AIM FUNDS GROUP/DE, DEF 14A, 1996-12-18

AIM FUNDS GROUP/DE
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 FUNDS GROUP
(For its Series Portfolios:
AIM Global Utilities Fund
AIM Growth Fund
AIM Value Fund)
_______________________________________________________________________________

(Name of Registrant as Specified in its Declaration of Trust)

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 FUNDS GROUP
AIM GLOBAL UTILITIES FUND
AIM GROWTH FUND
AIM VALUE 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 Trustees, to approve certain
proposed changes in fundamental policies and to ratify the selection of
independent accountants. After careful consideration, the Board of Trustees 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

Charles T. Bauer
Chairman
- ------------------------------
GROUP F
<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 FUNDS GROUP

AIM Global Utilities Fund
AIM Growth Fund
AIM Value 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 Funds Group ("AFG") 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 AFG and its series portfolios listed above
(such series portfolios are collectively referred to as the "Funds"), for the
following purposes:

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

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

(3) For each of the Funds, to eliminate the fundamental investment
policy prohibiting investments in other investment companies and to
amend certain related fundamental investment policies.

(4) For each of the Funds, to eliminate the fundamental investment
policy prohibiting or restricting investments in puts, calls,
straddles and spreads.

(5) For AFG, to ratify the selection of KPMG Peat Marwick LLP as
independent accountants for the fiscal years ending in 1997.

(6) 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 Funds 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 Trustees
<PAGE> 5

AIM FUNDS GROUP
AIM Global Utilities
AIM Growth Fund
AIM Value 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 Trustees of AIM Funds
Group ("AFG" or the "Company") on behalf of the series portfolios listed above
(collectively referred to as the "Funds"), in connection with the annual meeting
of shareholders of AFG 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 AFG, or by
returning a subsequently dated proxy. If you expect to attend the Annual Meeting
in person, please notify the Funds by calling 1-800-952-3502.

The following table summarizes each proposal to be presented at the Annual
Meeting and the Funds to be solicited pursuant to this joint proxy statement
with respect to such proposal:

<TABLE>
<CAPTION>
PROPOSAL AFFECTED COMPANY OR FUNDS
- -------- -------------------------
<S> <C> <C>
1. Election of Trustees AFG
2. Approval of New Advisory Agreement All Funds
3. Elimination of Fundamental Investment Policy All Funds
Prohibiting Investments in Other Investment
Companies and Amendment of Certain Related
Fundamental Investment Policies
4. Elimination of Fundamental Investment Policy All Funds
Prohibiting or Restricting Investments in Puts,
Calls, Straddles and Spreads
5. Ratification of KPMG Peat Marwick LLP as AFG
Independent Accountants
</TABLE>

Upon the request of any shareholder, each of the Funds will furnish,
without charge, a copy of such Fund's annual report for its most recent fiscal
year together with any subsequent semi-annual report. 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 applicable proposals set forth in the table above, with proportional votes
for fractional shares. AFG had 1,407,256,857.007 shares outstanding
<PAGE> 6

on the Record Date. The number of shares outstanding on the Record Date for each
series portfolio of AFG is set forth in Annex A. It is expected that this proxy
statement (the "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 Trustees (i.e., the nominees receiving the most votes will be elected)
(Proposal 1). The affirmative vote of the holders of a "majority of the
outstanding voting securities" of each Fund, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), is required to approve each
Fund's new Investment Advisory Agreement (Proposal 2), to approve the
elimination of each Fund's fundamental investment policy prohibiting investments
in other investment companies and to amend certain related fundamental
investment policies (Proposal 3), and to approve the elimination of each Fund's
fundamental investment policy prohibiting or restricting investments in puts,
calls, straddles and spreads (Proposal 4). 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 accountants for AFG.
(Proposal 5).

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

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.

The Board of Trustees of AFG 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.

2
<PAGE> 7

PROPOSAL 1 --

ELECTION OF TRUSTEES

For election of Trustees at the Annual Meeting, the Board of Trustees of
AFG 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 Trustee of AFG,
each to serve as Trustee 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").

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 Trustee. 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 Trustees who are not "interested persons" of the
Company, as defined in the 1940 Act, may recommend.

The following table sets forth certain information concerning the Trustees:

3
<PAGE> 8

<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION/AFFILIATIONS DURING
NAME (AGE) TRUSTEE SINCE PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS
- ---------------------------- --------------- -----------------------------------------------
<S> <C> <C>
Owen Daly II (72) 05/05/93 (and (1) Formerly, Director, CF&I Steel Corp.,
of its Monumental Life Insurance Company and
predecessor Monumental General Insurance Company; and
since 1992) Chairman of the Board of Equitable
Bancorporation. (2) Director/Trustee of the AIM
Funds; and Director, Cortland Trust Inc.
(investment company).
Carl Frischling (59) ** 05/05/93 (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) 05/05/93 (and (1) Formerly, Consultant, Wendell & Stockel
of its Associates, Inc. (consulting firm). (2)
predecessor Director/Trustee of the AIM Funds; and
since 1992) 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).
- ----------------------------
** 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.
</TABLE>

4
<PAGE> 9

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

AFG does not hold regular annual meetings at which Trustees are elected.

During the year ending December 31, 1996, AFG's Board of Trustees met eight
times. AFG has three standing committees of its Board of Trustees: the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee. During the year ending December 31, 1996, AFG's Audit Committee met
four times, Investments Committee met four times, and Nominating and
Compensation Committee met two times. During such year, all of AFG's Trustees
attended at least 75% of the aggregate of the number of meetings of the Board of
Trustees 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 the
Company's auditors to review audit procedure and results and to consider any
matters arising from an audit to be brought to the attention of the Trustees as
a whole with respect to each Company's fund accounting or its internal
accounting controls, and for considering such other matters as the Board of
Trustees may determine. None of the members of the Audit Committee is an
"interested person" of the Company, 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 Trustees may determine. Mr. Bauer is an
"interested person" of the Company, 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 responsi-

5
<PAGE> 10

ble for considering and nominating individuals to stand for election as
Trustees, reviewing from time to time the compensation payable to the Trustees
who are not "interested persons" of the Company, as defined by the 1940 Act, and
considering such other matters as the Board of Trustees may from time to time
determine. The Nominating and Compensation Committee has sole authority to
nominate persons for Trustees of the Company, 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 AFG, as
defined by the 1940 Act.

COMPENSATION OF TRUSTEES

Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not also
an officer of AFG is compensated for his services according to a fee schedule
which recognizes the fact that such Trustee also serves as a Director or Trustee
of other AIM Funds. Each such Trustee 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 Trustee of
AFG:

<TABLE>
<CAPTION>
RETIREMENT TOTAL
AGGREGATE BENEFITS ACCRUED COMPENSATION
COMPENSATION FROM BY ALL AIM FROM ALL AIM
TRUSTEE AFG(1) FUNDS(2) FUNDS(3)
------------------------------------ ----------------- ---------------- ------------
<S> <C> <C> <C>
Charles T. Bauer.................... -0- -0- -0-
Bruce L. Crockett................... $16,266 $ 38,621 $ 67,000
Owen Daly II........................ 16,161 82,607 67,000
Carl Frischling..................... 16,266 56,683 67,000
Robert H. Graham.................... -0- -0- -0-
John F. Kroeger..................... 15,683 83,654 65,000
Lewis F. Pennock.................... 15,922 33,702 66,000
Ian W. Robinson..................... 16,266 64,973 67,000
Louis S. Sklar...................... 16,025 47,593 65,500
</TABLE>

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

(1) The total amount of compensation deferred by all Trustees of AFG estimated
for the year ending December 31, 1996, including interest earned thereon, is
$67,337.

(2) During the year ending December 31, 1996, the total amount of expenses
allocated to AFG in respect of such retirement benefits is $98,998.

(3) Each Trustee 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 Trustee who is an "Eligible
Trustee" (as defined in the Retirement Plan) may be entitled to certain benefits
upon retirement from the Board of Trustees. Pursuant to the Retirement Plan, the
normal retirement date is the date on which the Eligible Trustee has attained

6
<PAGE> 11

age 65 and has completed at least five years of continuous service with one or
more of the AIM Funds. Each Eligible Trustee 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 Trustee during the
twelve-month period immediately preceding the Eligible Trustee's retirement
(including amounts deferred under a separate agreement between the AIM Funds and
the Eligible Trustee) for the number of such Eligible Trustee's years of service
(not in excess of ten years of service) completed with respect to any of the AIM
Funds. If an Eligible Trustee dies after attaining the normal retirement date
but before receipt of any benefits under the Retirement Plan commences, the
Eligible Trustee's surviving spouse (if any) shall receive a quarterly
survivor's benefit equal to 50% of the amount payable to the deceased Eligible
Trustee for no more than ten years beginning the first day of the calendar
quarter following the date of the Eligible Trustee'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 Trustee 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 upon no more than ten years of service.

ESTIMATED BENEFITS UPON RETIREMENT

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
PAID BY ALL AIM FUNDS
NUMBER OF YEARS OF -------------------------------
SERVICE WITH THE AIM FUNDS $55,000 $60,000 $65,000
- -------------------------- ------- ------- -------
<S> <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 Trustees") have each executed a Deferred
Compensation Agreement (collectively, the "DC Agreements"). Pursuant to the DC
Agreements, the Deferring Trustees 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 Trustees may select various AIM Funds
in which all or part of their deferral accounts shall be deemed to be invested.
Distributions from the Deferring Trustees' deferral accounts will be paid in
cash generally in equal quarterly installments over a period of ten years
beginning on the date the Deferring Trustee's retirement benefits commence under
the Retirement Plan. The Company's Board of Trustees, in its sole discretion,
may accelerate or extend the distribution of such deferral accounts after a
Deferring Trustee's termination of service as a Trustee of the Company. If a
Deferring Trustee 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 Trustee's death. The DC

7
<PAGE> 12

Agreements are not funded and, with respect to the payments of amounts held in
the deferral accounts, the Deferring Trustees have the status of unsecured
creditors of the Funds and of each other AIM Fund from which they are deferring
compensation.

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 Funds are
managed, advised or operated.

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

The Funds are 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 Trustees of
AFG, including a majority of the Independent Trustees, 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 Trustees 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 with respect to any Fund and the Merger is consummated, the Board of
Trustees will determine what action to take, in any event subject to the
approval of shareholders of such Fund.

8
<PAGE> 13

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 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

9
<PAGE> 14

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
Trustees that you are being asked to elect in Proposal No. 1 meets this 75%
requirement.

BOARD OF TRUSTEES 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. 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

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<PAGE> 15

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 the 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 Funds,
including the terms relating to the services to be provided and the fees and
expenses payable by each such Fund, is not materially different from the Current
Advisory Agreement for the Funds.

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 Trustees of AFG that the New Advisory Agreements be
approved.

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<PAGE> 16

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 Trustees the materials it reviewed, the issues it studied and the
reasons for its recommendation. Based upon the foregoing, the Board of Trustees
of AFG unanimously approved the New Advisory Agreement for the Funds 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 also 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 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.

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<PAGE> 17

The Merger Agreement may be terminated (a) at any time prior to the Closing
Date 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.

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.

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<PAGE> 18

Under the Advisory Agreements, AIM

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

(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 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 AIM considers desirable for inclusion in the Funds' assets;

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

(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 Trustees; and

(e) takes, 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 stated above, including but not limited,
to the placing of orders for the purchase and sale of securities for the Funds.

The Advisory Agreements provide that any investment program undertaken by
AIM, as well as any other actions taken by AIM on behalf of each Fund, shall at
all times be subject to any directives of the Board of Trustees 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 Funds or
their 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 Trustees of the Company and the shareholders of the applicable 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 each of the Funds and the offering of each of
their shares shall be paid by each such 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 a Fund only so long as AIM
serves as investment manager or advisor to such Fund. Although the Current
Advisory Agreement 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.

14
<PAGE> 19

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

Information with regard to the fees payable under each of the Advisory
Agreements and the aggregate advisory fees paid to AIM in each Fund's most
recently completed fiscal year is set forth in Annex F.

Each Advisory Agreement may be terminated with respect to a Fund on 60
days' written notice without penalty by (i) the applicable Fund, (ii) the action
of the shareholders of the applicable Fund, (iii) the Board of Trustees of AFG,
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 a Fund so long as their continuance is
specifically approved at least annually either (i) by the Board of Trustees of
AFG or (ii) by the vote of a majority of each 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 Trustees of AFG
who are not interested persons of AFG 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 AFG's Board of
Trustees, AIM may perform certain additional services on behalf of the Funds.
The Board of Trustees has approved, and AFG 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 each 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 Funds
reimburse 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 each of the Funds.
In addition, A I M Distributors, Inc. ("AIM Distributors"), a wholly owned
subsidiary of AIM, serves as the principal underwriter for each of the retail
classes of the Funds. Shares of the Funds are generally sold with an initial
sales charge ("Class A Shares"), or with respect to some of the Funds, subject
to a contingent deferred sales charge ("Class B Shares"). Such sales charges are
paid by investors. Each of the Funds has also adopted a distribution plan or
plans under Rule 12b-1 of the 1940 Act (each, a "Plan") with respect to each of
its classes. Pursuant to each Plan, each such Fund makes payments to AIM
Distributors in connection with the distribution of the Fund's shares and the
provision of ongoing services to shareholders of each class. The fees are
calculated as a percentage of the annualized average daily net assets
attributable to a class of shares. AIM Distributors pays 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. Each Fund categorizes the first 0.25% per year of the Rule 12b-1 fees
paid to such third parties attributable to the Class A Shares of the respective
Fund as a service fee for ongoing personal services.

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<PAGE> 20

AIM Distributors is authorized to advance to institutions through whom
Class B Shares are sold a sales commission under schedules established by AIM
Distributors. AIM Distributors (or its assignee or transferee) receives 0.75%
(of the total 1.00% payable under the distribution plan applicable to Class B
Shares) of each Fund's annualized average daily net assets attributable to those
Class B Shares sold through the sales efforts of AIM Distributors. The remaining
0.25% of each Fund's annualized average daily net assets attributable to Class B
Shares is paid to brokers, dealers, agents and other service providers as a
service fee for on-going personal services.

The amounts payable by a Fund under the Plans need not be directly related
to the expenses actually incurred by AIM Distributors on behalf of each Fund.
Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Funds 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 each of the Funds.

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

The agreements pursuant to which AIM provides administrative services to
the Funds and pursuant to which AIM Distributors serves as the Funds' principal
underwriter will terminate as a result of the Merger. The Board of Trustees of
AFG 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
agreements 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 each of the Funds. 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 Trustees and
executive officers of AFG, 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 TRUSTEES

The Board of Trustees of AFG 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 CERTAIN RELATED FUNDAMENTAL INVESTMENT POLICIES

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

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

acquire for value the securities of any other investment company, except
in connection with a merger, consolidation or acquisition of assets and
except for the investment in such securities of funds representing
compensation otherwise payable to its trustees pursuant to any deferred
compensation plan existing at any time between the Trust and its
Trustees.

Section 12 of the 1940 Act generally prohibits each 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 Trustees may, in the near future, authorize AIM and the
Company to seek exemptive relief from the Securities and Exchange Commission
("SEC") to permit the Funds 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 such Funds 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 Funds 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, each such 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 each
Fund can effectively invest in certain other types of securities through pooled
investment vehicles such as the Exemptive Order Funds. By pooling their
investments in such securities, the Funds 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 a
Fund would have available to it investing in such securities by itself. Pooling
investments may also allow the Funds to increase the efficiency of portfolio
management by permitting each 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 Funds 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 each Fund's prohibition against investments
in other investment companies is approved, each such Fund may invest in
securities of an Exemptive Order Fund only to

17
<PAGE> 22

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

In connection with obtaining Exemptive Orders, AIM may agree to waive fees
applicable to the Funds to the extent that the assets of the Funds 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 Funds. AIM believes that
these indirect expenses will be offset by the benefits to the Funds of pooling
their investments.

CERTAIN RELATED FUNDAMENTAL INVESTMENT POLICIES

The Funds currently have other fundamental investment restrictions that may
prohibit each such Fund from taking full advantage of the Exemptive Orders.
These fundamental restrictions include the following:

Diversification. Each Fund is prohibited from investing more than 5% of its
assets in securities of a single issuer (except that for AIM Growth Fund and
AIM Value Fund, such limitation does not apply to U.S. Government
securities, including securities issued by its agencies and
instrumentalities). Each Fund is prohibited from purchasing the securities
of any issuer if such purchase would cause more than 5% of the voting
securities, or 10% of the securities of any class, of such issuer to be held
by such Fund.

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

The foregoing restrictions may be worded differently from Fund to Fund, but
the substance of the restrictions is as set forth above. Additional information
regarding a 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, each Fund subject
to one or more of the foregoing investment restrictions seeks shareholder
approval to amend such restrictions by adding the following exception to each
restriction:

. . ., except that the [name of the applicable 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 amendments to the related
fundamental investment policies 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 each Fund in connection with
soliciting approval of this proposal because the Company will not be required to
hold a separate meeting.

18
<PAGE> 23

RECOMMENDATION OF TRUSTEES

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

PROPOSAL 4 --

ELIMINATION OF THE FUNDAMENTAL INVESTMENT POLICY PROHIBITING
OR RESTRICTING INVESTMENTS IN PUTS, CALLS, STRADDLES AND SPREADS

The Board of Trustees proposes to eliminate each Fund's fundamental
investment policy prohibiting or restricting the writing, purchase and sale of
puts, calls, straddles and spreads. Despite the change in policy, each Fund
presently intends to engage only in purchasing puts and writing covered call
options.

AIM Global Utilities Fund's current fundamental investment policy provides
that it will not:

invest in puts, straddles, spreads or any combination thereof, except,
however, that the Fund may write covered call options and purchase and sell
options on stock index futures contracts and options on stock indices.

AIM Growth Fund's and AIM Value Fund's current fundamental investment
policies provide that each Fund will not:

invest in puts, calls, straddles, spreads or any combination thereof,
except, however, that the Fund may invest in financial futures and options
thereon for hedging purposes and may sell covered call options.

Writing Covered Call Options. The Funds will not use leverage in their
covered call option strategies. Such investments will be made for hedging
purposes only. Writing a call option obligates a Fund to sell or deliver the
option's underlying security in return for a strike price upon exercise of the
option. By writing a call option, a Fund receives an option premium from the
purchaser of the call option. The Funds are primarily interested in having the
ability to write (sell) call options which are "covered" at the time of sale and
remain covered as long as a Fund is obligated as a writer (seller) of the
option. A call is "covered" if a Fund owns or has a right to acquire the
underlying security which is subject to the call. The purpose of such
transactions is to hedge against changes in the market value of a Fund's
portfolio securities caused by fluctuating interest rates, fluctuating currency
exchange rates and changing market conditions, and to close out or offset
existing positions in options or futures contracts. The Funds will not engage in
such transactions for speculative purposes. By writing covered call options, a
Fund gives up the opportunity, while the option is in effect, to profit from any
price increase in the underlying security above the option exercise price. In
addition, a Fund's ability to sell the underlying security will be limited while
the option is in effect unless the Fund effects a closing purchase transaction.
Each Fund will adopt a non-fundamental investment policy that limits the writing
of covered call options to no more than 25% of the value of each Fund's net
assets.

Purchasing Put Options. By purchasing a put option, a Fund obtains the
right (but not the obligation) to sell the option's underlying instrument at a
fixed strike price. In return for this right, a Fund pays an option premium. The
option's underlying instrument may be a security, or a futures

19
<PAGE> 24

contract. Put options may be used by a Fund to hedge securities it owns by
locking in a minimum price at which the Fund can sell. If security prices fall,
the put option could be exercised to offset all or a portion of the Fund's
resulting losses. At the same time, because the maximum the Fund has at risk is
the cost of the option, purchasing put options does not eliminate the potential
for the Fund to profit from an increase in the value of the securities hedged.

Risks of Options Transactions. Options are subject to certain risks,
including the risk of imperfect correlation between the option and a Fund's
other investments and the risk that there might not be a liquid secondary market
for the option. In general, options whose strike prices are close to their
underlying instruments' current value will have the highest trading volume,
while options whose strike prices are further away may be less liquid. The
liquidity of options may also be affected if options exchanges impose trading
halts, particularly when markets are volatile.

Asset Coverage for Options Positions. The Funds will hold securities or
other options positions whose values are expected to offset its obligations
under the hedge strategies. The Funds will not enter into an option position
that exposes the Fund to an obligation to another party unless it owns either
(i) an offsetting position in securities or other options or futures contracts
or (ii) cash, receivables and other liquid securities with a value sufficient to
cover its potential obligations. The Funds will comply with guidelines
established by the SEC with respect to coverage of options strategies by mutual
funds, and if the guidelines so require will set aside cash and liquid
securities in a segregated account with its custodian bank in the amount
prescribed. Securities held in a segregated account cannot be sold while the
option strategy is outstanding, unless they are replaced with similar
securities. As a result, there is a possibility that segregation of a large
percentage of a Fund's assets could impede portfolio management or the Fund's
ability to meet redemption requests or other current obligations.

The Funds do not presently intend to engage in the writing or sale of put
options or the writing, sale or purchase of uncovered calls, straddles, spreads
or combinations thereof. Each Fund will adopt a non-fundamental policy
prohibiting such transactions. However, because this policy will be non-
fundamental, it may be changed by AFG's Board of Trustees without shareholder
approval. The Board of Trustees is proposing to change the Funds' current
fundamental policy in order to provide the Funds with the flexibility to engage
in such transactions at some future date if, in the opinion of the Board of
Trustees and AIM, such transactions would be beneficial to the Funds and their
shareholders. The Board of Trustees will provide shareholders with 30 days'
prior written notice in the event it changes this non-fundamental policy.

The elimination of the fundamental investment policy prohibiting or
restricting investments in puts, calls, straddles and spreads would become
effective March 1, 1997, if approved by shareholders at the Annual Meeting. This
change is not related to the Merger described in Proposal 2. Shareholders are
being asked to consider such change at this time because AFG does not regularly
hold annual shareholder meetings. AIM believes that submitting this proposal
together with Proposal 2 may reduce the expenses incurred by each Fund in
connection with soliciting approval of this proposal because AFG will not be
required to hold a separate meeting.

20
<PAGE> 25

RECOMMENDATION OF TRUSTEES

The Board of Trustees of AFG recommends that you vote FOR the proposal to
eliminate each Fund's fundamental investment policy prohibiting or restricting
investments in puts, calls, straddles and spreads.

PROPOSAL 5 --

RATIFICATION OF SELECTION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT ACCOUNTANTS

The Board of Trustees of AFG, including a majority of the Independent
Trustees, has selected KPMG Peat Marwick LLP as independent accountants for the
fiscal year of the Funds ending in 1997 to examine and verify the accounts and
securities of the Funds, 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 TRUSTEES

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

GENERAL INFORMATION

EXECUTIVE OFFICERS OF AFG

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

SECURITY OWNERSHIP OF MANAGEMENT AND 5% HOLDERS

Information regarding ownership of each class of the Funds' shares by
Trustees and the Chief Executive Officer and by 5% holders of each class of such
Funds 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 Funds.

21
<PAGE> 26

SHAREHOLDER PROPOSALS

As a general matter, AFG 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 AFG 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 Trustees,

Charles T. Bauer
Chairman of the Board of Trustees

December 20, 1996

22
<PAGE> 27

ANNEX A

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

<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING ON
NAME OF FUND DECEMBER 3, 1996
- ------------------------------------------------------------------------ -----------------
<S> <C>
AIM Balanced Fund....................................................... 24,290,184.254
AIM Global Utilities Fund............................................... 15,315,546.132
AIM Growth Fund......................................................... 33,090,286.657
AIM High Yield Fund..................................................... 229,274,221.160
AIM Income Fund......................................................... 44,686,656.417
AIM Intermediate Government Fund........................................ 27,260,398.566
AIM Money Market Fund................................................... 670,661,890.044
AIM Municipal Bond Fund................................................. 38,307,656.064
AIM Value Fund.......................................................... 324,370,017.713
-----------------
TOTAL -- AIM FUNDS GROUP................................................ 1,407,256,857.007
=================
</TABLE>

23
<PAGE> 28

ANNEX B

DATE OF ADVISORY AGREEMENT

<TABLE>
<CAPTION>
DATE SINCE
DATE LAST AIM HAS
SUBMITTED TO SERVED AS
DATE OF CURRENT A VOTE OF INVESTMENT
NAME OF COMPANY AND FUND ADVISORY AGREEMENT SHAREHOLDERS ADVISOR
- ---------------------------------------- ---------------------------------------- ------------- -------------
<S> <C> <C> <C>
AIM FUNDS GROUP
AIM Global Utilities Fund Master Investment Advisory Agreement, August 6, June 30, 1992
dated October 18, 1993, as amended by 1993*
Amendment No. 1, dated September 28,
1994, as amended by Amendment No. 2,
dated November 14, 1994
AIM Growth Fund Master Investment Advisory Agreement, September 28, June 30, 1992
dated October 18, 1993, as amended by 1994**
Amendment No. 1, dated September 28,
1994, as amended by Amendment No. 2,
dated November 14, 1994
AIM Value Fund Master Investment Advisory Agreement, November 14, June 30, 1992
dated October 18, 1993, as amended by 1994**
Amendment No. 1, dated September 28,
1994, as amended by Amendment No. 2,
dated November 14, 1994
</TABLE>

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

* The Current Advisory Agreement dated October 18, 1993 was last submitted to
a vote of shareholders in 1993 as a result of a reorganization of several
AIM Funds and/or the recapitalization of A I M Management Group Inc.

** 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.

24
<PAGE> 29

ANNEX C

[NAME OF COMPANY]

MASTER INVESTMENT ADVISORY AGREEMENT

THIS AGREEMENT is made this day of , 1997, by and between
[Name of Company], a Delaware business trust (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 Agreement and Declaration of Trust authorizes the
Board of Trustees 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 Trustees 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 collectively herein 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 Trustees. 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;

25
<PAGE> 30

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

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
Trustees 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 Trustees. 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 Trustees 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;

(c) the provisions of the Agreement and Declaration of Trust of the
Company, as the same may be amended from time to time;

(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 Trustees 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

26
<PAGE> 31

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 Trustees 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 hereunder an annual fee, payable monthly, based upon the
average daily net assets of the Funds as the same is set forth in Appendix A
attached hereto. The average daily net asset value of the Funds shall be
determined in the manner set forth in the Agreement and Declaration of Trust and
registration statement of the Company, as amended from time to time.

8. Additional Services. Upon the request of the Company's Board of
Trustees, 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 Trustees based on a finding by the Board of Trustees 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

27
<PAGE> 32

(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 Trustees.

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 Advisory
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 Section, 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;

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

28
<PAGE> 33

(b) by the affirmative vote of a majority of the trustees 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 trustees), 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 Trustees 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. Liability of Shareholders. Notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually but are binding
only upon the assets and property of the Company and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as stockholders of private corporations for
profit.

16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other 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.

17. 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. Subject to the
foregoing, this Agreement shall be governed by and construed in accordance with
the laws (without reference to conflicts of law provisions) of the State of
Texas.

18. 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.

29
<PAGE> 34

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]
(a Delaware business trust)
Attest:

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

(SEAL)
A I M ADVISORS, INC.

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

(SEAL)
</TABLE>

30
<PAGE> 35

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

The Company shall pay the Advisor, out of the asset 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 fee 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 NAMES]

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

[Fees will be those set forth in Annex F]

31
<PAGE> 36

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 FUNDS GROUP
AIM Global Utilities Fund..................... $ 69,813 $ 364,239 $ 356,054
AIM Growth Fund............................... 67,618 389,219 260,147
AIM Value Fund................................ 137,307 10,998,207 4,741,201
</TABLE>

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

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

32
<PAGE> 37

ANNEX E

EXECUTIVE OFFICERS

EXECUTIVE OFFICERS OF AFG

Officers of AFG serve at the pleasure of the Board. Set forth below is
certain information regarding the executive officers of AFG.

<TABLE>
<CAPTION>
BUSINESS EXPERIENCE
NAME AGE POSITION WITH AFG DURING PAST FIVE YEARS
- ------------------------- --- ----------------------------- ---------------------------------------
<S> <C> <C> <C>
Charles T. Bauer 77 Chairman See Trustee table under Proposal 1.
Robert H. Graham 50 President See Trustee table under Proposal 1.
John J. Arthur* 52 Senior Vice President and Senior Vice President and Treasurer,
Treasurer 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.
Carol F. Relihan* 42 Senior Vice President and Senior Vice President, General Counsel
Secretary 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.
Robert G. Alley 48 Vice President Senior Vice President, AIM Capital; and
Vice President, AIM. Formerly, Senior
Fixed Income Money Manager, Waddell and
Reed, Inc.
Stuart W. Coco 40 Vice President Senior Vice President, AIM Capital; and
Vice President, AIM.
- ---------------
* Mr. Arthur and Ms. Relihan are married to each other.
</TABLE>

33
<PAGE> 38

<TABLE>
<CAPTION>
BUSINESS EXPERIENCE
NAME AGE POSITION WITH AFG DURING PAST FIVE YEARS
- ------------------------- --- ----------------------------- ---------------------------------------
<S> <C> <C> <C>
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.
Karen Dunn Kelley 36 Vice President Senior Vice President, AIM Capital; and
Vice President, AIM.
Jonathan C. Schoolar 35 Vice President Director and Senior Vice President, AIM
Capital; and Vice President, AIM.
Dana R. Sutton 37 Vice President and Assistant Vice President and Fund Controller,
Treasurer AIM; and Assistant Vice President and
Assistant Treasurer, Fund Management.
</TABLE>

34
<PAGE> 39

ANNEX F

ADVISORY AGREEMENT FEE SCHEDULE

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
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 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.
</TABLE>

35
<PAGE> 40

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE
TOTAL NET FEES
NET ASSETS PAID TO AIM WAIVERS
FOR THE MOST FOR THE MOST FOR THE MOST
ANNUAL RATE RECENTLY RECENTLY RECENTLY
(BASED ON AVERAGE COMPLETED COMPLETED COMPLETED
NAME OF COMPANY AND FUND DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* FISCAL YEAR
- ----------------------------------------- ------------------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
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
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
</TABLE>

36
<PAGE> 41

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE
TOTAL NET FEES
NET ASSETS PAID TO AIM WAIVERS
FOR THE MOST FOR THE MOST FOR THE MOST
ANNUAL RATE RECENTLY RECENTLY RECENTLY
(BASED ON AVERAGE COMPLETED COMPLETED COMPLETED
NAME OF COMPANY AND FUND DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* FISCAL YEAR
- ----------------------------------------- ------------------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
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

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

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

37
<PAGE> 42

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE
TOTAL NET FEES
NET ASSETS PAID TO AIM WAIVERS
FOR THE MOST FOR THE MOST FOR THE MOST
ANNUAL RATE RECENTLY RECENTLY RECENTLY
(BASED ON AVERAGE COMPLETED COMPLETED COMPLETED
NAME OF COMPANY AND FUND DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* FISCAL 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>

38
<PAGE> 43

ADVISORY AGREEMENT FEE SCHEDULE

<TABLE>
<CAPTION>
AGGREGATE
TOTAL NET FEES
NET ASSETS PAID TO AIM WAIVERS
FOR THE MOST FOR THE MOST FOR THE MOST
ANNUAL RATE RECENTLY RECENTLY RECENTLY
(BASED ON AVERAGE COMPLETED COMPLETED COMPLETED
NAME OF COMPANY AND FUND DAILY NET ASSETS) FISCAL YEAR FISCAL YEAR* FISCAL 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>

39
<PAGE> 44

ANNEX G

SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF MANAGEMENT

AFG

The following table sets forth certain information regarding the ownership
of the shares of AFG by the Trustees and Chief Executive Officer of AFG.

<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY AS
OF DECEMBER 3,
NAME OF TRUSTEE/CHIEF EXECUTIVE OFFICER COMPANY FUND (CLASS) 1996*
- ------------------------------------------ ------- --------------------------------------------- ----------------
<S> <C> <C> <C>
Charles T. Bauer.......................... AFG AIM Balanced Fund (Class A) 14,896.127
AIM High Yield Fund (Class A) 111,363.510
AIM Money Market Fund (Class C) 1,251,178.970
AIM Municipal Bond Fund (Class A) 11,245.556
AIM Value Fund (Class A) 6,382.102
Bruce L. Crockett......................... AFG AIM Growth Fund (Class A) 173.973
AIM High Yield Fund (Class A) 3,568.672
AIM Value Fund (Class A) 144.599
Owen Daly II.............................. AFG Owned no shares of any class as of
December 3, 1996
Carl Frischling........................... AFG AIM Balanced Fund (Class A) 10,148.981
AIM High Yield Fund (Class A) 11,257.402
AIM Value Fund (Class A) 3,686.664
Robert H. Graham.......................... AFG AIM Balanced Fund (Class A) 3,986.987
AIM High Yield Fund (Class A) 7,243.947
AIM Money Market Fund (Class A) 403,861.340
AIM Money Market Fund (Class C) 323,102.060
AIM Municipal Bond Fund (Class A) 6,923.828
AIM Value Fund (Class A) 6,420.316
John F. Kroeger........................... AFG AIM Balanced Fund (Class A) 1,967.543
AIM High Yield Fund (Class A) 9,247.927
Lewis F. Pennock.......................... AFG AIM Balanced Fund (Class A) 765.499
Ian W. Robinson........................... AFG AIM High Yield Fund (Class A) 3,147.967
Louis S. Sklar............................ AFG Owned no shares of any class as of
December 3, 1996
All Directors and Chief Executive
Officer................................. AFG AIM Balanced Fund (Class A) 31,765.137
AIM Growth Fund (Class A) 173.973
AIM High Yield Fund (Class A) 145,829.425
AIM Money Market Fund (Class A) 403,861.340
AIM Money Market Fund (Class C) 1,574,281.030
AIM Municipal Bond Fund (Class A) 18,169.384
AIM Value Fund (Class A) 16,633.681
</TABLE>

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

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

40
<PAGE> 45

SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS

AFG

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

<TABLE>
<CAPTION>
SHARES OWNED OF RECORD
FUND (CLASS) NAME AND ADDRESS OF RECORD OWNER AS OF DECEMBER 3, 1996 PERCENT OF CLASS
- ------------------------------------- ----------------------------------------- ---------------------------- ----------------
<S> <C> <C> <C>
AIM BALANCED FUND
CLASS A............................ Merrill Lynch Pierce Fenner & Smith 1,247,771.000 8.74%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Comerica Bank 795,708.586 5.57%
FBO 401K Accounts-Expediter
P.O. Box 75000
411 W. Lafayette
Detroit, MI 48275-3455
CLASS B............................ Merrill Lynch Pierce Fenner & Smith 1,257,139.000 12.56%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
AIM GLOBAL UTILITIES FUND
CLASS B............................ Merrill Lynch Pierce Fenner & Smith 374,822.837 7.45%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
AIM GROWTH FUND
CLASS B............................ Merrill Lynch Pierce Fenner & Smith 3,201,650.740 17.41%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
AIM HIGH YIELD FUND
CLASS A............................ Merrill Lynch Pierce Fenner & Smith 9,577,152.910 7.61%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
CLASS B............................ Merrill Lynch Pierce Fenner & Smith 17,660,369.149 17.06%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
AIM INCOME FUND
CLASS A............................ Merrill Lynch Pierce Fenner & Smith 2,066,607.000 5.98%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
CLASS B............................ Merrill Lynch Pierce Fenner & Smith 1,121,932.000 11.10%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
</TABLE>

41
<PAGE> 46

<TABLE>
<CAPTION>
SHARES OWNED OF RECORD
FUND (CLASS) NAME AND ADDRESS OF RECORD OWNER AS OF DECEMBER 3, 1996 PERCENT OF CLASS
- ------------------------------------- ----------------------------------------- ---------------------------- ----------------
<S> <C> <C> <C>
AIM INTERMEDIATE GOVERNMENT FUND
CLASS A............................ Merrill Lynch Pierce Fenner & Smith 1,397,241.000 7.40%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
CLASS B............................ Merrill Lynch Pierce Fenner & Smith 1,281,759.000 15.31%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
AIM MONEY MARKET FUND
CLASS C............................ A I M Advisors, Inc. 24,182,897.980 8.29%
11 Greenway Plaza
Suite 1919
Attn: David Hessel
Houston, TX 77046
AIM MUNICIPAL BOND FUND
CLASS B............................ Merrill Lynch Pierce Fenner & Smith 372,417.000 9.12%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
AIM VALUE FUND
CLASS A............................ Merrill Lynch Pierce Fenner & Smith 18,237,696.251 11.07%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
CLASS B............................ Merrill Lynch Pierce Fenner & Smith 27,400,230.540 17.17%
FBO the sole benefit of customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
</TABLE>

42
<PAGE> 47
APPENDIX 1

PROXY PROXY
AIM GLOBAL UTILITIES FUND
A SERIES OF AIM FUNDS GROUP
PROXY SOLICITED BY THE BOARD OF TRUSTEES
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, 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 F

<PAGE> 48
<TABLE>
<S> <C> <C> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES. THE TRUSTEES 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 certain related fundamental
investment policies.

4. Proposal to eliminate the fundamental investment policy prohibiting or restricting / / / / / /
investments in puts, calls, straddles and spreads.

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

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

GROUP F

<PAGE> 49
PROXY PROXY
AIM GROWTH FUND
A SERIES OF AIM FUNDS GROUP
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- FEBRUARY 7, 1997

___________________________________________
Signature

___________________________________________
Signature (if held jointly)

___________________________________________
Date
GROUP F

<PAGE> 50
<TABLE>
<S> <C> <C> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES. THE TRUSTEES RECOMMEND VOTING "FOR" ALL PROPOSALS.

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

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

4. Proposal to eliminate the fundamental investment policy prohibiting or restricting / / / / / /
investments in puts, calls, straddles and spreads.

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

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

GROUP F

<PAGE> 51
PROXY PROXY
AIM VALUE FUND
A SERIES OF AIM FUNDS GROUP
PROXY SOLICITED BY THE BOARD OF TRUSTEES
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, 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.

___________________________________________
Signature

___________________________________________
Signature (if held jointly)

___________________________________________
Date
GROUP F

<PAGE> 52
<TABLE>
<S> <C> <C> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES. THE TRUSTEES RECOMMEND VOTING "FOR" ALL PROPOSALS.

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

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

4. Proposal to eliminate the fundamental investment policy prohibiting or restricting / / / / / /
investments in puts, calls, straddles and spreads.

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

6. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.

</TABLE>

GROUP F