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AIM FLOATING RATE FUND
Supplement dated December 10, 1999
to the Prospectus dated May 3, 1999
as Supplemented October 1, 1999
This Supplement supersedes and replaces in its entirety the Supplement dated
October 1, 1999.
The following replaces in its entirety the second sentence in the second
paragraph appearing under the heading "DETERMINATION OF NET ASSET VALUE" on
Page 27 of the Prospectus:
"Under the Portfolio's current guidelines, Corporate Loans and
Corporate Debt Securities for which an active secondary market
exists to a reliable degree in the opinion of the Sub-advisor and
for which the Sub-advisor can obtain one or more quotations from
banks or dealers in Corporate Loans and Corporate Debt Securities
will be valued by the Sub-advisor utilizing bid quotes of the
market."
The following is added as a second paragraph under the heading "OTHER
INFORMATION - ORGANIZATION OF THE FUND" on Page 29 of the Prospectus:
"On December 9, 1999, the Board of Directors of the Fund
approved a restructuring of the Fund (the "Restructuring") and
recommended that it be submitted to the Fund's shareholders for
their approval. The Restructuring would include reorganizing the
Fund as a Delaware business trust and eliminating the current
"master/feeder" investment structure. The Restructuring would also
allow the Fund to offer multiple classes of shares and would commit
the Fund to making repurchase offers each quarter, thereby assuring
shareholders of at least partial liquidity for their shares. It is
anticipated that the Restructuring proposal will be submitted to
Fund shareholders in February, 2000, and, if approved, that the
Restructuring would be completed by March, 2000."
The following replaces in its entirety the fifth paragraph under the heading
"INVESTMENT OBJECTIVE AND POLICIES" on page 6 of the Prospectus:
"The Portfolio may invest up to 20% of its total assets in any
of the following: (a) senior floating rate loans made and notes
issued on an unsecured basis to Borrowers that meet the credit
standards established by AIM and the Sub-advisor ("Unsecured
Corporate Loans" and "Unsecured Corporate Debt Securities"); (b)
secured or unsecured short-term debt obligations including, but not
limited to, U.S. Government and Government agency securities (some
of which may not be backed by the full faith and credit of the
United States), money market instruments (such as certificates of
deposit and bankers' acceptances), corporate and commercial
obligations (such as commercial paper and medium-term notes) and
repurchase agreements, none of which are required to be secured but
all of which will be (or the securities of counterparties associated
therewith will be) investment grade (i.e., rated Baa, P-3 or higher
by Moody's or BBB, A-3 or higher by Standard & Poor's or, if
unrated, determined to be of comparable quality in the judgment of
the Sub-advisor); (c) fixed rate obligations of U.S. or non-U.S.
companies that meet the credit standards established by AIM and the
Sub-advisor and that the Portfolio expects to swap for a floating
rate structure; or (d) cash or cash equivalents, except that the
Portfolio, pursuant to an exemptive order granted by the SEC, may
invest up to 25% of its total assets in shares of money market
investment companies advised by AIM or its affiliates ("Affiliated
Money Market Funds"). In general, a purchase of
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investment company securities may result in the duplication of fees
and expenses. With respect to the Portfolio's purchase of shares of
Affiliated Money Market Funds, the Portfolio will indirectly pay
the advisory fees and other operating expenses of the Affiliated
Money Market Funds. Securities rated Baa, BBB, P-3 or A-3 are
considered to have adequate capacity for payment of principal and
interest, but are more susceptible to adverse economic conditions
and, in the case of securities rated BBB or Baa (or comparable
unrated securities), have speculative characteristics. Such
securities or cash will not exceed 20% of the Portfolio's total
assets except (i) during interim periods pending investment of the
net proceeds of public offerings of the Fund's securities, (ii)
pending reinvestment of proceeds of the sale of a security, and
(iii) during temporary defensive periods when, in the opinion of
the Sub-advisor, suitable Corporate Loans and Corporate Debt
Securities are not available for investment by the Portfolio or
prevailing market or economic conditions warrant. During such
periods, the Portfolio may also invest up to 25% of its total
assets in Affiliated Money Market Funds. Investments in Unsecured
Corporate Loans and Unsecured Corporate Debt Securities will be
made on the same basis as investments in Corporate Loans and
Corporate Debt Securities as described herein, except with respect
to collateral requirements. To a limited extent, incidental to and
in connection with its lending activities, the Portfolio also may
acquire warrants and other equity securities."
