INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 11 day of April, 2001, by and between AXP
VariablePortfolio - Investment Series, Inc. (the "Corporation"), a Minnesota
corporation, on behalf of its underlying series fund: AXP Variable Portfolio
-Equity Select Fund (the "Fund"), and IDS Life Insurance Company ("IDS Life") a
Minnesota corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation hereby retains IDS Life, and IDS Life hereby agrees, for
the period of this Agreement and under the terms and conditions
hereinafter set forth, to furnish the Corporation continuously with
suggested investment planning; to determine, consistent with the Fund's
investment objectives and policies, which securities in IDS Life'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 all services of whatever nature required in
connection with the management of the Fund including transfer agent and
dividend- disbursing agent services; to furnish or pay for all supplies,
printed material, office equipment, furniture and office space as the
Fund may require; and to pay or reimburse such expenses of the Fund 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
and the authorized officers of the Corporation and its underlying Fund.
IDS Life agrees to maintain (directly or through the contract described
in paragraph (7) of this Part One) an adequate organization of competent
persons to provide the services and to perform the functions herein
mentioned. IDS Life agrees to meet with any persons at such times as the
Board deems appropriate for the purpose of reviewing IDS Life's
performance under this Agreement.
(2) IDS Life agrees that the investment planning and investment decisions
will be in accordance with general investment policies of the Fund as
disclosed to IDS Life from time to time by the Fund and as set forth in
its prospectuses and registration statements filed with the United States
Securities and Exchange Commission (the "SEC").
(3) IDS Life 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 IDS Life any information that the
latter may reasonably request with respect to the services performed or
to be performed by IDS Life under this Agreement.
(5) IDS Life 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 Board of appropriate policies and procedures, and
subject to termination at any time by the Board, IDS Life 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 IDS Life 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 American Express Financial
Corporation's ("AEFC") or IDS Life's overall responsibilities with
respect to the Fund and other funds for which they act as investment
adviser.
(6) It is understood and agreed that in furnishing the Fund with the services
as herein provided, neither IDS Life, nor any officer, director or agent
thereof shall be held liable to a 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 IDS Life may rely
upon information furnished to it reasonably believed to be accurate and
reliable.
(7) The existence of an investment advisory agreement between IDS Life and
AEFC is specifically acknowledged and approved.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Corporation agrees to pay to IDS Life, and IDS Life covenants and
agrees to accept from the Corporation 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 Fund recorded on the books of the Fund for
that day.
(ii) The asset charge shall be based on the net assets of the
Fund as set forth in the following table.
-----------------------------------------------
AXP Variable Portfolio - Equity Select Fund
Assets Annual Rate at
(Billions) Each Asset Level
---------- ----------------
First $0.25 0.650%
Next 0.25 0.635
Next 0.25 0.620
Next 0.25 0.605
Next 1.00 0.590
Next 1.00 0.575
Over 3.00 0.560
-----------------------------------------------
(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 share of
the Fund and the performance of the Lipper Multi-Cap
Growth Fund Index (the "Index"). The performance of one
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 Fund to IDS
Life within five business days after the last day of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Corporation agrees to pay:
(a) Fees payable to IDS Life for the latter's services under the
terms of this Agreement.
(b) All fees, costs, expenses and allowances payable to any person,
firm or corporation for services under any agreement entered
into by the Fund covering the offering for sale, sale and
distribution of the Fund's shares.
(c) All taxes of any kind payable by the Fund other than federal
original issuance taxes on shares issued by the Fund.
(d) All brokerage commissions and charges in the purchase and sale
of assets.
(2) The Corporation agrees to reimburse IDS Life or its affiliates for the
aggregate cost of the services listed below incurred by IDS Life in its
operation of the Fund.
(a) All custodian or trustee fees, costs and expenses.
(b) Costs and expenses in connection with the auditing and
certification of the records and accounts of the Fund by
independent certified public accountants.
(c) Costs of obtaining and printing of dividend checks, reports to
shareholders, notices, proxies, proxy statements and tax notices
to shareholders, and also the cost of envelopes in which such
are to be mailed.
(d) Postage on all communications, notices and statements to
brokers, dealers, and the Fund's shareholders.
(e) All fees and expenses paid to directors of the Fund; however,
IDS Life will pay fees to directors who are officers or
employees of IDS Life or its affiliated companies.
(f) Costs of fidelity and surety bonds covering officers, directors
and employees of the Fund.
(g) All fees and expenses of attorneys who are not officers or
employees of IDS Life or any of its affiliates.
(h) All fees paid for the qualification and registration for public
sales of the securities of the Fund under the laws of the United
States and of the several states of the United States in which
the securities of the Fund shall be offered for sale.
(i) Cost of printing prospectuses, statements of additional
information and application forms for existing shareholders, and
any supplements thereto.
(j) Any losses due to theft and defalcation of the assets of the
Fund, or due to judgments or adjustments not covered by surety
or fidelity bonds, and not covered by agreement or obligation.
(k) Expenses incurred in connection with lending portfolio
securities of the Fund.
(l) Expenses properly payable by the Fund, approved by the Board.
Part Four: MISCELLANEOUS
(1) IDS Life 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 AEFC and IDS Life now render 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 AEFC and IDS Life manage their own
investments and/or those of their subsidiaries. AEFC and IDS Life 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 AEFC
or IDS Life or any successor or assignee thereof, as directors, officers,
stockholders or otherwise; that directors, officers, stockholders or
agents of AEFC or IDS Life are or may be interested in the Fund as
directors, officers, shareholders, or otherwise; or that AEFC or IDS Life
or any successor or assignee, is or may be interested in the Fund as
shareholder or otherwise, provided, however, that neither AEFC or IDS
Life, 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) IDS Life agrees that no officer, director or employee of IDS Life 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 IDS Life from having a
financial interest in the Fund or in IDS Life.
(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 IDS Life,
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 IDS
Life as may be allowed by rule or order of the SEC, and if made
pursuant to procedures adopted by the Board.
(7) IDS Life agrees that, except as herein otherwise expressly provided or as
may be permitted consistent with the use of a broker-dealer affiliate of
IDS Life 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 for two years from the date of
this Agreement, 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 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 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 a Fund or IDS Life 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 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 VARIABLE PORTFOLIO - INVESTMENT SERIES, INC.
AXP Variable Portfolio - Equity Select Fund
By /s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
IDS LIFE INSURANCE COMPANY
By /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Executive Vice President - Annuities
