INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 9th day of September, 1999, by and between AXP
Market Advantage Series, Inc., a Minnesota corporation (the "Corporation"), on
behalf of its underlying series funds, AXP International Equity Index Fund, AXP
Mid Cap Index Fund, AXP Nasdaq 100 Index Fund, AXP S&P 500 Index Fund and AXP
Total Stock Market Index Fund (each individually a "Fund"), and American Express
Financial Corporation, a Delaware corporation (the "Advisor").
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Fund hereby retains the Advisor, and the Advisor hereby agrees,
for the period of this Agreement and under the terms and conditions
hereinafter set forth, to furnish the Fund continuously with suggested
investment planning; to determine, consistent with the Fund's investment
objectives and policies, which securities in the Advisor's discretion
shall be purchased, held or sold and to execute or cause the execution
of purchase or sell orders; to prepare and make available to the Fund
all necessary research and statistical data in connection therewith; to
furnish services of whatever nature required in connection with the
management of the Fund as provided under this Agreement; and to pay such
expenses as may be provided for in Part Three; subject always to the
direction and control of the Board of Directors (the "Board"), the
Executive Committee of the Board and the authorized officers of the
Fund. The Advisor agrees to maintain an adequate organization of
competent persons to provide the services and to perform the functions
herein mentioned. The Advisor agrees to meet with any persons at such
times as the Board deems appropriate for the purpose of reviewing the
Advisor's performance under this Agreement.
(2) The Advisor agrees that the investment planning and investment
decisions will be in accordance with general investment policies of the
Fund as disclosed to the Advisor from time to time by the Fund and as
set forth in its prospectuses and registration statements filed with the
Securities and Exchange Commission (the "SEC").
(3) The Advisor agrees that it will maintain all required records,
memoranda, instructions or authorizations relating to the acquisition or
disposition of securities for the Fund.
(4) The Fund agrees that it will furnish to the Advisor any information
that the latter may reasonably request with respect to the services
performed or to be performed by the Advisor under this Agreement.
(5) The Advisor is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund and
is directed to use its best efforts to obtain the best available price
and most favorable execution, except as prescribed herein. Subject to
prior authorization by the Fund's Board of appropriate policies and
procedures, and subject to termination at any time by the Board, the
Advisor may also be authorized to effect individual securities
transactions at commission rates in excess of the minimum commission
rates available, to the extent authorized by law, 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
the Fund and other funds for which it acts as investment advisor.
(6) It is understood and agreed that in furnishing the Fund with the
services as herein provided, neither the Advisor, nor any officer,
director or agent thereof shall be held liable to the Fund or its
creditors or shareholders for errors of judgment or for anything except
willful misfeasance, bad faith, or gross negligence in the performance
of its duties, or reckless disregard of its obligations and duties under
the terms of this Agreement. It is further understood and agreed that
the Advisor may rely upon information furnished to it reasonably
believed to be accurate and reliable.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Fund agrees to pay to the Advisor, and the Advisor covenants and agrees
to accept from the Fund in full payment for the services furnished, a fee for
each calendar day of each year equal to the total of 1/365th (1/366th in each
leap year) of the amount computed as shown below. In the case of the suspension
of the computation of net asset value, the asset charge for each day during such
suspension shall be computed as of the close of business on the last full
business day on which the net assets were computed. Net assets as of the close
of a full business day shall include all transactions in shares of the Fund
recorded on the books of the Fund for that day.
The asset charge shall be based on the net assets of
the Fund as set forth in the following table.
AXP International Equity Index Fund AXP Mid Cap Index Fund
Assets Annual rate at Assets Annual rate at
(billions) each asset level (billions) each asset level
First $0.25 0.50% First $0.25 0.26%
Next 0.25 0.50 Next 0.25 0.26
Next 0.25 0.49 Next 0.25 0.26
Next 0.25 0.49 Next 0.25 0.26
Next 1.00 0.48 Next 1.00 0.25
Next 3.00 0.47 Next 3.00 0.24
Over 5.00 0.46 Over 5.00 0.23
AXP Nasdaq 100 Index Fund AXP S&P 500 Index Fund
------------------------- ----------------------
Assets Annual rate at Assets Annual rate at
(billions) each asset level (billions) each asset level
First $0.25 0.38% First $0.25 0.24%
Next 0.25 0.38 Next 0.25 0.24
Next 0.25 0.37 Next 0.25 0.24
Next 0.25 0.37 Next 0.25 0.24
Next 1.00 0.36 Next 1.00 0.23
Next 3.00 0.35 Next 3.00 0.22
Over 5.00 0.34 Over 5.00 0.21
AXP Total Stock Market Index Fund
Assets Annual rate at
(billions) each asset level
First $0.25 0.30%
Next 0.25 0.30
Next 0.25 0.29
Next 0.25 0.29
Next 1.00 0.28
Next 3.00 0.27
Over 5.00 0.26
(2) The fee shall be paid on a monthly basis and, in the event of the
termination of this Agreement, the fee accrued shall be pro-rated on the
basis of the number of days that this Agreement is in effect during the
month with respect to which such payment is made.
(3) The fee provided for hereunder shall be paid in cash by the Fund to
the Advisor within five business days after the last day of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Fund agrees to pay:
(a) Fees payable to American Express Financial
Corporation for its services under the terms of this
Agreement.
(b) Taxes.
(c) Brokerage commissions and charges in connection
with the purchase and sale of assets.
(d) Custodian fees and charges.
(e) Fees and charges of its independent certified
public accountants for service the Fund requests.
(f) Premium on the bond required by Rule 17g-1 under
the Investment Company Act of 1940.
(g) Fees and expenses of attorneys (i) it employs in
matters not involving the assertion of a claim by a
third party against the Fund, its directors and
officers, (ii) it employs in conjunction with a claim
asserted by the Board against American Express
Financial Corporation, except that American Express
Financial Corporation shall reimburse the Fund for
such fees and expenses if it is ultimately determined
by a court of competent jurisdiction, or American
Express Financial Corporation agrees, that it is
liable in whole or in part to the Fund, and (iii) it
employs to assert a claim against a third party.
(h) Fees paid for the qualification and registration for
public sale of the securities of the Fund under the
laws of the United States and of the several states
in which such securities shall be offered for sale.
(i) Fees of consultants employed by the Fund.
(j) Directors, officers and employees expenses which
shall include fees, salaries, memberships, dues,
travel, seminars, pension, profit sharing, and all
other benefits paid to or provided for directors,
officers and employees, directors and officers
liability insurance, errors and omissions liability
insurance, worker's compensation insurance and other
expenses applicable to the directors, officers and
employees, except the Fund will not pay any fees or
expenses of any person who is an officer or employee
of American Express Financial Corporation or its
affiliates.
(k) Filing fees and charges incurred by the Fund in
connection with filing any amendment to its articles
of incorporation, or incurred in filing any other
document with the State of Minnesota or its political
subdivisions.
(l) Organizational expenses of the Fund.
(m) Expenses incurred in connection with lending
portfolio securities of the Fund.
(n) Expenses properly payable by the Fund, approved by
the Board.
(2) American Express Financial Corporation agrees to pay all expenses
associated with the services it provides under the terms of this
Agreement. Further, American Express Financial Corporation agrees that
if, at the end of any month, the expenses of the Fund under this
Agreement and any other agreement between the Fund and American Express
Financial Corporation, but excluding those expenses set forth in (1)(b)
and (1)(c) of this Part Three, exceed the most restrictive applicable
state expenses limitation, the Fund shall not pay those expenses set
forth in (1)(a) and (d) through (n) of this Part Three to the extent
necessary to keep the Fund's expenses from exceeding the limitation, it
being understood that American Express Financial Corporation will assume
all unpaid expenses and xxxx the Fund for them in subsequent months but
in no event can the accumulation of unpaid expenses or billing be
carried past the end of the Fund's fiscal year.
Part Four: MISCELLANEOUS
(1) American Express Financial Corporation shall be deemed to be an
independent contractor and, except as expressly provided or authorized
in this Agreement, shall have no authority to act for or represent the
Fund.
(2) A "full business day" shall be as defined in the By-laws.
(3) The Fund recognizes that American Express Financial Corporation now
renders and may continue to render investment advice and other services
to other investment companies and persons which may or may not have
investment policies and investments similar to those of the Fund and
that American Express Financial Corporation manages its own investments
and/or those of its subsidiaries. American Express Financial Corporation
shall be free to render such investment advice and other services and
the Fund hereby consents thereto.
(4) Neither this Agreement nor any transaction had pursuant hereto shall
be invalidated or in any way affected by the fact that directors,
officers, agents and/or shareholders of the Fund are or may be
interested in American Express Financial Corporation or any successor or
assignee thereof, as directors, officers, stockholders or otherwise;
that directors, officers, stockholders or agents of American Express
Financial Corporation are or may be interested in the Fund as directors,
officers, shareholders, or otherwise; or that American Express Financial
Corporation or any successor or assignee, is or may be interested in the
Fund as shareholder or otherwise, provided, however, that neither
American Express Financial Corporation, nor any officer, director or
employee thereof or of the Fund, shall sell to or buy from the Fund any
property or security other than shares issued by the Fund, except in
accordance with applicable regulations or orders of the SEC.
(5) Any notice under this Agreement shall be given in writing,
addressed, and delivered, or mailed postpaid, to the party to this
Agreement entitled to receive such, at such party's principal place of
business in Minneapolis, Minnesota, or to such other address as either
party may designate in writing mailed to the other.
(6) American Express Financial Corporation agrees that no officer,
director or employee of American Express Financial Corporation will deal
for or on behalf of the Fund with himself as principal or agent, or with
any corporation or partnership in which he may have a financial
interest, except that this shall not prohibit:
(a) Officers, directors or employees of American Express
Financial Corporation from having a financial interest in the
Fund or in American Express Financial Corporation.
(b) The purchase of securities for the Fund, or the sale of
securities owned by the Fund, through a security broker or
dealer, one or more of whose partners, officers, directors or
employees is an officer, director or employee of American
Express Financial Corporation, provided such transactions are
handled in the capacity of broker only and provided
commissions charged do not exceed customary brokerage charges
for such services.
(c) Transactions with the Fund by a broker-dealer affiliate of
American Express Financial Corporation as may be allowed by
rule or order of the SEC, and if made pursuant to procedures
adopted by the Fund's Board.
(7) American Express Financial Corporation agrees that, except as
herein otherwise expressly provided or as may be permitted consistent
with the use of a broker-dealer affiliate of American Express Financial
Corporation under applicable provisions of the federal securities laws,
neither it nor any of its officers, directors or employees shall at any
time during the period of this Agreement, make, accept or receive,
directly or indirectly, any fees, profits or emoluments of any
character in connection with the purchase or sale of securities (except
shares issued by the Fund) or other assets by or for the Fund.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until Sept. 9, 2001, or
until a new agreement is approved by a vote of the majority of the
outstanding shares of the Fund and by vote of the Fund's Board,
including the vote required by (b) of this paragraph, and if no new
agreement is so approved, this Agreement shall continue from year to
year thereafter unless and until terminated by either party as
hereinafter provided, except that such continuance shall be
specifically approved at least annually (a) by the Board of the Fund or
by a vote of the majority of the outstanding shares of the Fund and (b)
by the vote of a majority of the directors who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. As used in
this paragraph, the term "interested person" shall have the same
meaning as set forth in the Investment Company Act of 1940, as amended
(the "1940 Act").
(2) This Agreement may be terminated by either the Fund or American
Express Financial Corporation at any time by giving the other party 60
days' written notice of such intention to terminate, provided that any
termination shall be made without the payment of any penalty, and
provided further that termination may be effected either by the Board
of the Fund or by a vote of the majority of the outstanding voting
shares of the Fund. The vote of the majority of the outstanding voting
shares of the Fund for the purpose of this Part Five shall be the vote
at a shareholders' regular meeting, or a special meeting duly called
for the purpose, of 67% or more of the Fund's shares present at such
meeting if the holders of more than 50% of the outstanding voting
shares are present or represented by proxy, or more than 50% of the
outstanding voting shares of the Fund, whichever is less.
(3) This Agreement shall terminate in the event of its assignment, the
term "assignment" for this purpose having the same meaning as set forth
in the 1940 Act.
IN WITNESS THEREOF, the parties hereto have executed the foregoing
Agreement as of the day and year first above written.
AXP MARKET ADVANTAGE SERIES, INC.
AXP International Equity Index Fund
AXP Mid Cap Index Fund
AXP Nasdaq 100 Index Fund
AXP S&P 500 Index Fund
AXP Total Stock Market Index Fund
By: /s/Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By: /s/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President
