INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 13th day of May, 1996, by and between Growth Trust
(the "Trust"), a Massachusetts business trust, on behalf of its underlying
series portfolios, Growth Portfolio and Growth Trends 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
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.
(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.
Growth Portfolio
Growth Trends Portfolio
Assets Annual rate at
(billions) each asset level
First $1.0 0.600%
Next 1.0 0.575
Next 1.0 0.550
Next 3.0 0.525
Over 6.0 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 the Lipper Growth Fund Index (the "Index"). For
Growth Portfolio and Growth Trends Portfolio, the comparison funds are IDS
Growth Fund and IDS New Dimensions Fund, respectively. 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
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
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.
(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
Growth Portfolio
Growth Trends 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
