SUB-ITEM 77Q1(e)
AIM EQUITY FUNDS
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 21st day of June, 2000, by and between AIM
Equity Funds, a Delaware business trust (the "Trust") 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 Trust 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 Trust's Agreement and Declaration of Trust (the
"Declaration of Trust") authorizes the Board of Trustees of the Trust (the
"Board of Trustees") to create separate series of shares of beneficial interest
of the Trust, and as of the date of this Agreement, the Board of Trustees has
created eleven separate series portfolios (such portfolios and any other
portfolios hereafter added to the Trust being referred to collectively herein
as the "Funds"); and
WHEREAS, the Trust 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 Board of Trustees. The Advisor shall give the Trust
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;
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(c) determine which issuers and securities shall be represented
in the Funds' investment portfolios and regularly report thereon to the
Board of Trustees;
(d) formulate and implement continuing programs for the purchases
and sales of the securities of such issuers and regularly report thereon
to the Board of Trustees; and
(e) take, on behalf of the Trust and the Funds, all actions which
appear to the Trust 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. Securities Lending Duties and Fees. The Advisor agrees to provide the
following services in connection with the securities lending activities of each
Fund: (a) oversee participation in the securities lending program to ensure
compliance with all applicable regulatory and investment guidelines; (b) assist
the securities lending agent or principal (the "Agent") in determining which
specific securities are available for loan; (c) monitor the Agent to ensure
that securities loans are effected in accordance with the Advisor's
instructions and with procedures adopted by the Board of Trustees; (d) prepare
appropriate periodic reports for, and seek appropriate approvals from, the
Board of Trustees with respect to securities lending activities; (e) respond to
Agent inquiries; and (f) perform such other duties as necessary.
As compensation for such services provided by the Advisor in
connection with securities lending activities of each Fund, a lending Fund
shall pay the Advisor a fee equal to 25% of the net monthly interest or fee
income retained or paid to the Fund from such activities.
4. Delegation of Responsibilities. The Advisor is authorized to delegate
any or all of its rights, duties and obligations under this Agreement to one or
more sub-advisors, and may enter into agreements with sub-advisors, and may
replace any such sub-advisors from time to time in its discretion, in
accordance with the 1940 Act, the Advisers Act, and rules and regulations
thereunder, as such statutes, rules and regulations are amended from time to
time or are interpreted from time to time by the staff of the Securities and
Exchange Commission ("SEC"), and if applicable, exemptive orders or similar
relief granted by the SEC and upon receipt of approval of such sub-advisors by
the Board of Trustees and by shareholders (unless any such approval is not
required by such statutes, rules, regulations, interpretations, orders or
similar relief).
5. Independent Contractors. The Advisor and any sub-advisors shall for all
purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed to be an agent of the
Trust.
6. 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.
7. 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;
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(b) the provisions of the registration statement of the Trust, 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 Declaration of Trust, as the same may be
amended from time to time;
(d) the provisions of the by-laws of the Trust, as the same may be
amended from time to time; and
(e) any other applicable provisions of state, federal or foreign
law.
8. 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.
(a) The Advisor's primary consideration in effecting a security
transaction will be to obtain the best execution.
(b) 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 fund execution services
offered.
(c) 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
commission for effecting a fund 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
Trust, 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 indicating the brokers to whom such allocations have
been made and the basis therefor.
(d) With respect to one or more Funds, to the extent the Advisor
does not delegate trading responsibility to one or more sub-advisors, 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.
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(e) Subject to the other provisions of this Section 8, the 1940
Act, the Securities Exchange Act of 1934, and rules and regulations
thereunder, as such statutes, rules and regulations are amended from time
to time or are interpreted from time to time by the staff of the SEC, any
exemptive orders issued by the SEC, and any other applicable provisions of
law, the Advisor may select brokers or dealers with which it or the Funds
are affiliated.
9. Compensation. The compensation that each Fund shall pay the Advisor is
set forth in Appendix B attached hereto.
10. 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
trustees and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by
the Trust 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.
11. Services to Other Companies or Accounts. The Trust understands that
the Advisor now acts, will continue to act and may act in the future as
investment manager or advisor to fiduciary and other managed accounts, and as
investment manager or advisor to other investment companies, including any
offshore entities, or accounts, and the Trust has no objection to the Advisor
so acting, provided that whenever the Trust and one or more other investment
companies or accounts managed or advised by the Advisor have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with a formula believed to be equitable to each company and
account. The Trust recognizes that in some cases this procedure may adversely
affect the size of the positions obtainable and the prices realized for the
Funds.
12. Non-Exclusivity. The Trust understands that the persons employed by
the Advisor to assist in the performance of the Advisor's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict the right of the Advisor
or any affiliate of the Advisor to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature. The Trust
further understands and agrees that officers or directors of the Advisor may
serve as officers or trustees of the Trust, and that officers or trustees of
the Trust 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.
13. Effective Date, Term and Approval. This Agreement shall become
effective with respect to a Fund, if approved by the shareholders of such Fund,
on the Effective Date for such Fund, as set forth in Appendix A attached
hereto. If so approved, this Agreement shall thereafter continue in force and
effect until June 30, 2001, and may be continued from year to year thereafter,
provided that the continuation of the Agreement is specifically approved at
least annually:
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(a) (i) by the Board of Trustees or (ii) by the vote of "a majority
of the outstanding voting securities" of such Fund (as defined in Section
2(a)(42) of the ▇▇▇▇ ▇▇▇); and
(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
▇▇▇▇ ▇▇▇) of a party to this Agreement (other than as trustees of the
Trust), by votes cast in person at a meeting specifically called for such
purpose.
14. Termination. This Agreement may be terminated as to the Trust or as to
any one or more of the Funds at any time, without the payment of any penalty,
by vote of the 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.
15. Amendment. No amendment of this Agreement shall be effective unless it
is in writing and signed by the party against which enforcement of the
amendment is sought.
16. Liability of Advisor and Fund. 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 Trust 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. Any liability of
the Advisor to one Fund shall not automatically impart liability on the part of
the Advisor to any other Fund. No Fund shall be liable for the obligations of
any other Fund.
17. 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 Trust individually but are binding
only upon the assets and property of the Trust and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as shareholders of private corporations for
profit.
18. 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 Trust and that of the Advisor shall be ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
19. 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 SEC 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 SEC, such provision shall be deemed to incorporate the effect of such rule,
regulation or order. Subject to the foregoing, this Agreement shall be
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governed by and construed in accordance with the laws (without reference to
conflicts of law provisions) of the State of Texas.
20. License Agreement. The Trust 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 Trust
with respect to such series of shares.
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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.
AIM EQUITY FUNDS
(a Delaware business trust)
Attest:
/s/ ▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ --------------------------------
Assistant Secretary President
(SEAL)
Attest: A I M ADVISORS, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ --------------------------------
Assistant Secretary President
(SEAL)
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APPENDIX A
FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT
------------ ------------------------------------
AIM Aggressive Growth Fund June 21, 2000
AIM Blue Chip Fund June 21, 2000
AIM Capital Development Fund June 21, 2000
AIM Charter Fund June 21, 2000
AIM Constellation Fund June 21, 2000
AIM Dent Demographic Trends Fund June 21, 2000
AIM Emerging Growth Fund June 21, 2000
AIM Large Cap Basic Value Fund June 21, 2000
AIM Large Cap Growth Fund June 21, 2000
AIM Mid Cap Growth Fund June 21, 2000
AIM ▇▇▇▇▇▇▇▇▇▇ Fund June 21, ▇▇▇▇
▇-▇
▇▇▇▇▇▇▇▇ ▇
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered, an advisory 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.
AIM AGGRESSIVE GROWTH FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $150 million.............................................. 0.80%
Over $150 million............................................... 0.625%
AIM BLUE CHIP FUND
AIM CAPITAL DEVELOPMENT FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $350 million.............................................. 0.75%
Over $350 million............................................... 0.625%
AIM CHARTER FUND
AIM CONSTELLATION FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $30 million............................................... 1.00%
Over $30 million to and including $150 million.................. 0.75%
Over $150 million............................................... 0.625%
AIM DENT DEMOGRAPHIC TRENDS FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $2 billion................................................ 0.85%
Over $2 billion................................................. 0.80%
B-1
AIM EMERGING GROWTH FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $1 billion................................................ 0.85%
Over $1 billion................................................. 0.80%
AIM LARGE CAP BASIC VALUE FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $1 billion................................................ 0.60%
Over $1 billion to and including $2 billion..................... 0.575%
Over $2 billion................................................. 0.55%
AIM LARGE CAP GROWTH FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $1 billion................................................ 0.75%
Over $1 billion to and including $2 billion..................... 0.70%
Over $2 billion................................................. 0.625%
AIM MID CAP GROWTH FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $1 billion................................................ 0.80%
Over $1 billion................................................. 0.75%
AIM ▇▇▇▇▇▇▇▇▇▇ FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $ 30 million.............................................. 1.00%
Over $30 million to and including $350 million.................. 0.75%
Over $350 million............................................... 0.625%
B-2