<PAGE> 1
ADVISOR CLASS
AIM BASIC VALUE FUND
AIM SMALL CAP GROWTH FUND
Supplement dated September 13, 1999
to the Statement of Additional Information dated May 3, 1999
The following replaces in its entirety the section "DEPOSITARY RECEIPTS" on
page 6 of the Statement of Additional Information:
"FOREIGN SECURITIES
To the extent consistent with their respective investment
objectives, each of the Funds may invest up to 25% of its total assets in
foreign securities. For purposes of computing such limitation American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") and other
securities representing underlying securities of foreign issuers are treated as
foreign securities. These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. ADRs are
receipts typically issued by a United States bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs are receipts issued in Europe which evidence a similar ownership
arrangement. Generally, ADRs, in registered form, are designed for use in the
United States securities markets, and EDRs, in bearer form, are designed for
use in European securities markets. ADRs and EDRs may be listed on stock
exchanges, or traded in OTC markets in the United States or Europe, as the case
may be. ADRs, like other securities traded in the United States, will be subject
to negotiated commission rates.
To the extent a Fund invests in securities denominated in foreign
currencies, each Fund bears the risk of changes in the exchange rates between
U. S. currency and the foreign currency, as well as the availability and status
of foreign securities markets. These securities will be marketable equity
securities (including common and preferred stock, depositary receipts for stock
and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market. Each of the
Funds may also invest in foreign securities listed on recognized U.S.
securities exchanges or traded in the U.S. over-the-counter market. Such
foreign securities may be issued by foreign companies located in developing
countries in various regions of the world. A "developing country" is a country
in the initial stages of its industrial cycle. As compared to investment in the
securities markets of developed countries, investment in the securities markets
of developing countries involves exposure to markets that may have
substantially less trading volume and greater price volatility, economic
structures that are less diverse and mature, and political systems that may be
less stable.
Investments by a Fund in foreign securities, whether denominated in
U.S. currencies or foreign currencies, may entail all of the risks set forth
below. Investments by a Fund in ADRs, EDRs or similar securities also may
entail some or all of the risks as set forth below.
<PAGE> 2
Currency Risk. The value of each Fund's foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated and increases when the
value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and
Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a
common European currency known as the "euro" and each member's local currency
became a denomination of the euro. It is anticipated that each participating
country will replace its local currency with the euro on July 1, 2002. Any
other European country that is a member of the European Union and satisfies the
criteria for participation in the EMU may elect to participate in the EMU and
may supplement its existing currency with euro. The anticipated replacement of
existing currencies with the euro on July 1, 2002 could cause market
disruptions before or after July 1, 2002 and could adversely affect the value
of securities held by a Fund.
Political and Economic Risk. The economies of many of the countries
in which the Funds may invest are not as developed as the United States economy
and may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of each
Fund's investments.
Regulatory Risk. Foreign companies are not registered with the SEC
and are generally not subject to the regulatory controls imposed on United
States issuers and, as a consequence, there is generally less publicly
available information about foreign securities than is available about domestic
securities. Foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic companies. Income from foreign securities owned by
the Funds may be reduced by a withholding tax at the source, which tax would
reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in
which the Funds invest will have substantially less trading volume than the
major United States markets. As a result, the securities of some foreign
companies may be less liquid and experience more price volatility than
comparable domestic securities. Increased custodian costs as well as
administrative costs (such as the need to use foreign custodians) may be
associated with the maintenance of assets in foreign jurisdictions. There is
generally less government regulation and supervision of foreign stock
exchanges, brokers and issuers which may make it difficult to enforce
contractual obligations. In addition, transaction costs in foreign securities
markets are likely to be higher, since brokerage commission rates in foreign
countries are likely to be higher than in the United States."
<PAGE> 3
The following replaces in its entirety the first paragraph under the heading
"BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS" on page 7 of
the Statement of Additional Information:
"Each Fund's borrowings will not exceed 33 1/3% of its total
assets, i.e., each Fund's total assets will equal at least 300% of the amount
of outstanding borrowings. If market fluctuations in the value of a Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Each Fund may not make additional investments if borrowings exceed
5% of its total assets. A Fund may borrow in connection with meeting requests
for the redemption of a Fund's shares. Any borrowing by a Fund may cause
greater fluctuation in the value of its shares than would be the case if the
Fund did not borrow."
<PAGE> 4
CLASS A, B AND C SHARES
AIM BASIC VALUE FUND
AIM SMALL CAP GROWTH FUND
Supplement dated September 13, 1999
to the Statement of Additional Information dated May 3, 1999
The following replaces in its entirety the section "DEPOSITARY RECEIPTS" on
page 6 of the Statement of Additional Information:
"FOREIGN SECURITIES
To the extent consistent with their respective investment
objectives, each of the Funds may invest up to 25% of its total assets in
foreign securities. For purposes of computing such limitation American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") and other
securities representing underlying securities of foreign issuers are treated as
foreign securities. These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. ADRs are
receipts typically issued by a United States bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs are receipts issued in Europe which evidence a similar ownership
arrangement. Generally, ADRs, in registered form, are designed for use in the
United States securities markets, and EDRs, in bearer form, are designed for
use in European securities markets. ADRs and EDRs may be listed on stock
exchanges, or traded in OTC markets in the United States or Europe, as the case
may be. ADRs, like other securities traded in the United States, will be subject
to negotiated commission rates.
To the extent a Fund invests in securities denominated in foreign
currencies, each Fund bears the risk of changes in the exchange rates between
U. S. currency and the foreign currency, as well as the availability and status
of foreign securities markets. These securities will be marketable equity
securities (including common and preferred stock, depositary receipts for stock
and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market. Each of the
Funds may also invest in foreign securities listed on recognized U.S.
securities exchanges or traded in the U.S. over-the-counter market. Such
foreign securities may be issued by foreign companies located in developing
countries in various regions of the world. A "developing country" is a country
in the initial stages of its industrial cycle. As compared to investment in the
securities markets of developed countries, investment in the securities markets
of developing countries involves exposure to markets that may have
substantially less trading volume and greater price volatility, economic
structures that are less diverse and mature, and political systems that may be
less stable.
Investments by a Fund in foreign securities, whether denominated in
U.S. currencies or foreign currencies, may entail all of the risks set forth
below. Investments by a Fund in ADRs, EDRs or similar securities also may
entail some or all of the risks as set forth below.
<PAGE> 5
Currency Risk. The value of each Fund's foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated and increases when the
value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and
Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a
common European currency known as the "euro" and each member's local currency
became a denomination of the euro. It is anticipated that each participating
country will replace its local currency with the euro on July 1, 2002. Any
other European country that is a member of the European Union and satisfies the
criteria for participation in the EMU may elect to participate in the EMU and
may supplement its existing currency with euro. The anticipated replacement of
existing currencies with the euro on July 1, 2002 could cause market
disruptions before or after July 1, 2002 and could adversely affect the value
of securities held by a Fund.
Political and Economic Risk. The economies of many of the countries
in which the Funds may invest are not as developed as the United States economy
and may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of each
Fund's investments.
Regulatory Risk. Foreign companies are not registered with the SEC
and are generally not subject to the regulatory controls imposed on United
States issuers and, as a consequence, there is generally less publicly
available information about foreign securities than is available about domestic
securities. Foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic companies. Income from foreign securities owned by
the Funds may be reduced by a withholding tax at the source, which tax would
reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in
which the Funds invest will have substantially less trading volume than the
major United States markets. As a result, the securities of some foreign
companies may be less liquid and experience more price volatility than
comparable domestic securities. Increased custodian costs as well as
administrative costs (such as the need to use foreign custodians) may be
associated with the maintenance of assets in foreign jurisdictions. There is
generally less government regulation and supervision of foreign stock
exchanges, brokers and issuers which may make it difficult to enforce
contractual obligations. In addition, transaction costs in foreign securities
markets are likely to be higher, since brokerage commission rates in foreign
countries are likely to be higher than in the United States."
<PAGE> 6
The following replaces in its entirety the first paragraph under the heading
"BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS" on page 8 of
the Statement of Additional Information:
"Each Fund's borrowings will not exceed 33 1/3% of its total
assets, i.e., each Fund's total assets will equal at least 300% of the amount
of outstanding borrowings. If market fluctuations in the value of a Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Each Fund may not make additional investments if borrowings exceed
5% of its total assets. A Fund may borrow in connection with meeting requests
for the redemption of a Fund's shares. Any borrowing by a Fund may cause
greater fluctuation in the value of its shares than would be the case if the
Fund did not borrow."
