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[AIM LOGO APPEARS HERE] 
 
                THE AIM FAMILY OF FUNDS--Registered Trademark--
 
                         AIM EUROPEAN DEVELOPMENT FUND
 
             (A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.)
           
PROSPECTUS
November 12, 1997
as revised 
January 2, 1998
 
           AIM EUROPEAN DEVELOPMENT FUND (the "Fund") is a diversified, series
           investment portfolio of AIM International Funds, Inc. (the
           "Company"), an open-end, series, management investment company. The
           Fund seeks to provide long-term growth of capital. There is no
           assurance that the Fund will attain its investment objective. The
           Fund seeks to achieve its objective by investing in a diversified
           portfolio of European equity securities, the issuers of which are
           considered by the Fund's investment advisor to have strong earnings
           momentum or demonstrate other potential for capital appreciation.
 
           The Fund has the ability to invest a significant portion of its total
           assets in securities of European issuers located in "emerging
           markets." See "Risk Factors."
 
           This Prospectus sets forth basic information about the Fund that
           prospective investors should know before investing. It should be read
           and retained for future reference. A Statement of Additional
           Information, dated November 12, 1997, as revised January 2, 1998, has
           been filed with the United States Securities and Exchange Commission
           (the "SEC") and is incorporated herein by reference. The Statement of
           Additional Information is available without charge upon written
           request to the Company at P.O. Box 4739, Houston, Texas 77210-4739 or
           by calling (800) 347-4246. 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. Additional information about the 
           Fund may also be obtained on the Web at http://www.aimfunds.com.
 
           THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
           OR ENDORSED BY, ANY BANK, AND THE FUND'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.
           SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
           LOSS OF PRINCIPAL.
 
           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.
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                               TABLE OF CONTENTS
 
                                               
                                             
                                             PAGE                                                   PAGE
                                             ----                                                   ----
                                                                                         
SUMMARY..................................       2      INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUND.................................       4        FUNDS--Registered Trademark--..........     A-1
  Table of Fees and Expenses.............       4        Introduction to The AIM Family of
  Performance............................       5           Funds...............................     A-1
  Investment Objective and Policies......       5        How to Purchase Shares.................     A-1
  Hedging Strategies and Other Investment                Terms and Conditions of Purchase of the
     Policies............................       6           AIM
  Risk Factors...........................       9           Funds...............................     A-2
  Investment Restrictions................      11        Special Plans..........................     A-9
  Management.............................      11        Exchange Privilege.....................    A-11
  Organization of the Company............      14        How to Redeem Shares...................    A-13
                                                         Determination of Net Asset Value.......    A-17
                                                         Dividends, Distributions and Tax
                                                            Matters.............................    A-18
                                                         General Information....................    A-20
                                                       APPLICATION INSTRUCTIONS.................     B-1

 
                                    SUMMARY
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  THE FUND. AIM International Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end, series, management investment company.
Currently the Company offers six separate series portfolios. This Prospectus
relates to AIM EUROPEAN DEVELOPMENT FUND (the "Fund"). The Company also offers
other classes of shares in five other investment portfolios, AIM ASIAN GROWTH
FUND ("ASIAN FUND"), AIM GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH
FUND"), AIM GLOBAL GROWTH FUND ("GROWTH FUND"), AIM GLOBAL INCOME FUND ("INCOME
FUND"), and AIM INTERNATIONAL EQUITY FUND ("EQUITY FUND"), (collectively, with
AIM EUROPEAN DEVELOPMENT FUND, the "Funds") each of which pursues unique
investment objectives. All such other Funds offer multiple classes of shares to
different types of investors. The shares of the other Funds of the Company have
different sales charges and expenses, which may affect performance. To obtain
information about ASIAN FUND, AGGRESSIVE GROWTH FUND, GROWTH FUND, INCOME FUND
or EQUITY FUND, call (800) 347-4246. See "General Information."
 
  The investment objective of the Fund is to provide long-term growth of
capital. The Fund seeks to achieve its objective by investing in a diversified
portfolio of European equity securities, the issuers of which are considered by
the Fund's investment advisor to have strong earnings momentum or demonstrate
other potential for capital appreciation. Any income realized by the Fund will
be incidental and will not be an important criterion in the selection of
portfolio securities. Under normal market conditions, the Fund will invest at
least 80% of its total assets in marketable equity securities (including common
and preferred stock, depositary receipts for stock and other securities having
the characteristics of stock) of European companies. The Fund may satisfy the
foregoing requirement in part by investing up to 20% of its total assets in
securities exchangeable for or convertible into equity securities. Under normal
market conditions, at least three European countries will be represented in the
Fund's portfolio of investments. The Fund may invest up to 65% of its total
assets in securities of European issuers located in "developing" countries or
"emerging markets." The Fund may invest up to 20% of its total assets in
securities of non-European companies.
 
  The Fund intends to achieve its investment objective by using a fully managed
investment policy providing for the selection of securities which meet certain
quantitative standards determined by AIM. The Fund will also seek to spread its
investments among countries or regions in accordance with the investment
advisor's assessment of prospects for relative economic growth, political
conditions, currency exchange fluctuations and other relevant factors. For more
complete information on the Fund's investment objective, policies and
strategies, see "Investment Objective and Policies" and "Hedging Strategies and
Other Investment Policies."
 
  RISK FACTORS. THE FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING
INTERNATIONAL DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH (A)
INVESTMENT IN FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND
ECONOMIC RISK, REGULATORY RISK AND MARKET RISK; AND (B) INVESTMENT IN "EMERGING
MARKETS," WHICH INVOLVE EXPOSURE TO ECONOMIC STRUCTURES THAT ARE GENERALLY LESS
DIVERSE AND MATURE THAN IN THE UNITED STATES, AND TO POLITICAL SYSTEMS THAT MAY
BE LESS STABLE. IT IS NOT DESIGNED AS A COMPLETE INVESTMENT PROGRAM. FOR A
DISCUSSION OF THESE RISKS, SEE "RISK FACTORS."
 
  MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Fund's investment
advisor pursuant to an investment advisory agreement (the "Advisory Agreement").
AIM, together with its subsidiaries, manages or advises 56 investment company
portfolios. Under the terms of the Advisory Agreement, AIM supervises all
aspects of the Fund's operations and provides investment advisory services to
the Fund. As compensation for these services, AIM receives a fee based on the
Fund's average daily net assets. Under an Administrative Services Agreement, AIM
may be reimbursed by the Fund for its costs of performing, or arranging for the
performance of, certain accounting and other administrative services for the
Fund. Under a Transfer Agency and Service Agreement, AIM Fund Services, Inc.
("AFS"), 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 for the Fund. Under the terms of a
sub-advisory agreement (the "Sub--
 
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Advisory Agreement") between AIM and INVESCO Global Asset Management Limited
("IGAM"), IGAM has been appointed by AIM to serve as investment sub-advisor to
the Fund. IGAM is an indirect, wholly owned subsidiary of AMVESCAP PLC, the
indirect parent of AIM. Under the terms of a sub-sub-advisory agreement (the
"Sub-Sub-Advisory Agreement") between IGAM and INVESCO Asset Management Limited
("IAML"), IAML has been appointed by IGAM to serve as investment sub-sub-advisor
to the Fund. IAML is also an indirect, wholly owned subsidiary of AMVESCAP PLC.
The Sub-Advisory Agreement and Sub-Sub-Advisory Agreement provide that IGAM and
IAML will furnish AIM with international economic and market research,
securities analyses and investment recommendations for the Fund's portfolio.
Neither IGAM nor IAML are responsible for actual portfolio investment decisions
for the Fund or for the execution of transactions on behalf of the Fund. Under
the Sub-Advisory Agreement, AIM compensates IGAM for its services through the
payment of a portion of the fees paid by the Fund to AIM. Under the
Sub-Sub-Advisory Agreement IGAM compensates IAML for its services through the
payment of all the fees paid by AIM to IGAM. See "Management."
 
  MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class C
shares of the Fund which are offered by this Prospectus at an offering price
that reflects differing sales charges and expense levels. See "Terms and
Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer
Concessions."
 
          Class A Shares -- Shares are offered at net asset value plus any
     applicable initial sales charge.
 
          Class B Shares -- Shares are offered at net asset value, without an
     initial sales charge, and are subject to a maximum contingent deferred
     sales charge of 5% on certain redemptions made within six years of the date
     on which a purchase was made. Class B shares automatically convert to Class
     A shares of the Fund eight years following the end of the calendar month in
     which a purchase was made. Class B shares are subject to higher expenses
     than Class A shares.
 
          Class C Shares -- Shares are offered at net asset value, without an
     initial sales charge, and are subject to a contingent deferred sales charge
     of 1% on certain redemptions made within one year of the date such shares
     were purchased. Class C shares are subject to higher expenses than Class A
     shares.
 
  SUITABILITY FOR INVESTORS. The Multiple Distribution System permits an
investor to choose the method of purchasing shares that is most beneficial given
the amount of the purchase, the length of time the shares are expected to be
held, whether dividends will be paid in cash or reinvested in additional shares
of the Fund and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the Fund, the accumulated
distribution fees and any applicable contingent deferred sales charges on Class
B shares prior to conversion or Class C shares would be less than the initial
sales charge and accumulated distribution fees on Class A shares purchased at
the same time, and to what extent such differential would be offset by the
higher return on Class A shares. To assist investors in making this
determination, the table under the caption "Table of Fees and Expenses" sets
forth examples of the charges applicable to each class of shares. Class A shares
will normally be more beneficial than Class B shares or Class C shares to the
investor who qualifies for reduced initial sales charges, as described below.
A I M Distributors, Inc. ("AIM Distributors") intends to reject any order for
purchase of more than $250,000 for Class B shares.
 
  PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Fund's shares is A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. See "How to Purchase Shares" and "Special Plans."
 
  EXCHANGE PRIVILEGE. The Fund is one of several mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of the Fund may be exchanged for shares of other funds in The AIM
Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
 
  REDEEMING SHARES. Holders of Class A shares may redeem all or a portion of
their shares at net asset value on any business day, generally without charge. A
contingent deferred sales charge of 1% may apply to certain redemptions of Class
A shares, where purchases of $1 million or more are made at net asset value. See
"How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
 
  Holders of Class B shares may redeem all or a portion of their shares at net
asset value on any business day, less a contingent deferred sales charge for
redemptions made within six years following the date on which a purchase was
made. Class B shares redeemed after six years following the date of purchase
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
 
  Holders of Class C shares of the Fund may redeem all or a portion of their
shares at net asset value on any business day, less a 1% contingent deferred
sales charge for redemptions made within one year from the date such shares were
purchased. Class C shares redeemed after one year from the date such shares were
purchased will not be subject to any contingent deferred sales charge. See "How
to Redeem Shares -- Multiple Distribution System."
 
  DISTRIBUTIONS. The Fund declares and pays dividends from net investment
income, if any, and makes distributions of realized capital gains, if any, on an
annual basis. Dividends and distributions of the Fund may be reinvested at net
asset value without payment of a sales charge in the Fund's shares or may be
invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
 
  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, LA FAMILIA AIM DE
FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED SERVICE MARKS AND
AIMFUNDS.COM AND INVEST WITH DISCIPLINE ARE SERVICE MARKS OF A I M MANAGEMENT
GROUP INC.
 
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                                    THE FUND
- - - - - --------------------------------------------------------------------------------
 
TABLE OF FEES AND EXPENSES
 
  The following table is designed to help an investor in the Fund understand the
various costs that an investor will bear, both directly and indirectly. The fees
and expenses set forth in the table are based on the estimated average net
assets of the respective classes of the Fund for the first period of operation.
The rules of the SEC require that the maximum sales charge be reflected in the
table, even though certain investors may qualify for reduced sales charges. See
"How to Purchase Shares."
 


                                                              CLASS A     CLASS B     CLASS C
                                                              -------     -------     -------
                                                                             
Shareholder Transaction Expenses
  Maximum sales load imposed on purchase of shares (as a %
    of offering price)......................................   5.50%        None        None
  Maximum sales load on reinvested dividends and
    distributions...........................................    None        None        None
  Deferred sales load (as a % of original purchase price or
    redemption proceeds, whichever is lower)................    None*      5.00%       1.00%
  Redemption fee............................................    None        None        None
  Exchange fee..............................................    None        None        None
Annual Fund Operating Expenses (as a % of average net
  assets)
  Management fees...........................................   0.95%       0.95%       0.95%
  Rule 12b-1 distribution plan payments.....................   0.35%       1.00%       1.00%
  Other expenses............................................   0.70%       0.77%       0.77%
                                                               -----       -----       -----
      Total fund operating expenses.........................   2.00%       2.72%       2.72%
                                                               =====       =====       =====

 
- - - - - ------------
 
*  Purchases of $1 million or more are not subject to an initial sales charge.
   HOWEVER, A CONTINGENT DEFERRED SALES CHARGE OF 1% APPLIES TO CERTAIN
   REDEMPTIONS MADE WITHIN 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED.
   See the Investor's Guide, under the caption "How to Redeem Shares --
   Contingent Deferred Sales Charge Program for Large Purchases."
 
  EXAMPLES. An investor in the Fund would pay the following expenses on a $1,000
investment in Class A shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
 
                                                         
1 year....................................................    $ 74
3 years...................................................    $114


 
  THE EXAMPLES ABOVE ASSUME PAYMENT OF A SALES CHARGE AT THE TIME OF PURCHASE;
ACTUAL EXPENSES MAY VARY FOR PURCHASES OF $1 MILLION OR MORE, WHICH ARE MADE AT
NET ASSET VALUE AND ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE FOR 18
MONTHS FOLLOWING THE DATE SUCH SHARES WERE PURCHASED.
 
  An investor in the Fund would pay the following expenses on a $1,000
investment in Class B shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
 
                                                         
 1 year...................................................    $ 78
 3 years..................................................    $114


 
  An investor in the Fund would pay the following expenses on the same $1,000
investment in Class B shares, assuming no redemption at the end of each time
period.
 
                                                         
 1 year...................................................    $ 28
 3 years..................................................    $ 84


 
  An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
 
                                                          
 1 year....................................................    $38
 3 years...................................................    $84


 
  An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming no redemption at the end of each time
period.
 
                                                          
 1 year....................................................    $28
 3 years...................................................    $84


 
  As a result of 12b-1 fees, a long-term shareholder in the Fund may pay more
than the economic equivalent of the maximum front-end sales charges permitted by
rules of the National Association of Securities Dealers, Inc. Given the maximum
front-end sales charge applicable to Class A shares and the Rule 12b-1 fees
applicable to Class A shares, Class B shares and Class C shares, it is estimated
that it would require a substantial number of years to exceed the maximum
permissible front-end sales charges.
 
  THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF THE FUND'S
ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. In
addition, while the examples assume a 5% annual return, the Fund's actual
performance will
 
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vary and may result in an actual return that is greater or less than 5%. The
examples assume reinvestment of all dividends and distributions and that the
percentage amounts for total fund operating expenses remain the same for each
year.
 
- - - - - --------------------------------------------------------------------------------
 
PERFORMANCE
 
  The Fund's performance may be quoted in advertising in terms of total return.
All advertisements of the Fund will disclose the maximum sales charge (including
deferred sales charge) to which investments in the Fund's shares may be subject.
If any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance will be contained in the Fund's annual report to shareholders, which
is available upon request and without charge.
 
  Standardized total return for Class A shares reflects the deduction of the
maximum initial sales charge at the time of purchase. Standardized total return
for Class B shares reflects the deduction of the maximum applicable contingent
deferred sales charge on a redemption of shares held for the period.
Standardized total return for Class C shares reflects the deduction of a 1%
contingent deferred sales charge, if applicable, on a redemption of shares held
for the period.
 
  The Fund's total return shows its overall change in value, including changes
in share price assuming that all the Fund's dividends and capital gain
distributions are reinvested and that all charges and expenses are deducted. A
cumulative total return reflects the Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical compounded annual
rate of return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. BECAUSE AVERAGE
ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS
SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR
RESULTS. To illustrate the components of overall performance, the Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses. The stated period for quotations of average annual
total return will be for periods of one year and the life of the Fund
(commencing as of the effective date of its registration statement).
 
  From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such a practice will
have the effect of increasing the Fund's total return.
 
  The performance of the Fund will vary from time to time, and past results are
not necessarily representative of future results. The Fund's performance is a
function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund as well
as by general market conditions. A shareholder's investment in the Fund is not
insured or guaranteed. These factors should be carefully considered by the
investor before making an investment in the Fund.
 
- - - - - --------------------------------------------------------------------------------
 
INVESTMENT OBJECTIVE AND POLICIES
 
  The investment objective of the Fund, which is a fundamental policy that may
be changed only with the approval of the Fund's shareholders, is to provide
long-term growth of capital. The Fund intends to seek to achieve its investment
objective by investing in a diversified portfolio of European equity securities,
the issuers of which are considered by AIM to have strong earnings momentum or
demonstrate other potential for capital appreciation. Any income realized by the
Fund will be incidental and will not be an important criterion in the selection
of portfolio securities. There can be no assurance that the Fund will achieve
its objective.
 
  The Board of Directors of the Company reserves the right to change any of the
investment policies, strategies or practices of the Fund, as described below and
elsewhere in this Prospectus and in the Statement of Additional Information,
without approval of the Fund's shareholders, except in those instances in which
shareholder approval is expressly required.
 
  Under normal market conditions the Fund will invest at least 80% of its total
assets in marketable equity securities, including common stock, preferred stock,
depositary receipts for stock and other securities having the characteristics of
stock (such as an equity or ownership interest in a company) of European
companies. The Fund may satisfy the foregoing requirement in part by investing
in the securities of European issuers which are in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other
securities representing underlying securities of European issuers. The Fund may
also satisfy such requirement by investing up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of European
issuers. Investments in foreign securities may include securities issued by
enterprises that have undergone or are currently undergoing privatization.
 
  The Fund considers an issuer of securities to be a European company if: (i) it
is organized under the laws of a European country and has a principal office in
a European country; (ii) it derives a significant portion (i.e., 50% or more) of
its total revenues from business in Europe; or (iii) its equity securities are
traded principally on a stock exchange in Europe or in an over-the-counter
market in Europe. The Fund also considers European equity securities of
closed-end management investment companies, the assets of which are invested
primarily in European equity securities, to be securities of European companies.
 
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  In managing the Fund, AIM seeks to apply to a diversified portfolio of
European equity securities substantially the same investment strategy which it
applies to several of its other managed portfolios which have similar investment
objectives but which invest primarily in United States equities markets. The
Fund will utilize to the extent practicable a fully managed investment policy
providing for the selection of securities which meet certain quantitative
standards determined by AIM. AIM reviews carefully the earnings history and
prospects for growth of each company considered for investment by the Fund. It
is expected that the Fund's portfolio, when fully invested, will generally be
comprised of two basic categories of European companies: (1) "core" companies,
which AIM considers to have experienced consistent long-term growth in earnings
and to have strong prospects for outstanding future growth, and (2) companies
that AIM believes are currently experiencing a greater than anticipated increase
in earnings.
 
  If a particular European company meets the quantitative standards determined
by AIM, its securities may be acquired by the Fund regardless of the location of
the company or the percentage of the Fund's investments in the company's country
or region. However, AIM will also consider other factors in making investment
decisions for the Fund, including such factors as the prospects for relative
economic growth among countries or regions, economic and political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security.
 
  There are no prescribed limits on geographic asset distribution within the
European community. Under normal market conditions, at least three European
countries will be represented in the Fund's portfolio of investments. The Fund
intends to invest in securities of issuers in Western Europe (such as the United
Kingdom, Germany and the Netherlands) as well as companies of issuers in Eastern
Europe (such as Croatia, Czech Republic, all of Russia and Turkey). Many of the
countries in Eastern Europe are "developing" countries or "emerging markets."
The Fund may invest up to 65% of its total assets in securities of European
issuers located in "developing" countries or "emerging markets." For a
description of the risks associated with investment in emerging markets, see
"Risk Factors -- Emerging Markets." The Fund may invest up to 20% of its total
assets in securities of non-European companies.
 
  Often there is less public information about foreign companies than is
available in reports supplied by domestic companies, that foreign companies are
not subject to uniform accounting and financial reporting standards, and that
there may be greater delays experienced by the Fund in receiving financial
information supplied by foreign companies than comparable information supplied
by domestic companies. For these and other reasons, AIM from time to time may
encounter greater difficulty applying its disciplined stock selection strategy
to a European equity investment portfolio than to a portfolio of domestic equity
securities.
 
  AIM may invest a portion of the Fund's assets in (i) cash or high-grade
short-term securities, including repurchase agreements, commercial paper, time
deposits and master notes, denominated either in U.S. dollars or foreign
currencies, (ii) U.S. government obligations or investment grade corporate bonds
or other debt securities, and (iii) taxable municipal securities, when such
positions are deemed advisable in light of economic or market conditions or for
daily cash management purposes. In addition, AIM may invest, for temporary
defensive purposes, all or substantially all of the Fund's assets in the
securities described above. To the extent that the Fund is invested to a
significant degree in cash, high-grade short-term securities, U.S. government
obligations, investment grade corporate bonds or other debt securities, or
taxable municipal securities, its ability to achieve its investment objective of
growth of capital may be adversely affected. Under normal circumstances, the
Fund will invest no more than 20% of the value of its total assets in high-grade
short-term securities. A repurchase agreement is an instrument under which the
Fund 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 Fund's holding period. In the event of
a bankruptcy or other default of a seller of a repurchase agreement, the Fund
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 Fund seeks to enforce its rights thereto, (b)
possible reduced levels of income and lack of access to income during this
period and (c) expenses of enforcing its rights. The Fund intends to enter into
repurchase agreements with sellers believed by AIM to present minimal credit
risk. See "Investment Restrictions."
 
- - - - - --------------------------------------------------------------------------------
 
HEDGING STRATEGIES AND OTHER INVESTMENT POLICIES
 
  The Fund may, at such times as AIM deems appropriate and consistent with the
investment objective of the Fund, write (sell) covered put or call options and
may purchase put or call options on its portfolio securities. The Fund may also
purchase and sell (i) options on domestic and foreign securities and currencies,
(ii) stock index options, (iii) stock, currency and interest rate futures, (iv)
options on stock, currency, stock index and interest rate futures and (v)
foreign forward currency exchange contracts. The purpose of such transactions is
to hedge against changes in the market value of the 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 or futures contracts as described below. The Fund will not engage
in such transactions for speculative purposes. Any change to such policy must be
submitted by AIM to the Company's Board of Directors prior to the effectiveness
of such change.
 
  OPTIONS. The Fund may purchase put or call options. Such options give the Fund
the right for a fixed period of time to sell (in the case of purchase of a put
option) or to buy (in the case of purchase of a call option) the number of units
of the underlying security or obligation covered by the option at a fixed or
determinable exercise price. Buying a put option hedges against the risk of a
market decline. Buying a call option hedges against a market advance. Prior to
its expiration, a put or call option may be sold in a closing sale transaction.
Gain or loss from such a sale will depend on whether the amount received is more
or less than the premium paid for the option plus the related transaction costs.
 
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   7
 
  The Fund may also write (sell) put or call options, but only if such options
are covered and remain covered as long as the Fund is obligated as a writer of
the option (seller). A call option is "covered" if the Fund owns the underlying
security covered by the call. A put option is "covered" if the Fund's custodian
segregates cash or liquid securities with a value equal to the exercise price of
the put option. If a "covered" call or put option expires unexercised, the
writer realizes a gain in the amount of the premium received. If the covered
call option is exercised, the writer realizes either a gain or loss from the
sale or purchase of the underlying security with the proceeds to the writer
being increased by the amount of the premium. If the covered put option is
exercised, the writer's cost of purchasing the underlying security is reduced by
the amount of the premium received from the initial sale of the put option.
Prior to its expiration, a put or call option may be closed out by means of a
purchase of an identical option. Any gain or loss from such transaction will
depend on whether the amount paid is more or less than the premium received for
the option plus related transaction costs.
 
  The Fund may also purchase and write options in combination with each other to
adjust the risk and return characteristics of certain portfolio security
positions. This technique is commonly referred to as a "collar."
 
  Options are subject to certain risks, including the risk of imperfect
correlation between the option and the Fund's portfolio securities and the risk
that there might not be a liquid secondary market for the option when the Fund
seeks to hedge against adverse market movements. In general, options whose
strike prices are close to their underlying securities' current values will have
the highest trading value, while options whose strike prices are further away
may be less liquid. The liquidity of options may also be affected if options
exchanges impose trading halts, particularly when markets are volatile.
 
  Options purchased or written by the Fund may be traded on the national
securities exchanges or negotiated with a dealer. Options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to enter into closing transactions with respect to such options. Such
options and the securities used as "cover" for such options, unless otherwise
indicated, would be considered illiquid securities.
 
  The Fund will not write options if, immediately after such sale, the aggregate
value of the securities or obligations underlying the outstanding options would
exceed 25% of the Fund's total assets. The Fund will not purchase put options
(including options on securities indices and futures contracts) if, at the time
of investment, the aggregate premiums to be paid for such options would exceed
5% of its total assets.
 
  FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities held
by the Fund may be denominated in foreign currencies, the value of the Fund's
portfolio will be affected by changes in exchange rates between currencies
(including the U.S. dollar), as well as by changes in the market value of the
securities themselves. The Fund may enter into interest rate, exchange rate and
currency futures contracts and related options, or it may purchase or sell stock
index futures contracts and related options in order to hedge the value of its
portfolio against changes in market conditions or in exchange rates between
currencies (including the U.S. dollar). Futures contracts obligate the seller to
deliver a specific type of security called for in the contract, at a specified
future time and for a specified price. Futures contracts are traded on U.S. and
foreign exchanges and generally contain standardized strike prices and
expiration dates. Certain futures contracts may be satisfied by actual delivery
of the securities or, more typically, by entering into an offsetting
transaction. An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract. In
addition to purchasing or selling futures contracts on currencies and specific
securities, interest rates and exchange rates, the Fund may purchase or sell
stock index futures contracts. A stock index futures contract is an agreement to
take or make delivery of an amount of cash based on the difference between the
value of a stock index at the beginning and at the end of the contract period.
No more than 5% of the Fund's total assets will be committed to initial margin
deposits required pursuant to futures contracts. Percentage investment
limitations on the Fund's investment in options on futures contracts and asset
coverage requirements are set forth above under "Options." Although the Fund is
authorized to invest in futures contracts and related options with respect to
foreign securities, stock indices, interest rates and currencies, it will limit
such investments to those which have been approved by the Commodity Futures
Trading Commission for investment by United States investors.
 
  In attempting to manage its currency exposure, the Fund may buy and sell
currencies, either in the spot (cash) market or in the forward market (through
forward contracts generally expiring within one year). The Fund may also enter
into forward contracts with respect to a specific purchase or sale of a
security, or with respect to its portfolio positions generally. When the Fund
purchases a security for settlement in the near future, it may immediately
purchase in the forward market the currency needed to pay for and settle the
purchase. By entering into a forward contract with respect to the specific
purchase or sale of a security denominated in a foreign currency, the Fund can
secure an exchange rate between the trade and settlement dates for that purchase
or sale transaction. This practice is sometimes referred to as "transaction
hedging." Unlike futures contracts, forward contracts are generally individually
negotiated and privately traded. A forward contract obligates the seller to sell
a specific security or currency at a specified price on a future date, which may
be any fixed number of days from the date of the contract. The Fund may enter
into transaction hedging forward contracts with respect to all or a substantial
portion of its trades.
 
  There are risks associated with the use of futures and forward contracts and
options thereon for hedging purposes. During certain market conditions, sales of
futures contracts may not completely offset a decline or rise in the value of
the Fund's portfolio securities or currency against which the futures or forward
contract or options thereon are being sold. In the futures and options on
futures markets, it may not always be possible to execute a buy or sell order at
the desired price, or to close out an open position due to market conditions,
limits on open positions and/or daily price fluctuations. Risks in the use of
futures contracts and options thereon also result from the possibility that
changes in the market value of securities or currency may differ substantially
from the changes antici-
 
                                        7
   8
 
pated by the Fund when hedged positions were established. Successful use of
futures and forward contracts and options thereon is dependent upon AIM's
ability to predict correctly movements in the direction of the applicable
markets. No assurance can be given that AIM's judgment in this respect will be
correct. Accordingly, the Fund may lose the expected benefit of futures and
forward transactions and options thereon if markets move in an unanticipated
manner.
 
  OTHER HEDGING TECHNIQUES. For hedging purposes, the Fund may also purchase
foreign currencies in the form of bank deposits as well as other foreign money
market instruments, including, but not limited to, bankers' acceptances,
certificates of deposit, commercial paper, short-term government and corporate
obligations and repurchase agreements.
 
  TEMPORARY DEFENSIVE MEASURES. To a limited extent the Fund may employ certain
investment techniques intended to provide liquidity for temporary or emergency
purposes, provide flexibility in the purchase of new issues of securities,
protect the Fund from a decline in the market value of its securities and permit
the Fund to invest all of its assets. Those techniques include entering into
reverse repurchase agreements, lending portfolio securities, purchasing
securities on a "when-issued" basis, short sales "against the box" and investing
in closed-end investment companies.
 
  REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
institutions believed by the Company's Board of Directors to present minimal
credit risk. A repurchase agreement is an instrument under which the Fund
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 Fund's holding period. In the event of
a bankruptcy or other default of a seller of a repurchase agreement (such as the
sellers' failure to repurchase the obligation in accordance with the terms of
the agreement), a Fund 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 Fund seeks to enforce its
rights thereto; (b) possible reduced levels of income and lack of access to
income during this period; and (d) expenses of enforcing its rights. Repurchase
agreements are considered to be loans by the Fund under the Investment Company
Act of 1940, as amended (the "1940 Act"). Repurchase agreements will be secured
by U.S. Treasury securities, U.S. Government agency securities (including, but
not limited to, those which have been stripped of their interest payments and
mortgage-backed securities) and commercial paper. For additional information on
the use of repurchase agreements, see the Statement of Additional Information.
 
  REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements involve the sale
by the Fund of a portfolio security with a simultaneous obligation to repurchase
the security at an agreed upon price, date and interest payment. The Fund will
enter into reverse repurchase agreements solely for temporary or defensive
purposes to facilitate the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests should they occur. The Fund 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 Fund may enter into reverse repurchase agreements in amounts
not exceeding 33 1/3% of the value of its total assets. Reverse repurchase
agreements involve the risk that the market value of securities retained by the
Fund in lieu of liquidation may decline below the repurchase price of the
securities sold by the Fund which it is obligated to repurchase. This risk, if
encountered, could cause a reduction in the net asset value of the Fund's
shares. Reverse repurchase agreements are considered to be borrowings under the
1940 Act.
 
  LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend
securities from its portfolio, with a value not exceeding 33 1/3% of its total
assets, to banks, brokers and other financial institutions, and receive in
return collateral in the form of cash or securities issued or guaranteed by the
U.S. Government which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. During the
period of the loan, the Fund receives the income on both the loaned securities
and the collateral and thereby increases its yield. In the event that the
borrower defaults on its obligation to return loaned securities because of
insolvency or otherwise, the Fund could experience delays and costs in gaining
access to the collateral and could suffer a loss to the extent that the value of
the collateral falls below the market value of the loaned securities.
 
  BORROWING. The Fund may borrow money to a limited extent from banks (including
the Fund's custodian bank) for temporary or emergency purposes subject to the
limitations under the 1940 Act. The current provisions of the 1940 Act restrict
borrowings (including reverse repurchase agreements) to an aggregate of 33 1/3%
of the Fund's total assets at the time of the transaction. In addition, the Fund
does not intend to engage in leverage; therefore consistent with current
interpretations of the Securities and Exchange Commission, the Fund will not
purchase additional securities while borrowings from banks exceed 5% of the
Fund's total assets.
 
  SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
of 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 Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. The Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. If the Fund purchases a when-issued
security or enters into a delayed delivery agreement, the Fund's custodian bank
will segregate cash or liquid securities in an amount at least equal to the
when-issued commitment or delayed delivery agreement commitment.
 
                                        8
   9
 
  SHORT SALES. The Fund may make short sales "against the box." A short sale is
a transaction in which a party sells a security it does not own in anticipation
of a decline in the market value of that security. A short sale is "against the
box" to the extent that the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short without payment of any further
consideration. The Fund will enter into such transactions only to the extent the
aggregate value of all securities sold short does not represent more than 10% of
the Fund's total assets at any given time.
 
  ILLIQUID SECURITIES AND RULE 144A SECURITIES. The Fund will not invest more
than 15% of its total assets in illiquid securities, including restricted
securities which are illiquid. Although securities which may be resold only to
"qualified institutional buyers" in accordance with the provisions of Rule 144A
under the Securities Act of 1933 are unregistered securities, the Fund may
purchase Rule 144A securities without regard to the 15% limitation described
above provided that a determination is made that such securities have a readily
available trading market. AIM will determine the liquidity of Rule 144A
securities under the supervision of the Company's Board of Directors. The
liquidity of Rule 144A securities will be monitored by AIM and, if as a result
of changed conditions, it is determined that a Rule 144A security is no longer
liquid, the Fund's holdings of illiquid securities will be reviewed to determine
what, if any, action is required to assure that the Fund does not invest more
than 15% of its total assets in illiquid securities. See the Statement of
Additional Information.
 
  CLOSED-END INVESTMENT COMPANIES. The Fund may invest up to 10% of its total
assets in the securities of certain closed-end investment companies. Shares of
closed-end investment companies are often traded at market prices that are less
than the net asset values of their shares. Such investments will involve the
payment of duplicative fees through the indirect payment of a portion of the
expenses, including advisory fees, of such closed-end investment companies.
 
  PORTFOLIO TURNOVER. Any particular security will be sold, and the proceeds
reinvested, whenever such action is deemed prudent from the viewpoint of the
Fund's investment objectives, regardless of the holding period of that security.
The estimated portfolio turnover rate for the Fund is less than 100%. A higher
rate of portfolio turnover may result in higher transaction costs, including
brokerage commissions. Also, to the extent that higher portfolio turnover
results in a higher rate of net realized capital gains to the Fund, the portion
of the Fund's distributions constituting taxable capital gains may increase.
 
- - - - - --------------------------------------------------------------------------------
 
RISK FACTORS
 
  FOREIGN SECURITIES. There can be no assurance that the Fund's investment
objective will be attained. The Fund is designed for investors seeking
international diversification, and is not intended as a complete investment
program. In addition, investing in securities of foreign companies generally
involves greater risks than investing in securities of domestic companies.
Investors should consider carefully the following special factors before
investing in the Fund.
 
  Currency Risk. The value of the Fund's foreign investments may be affected by
changes in currency exchange rates. The U.S. dollar value of a foreign security
generally decreases when the value of the U.S. dollar rises against the foreign
currency in which the security is denominated, and tends to increase when the
value of the U.S. dollar falls against such currency.
 
  Political and Economic Risk. The economies of many of the countries in which
the Fund may invest are not as developed as the United States economy and may be
subject to significantly different forces. Political or social instability,
deterioration of diplomatic relations, expropriation, nationalization or
confiscatory taxation, and limitations on the removal of funds or other assets
could also adversely affect the value of the Fund's investments. Individual
foreign economies may also differ favorably or unfavorably from the United
States economy in areas such as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency, and balance of
payments position, which may likewise affect the Fund's investments. Moreover,
foreign legal systems may be affected by the prevailing political climate and
the Fund may not be able to obtain legal remedies or enforce judgments in those
courts.
 
  Regulatory Risk. Foreign companies 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 Fund may be reduced by withholding tax at the
source which would reduce dividend income payable to the Fund's shareholders.
 
  Market Risk. The securities markets in many of the countries in which the Fund
invests 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.
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.
 
  EMERGING MARKETS. General. A developing country or emerging market country can
be considered to be a country that is in the initial stages of its
industrialization cycle. Currently, emerging markets generally include every
country in the world other than the developed European countries (primarily in
Western Europe), the United States, Canada, Japan, Australia, New Zealand, Hong
Kong and Singapore. The characteristics of markets can change over time.
Currently, investing in many emerging markets may not be
 
                                        9
   10
 
desirable or feasible because of the lack of adequate custody arrangements for
the Fund's assets, overly burdensome repatriation and similar restrictions, the
lack of organized and liquid securities markets, unacceptable political risks or
other reasons. As desirable opportunities to invest in securities in emerging
markets develop, the Fund may expand and further broaden the group of emerging
markets in which it invests. In the past, markets of developing countries have
been more volatile than the markets of developed countries; however, such
markets often have provided higher rates of return to investors. AIM believes
that these characteristics can be expected to continue in the future.
 
  Many of the risks described above relating to foreign securities generally
will be greater for emerging markets than for developed countries. Many emerging
markets have experienced substantial rates of inflation for many years.
Inflation and rapid fluctuations in inflation rates have had and may continue to
have very negative effects on the economies and securities markets of certain
developing markets. Economies in emerging markets generally are heavily
dependent upon international trade and accordingly, have been and may continue
to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. These economies also have
been and may continue to be affected adversely by economic conditions in the
countries with which they trade.
 
  Also, the securities markets of developing countries are substantially
smaller, less developed, less liquid and more volatile than the securities
markets of the United States and other more developed countries. Disclosure,
regulatory and accounting standards in many respects are less stringent than in
the United States and other developed markets. There also may be a lower level
of monitoring and regulation of developing markets and the activities of
investors in such markets, and enforcement of existing regulations has been
extremely limited.
 
  In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States; this is particularly true with respect to emerging markets.
Such markets have different settlement and clearance procedures. In certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Such settlement problems may cause emerging market securities to
be illiquid. The inability of the Fund to make intended securities purchases due
to settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. Certain
emerging markets may lack clearing facilities equivalent to those in developed
countries. Accordingly, settlements can pose additional risks in such markets
and ultimately can expose the Fund to the risk of losses resulting from the
Fund's inability to recover from a counterparty.
 
  The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. The Fund's portfolio securities in the
affected markets will be valued at fair value determined in good faith by or
under the direction of the Board of Directors.
 
  Investment in certain emerging market securities is restricted or controlled
to varying degrees. These restrictions or controls may at times limit or
preclude foreign investment in certain emerging market securities and increase
the costs and expenses of the Fund. Emerging markets may require governmental
approval for the repatriation of investment income, capital or the proceeds of
sales of securities by foreign investors. In addition, if a deterioration occurs
in an emerging market's balance of payments, the market could impose temporary
restrictions on foreign capital remittances.
 
  Eastern European Markets. The Fund intends to invest in the securities of
issuers domiciled in Eastern European countries. Investment in the securities of
issuers in Eastern European markets involves certain additional risks not
involved in investment in securities of issuers in more developed capital
markets, such as (i) low or non-existent trading volume, resulting in a lack of
liquidity and increased volatility in prices for such securities, as compared to
securities of comparable issuers in more developed capital markets, (ii)
uncertain national policies and social, political and economic instability
(including the possibility that such countries could revert to a centralist
planned government), increasing the potential for expropriation of assets,
confiscatory taxation, high rates of inflation or unfavorable diplomatic
developments, (iii) possible fluctuations in exchange rates, differing legal
systems and the existence or possible imposition of exchange controls, custodial
restrictions or other foreign or U.S. governmental laws or restrictions
applicable to such investments, (iv) national policies which may limit the
Fund's investment opportunities such as restrictions on investment in issuers or
industries deemed sensitive to national interests, and (v) the lack of developed
legal structures governing private and foreign investments and private property.
 
  Eastern European capital markets are emerging in a dynamic political and
economic environment brought about by the recent events there that have reshaped
political boundaries and traditional ideologies. In such a dynamic environment,
there can be no assurance that the Eastern European capital markets will
continue to present viable investment opportunities for the Fund. In the past,
Eastern European governments have expropriated substantial amounts of private
property, and most claims of the property owners have never been finally
settled. There is no assurance that such expropriations will not recur. In such
an event, it is possible that the Fund could lose the entire value of its
investments in the affected Eastern European markets.
 
  The currencies of Eastern European countries are not, at present, freely
convertible into other currencies. Also, certain Eastern European authorities
presently require that securities of certain Eastern European issuers be held by
custodians in Eastern Europe. At
 
                                       10
   11
 
this time, it is possible that certain Eastern European countries may not have
available institutions qualified under the 1940 Act to hold Fund assets.
Therefore, the Fund may need to seek an exemptive order from the SEC prior to
investing in certain Eastern European countries. There is no assurance that the
SEC would issue such an order.
 
  Reforms currently underway and anticipated throughout Eastern Europe are
directed at political and economic liberalization, with efforts to develop
increasingly market-oriented economies and to decentralize the economic and
political decision-making processes currently in the forefront. There can be no
assurance that these reforms will continue or, if continued, will achieve their
goals; in addition, there is the possibility that reforms may be reversed in the
future.
 
- - - - - --------------------------------------------------------------------------------
 
INVESTMENT RESTRICTIONS
 
  The following restrictions may not be changed without approval of the Fund's
shareholders. The Fund may not:
 
          1. Purchase a security if, as a result, with respect to 75% of the
     value of the Fund's total assets, taken at market value, more than 5% of
     the value of the Fund's total assets, taken at market value, would be
     invested in securities of any one issuer, except securities issued or
     guaranteed by the U.S. Government or any of its agencies or
     instrumentalities, and except that a Fund may purchase securities of other
     investment companies to the extent permitted by applicable law or exemptive
     order.
 
          2. Purchase a security if, as a result, more than 10% of the
     outstanding voting securities of any issuer would be held by the Fund,
     except that the Fund may purchase securities of other investment companies
     to the extent permitted by applicable law or exemptive order.
 
          3. Purchase a security if, as a result, 25% or more of the value of
     the Fund's total assets, taken at market value, would be invested in the
     securities of issuers having their principal business activities in the
     same industry. This restriction does not apply to obligations issued or
     guaranteed by the U.S. Government or by any of its agencies or
     instrumentalities but will apply to foreign government obligations unless
     the SEC permits their exclusion.
 
          4. Issue senior securities, except to the extent permitted by the 1940
     Act, including permitted borrowings.
 
  A complete listing of investment restrictions applicable to the Fund, some of
which may be changed by the Board of Directors without shareholder approval, is
contained in the Statement of Additional Information.
 
- - - - - --------------------------------------------------------------------------------
 
MANAGEMENT
 
  The overall management of the business and affairs of the Fund is vested with
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Fund and persons or companies furnishing
services to the Fund, including the investment advisory agreement with AIM, the
administrative services agreement with AIM, the agreement with AIM Distributors
regarding distribution of the Fund's shares, the agreement with State Street
Bank and Trust Company as custodian, and the agreement with A I M Fund Services,
Inc. as transfer agent. The day-to-day operations of the Fund are delegated to
the officers of the Company and to AIM, subject always to the objective and
policies of the Fund and to the general supervision of the Board of Directors.
Information concerning the Board of Directors may be found in the Statement of
Additional Information. Certain directors and officers of the Company are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM. AIM Management is 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 the business of investment management on an
international basis.
 
  INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as the investment advisor to the Fund pursuant to
an investment advisory agreement dated as of February 28, 1997, as amended (the
"Advisory Agreement"). AIM was organized in 1976 and, together with its
subsidiaries, manages or advises 56 investment company portfolios (including the
Fund).
 
  Under the terms of the Advisory Agreement, AIM supervises all aspects of the
Fund's operations and provides investment advisory services to the Fund. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Fund.
 
  SUB-ADVISOR AND SUB-SUB-ADVISOR. INVESCO Global Asset Management Limited,
Cedar House, 41 Cedar Avenue, Hamilton, HM12 Bermuda, serves as sub-advisor to
the Fund pursuant to a sub-advisory agreement between AIM and IGAM, dated as of
November 1, 1997 (the "Sub-Advisory Agreement"). INVESCO Asset Management
Limited, 11 Devonshire Square, London, England EC2M4YR, serves as
sub-sub-advisor to the Fund pursuant to a sub-sub-advisory agreement between
IGAM and IAML, dated as of November 1, 1997 (the "Sub-Sub-Advisory Agreement").
By the terms of the Sub-Advisory Agreement and Sub-Sub-Advisory Agreement, AIM
has appointed IGAM and IGAM has appointed IAML to provide AIM with international
economic and market research, securities analyses and investment recommendations
with respect to the Fund's investment portfolio. IGAM has delegated certain of
its responsibilities to IAML through the Sub-Sub-Advisory Agreement. IAML
provides international economic and market research,
 
                                       11
   12
 
securities analyses and investment recommendations with respect to the Fund's
investment portfolio. The Sub-Advisory Agreement and Sub-Sub-Advisory Agreement
provide that neither IGAM nor IAML are responsible for the actual portfolio
investment decisions of the Fund or for the execution of portfolio transactions
on behalf of the Fund. The Fund's portfolio investment decisions and the
execution of securities transactions to carry out such decisions are solely the
responsibility of AIM as the Fund's investment advisor. The professional
investment staffs of IGAM and IAML include experienced portfolio managers and
research staffs. IGAM and IAML are indirect, wholly owned, investment advisory
subsidiaries of AMVESCAP PLC.
 
  ADMINISTRATOR. AIM and the Company have entered into an Administrative
Services Agreement, dated as of February 28, 1997, pursuant to which AIM has
agreed to provide or arrange for the provision of certain accounting and other
administrative services to the Fund. AIM is entitled to receive from the Fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Board of Directors. Currently, AIM is reimbursed for the services of the
Fund's principal financial officer and his staff, and any expenses related to
such services.
 
  For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the Board of Directors,
AIM may take into account sales of shares of the Fund and other funds advised by
AIM in selecting broker-dealers to effect portfolio transactions on behalf of
the Fund.
 
  PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Fund. AIM's investment staff consists of approximately 125
individuals. While individual members of AIM's investment staff are assigned
primary responsibility for the day-to-day management of each of AIM's accounts,
all accounts are reviewed on a regular basis by AIM's Investment Policy
Committee to ensure that they are being invested in accordance with the
accounts' and AIM's investment policies. The individuals on the investment team
who are primarily responsible for the day-to-day management of the Fund are Paul
A. Rogge and Clas G.Olsson. Mr. Rogge is Vice President of A I M Capital
Management, Inc. ("AIM Capital"), a wholly owned subsidiary of AIM, and has been
responsible for the Fund since its inception. Mr. Rogge has been associated with
AIM since 1991 and has a total of six years of experience as an investment
professional. Mr. Olsson has been responsible for the Fund since its inception.
Mr. Olsson has been associated with AIM since 1994 and has a total of three
years of experience as an investment professional. Prior to joining AIM, he was
a broker assistant with Merrill Lynch, Pierce, Fenner & Smith Incorporated.
 
  FEES AND EXPENSES. Pursuant to the Advisory Agreement, AIM is entitled to
receive a fee from the Fund calculated at the annual rate 0.95% of the first
$500 million of net assets and 0.90% of net assets over $500 million. AIM is
also entitled to receive reimbursement of administrative costs incurred on
behalf of the Fund. Pursuant to the Sub-Advisory Agreement between AIM and IGAM
with respect to the Fund, IGAM is entitled to receive 0.20% of the first $500
million and 0.175% of net assets over $500 million. Pursuant to the
Sub-Sub-Advisory Agreement between IGAM and IAML with respect to the Fund, IAML
is entitled to receive an annual fee equal to 100% of the fee received by IGAM
with respect to the Fund.
 
  In addition, the Company and A I M Fund Services, Inc. P.O. Box 4739, Houston,
TX 77210-4739, a wholly owned subsidiary of AIM and registered transfer agent,
have entered into a Transfer Agency and Service Agreement, pursuant to which AFS
provides transfer agency, dividend distribution and disbursement, and
shareholder services to the Fund.
 
  FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its fees,
while retaining its ability to be reimbursed for such fees prior to the end of
each fiscal year. Any fee waivers will be shared proportionately by AIM and
IGAM. Fee waivers or reductions, other than those contained in the Advisory
Agreement, may be modified or terminated at any time and without notice to
investors.
 
  DISTRIBUTOR. The Company has entered into Master Distribution Agreements on
behalf of the Fund (the "Distribution Agreements") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A, Class B and Class C shares of the Fund. The address of
AIM Distributors is P.O. Box 4739, Houston, Texas 77021-4739. Certain directors
and officers of the Company are affiliated with AIM Distributors.
 
  The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute shares of the Fund directly and through institutions with whom AIM
Distributors has entered into selected dealer agreements. Under the Distribution
Agreement for the Class B shares, AIM Distributors sells Class B shares at net
asset value subject to a contingent deferred sales charge established by AIM
Distributors. AIM Distributors is authorized to advance to institutions through
whom Class B shares are sold a sales commission under schedules established by
AIM Distributors. The Distribution Agreement for the Class B shares provides
that AIM Distributors (or its assignee or transferee) will receive 0.75% (of the
total 1.00% payable under the distribution plan applicable to Class B shares) of
the Fund's average daily net assets attributable to Class B shares attributable
to the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would continue to receive
payments of asset based sales charges in respect of the outstanding Class B
shares attributable to AIM Distributors; provided, however, that a complete
termination of the Class B shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay Contingent Deferred Sales Charges.
 
  DISTRIBUTION PLANS. Class A and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of the Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of the Fund.
 
                                       12
   13
 
  Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.35% of the average daily net assets of Class A shares of
the Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of the Fund on an annualized basis.
 
  The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of the Fund. Payments
can also be directed by AIM Distributors to selected institutions who have
entered into service agreements with respect to Class A and Class C shares of
the Fund and who provide continuing personal services to their customers who own
Class A and Class C shares of the Fund. The service fees payable to selected
institutions are calculated at the annual rate of 0.25% of the average daily net
asset value of those Fund shares that are held in such institution's customers'
accounts which were purchased on or after a prescribed date set forth in the
Plan.
 
  Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions, are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of the Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
 
  Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of such amount, the
Fund pays a service fee of 0.25% of the average daily net assets attributable to
the Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset based sales charge. Amounts paid in accordance with the
Class B Plan may be used to finance any activity primarily intended to result in
the sale of Class B shares.
 
  Activities that may be financed under the Class A and C Plan and the Class B
Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements and the cost of administering the Plans.
These amounts payable by a Fund under the Plans need not be directly related to
the expenses actually incurred by AIM Distributors on behalf of the Fund. Thus,
even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Company will not be obligated to
pay more than that fee, and, if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Payments
pursuant to the Plans are subject to any applicable limitations imposed by the
rules of the National Association of Securities Dealers, Inc.
 
  Each of the Plans may be terminated at any time by a vote of the majority of
those directors who are not "interested persons" of the Company or by a vote of
the holders of the majority of the outstanding shares of the applicable class.
 
  Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
 
  Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent, for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one
particular class over another.
 
  For additional information concerning the operation of the Plans, see the
Statement of Additional Information.
 
                                       13
   14
 
- - - - - --------------------------------------------------------------------------------
 
ORGANIZATION OF THE COMPANY
 
  The Company was organized in 1991 as a Maryland corporation, and is registered
with the SEC as an open-end series management investment company. The Company
currently consists of six investment portfolios: the Fund, AIM GLOBAL AGGRESSIVE
GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM INTERNATIONAL
EQUITY FUND and AIM ASIAN GROWTH FUND. The Board of Directors may authorize
additional portfolios in the future. Shares of the Fund are offered to investors
pursuant to this Prospectus, while shares of the Company's other portfolios are
offered to investors pursuant to separate prospectuses. The authorized capital
stock of the Company consists of 4,000,000,000 shares of common stock with a par
value of $0.001 per share, of which 200,000,000 shares are designated Class A
shares, 200,000,000 shares are designated Class B shares and 200,000,000 shares
are designated Class C shares of each investment portfolio of the Company, and
the balance of which are unclassified.
 
  Class A shares, Class B shares and Class C shares of the Fund represent
interests in the Fund's assets and have identical voting, dividend, liquidation
and other rights on the same terms and conditions, except that each class of
shares bears differing class-specific expenses (such as those associated with
the shareholder servicing of their shares) and is subject to differing sales
loads (which may affect performance), conversion features and exchange
privileges, and has exclusive voting rights on matters pertaining to that class'
distribution plan.
 
  Except as specifically noted above, shareholders of the Fund are entitled to
one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the Class A shares, Class B
shares and Class C shares of the Fund. However, on matters affecting one
portfolio of the Company or one class of shares, a separate vote of shareholders
of that portfolio or class is required. Shareholders of a portfolio or class are
not entitled to vote on any matter which does not affect that portfolio or class
but which requires a separate vote of another portfolio or class. An example of
a matter which would be voted on separately by shareholders of a portfolio is
the approval of an advisory agreement, and an example of a matter which would be
voted on separately by shareholders of a class of shares is approval of a
distribution plan. When issued, shares of the Fund are fully paid and
nonassessable, have no preemptive or subscription rights, and are fully
transferable. Other than the automatic conversion of Class B shares to Class A
shares, there are no conversion rights. Shares do not have cumulative voting
rights, which means that in situations in which shareholders elect directors,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors of the Company, and the holders of less than 50% of
the shares voting for the election of directors will not be able to elect any
directors.
 
  Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders unless a meeting is otherwise required under the
1940 Act to elect directors. Shareholders may remove directors from office, and
a meeting of shareholders may be called at the request of the holders of 10% or
more of the Company's outstanding shares.
 
                                       14
   15
  
 THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
                                 ASSISTANCE IS
             (800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
                                INVESTOR'S GUIDE
               TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- - - - - --------------------------------------------------------------------------------
 
INTRODUCTION TO THE AIM FAMILY OF FUNDS
 
  THE AIM FAMILY OF FUNDS consists of the following mutual funds:
 
                                           
            AIM ADVISOR CASH MANAGEMENT FUND(2)           AIM GLOBAL INCOME FUND
            AIM ADVISOR FLEX FUND                         AIM GLOBAL UTILITIES FUND
            AIM ADVISOR INCOME FUND(2)                    AIM GROWTH FUND
            AIM ADVISOR INTERNATIONAL VALUE FUND          AIM HIGH INCOME MUNICIPAL FUND                                         
            AIM ADVISOR LARGE CAP VALUE FUND              AIM HIGH YIELD FUND
            AIM ADVISOR MULTIFLEX FUND                    AIM INCOME FUND
            AIM ADVISOR REAL ESTATE FUND                  AIM INTERMEDIATE GOVERNMENT FUND
            AIM AGGRESSIVE GROWTH FUND                    AIM INTERNATIONAL EQUITY FUND
            AIM ASIAN GROWTH FUND                         AIM LIMITED MATURITY TREASURY FUND
            AIM BALANCED FUND                             AIM MONEY MARKET FUND(1)
            AIM BLUE CHIP FUND                            AIM MUNICIPAL BOND FUND
            AIM CAPITAL DEVELOPMENT FUND                  AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
            AIM CHARTER FUND                              AIM TAX-EXEMPT CASH FUND(1)
            AIM CONSTELLATION FUND                        AIM TAX-FREE INTERMEDIATE FUND
            AIM EUROPEAN DEVELOPMENT FUND                 AIM VALUE FUND
            AIM GLOBAL AGGRESSIVE GROWTH FUND             AIM WEINGARTEN FUND
            AIM GLOBAL GROWTH FUND                        

            
 
(1) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of 
    AIM MONEY MARKET FUND are offered to investors at net asset value, without
    payment of a sales charge, as described below. Other funds, including the
    Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
    an initial sales charge or subject to a contingent deferred sales charge
    upon redemption, as described below.
 
(2) Fund closed to investments on October 3, 1997. Please refer to 
    "Exchange Privilege" herein and the Fund's prospectus dated August 4, 1997.
 
  IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- - - - - --------------------------------------------------------------------------------
 
HOW TO PURCHASE SHARES
 
  HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
 
  Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
 
  AFS' mailing address is:
                              A I M Fund Services, Inc.
                              P.O. Box 4739
                              Houston, TX 77210-4739
 
                                                                     MCF-01/98
 
                                       A-1
   16
  For additional information or assistance, investors should call the Client
Services Department of AFS at:
 
                               (800) 959-4246
 
  Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
 
  HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
 
  Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
 
  SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
 
  PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
 
                                 
Beneficiary Bank ABA/Routing #:     113000609
Beneficiary Account Number:         00100366807
Beneficiary Account Name:           A I M Fund Services, Inc.
RFB:                                Fund name, Reference Number (16 character limit)
OBI:                                Shareholder Name, Shareholder Account Number
                                    (70 character limit)


 
- - - - - --------------------------------------------------------------------------------
 
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS

  Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM
GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND,
AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND,) the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem Shares --
Multiple Distribution System." Securities dealers and other persons entitled to
receive compensation for selling or servicing shares of a Multiple Class Fund
may receive different compensation for selling or servicing one particular class
of shares over another class in the same Multiple Class Fund. Factors an
investor should consider prior to purchasing Class A, Class B or Class C shares
(or, if applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are
described below under "Special Information Relating to Multiple Class Funds."
For information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds. 
                                                                       MCF-01/98
 
                                       A-2
   17
  
SALES CHARGES AND DEALER CONCESSIONS
 
  GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
 


                                                                                DEALER
                                                                              CONCESSION
                                                  INVESTOR'S SALES CHARGE     ----------
                                                 --------------------------      AS A
                                                     AS A           AS A      PERCENTAGE
                                                  PERCENTAGE     PERCENTAGE     OF THE
                                                 OF THE PUBLIC   OF THE NET     PUBLIC
     AMOUNT OF INVESTMENT IN                       OFFERING        AMOUNT      OFFERING
        SINGLE TRANSACTION                           PRICE        INVESTED      PRICE
     -----------------------                     -------------   ----------   ----------
                                                                  
              Less than $   25,000                    5.50%         5.82%        4.75%
 $ 25,000 but less than $   50,000                    5.25          5.54         4.50
 $ 50,000 but less than $  100,000                    4.75          4.99         4.00
 $100,000 but less than $  250,000                    3.75          3.90         3.00
 $250,000 but less than $  500,000                    3.00          3.09         2.50
 $500,000 but less than $1,000,000                    2.00          2.04         1.60

 
  There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
 
  GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM ADVISOR REAL ESTATE FUND, AIM BALANCED FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND and AIM MUNICIPAL BOND FUND.
 


                                                                                DEALER
                                                                              CONCESSION
                                                  INVESTOR'S SALES CHARGE     ----------
                                                 --------------------------      AS A
                                                     AS A           AS A      PERCENTAGE
                                                  PERCENTAGE     PERCENTAGE     OF THE
                                                 OF THE PUBLIC   OF THE NET     PUBLIC
     AMOUNT OF INVESTMENT IN                       OFFERING        AMOUNT      OFFERING
        SINGLE TRANSACTION                           PRICE        INVESTED      PRICE
     -----------------------                     -------------   ----------   ----------
                                                                  
              Less than $   50,000                   4.75%          4.99%        4.00%
 $ 50,000 but less than $  100,000                   4.00           4.17         3.25
 $100,000 but less than $  250,000                   3.75           3.90         3.00
 $250,000 but less than $  500,000                   2.50           2.56         2.00
 $500,000 but less than $1,000,000                   2.00           2.04         1.60

 
  There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
                                                                       MCF-01/98
 
                                       A-3
   18
  
  GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY 
FUND and AIM TAX-FREE INTERMEDIATE FUND.


                                                                                DEALER
                                                                              CONCESSION
                                                  INVESTOR'S SALES CHARGE     ----------
                                                 --------------------------      AS A
                                                     AS A           AS A      PERCENTAGE
                                                  PERCENTAGE     PERCENTAGE     OF THE
                                                 OF THE PUBLIC   OF THE NET     PUBLIC
     AMOUNT OF INVESTMENT IN                       OFFERING        AMOUNT      OFFERING
        SINGLE TRANSACTION                           PRICE        INVESTED      PRICE
     -----------------------                     -------------   ----------   ----------
                                                                       
              Less than $  100,000                    1.00%        1.01%        0.75%
 $100,000 but less than $  250,000                    0.75         0.76         0.50
 $250,000 but less than $1,000,000                    0.50         0.50         0.40

 
  There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
 
  ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
 
  In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
 
  AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND. 

  AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
 
  AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) (0.35% for AIM ADVISOR INCOME FUND) is intended
in part to permit AIM Distributors to recoup a portion of on-going sales
commissions to dealers plus financing costs, if any. After the first full year,
AIM Distributors will make such payments quarterly to dealers and institutions
based on the average net asset value of Class C shares which are attributable to
shareholders for whom the dealers and institutions are designated as dealers of
record.

                                                                       MCF-01/98
 
                                       A-4
   19
  
  TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
 
  An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
 
  SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
 
     CLASS A SHARES are sold subject to the initial sales charges described 
     above and are subject to the other fees and expenses described herein.
     Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
     an investor who wishes to establish a dollar cost averaging program,
     pursuant to which Class A shares an investor owns may be exchanged at net
     asset value for Class A shares of another Multiple Class Fund or shares of
     another AIM Fund which is not a Multiple Class Fund, subject to the terms
     and conditions described under the caption "Exchange Privilege -- Terms and
     Conditions of Exchanges."
 
     CLASS B SHARES are sold without an initial sales charge. Thus, the entire
     purchase price of Class B shares is immediately invested in Class B shares.
     Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
     per annum on the average daily net assets of a Multiple Class Fund
     attributable to Class B shares. See the discussion under the caption
     "Management -- Distribution Plans." In addition, Class B shares redeemed
     within six years from the date such shares were purchased are subject to a
     contingent deferred sales charge ranging from 5% for redemptions made
     within the first year to 1% for redemptions made within the sixth year. No
     contingent deferred sales charge will be imposed if Class B shares are
     redeemed after six years from the date such shares were purchased.
     Redemptions of Class B shares and associated charges are further described
     under the caption "How to Redeem Shares -- Multiple Distribution System."
 
     Class B shares will automatically convert into Class A shares of the same
     Multiple Class Fund (together with a pro rata portion of all Class B shares
     acquired through the reinvestment of dividends and distributions) eight
     years from the end of the calendar month in which the purchase of Class B
     shares was made. Following such conversion of their Class B shares,
     investors will be relieved of the higher Rule 12b-1 Plan payments
     associated with Class B shares. See "Management -- Distribution Plans."
 
     CLASS C SHARES are sold without an initial sales charge. Thus the entire
     purchase price of Class C shares is immediately invested in Class C shares.
     Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND)
     are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the
     average daily net assets of a Multiple Class Fund attributable to Class C
     shares. See the discussion under the caption "Management -- Distribution
     Plans." In addition, Class C shares (except Class C shares of AIM ADVISOR
     CASH MANAGEMENT FUND) redeemed within one year from the date such shares
     were purchased are subject to a 1.00% contingent deferred sales charge. No
     contingent deferred sales charge will be imposed if Class C shares are
     redeemed after one year from the date such shares were purchased.
     Redemptions of Class C shares and associated charges are further described
     under the caption "How to Redeem Shares -- Multiple Distribution System."
 
     AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
     initial sales charge and are not subject to a contingent deferred sales
     charge. (A contingent deferred sales charge may be imposed upon redemptions
     of Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND when such
     shares were purchased in an exchange. See "How to Redeem Shares -- Multiple
     Distribution System -- Class C Shares" and "How to Redeem Shares --
     Contingent Deferred Sales Charge Program for Large Purchases"). AIM Cash
     Reserve Shares of AIM MONEY MARKET FUND are, however, subject to the other
     fees and expenses described in the prospectus for AIM MONEY MARKET FUND.
                                                                       MCF-01/98
 
                                       A-5
   20
  
  TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
 
  SPECIAL INFORMATION RELATING TO AIM ADVISOR CASH MANAGEMENT FUND, AIM MONEY
MARKET FUND, AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because
each Money Market Fund uses the amortized cost method of valuing the securities
it holds and rounds its per share net asset value to the nearest whole cent, it
is anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
 
  SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
 
  MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
 
REDUCTIONS IN INITIAL SALES CHARGES
 
  Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
 
  The term "purchaser" means:
 
  - an individual and his or her spouse and children, including any trust
    established exclusively for the benefit of any such person; or a pension,
    profit-sharing, or other benefit plan established exclusively for the
    benefit of any such person, such as an IRA, a single-participant
    money-purchase/profit-sharing plan or an individual participant in a 403(b)
    Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
 
  - a 403(b) plan, the employer/sponsor of which is an organization described
    under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
    (the "Code"), provided that:
 
        a. the employer/sponsor must submit contributions for all participating
           employees in a single contribution transmittal (i.e., the funds will
           not accept contributions submitted with respect to individual
           participants);
 
        b. each transmittal must be accompanied by a single check or wire
           transfer; and
 
        c. all new participants must be added to the 403(b) plan by submitting
           an application on behalf of each new participant with the
           contribution transmittal;
 
  - a trustee or fiduciary purchasing for a single trust, estate or single
    fiduciary account (including a pension, profit-sharing or other employee
    benefit trust created pursuant to a plan qualified under Section 401 of the
    Code) and 457 plans, although more than one beneficiary or participant is
    involved;
 
  - a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
    Simplified Employee Pension account ("SARSEP") where the employer has
    notified AIM Distributors in writing that all of its related employee SEP or
    SARSEP accounts should be linked;
                                                                       MCF-01/98
 
                                       A-6
   21
  
  - any other organized group of persons, whether incorporated or not, provided
    the organization has been in existence for at least six months and has some
    purpose other than the purchase at a discount of redeemable securities of a
    registered investment company; or
 
  - the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
    Capital Management, Inc. ("AIM Capital").
 
  Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
 
  (1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds)
within the following 13 consecutive months. By marking the LOI section on the
account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
 
  Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
 
  To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
 
  If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
 
  (2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii)
Class B and Class C shares of the Multiple Class Funds) at the time of the
proposed purchase. Rights of Accumulation are also available to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C
shares of AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) owned by such purchaser, calculated at their then current public offering
price. If a purchaser so qualifies for a reduced sales charge, the reduced sales
charge applies to the total amount of money then being invested by such
purchaser and not just to the portion that exceeds the breakpoint above which a
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum
                                                                       MCF-01/98
 
                                       A-7
   22
 
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
 
  PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
 
  Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
 
  The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
 
  In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of 
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee 
benefit plan in accordance with this paragraph.
 
  Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided:
                                                                       MCF-01/98
 
                                       A-8
   23
  
(a) that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is effected within 30 days of such redemption or repurchase;
and (b) that the unit holder or his dealer provides AIM Distributors with a
letter which: (i) identifies the name, address and telephone number of the
dealer who sold to the unit holder the units to be redeemed or repurchased; and
(ii) states that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is being funded exclusively by the proceeds from the
redemption or repurchase of units of such trusts.
 
  FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
 
- - - - - --------------------------------------------------------------------------------
 
SPECIAL PLANS
 
  Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
 
  Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
 
  SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual checks in any amount (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
 
  Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
 
  Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND, it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
 
  The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
 
  AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan a draft
is drawn on the shareholder's bank account in the amount specified by the
shareholder (minimum $50 per investment, per account) and on a day or date(s)
specified by the shareholder. The proceeds of the draft are invested in shares
of the designated AIM Fund at the applicable offering price determined on the
date of the draft. An Automatic Investment Plan may be discontinued upon 10
days' prior notice to the Transfer Agent or AIM Distributors.
 
  AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares

                                                                      MCF-01/98
 
                                       A-9
   24
  
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
 
  DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
 
  PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE 
INTERMEDIATE FUND, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND, AIM HIGH
INCOME MUNICIPAL FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; SARSEP plans; and SEP
plans (collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).

                                                                     MCF-01/98
 
                                      A-10
   25
- - - - - --------------------------------------------------------------------------------
 
EXCHANGE PRIVILEGE
 
  TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
 
                                                                       
                                LOAD FUNDS:                                  LOWER LOAD FUNDS:
   AIM ADVISOR FLEX FUND --            AIM GLOBAL GROWTH                     AIM LIMITED MATURITY TREASURY FUND -- CLASS A
     CLASS A                             FUND -- CLASS A                     AIM TAX-FREE INTERMEDIATE
   AIM ADVISOR INCOME FUND --          AIM GLOBAL INCOME                       FUND -- CLASS A
     CLASS A                             FUND -- CLASS A                     
   AIM ADVISOR INTERNATIONAL           AIM GLOBAL UTILITIES                  NO LOAD FUNDS:
     VALUE FUND -- CLASS A               FUND -- CLASS A                     AIM ADVISOR CASH MANAGEMENT FUND
   AIM ADVISOR LARGE CAP               AIM GROWTH FUND -- CLASS A                -- CLASS A
     VALUE FUND -- CLASS A             AIM HIGH INCOME                         AIM MONEY MARKET FUND
   AIM ADVISOR MULTIFLEX               MUNICIPAL FUND -- CLASS A                 -- AIM CASH RESERVE SHARES
     FUND -- CLASS A                   AIM HIGH YIELD FUND -- CLASS A          AIM TAX-EXEMPT CASH FUND -- CLASS A
   AIM ADVISOR REAL ESTATE             AIM INCOME FUND -- CLASS A
     FUND -- CLASS A                   AIM INTERMEDIATE GOVERNMENT
   AIM AGGRESSIVE GROWTH                 FUND -- CLASS A
     FUND -- CLASS A                   AIM INTERNATIONAL EQUITY
   AIM ASIAN GROWTH                      FUND -- CLASS A
     FUND -- CLASS A                   AIM MONEY MARKET
   AIM BALANCED FUND -- CLASS A          FUND -- CLASS A
   AIM BLUE CHIP FUND -- CLASS A       AIM MUNICIPAL BOND
   AIM CAPITAL DEVELOPMENT               FUND -- CLASS A
     FUND -- CLASS A                   AIM TAX-EXEMPT BOND FUND
   AIM CHARTER FUND -- CLASS A           OF CONNECTICUT -- CLASS A
   AIM CONSTELLATION                   AIM VALUE FUND -- CLASS A
     FUND -- CLASS A                   AIM WEINGARTEN FUND -- CLASS A
   AIM EUROPEAN DEVELOPMENT
     FUND -- CLASS A
   AIM GLOBAL AGGRESSIVE GROWTH
     FUND -- CLASS A


 
  Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) no share of any Load
Fund, Class C of a Multiple Class Fund, Lower Load Fund or No Load Fund may be
exchanged for shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM ADVISOR INCOME
FUND; (ii) Load Fund share purchases of $1,000,000 or more which are subject to
a contingent deferred sales charge may not be exchanged for Lower Load Funds or
for AIM TAX-EXEMPT CASH FUND; (iii) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM Cash Reserve Shares of AIM MONEY MARKET FUND and AIM
TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS
OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES
CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED
FROM THE DATE OF SUCH EXCHANGE; (iv) Class A shares may be exchanged for Class A
shares , (v) Class B shares may be exchanged only for Class B shares; (vi) Class
C shares may only be exchanged for Class C shares; (vii) Class A shares of AIM
ADVISOR CASH MANAGEMENT FUND may be exchanged for Class A shares of any Load
Fund, Lower Load Fund or No-Load Fund at net asset value; (viii) Class C shares
of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged for Class C shares of any
Multiple Class Fund at net asset value; and (ix) AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET
FUND or for Class B or Class C shares.   

                                                                       MCF-01/98
 
                                      A-11
   26
  Broker-dealers and institutions of record for Class A or Class C shares
purchased pursuant to an exchange from Class A or Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND will be compensated according to the sales commission or
concession that would apply if these Class A or Class C share purchases had been
purchased in a manner other than pursuant to an exchange.
 
  DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
 


                                                                                                      MULTIPLE CLASS FUNDS:
                                                            LOWER LOAD              NO LOAD       ------------------------------
      FROM:                 TO: LOAD FUNDS                     FUNDS                 FUNDS           CLASS B         CLASS C
      -----                 --------------            -----------------------  -----------------  --------------  --------------
                                                                                                   
Load Funds.......  Net Asset Value                    Net Asset Value          Net Asset Value    Not Applicable  Not Applicable
 
Lower Load         
  Funds..........  Net Asset Value                    Net Asset Value          Net Asset Value    Not Applicable  Not Applicable

No Load Funds....  Offering Price if No Load shares   Net Asset Value if No    Net Asset Value    Not Applicable  Not Applicable
                   were directly purchased. Net       Load shares were
                   Asset Value if No Load shares      acquired upon exchange
                   were acquired upon exchange of     of shares of any Load
                   shares of any Load Fund or any     Fund or any Lower Load
                   Lower Load Fund.                   Fund; otherwise,
                                                      Offering Price.
Multiple Class
  Funds:
  Class B........  Not Applicable                     Not Applicable           Not Applicable     Net Asset Value Not Applicable
 
  FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds.......  Net Asset Value                    Net Asset Value          Net Asset Value    Not Applicable  Not Applicable

Lower Load        
  Funds..........  Net Asset Value if shares were     Net Asset Value          Net Asset Value    Not Applicable  Not Applicable
                   acquired upon exchange of any
                   Load Fund. Otherwise, difference
                   in sales charge will apply.

No Load Funds....  Offering Price if No Load shares   Net Asset Value if No    Net Asset Value    Not Applicable  Not Applicable
                   were directly purchased. Net       Load shares were
                   Asset Value if No Load shares      acquired upon exchange
                   were acquired upon exchange of     of shares of any Load
                   shares of any Load Fund.           Fund or any Lower Load
                   Difference in sales charge will    Fund; otherwise, Of-
                   apply if No Load shares were       fering Price.
                   acquired upon exchange of Lower
                   Load Fund shares.
Multiple Class
  Funds:
  Class B........  Not Applicable                     Not Applicable           Not Applicable     Net Asset Value Not Applicable
  Class C........  Not Applicable                     Not Applicable           Not Applicable     Not Applicable  Net Asset Value

 
  An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (g) newly acquired shares (through either an initial
or subsequent investment) are held in an account for at least ten business days,
and all other shares are held in an account for at least one day, prior to the
exchange; and (h) certificates representing shares must be returned before
shares can be exchanged. There is no fee for exchanges among the AIM Funds.
 
  THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.    

                                                                      MCF-01/98
 
                                      A-12
   27
  THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
 
  Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
 
  In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
 
  EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
 
  EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe 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 may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
 
  EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares (except for Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) acquired in an exchange.
 
- - - - - --------------------------------------------------------------------------------
 
HOW TO REDEEM SHARES
 
  Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
 
  MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-    

                                                                       MCF-01/98
 
                                      A-13
   28
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
 

 
                           YEAR                              CONTINGENT DEFERRED
                           SINCE                               SALES CHARGE AS
                         PURCHASE                            % OF DOLLAR AMOUNT
                           MADE                               SUBJECT TO CHARGE
                         --------                            -------------------
                                                          
First......................................................          5%
Second.....................................................          4%
Third......................................................          3%
Fourth.....................................................          3%
Fifth......................................................          2%
Sixth......................................................          1%
Seventh and Following......................................         None

 
  In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
 
  Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on
April 30, 1995 of these funds (shareholders whose broker/dealers maintain a
single omnibus account with the Transfer Agent on behalf of those shareholders,
perform sub-accounting functions with respect to those shareholders, and are
unable to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996); or (v) on Class C shares of AIM
ADVISOR CASH MANAGEMENT FUND except in certain cases when the shares were
purchased in an exchange. Redemptions of shares of AIM ADVISOR CASH MANAGEMENT
FUND are generally not subject to a contingent deferred sales charge; however, a
contingent deferred sales charge may be applicable to redemptions of shares of
AIM ADVISOR CASH MANAGEMENT FUND if the redeemed shares were exchanged from
another Class C share fund and the one year holding period in such fund has not
been completed.
 
  Contingent deferred sales charges on Class B and Class C shares will be waived
on redemptions (1) following the death or post-purchase disability, as defined
in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust
(provided AIM Distributors is notified of such death or post-purchase disability
at the time of the redemption request and is provided with satisfactory evidence
of such death or post-purchase disability), (2) in connection with certain
distributions from individual retirement accounts, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the fifth paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
 
  Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
 
  Waiver category (2) above applies only to redemptions resulting from:
 
        (i) required minimum distributions to plan participants or
     beneficiaries who are age 70-1/2 or older, and only with respect to that
     portion of such distributions which does not exceed 12% annually of the
     participant's or beneficiary's account value in a particular AIM Fund;
 
          (ii) in kind transfers of assets where the participant or beneficiary
     notifies AIM Distributors of such transfer no later than the time such
     transfer occurs;
                                                                       MCF-01/98
 
                                      A-14
   29
  
          (iii) tax-free rollovers or transfers of assets to another Retirement
     Plan invested in Class B or Class C shares of one or more Multiple Class
     Funds;

          (iv) tax-free returns of excess contributions or returns of excess
     deferral amounts; and
 
          (v) distributions upon the death or disability (as defined in the
     Code) of the participant or beneficiary.
 
  CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund, Class A shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM Cash Reserve
Shares of AIM MONEY MARKET FUND which were acquired through an exchange of
shares which previously were subject to the 1% contingent deferred sales charge
will be credited with the period of time such exchanged shares were held, and
(ii) shares of any Load Fund which are subject to the 1% contingent deferred
sales charge and which were acquired through an exchange of shares of a Lower
Load Fund or a No Load Fund which previously were not subject to the 1%
contingent deferred sales charge will not be credited with the period of time
such exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the total amount invested in
a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of
intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the
shares being redeemed were purchased by an employer-sponsored Plan with at least
100 eligible employees; provided, however, that Plans created under Section
403(b) of the Code which are sponsored by public educational institutions shall
qualify under (a), (b) or (c) above on the basis of the value of each Plan
participant's aggregate investment in the AIM Funds, and not on the aggregate
investment made by the Plan or on the number of eligible employees; (2)
redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
 
  REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
 
  Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
 
  In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
 
  REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within    

                                                                       MCF-01/98
 
                                      A-15
   30
  
the preceding 30 days; (c) the shares to be redeemed are not in certificate
form; (d) the person requesting the redemption can provide proper identification
information; and (e) the proceeds of the redemption do not exceed $50,000.
Accounts in AIM Distributors' prototype retirement plans (such as IRA and
IRA/SEP) or 403(b) plans are not eligible for the telephone redemption option.
AIM Distributors has made arrangements with certain dealers and investment
advisors to accept telephone instructions for the redemption of shares. AIM
Distributors reserves the right to impose conditions on these dealers and
investment advisors, including the condition that they enter into agreements
(which contain additional conditions with respect to the redemption of shares)
with AIM Distributors. The Transfer Agent and AIM Distributors will not be
liable for any loss, expense or cost arising out of any telephone redemption
request effected in accordance with the authorization set forth at that item of
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 may include recordings of
telephone transactions (maintained for six months), requests for confirmation of
the shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
 
  EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
 
  REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT FUND and
the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not
apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
 
  TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
 
  Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
 
  SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
                                                                       MCF-01/98
 
                                      A-16
   31
 
  Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as
certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
 
  REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund (except Class A shares of AIM ADVISOR CASH MANAGEMENT
FUND) at the net asset value next computed after receipt by the Transfer Agent 
of the funds to be reinvested; provided, however, if the redemption was made 
from Class A shares of either AIM LIMITED MATURITY TREASURY FUND or AIM TAX-FREE
INTERMEDIATE FUND, the reinvested proceeds will be subject to the difference in
sales charge between the shares redeemed and the shares the proceeds are
reinvested in. The shareholder must ask the Transfer Agent for such privilege at
the time of reinvestment. A realized gain on the redemption is taxable, and
reinvestment may alter any capital gains payable. If there has been a loss on
the redemption and shares of the same fund are repurchased, all of the loss may
not be tax deductible, depending on the timing and amount reinvested. Under the
Code, if the redemption proceeds of fund shares on which a sales charge was paid
are reinvested in (or exchanged for) shares of another AIM Fund at a reduced
sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
 
  Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
 
- - - - - --------------------------------------------------------------------------------
 
DETERMINATION OF NET ASSET VALUE
 
  The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE. The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
 
  Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.

                                                                       MCF-01/98
 
                                      A-17
   32
  
- - - - - --------------------------------------------------------------------------------
 
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
 
DIVIDENDS AND DISTRIBUTIONS
 
  Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
 


                                                                                DISTRIBUTIONS    DISTRIBUTIONS
                                                                                   OF NET           OF NET
                                                    DIVIDENDS FROM                REALIZED         REALIZED
                                                    NET INVESTMENT               SHORT-TERM        LONG-TERM
                   FUND                                 INCOME                  CAPITAL GAINS    CAPITAL GAINS
                   ----                             --------------              -------------    -------------
                                                                                        
AIM ADVISOR CASH MANAGEMENT FUND..........  declared daily; paid monthly      annually           annually
AIM ADVISOR FLEX FUND.....................  declared and paid quarterly       quarterly          annually
AIM ADVISOR INCOME FUND...................  declared and paid monthly         monthly            annually
AIM ADVISOR INTERNATIONAL VALUE FUND......  declared and paid annually        annually           annually
AIM ADVISOR LARGE CAP VALUE FUND..........  declared and paid quarterly       quarterly          annually
AIM ADVISOR MULTIFLEX FUND................  declared and paid quarterly       quarterly          annually
AIM ADVISOR REAL ESTATE FUND..............  declared and paid quarterly       quarterly          annually
AIM AGGRESSIVE GROWTH FUND................  declared and paid annually        annually           annually
AIM ASIAN GROWTH FUND.....................  declared and paid annually        annually           annually
AIM BALANCED FUND.........................  declared and paid quarterly       annually           annually
AIM BLUE CHIP FUND........................  declared and paid annually        annually           annually
AIM CAPITAL DEVELOPMENT FUND..............  declared and paid annually        annually           annually
AIM CHARTER FUND..........................  declared and paid quarterly       annually           annually
AIM CONSTELLATION FUND....................  declared and paid annually        annually           annually
AIM EUROPEAN DEVELOPMENT FUND.............  declared and paid annually        annually           annually
AIM GLOBAL AGGRESSIVE GROWTH FUND.........  declared and paid annually        annually           annually
AIM GLOBAL GROWTH FUND....................  declared and paid annually        annually           annually
AIM GLOBAL INCOME FUND....................  declared daily; paid monthly      annually           annually
AIM GLOBAL UTILITIES FUND.................  declared daily; paid monthly      annually           annually
AIM GROWTH FUND...........................  declared and paid annually        annually           annually
AIM HIGH INCOME MUNICIPAL FUND............  declared daily; paid monthly      annually           annually
AIM HIGH YIELD FUND.......................  declared daily; paid monthly      annually           annually
AIM INCOME FUND...........................  declared daily; paid monthly      annually           annually
AIM INTERMEDIATE GOVERNMENT FUND..........  declared daily; paid monthly      annually           annually
AIM INTERNATIONAL EQUITY FUND.............  declared and paid annually        annually           annually
AIM LIMITED MATURITY TREASURY FUND........  declared daily; paid monthly      annually           annually
AIM MONEY MARKET FUND.....................  declared daily; paid monthly      at least annually  annually
AIM MUNICIPAL BOND FUND...................  declared daily; paid monthly      annually           annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT...  declared daily; paid monthly      annually           annually
AIM TAX-EXEMPT CASH FUND..................  declared daily; paid monthly      at least annually  annually
AIM TAX-FREE INTERMEDIATE FUND............  declared daily; paid monthly      annually           annually
AIM VALUE FUND............................  declared and paid annually        annually           annually
AIM WEINGARTEN FUND.......................  declared and paid annually        annually           annually

 
  In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
 
  All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
 
  Dividends on Class B and Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) are expected to be lower than those for Class A shares or
AIM Cash Reserve Shares because of higher distribution fees paid by Class B and
Class C shares   
                                                                       MCF-01/98
 
                                      A-18
   33
  
(except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND).
Dividends on all shares may also be affected by other class-specific expenses.

  Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
 
  Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
 
TAX MATTERS
 
  Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
 
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR INCOME FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM
HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM
INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET
FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will qualify for this
dividends received deduction. Shortly after the end of each year, shareholders
will receive information regarding the amount and federal income tax treatment
of all distributions paid during the year. Certain dividends declared in
October, November or December of a calendar year are taxable to shareholders as
though received on December 31 of that year if paid to shareholders during
January of the following calendar year. No gain or loss will be recognized by
shareholders upon the automatic conversion of Class B shares of a Multiple Class
Fund into Class A shares of such Fund. With respect to tax-exempt shareholders,
distributions from the Funds will not be subject to federal income taxation to
the extent permitted under the applicable tax-exemption.
 
  For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
 
  TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
 
  Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
 
  DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
 
  TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of inter-
                                                                       MCF-01/98
 
                                      A-19
   34
est on certain indebtedness of the shareholder, and may have other collateral
federal income tax consequences. The Tax-Exempt Funds may invest in Municipal
Securities the interest on which will constitute an item of tax preference and
which therefore could give rise to a federal alternative minimum tax liability
for shareholders, and may invest up to 20% of their net assets in such
securities and other taxable securities. For additional information concerning
the alternative minimum tax and certain collateral tax consequences of the
receipt of exempt-interest dividends, see the Statements of Additional
Information applicable to the Tax-Exempt Funds.
 
  The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
 
  To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
 
  From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
 
  AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. Government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
 
  AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
 
- - - - - --------------------------------------------------------------------------------
 
GENERAL INFORMATION
 
  CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Texas Commerce Bank
National Association, P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for retail purchases of the AIM Funds.
 
  A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
 
  LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
 
  SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
 
  OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. 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. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
                                                                       MCF-01/98
 
                                      A-20
   35
 
                            APPLICATION INSTRUCTIONS
 
  SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- - - - - --------------------------------------------------------------------------------
 


                                   GIVE SOCIAL SECURITY                                           GIVE TAXPAYER I.D.
        ACCOUNT TYPE                    NUMBER OF:                     ACCOUNT TYPE                   NUMBER OF:
                                                                                    
      Individual              Individual                       Trust, Estate, Pension        Trust, Estate, Pension
                                                               Plan Trust                    Plan Trust and not
                                                                                             personal TIN of fiduciary

      Joint Individual        First individual listed in the
                              "Account Registration" portion
                              of the Application

      Unif. Gifts to          Minor                            Corporation, Partnership,     Corporation, Partnership,
      Minors/Unif.                                             Other Organization            Other Organization
      Transfers to Minors

      Legal Guardian          Ward, Minor or
                              Incompetent

      Sole Proprietor         Owner of Business                Broker/Nominee                Broker/Nominee

 
- - - - - --------------------------------------------------------------------------------
 
  Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
 
  BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
 
  An investor is subject to backup withholding if:
 
  (1) the investor fails to furnish a correct TIN to the Fund, or
 
  (2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
 
  (3) the investor is notified by the IRS that the investor is subject to backup
      withholding because the investor failed to report all of the interest and
      dividends on such investor's tax return (for reportable interest and
      dividends only), or
 
  (4) the investor fails to certify to the Fund that the investor is not subject
      to backup withholding under (3) above (for reportable interest and
      dividend accounts opened after 1983 only), or
 
  (5) the investor does not certify his TIN. This applies only to reportable
      interest, dividend, broker or barter exchange accounts opened after 1983,
      or broker accounts considered inactive during 1983.
 
  Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
 
  Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
 
- - - - - - a corporation
- - - - - - an organization exempt from tax under Section 501(a), an individual retirement
  plan (IRA), or a custodial account under Section 403(b)(7)
- - - - - - the United States or any of its agencies or instrumentalities
- - - - - - a state, the District of Columbia, a possession of the United States, or any
  of their political subdivisions or instrumentalities
- - - - - - a foreign government or any of its political subdivisions, agencies or
  instrumentalities
- - - - - - an international organization or any of its agencies or instrumentalities
- - - - - - a foreign central bank of issue
- - - - - - a dealer in securities or commodities required to register in the U.S. or a
  possession of the U.S.
- - - - - - a futures commission merchant registered with the Commodity Futures Trading
  Commission
- - - - - - a real estate investment trust
- - - - - - an entity registered at all times during the tax year under the Investment
  Company Act of 1940
- - - - - - a common trust fund operated by a bank under Section 584(a)
- - - - - - a financial institution
- - - - - - a middleman known in the investment community as a nominee or listed in the
  most recent publication of the American Society of Corporate Secretaries,
  Inc., Nominee List
- - - - - - a trust exempt from tax under Section 664 or described in Section 4947
 
  Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
 
  IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
                                                                       MCF-01/98
 
                                       B-1
   36
 
  NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
 
  SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
 
  SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
                                                                       MCF-01/98
 
                                       B-2
   37
[AIM LOGO APPEARS HERE]

       THE AIM FAMILY OF FUNDS--Registered Trademark--
 
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
 
Sub-Advisor
INVESCO Global Asset Management Limited
Cedar House, 41 Cedar Avenue
Hamilton, HM 12 Bermuda
 
Sub-Sub-Advisor
INVESCO Asset Management Limited
11 Devonshire Square
London, England EC2M4YR
 
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston TX 77210-4739
 
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
 
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
 
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Bldg.
Houston, TX 77002
 
For more complete information about any other Fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call 
(800) 347-4246 or write to A I M Distributors, Inc. and request a free 
prospectus. Please read the prospectus carefully before you invest or send 
money.
 
EDF-PRO-1