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RETAIL CLASS OF AIM EQUITY FUNDS, INC.
AIM CAPITAL DEVELOPMENT FUND
Supplement Dated December 16, 1996
to the Prospectus dated September 23, 1996
as supplemented November 5, 1996
APPROVAL OF NEW ADVISORY, ADMINISTRATIVE SERVICES AND DISTRIBUTION AGREEMENTS
On December 11, 1996, the Board of Directors (the "Board") of AIM
Equity Funds, Inc. (the "Company") approved a new investment advisory
agreement, subject to shareholder approval, between A I M Advisors, Inc.
("AIM") and the Company with respect to AIM Capital Development Fund (the
"Fund"). Shareholders will be asked to approve the proposed advisory agreement
at an annual meeting of shareholders to be held on February 7, 1997 (the
"Annual Meeting"). The Board has also approved a new administrative services
agreement with AIM and a new distribution agreement with A I M Distributors,
Inc. There have been no material changes to the terms of the new agreements,
including the fees payable by the Fund. No change is anticipated in the
investment advisory or other personnel responsible for the Fund as a result of
these new agreements.
The Board has approved these new agreements because the Fund's
corresponding existing agreements will terminate upon the consummation of the
proposed merger of A I M Management Group Inc., the parent of AIM, into a
subsidiary of INVESCO plc. INVESCO plc and its subsidiaries are an independent
investment management group engaged in institutional investment management and
retail mutual fund businesses in the United States, Europe and the Pacific
region. It is contemplated that the merger will occur on February 28, 1997.
Provided that the Fund's shareholders approve the new advisory agreement at the
Annual Meeting and the merger is consummated, the new advisory agreement with
respect to the Fund, as well as the new administrative services and
distribution agreements, will automatically become effective as of the closing
of the merger.
PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT POLICIES
The Board has unanimously approved changes to a certain fundamental
investment policy of the Fund, subject to shareholder approval. Shareholders
will be asked to approve this change at the Annual Meeting. If approved, it
will become effective on March 1, 1997.
The Fund is currently prohibited from investing more than 5% of its
assets in securities of a single issuer or holding more than 10% of the
outstanding voting securities of an issuer, except that the Fund may invest up
to 25% of all assets without regard to such restrictions. The Board has
approved the amendment of this fundamental investment policy to permit
investment in other investment companies to the extent permitted by the
Investment Company Act of 1940, and rules and regulations thereunder, and if
applicable, exemptive orders granted by the Securities and Exchange Commission.
For additional information regarding the proposed change described
above, see the Fund's Statement of Additional Information dated September 23,
1996, as supplemented November 5, 1996 and December 16, 1996.
