INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 1st day of July, 1999, by and between World Trust (the
"Trust"), a Massachusetts business trust, on behalf of its underlying series
portfolios, World Growth Portfolio and World Income 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 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 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, on behalf of each Portfolio, 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
for each Portfolio and a performance incentive adjustment for World
Growth Portfolio.
(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 each
Portfolio as set forth in the following table.
World Growth Portfolio World Income Portfolio
Assets Annual Rate at Assets Annual Rate at
(Billions) Each Asset Level (Billions) Each Asset Level
First $0.25 0.800% First $0.25 0.770%
Next 0.25 0.775 Next 0.25 0.745
Next 0.25 0.750 Next 0.25 0.720
Next 0.25 0.725 Next 0.25 0.695
Next 1.00 0.700 Over 1.00 0.670
Over 2.00 0.675
(b) The performance incentive adjustment for World Growth Portfolio
(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
the Fund that invests in the Portfolio (the "comparison
fund") and the performance of an (the "Index"). For World
Growth Portfolio, the comparison fund is AXP Global Growth
Fund and the Index is the Lipper Global Fund Index. The
performance of one Class A share of the Fund shall be
measured by computing the percentage difference, carried to
two decimal places, between the opening net asset value of
one share of the 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 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
performance of the Fund exceeds the Index, the amount so
determined shall be an increase in fees as computed under
paragraph (a). Where Fund performance is exceeded by the
Index, the amount so determined shall be a decrease in such
fees. The percentage point difference between the
performance of the 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 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.
(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.
(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 June
30, 2001, 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.
(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.
WORLD TRUST
World Growth Portfolio
World Income 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
