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INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 13th day of May 1996, by and between
Growth and Income Trust (the "Trust"), a Massachusetts business
trust, on behalf of its underlying series portfolios, Balanced
Portfolio, Equity Income Portfolio, Total Return Portfolio, and
Equity Portfolio (individually, a "Portfolio" and collectively the
"Portfolios"), and American Express Financial Corporation (the
"Advisor"), a Delaware corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Trust 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 Portfolios
continuously with suggested investment planning; to determine,
consistent with the Portfolios' 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 Portfolios all
necessary research and statistical data in connection therewith; to
furnish all services of whatever nature required in connection with
the management of the Portfolios 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
Trustees (the "Board"), the Executive Committee and the authorized
officers of the Trust. 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 Portfolios as disclosed to the Advisor from time to
time by the Portfolios and as set forth in their prospectuses and
registration statements filed with the United States 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 Portfolios.
(4) The Trust 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 Portfolios 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 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
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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 Portfolios and other funds for
which it acts as investment advisor.
(6) It is understood and agreed that in furnishing the
Portfolios with the services as herein provided, neither the
Advisor nor any officer, director or agent thereof shall be held
liable to the Trust, a Portfolio or its creditors or unitholders
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 Trust agrees to pay to the Advisor, and the Advisor
covenants and agrees to accept from each Portfolio in full payment
for the services furnished, a fee composed of an asset charge and a
performance incentive adjustment for all Portfolios except for
Equity Income Portfolio.
(a) The asset charge
(i) The asset charge 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. The computation shall be made for
each day on the basis of net assets as of the close of business of
the full business day two (2) business days prior to the day for
which the computation is being made. 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 Portfolio recorded on the
books of the Portfolio for that day.
The asset charge shall be based on the net assets of each
Portfolio as set forth in the following table.
Equity Income Portfolio Total Return Portfolio
Balanced Portfolio Equity Portfolio
Assets Annual rate at Assets Annual rate at
(billions) each asset level (billions) each asset level
First $1.0 0.530% First $0.50 0.530%
Next 1.0 0.505 Next 0.50 0.505
Next 1.0 0.480 Next 1.0 0.480
Next 3.0 0.455 Next 1.0 0.455
Over 6.0 0.430 Next 3.0 0.430
Over 6.0 0.400
(b) The performance incentive adjustment for Balanced,
Total Return and Equity Portfolios.
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(i) The performance incentive adjustment, determined
monthly, shall be computed by measuring the percentage point
difference between the performance of one Class A share of a fund
that invests in the Portfolio (the "comparison fund") and the
performance of an Index (the "Index"). For Balanced Portfolio, the
comparison fund is IDS Mutual and the Index is the Lipper Balanced
Fund Index. For Total Return and Equity Portfolios, the comparison
funds are IDS Managed Retirement Fund and IDS Stock Fund,
respectively and the Index is the Lipper Growth and Income Fund
Index. The performance of one Class A share of the comparison fund
shall be measured by computing the percentage difference, carried
to two decimal places, between the opening net asset value of one
Class A share of the comparison fund and the closing net asset
value of such share as of the last business day of the period
selected for comparison, adjusted for dividends or capital gain
distributions treated as reinvested at the end of the month during
which the distribution was made but without adjustment for expenses
related to a particular class of shares. The performance of the
Index will then be established by measuring the percentage
difference, carried to two decimal places, between the beginning
and ending Index for the comparison period, with dividends or
capital gain distributions on the securities which comprise the
Index being treated as reinvested at the end of the month during
which the distribution was made.
(ii) In computing the adjustment, one percentage point shall
be deducted from the difference, as determined in (b)(i) above. The
result shall be converted to a decimal value (e.g., 2.38% to
0.0238), multiplied by .01 and then multiplied by the comparison
fund's average net assets for the comparison period. This product
next shall be divided by 12 to put the adjustment on a monthly
basis. Where the Class A performance of the comparison fund
exceeds the Index, the amount so determined shall be an increase in
fees as computed under paragraph (a). Where the comparison fund
Class A performance is exceeded by the Index, the amount so
determined shall be a decrease in such fees. The percentage point
difference between the Class A performance of the comparison fund
and that of the Index, as determined above, is limited to a maximum
of 0.0008 per year.
(iii)The 12 month comparison period will roll over with each
succeeding month, so that it always equals 12 months, ending with
the month for which the performance adjustment is being computed.
(iv) If the Index ceases to be published for a period of
more than 90 days, changes in any material respect or otherwise
becomes impracticable to use for purposes of the adjustment, no
adjustment will be made under this paragraph (b) until such time as
the Board approves a substitute index.
(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 prorated 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.
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(3) The fee provided for hereunder shall be paid in cash by
the Portfolios to the Advisor within five business days after the
last day of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Trust agrees to pay:
(a) Fees payable to the Advisor 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 services the Trust or Portfolios request.
(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 Trust, its trustees and officers, (ii) it employs in
conjunction with a claim asserted by the Board against the Advisor
except that the Advisor shall reimburse the Trust for such fees
and expenses if it is ultimately determined by a court of competent
jurisdiction, or the Advisor agrees, that it is liable in whole or
in part to the Trust, 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 Portfolios 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 Trust or
Portfolios.
(j) Trustees, 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 trustees, officers and employees, trustees and officers
liability insurance, errors and omissions liability insurance,
worker's compensation insurance and other expenses applicable to
the trustees, officers and employees, except the Trust will not pay
any fees or expenses of any person who is an officer or employee of
the Advisor or its affiliates.
(k) Filing fees and charges incurred by the Trust in
connection with filing any amendment to its agreement or
declaration of Trust, or incurred in filing any other document with
the State of Massachusetts or its political subdivisions.
(l) Organizational expenses of the Trust.
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(m) Expenses incurred in connection with lending portfolio
securities of the Portfolios.
(n) Expenses properly payable by the Trust or Portfolios,
approved by the Board.
(2) The Advisor agrees to pay all expenses associated with
the services it provides under the terms of this Agreement.
Part Four: MISCELLANEOUS
(1) The Advisor 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
Trust or Portfolios.
(2) A "full business day" shall be as defined in the
By-laws.
(3) The Trust and each Portfolio recognize that the Advisor
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 Portfolios and that the Advisor manages its own investments
and/or those of its subsidiaries. The Advisor shall be free to
render such investment advice and other services and the Trust and
each Portfolio hereby consent thereto.
(4) Neither this Agreement nor any transaction made
pursuant hereto shall be invalidated or in any way affected by the
fact that trustees, officers, agents and/or unitholders of the
Trust are or may be interested in the Advisor or any successor or
assignee thereof, as directors, officers, stockholders or
otherwise; that directors, officers, stockholders or agents of the
Advisor are or may be interested in the Trust or Portfolios as
trustees, officers, unitholders, or otherwise; or that the Advisor
or any successor or assignee, is or may be interested in the
Portfolios as unitholder or otherwise, provided, however, that
neither the Advisor nor any officer, trustee or employee thereof or
of the Trust, shall sell to or buy from the Portfolios any property
or security other than units issued by the Portfolios, 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) The Advisor agrees that no officer, director or
employee of the Advisor will deal for or on behalf of the Trust or
Portfolios 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 the Advisor from
having a financial interest in the Portfolios or in the Advisor.
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(b) The purchase of securities for the Portfolios, or the
sale of securities owned by the Portfolios, through a security
broker or dealer, one or more of whose partners, officers,
directors or employees is an officer, director or employee of the
Advisor 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 Portfolios by a broker-dealer
affiliate of the Advisor as may be allowed by rule or order of the
SEC, and if made pursuant to procedures adopted by the Board.
(7) The Advisor agrees that, except as herein otherwise
expressly provided or as may be permitted consistent with the use
of a broker-dealer affiliate of the Advisor 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 Portfolios) or other assets by or for the Trust or
Portfolios.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect for each
Portfolio until May 12, 1998, or until a new agreement is approved
by a vote of the majority of the outstanding units of each
Portfolio and by vote of the Trust'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 or by a
vote of the majority of the outstanding units of the relevant
Portfolios and (b) by the vote of a majority of the trustees 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 Trust on
behalf of a Portfolio or the Advisor 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 or by a vote of the majority of the outstanding
voting units of the Portfolio. The vote of the majority of the
outstanding voting units of a Portfolio for the purpose of this
Part Five shall be the vote at a unitholders' regular meeting, or a
special meeting duly called for the purpose, of 67% or more of the
Portfolio's shares present at such meeting if the holders of more
than 50% of the outstanding voting units are present or represented
by proxy, or more than 50% of the outstanding voting units of the
Portfolio, whichever is less.
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(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.
GROWTH AND INCOME TRUST
Balanced Portfolio
Equity Income Portfolio
Total Return Portfolio
Equity Portfolio
By: /s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Senior Vice President
