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AIM MUNICIPAL BOND FUND
Supplement dated September 29, 2000
to the Prospectus dated June 1, 2000
The following replaces in its entirety the first paragraph appearing under
"INVESTMENT OBJECTIVE AND STRATEGIES" on page 1 of the Prospectus:
"The fund's investment objective is to achieve a high level of current
income exempt from federal income taxes, consistent with the
preservation of principal. The fund's investment objective may be
changed by the Board of Trustees without shareholder approval. The
fund will attempt to achieve its objective by investing in a
diversified portfolio of municipal bonds and other municipal
securities."
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AIM INVESTMENT SECURITIES FUNDS
AIM HIGH YIELD FUND
AIM HIGH YIELD FUND II
AIM INCOME FUND
AIM INTERMEDIATE GOVERNMENT FUND
AIM MONEY MARKET FUND
AIM MUNICIPAL BOND FUND
AND
CLASS A SHARES OF AIM LIMITED MATURITY TREASURY FUND
Supplement dated September 29, 2000 to the
Statement of Additional Information dated June 1, 2000
The following replaces in its entirety the second paragraph appearing under the
heading "INVESTMENT STRATEGIES AND RISKS -- MUNICIPAL BOND" on page 16 of the
Statement of Additional Information:
"For purposes of the Fund's investment policies and
limitations, the term "municipal bonds" includes debt obligations of
varying maturities issued to obtain Funds for various public purposes,
including the construction of a wide range of public facilities, the
refunding of outstanding obligations, the obtaining of Funds for
general operating expenses and the lending of such Funds to other
public institutions and facilities. In addition, certain types of
industrial development bonds are issued by or on behalf of public
authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated facilities
("private activity bonds"). Such obligations are considered to be
municipal bonds appropriate for investment by the Fund, provided that
the interest paid thereon, in the opinion of bond counsel, is exempt
from federal income taxes.
The Fund may also invest in municipal lease obligations,
which may take the form of a lease, an installment purchase or a
conditional sales contract. Municipal lease obligations are issued by
state and local governments and authorities to acquire land, equipment
and facilities such as state and municipal vehicles,
telecommunications and computer equipment, and other capital assets.
Interest payments on qualifying municipal leases are exempt from
federal income taxes. The Fund may purchase these obligations
directly, or they may purchase participation interests in such
obligations. Municipal leases are generally subject to greater risks
than general obligation or revenue bonds. State laws set forth
requirements that states or municipalities must meet in order to issue
municipal obligations, and such obligations may contain a covenant by
the issuer to budget for, appropriate, and make payments due under the
obligation. However, certain municipal lease obligations may contain
"non-appropriation" clauses which provide that the issuer is not
obligated to make payments on the obligation in future years unless
funds have been appropriated for this purpose each year. Accordingly,
such obligations are subject to "non-appropriation" risk. While
municipal leases are secured by the underlying capital asset, it may
be difficult to dispose of such assets in the event of
non-appropriation or other default. All direct investments by the Fund
in municipal lease obligations shall be deemed illiquid and shall be
valued according to the Fund's Procedures for Valuing Securities
current at the time of such valuation.
As used in this Statement of Additional Information, interest
which is "tax-exempt" or "exempt from federal income taxes" means
interest on municipal securities which is excluded from gross income
for federal income tax purposes, but which may give rise to federal
alternative minimum tax liability. The principal and interest payments
on private activity bonds (such as industrial development or pollution
control bonds) are
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the responsibility of the industrial user and, therefore, are not
backed by the taxing power of the issuing municipality. Such
obligations are included within the term municipal bonds if the
interest paid thereon qualifies for exemption from federal income tax,
but the interest on private activity bonds will be considered to be an
item of preference for purposes of alternative minimum tax liability
under the Internal Revenue Code of 1986, as amended (the "Code"). See
"Dividends, Distributions and Tax Matters" below."
Effective October 10, 2000, The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, will act as custodian of all securities and
cash of AIM Money Market Fund.
