basis and use of
delayed delivery agreements may increase the Portfolio's exposure to market
fluctuation, or may increase the possibility that the Portfolio will incur a
short-term loss, if the Portfolio must engage in portfolio transactions in
order to honor a when-issued commitment or accept delivery of a security under
a delayed delivery agreement. The Portfolio will employ techniques designed to
minimize these risks. No additional delayed delivery agreements or when-issued
commitments will be made by the Portfolio if, as a result, more than 25% of
the Portfolio's net assets would become so committed.

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 sixty 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 RESTRICTIONS

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<PAGE>

certain risks associated with investing in 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) concentrate 25% or more of the value of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to investors in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and bank instruments such as
CDs, bankers' acceptances, time deposits and bank repurchase agreements;

(2) purchase securities of any one issuer (other than obligations of the
U.S. Government, its agencies or instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Portfolio's total assets
would be invested in such issuer, except as permitted by Rule 2a-7 under
the 1940 Act, as such Rule may be 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; or

(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 or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, 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. The Portfolio will not purchase securities while borrowings in
excess of 5% of its total assets are outstanding.

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 Fund reserves the right to reject any purchase order.
Although there is no sales charge imposed on the purchase of shares of the
Class, banks and other institutions may charge a recordkeeping, account
maintenance or other fee to their customers. Beneficial holders of 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, 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 4:00 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. Shares of
the Class will earn the dividend declared on the effective date of purchase.

10
<PAGE>

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 Fund's custodian bank,
are open for business. It is expected that the Federal Reserve Bank of New
York and The Bank of New York will be closed during the next twelve months on
Saturdays and Sundays and on observed holidays of New Year's Day, Martin
Luther King, Jr.'s Birthday, President's Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.
Further, the Portfolio reserves the right to change the time for which
purchase orders for shares of the Personal Investment Class 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.

Shares of the Class are sold to customers of banks, certain broker-dealers
and other financial institutions (each, an "Institution" and, collectively,
"Institutions"). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an Institution may invest in the shares of
the Class. Each Institution will render administrative support services to its
customers who are the beneficial owners of the shares of the Class. Such
services may include, among other things, establishment and maintenance of
shareholder accounts and records; assistance in processing purchase and
redemption transactions in shares of the Class; providing periodic statements
to customers showing a client's account balance in shares of the Class;
distribution of Fund proxy statements, annual reports and other communications
to shareholders whose accounts are serviced by the Institution; and such other
services as the Fund may reasonably request. Institutions will be required to
certify to the Fund that they comply with applicable state law regarding
registration as broker-dealers, or that they are exempt from such
registration.

Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497.
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. An investor must open an account in the Class through an
Institution in accordance with the procedures established by such Institution.
Each Institution separately determines the rules applicable to accounts in the
Class opened with it, including minimum initial and subsequent investment
requirements and the procedures to be followed by investors to effect
purchases of shares of the Class. The minimum initial investment is $1,000,
and there is no minimum amount for subsequent purchases of shares of the Class
by an Institution on behalf of its customers. An investor who proposes to open
a Portfolio account with an Institution should consult with a representative
of such Institution to obtain a description of the rules governing such an
account. The Institution holds shares of the Class registered in its name, as
agent for the customer, on the books of the Institution. A statement with
regard to the customer's shares of the Class is supplied to the customer
periodically, and confirmations of all transactions for the account of the
customer are provided by the Institution to the customer promptly upon
request. In addition, the Institution sends each customer proxies, periodic
reports and other information with regard to the customer's shares of the
Class. The customer's shares of the Class are fully assignable and subject to
encumbrance by the customer.

11
<PAGE>

required to make immediate settlement in federal funds (member bank deposits
with a Federal Reserve Bank) for portfolio securities purchased. Accordingly,
payment for shares of the Class purchased by Institutions on behalf of their
customers must be in federal funds. If an investor's order to purchase shares
of the Class is paid for other than in federal funds, the Institution, acting
on behalf of the investor, completes the conversion into federal funds (which
may take two business days), or itself advances federal funds prior to
conversion, and promptly transmits the order and payment in the form of
federal funds to the Transfer Agent.

Subject to the conditions stated above and to the Portfolio'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 Fund's
custodian bank, in the form described above 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.

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 Portfolio and any funds
received for which an order has not been received will be returned to the
sending Institution. An order must specify that it is for the purchase of
shares of the "Personal Investment Class of the Prime Portfolio," otherwise
any funds received will be returned to the sending Institution.

The Fund 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.

REDEMPTION OF SHARES

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 4:00 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 4:00 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 4:00 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.

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<PAGE>

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 Fund
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.

DIVIDENDS

Dividends from the net income of the Portfolio are declared daily to
shareholders of record of the Class immediately after 4:00 p.m. Eastern Time
on the day of declaration. Net income for dividend purposes is determined
daily as of 4:00 p.m. Eastern Time. The dividend accrued and paid for the
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) Fund expenses, such as
custodian fees, directors' fees, accounting and legal expenses, based upon the
Class's pro rata share of the net assets of the Portfolio, less (c) expenses
directly attributable to the 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 4:00 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 at 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.

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<PAGE>

The Portfolio uses its best efforts to maintain the net asset value per
share of the Portfolio at $1.00 for purposes of sales and redemptions. See
"Net Asset Value." Should the Fund incur or anticipate any unusual expense,
loss or depreciation which could adversely affect the income or net asset
value of the Portfolio, the Fund's Board of Directors 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 Directors 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 and 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 in additional 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 Fund and each Portfolio of the Fund 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>

NET ASSET VALUE

The net asset value per share of the Portfolio is determined daily as of
4:00 p.m. Eastern Time on each business day of the Fund. 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 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 Fund at (800)
877-4744. 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 OTHER
INSTITUTION. These factors should be carefully considered by the investor
before investing in the Portfolio.

For the seven-day period ended August 31, 1998, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for
a 365-day year and a return for the entire year equal to the annualized
current yield for the period) were 5.09% and 5.22%, respectively. These yields
are quoted for illustration purposes only. The yields for any other seven-day
period may be substantially different from the yields quoted above.

REPORTS TO SHAREHOLDERS

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<PAGE>

Each shareholder will be provided a written confirmation by its Institution
for each transaction unless otherwise specified by the shareholder.
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 account.

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

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

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 (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises over 90
investment company portfolios. AIM is a wholly owned subsidiary of AIM
Management, 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
institutional investment management and retail fund businesses in the United
States, Europe and the Pacific Region.

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. The Advisory Agreement also provides that, upon the request of the
Fund's Board of Directors, AIM may perform (or arrange for the performance of)
certain accounting, shareholder servicing and other administrative services
for the Fund which are not required to be performed by AIM under the Advisory
Agreement. The Advisory Agreement requires AIM to reduce its fee to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Portfolio's shares are
qualified for sale.

For the fiscal year ended August 31, 1998, AIM received fees pursuant to the
Advisory Agreement with respect to the Portfolio which represented 0.06% of
the Portfolio's average daily net assets. During such fiscal year, the
expenses of the Class, including AIM's fees, amounted to 0.59% of the Class's
average daily net assets.

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<PAGE>

ADMINISTRATOR

The Fund has entered into a Master Administrative Services Agreement 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 Fund and related staff. Under the
Administrative Services Agreement, the Portfolio reimburses AIM for expenses
incurred by AIM in connection with such services.

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

FMC may, from time to time, at its expense, pay a bonus or other
consideration or incentive to dealers or banks who sell a minimum dollar
amount of shares of the Class during a specific period of time. In some
instances, these incentives may be offered only to certain dealers or
Institutions who have sold or may sell significant amounts of shares. The
total amount of such additional bonus payments or other consideration shall
not exceed .05% of the net asset value of the shares of the Class sold. Any
such bonus or incentive programs will not change the price paid by investors
for the purchase of shares of the Class or the amount received as proceeds
from such sales. Sales of shares of the Class may not be used to qualify for
any incentives to the extent that such incentives may be prohibited by the
laws of any jurisdiction.

DISTRIBUTION PLAN

The Fund has adopted a Master Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Plan provides that the Fund may compensate
FMC in connection with the distribution of the shares of the Class in an
amount equal to 0.75% on an annualized basis of the average daily net assets
of the Portfolio attributable to the Class. Such amounts may be expended when
and if authorized by the Board of Directors of the Fund and may be used to
finance such distribution-related services as expenses of organizing and
conducting sales seminars, printing of prospectuses and statements of
additional information (and supplements thereto) and reports for other than
existing shareholders, preparation and distribution of advertising material
and sales literature and costs of administering the Plan.

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<PAGE>

pursuant to the Plan. The Plan also imposes a cap on the total amount of sales
charges, including asset-based sales charges, that may be paid by the
Portfolio with respect to the Class. The Plan does not obligate the Fund to
reimburse FMC for the actual expenses FMC may incur in fulfilling its
obligations under the Plan on behalf of the Class. Thus, under the Plan, even
if FMC's actual expenses exceed the fee payable to FMC thereunder at any given
time, the Fund will not be obligated to pay more than that fee. If FMC's
expenses are less than the fee it receives, FMC will retain the full amount of
the fee.

The Plan may be terminated by a vote of a majority of the Qualified
Directors, or by a vote of a majority of the holders of the outstanding voting
securities of the Class. Any change in the Plan that would increase materially
the distribution expenses paid by the Class requires shareholder approval;
otherwise the Plan may be amended by the Board of Directors, including a
majority of the Qualified Directors, by votes cast in person at a meeting
called for the purpose of voting upon such amendment. As long as the Plan is
in effect, the selection or nomination of the Qualified Directors is committed
to the discretion of the Qualified Directors.

PORTFOLIO TRANSACTIONS AND BROKERAGE

AIM is responsible for decisions to buy and sell securities for the
Portfolio, 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. The purchase price paid to
dealers serving as market makers may include a spread between the bid and
asked prices. 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 AIM with respect to
clients 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.

18
<PAGE>

GENERAL INFORMATION

ORGANIZATION AND DESCRIPTION OF SHARES

The Fund was incorporated in Maryland on May 3, 1993. On October 15, 1993,
the Portfolio succeeded to the assets and assumed the liabilities of the Prime
Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a
Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of
Reorganization between the Fund and STIC. All historical financial and other
information contained in this Prospectus for periods prior to October 15, 1993
relating to the Portfolio (or class thereof) is that of the Predecessor
Portfolio (or the corresponding class thereof). Shares of common stock of the
Fund are divided into twelve classes. Six classes, including the Class,
represent interests in the Portfolio and six classes represent interests in
the Liquid Assets Portfolio. Each class of shares has a par value of $.001 per
share. The other classes of the Fund may have different sales charges and
other expenses which may affect performance. An investor may obtain
information concerning the Fund's other classes by contacting FMC.

All shares of the Fund 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, 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 each portfolio have distinctive rights with respect
to dividends and redemptions which are more fully described in this
Prospectus. In the event of liquidation or termination of the Fund, 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 Fund
attributable or allocated to the respective portfolio based on the respective
liquidation value of each portfolio. Fractional shares of each portfolio have
the same rights as full shares to the extent of their proportionate interest.

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 Fund and passes upon certain legal
matters for the Fund.

SHAREHOLDER INQUIRIES

Shareholder inquiries concerning the status of an account should be directed
to the Fund at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may
be made by calling (800) 877-4744.

19
<PAGE>

YEAR 2000 COMPLIANCE PROJECT

In providing services to the Fund, 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 Fund provide the Fund and its shareholders.

To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking 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 reviewed to confirm year 2000
compliance upon installation. No assurance can be given that the Project will
be successful or that the Fund 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 Fund 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 Fund 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.

20
<PAGE>

INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100 SHORT-TERM
Houston, Texas 77046-1173 INVESTMENTS CO.
(713) 626-1919
PERSONAL
DISTRIBUTOR INVESTMENT CLASS
FUND MANAGEMENT COMPANY OF THE
11 Greenway Plaza, Suite 100 -------------------------------------
Houston, Texas 77046-1173 PRIME PROSPECTUS
(800) 877-4744 PORTFOLIO

AUDITORS
KPMG PEAT MARWICK LLP
700 Louisiana
Houston, Texas 77002

CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street, 11th Floor DECEMBER 18, 1998
New York, New York 10286

TRANSFER AGENT
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 THIS
PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUND OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM [LOGO OF AIM APPEARS HERE]
SUCH OFFERING MAY NOT LAWFULLY BE FUND MANAGEMENT COMPANY
MADE.

<PAGE>

PROSPECTUS

PRIVATE INVESTMENT CLASS
OF THE
PRIME PORTFOLIO
OF
SHORT-TERM INVESTMENTS CO.
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
(800) 877-7748

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

The Prime Portfolio (the "Portfolio") is a money market fund whose
investment objective is the maximization of current income to the extent
consistent with the preservation of capital and the maintenance of liquidity.
The Portfolio seeks to achieve its objective by investing in high grade money
market instruments, such as U.S. Government obligations, bank obligations,
commercial instruments and repurchase agreements. The instruments purchased by
the Portfolio will have maturities of sixty days or less.

The Portfolio is a series portfolio of Short-Term Investments Co. (the
"Fund"), an open-end, diversified, series, management investment company. This
Prospectus relates solely to the Private Investment Class of the Portfolio, a
class of shares designed to be a convenient vehicle in which customers of
banks, certain broker-dealers and other financial institutions 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 PRIVATE INVESTMENT CLASS OF THE
PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF
ADDITIONAL INFORMATION, DATED DECEMBER 18, 1998, HAS BEEN FILED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY
INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL
INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS BELOW OR CALL (800) 877-7748.
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 FUND.

THE PORTFOLIO'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE PORTFOLIO'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 PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE. SHARES OF THE PORTFOLIO INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.

PROSPECTUS DATED: DECEMBER 18, 1998
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <S> <C>
SUMMARY..................... 2 DIVIDENDS................. 13
TABLE OF FEES AND EXPENSES.. 4 TAXES..................... 13
FINANCIAL HIGHLIGHTS........ 5 NET ASSET VALUE........... 14
SUITABILITY FOR INVESTORS... 5 YIELD INFORMATION......... 15
INVESTMENT PROGRAM.......... 6 REPORTS TO SHAREHOLDERS... 15
PURCHASE OF SHARES.......... 10 MANAGEMENT OF THE FUND.... 15
REDEMPTION OF SHARES........ 12 GENERAL INFORMATION....... 18
</TABLE>

SUMMARY

THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE

The Fund is an open-end diversified series management investment company.
This Prospectus relates to the Private Investment Class (the "Class") of the
Portfolio. The Portfolio is a money market fund which invests in money market
instruments, such as U.S. Government obligations, bank obligations, commercial
instruments and repurchase agreements. The instruments purchased by the
Portfolio will have maturities of sixty days or less. 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.

Pursuant to separate prospectuses, the Fund also offers shares of other
classes of the Fund representing interests in the Portfolio: the Cash
Management Class, the Institutional Class, the Personal Investment Class, the
Reserve Class and the Resource Class. Such classes have different distribution
arrangements and are designed for institutional and other categories of
investors. The Fund also offers shares of classes of another portfolio, the
Liquid Assets Portfolio, each pursuant to a separate prospectus. Such classes
have different distribution arrangements and are designed for institutional
and other categories of investors. The portfolios of the Fund are referred to
collectively as the "Portfolios."

All classes of the Portfolio share a common investment objective and
portfolio of investments. 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. 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 vehicle in which customers of
banks, certain broker-dealers and other financial institutions can invest in a
diversified, open-end money market fund.

PURCHASE OF SHARES

Shares of the Class that are offered hereby are sold at net asset value. The
minimum initial investment in the Class is $10,000. There is no minimum amount
for subsequent investments. Payment for shares of the Class purchased must be
in funds immediately available to the Portfolio. See "Purchase of Shares."

REDEMPTION OF SHARES

2
<PAGE>

DIVIDENDS

The net income of the Portfolio is declared as a dividend daily to
shareholders of record immediately after 4:00 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 5:00 p.m. Eastern Time on
that day. See "Dividends."

CONSTANT NET ASSET VALUE

The Portfolio 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

DISTRIBUTOR AND DISTRIBUTION PLAN

Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to the Master Distribution Plan, the Fund may
pay up to 0.50% of the average daily net assets of the Portfolio attributable
to the shares of the Class to FMC as well as certain broker-dealers or other
financial institutions. Of this amount, up to 0.25% may be for continuing
personal services to shareholders provided by broker-dealers or institutions
and the balance would be deemed an asset-based sales charge. See "Purchase of
Shares" and "Management of the Fund--Distribution Plan."

SPECIAL CONSIDERATIONS

The Portfolio may borrow money and enter into reverse repurchase agreements.
The Portfolio may invest in certificates of deposit and time deposits of
foreign branches of major domestic banks and in repurchase agreements. The
Portfolio may purchase delayed delivery or when-issued securities.
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, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.

3
<PAGE>

TABLE OF FEES AND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES--PRIVATE INVESTMENT CLASS*
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price).............................................................. None
Maximum Sales Load Imposed 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--PRIVATE INVESTMENT CLASS (AS A
PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees...................................................... 0.06%
12b-1 Fees (after fee waivers)**..................................... 0.30%***
Other Expenses....................................................... 0.03%
----
Total Operating Expenses--Private Investment Class**................. 0.39%
====
</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.
** Had there been no fee waivers, 12b-1 Fees and Total Operating Expenses
would have been 0.50% and 0.59%, respectively.
*** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted under rules of the National Association of Securities
Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is
estimated that it would take a substantial number of years for a
shareholder to exceed such maximum front-end sales charges.

EXAMPLE

An investor in the Class 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.............................................................. $ 4
3 years............................................................. $13
5 years............................................................. $22
10 years............................................................ $49
</TABLE>

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--Private Investment Class" remain the same in the
years shown.

THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.

4
<PAGE>

FINANCIAL HIGHLIGHTS

Shown below are the per share data, ratios and supplemental data
(collectively "data") for each of the years in the five-year period ended
August 31, 1998 and for the period July 8, 1993 (date operations commenced)
through August 31, 1993. The data has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report on the financial statements and the related
notes appears in the Statement of Additional Information.

<TABLE>
<CAPTION>
JULY 8, 1993
(COMMENCEMENT
OF
OPERATIONS)
TO AUGUST 31,
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income.. 0.05 0.05 0.05 0.05 0.03 0.03
-------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income..... (0.05) (0.05) (0.05) (0.05) (0.03) (0.03)
-------- -------- -------- -------- ------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======= =======
Total return............ 5.39% 5.21% 5.32% 5.48% 3.33% 3.24%(a)
======== ======== ======== ======== ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted). $294,811 $235,447 $209,443 $154,278 $30,834 $17,857
======== ======== ======== ======== ======= =======
Ratio of expenses to
average net assets(b). 0.39%(c) 0.39% 0.39% 0.39% 0.38% 0.37%(a)
======== ======== ======== ======== ======= =======
Ratio of net investment
income to average net
assets(d)............. 5.26%(c) 5.10% 5.20% 5.50% 3.32% 2.85%(a)
======== ======== ======== ======== ======= =======
</TABLE>
- ----------
(a) Annualized.
(b) After fee waivers and/or expense reimbursement. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.59%, 0.59%, 0.59%, 0.60%, 1.38% and 0.57% (annualized) for the periods
1998-1993, respectively.
(c) Ratios are based on average net assets of $269,934,764.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.06%, 4.90%, 5.00%, 5.29%, 2.32% and 2.65%
(annualized) for the periods 1998-1993, respectively.

SUITABILITY FOR INVESTORS

The Class is intended for use primarily by customers of banks, certain
broker-dealers and other financial institutions who seek a convenient vehicle
in which to invest in an open-end diversified money market fund. The minimum
initial investment is $10,000. 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.

5
<PAGE>

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 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 consists exclusively of money
market instruments which have maturities of 60 days or less from the date of
purchase (except for securities subject to repurchase agreements which may
have longer maturities), and normally does not maintain a dollar-weighted
average maturity of its portfolio securities in excess of 40 days.

INVESTMENT POLICIES

The Portfolio may invest in a broad range of government, bank and commercial
obligations and taxable municipal securities that may be available in the
money markets. Such obligations are collectively referred to as "Money Market
Obligations" and include U.S. Treasury obligations, which include Treasury
bills, notes and bonds, and repurchase agreements relating to such securities.
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

The following list of descriptions illustrates the types of Money Market
Obligations in which the Portfolio intends to invest. The list does not
purport to be an exhaustive list of all Money Market Obligations, and the
Portfolio reserves the right to invest in Money Market Obligations other than
those listed below.

6
<PAGE>

statistical rating organizations ("NRSROs") or, if only rated by one NRSRO,
are rated in the highest rating category by that NRSRO, or, if unrated, are
determined by the Portfolio's investment advisor (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company
that is a money market fund and U.S. government securities. Commercial paper
consists of short-term promissory notes issued by corporations. Commercial
paper may be traded in the secondary market after its issuance. Master notes
are unsecured demand notes that permit the investment of fluctuating amounts
of money at varying rates of interest pursuant to arrangements with issuers
who meet the quality criteria of the Portfolio. The interest rate on a master
note may fluctuate based upon changes in specified interest rates or be reset
periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master notes, if such notes have a demand
feature, the payee may demand payment of the principal amount of the note upon
relatively short notice.

REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities
described above. 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 Fund's Board of Directors 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) the expense of enforcing its rights.
Repurchase agreements are considered to be loans by the Portfolio under the
1940 Act. Repurchase agreements will be secured by securities eligible under
Rule 2a-7 of the 1940 Act. For additional information, see the Statement of
Additional Information.

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 be 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
Student Loan Marketing Association). 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 to do so
by law.

BANK INSTRUMENTS. The Portfolio may invest in certificates of deposit
("CDs"), time deposits and bankers' acceptances of domestic commercial banks
having total assets in excess of $1.5 billion as of the date of their most
recently published financial statements and CDs of other domestic banks that
are fully insured as to principal by the Federal Deposit Insurance
Corporation. CDs represent short-term interest-bearing deposits of commercial
banks against which negotiable certificates bearing stated rates of interest
are issued. Bankers' acceptances are short-term negotiable drafts endorsed by
commercial banks which arise primarily from international commercial
transactions.

7
<PAGE>

banking institution for a specified period of time at a stated interest rate.
The Portfolio will not make any time or savings deposit if, immediately after
making such deposits, over 5% of the Portfolio's total assets would be
invested in illiquid time and savings deposits.

Investment Practices

BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow
money and enter into reverse repurchase agreements 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 reverse repurchase agreement. Reverse
repurchase agreements involve the sale by the Portfolio of a portfolio
security at an agreed-upon price, date and interest payment. The Portfolio
will borrow money or enter into reverse repurchase agreements 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. Reverse repurchase transactions are limited to a term not
to exceed 92 days. The Portfolio will use reverse repurchase agreements when
the interest income to be earned from the securities that would otherwise have
to be liquidated to meet redemption requests is greater than the interest
expense of the reverse repurchase transaction. The Portfolio will give
shareholders notice of its intent to enter into a reverse repurchase agreement
in sufficient time to permit shareholder redemptions before the Portfolio
enters into any reverse repurchase agreements. Reverse repurchase agreements
involve the risk that the market value of securities retained by the Portfolio
in lieu of liquidation may decline below the repurchase price of the
securities sold by the Portfolio which it is obligated to repurchase. The
risk, if encountered, could cause a reduction in the net asset value of the
Portfolio's shares. Reverse repurchase agreements are considered to be
borrowings by the Portfolio under the 1940 Act.

PURCHASING DELAYED DELIVERY AND WHEN-ISSUED SECURITIES. The Portfolio may
enter into delayed delivery agreements and may purchase securities on a "when-
issued" basis.

Delayed delivery agreements are commitments by the Portfolio to dealers or
issuers to acquire securities beyond the customary settlement date for such
securities. These commitments fix the payment price and interest rate to be
received on the investment. Delayed delivery agreements will not be used as a
speculative or leverage technique. Rather, from time to time, the Portfolio's
investment advisor can anticipate that cash for investment purposes will
result from scheduled maturities of existing portfolio instruments or from net
sales of shares of the Portfolio and may enter into delayed delivery
agreements to assure that the Portfolio will be as fully invested as possible
in instruments meeting its investment objective.

Debt securities are sometimes offered on a "when-issued" basis; that is, the
date for delivery of and payment for the securities is not fixed at the date
of purchase, but is set after the securities are issued (normally within
forty-five days after the date of the transaction). The payment obligation and
the interest rate that will be received on the securities are fixed at the
time the buyer enters into the commitment. The Portfolio will only make
commitments to purchase such debt securities with the intention of actually
acquiring the securities, but the Portfolio may sell these securities before
the settlement date if it is deemed advisable.

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<PAGE>

If the Portfolio enters into a delayed delivery agreement or purchases a
when-issued security, the Fund will direct its custodian bank to segregate
liquid assets (including Money Market Obligations) in an amount equal to its
delayed delivery agreement obligations or when-issued commitments. If the
market value of such securities declines, additional cash or securities will
be segregated on a daily basis so that the market value of the account will
equal the amount of the Portfolio's delayed delivery agreement obligations and
when-issued commitments. To the extent that funds are segregated, they will
not be available for new investment or to meet redemptions. Investment in
securities on a when-issued basis and use of delayed delivery agreements may
increase the Portfolio's exposure to market fluctuation, or may increase the
possibility that the Portfolio will incur a short-term loss, if the Portfolio
must engage in portfolio transactions in order to honor a when-issued
commitment or accept delivery of a security under a delayed delivery
agreement. The Portfolio will employ techniques designed to minimize these
risks. No additional delayed delivery agreements or when-issued commitments
will be made by the Portfolio if, as a result, more than 25% of the
Portfolio's net assets would become so committed.

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 sixty 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 RESTRICTIONS

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

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(2) purchase securities of any one issuer (other than obligations of the
U.S. Government, its agencies or instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Portfolio's total assets
would be invested in such issuer, except as permitted by Rule 2a-7 under
the 1940 Act, as such rule may be 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; or

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 Fund reserves the right to reject any purchase order.
Although there is no sales charge imposed on the purchase of shares of the
Class, banks and other institutions may charge a recordkeeping, account
maintenance or other fee to their customers. Beneficial holders of 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, 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 4:00 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. Shares of
the Class will earn the dividend declared on the effective date of purchase.

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 Fund"s custodian bank,
are open for business. It is expected that the Federal Reserve Bank of New
York and The Bank of New York will be closed during the next twelve months on
Saturdays and Sundays and on 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.
Further, the Portfolio reserves the right to change the time for which
purchase orders for shares of the Private Investment Class 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.

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Shares of the Class are sold to customers of banks, certain broker-dealers
and other financial institutions (each, an "Institution" and, collectively,
"Institutions"). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an Institution may invest in the shares of
the Class. Each Institution will render administrative support services to its
customers who are the beneficial owners of the shares of the Class. Such
services may include, among other things, establishment and maintenance of
shareholder accounts and records; assistance in processing purchase and
redemption transactions in shares of the Class; providing periodic statements
showing a customer's account balance in shares of the Class; distribution of
Fund proxy statements, annual reports and other communications to shareholders
whose accounts are serviced by the Institution; and such other services as the
Fund may reasonably request. Institutions will be required to certify to the
Fund that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration.

Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497.
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. An investor must open an account in the shares of the Class
through an Institution in accordance with the procedures established by such
Institution. Each Institution separately determines the rules applicable to
accounts in the shares of the Class opened with it, including minimum initial
and subsequent investment requirements and the procedures to be followed by
investors to effect purchases of shares of the Class. The minimum initial
investment is $10,000, and there is no minimum amount for subsequent purchases
of shares of the Class by an Institution on behalf of its customers. An
investor who proposes to open a Portfolio account with an Institution should
consult with a representative of such Institution to obtain a description of
the rules governing such an account. The Institution holds shares of the Class
registered in its name, as agent for the customer, on the books of the
Institution. A statement with regard to the customer's shares of the Class is
supplied to the customer periodically, and confirmations of all transactions
for the account of the customer are provided by the Institution to the
customer promptly upon request. In addition, each Institution sends its
customers proxies, periodic reports and other information from the Institution
with regard to the customer's shares of the Class. The customer's shares of
the Class are fully assignable and subject to encumbrance by the customer.

All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will
be established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
directly purchase additional shares of the Class, except through reinvestment
of dividends and distributions.

Orders for the purchase of shares of the Class are placed by the investor
with the Institution. The Institution is responsible for the prompt
transmission of the order to the Transfer Agent. The Portfolio will normally
be required to make immediate settlement in federal funds (member bank
deposits with a Federal Reserve Bank) for portfolio securities purchased.
Accordingly, payment for shares of the Class purchased by Institutions on
behalf of their customers must be in federal funds. If an investor's order to
purchase shares of the Class is paid for other than in federal funds, the
Institution, acting on behalf of the investor, completes the conversion into
federal funds (which may take two business days), or itself advances federal
funds prior to conversion, and promptly transmits the order and payment in the
form of federal funds to the Transfer Agent.

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<PAGE>

Subject to the conditions stated above and to the Portfolio'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 Fund's
custodian bank, in the form described above 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.

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 Portfolio and any funds
received for which an order has not been received will be returned to the
sending Institution. An order must specify that it is for the purchase of
shares of the "Private Investment Class of the Prime Portfolio," otherwise any
funds received will be returned to the sending Institution.

The Fund 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.

REDEMPTION OF SHARES

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 4:00 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 4:00 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 4:00 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.

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<PAGE>

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 Fund
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.

DIVIDENDS

Dividends from the net income of the Portfolio are declared daily to
shareholders of record of the Class immediately after 4:00 p.m. Eastern Time
on the day of declaration. Net income for dividend purposes is determined
daily as of 4:00 p.m. Eastern Time. The dividend accrued and paid for the
Class will consist of (a) income of the Portfolio, the allocation of which is
based upon the Class's pro rata share of the total outstanding shares
representing an interest in the Portfolio, less (b) Fund expenses, such as
custodian fees, directors' fees, accounting and legal expenses, based upon the
Class's pro rata share of the net assets of the Portfolio, less (c) expenses
directly attributable to the 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 4:00 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 at 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 the net asset value per
share of the Portfolio at $1.00 for purposes of sales and redemptions. See
"Net Asset Value." Should the Fund incur or anticipate any unusual expense,
loss or depreciation which could adversely affect the income or net asset
value of the Portfolio, the Fund's Board of Directors 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 Directors 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

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<PAGE>

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 in additional 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 Fund and each Portfolio of the Fund 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.

NET ASSET VALUE

The net asset value per share of the Portfolio is determined daily as of
4:00 p.m. Eastern Time on each business day of the Fund. 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.

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<PAGE>

YIELD INFORMATION

Yield information for the Class can be obtained by calling the Fund at (800)
877-7748. 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.

For the seven-day period ended August 31, 1998, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for
a 365-day year and a return for the entire year equal to the annualized
current yield for the period) were 5.29% and 5.43%, respectively. These yields
are quoted for illustration purposes only. The yields for any other seven-day
period may be substantially different from the yields quoted above.

REPORTS TO SHAREHOLDERS

Each shareholder will be provided with a written confirmation by its
Institution for each transaction unless otherwise specified by the
shareholder. 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 FUND

BOARD OF DIRECTORS

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

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

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<PAGE>

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 (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises over 90
investment company portfolios. AIM is a wholly owned subsidiary of AIM
Management, 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
institutional investment management and retail fund businesses in the United
States, Europe and the Pacific Region.

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. The Advisory Agreement also provides that, upon the request of the
Fund's Board of Directors, AIM may perform (or arrange for the performance of)
certain accounting, shareholder servicing and other administrative services
for the Fund which are not required to be performed by AIM under the Advisory
Agreement. The Advisory Agreement requires AIM to reduce its fee to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Portfolio's shares are
qualified for sale.

For the fiscal year ended August 31, 1998, AIM received fees pursuant to the
Advisory Agreement with respect to the Portfolio which represented 0.06% of
the Portfolio's average daily net assets. During such fiscal year, the
expenses of the Class, including AIM's fees, amounted to 0.39% of the Class's
average daily net assets.

ADMINISTRATOR

The Fund has also entered into a Master Administrative Services Agreement
with AIM (the "Administrative Services Agreement"), as permitted by the
Advisory 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 Fund
and related staff. Under the Administrative Services Agreement, the Portfolio
reimburses AIM for expenses incurred by AIM in connection with such services.

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 expense prior to the end of each fiscal year.

DISTRIBUTOR

The Fund has entered into a Master Distribution Agreement (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 directors and officers of the Fund are affiliated with FMC and AIM.
The Distribution Agreement provides that FMC has the exclusive right to
distribute shares of the Class either directly or through other broker-
dealers. FMC is the distributor of several of the mutual funds managed or
advised by AIM.

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<PAGE>

not exceed 0.05% of the net asset value of the shares of the Class sold. Any
such bonus or incentive programs will not change the price paid by investors
for the purchase of shares of the Class or the amount received as proceeds
from such sales. Sales of the shares of the Class may not be used to qualify
for any incentives to the extent that such incentives may be prohibited by the
laws of any jurisdiction.

DISTRIBUTION PLAN

The Fund has adopted a Master Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Plan provides that the Fund may compensate
FMC in connection with the distribution of the shares of the Class in an
amount equal to 0.50% on an annualized basis of the average daily net assets
of the Portfolio attributable to the Class. Such amounts may be expended when
and if authorized by the Board of Directors and may be used to finance such
distribution-related services as expenses of organizing and conducting sales
seminars, printing of prospectuses and statements of additional information
(and supplements thereto) and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature and
costs of administering the Plan.

Of the compensation paid to FMC under the Plan, a service fee may be paid to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the
Class. Payments to dealers and other financial institutions in excess of 0.25%
of the average daily net assets of the Portfolio attributable to the Class
which are attributable to the customers of such dealers or financial
institutions and payments to FMC would be characterized as an asset-based
sales charge pursuant to the Plan. The Plan also imposes a cap on the total
amount of sales charges, including asset-based sales charges, that may be paid
by the Portfolio with respect to the Class. The Plan does not obligate the
Fund to reimburse FMC for the actual expenses FMC may incur in fulfilling its
obligations under the Plan on behalf of the Class. Thus, under the Plan, even
if FMC's actual expenses exceed the fee payable to FMC thereunder at any given
time, the Fund will not be obligated to pay more than that fee. If FMC's
expenses are less than the fee it receives, FMC will retain the full amount of
the fee.

PORTFOLIO TRANSACTIONS AND BROKERAGE

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<PAGE>

purchased directly from the issuer or from a market maker for the securities.
The purchase price paid to dealers serving as market makers may include a
spread between the bid and asked prices. 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 program. Certain
research services furnished by dealers may be useful to AIM with respect to
clients 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 Fund was incorporated in Maryland on May 3, 1993. On October 15, 1993,
the Portfolio succeeded to the assets and assumed the liabilities of the Prime
Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a
Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of
Reorganization between the Fund and STIC. All historical financial and other
information contained in this Prospectus for periods prior to October 15, 1993
relating to the Portfolio (or a class thereof) is that of the Predecessor
Portfolio (or the corresponding class thereof). Shares of common stock of the
Fund are divided into twelve classes. Six classes, including the Class,
represent interests in the Portfolio, and six classes represent interests in
the Liquid Assets Portfolio. Each class of shares has a par value of $.001 per
share. The other classes of the Fund may have different sales charges and
other expenses which may affect performance. An investor may obtain
information concerning the Fund's other classes by contacting FMC.

All shares of the Fund 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, 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 each 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 Fund, 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 Fund attributable or
allocated to the respective portfolio based on the respective liquidation
value of each portfolio. Fractional shares of each portfolio have the same
rights as full shares to the extent of their proportionate interest.

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.

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<PAGE>

LEGAL COUNSEL

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

SHAREHOLDER INQUIRIES

Shareholder inquiries concerning the status of an account should be directed
to the Fund at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may
be made by calling (800) 877-7748.

YEAR 2000 COMPLIANCE PROJECT

In providing services to the Fund, 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 Fund provide the Fund and its shareholders.

To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking 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 reviewed to confirm year 2000
compliance upon installation. No assurance can be given that the Project will
be successful or that the Fund 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 Fund 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 Fund 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.

19
<PAGE>

INVESTMENT ADVISOR
A I M ADVISORS, INC. SHORT-TERM
11 Greenway Plaza, Suite 100 INVESTMENTS CO.
Houston, Texas 77046-1173
(713) 626-1919 PRIVATE
INVESTMENT CLASS
DISTRIBUTOR OF THE
FUND MANAGEMENT COMPANY -------------------------------------
11 Greenway Plaza, Suite 100 PRIME PORTFOLIO PROSPECTUS
Houston, Texas 77046-1173
(800) 877-7748 DECEMBER 18, 1998

AUDITORS
KPMG PEAT MARWICK LLP
700 Louisiana
Houston, Texas 77002

CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street, 11th Floor
New York, New York 10286

TRANSFER AGENT
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 THIS
PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUND OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM
SUCH OFFERING MAY NOT LAWFULLY BE [LOGO APPEARS HERE]
MADE. FUND MANAGEMENT COMPANY
<PAGE>

SHORT-TERM
INVESTMENTS CO.

<TABLE> PROSPECTUS
- --------------------------------------------------------------------------------
<S> <C>
PRIME Prospectus
PORTFOLIO
The Prime Portfolio (the "Portfolio") is a
RESERVE CLASS money market fund whose investment objective is
the maximization of current income to the extent
DECEMBER 18, 1998 consistent with the preservation of capital and
the maintenance of liquidity. The Portfolio
seeks to achieve its objective by investing in
high grade money market instruments, such as
U.S. Government obligations, bank obligations,
commercial instruments and repurchase
agreements. The instruments purchased by the
Portfolio will have maturities of sixty days or
less.

The Portfolio is a series portfolio of Short-
Term Investments Co. (the "Fund"), an open-end,
diversified, series, management investment
company. This Prospectus relates solely to the
Reserve Class of the Portfolio, a class of
shares designed to be a convenient vehicle in
which customers of banks, certain broker-dealers
and other financial institutions 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 RESERVE CLASS OF THE
PORTFOLIO AND SHOULD BE READ AND RETAINED FOR
FUTURE REFERENCE. A STATEMENT OF ADDITIONAL
INFORMATION, DATED DECEMBER 18, 1998, HAS BEEN
FILED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY
INCORPORATED BY REFERENCE. FOR A COPY OF THE
STATEMENT OF ADDITIONAL INFORMATION WITHOUT
CHARGE, WRITE TO THE ADDRESS BELOW OR CALL (800)
467-8792. 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 FUND.

THE PORTFOLIO'S SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK, AND THE PORTFOLIO'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
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE. SHARES OF THE
[LOGO APPEARS HERE] PORTFOLIO INVOLVE INVESTMENT RISKS, INCLUDING
Fund Management Company THE POSSIBLE LOSS OF PRINCIPAL.

11 Greenway Plaza
Suite 100
Houston, TX 77046-1173

(800) 467-8792
</TABLE>
<PAGE>

SUMMARY

THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE

The Fund is an open-end diversified series management investment company.
This Prospectus relates to the Reserve Class (the "Class") of the Portfolio.
The Portfolio is a money market fund which invests in money market instruments,
such as U.S. Government obligations, bank obligations, commercial instruments
and repurchase agreements. The instruments purchased by the Portfolio will have
maturities of sixty days or less. 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.

Pursuant to separate prospectuses, the Fund also offers shares of other
classes of the Fund representing interests in the Portfolio: the Cash
Management Class, the Institutional Class, the Personal Investment Class, the
Private Investment Class and the Resource Class. Such classes have different
distribution arrangements and are designed for institutional and other
categories of investors. The Fund also offers shares of classes of another
portfolio, the Liquid Assets Portfolio, each pursuant to a separate prospectus.
Such classes have different distribution arrangements and are designed for
institutional and other categories of investors. The portfolios of the Fund are
referred to collectively as the "Portfolios."

INVESTORS IN THE CLASS

The Class is designed to be a convenient vehicle in which customers of banks,
certain broker-dealers and other financial institutions can invest in a
diversified, open-end money market fund.

PURCHASE OF SHARES

REDEMPTION OF SHARES

DIVIDENDS

CONSTANT NET ASSET VALUE

The Portfolio 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."

2
<PAGE>

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 a separate Master Administrative Services Agreement, AIM may
be reimbursed by the Fund for its costs of performing certain accounting and
other administrative services for the Fund. See "Management of the Fund--
Investment Advisor" and "Administrator." 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 Fund. See "General Information--Transfer Agent and Custodian."

DISTRIBUTOR AND DISTRIBUTION PLAN

Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to the Master Distribution Plan, the Fund may pay
up to 1.00% of the average daily net assets of the Portfolio attributable to
the shares of the Class to FMC as well as certain broker-dealers or other
financial institutions. Of this amount, up to 0.25% may be for continuing
personal services to shareholders provided by broker-dealers or institutions
and the balance would be deemed an asset-based sales charge. See "Purchase of
Shares" and "Management of the Fund--Distribution Plan."

SPECIAL CONSIDERATIONS

3
<PAGE>

TABLE OF FEES AND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES-- RESERVE CLASS*
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price).............................................................. None
Maximum Sales Load Imposed 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 -- RESERVE CLASS (AS A PERCENTAGE
OF AVERAGE NET ASSETS)
Management Fees...................................................... 0.06%
12b-1 Fees (after fee waivers)**..................................... 0.80%***
Other Expenses....................................................... 0.03%
----
Total Operating Expenses -- Reserve Class**.......................... 0.89%
====
</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.
** Had there been no fee waivers, 12b-1 Fees and Total Operating Expenses
would be 1.00% and 1.09%, respectively.
*** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted under rules of the National Association of Securities
Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is
estimated that it would take a substantial number of years for a
shareholder to exceed such maximum front-end sales charges.

EXAMPLE

An investor in the Class 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............................................................ $ 9
3 years........................................................... $28
</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 Fund" below.) The "Total Operating
Expenses -- Reserve 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" and "12b-1 fees" figures are based upon estimated costs and the
estimated size of the Class and the Portfolio and estimated fees to be charged
for the current fiscal period. Thus, actual expenses may be greater or less
than such estimates. The Table of Fees and Expenses reflects a voluntary waiver
of management fees and 12b-1 fees for the Class. Future waivers of fees (if
any) may vary from the figures listed in the Table of Fees and Expenses. To the
extent any service providers assume additional expenses of the Class, such
assumption of additional expenses will have the effect of lowering the Class's
overall expense ratio and increasing its yield to investors. Beneficial owners
of shares of the Class should also consider the effect of any charges imposed
by the institution maintaining their accounts.

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 -- Reserve Class" remain the same in the years
shown.

THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST
OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

4
<PAGE>

SUITABILITY FOR INVESTORS

The Class is intended for use primarily by customers of banks, certain
broker-dealers and other financial institutions who seek a convenient vehicle
in which to invest in an open-end diversified money market fund. The minimum
initial investment is $1,000. 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.

INVESTMENT PROGRAM

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

Money Market Obligations

COMMERCIAL INSTRUMENTS. The Portfolio intends to invest in commercial
instruments, including commercial paper, master notes and other short-term
corporate instruments, that are denominated in U.S. dollars and which at the
date of purchase are "First Tier" securities as defined in Rule 2a-7 under the
Investment Company Act of 1940 ("1940 Act"), as such Rule may be amended from
time to time. Briefly, "First Tier" securities are securities that are rated in
the highest rating category for short-term debt obligations by two nationally
recognized statistical rating organizations ("NRSROs") or, if only rated by one
NRSRO, are rated in the highest rating category by that NRSRO, or, if unrated,
are determined by the Portfolio's investment advisor (under the supervision of
and pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. Commercial paper
consists of short-term promissory notes issued by corporations. Commercial
paper may be traded in the secondary market after its issuance. Master notes
are unsecured demand notes that permit the investment of fluctuating amounts of
money at varying rates of interest pursuant to arrangements with issuers who
meet the quality criteria of the Portfolio. The interest rate on a master note
may fluctuate based upon changes in specified interest rates or be reset
periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master notes, if such notes have a demand
feature, the payee may demand payment of the principal amount of the note upon
relatively short notice.

5
<PAGE>

REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities described
above. 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 Fund's
Board of Directors 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) the
expense of enforcing its rights. Repurchase agreements are considered to be
loans by the Portfolio under the 1940 Act. Repurchase agreements will be
secured by securities eligible under Rule 2a-7 of the 1940 Act. For additional
information, see the Statement of Additional Information.

Investment Practices

BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money
and enter into reverse repurchase agreements 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 reverse repurchase agreement. Reverse repurchase
agreements involve the sale by the Portfolio of a portfolio security at an
agreed-upon price, date and interest payment. The Portfolio will borrow money
or enter into reverse repurchase agreements 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. Reverse
repurchase transactions are limited to a term not to exceed 92 days. The
Portfolio will use reverse repurchase agreements when the interest income to be
earned from the securities that would otherwise have to be liquidated to meet
redemption requests is greater than the interest expense of the reverse
repurchase transaction. The Portfolio will give shareholders notice of its
intent to enter into a reverse repurchase agreement in sufficient time to
permit shareholders redemptions before the Portfolio enters into any reverse
repurchase agreements. Reverse repurchase agreements involve the risk that the
market value of securities retained by the Portfolio in lieu of liquidation may
decline below the repurchase price of the securities sold by the Portfolio
which it is obligated to repurchase. The risk, if encountered, could cause a
reduction in the net asset value of the Portfolio's shares. Reverse repurchase
agreements are considered to be borrowings by the Portfolio under the 1940 Act.

6
<PAGE>

PURCHASING DELAYED DELIVERY AND WHEN-ISSUED SECURITIES. The Portfolio may
enter into delayed delivery agreements and may purchase securities on a "when-
issued" basis.

If the Portfolio enters into a delayed delivery agreement or purchases a
when-issued security, the Fund will direct its custodian bank to segregate
liquid assets (including Money Market Obligations) in an amount equal to its
delayed delivery agreement obligations or when-issued commitments. If the
market value of such securities declines, additional cash or securities will be
segregated on a daily basis so that the market value of the account will equal
the amount of the Portfolio's delayed delivery agreement obligations and when-
issued commitments. To the extent that funds are segregated, they will not be
available for new investment or to meet redemptions. Investment in securities
on a when-issued basis and use of delayed delivery agreements may increase the
Portfolio's exposure to market fluctuation, or may increase the possibility
that the Portfolio will incur a short-term loss, if the Portfolio must engage
in portfolio transactions in order to honor a when-issued commitment or accept
delivery of a security under a delayed delivery agreement. The Portfolio will
employ techniques designed to minimize these risks. No additional delayed
delivery agreements or when-issued commitments will be made by the Portfolio
if, as a result, more than 25% of the Portfolio's net assets would become so
committed.

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

INVESTMENT RESTRICTIONS

7
<PAGE>

(2) purchase securities of any one issuer (other than obligations of the
U.S. Government, its agencies or instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Portfolio's total assets
would be invested in such issuer, except as permitted by Rule 2a-7 under the
1940 Act, as such rule may be 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; or

PURCHASE OF SHARES

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 Fund"s custodian bank,
are open for business. It is expected that the Federal Reserve Bank of New York
and The Bank of New York will be closed during the next twelve months on
Saturdays and Sundays and on 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. Further,
the Portfolio reserves the right to change the time for which purchase orders
for shares of the Reserve Class 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.

Shares of the Class are sold to customers of banks, certain broker-dealers
and other financial institutions (each, an "Institution" and, collectively,
"Institutions"). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an Institution may invest in the shares of
the Class. Each Institution will render administrative support services to its
customers who are the beneficial owners of the shares of the Class. Such
services may include, among other things, establishment and maintenance of
shareholder accounts and records; assistance in processing purchase and
redemption transactions in shares of the Class; providing periodic statements
showing a customer's account balance in shares of the Class; distribution of
Fund proxy statements, annual reports and other communications to shareholders
whose accounts are serviced by the Institution; and such other services as the
Fund may reasonably request. Institutions will be required to certify to the
Fund that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration.

8
<PAGE>

by investors to effect purchases of shares of the Class. The minimum initial
investment is $1,000, and there is no minimum amount for subsequent purchases
of shares of the Class by an Institution on behalf of its customers. An
investor who proposes to open a Portfolio account with an Institution should
consult with a representative of such Institution to obtain a description of
the rules governing such an account. The Institution holds shares of the Class
registered in its name, as agent for the customer, on the books of the
Institution. A statement with regard to the customer's shares of the Class is
supplied to the customer periodically, and confirmations of all transactions
for the account of the customer are provided by the Institution to the customer
promptly upon request. In addition, each Institution sends its customers
proxies, periodic reports and other information from the Institution with
regard to the customer's shares of the Class. The customer's shares of the
Class are fully assignable and subject to encumbrance by the customer.

All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will
be established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
directly purchase additional shares of the Class, except through reinvestment
of dividends and distributions.

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 Portfolio and any funds
received for which an order has not been received will be returned to the
sending Institution. An order must specify that it is for the purchase of
shares of the "Reserve Class of the Prime Portfolio," otherwise any funds
received will be returned to the sending Institution.

The Fund 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.

REDEMPTION OF SHARES

9
<PAGE>

DIVIDENDS

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
4:00 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 at 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 the net asset value per share
of the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset
Value." Should the Fund incur or anticipate any unusual expense, loss or
depreciation which could adversely affect the income or net asset value of the
Portfolio, the Fund's Board of Directors 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 Directors 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.

10
<PAGE>

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 Fund and each Portfolio of the Fund must
specifically comply with all the provisions of the Code.

NET ASSET VALUE

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 Fund at (800)
467-8792. 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.

11
<PAGE>

REPORTS TO SHAREHOLDERS

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

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

INVESTMENT ADVISOR

For the fiscal year ended August 31, 1998, AIM received fees pursuant to the
Advisory Agreement with respect to the Portfolio which represented 0.06% of the
Portfolio's average daily net assets.

ADMINISTRATOR

FEE WAIVERS

12
<PAGE>

DISTRIBUTOR

The Fund has entered into a Master Distribution Agreement (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 directors and officers of the Fund are affiliated with FMC and AIM. The
Distribution Agreement provides that FMC has the exclusive right to distribute
shares of the Class either directly or through other broker-dealers. FMC is the
distributor of several of the mutual funds managed or advised by AIM.

FMC may, from time to time, at its expense, pay a bonus or other
consideration or incentive to dealers or banks who sell a minimum dollar amount
of the shares of the Class during a specific period of time. In some instances,
these incentives may be offered only to certain dealers or institutions who
have sold or may sell significant amounts of shares. The total amount of such
additional bonus payments or other consideration shall not exceed 0.05% of the
net asset value of the shares of the Class sold. Any such bonus or incentive
programs will not change the price paid by investors for the purchase of shares
of the Class or the amount received as proceeds from such sales. Sales of the
shares of the Class may not be used to qualify for any incentives to the extent
that such incentives may be prohibited by the laws of any jurisdiction.

DISTRIBUTION PLAN

The Fund has adopted a Master Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The Plan provides that the Fund may compensate FMC in
connection with the distribution of the shares of the Class in an amount equal
to 1.00% on an annualized basis of the average daily net assets of the
Portfolio attributable to the Class. Such amounts may be expended when and if
authorized by the Board of Directors and may be used to finance such
distribution-related services as expenses of organizing and conducting sales
seminars, printing of prospectuses and statements of additional information
(and supplements thereto) and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature and
costs of administering the Plan.

Of the compensation paid to FMC under the Plan, a service fee may be paid to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the
Class. Payments to dealers and other financial institutions in excess of 0.25%
of the average daily net assets of the Portfolio attributable to the Class
which are attributable to the customers of such dealers or financial
institutions and payments to FMC would be characterized as an asset-based sales
charge pursuant to the Plan. The Plan also imposes a cap on the total amount of
sales charges, including asset-based sales charges, that may be paid by the
Portfolio with respect to the Class. The Plan does not obligate the Fund to
reimburse FMC for the actual expenses FMC may incur in fulfilling its
obligations under the Plan on behalf of the Class. Thus, under the Plan, even
if FMC's actual expenses exceed the fee payable to FMC thereunder at any given
time, the Fund will not be obligated to pay more than that fee. If FMC's
expenses are less than the fee it receives, FMC will retain the full amount of
the fee.

The Plan may be terminated by a vote of a majority of the Qualified
Directors, or by a vote of a majority of the holders of the outstanding voting
securities of the Class. Any change in the Plan that would increase materially
the distribution expenses paid by the Class requires shareholder approval;
otherwise the Plan may be amended by the Board of Directors, including a
majority of the Qualified Directors, by votes cast in person at a meeting
called for the purpose of voting upon such amendment. As long as the Plan is in
effect, the selection or nomination of the Qualified Directors is committed to
the discretion of the Qualified Directors.

PORTFOLIO TRANSACTIONS AND BROKERAGE

13
<PAGE>

as market makers may include a spread between the bid and asked prices. The
Portfolio may also purchase securities from underwriters at prices which
include a concession paid by the issuer to the underwriter.

GENERAL INFORMATION

ORGANIZATION AND DESCRIPTION OF SHARES

The Fund was incorporated in Maryland on May 3, 1993. On October 15, 1993,
the Portfolio succeeded to the assets and assumed the liabilities of the Prime
Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a
Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of
Reorganization between the Fund and STIC. All historical financial and other
information contained in this Prospectus for periods prior to October 15, 1993
relating to the Portfolio (or a class thereof) is that of the Predecessor
Portfolio (or the corresponding class thereof). Shares of common stock of the
Fund are divided into twelve classes. Six classes, including the Class,
represent interests in the Portfolio, and six classes represent interests in
the Liquid Assets Portfolio. Each class of shares has a par value of $.001 per
share. The other classes of the Fund may have different sales charges and other
expenses which may affect performance. An investor may obtain information
concerning the Fund's other classes by contacting FMC.

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 Fund and passes upon certain legal
matters for the Fund.

SHAREHOLDER INQUIRIES

Shareholder inquiries concerning the status of an account should be directed
to the Fund at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may
be made by calling (800) 467-8792.

14
<PAGE>

YEAR 2000 COMPLIANCE PROJECT

To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking 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 reviewed to confirm year 2000
compliance upon installation. No assurance can be given that the Project will
be successful or that Fund will not otherwise be adversely affected by the year
2000 issue.

OTHER INFORMATION

15
<PAGE>

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

SHORT-TERM INVESTMENTS CO. PROSPECTUS
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 December 18, 1998
(800) 467-8792 SHORT-TERM
INVESTMENTS CO.
INVESTMENT ADVISOR
A I M ADVISORS, INC. ------------
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 PRIME PORTFOLIO
(713) 626-1919
------------
DISTRIBUTOR
FUND MANAGEMENT COMPANY RESERVE CLASS
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 467-8792 TABLE OF CONTENTS

<TABLE>
AUDITORS <CAPTION>
KPMG PEAT MARWICK LLP PAGE
700 Louisiana ----
Houston, Texas 77002 <S> <C>
SUMMARY........................ 2
CUSTODIAN TABLE OF FEES AND EXPENSES..... 4
THE BANK OF NEW YORK SUITABILITY FOR INVESTORS...... 5
90 Washington Street INVESTMENT PROGRAM............. 5
11th Floor PURCHASE OF SHARES............. 8
New York, New York 10286 REDEMPTION OF SHARES........... 9
DIVIDENDS...................... 10
TRANSFER AGENT TAXES.......................... 10
A I M FUND SERVICES, INC. NET ASSET VALUE................ 11
P.O. Box 4497 YIELD INFORMATION.............. 11
Houston, Texas 77210-4497 REPORTS TO SHAREHOLDERS........ 12
MANAGEMENT OF THE FUND......... 12
GENERAL INFORMATION............ 14
</TABLE>

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 THIS
PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND 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.

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

<PAGE>

<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS CO.
PROSPECTUS

- ------------------------------ ----------------------------------------------------------------------------------
<S> <C>

The Prime Portfolio (the "Portfolio") is a money market fund whose investment
PRIME objective is the maximization of current income to the extent consistent with
PORTFOLIO the preservation of capital and the maintenance of liquidity. The Portfolio
seeks to achieve its objective by investing in high grade money market
RESOURCE instruments, such as U.S. Government obligations, bank obligations, commercial
CLASS instruments and repurchase agreements. The instruments purchased by the
Portfolio will have maturities of sixty days or less.
DECEMBER 18, 1998
The Portfolio is a series portfolio of Short-Term Investments Co. (the
"Fund"), an open-end, diversified, series management investment company. This
Prospectus relates solely to the Resource Class of the Portfolio, a class of
shares designed to be a convenient vehicle in which institutional customers of
banks, certain broker-dealers and other financial institutions 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 RESOURCE CLASS OF THE PORTFOLIO
AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL
INFORMATION, DATED DECEMBER 18, 1998, HAS BEEN FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY INCORPORATED BY
REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION WITHOUT
CHARGE, WRITE TO THE ADDRESS BELOW OR CALL (800) 825-6858. 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 FUND.

THE PORTFOLIO'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE PORTFOLIO'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 PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
[LOGO APPEARS HERE] SHARE. SHARES OF THE PORTFOLIO INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
Fund Management Company LOSS OF PRINCIPAL.

11 Greenway Plaza
Suite 100
Houston, TX 77046-1173
(800) 825-6858

</TABLE>
<PAGE>

SUMMARY

THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE

The Fund is an open-end diversified series management investment company.
This Prospectus relates to the Resource Class (the "Class") of the Portfolio.
The Portfolio is a money market fund which invests in money market instruments,
such as U.S. Government obligations, bank obligations, commercial instruments
and repurchase agreements. The instruments purchased by the Portfolio will have
maturities of sixty days or less. 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.

Pursuant to separate prospectuses, the Fund also offers shares of other
classes of common stock of the Fund representing interests in the Portfolio:
the Cash Management Class, the Institutional Class, the Personal Investment
Class, the Private Investment Class and the Reserve Class. Such classes have
different distribution arrangements and are designed for institutional and
other categories of investors. The Fund also offers shares of classes of
another portfolio, the Liquid Assets Portfolio, each pursuant to a separate
prospectus. Such classes have different distribution arrangements and are
designed for institutional and other categories of investors. The portfolios of
the Fund are referred to collectively as the "Portfolios."

INVESTORS IN THE CLASS

PURCHASE OF SHARES

REDEMPTION OF SHARES

DIVIDENDS

CONSTANT NET ASSET VALUE

2
<PAGE>

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 a separate Master Administrative Services Agreement, AIM may
be reimbursed by the Fund for its costs of performing certain accounting and
other administrative services for the Fund. See "Management of the Fund--
Investment Advisor" and "--Administrator." 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 Fund. See "General Information--Transfer Agent and Custodian."

DISTRIBUTOR AND DISTRIBUTION PLAN

Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to the Master Distribution Plan, the Fund may pay
up to 0.20% of the average daily net assets of the Portfolio attributable to
the shares of the Class to FMC as well as certain broker-dealers or other
financial institutions as compensation for distribution-related services. See
"Purchase of Shares" and "Management of the Fund--Distribution Plan."

SPECIAL CONSIDERATIONS

3
<PAGE>

TABLE OF FEES AND EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES-- RESOURCE CLASS*
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)................................................................ None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price)....................................................... None
Deferred Sales Load (as a percentage of original purchase price or re-
demption proceeds, as applicable)..................................... None
Redemption Fees (as a percentage of amount redeemed, if applicable).... None
Exchange Fee........................................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES -- RESOURCE CLASS (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Management Fees........................................................ 0.06%
12b-1 Fees (after fee waivers)**....................................... 0.16%
Other Expenses......................................................... 0.03%
----
Total Operating Expenses --Resource Class**............................ 0.25%
====
</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.

** Had there been no fee waivers, 12b-1 fees and Total Operating Expenses would
have been 0.20% and 0.29%, respectively.

EXAMPLE

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

<TABLE>
<S> <C>
1 year........................................................... $ 3
3 years.......................................................... $ 8
5 years.......................................................... $14
10 years......................................................... $32
</TABLE>

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--Resource Class" remain the same in the years
shown.

THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE REPRESENTATION OF PAST
OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

4
<PAGE>

FINANCIAL HIGHLIGHTS

Shown below are the per share data, ratios and supplemental data
(collectively, "data") for each of the years in the two-year period ended
August 31, 1998 and for the period January 16, 1996 (date operations commenced)
through August 31, 1996. The data has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report on the financial statements and the related
notes appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
JANUARY 16,
1996
(COMMENCEMENT
OF
OPERATIONS)
TO AUGUST 31,
1998 1997 1996
-------- -------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period..... $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income.................. 0.05 0.05 0.03
-------- -------- -------
Less distributions:
Dividends from net investment income... (0.05) (0.05) (0.03)
-------- -------- -------
Net asset value, end of period........... $ 1.00 $ 1.00 $ 1.00
======== ======== =======
Total return............................. 5.54% 5.36% 5.23%(a)
======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted). $698,380 $161,701 $58,012
======== ======== =======
Ratio of expenses to average net
assets(b)............................... 0.25%(c) 0.25% 0.25%(a)
======== ======== =======
Ratio of net investment income to average
net assets(d)........................... 5.40%(c) 5.25% 5.18%(a)
======== ======== =======
</TABLE>
(a) Annualized.

(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursement were
0.29%, 0.29% and 0.29% (annualized), for the periods 1998-1996,
respectively.

(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.36%, 5.21% and 5.14% (annualized), for the periods
1998-1996, respectively.

SUITABILITY FOR INVESTORS

The shares of the Class are intended for use primarily by institutional
customers of banks, certain broker-dealers and other financial institutions who
seek a convenient vehicle in which to invest in an open-end diversified money
market fund. It is expected that the shares of the Class may be particularly
suitable investments for corporate cash managers, municipalities or other
public entities. 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. The minimum initial investment is $10,000.

INVESTMENT PROGRAM

INVESTMENT OBJECTIVE

5
<PAGE>

instruments of lesser quality. The Portfolio consists exclusively of money
market instruments which have maturities of 60 days or less from the date of
purchase (except for securities subject to repurchase agreements which may have
longer maturities), and normally does not maintain a dollar-weighted average
maturity of its portfolio securities in excess of 40 days.

INVESTMENT POLICIES

Money Market Obligations

COMMERCIAL INSTRUMENTS. The Portfolio intends to invest in commercial
instruments, including commercial paper, master notes and other short-term
corporate instruments, that are denominated in U.S. dollars and which at the
date of purchase are "First Tier" securities as defined in Rule 2a-7 under the
Investment Company Act of 1940 ("1940 Act"), as such Rule may be amended from
time to time. Briefly, "First Tier" securities are securities that are rated in
the highest rating category for short-term debt obligations by two nationally
recognized statistical rating organizations ("NRSROs") or, if only rated by one
NRSRO, are rated in the highest rating category by that NRSRO, or, if unrated,
are determined by the Portfolio's investment advisor (under the supervision of
and pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. Commercial paper
consists of short-term promissory notes issued by corporations. Commercial
paper may be traded in the secondary market after its issuance. Master notes
are unsecured demand notes that permit the investment of fluctuating amounts of
money at varying rates of interest pursuant to arrangements with issuers who
meet the quality criteria of the Portfolio. The interest rate on a master note
may fluctuate based upon changes in specified interest rates or be reset
periodically according to a prescribed formula or may be a set rate. Although
there is no secondary market in master demand notes, if such notes have a
demand feature, the payee may demand payment of the principal amount of the
note upon relatively short notice.

6
<PAGE>

Investment Practices

PURCHASING DELAYED DELIVERY AND WHEN-ISSUED SECURITIES.The Portfolio may
enter into delayed delivery agreements and may purchase securities on a "when-
issued" basis.

7
<PAGE>

portfolio transactions in order to honor a when-issued commitment or accept
delivery of a security under a delayed delivery agreement. The Portfolio will
employ techniques designed to minimize these risks. No additional delayed
delivery agreements or when-issued commitments will be made by the Portfolio
if, as a result, more than 25% of the Portfolio's net assets would become so
committed.

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

INVESTMENT RESTRICTIONS

8
<PAGE>

PURCHASE OF SHARES

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 Fund's custodian bank,
are open for business. It is expected that the Federal Reserve Bank of New York
and The Bank of New York will be closed during the next twelve months on
Saturdays and Sundays and on 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. Further,
the Portfolio reserves the right to change the time for which purchase orders
for shares of the Resource Class 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.

Prior to the initial purchase of shares of the Class, an Account Application,
which can be obtained from the Transfer Agent, must be completed and sent to
the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497. 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. An
investor must open an account in the shares of the Class through an Institution
in accordance with the procedures established by such Institution. Each
Institution separately determines the rules applicable to accounts in the
shares of the Class opened with it, including minimum initial and subsequent
investment requirements and the procedures to be followed by investors to
effect purchases of shares of the Class. The minimum initial investment is
$10,000, and there is no minimum amount for subsequent purchases of shares of
the Class by an Institution on behalf of its customers. An investor who
proposes to open a Portfolio account with an Institution should consult with a
representative of such Institution to obtain a description of the rules
governing such an account. The Institution holds shares of the Class registered
in its name, as agent for the customer, on the books of the Institution. A
statement with regard to the customer's shares of the Class is supplied to the
customer periodically, and confirmations of all transactions for the account of
the customer are provided by the Institution to the customer promptly upon
request. In addition, the Institution sends to each customer proxies, periodic
reports and other information with regard to the customer's shares of the
Class. The customer's shares of the Class are fully assignable and subject to
encumbrance by the customer.

9
<PAGE>

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 Portfolio and any funds
received for which an order has not been received will be returned to the
sending Institution. An order must specify that it is for the purchase of
shares of the "Resource Class of the Prime Portfolio," otherwise any funds
received will be returned to the sending Institution.

The Fund 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.

REDEMPTION OF SHARES

10
<PAGE>

DIVIDENDS

Dividends from the net income of the Portfolio are declared daily to
shareholders of record of the Class immediately after 4:00 p.m. Eastern Time on
the day of declaration. Net income for dividend purposes is determined daily as
of 4:00 p.m. Eastern Time. The dividend accrued and paid for the Class will
consist of (a) income of the Portfolio, the allocation of which is based upon
the Class's pro rata share of the total outstanding shares representing an
interest in the Portfolio, less (b) Fund expenses, such as custodian fees,
directors' fees, accounting and legal expenses, based upon the Class's pro rata
share of the net assets of the Portfolio, less (c) expenses directly
attributable to the 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
4:00 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 at 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.

TAXES

11
<PAGE>

NET ASSET VALUE

YIELD INFORMATION

Yield information for the Class can be obtained by calling the Fund at (800)
825-6858. 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 an investor before
making an investment in the Portfolio.

For the seven-day period ended August 31, 1998, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the annualized current
yield for the period) were 5.43% and 5.57%, respectively. These yields are
quoted for illustration purposes only. The yields for any other seven-day
period may be substantially different from the yields quoted above.

REPORTS TO SHAREHOLDERS

12
<PAGE>

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

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

INVESTMENT ADVISOR

ADMINISTRATOR

FEE WAIVERS

DISTRIBUTOR

13
<PAGE>

DISTRIBUTION PLAN

The Fund has adopted a Master Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The Plan provides that the Fund may compensate FMC in
connection with the distribution of shares of the Class in an amount equal to
0.20% on an annualized basis of the average daily net assets of the Portfolio
attributable to the Class. Such amounts may be expended when and if authorized
by the Board of Directors and may be used to finance such distribution-related
services as expenses of organizing and conducting sales seminars, printing of
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature and costs of administering the
Plan.

PORTFOLIO TRANSACTIONS AND BROKERAGE

14
<PAGE>

GENERAL INFORMATION

ORGANIZATION AND DESCRIPTION OF SHARES

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 Fund and passes upon certain legal
matters for the Fund.

SHAREHOLDER INQUIRIES

Shareholder inquiries concerning the status of an account should be directed
to the Fund at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may
be made by calling (800) 825-6858.

YEAR 2000 COMPLIANCE PROJECT

To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking 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 reviewed to confirm year 2000
compliance upon installation. No assurance can be given that the Project will
be successful or that the Fund will not otherwise be adversely affected by the
year 2000 issue.

OTHER INFORMATION

15
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------- ------------------------------------------------------------
- --------------------------------------------------------- ------------------------------------------------------------
<S> <C>

SHORT-TERM INVESTMENTS CO. PROSPECTUS
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 December 18, 1998
(800) 825-6858
SHORT-TERM
INVESTMENT ADVISOR INVESTMENTS CO.
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100 ------------
Houston, Texas 77046-1173
(713) 626-1919 PRIME PORTFOLIO

DISTRIBUTOR ------------
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100 RESOURCE CLASS
Houston, Texas 77046-1173
(800) 825-6858 TABLE OF CONTENTS

AUDITORS PAGE
KPMG PEAT MARWICK LLP ----
700 Louisiana SUMMARY................................................. 2
Houston, Texas 77002 TABLE OF FEES AND EXPENSES.............................. 4
FINANCIAL HIGHLIGHTS.................................... 5
CUSTODIAN SUITABILITY FOR INVESTORS............................... 5
THE BANK OF NEW YORK INVESTMENT PROGRAM...................................... 5
90 Washington Street PURCHASE OF SHARES...................................... 9
11th Floor REDEMPTION OF SHARES.................................... 10
New York, New York 10286 DIVIDENDS............................................... 11
TAXES................................................... 11
TRANSFER AGENT NET ASSET VALUE......................................... 12
A I M FUND SERVICES, INC. YIELD INFORMATION....................................... 12
P.O. Box 4497 REPORTS TO SHAREHOLDERS................................. 12
Houston, Texas 77210-4497 MANAGEMENT OF THE FUND.................................. 13
GENERAL INFORMATION..................................... 15