INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 1st day of July, 1999, by and between Growth Trust
(the "Trust"), a Massachusetts business trust, on behalf of its underlying
series portfolio, Aggressive Growth Portfolio (the "Portfolio"), 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 Portfolio continuously with
suggested investment planning; to determine, consistent with the
Portfolio 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 Portfolio all necessary research and statistical data
in connection therewith; to furnish services of whatever nature required
in connection with the management of the Portfolio 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
Portfolio as disclosed to the Advisor from time to time by the Portfolio
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 Portfolio.
(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 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 Portfolio and other funds for which it acts as
investment advisor.
(6) It is understood and agreed that in furnishing the Portfolio with
the services as herein provided, neither the Advisor nor any officer,
director or agent thereof shall be held liable to the Trust, the
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 the Portfolio in full payment for the services
furnished, a fee composed of an asset charge and a performance incentive
adjustment.
(a) The asset charge
(i) The asset charge for each calendar day of each year shall
be equal to the total of 1/365th (1/366th in each leap year)
of the amount computed in accordance with paragraph (ii)
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.
(ii) The asset charge shall be based on the net assets of the
Portfolio as set forth in the following table.
Assets Annual Rate at
(Billions) Each Asset Level
First $0.25 0.650%
Next 0.25 0.625
Next 0.50 0.600
Next 1.00 0.575
Next 1.00 0.550
Next 3.00 0.525
Over 6.00 0.500
(b) The performance incentive adjustment
(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 Aggressive Growth
Portfolio, the comparison fund is AXP Research Opportunities
Fund and the Index is Lipper Growth 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 0.0012
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.
(3) The fee provided for hereunder shall be paid in cash by the
Portfolio 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
Portfolio 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 Portfolio 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
Portfolio.
(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.
(m) Expenses incurred in connection with lending
portfolio securities of the Portfolio.
(n) Expenses properly payable by the Trust or
Portfolio, 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 Portfolio.
(2) A "full business day" shall be as defined in the By-laws.
(3) The Trust and the 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 Portfolio 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 the 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 Portfolio as trustees, officers, unitholders, or
otherwise; or that the Advisor or any successor or assignee, is or may
be interested in the Portfolio 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 Portfolio any
property or security other than units issued by the Portfolio, 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 Portfolio 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 Portfolio or in the
Advisor.
(b) The purchase of securities for the Portfolio, or the sale
of securities owned by the Portfolio 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 Portfolio 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 Portfolio) or other
assets by or for the Trust or Portfolio.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect for the Portfolio until June
30, 2001, or until a new agreement is approved by a vote of the majority
of the outstanding units of the 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 Portfolio 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
the 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
the 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.
(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 TRUST
Aggressive Growth Portfolio
By: /s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President
