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AIM BALANCED FUND
AIM GLOBAL UTILITIES FUND
AIM GROWTH FUND
AIM HIGH YIELD FUND
AIM INCOME FUND
AIM INTERMEDIATE GOVERNMENT FUND
AIM MONEY MARKET FUND
AIM MUNICIPAL BOND FUND
AIM VALUE FUND
(SERIES PORTFOLIOS OF AIM FUNDS GROUP)
Supplement dated December 16, 1996
to the Prospectus dated May 1, 1996, as revised June 11, 1996,
and as supplemented on October 10, 1996 and November 5, 1996
APPROVAL OF NEW ADVISORY, ADMINISTRATIVE SERVICES AND DISTRIBUTION AGREEMENTS
On December 11, 1996, the Board of Trustees (the "Board") of AIM Funds
Group (the "Trust") approved a new investment advisory agreement, subject to
shareholder approval, between A I M Advisors, Inc. ("AIM") and the Trust with
respect to AIM Balanced Fund, AIM Global Utilities Fund, AIM Growth Fund, AIM
High Yield Fund, AIM Income Fund, AIM Intermediate Government Fund, AIM Money
Market Fund, AIM Municipal Bond Fund and AIM Value Fund (the "Funds").
Shareholders will be asked to approve the new investment advisory agreement at
an annual meeting of shareholders to be held on February 7, 1997 (the "Annual
Meeting"). The Board has also approved a new administrative services agreement
with AIM and a new distribution agreement with A I M Distributors, Inc. There
have been no material changes to the terms of the new agreements, including the
fees payable by the Funds. No change is anticipated in the investment advisory
or other personnel responsible for the Funds as a result of these new
agreements.
The Board has approved these new agreements because the Funds'
corresponding existing agreements will terminate upon consummation of the
proposed merger of A I M Management Group Inc., the parent of AIM, into a
subsidiary of INVESCO plc. INVESCO plc and its subsidiaries are an independent
investment management group engaged in institutional investment management and
retail mutual fund businesses in the United States, Europe and the Pacific
region. It is contemplated that the merger will occur on February 28, 1997.
Provided that each Fund's shareholders approve the new advisory agreement at
the Annual Meeting and the merger is consummated, the new advisory agreement
with respect to each such Fund, as well as the new administrative services and
distribution agreements, will automatically become effective as of the closing
of the merger.
PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT POLICIES
The Board has unanimously approved the elimination of and changes to
certain fundamental investment policies of each Fund, subject to shareholder
approval. Shareholders will be asked to approve these changes at the Annual
Meeting. If approved, they will become effective on March 1, 1997.
Investment in Other Investment Companies
Each of the Funds is currently subject to a fundamental investment
policy which generally prohibits it from investing in other investment
companies. The Board has approved the elimination of these fundamental
investment policies, and the amendment of other fundamental investment policies
that relate to the ability to invest in other investment companies. The
proposed changes permit the Funds to invest in other investment companies to
the extent permitted by the Investment Company Act of 1940, and rules and
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regulations thereunder, and, if applicable, exemptive orders granted by the
Securities and Exchange Commission.
For additional information regarding the proposed changes described
above, see the Funds' Statement of Additional Information dated May 1, 1996, as
supplemented December 16, 1996 (the "Supplemented Statement of Additional
Information").
Investment in Puts and Covered Calls
AIM Global Utilities Fund currently is prohibited from investing in
puts, straddles, spreads or any combination thereof, although it may write
covered call options and purchase and sell options on stock index futures
contracts and stock indices. AIM Growth Fund and AIM Value Fund currently are
prohibited from investing in puts, calls, straddles, spreads or any combination
thereof, although they may invest in financial futures and options thereon for
hedging purposes and may sell covered call options. Such prohibitions are
fundamental investment policies of those Funds. The Board has approved the
elimination of the above prohibitions, and will adopt a nonfundamental policy
(which may changed without further shareholder approval) that provides that
each of AIM Global Utilities Fund, AIM Growth Fund and AIM Value Fund may
purchase put options and may only write call options on a "covered" basis.
Writing a call option obligates a Fund to sell or deliver the
option's underlying security in return for a strike price upon exercise of the
option. A call option is "covered" if a Fund owns or has the right to acquire
the underlying security subject to the call. By purchasing a put option, a
Fund obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. The purpose of put and covered call option
transactions is to hedge against changes in the market value of a Fund's
portfolio securities caused by fluctuating interest rates, fluctuating currency
exchange rates and changing market conditions, and to close out or offset
existing positions in such options. AIM Global Utilities Fund, AIM Growth Fund
and AIM Value Fund will not use leverage in their strategies involving put and
covered call options, and will make such investments for hedging purposes only.
For additional information regarding the proposed changes, see the
Supplemented Statement of Additional Information.
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