AIM EQUITY FUNDS INC, DEF 14A, 1996-12-18

AIM EQUITY FUNDS INC
DEF 14A, 1996-12-18

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<PAGE> 1
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement

[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

_______________________________________________________________________________

AIM EQUITY FUNDS, INC.
(For its Series Portfolio:
AIM Aggressive Growth Fund)
_______________________________________________________________________________

(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

_______________________________________________________________________________

2) Aggregate number of securities to which transaction applies:

_______________________________________________________________________________

3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

_______________________________________________________________________________

4) Proposed maximum aggregate value of transaction:

_______________________________________________________________________________

5) Total fee paid:

_______________________________________________________________________________

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

_______________________________________________________________________________

2) Form, Schedule or Registration Statement No.:

_______________________________________________________________________________

3) Filing Party:

_______________________________________________________________________________

4) Date Filed:

_______________________________________________________________________________
<PAGE> 2

AIM EQUITY FUNDS, INC.
AIM AGGRESSIVE GROWTH FUND
11 GREENWAY PLAZA, SUITE 1919
HOUSTON, TX 77046

December 20, 1996

Dear Shareholder:

As you may know, A I M Management Group Inc. ("AIM Management"), the parent
company of A I M Advisors, Inc. ("AIM"), the investment advisor to The AIM
Family of Funds--Registered Trademark--, has entered into an agreement under
which AIM Management will merge with a subsidiary of INVESCO plc. As a result
of this merger, it is necessary for the shareholders of each of the AIM Funds
to approve a new investment advisory agreement (and in some cases, a new
sub-advisory agreement).

The following important facts about the transaction are outlined below:

- The merger has no effect on the number of shares you own or the value of
those shares.

- The advisory fees and expenses charged to your Fund will not change as a
result of this merger.

- The investment objectives of the Fund will remain the same and key
employees of AIM will continue to manage your Funds as they have in the
past.

- The merger will not change the quality of the investment management and
shareholder services that you have received over the years.

Shareholders are also being asked to approve Directors, to approve certain
proposed changes in fundamental policies and to ratify the selection of
independent accountants. After careful consideration, the Board of Directors of
your Fund has unanimously approved these proposals and recommends that you read
the enclosed materials carefully and then vote FOR all proposals.

Since all of the AIM Funds are required to conduct shareholder meetings, you
will receive at least one statement and a proxy card for each Fund you own.
PLEASE VOTE EACH PROXY CARD YOU RECEIVE.

Your vote is important. Please take a moment now to sign and return your proxy
cards in the enclosed postage paid return envelope. If we do not hear from you
after a reasonable amount of time you may receive a telephone call from our
proxy solicitor, Shareholder Communications Corporation, reminding you to vote
your shares.

Thank you for your cooperation and continued support.

Sincerely,

/s/ Charles T. Bauer
Chairman
- -------------
GROUP C
<PAGE> 3

YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN

ENCLOSED YOU WILL FIND ONE OR MORE PROXY CARDS RELATING TO EACH OF THE
FUNDS FOR WHICH YOU ARE ENTITLED TO VOTE. PLEASE INDICATE YOUR VOTING
INSTRUCTIONS ON EACH OF THE ENCLOSED PROXY CARDS, DATE AND SIGN THEM, AND RETURN
THEM IN THE ENVELOPE PROVIDED. IF YOU SIGN, DATE AND RETURN A PROXY CARD BUT
GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" THE NOMINEES FOR
TRUSTEE OR DIRECTOR NAMED IN THE ATTACHED PROXY STATEMENT AND "FOR" ALL OTHER
PROPOSALS INDICATED ON THE CARDS. IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF
FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR PROXY CARDS
PROMPTLY. UNLESS PROXY CARDS ARE SIGNED BY THE APPROPRIATE PERSONS AS INDICATED
IN THE INSTRUCTIONS BELOW, THEY WILL NOT BE VOTED.

INSTRUCTIONS FOR SIGNING PROXY CARDS

The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense involved in validating your vote if you fail
to sign your proxy card properly.

1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.

2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.

3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:

<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
- ------------------------------------------------------------ ------------------------------
<S> <C>
Trust Accounts
(1) ABC Trust Account.................................. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78................ Jane B. Doe
Partnership Accounts
(1) The XYZ Partnership................................ Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership............... Jane B. Smith, General Partner
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr.
UGMA/UTMA......................................... John B. Smith
(2) Estate of John B. Smith............................ John B. Smith, Jr., Executor
Corporate Accounts
(1) ABC Corp. ......................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp. ......................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer.................. John Doe
(4) ABC Corp. Profit Sharing Plan...................... John Doe, Trustee
</TABLE>
<PAGE> 4

AIM EQUITY FUNDS, INC.

AIM Aggressive Growth Fund

11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173

------------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 7, 1997

------------------------------

TO THE SHAREHOLDERS:

An annual meeting of shareholders of AIM Equity Funds, Inc. ("AEF") will be
held on Friday, February 7, 1997 at 2:00 p.m. local time at 11 Greenway Plaza,
Suite 1919, Houston, Texas, with respect to AEF and the series portfolio listed
above (such portfolio to be referred to as the "Fund"), for the following
purposes:

(1) For AEF, to elect nine Directors, each of whom will serve until his
successor is elected and qualified.

(2) For the Fund, to approve a new Investment Advisory Agreement with
A I M Advisors, Inc.

(3) For the Fund, to eliminate the fundamental investment policy
prohibiting investments in other investment companies and to amend a
related fundamental investment policy.

(4) For AEF, to ratify the selection of KPMG Peat Marwick LLP as
independent accountants for the fiscal year ending in 1997.

(5) To transact such other business as may properly come before the
meeting.

Shareholders of record at the close of business on December 3, 1996 are
entitled to vote at the annual meeting and any adjournments. If you attend the
annual meeting, you may vote your shares in person. If you expect to attend the
annual meeting in person, please notify the Fund by calling 1-800-952-3502. If
you do not expect to attend the annual meeting, please fill in, date, sign and
return the proxy card in the enclosed envelope which requires no postage if
mailed in the United States.

It is important that you return your signed proxy card promptly so that a
quorum may be assured.

December 20, 1996

Charles T. Bauer
Chairman of the Board of Directors
<PAGE> 5

AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund

11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173

------------------------------

PROXY STATEMENT
------------------------------

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 7, 1997
------------------------------

The accompanying proxy is solicited by the Board of Directors of AIM Equity
Funds, Inc. ("AEF" or the "Company") on behalf of the series portfolio listed
above (the "Fund"), in connection with the annual meeting of shareholders of AEF
to be held at the offices of A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza,
Suite 1919, Houston, Texas at 2:00 p.m. local time on Friday, February 7, 1997
(the "Annual Meeting"). A shareholder can revoke the proxy prior to its use by
appearing at the Annual Meeting and voting in person, by giving written notice
of such revocation to the Secretary of AEF, or by returning a subsequently dated
proxy. If you expect to attend the Annual Meeting in person, please notify the
Fund by calling 1-800-952-3502.

The proposals to be presented at the Annual Meeting are as follows:

(1) For AEF, to elect nine Directors, each of whom will serve until his
successor is elected and qualified.

(2) For the Fund, to approve a new Investment Advisory Agreement with A I M
Advisors, Inc.

(3) For the Fund, to eliminate the fundamental investment policy
prohibiting investments in other investment companies and to amend a
related fundamental investment policy.

(4) For the Fund, to ratify the selection of KPMG Peat Marwick LLP as
independent accountants for the fiscal year ending in 1997.

Upon the request of any shareholder, the Fund will furnish, without charge,
a copy of its annual report for its most recent fiscal year. All such requests
should be directed to AIM at 1-800-347-4246.

VOTING

At the Annual Meeting, shareholders of record at the close of business on
December 3, 1996 (the "Record Date") will be entitled to one vote per share on
the proposals set forth above, with proportional votes for fractional shares.
AEF had 1,114,141,489.255 shares outstanding on the Record Date. The number of
shares outstanding on the Record Date for each series portfolio of AEF is set
forth in Annex A. It is expected that this proxy statement and the accompanying
proxy will be first sent to shareholders on or about December 20, 1996.

The affirmative vote of a plurality of votes cast is necessary to elect the
Board of Directors (i.e., the nominees receiving the most votes will be elected)
(Proposal 1). The affirmative vote of the
<PAGE> 6

holders of a "majority of the outstanding voting securities" of the Fund, as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"), is
required to approve the Fund's new Investment Advisory Agreement (Proposal 2),
and to approve the elimination of the Fund's fundamental investment policy
prohibiting investments in other investment companies and to amend a related
fundamental investment policy (Proposal 3). The 1940 Act defines a "majority of
the outstanding voting securities" of a Fund to mean the lesser of (a) the vote
of holders of 67% or more of the voting shares of the Fund present in person or
by proxy at the Annual Meeting, if the holders of more than 50% of the
outstanding voting shares of the Fund are present in person or by proxy, or (b)
the vote of the holders of more than 50% of the outstanding voting shares of the
Fund. The affirmative vote of a majority of votes cast is necessary to ratify
the selection of KPMG Peat Marwick LLP as independent accountant for AEF
(Proposal 4).

The Board of Directors of AEF has named Charles T. Bauer, Chairman, Robert
H. Graham, President, and Carol F. Relihan, Secretary, of AEF, as proxies.
Unless specific instructions are given to the contrary in the accompanying
proxy, the proxies will vote FOR the election of each Director named in the
proxy statement, FOR the approval of the new Investment Advisory Agreement, FOR
the proposal to eliminate the Fund's fundamental investment policy prohibiting
investments in other investment companies and to amend a related fundamental
investment policy, and FOR the ratification of the selection of KPMG Peat
Marwick LLP as independent accountants for AEF.

Abstentions and broker non-votes (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other person entitled to vote shares on a particular matter with
respect to which the broker or nominee does not have discretionary power) with
respect to any proposal will be counted for purposes of determining whether a
quorum is present at the Annual Meeting. Abstentions and broker non-votes do not
count as votes cast but have the same effect as casting a vote against proposals
that require the vote of a majority of the shares present at the Annual Meeting,
provided a quorum exists. A quorum will be deemed present with respect to a Fund
if the holders of more than 50% of the outstanding voting securities of such
Fund are present in person or voting by proxy.

The Board of Directors of AEF currently knows of no other matters to be
presented at the Annual Meeting. If any other matters properly come before the
Annual Meeting, the proxies will vote in accordance with their best judgment.
The proxies may propose to adjourn the meeting to permit further solicitation of
proxies or for other purposes. Any such adjournment will require the affirmative
vote of a majority of the votes cast.

PROPOSAL 1 --

ELECTION OF DIRECTORS

For election of Directors at the Annual Meeting, the Board of Directors of
AEF has approved the nomination of Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F. Pennock,
Ian W. Robinson, and Louis S. Sklar, each of whom is currently a Director of
AEF, each to serve as Director until his successor is elected and qualified. All
of the nominees presently serve as Directors, Trustees or officers of the ten
open-end management investment companies advised by AIM (all such investment
companies and their series portfolios, if any, are referred to collectively as
the "AIM Funds").

2
<PAGE> 7

The proxies will vote for the election of the nominees named below unless
authority to vote for any or all of the nominees is withheld in the proxy. Each
of the nominees has indicated that he is willing to serve as a Director. If any
or all of the nominees should become unavailable for election due to events not
now known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the Directors who are not "interested persons" of AEF, as
defined in the 1940 Act, may recommend.

The following table sets forth certain information concerning the
Directors:

<TABLE>
<CAPTION>
DIRECTOR (1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING PAST
NAME (AGE) SINCE FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
- ---------------------------- --------- -----------------------------------------------------
<S> <C> <C>
Charles T. Bauer (77)* 05/20/88 (1) Director, Chairman and Chief Executive Officer,
A I M Management Group Inc.; and Chairman of the
Board of Directors, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company. (2)
Director/Trustee of the AIM Funds.
Bruce L. Crockett (52) 10/04/93 (1) Formerly, Director, President and Chief Executive
Officer, COMSAT Corporation (includes COMSAT World
Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International
Ventures); President and Chief Operating Officer,
COMSAT Corporation; President, World Systems
Division, COMSAT Corporation; and Chairman, Board of
Governors of INTELSAT; (each of the COMSAT companies
listed above is an international communication,
information and entertainment-distribution services
company). (2) Director/Trustee of the AIM Funds.
Owen Daly II (72) 05/24/88 (1) Formerly, Director, CF&I Steel Corp., Monumental
Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation. (2) Director/Trustee of the
AIM Funds; and Director, Cortland Trust Inc.
(investment company).
</TABLE>

- ---------------

* Mr. Bauer is an "interested person" of the Company, as defined in the 1940
Act, primarily because of his positions with AIM and its affiliated companies,
as set forth above, and through his ownership of stock of A I M Management
Group Inc., which owns all of the outstanding stock of AIM.

3
<PAGE> 8

<TABLE>
<CAPTION>
DIRECTOR (1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING PAST
NAME (AGE) SINCE FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
- ---------------------------- --------- -----------------------------------------------------
<S> <C> <C>
Carl Frischling (59)** 05/24/88 (1) Partner, Kramer, Levin, Naftalis & Frankel (law
firm). Formerly, Partner, Reid & Priest (law firm);
and prior thereto, Partner, Spengler Carlson Gubar
Brodsky & Frischling (law firm). (2) Director/Trustee
of the AIM Funds.
Robert H. Graham (50)*** 05/10/94 (1) Director, President and Chief Operating Officer,
A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; and Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., A I M
Institutional Fund Services, Inc. and Fund Management
Company. (2) Director/Trustee of the AIM Funds.
John F. Kroeger (72) 05/24/88 (1) Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm). (2)
Director/Trustee of the AIM Funds; and Director, Flag
Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone
Income Fund, Inc., Flag Investors Equity Partners
Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund, Inc.,
Managed Municipal Fund, Inc., Flag Investors Value
Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag
Investors Real Estate Securities Fund, Inc., Alex
Brown Cash Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment companies).
Lewis F. Pennock (54) 05/24/88 (1) Attorney in private practice in Houston, Texas.
(2) Director/Trustee of the AIM Funds.
</TABLE>

- ---------------

** Mr. Frischling is an "interested person" of the Company, as defined in the
1940 Act, primarily because of payments received by his law firm for
services to the AIM Funds.

*** Mr. Graham is an "interested person" of the Company, as defined in the 1940
Act, primarily because of his positions with AIM and its affiliated
companies, as set forth above, and through his ownership of stock of A I M
Management Group Inc., which owns all of the outstanding stock of AIM.

4
<PAGE> 9

The Company does not hold regular annual meetings at which Directors are
elected.

During the year ending December 31, 1996, AEF's Board of Directors met
eight times. AEF has three standing committees of its Board of Directors: the
Audit Committee, the Investments Committee and the Nominating and Compensation
Committee. During the year ending December 31, 1996, the Audit Committee met
four times, the Investments Committee met four times, and the Nominating and
Compensation Committee met two times. During such year, AEF's Directors attended
at least 75% of the aggregate of the number of meetings of the Board of
Directors and all committees.

The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman),
Pennock and Robinson. The Audit Committee is responsible for meeting with AEF's
auditors to review audit procedures and results and to consider any matters
arising from an audit to be brought to the attention of the Directors as a whole
with respect to AEF's fund accounting or its internal accounting controls, and
for considering such other matters as the Board of Directors may determine. None
of the members of the Audit Committee is an "interested person" of AEF, as
defined by the 1940 Act.

The members of the Investments Committee are Messrs. Bauer, Crockett, Daly
(Chairman), Kroeger and Pennock. The Investments Committee is responsible for
reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, and considering such
other matters as the Board of Directors may from time to time determine. Mr.
Bauer is an "interested person" of AEF, as defined by the 1940 Act.

The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman), and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating individuals
to stand for election as Directors, reviewing from time to time the compensation
payable to the Directors who are not "interested persons" of AEF, as defined by
the 1940 Act, and considering such other matters as the Board of Directors may
from time to time determine. The Nominating and Compensation Committee has sole
authority to nominate persons for Directors of AEF, but shareholders may submit
names of individuals for the Committee's consideration. None of the members of
the Nominating and Compensation Committee is an "interested person" of AEF, as
defined by the 1940 Act.

5
<PAGE> 10

COMPENSATION OF DIRECTORS

Each Director is reimbursed for expenses incurred in attending each meeting
of the Board of Directors or any committee thereof. Each Director who is not
also an officer of AEF is compensated for his services according to a fee
schedule which recognizes the fact that such Director also serves as a Director
or Trustee of other AIM Funds. Each such Director receives a fee, allocated
among the AIM Funds, which consists of an annual retainer component and a
meeting fee component.

Set forth below is information regarding compensation paid or accrued
estimated for the calendar year ending December 31, 1996 for each Director of
the Company:

<TABLE>
<CAPTION>
RETIREMENT TOTAL
AGGREGATE BENEFITS ACCRUED COMPENSATION
COMPENSATION BY ALL AIM FROM ALL AIM
DIRECTOR FROM AEF(1) FUNDS(2) FUNDS(3)
-------------------------------------- ----------- ---------------- ------------
<S> <C> <C> <C>
Charles T. Bauer...................... 0 0 0
Bruce L. Crockett..................... $18,347 $ 38,621 $ 67,000
Owen Daly II.......................... 18,276 82,607 67,000
Carl Frischling....................... 18,347 56,683 67,000
Robert H. Graham...................... 0 0 0
John F. Kroeger....................... 17,777 83,654 65,000
Lewis F. Pennock...................... 18,026 33,702 66,000
Ian W. Robinson....................... 18,347 64,973 67,000
Louis S. Sklar........................ 18,069 47,593 65,500
</TABLE>

- ------------------------------

(1) The total amount of compensation deferred by all Directors of AEF estimated
for the year ending December 31, 1996, including interest earned thereon, is
$75,752.

(2) During the year ending December 31, 1996, the total amount of expenses
allocated to the Company in respect of such retirement benefits is $163,136
for AEF.

(3) Each Director serves as a Director or Trustee of a total of ten AIM Funds.
Data reflect estimated total compensation earned during the calendar year
ending December 31, 1996. Does not include accrued retirement benefits or
earnings on deferred compensation.

------------------------------

AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES

Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Retirement Plan"), each Director who is an "Eligible
Director" (as defined in the Retirement Plan) may be entitled to certain
benefits upon retirement from the Board of Directors. Pursuant to the Retirement
Plan, the normal retirement date is the date on which the Eligible Director has
attained age 65 and has completed at least five years of continuous service with
one or more of the AIM Funds. Each Eligible Director is entitled to receive an
annual benefit from the AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 75% of the
retainer paid or accrued by the AIM Funds for such Eligible Director during the
twelve-month period immediately preceding the Eligible Director's retirement
(including amounts deferred under a separate agreement between the AIM Funds and
the Eligible Director) for the number of such Eligible Director's years of
service (not in excess of ten years of service) completed with respect to any of
the

6
<PAGE> 11

AIM Funds. If an Eligible Director dies after attaining the normal retirement
date but before receipt of any benefits under the Retirement Plan commences, the
Eligible Director's surviving spouse (if any) shall receive a quarterly
survivor's benefit equal to 50% of the amount payable to the deceased Eligible
Director for no more than ten years beginning the first day of the calendar
quarter following the date of the Eligible Director's death. Payments under the
Retirement Plan are not secured or funded by any AIM Fund.

Set forth below is a table that shows the estimated annual benefits payable
to an Eligible Director upon retirement assuming various final annual
compensation and years of service classifications. The estimated credited years
of service for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson
and Sklar are 9, 10, 19, 19, 15, 9, and 7, respectively, although, as noted
above, the benefits payable are based on no more than ten years of service.

ESTIMATED BENEFITS UPON RETIREMENT

<TABLE>
<CAPTION>
NUMBER OF YEARS ANNUAL COMPENSATION PAID BY ALL AIM FUNDS
OF SERVICE WITH -------------------------------------------
THE AIM FUNDS $55,000 $60,000 $65,000
- --------------- ------- ------- -------
<S> <C> <C> <C> <C>
10.................................. $41,250 $45,000 $48,750
9................................... 37,125 40,500 43,875
8................................... 33,000 36,000 39,000
7................................... 28,875 31,500 34,125
6................................... 24,750 27,000 29,250
5................................... 20,625 22,500 24,375
</TABLE>

DEFERRED COMPENSATION AGREEMENTS

Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "Deferring Directors") have each executed a Deferred
Compensation Agreement (collectively, the "DC Agreements"). Pursuant to the DC
Agreements, the Deferring Directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the Deferring Directors may select various AIM
Funds in which all or part of their deferral accounts shall be deemed to be
invested. Distributions from the Deferring Directors' deferral accounts will be
paid in cash generally in equal quarterly installments over a period of ten
years beginning on the date the Deferring Director's retirement benefits
commence under the Retirement Plan. The Company's Board of Directors, in its
sole discretion, may accelerate or extend the distribution of such deferral
accounts after a Deferring Director's termination of service as a Director of
the Company. If a Deferring Director dies prior to the distribution of amounts
in his deferral account, the balance of the deferral account will be distributed
to his designated beneficiary in a single lump sum payment as soon as
practicable after such Deferring Director's death. The DC Agreements are not
funded and, with respect to the payments of amounts held in the deferral
accounts, the Deferring Directors have the status of unsecured creditors of AEF
and of each other AIM Fund from which they are deferring compensation.

7
<PAGE> 12

LEGAL PROCEEDINGS

A claim, Saltzberg v. AIM Equity Funds, Inc., et al., Case No. H96-3657
(S.D. Tex. filed October 25, 1996), has recently been brought against AEF, AIM
and certain other subsidiaries of AIM and against the Fund as a nominal
defendant. The claim was instituted under section 36(b) of the 1940 Act and
seeks to recover damages allegedly suffered by the Fund in connection with fees
paid for marketing and shareholder services after the Fund was closed to new
investors. AIM Management is investigating whether there is any basis at all for
this claim and intends to defend it vigorously.

PROPOSAL 2 --

APPROVAL OF INVESTMENT ADVISORY AGREEMENT

INTRODUCTION

Shareholders are being asked to approve a new Investment Advisory Agreement
(the "New Advisory Agreement") that has no material changes in its terms and
conditions, no changes in fees, and no material changes in the way the Fund is
managed, advised or operated.

AIM serves as investment advisor to the Fund pursuant to an advisory
agreement (the "Current Advisory Agreement") executed on the date set forth in
Annex B and has been investment advisor to the Fund since June 30, 1992. On May
14, 1996, the Board of Directors of AEF, including a majority of the Directors
who are not interested persons of the Company or AIM (the "Independent
Directors"), voted to continue the Current Advisory Agreement for an additional
year until June 30, 1997.

The Fund is seeking shareholder approval of the New Advisory Agreement
because of the technical requirements of the 1940 Act that apply to the merger
(the "Merger") described below under "Merger of AIM Management and INVESCO."
Because the Merger will result in a transfer of more than 25% of the outstanding
voting shares of A I M Management Group Inc. ("AIM Management"), the direct
parent of AIM, an "assignment" of the Current Advisory Agreement will occur
under the 1940 Act. The Current Advisory Agreement provides that it will
terminate automatically upon its assignment, as required by the 1940 Act. As
discussed below, the Merger will not cause any change in the operation of AIM's
business.

At a meeting held on December 10 and 11, 1996, the Board of Directors of
AEF, including a majority of the Independent Directors, approved, subject to
shareholder approval, the New Advisory Agreement. A copy of a form of the New
Advisory Agreement is attached hereto as Annex C. In approving the New Advisory
Agreement, the Board of Directors took into account the terms of the Merger.
There are no material differences between the provisions of the Current Advisory
Agreement and the New Advisory Agreement. A description of such agreements is
provided below under "Terms of the Advisory Agreements." Such description is
only a summary and is qualified by reference to the attached Annex C.

If the conditions to the Merger are not met or waived or if the merger
agreement between AIM Management and INVESCO is terminated, the Merger will not
be consummated, and the Current Advisory Agreement will remain in effect. If the
New Advisory Agreement is approved, and the Merger is thereafter consummated,
the New Advisory Agreement will be executed and become effective on the Closing
Date, as defined below. In the event that the New Advisory Agreement is not
approved and the

8
<PAGE> 13

Merger is consummated, the Board of Directors will determine what action to
take, in any event subject to the approval of shareholders of the Fund.

MERGER OF AIM MANAGEMENT AND INVESCO

On November 4, 1996, AIM Management (the parent of AIM) entered into an
agreement and plan of merger (the "Merger Agreement") with INVESCO plc
("INVESCO"). The Merger Agreement provides for the merger of AIM Management into
INVESCO Group Services, Inc., a wholly owned U.S. subsidiary of INVESCO, or into
another wholly owned U.S. subsidiary of INVESCO (in either case, "INVESCO Sub").

INVESCO is an English holding company whose shares are publicly traded on
the London Stock Exchange. American Depositary Shares evidencing such shares are
traded on the New York Stock Exchange. INVESCO and its subsidiaries are an
independent investment management group with a major presence in the
institutional investment management and retail mutual fund businesses in the
United States and Europe, and a growing presence in the Pacific. INVESCO's U.S.
subsidiaries manage individualized investment portfolios of equity, fixed income
and real estate securities for institutional clients through five business
units. Each unit utilizes a particular investment style in managing assets, and
most of these units also serve as advisor or sub-advisor to one or more of
INVESCO's U.S. mutual funds. INVESCO's European region serves both institutional
and individual investors through six major business units with facilities in the
United Kingdom, the Channel Islands, Luxembourg and France. INVESCO has also
established relationships with substantial financial organizations in Italy, the
Netherlands, Spain and Portugal. INVESCO's Pacific region manages assets of
clients based in Asia and Australia on a local, regional or global basis. It
also manages investments in the region for INVESCO clients based outside the
region. At September 30, 1996, INVESCO's assets under management were in excess
of $90 billion.

Following the Merger, INVESCO will be renamed AMVESCO, plc ("AMVESCO").
AMVESCO will consist of two major complementary businesses, one comprising
principally its United States institutional and international businesses, and
the other comprising principally its United States retail mutual fund and
defined contribution plan businesses. Each of these businesses will be directed
by a separate management committee. Charles W. Brady, the Chairman of INVESCO,
will head the management committee for AMVESCO's U.S. institutional and
international businesses. Robert H. Graham, President and Chief Operating
Officer of AIM Management, will become President and Chief Executive Officer of
AIM Management's successor and will head the management committee directing
AMVESCO's United States retail businesses. Charles T. Bauer, currently Chairman
and Chief Executive Officer of AIM Management, will become Vice Chairman of
AMVESCO and Chairman of AIM Management's successor. AIM Management and INVESCO
believe that their businesses are highly complementary and that the expected
benefits resulting from the Merger include broader product range, expanded
distribution capability, increased globalization, greater capacity in defined
contribution plans, and increased financial strength and independence.

AIM has advised the AIM Funds that the Merger is not expected to have a
material effect on the operations of the AIM Funds or on their shareholders. No
material change in investment philosophy, policies or strategies is currently
envisioned. Following the Merger, AIM will continue to be a wholly owned
subsidiary of the successor to AIM Management. The Merger Agreement does not, by
its terms, contemplate any changes, other than changes in the ordinary course of
business, in the management or operation of AIM relating to the AIM Funds, the
personnel managing the AIM Funds or other

9
<PAGE> 14

services provided to and business activities of the AIM Funds. The Merger also
is not expected to result in material changes in the business, corporate
structure or composition of the senior management or personnel of AIM. Based on
the foregoing, AIM does not anticipate that the Merger will cause a reduction in
the quality of services provided to the AIM Funds, or have any adverse effect
either on AIM's ability to fulfill its respective obligations under the New
Advisory Agreements, or on its ability to operate its businesses in a manner
consistent with its current practices.

Under the Merger Agreement, each of INVESCO and INVESCO Sub has covenanted
and agreed that it will comply, and use all reasonable efforts to cause
compliance on behalf of its affiliates, with the provisions of Section 15(f) of
the 1940 Act. Section 15(f) provides, in pertinent part, that an investment
advisor and its affiliates may receive any amount of benefit in connection with
a sale of securities of, or a sale of any other interest in, such investment
advisor that results in an "assignment" of an investment advisory contract as
long as two conditions are met. First, no "unfair burden" may be imposed on the
investment company as a result of the Merger. The term "unfair burden," as
defined in the 1940 Act, includes any arrangement during the two-year period
after the transaction whereby the investment advisor (or predecessor or
successor investment advisor) or any interested person of any such advisor
receives or is entitled to receive any compensation directly or indirectly from
the investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from, or on behalf of the
investment company (other than fees for bona fide principal underwriting
services). No such compensation arrangements are contemplated in connection with
the Merger.

The second condition is that, for a period of three years after the
transaction occurs, at least 75% of the members of the board of directors of the
investment company advised by such advisor are not "interested persons" (as
defined in the 1940 Act) of the new or the old investment advisor. The Board of
Directors that you are being asked to elect in Proposal No. 1 meets this 75%
requirement.

BOARD OF DIRECTORS EVALUATION

At meetings with the Boards of Directors/Trustees of the AIM Funds
beginning in September, 1996, representatives of AIM Management began discussing
with the Boards the possibility of a merger between AIM Management and INVESCO.
At a meeting in person held on September 27 and 28, 1996, the Boards of
Directors/Trustees of the AIM Funds appointed a special committee (the "Special
Committee") consisting of the Directors/Trustees of the AIM Funds who are not
interested persons of AIM or INVESCO, to review the proposed Merger, consider
its potential impact on the AIM Funds and their shareholders, and make
recommendations to the Boards of Directors/Trustees of the AIM Funds with
respect to the approval of the New Advisory Agreements in view of the proposed
Merger. Directors/Trustees of the AIM Funds who are members of the Special
Committee are Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and
Sklar. The Special Committee met with its legal counsel ("Special Counsel"), who
assisted it in its deliberations concerning approval of the New Advisory
Agreements. At a meeting in person held on November 19, 1996, representatives of
AIM Management and INVESCO discussed with the Boards of Directors/Trustees of
the AIM Funds the specific terms of the Merger Agreement.

The Special Committee met separately with Special Counsel on November 8,
1996, November 19, 1996 and December 2, 1996 to consider and review the
Directors'/Trustees' fiduciary obligations and the nature and extent of
additional information to be requested by them to evaluate the New Advisory
Agreements and the potential impact of the Merger on the AIM Funds and their
shareholders.

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<PAGE> 15

Between November 8, 1996 and December 10, 1996, the Special Committee and
Special Counsel requested and received additional information from AIM
Management, INVESCO and their counsel, and held telephone conferences, regarding
the proposed Merger and its potential impact on the AIM Funds and their
shareholders. On December 10, 1996, the Special Committee and Special Counsel
met separately with representatives of AIM Management and INVESCO to review
various aspects of the proposed Merger, and to review additional information
regarding INVESCO and the future plans for AIM Management and AIM.

In connection with its review, the Special Committee possessed or obtained
substantial information regarding: the management, financial position and
business of INVESCO and its subsidiaries; the history of INVESCO's and its
subsidiaries' business and operations; the performance of the investment
companies and private accounts advised by INVESCO and its subsidiaries; the
impact of the Merger on the AIM Funds and their shareholders; future plans of
AMVESCO with respect to AIM and the AIM Funds; performance and financial
information about each of the AIM Funds; and information about other funds and
their fees and expenses.

The Special Committee also received information regarding the terms of the
Merger and comprehensive financial information, including: INVESCO's plans for
financing the Merger; the impact of the financing on AIM Management and AIM;
AMVESCO's plans for the compensation of executives and investment and other
staff of AIM Management and AIM; information concerning employment contracts
with senior management of AIM Management and AIM; and AMVESCO's access to
capital markets to meet the capital needs of AIM Management and its
subsidiaries.

In connection with its deliberations, the Special Committee obtained
assurances from INVESCO that: the separate identity of AIM Management and AIM
would be maintained for the foreseeable future; AMVESCO did not intend to change
executive management or staff of AIM Management or AIM (other than to appoint
Robert H. Graham Chief Executive Officer of the successor to AIM Management),
and has entered into employment agreements with key personnel; AMVESCO will
consult with the Boards of Directors/Trustees of the AIM Funds prior to making
material changes to AIM, including its financial and personnel resources, that
could adversely affect the ability of AIM or its subsidiaries to render high
quality services to the AIM Funds; AMVESCO will appoint a general counsel for
AMVESCO who will have responsibility for overall compliance systems; neither
AMVESCO nor its affiliates will impose an "unfair burden" within the meaning of
Section 15(f) of the 1940 Act for a period of two years following the
consummation of the Merger; AMVESCO has not planned any major changes to the
operations and capabilities of AIM or its subsidiaries, except those intended to
enhance the capabilities of those entities to provide improved services to the
AIM Funds; and AMVESCO and its affiliates will use reasonable best efforts to
assure that for a period of three years following consummation of the Merger at
least 75% of the members of the Boards of Directors/ Trustees of the AIM Funds
will not be interested persons of either AIM or INVESCO Group Services, Inc. The
Special Committee determined that it was not in a position to rank the foregoing
in order of importance.

The Special Committee also evaluated the New Advisory Agreement. The
Special Committee assured itself that the New Advisory Agreement for the Fund,
including the terms relating to the services to be provided and the fees and
expenses payable by the Fund, is not materially different from the Current
Advisory Agreement for the Fund.

11
<PAGE> 16

Based on the Special Committee's review and analysis of the material
provided and the assurances received, the Special Committee unanimously
recommended to the Board of Directors of AEF that the New Advisory Agreements be
approved.

At the Boards of Directors/Trustees meetings of the AIM Funds held on
December 10 and 11, 1996, the Boards received presentations by INVESCO and AIM.
The Directors/Trustees were supplied with the information given to the Special
Committee in advance of the meeting. The Special Committee discussed with the
Board of Directors the materials it reviewed, the issues it studied and the
reasons for its recommendation. Based upon the foregoing, the Board of Directors
of AEF unanimously approved the New Advisory Agreement for the Fund and
recommended approval by the shareholders.

ADDITIONAL TERMS OF THE MERGER AGREEMENT

AIM Management will merge into INVESCO Sub for consideration valued at
November 4, 1996 at approximately $1.6 billion, plus the amount of AIM
Management net income from September 1, 1996 through the date on which the
Merger is consummated (the "Closing Date"), minus dividends paid during such
period and subject to adjustments for certain balance sheet items and
transaction expenses. The consideration will include 290 million new Ordinary
Shares (including Ordinary Shares issuable in respect of vested and unvested AIM
Management options) of INVESCO valued at November 4, 1996 at approximately $1.1
billion. The balance of the consideration will be paid in cash.

The directors of AIM Management's successor will be Charles T. Bauer,
Robert H. Graham, Gary T. Crum and Michael J. Cemo, all of whom are currently
officers and directors of AIM Management. Although Charles T. Bauer will remain
Chairman of AIM Management's successor, Robert H. Graham will become President
and Chief Executive Officer of such successor. Mr. Graham currently serves as
AIM Management's President and Chief Operating Officer.

Upon consummation of the Merger, the AIM Management stockholders will own
approximately 45% of AMVESCO's total outstanding capital stock on a fully
diluted basis. INVESCO's shareholders approved the Merger at a meeting on
November 27, 1996, and on December 4, 1996 approved changing INVESCO's name upon
consummation of the Merger. AIM Management's stockholders have also approved the
Merger. The name of AIM will not change.

The closing is presently expected to occur on February 28, 1997, subject to
the satisfaction of conditions to closing that include, among other things: (a)
INVESCO having consummated one or more financings and having received net
proceeds of not less than $500 million; (b) the respective aggregate annualized
asset management fees of INVESCO and AIM Management (based on assets under
management, excluding the effects of market movements) in respect of which
consents to the Merger have been obtained being equal to or greater than 87.5%
of all such fees at October 31, 1996; (c) INVESCO and AIM Management having
received certain consents from regulators, lenders and/or other third parties;
(d) AIM Management not having received from the holder or holders of more than
2% of the outstanding AIM Management shares notices that they intend to exercise
dissenters' rights; (e) a Voting Agreement, Standstill Agreement, Transfer
Administration Agreement, Registration Rights Agreement, and Indemnification
Agreement, and Transfer Restriction Agreements and Employment Agreements with
certain AIM Management employees having been executed and delivered; (f) AIM
Management having received an opinion from its U.S. counsel that the Merger will
be treated as a tax-free reorganization; and (g) shareholder resolutions to
appoint to

12
<PAGE> 17

INVESCO's Board of Directors six AIM Management designees and a Board resolution
to appoint the seventh AIM Management designee having been passed and not
revoked.

The Merger Agreement may be terminated at any time prior to the Closing
Date (a) by written agreement of INVESCO and AIM Management, (b) by written
notice by AIM Management or INVESCO to the other after June 1, 1997 or (c) under
other circumstances set forth in the Merger Agreement. In certain circumstances
occurring on or before September 30, 1997, a termination fee will be payable by
the party in respect of which such circumstances have occurred.

In connection with the Merger, the following agreements, each to be
effective upon the closing of the Merger, have been or will be executed:

Employment Agreements. Following the Merger, the current officers of
AIM Management will be the officers of the successor to AIM Management and
the directors of the successor to AIM Management will be four of the
current directors of AIM Management. Senior management and key employees of
AIM Management have entered into employment agreements which will commence
when the Merger is consummated and will continue for initial terms ranging
from one year to four years. All of the employment agreements contain
covenants not to compete extending for at least one year after termination
of employment. Approximately thirty current employees of AIM Management are
expected to enter into such employment agreements with INVESCO.

Voting Agreement. Certain AIM Management stockholders and their
spouses, the current directors of INVESCO and proposed directors of AMVESCO
(all of whom are expected to hold in the aggregate approximately 25% of the
Ordinary Shares outstanding immediately following the consummation of the
Merger) have agreed to vote as directors and as shareholders to ensure
that: (a) the AMVESCO Board will have fifteen members, consisting of four
executive directors and three non-executive directors designated by
INVESCO's current senior management, four executive directors and three
non-executive directors designated by AIM Management's current senior
management and a Chairman; (b) the initial Chairman will be Charles W.
Brady (INVESCO's current Chairman) and the initial Vice Chairman will be
Charles T. Bauer (AIM Management's current Chairman); (c) the parties will
vote at any AMVESCO shareholder meeting on resolutions (other than those in
respect of the election of directors) supported by two-thirds of the Board
in the same proportion as votes are cast by unaffiliated shareholders. The
Voting Agreement will terminate on the earlier of the fourth anniversary of
the Closing Date and the date on which a resolution proposed by an
INVESCO-designated Board member is approved by the AMVESCO Board despite
being voted against by each AIM Management-designated Board member present
at such Board meeting.

Standstill Agreement and Transfer Restriction Agreements. Certain AIM
Management stockholders and their spouses and certain other significant
shareholders of INVESCO have agreed under certain circumstances for a
maximum of five years not to engage in a number of specified activities
that might result in a change of the ownership or control positions of
AMVESCO existing as of the Closing Date. AIM Management stockholders and
INVESCO's current chairman will be restricted in their ability to transfer
their shares of AMVESCO for a period of up to five years.

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<PAGE> 18

TERMS OF THE ADVISORY AGREEMENTS

Although the Current Advisory Agreement has not terminated and the New
Advisory Agreement has not become effective, such Agreements (collectively, the
"Advisory Agreements") are described below as if they were both in effect.

Under the Advisory Agreements, AIM

(a) supervises all aspects of the operations of the Fund;

(b) obtains and evaluates pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are included in the assets of
the Fund or the activities in which such issuers engage, or with respect to
securities which AIM considers desirable for inclusion in the Fund's assets;

(c) determines which issuers and securities shall be represented in the
Fund's investment portfolios and regularly reports thereon to the Company's
Board of Directors;

(d) formulates and implements continuing programs for the purchases and
sales of the securities of such issuers and regularly reports thereon to the
Company's Board of Directors; and

(e) takes, on behalf of the Company and the Fund, all actions which appear
to the Company and the Fund necessary to carry into effect such purchase and
sale programs and supervisory functions stated above, including but not limited
to the placing of orders for the purchase and sale of securities for the Fund.

The Advisory Agreements provide that any investment program undertaken by
AIM, as well as any other actions taken by AIM on behalf of the Fund, shall at
all times be subject to any directives of the Board of Directors of the Company.

In performing its obligations under the Advisory Agreements, AIM is
required to comply with all applicable laws. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties under the Advisory Agreements on the part of AIM or its officers,
directors or employees, AIM shall not be liable to the Company or the Fund or
its shareholders for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.

The Advisory Agreements provide that, subject to the approval of the Board
of Directors of the Company and the shareholders of the Fund, AIM may delegate
certain of its duties to a sub-advisor, provided that AIM shall continue to
supervise the performance of any such sub-advisor.

The Advisory Agreements provide that all of the ordinary business expenses
incurred in the operations of the Fund and the offering of its shares shall be
paid by the Fund. These expenses include brokerage commissions, taxes, legal,
accounting, auditing or governmental fees, custodian, transfer agent and
shareholder service agent costs.

The New Advisory Agreement also expressly provides that the Company shall
be entitled to use the name "AIM" with respect to the Fund only so long as AIM
serves as investment manager or

14
<PAGE> 19

advisor to such Fund. Although the Current Advisory Agreement presently has a
similar provision, the provision in the New Advisory Agreement will read as
follows:

License Agreement. The Company shall have the non-exclusive right to use
the name "AIM" to designate any current or future series of shares only
so long as A I M Advisors, Inc. serves as investment manager or advisor
to the Company with respect to such series of shares.

Management of AEF understands that AEF has been using the AIM mark for the
Fund only by permission of AIM and that the express licensing provision
contained in the New Advisory Agreement clarifies this understanding.

The Advisory Agreements provide for a monthly fee to AIM computed at an
annual rate of 0.80% of the first $150 million of net assets and 0.625% of the
excess over $150 million. The aggregate advisory fee paid by the Fund to AIM in
its most recently completed fiscal year was $16,492,564.

The Advisory Agreements may be terminated with respect to the Fund on 60
days' written notice without penalty by (i) the Fund, (ii) the action of the
shareholders of the Fund, (iii) the Board of Directors of the Company, or (iv)
AIM. Each Advisory Agreement will terminate automatically in the event of any
assignment, as defined by the 1940 Act. The Advisory Agreements continue from
year to year with respect to the Fund so long as their continuance is
specifically approved at least annually either (i) by the Board of Directors of
the Company or (ii) by the vote of a majority of the Fund's outstanding voting
securities, as defined by the 1940 Act, provided that in either event the
continuance is also approved by the vote of a majority of the Directors of the
Company who are not interested persons of the Company or of AIM, cast in person
at a meeting called for the purpose of voting on such approval.

The Advisory Agreements provide that, upon the request of the Company's
Board of Directors, AIM may perform certain additional services on behalf of the
Fund. The Board of Directors has approved, and AEF has entered into, a Master
Administrative Services Agreement with AIM, pursuant to which AIM has agreed to
provide or arrange for the provision of certain accounting and other
administrative services to the Fund, including the services of a principal
financial officer of the Company and related staff. As compensation to AIM for
its services under the Master Administrative Services Agreement, the Fund
reimburses AIM for expenses incurred by AIM or its affiliates in connection with
such services.

ADDITIONAL SERVICES PROVIDED BY AIM AND ITS AFFILIATES

As noted above, AIM provides administrative services to the Fund. In
addition, A I M Distributors, Inc. ("AIM Distributors"), a wholly owned
subsidiary of AIM, serves as the principal underwriter for the Fund. Shares of
the Fund are generally sold with an initial sales charge. Such sales charges are
paid by investors. The Fund has also adopted a distribution plan under Rule
12b-1 of the 1940 Act (the "Plan"). Pursuant to the Plan, the Fund makes
payments to AIM Distributors in connection with the distribution of the Fund's
shares and the provision of ongoing services to shareholders. The fees are
calculated as a percentage (0.25%) of the annualized average daily net assets
attributable to the shares. AIM Distributors pays as a service fee a portion of
the Rule 12b-1 fees that it receives to the brokers, dealers, agents and other
service providers with whom it has entered into agreements and who offer shares
of the Fund for sale or provide customers or clients certain continuing personal
services.

15
<PAGE> 20

The amounts payable by a Fund under the Plan 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 Fund 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.

A I M Fund Services, Inc. ("AIM Services"), a wholly owned subsidiary of
AIM, serves as transfer agent to the Fund.

Information with regard to the amount of fees paid by the Fund to AIM and
its affiliates for services provided other than under the Current Advisory
Agreement in the Fund's most recently completed fiscal year is set forth in
Annex D.

The agreements pursuant to which AIM provides administrative services to
the Fund and pursuant to which AIM Distributors serves as the Fund's principal
underwriter will terminate as a result of the Merger. The Board of Directors of
the Company has approved new agreements, which are substantially identical to
the existing administrative services and distribution agreements, to take effect
upon consummation of the Merger. Under the 1940 Act, such agreements do not
require the approval of shareholders before they become effective. The agreement
pursuant to which AIM Services provides transfer agency services will not
terminate as a result of the Merger.

INFORMATION CONCERNING AIM

AIM serves as the investment advisor to the Fund. AIM was organized in 1976
and, together with its affiliates, advises 38 investment company portfolios
constituting the AIM Funds and sub-advises one investment company portfolio. As
of December 3, 1996, the total assets of the AIM Funds were approximately $62.6
billion. AIM is a wholly owned subsidiary of AIM Management. Certain of the
Directors and officers of AIM are also Directors and executive officers of the
Company, and their names, principal occupations and affiliations are shown in
the table under Proposal 1 and under "Executive Officers" in Annex E.
Information regarding the AIM Funds, including their total net assets and the
fees received by AIM from such AIM Funds for its services, is set forth in Annex
F. The address of AIM, all of the Directors of AIM, AIM Distributors, AIM
Services and AIM Management, is 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173.

RECOMMENDATION OF DIRECTORS

The Board of Directors of AEF recommends that you vote FOR the approval of
the New Advisory Agreement.

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<PAGE> 21

PROPOSAL 3 --

ELIMINATION OF THE FUNDAMENTAL INVESTMENT POLICY
PROHIBITING INVESTMENTS IN OTHER INVESTMENT COMPANIES AND
AMENDMENT OF A RELATED FUNDAMENTAL INVESTMENT POLICY

The Board of Directors of AEF proposes the elimination and modification of
certain fundamental investment policies that prohibit the Fund from investing in
other investment companies. The specific changes proposed are described below.

The Fund's current fundamental investment policy prohibiting investments in
other investment companies states that the Fund may not:

purchase the securities of any other investment company, except that it
may make such a purchase as part of a merger, consolidation or
acquisition of assets and except for the investment in such securities
of funds representing compensation otherwise payable to the directors of
the Company pursuant to any deferred compensation plan existing at any
time between the Company and one or more of its directors.

Section 12 of the 1940 Act generally prohibits the Fund from (i) owning
more than 3% of the total outstanding voting stock of any other investment
company; (ii) investing more than 5% of its total assets in the securities of
any one other investment company; and (iii) investing more than 10% of its total
assets (in the aggregate) in the securities of other investment companies.

The Board of Directors may, in the near future, authorize AIM and the
Company to seek exemptive relief from the Securities and Exchange Commission
("SEC") to permit the Fund to purchase securities of other investment companies
in excess of the limitations imposed by Section 12 of the 1940 Act (exemptive
orders granted with respect to the Fund are referred to herein collectively as
the "Exemptive Orders"). There is no assurance that such Exemptive Orders will
be granted. The investment companies in which the Fund may invest pursuant to
the Exemptive Orders are referred to herein collectively as the "Exemptive Order
Funds." In order to take full advantage of the exemptive relief that may be
granted by the SEC and to invest in shares of the Exemptive Order Funds in
excess of the percentage limitations imposed by Section 12, the Fund is seeking
shareholder approval to eliminate the prohibition against investing in other
investment companies.

The Company and AIM may seek Exemptive Orders because they believe that the
Fund can effectively invest in certain other types of securities through pooled
investment vehicles such as the Exemptive Order Funds. By pooling its
investments in such securities, the Fund may have the ability to invest in a
wider range of issuers, industries and markets, thereby seeking to decrease
volatility and risk while at the same time providing greater liquidity than the
Fund would have available to it investing in such securities by itself. Pooling
investments may also allow the Fund to increase the efficiency of portfolio
management by permitting the Fund's portfolio manager to concentrate on those
investments that constitute the bulk of the Fund's assets and not spend a
disproportionate amount of time on specialized areas. The Company may seek
Exemptive Orders to permit, among other things, investments by the Fund for cash
management purposes in money market funds advised by AIM, implementation of a
master/feeder fund structure or investments in a separate small capitalization
or initial public offering fund.

If the proposed elimination of the Fund's prohibition against investments
in other investment companies is approved, the Fund may invest in securities of
an Exemptive Order Fund only to the

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<PAGE> 22

extent consistent with the Fund's investment objectives and policies as set
forth from time to time in AEF's registration statement.

In connection with obtaining Exemptive Orders, AIM may agree to waive fees
applicable to the Fund to the extent that the assets of the Fund are invested in
Exemptive Order Funds and collect fees from the Exemptive Order Funds. Other
expenses incurred by the Exemptive Order Funds (such as audit and custodial
fees) will be borne by them, and thus indirectly by the Fund. AIM believes that
these indirect expenses will be offset by the benefits to the Fund of pooling
its investments.

CERTAIN RELATED FUNDAMENTAL INVESTMENT POLICIES

The Fund currently has the following fundamental investment restriction
that may prohibit it from taking full advantage of the Exemptive Orders:

Diversification. AIM Aggressive Growth Fund may not, with respect to 75%
of the total assets of the Fund, purchase the securities of any issuer
if such purchase would cause more than 5% of the value of its assets to
be invested in the securities of such issue (except U.S. Government
securities including securities issued by its agencies and
instrumentalities).

From time to time, the Fund may desire to invest more than 25% of its total
assets in one or more Exemptive Order Funds.

Additional information regarding the Fund's fundamental investment
restrictions may be obtained without cost by telephoning AIM at 1-800-347-4246
and requesting a copy of the Fund's Statement of Additional Information.

In order to take full advantage of the Exemptive Orders, the Fund seeks
shareholder approval to amend such restriction by adding the following exception
to the restriction:

. . ., except that the AIM Aggressive Growth Fund may purchase securities
of other investment companies to the extent permitted by applicable law or
exemptive order.

The elimination of the fundamental investment policy prohibiting
investments in other investment companies and the amendment to the related
fundamental investment policy would become effective March 1, 1997, if approved
by shareholders at the Annual Meeting. These changes are not related to the
Merger described in Proposal 2. Shareholders are being asked to consider such
amendments at this time because the Company does not regularly hold annual
shareholder meetings. AIM believes that submitting this proposal together with
Proposal 2 may reduce the expenses incurred by the Fund in connection with
soliciting approval of this proposal because the Company will not be required to
hold a separate meeting.

RECOMMENDATION OF DIRECTORS

The Board of Directors of AEF recommends that you vote FOR the proposal to
eliminate the fundamental investment policy prohibiting investments in other
investment companies and to amend the related fundamental investment policy.

18
<PAGE> 23

PROPOSAL 4 --

RATIFICATION OF SELECTION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT ACCOUNTANTS

The Board of Directors of AEF, including a majority of the Independent
Directors, has selected KPMG Peat Marwick LLP as independent accountants for the
fiscal year of the Fund ending in 1997 to examine and verify the accounts and
securities of the Fund, and to report thereon to the Board and the shareholders.
This selection will be submitted for ratification at the Annual Meeting. A
representative of KPMG Peat Marwick LLP is expected to be present at the Annual
Meeting.

RECOMMENDATION OF DIRECTORS

The Board of Directors of AEF recommends that you vote FOR the ratification
of the selection of KPMG Peat Marwick LLP as AEF's independent accountants.

GENERAL INFORMATION

EXECUTIVE OFFICERS OF THE COMPANY

Information regarding the executive officers of the Company is set forth in
Annex E.

SECURITY OWNERSHIP OF MANAGEMENT AND 5% HOLDERS

Information regarding ownership of each class of the Fund's shares by
Directors and the Chief Executive Officer and by 5% holders of each class of the
Fund is set forth in Annex G.

PROXY SOLICITATION

The Company has engaged the services of Shareholder Communications
Corporation ("SCC") to assist in the solicitation of proxies for the Annual
Meeting. It is estimated that the aggregate cost of SCC's services with respect
to all of the AIM Funds will be approximately $3,500,000. The cost of soliciting
proxies will be borne primarily by AIM Management, and certain incremental costs
will be borne by the AIM Funds. The Company expects to solicit proxies
principally by mail, but the Company or SCC may also solicit proxies by
telephone, facsimile or personal interview. AIM Management may also reimburse
firms and others for their expenses in forwarding solicitation materials to the
beneficial owners of shares of the Fund.

19
<PAGE> 24

SHAREHOLDER PROPOSALS

As a general matter, the Company does not hold regular annual meetings of
shareholders. Any shareholder who wishes to submit proposals for consideration
at a shareholders' meeting should send such proposal to the Company at the
address set forth on the first page of this proxy statement. To be considered
for presentation at a shareholders' meeting, proposals must be received a
reasonable time before a solicitation is made and must comply with applicable
law.

OTHER BUSINESS

The management knows of no business to be presented to the Annual Meeting
other than the matters set forth in this proxy statement.

By order of the Board of Directors,

Charles T. Bauer
Chairman of the Board of Directors

December 20, 1996

20
<PAGE> 25

ANNEX A

NUMBER OF SHARES OUTSTANDING ON DECEMBER 3, 1996
FOR EACH SERIES PORTFOLIO OF AEF

<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND DECEMBER 3, 1996
- ------------------------------------------------------------------------- -----------------
<S> <C>
AIM Aggressive Growth Fund............................................... 60,713,760.440
AIM Blue Chip Fund....................................................... 6,132,165.159
AIM Capital Development Fund............................................. 28,846,040.199
AIM Charter Fund......................................................... 289,860,679.395
AIM Constellation Fund................................................... 462,867,166.774
AIM Weingarten Fund...................................................... 265,721,677.288
-----------------
TOTAL -- AIM EQUITY FUNDS, INC. ......................................... 1,114,141,489.255
=================
</TABLE>

21
<PAGE> 26

ANNEX B

DATE OF ADVISORY AGREEMENT

<TABLE>
<CAPTION>
DATE SINCE
DATE LAST SUBMITTED AIM HAS SERVED
DATE OF CURRENT TO A VOTE OF AS INVESTMENT
NAME OF COMPANY AND FUND ADVISORY AGREEMENT SHAREHOLDERS* ADVISOR
- ----------------------------------- ----------------------------------- ------------------- ----------------
<S> <C> <C> <C>
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund Master Investment Advisory September 28, 1994 June 30, 1992
Agreement, dated October 18, 1993,
as amended by Amendment No. 1,
dated November 14, 1994, as amended
by Amendment No. 2, dated March 12,
1996
</TABLE>

- ---------------

* The Current Advisory Agreement dated October 18, 1993 was last submitted to a
vote of shareholders in 1994 to approve a change in the investment advisory
fee.

22
<PAGE> 27

ANNEX C

[NAME OF COMPANY]

MASTER INVESTMENT ADVISORY AGREEMENT

THIS AGREEMENT is made this day of , 1997, by and between
[Name of Company], a Maryland Corporation (the "Company"), with respect to its
series of shares shown on the Appendix A attached hereto, as the same may be
amended from time to time, and A I M Advisors, Inc., a Delaware corporation (the
"Advisor").

RECITALS

WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;

WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;

WHEREAS, the Company's charter authorizes the Board of Directors of the
Company to classify or reclassify authorized but unissued shares of the Company,
and as of the date of this Agreement, the Company's Board of Directors has
authorized the issuance of [ ] series of shares representing interests in
[ ] investment portfolios (such portfolios and any other portfolios
hereafter added to the Company being referred to individually as a "Fund,"
collectively as the "Funds"); and

WHEREAS, the Company and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;

NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:

1. Advisory Services. The Advisor shall act as investment advisor for the
Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Company's Board of Directors. The Advisor shall give
the Company and the Funds the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor.

2. Investment Analysis and Implementation. In carrying out its obligations
under Section 1 hereof, the Advisor shall:

(a) supervise all aspects of the operations of the Funds;

(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Funds,
and whether concerning the individual issuers whose securities are included
in the assets of the Funds or the activities in which such issuers engage,
or with respect to securities which the Advisor considers desirable for
inclusion in the Funds' assets;

23
<PAGE> 28

(c) determine which issuers and securities shall be represented in the
Funds' investment portfolios and regularly report thereon to the Company's
Board of Directors; and

(d) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Company's Board of Directors;

and take, on behalf of the Company and the Funds, all actions which appear to
the Company and the Funds necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including but not limited to
the placing of orders for the purchase and sale of securities for the Funds.

3. Delegation of Responsibilities. Subject to the approval of the Board of
Directors and the shareholders of the Funds, the Advisor may delegate to a
sub-advisor certain of its duties enumerated in Section 2 hereof, provided that
the Advisor shall continue to supervise the performance of any such sub-advisor.

4. Control by Board of Directors. Any investment program undertaken by the
Advisor pursuant to this Agreement, as well as any other activities undertaken
by the Advisor on behalf of the Funds, shall at all times be subject to any
directives of the Board of Directors of the Company.

5. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:

(a) all applicable provisions of the 1940 Act and the Advisers Act and
any rules and regulations adopted thereunder;

(b) the provisions of the registration statement of the Company, as
the same may be amended from time to time under the Securities Act of 1933
and the 1940 Act;

(d) the provisions of the by-laws of the Company, as the same may be
amended from time to time; and

(e) any other applicable provisions of state, federal or foreign law.

6. Broker-Dealer Relationships. The Advisor is responsible for decisions to
buy and sell securities for the Funds, broker-dealer selection, and negotiation
of brokerage commission rates. The Advisor's primary consideration in effecting
a security transaction will be to obtain execution at the most favorable price.
In selecting a broker-dealer to execute each particular transaction, the Advisor
will take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
and the difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Funds on
a continuing basis. Accordingly, the price to the Funds in any transaction may
be less favorable than that available from another broker-dealer if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies as the Board of Directors may from
time to time determine, the Advisor shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Funds to pay a broker or dealer that provides
brokerage and research services to the Advisor an amount of

24
<PAGE> 29

commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
a particular Fund, other Funds of the Company, and to other clients of the
Advisor as to which the Advisor exercises investment discretion. The Advisor is
further authorized to allocate the orders placed by it on behalf of the Funds to
such brokers and dealers who also provide research or statistical material, or
other services to the Funds, to the Advisor, or to any sub-advisor. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine and the Advisor will report on said allocations regularly to the Board
of Directors of the Company indicating the brokers to whom such allocations have
been made and the basis therefor. In making decisions regarding broker-dealer
relationships, the Advisor may take into consideration the recommendations of
any sub-advisor appointed to provide investment research or advisory services in
connection with the Funds, and may take into consideration any research services
provided to such sub-advisor by broker-dealers.

7. Compensation. The Company shall pay the Advisor as compensation for
services rendered to a Fund hereunder an annual fee, payable monthly, based upon
the average daily net assets of such Fund as the same is set forth in Appendix A
attached hereto. Such compensation shall be paid solely from the assets of such
Fund. The average daily net asset value of the Funds shall be determined in the
manner set forth in the corporate charter and registration statement of the
Company, as amended from time to time.

8. Additional Services. Upon the request of the Company's Board of
Directors, the Advisor may perform certain accounting, shareholder servicing or
other administrative services on behalf of the Funds which are not required by
this Agreement. Such services will be performed on behalf of the Funds and the
Advisor may receive from the Funds such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and the
Company's Board of Directors based on a finding by the Board of Directors that
the provision of such services by the Advisor is in the best interests of the
Company and its shareholders. Payment or assumption by the Advisor of any Fund
expense that the Advisor is not otherwise required to pay or assume under this
Agreement shall not relieve the Advisor of any of its obligations to the Funds
nor obligate the Advisor to pay or assume any similar Fund expense on any
subsequent occasions. Such services may include, but are not limited to:

(a) the services of a principal financial officer of the Company
(including applicable office space, facilities and equipment) whose normal
duties consist of maintaining the financial accounts and books and records
of the Company and the Funds, including the review and calculation of daily
net asset value and the preparation of tax returns; and the services
(including applicable office space, facilities and equipment) of any of the
personnel operating under the direction of such principal financial
officer;

(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by the
Advisor; changing account designations or changing addresses; assisting in
the purchase or redemption of shares; supervising the operations of the
custodian, transfer agent(s) or dividend disbursing agent(s) for the Funds;
or otherwise providing services to shareholders of the Funds; and

25
<PAGE> 30

(c) such other administrative services as may be furnished from time
to time by the Advisor to the Company or the Funds at the request of the
Company's Board of Directors.

9. Expenses of the Funds. All of the ordinary business expenses incurred in
the operations of the Funds and the offering of their shares shall be borne by
the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
directors and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by the
Company on behalf of the Funds in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Funds' shareholders.

10. Expense Limitation. If, for any fiscal year of the Company, the total
of all ordinary business expenses of the Funds, including all investment
advisory fees, but excluding brokerage commissions and fees, taxes, interest and
extraordinary expenses, such as litigation costs, would exceed the applicable
expense limitations imposed by state securities regulations in any state in
which the Funds' shares are qualified for sale, as such limitations may be
raised or lowered from time to time, the aggregate of all such investment
advisory fees shall be reduced by the amount of such excess. The amount of any
such reduction to be borne by the Advisor shall be deducted from the monthly
investment advisory fee otherwise payable to the Advisor during such fiscal
year. If required pursuant to such state securities regulations, the Advisor
will, not later than the last day of the first month of the next succeeding
fiscal year, reimburse the Funds for any such annual operating expenses (after
reduction of all investment advisory fees in excess of such limitation). For the
purposes of this paragraph, the term "fiscal year" shall exclude the portion of
the current fiscal year which shall have elapsed prior to the date hereof and
shall include the portion of the then current fiscal year which shall have
elapsed at the date of termination of this Agreement. The application of expense
limitations shall be applied to each Fund of the Company separately unless the
laws or regulations of any state shall require that the expense limitations be
imposed with respect to the Company as a whole.

11. Non-Exclusivity. The services of the Advisor to the Company and the
Funds are not to be deemed to be exclusive, and the Advisor shall be free to
render investment advisory and administrative or other services to others
(including other investment companies) and to engage in other activities. It is
understood and agreed that officers or directors of the Advisor may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.

12. Term and Approval. This Agreement shall become effective with respect
to a Fund if approved by the shareholders of such Fund, and if so approved, this
Agreement shall thereafter continue in force and effect until February 28, 1999,
and may be continued from year to year thereafter, provided that the
continuation of the Agreement is specifically approved at least annually;

26
<PAGE> 31

(a) (i) by the Company's Board of Directors or (ii) by the vote of "a
majority of the outstanding voting securities" of such Fund (as defined in
Section 2(a)(42) of the 1940 Act); and

(b) by the affirmative vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Company directors), by
votes cast in person at a meeting specifically called for such purpose.

13. Termination. This Agreement may be terminated as to the Company or as
to any one or more of the Funds at any time, without the payment of any penalty,
by vote of the Company's Board of Directors or by vote of a majority of the
outstanding voting securities of the applicable Fund, or by the Advisor, on
sixty (60) days' written notice to the other party. The notice provided for
herein may be waived by the party entitled to receipt thereof. This Agreement
shall automatically terminate in the event of its assignment, the term
"assignment" for purposes of this paragraph having the meaning defined in
Section 2(a)(4) of the 1940 Act.

14. Liability of Advisor and Indemnification. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company or to
the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.

15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company shall be and that of the Advisor shall be Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046.

16. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said Acts. In
addition, where the effect of a requirement of the 1940 Act or the Advisers Act
reflected in any provision of the Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.

17. License Agreement. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Company with respect to such series of shares.

27
<PAGE> 32

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.

<TABLE>
<S> <C>
[NAME OF COMPANY]
Attest: (a Maryland corporation)

By:
- -------------------------------------------- -----------------------------------------
Assistant Secretary President

(SEAL)
A I M ADVISORS, INC.

By:
- -------------------------------------------- -----------------------------------------
Assistant Secretary President
(SEAL)

</TABLE>

28
<PAGE> 33

APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
[NAME OF COMPANY]

The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee for such Fund set forth below. Such fees shall be calculated by
applying the following annual rates to the average daily net assets of such Fund
for the calendar year computed in the manner used for the determination of the
net asset value of shares of such Fund.

[FUND]

<TABLE>
<CAPTION>
ANNUAL
NET ASSETS RATE
---------- -------
<S> <C>
</TABLE>

[Fees will be those set forth in Annex F]

29
<PAGE> 34

ANNEX D

FEES PAID TO AFFILIATES
IN MOST RECENT FISCAL YEAR

<TABLE>
<CAPTION>
AIM
(ADMINISTRATIVE AIM AIM
COMPANY AND FUND AGREEMENT) DISTRIBUTORS* SERVICES
- ------------------------------------------------- ---------------- ------------- ----------
<S> <C> <C> <C>
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund $ 97,857 $ 2,427,764 $2,047,282
</TABLE>

- ---------------

* Net amount received from sales commissions and Rule 12b-1 fees, not including
amounts reallocated to brokers, dealers, agents and other service providers.

30
<PAGE> 35

ANNEX E

EXECUTIVE OFFICERS

EXECUTIVE OFFICERS OF AEF

Officers of AEF serve at the pleasure of the Board and until their
successors are elected and qualified. Set forth below is certain information
regarding the executive officers of AEF.

<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING
NAME AGE POSITION WITH AEF PAST FIVE YEARS
- ---------------------------- --- --------------------- ----------------------------------
<S> <C> <C> <C>
Charles T. Bauer 77 Chairman See Director table under Proposal
1.
Robert H. Graham 50 President See Director table under Proposal
1.
John J. Arthur* 52 Senior Vice President Senior Vice President and
and Treasurer Treasurer, A I M Advisors, Inc.
("AIM"); and Vice President and
Treasurer, A I M Management Group
Inc. ("AIM Management"), A I M
Capital Management, Inc. ("AIM
Capital"), A I M Distributors,
Inc. ("AIM Distributors"), A I M
Fund Services, Inc. ("AIM
Services"), A I M Institutional
Fund Services, Inc. ("AIM
Institutional"), and Fund
Management Company ("Fund
Management").
Gary T. Crum 49 Senior Vice President Director and President, AIM
Capital; Director and Senior Vice
President, AIM Management, and
AIM; and Director, AIM
Distributors.
Scott G. Lucas 37 Senior Vice President Director and Senior Vice
President, AIM Capital; and Vice
President, AIM Management and AIM.
Jonathan C. Schoolar 35 Senior Vice President Director and Senior Vice
President, AIM Capital; and Vice
President, AIM.
Carol F. Relihan* 42 Senior Vice President Senior Vice President, General
and Secretary Counsel and Secretary, AIM; Vice
President, General Counsel and
Secretary, AIM Management; Vice
President and General Counsel,
Fund Management; and Vice
President, AIM Capital, AIM
Distributors, AIM Services, and
AIM Institutional.
</TABLE>

- ------------------------------
* Mr. Arthur and Ms. Relihan are married to each other.

31
<PAGE> 36

<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING
NAME AGE POSITION WITH AEF PAST FIVE YEARS
- ---------------------------- --- --------------------- ----------------------------------
<S> <C> <C> <C>
Dana R. Sutton 37 Vice President and Vice President and Fund
Assistant Treasurer Controller, AIM; and Assistant
Vice President and Assistant
Treasurer, Fund Management.
Melville B. Cox 53 Vice President Vice President and Chief
Compliance Officer, AIM, AIM
Capital, AIM Distributors, AIM
Services, AIM Institutional and
Fund Management; Formerly, Vice
President, Charles Schwab & Co.,
Inc.; Assistant Secretary, Charles
Schwab Family of Funds and Schwab
Investments; Chief Compliance
Officer, Charles Schwab Investment
Management, Inc.; and Vice
President, Integrated Resources
Life Insurance Co. and Capital
Life Insurance Co.
</TABLE>

- ------------------------------
* Mr. Arthur and Ms. Relihan are married to each other.

32
<PAGE> 37

ANNEX F

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
ANNUAL RATE RECENTLY RECENTLY COMPLETED
(BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund 0.80% of the first $150
million.
0.625% of the excess over
$150 million. $ 2,750,563,943 $16,492,564 $ 0
AIM Blue Chip Fund 0.75% of the first $350
million.
0.625% of the excess over
$350 million. $ 128,548,354 $ 256,773 ** $ 26,433
AIM Capital Development Fund 0.75% of the first $350
million.
0.625% of the excess over
$350 million. $ 273,687,609 $ 280,248 *** $ 144,946
AIM Charter Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $150 million.
0.625% of the excess over
$150 million. $ 3,192,471,415 $16,529,891 $ 156,975
AIM Constellation Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $150 million.
0.625% of the excess over
$150 million. $11,548,540,962 $57,614,412 $1,869,383
AIM Weingarten Fund 1.00% of the first $30
million.
0.75% over $30 million up
to $350 million.
0.625% of the excess over
$350 million. $ 5,305,435,087 $29,960,379 $1,458,804
</TABLE>

- ---------------

* AIM reimbursed expenses with respect to the following Funds: AIM Municipal
Bond Fund, $13,200; AIM Global Growth Fund, $11,719; AIM Global Income Fund,
$18,300; AIM V.I. Global Utilities Fund, $13,800; Liquid Assets Portfolio,
$116,930; Prime Portfolio, $61,100; Treasury Portfolio, $113,500; Treasury
TaxAdvantage Portfolio, $25,600; and Cash Reserve Portfolio, $20,000.
** For the period 06/03/96 through 10/31/96.
*** For the period 06/17/96 through 10/31/96.

33
<PAGE> 38

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
ANNUAL RATE RECENTLY RECENTLY COMPLETED
(BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM FUNDS GROUP
AIM Balanced Fund 0.75% of the first $150
million.
0.50% of the excess over
$150 million. $ 164,874,356 $ 666,619 $ 24,176
AIM Global Utilities Fund 0.60% of the first $200
million.
0.50% over $200 million up
to $500 million.
0.40% over $500 million up
to $1 billion.
0.30% of the excess over
$1 billion. $ 241,317,685 $ 1,256,220 0
AIM Growth Fund 0.80% of the first $150
million.
0.625% of excess over $150
million. $ 306,250,064 $ 1,715,406 0
AIM High Yield Fund 0.625% of the first $200
million.
0.55% over $200 million to
$500 million.
0.50% over $500 million to
$1 billion.
0.45% of the excess over
$1 billion. $ 1,444,032,572 $ 5,717,303 0
AIM Income Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 295,583,696 $ 1,176,249 0
AIM Intermediate Government Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 237,617,705 $ 996,681 0
</TABLE>

34
<PAGE> 39

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
ANNUAL RATE RECENTLY RECENTLY COMPLETED
(BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM Money Market Fund 0.55% of the first $1
billion.
0.50% of the excess over
$1 billion. $ 584,793,680 $ 2,589,822 0
AIM Municipal Bond Fund 0.50% of the first $200
million.
0.40% over $200 million to
$500 million.
0.35% over $500 million to
$1 billion.
0.30% of the excess over
$1 billion. $ 306,280,329 $ 1,356,225 0
AIM Value Fund 0.80% of the first $150
million.
0.625% of excess over $150
million. $ 6,269,483,246 $24,829,687 $ 502,799
AIM INTERNATIONAL FUNDS, INC.
AIM Global Aggressive Growth Fund 0.90% of the first $1
billion.
0.85% of the excess over
$1 billion. $ 1,726,533,976 $ 8,751,918 0
AIM Global Growth Fund 0.85% of the first $1
billion.
0.80% of the excess over
$1 billion. $ 236,819,172 $ 1,162,771 0
AIM Global Income Fund 0.70% of the first $1
billion.
0.65% of the excess over
$1 billion. $ 38,713,770 $ 0 $ 182,596
AIM International Equity Fund 0.95% of the first $1
billion.
0.90% of the excess over
$1 billion. $ 1,476,749,468 $10,085,495 $ 299,147
AIM INVESTMENT SECURITIES FUNDS
Limited Maturity Treasury Portfolio 0.20% of the first $500
million.
0.175% of the excess over
$500 million. $ 502,515,805 $ 933,207 0
AIM SUMMIT FUND, INC. 1.00% of the first $10
million.
0.75% over $10 million to
$150 million.
0.625% over $150 million. $ 1,261,008,244 $ 7,360,028 **** 0
</TABLE>

- ---------------

**** Of the $7,360,028 paid to AIM, $2,442,907 was paid by AIM to TradeStreet
pursuant to a sub-advisory agreement.

35
<PAGE> 40

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
ANNUAL RATE RECENTLY RECENTLY COMPLETED
(BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund 0.35%. $ 30,014,343 $ 101,649 0
AIM Tax-Exempt Bond Fund of Connecticut
0.50%. $ 39,355,441 $ 0 $ 198,182
Intermediate Portfolio 0.30% of the first $500
million.
0.25% over $500 million to
$1 billion.
0.20% of the excess over
$1 billion. $ 83,066,447 $ 232,893 0
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 212,152,423 $ 882,870 0
AIM V.I. Diversified Income Fund 0.60% of the first $250
million.
0.55% of the excess over
$250 million. $ 44,630,145 $ 193,008 0
AIM V.I. Global Utilities Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 8,393,967 0 $ 32,703
AIM V.I. Government Securities Fund 0.50% of the first $250
million.
0.45% of the excess over
$250 million. $ 19,545,391 $ 71,080 0
AIM V.I. Growth Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 102,600,112 $ 434,620 0
AIM V.I. Growth and Income Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 38,567,212 $ 46,017 $ 67,802
AIM V.I. International Equity Fund 0.75% of the first $250
million.
0.70% of the excess over
$250 million. $ 82,256,855 $ 457,559 0
</TABLE>

36
<PAGE> 41

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE WAIVERS
TOTAL NET FEES FOR THE
NET ASSETS PAID TO AIM MOST
FOR THE MOST FOR THE MOST RECENTLY
ANNUAL RATE RECENTLY RECENTLY COMPLETED
(BASED ON COMPLETED COMPLETED FISCAL
NAME OF COMPANY AND FUND AVERAGE DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* YEAR
- ----------------------------------------- -------------------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
AIM V.I. Money Market Fund 0.40% of the first $250
million.
0.35% of the excess over
$250 million. $ 65,505,754 $ 168,901 0
AIM V.I. Value Fund 0.65% of the first $250
million.
0.60% of the excess over
$250 million. $ 257,211,787 $ 1,078,007 0
SHORT-TERM INVESTMENTS CO.
Liquid Assets Portfolio 0.15%. $ 2,086,944,322 $ 125,264 $2,562,094
Prime Portfolio 0.20% of the first $100
million.
0.15% over $100 million up
to $200 million.
0.10% over $200 million up
to $300 million.
0.06% over $300 million up
to $1.5 billion.
0.05% over $1.5 billion. $ 6,151,948,355 $ 3,007,431 0
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio 0.15% of the first $300
million.
0.06% over $300 million up
to $1.5 billion.
0.05% of the excess over
$1.5 billion. $ 3,703,891,140 $ 2,227,788 0
Treasury TaxAdvantage Portfolio 0.20% of the first $250
million.
0.15% over $250 million up
to $500 million.
0.10% of the excess over
$500 million. $ 457,196,150 $ 675,795 $ 116,126
TAX-FREE INVESTMENTS CO.
Cash Reserve Portfolio 0.25% of the first $500
million.
0.20% of the excess over
$500 million. $ 1,044,178,428 $ 1,819,232 $ 690,397
</TABLE>

37
<PAGE> 42

ANNEX G

SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF MANAGEMENT

AEF

The following table sets forth certain information regarding the ownership
of the shares of Common Stock of AEF by the Directors and Chief Executive
Officer of AEF.

<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AS
OF DECEMBER 3,
NAME OF DIRECTOR/CHIEF EXECUTIVE OFFICER COMPANY FUND (CLASS) 1996*
- --------------------------------------------- ------- ----------------------------------------------------- ----------------
<S> <C> <C> <C>
Charles T. Bauer............................. AEF AIM Aggressive Growth Fund (Class A) 4,544.953
AIM Capital Development Fund (Class A) 10,921.776
AIM Charter Fund (Class A) 48,369.432
AIM Constellation Fund (Class A) 29,927.659
AIM Weingarten Fund (Class A) 14,911.721
Bruce L. Crockett............................ AEF AIM Aggressive Growth Fund (Class A) 251.624
AIM Charter Fund (Class A) 131.885
AIM Constellation Fund (Class A) 58.293
AIM Weingarten Fund (Class A) 73.643
Owen Daly II................................. AEF AIM Aggressive Growth Fund (Class A) 366.902
AIM Charter Fund (Class A) 27,750.297
AIM Constellation Fund (Class A) 15,783.283
AIM Weingarten Fund (Class A) 20,313.067
Carl Frischling.............................. AEF AIM Aggressive Growth Fund (Class A) 265.225
AIM Charter Fund (Class A) 3,336.570
AIM Constellation Fund (Class A) 3,455.961
AIM Weingarten Fund (Class A) 3,272.528
Robert H. Graham............................. AEF AIM Aggressive Growth Fund (Class A) 2,859.955
AIM Blue Chip Fund (Class A) 3,067.485
AIM Capital Development Fund (Class A) 7,411.067
AIM Charter Fund (Class A) 15,775.609
AIM Constellation Fund (Class A) 7,406.817
AIM Weingarten Fund (Class A) 10,584.043
John F. Kroeger.............................. AEF AIM Charter Fund (Class A) 6,486.779
AIM Weingarten Fund (Class A) 2,058.234
Lewis F. Pennock............................. AEF AIM Charter Fund (Class A) 1,071.175
Ian W. Robinson.............................. Owned no shares of any class as of December 3, 1996
Louis S. Sklar............................... AEF AIM Aggressive Growth Fund (Class A) 522.624
AIM Charter Fund (Class A) 4,870.955
AIM Constellation Fund (Class A) 2,153.944
AIM Weingarten Fund (Class A) 1,630.405
All Directors and Chief Executive Officer AEF AIM Aggressive Growth Fund (Class A) 8,811.283
AIM Blue Chip Fund (Class A) 3,067.485
AIM Capital Development Fund (Class A) 18,332.843
AIM Charter Fund (Class A) 107,792.702
AIM Constellation Fund (Class A) 58,785.957
AIM Weingarten Fund (Class A) 52,843.641
</TABLE>

- ---------------

* Less than 1% of the outstanding shares of the Class.

38
<PAGE> 43

SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS

AEF

To the best knowledge of AEF, the names and addresses of the record holders
of 5% or more of the outstanding shares of AEF as of the Record Date, and the
amount of the outstanding shares owned of record by such holders are set forth
below. AEF has no knowledge of shares held beneficially.

<TABLE>
<CAPTION>
SHARES OF RECORD
NAME AND ADDRESS OWNED AS OF PERCENT
FUND (CLASS) OF RECORD OWNERS DECEMBER 3, 1996 OF CLASS
- ---------------------------------------------- ----------------------------------------------- ---------------- --------
<S> <C> <C> <C>
AIM AGGRESSIVE GROWTH FUND
Class A..................................... Merrill Lynch Pierce Fenner & Smith 13,102,312.079 21.58%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
AIM BLUE CHIP FUND
Class A..................................... Robert W. Baird Inc. 1,719,177.080 31.40%
Attn: Mutual Fd Operations
777 E. Wisconsin Ave.
Milwaukee, WI 53202
Class B..................................... Merrill Lynch Pierce Fenner & Smith 69,514.000 10.59%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
AIM CAPITAL DEVELOPMENT FUND
Class A..................................... Merrill Lynch Pierce Fenner & Smith 4,455,139.471 17.98%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Robert W. Baird Inc. 2,590,087.830 10.45%
Attn: Mutual Fd Operations
777 E. Wisconsin Ave.
Milwaukee, WI 53202
Class B..................................... Merrill Lynch Pierce Fenner & Smith 838,416.000 20.61%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
</TABLE>

39
<PAGE> 44

<TABLE>
<CAPTION>
SHARES OF RECORD
NAME AND ADDRESS OWNED AS OF PERCENT
FUND (CLASS) OF RECORD OWNERS DECEMBER 3, 1996 OF CLASS
- ---------------------------------------------- ----------------------------------------------- ---------------- --------
<S> <C> <C> <C>
AIM CHARTER FUND
Class A..................................... Merrill Lynch Pierce Fenner & Smith 30,259,884.858 12.68%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Great-West Life and Annuity Insurance Co 18,214,762.787 7.63%
401(k) Unit Valuations
Attn: Rod Switzer 2T2
8515 E. Orchard
Englewood, CO 80111
Class B..................................... Merrill Lynch Pierce Fenner & Smith 5,179,090.000 10.66%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Institutional Class......................... Commonwealth of Massachusetts 2,388,416.162 90.45%
Deferred Compensation Plan
One Ashburton Place
12th Floor
Boston, MA 02108
AIM CONSTELLATION FUND
Class A..................................... Merrill Lynch Pierce Fenner & Smith 76,352,799.963 16.92%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd floor
Jacksonville, FL 32246
Institutional Class......................... City of New York Deferred Compensation 5,669,522.144 49.10%
Attn: Joan Barrow
40 Rector Street 3rd floor
New York, NY 10006
Nationwide Ohio Variable Account 1,562,558.914 13.53%
P.O. Box 182029
C/O IPO Portfolio Accounting
Columbus, OH 43218
Commonwealth of Massachusetts 1,472,819.304 12.75%
Deferred Compensation Plan
Attn: Laureen Casper
One Ashburton Place 12th floor
Boston, MA 02108
</TABLE>

40
<PAGE> 45

41
<PAGE> 46
APPENDIX 1

PROXY PROXY
AIM AGGRESSIVE GROWTH FUND
A SERIES OF AIM EQUITY FUNDS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- FEBRUARY 7, 1997

The undersigned hereby appoints Charles T. Bauer, Robert H. Graham and Carol F.
Relihan, and each of them separately, proxies with the power of substitution to
each, and hereby authorizes them to represent and to vote, as designated below,
at the Annual Meeting of Shareholders of the Fund indicated above, a series of
AIM Equity Funds, Inc., on February 7, 1997 at 2 p.m. Central time, and at
any adjournment thereof, all of the shares of the Fund which the undersigned
would be entitled to vote if personally present. IF THIS PROXY IS SIGNED AND
RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED FOR THE ELECTION
OF THE NOMINEES NAMED ON THIS PROXY AND FOR APPROVAL OF THE OTHER PROPOSALS.

NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
ON THIS PROXY CARD. All joint owners should
sign. When signing as executor, administrator,
attorney, trustee or guardian or as custodian
for a minor, please give full title as such.
If a corporation, please sign in full
corporate name and indicate the signer's
office. If a partner, sign in the partnership
name.

___________________________________________
Signature

___________________________________________
Signature (if held jointly)

___________________________________________
Date

GROUP C

<PAGE> 47
<TABLE>
<S> <C> <C> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS RECOMMEND VOTING "FOR" ALL PROPOSALS.

1. ELECTION OF DIRECTORS -- To Withhold Authority to vote for any individual nominee,
strike a line through the name below.

Nominees: Charles T. Bauer Bruce L. Crockett Owen Daly II Carl Frischling Robert H. Graham
John F. Kroeger Lewis F. Pennock Ian W. Robinson Louis S. Sklar
FOR AGAINST ABSTAIN
2. Proposal to approve a new Master Investment Advisory Agreement for the Fund. / / / / / /

3. Proposal to eliminate fundamental investment policy prohibiting investments in / / / / / /
other investment companies and to amend a related fundamental investment
policy.

4. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent / / / / / /
accountants for the Fund.

5. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>

GROUP C