INVESTMENT MANAGEMENT SERVICES AGREEMENT
This Agreement dated as of January 12, 2006, is by and between
RiverSource Investments, LLC (the "Investment Manager"), a Minnesota limited
liability company and AXP Dimensions Series, Inc. (the "Registrant") on behalf
of its underlying series, RiverSource Disciplined Small Cap Value Fund (the term
"Fund" is used to refer to either the Registrant or its underlying series, as
context requires).
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Fund hereby retains the Investment Manager, and the Investment Manager
hereby agrees, for the period of this Agreement and under the terms and
conditions hereinafter set forth, to furnish the Fund continuously with
investment advice; to determine, consistent with the Fund's investment
objectives and policies, which securities in the Investment Manager'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 other
services of whatever nature required in connection with the management of the
Fund 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 Directors (the "Board") and the authorized officers of the Fund. The
Investment Manager agrees to maintain an adequate organization of competent
persons to provide the services and to perform the functions herein mentioned
and to maintain adequate oversight over any service providers including
subadvisers hired to provide services and to perform the functions herein
mentioned. The Investment Manager agrees to meet with any persons at such times
as the Board deems appropriate for the purpose of reviewing the Investment
Manager's performance under this Agreement. The Fund agrees that the Investment
Manager may subcontract for certain of the services described under this
Agreement with the understanding that there shall be no diminution in the
quality or level of services and also with the understanding, that the
Investment Manager shall obtain such approval from the Fund's Board and/or its
shareholders as is required by law, rules and regulations promulgated
thereunder, terms of the Agreement, resolutions of the Board and commitments of
the Investment Manager.
(2) The Investment Manager agrees that the investment advice and investment
decisions will be in accordance with general investment policies of the Fund as
disclosed to the Investment Manager from time to time by the Fund and as set
forth in the prospectus and registration statement filed with the United States
Securities and Exchange Commission (the "SEC").
(3) The Investment Manager agrees to provide such support as required or
requested by the Board in conjunction with voting proxies solicited by or with
respect to the issuers of securities in which the Fund's assets may be invested
from time to time, it being understood that the Board has sole voting power with
respect to all such proxies.
(4) The Investment Manager agrees that it will maintain all required records,
memoranda, instructions or authorizations relating to the management of the
assets for the Fund
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including the acquisition or disposition of securities, proxy voting and
safekeeping of assets.
(5) The Fund agrees that it will furnish to the Investment Manager any
information that the latter may reasonably request with respect to the services
performed or to be performed by the Investment Manager under this Agreement.
(6) In selecting broker-dealers for execution, the Investment Manager will seek
to obtain best execution for securities transactions on behalf of the Fund,
except where otherwise directed by the Board. In selecting broker-dealers to
execute transactions, the Investment Manager will consider not only available
prices (including commissions or xxxx-up), but also other relevant factors such
as, without limitation, the characteristics of the security being traded, the
size and difficulty of the transaction, the execution, clearance and settlement
capabilities as well as the reputation, reliability, and financial soundness of
the broker-dealer selected, the broker-dealer's risk in positioning a block of
securities, the broker-dealer's execution service rendered on a continuing basis
and in other transactions, the broker-dealer's expertise in particular markets,
and the broker-dealer's ability to provide research services. To the extent
permitted by law, and consistent with its obligation to seek best execution, the
Investment Manager may execute transactions or pay a broker-dealer a commission
or markup in excess of that which another broker-dealer might have charged for
executing a transaction provided that the Investment Manager determines, in good
faith, that the execution is appropriate or the commission or markup is
reasonable in relation to the value of the brokerage and/or research services
provided, viewed in terms of either that particular transaction or the
Investment Manager's overall responsibilities with respect to the Fund and other
clients for which it acts as investment adviser. The Investment Manager shall
not consider the sale or promotion of shares of the Fund, or other affiliated
products, as a factor in the selection of broker-dealers through which
transactions are executed.
(7) Except for bad faith, intentional misconduct or negligence in regard to the
performance of its duties under this Agreement, neither the Investment Manager,
nor any of its respective directors, officers, partners, principals, employees,
or agents shall be liable for any acts or omissions or for any loss suffered by
the Fund or its shareholders or creditors. Each of the Investment Manager, and
its respective directors, officers, partners, principals, employees and agents,
shall be entitled to rely, and shall be protected from liability in reasonably
relying, upon any information or instructions furnished to it (or any of them as
individuals) by the Fund or its agents which is believed in good faith to be
accurate and reliable. The Fund understands and acknowledges that the Investment
Manager does not warrant any rate of return, market value or performance of any
assets in the Fund. Notwithstanding the foregoing, the federal securities laws
impose liabilities under certain circumstances on persons who act in good faith
and, therefore, nothing herein shall constitute a waiver of any right which the
Fund may have under such laws or regulations.
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Part Two: COMPENSATION TO THE INVESTMENT MANAGER
(1) The Fund agrees to pay to the Investment Manager, and the Investment Manager
covenants and agrees to accept from the Fund in full payment for the services
furnished, a fee as set forth in Schedule A.
(2) The fee shall be paid on a monthly basis and, in the event of the
termination of this Agreement, in whole or in part with respect to any Fund, 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 the
Investment Manager within five business days after the last day of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Fund agrees to pay:
(a) Fees payable to the Investment Manager 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) Premium on the bond required by Rule 17g-1 under the Investment Company
Act of 1940.
(f) Fees and expenses of attorneys (i) it employs in matters not involving
the assertion of a claim by a third party against the Fund, its Board
members and officers, (ii) it employs in conjunction with a claim asserted
by the Board against the Investment Manager, except that the Investment
Manager shall reimburse the Fund for such fees and expenses if it is
ultimately determined by a court of competent jurisdiction, or the
Investment Manager agrees, that it is liable in whole or in part to the
Fund, (iii) it employs to assert a claim against a third party, and (iv) it
or the Investment Manager employs, with the approval of the Board, to
assist in the evaluation of certain investments or other matters related to
the management of the Fund.
(g) Fees paid for the qualification and registration for public sale of the
securities of the Fund under the laws of the United States and of the
several states in which such securities shall be offered for sale.
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(h) Fees of consultants employed by the Fund.
(i) Board member, officer and employee expenses which shall include fees,
salaries, memberships, dues, travel, seminars, pension, profit sharing, and
all other benefits paid to or provided for Board members, officers and
employees, directors and officers liability insurance, errors and omissions
liability insurance, worker's compensation insurance and other expenses
applicable to the Board members, officers and employees, except the Fund
will not pay any fees or expenses of any person who is an officer or
employee of the Investment Manager or its affiliates.
(j) Filing fees and charges incurred by the Fund in connection with filing
any amendment to its organizational documents, or incurred in filing any
other document with the state where the Fund is organized or its political
subdivisions.
(k) Organizational expenses of the Fund.
(l) Expenses incurred in connection with lending portfolio securities of
the Fund.
(m) Expenses properly payable by the Fund, approved by the Board.
(n) Other expenses payable by the Fund pursuant to separate agreement of
the Fund and any of its service providers.
(2) Unless the Fund is obligated to pay an expense pursuant to Part Three,
Section I, above, the Investment Manager agrees to pay all expenses associated
with the services it provides under the terms of this Agreement.
Part Four: MISCELLANEOUS
(1) The Investment Manager 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 of the Fund.
(3) The Fund acknowledges that the Investment Manager and its affiliates may
perform investment advisory services for other clients, so long as the
Investment Manager's services to the Fund under this Agreement are not impaired
thereby. The Investment Manager and its affiliates may give advice or take
action in the performance of duties to other clients that may differ from advice
given, or the timing and nature of action taken, with respect to the Fund, and
that the Investment Manager and its affiliates may trade and have positions in
securities of issuers where the Fund may own equivalent or related securities,
and where action may or may not be taken or recommended for the Fund. Nothing in
this Agreement shall be deemed to impose upon the Investment Manager or any of
its affiliates any obligation to purchase or sell, or recommend for purchase or
sale for the Fund, any security or any other property that the Investment
Manager or any of its
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affiliates may purchase, sell or hold for its own account
or the account of any other client. Notwithstanding any of the foregoing, the
Investment Manager shall allocate investment opportunities among its clients,
including the Fund, in an equitable manner, consistent with its fiduciary
obligations. By reason of their various activities, the Investment Manager and
its affiliates may from time to time acquire information about various
corporations and their securities. The Fund recognizes that the Investment
Manager and its affiliates may not always be free to divulge such information,
or to act upon it.
(4) Neither this Agreement nor any transaction pursuant hereto shall be
invalidated or in any way affected by the fact that Board members, officers,
agents and/or shareholders of the Fund are or may be interested in the
Investment Manager or any successor or assignee thereof, as directors, officers,
stockholders or otherwise; that directors, officers, stockholders or agents of
the Investment Manager are or may be interested in the Fund as Board members,
officers, shareholders, or otherwise; or that the Investment Manager or any
successor or assignee, is or may be interested in the Fund as shareholder or
otherwise, provided, however, that neither the Investment Manager, nor any
officer, Board member 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) The Investment Manager agrees that no officer, director or employee of the
Investment Manager 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 the Investment Manager from having
a financial interest in the Fund or in the Investment Manager.
(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 the Investment Manager, 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 the
Investment Manager as may be allowed by rule or order of the U.S.
Securities and Exchange Commission and if made pursuant to procedures
adopted by the Board.
(7) The Investment Manager agrees that, except as herein otherwise expressly
provided or as may be permitted consistent with the use of a broker-dealer
affiliate of the Investment
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Manager 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.
(8) All information and advice furnished by the Investment Manager to the Fund
under this Agreement shall be confidential and shall not be disclosed to third
parties, except as required by law, order, judgment, decree, or pursuant to any
rule, regulation or request of or by any government, court, administrative or
regulatory agency or commission, other governmental or regulatory authority or
any self-regulatory organization. All information furnished by the Fund to the
Investment Manager under this Agreement shall be confidential and shall not be
disclosed to any unaffiliated third party, except as permitted or required by
the foregoing, where it is necessary to effect transactions or provide other
services to the Fund, or where the Fund requests or authorizes the Investment
Manager to do so. The Investment Manager may share information with its
affiliates in accordance with its privacy policies in effect from time to time.
(9) This Agreement shall be governed by the laws of the State of Minnesota.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until January 11, 2008 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 Board
members 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, and
the rules promulgated thereunder (the "1940 Act"). As used in this agreement,
the term "majority of the outstanding shares of the Fund" shall have the same
meaning as set forth in the 1940 Act.
(2) This Agreement may be terminated, with respect to each underlying series of
the Fund, by either the Fund or the Investment Manager 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.
(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.
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(4) Non-material amendments or modifications to this Agreement as may be
permitted by the 1940 Act will only be made effective upon written agreement
executed by the Investment Manager and the Board.
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as
of the day and year first above written.
AXP DIMENSIONS SERIES, INC.
RiverSource Disciplined Small Cap Value Fund
By: /s/ Xxxxxx X. Xxx
-----------------
Xxxxxx X. Xxx
Vice President
RIVERSOURCE INVESTMENTS, LLC
By: /s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx
Senior Vice President
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Asset Charge
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
the fee schedule in the table, below:
------------------------------------- ------------------------------ ------------------------
Fund Net Assets (billions) Annual rate at each
asset level
------------------------------------- ------------------------------ ------------------------
------------------------------------- ------------------------------ ------------------------
RiverSource Disciplined Small Cap First $0.25 0.850%
Value Fund Next $0.25 0.825%
Next $0.25 0.800%
Next $0.25 0.775%
Next $1.0 0.750%
Over $2.0 0.725%
------------------------------------- ------------------------------ ------------------------
The computation shall be made for each calendar day on the basis of net assets
as of the close of the preceding business day. In the case of the suspension of
the computation of net asset value, the fee for each calendar 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.
Performance Incentive Adjustment
In addition to an asset charge, the fee for the Fund shall include a performance
incentive adjustment.
The performance incentive adjustment shall be based on the Fund's performance
compared to an index of similar funds (the "Index"). Current Indexes are shown
below. These Indexes may change as set forth below.
---------------------------------------- ---------------------------------------
Fund Lipper Index
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
Disciplined Small Cap Value Lipper Small-Cap Value Index
---------------------------------------- ---------------------------------------
The performance incentive adjustment is determined by measuring the percentage
difference over a rolling 12-month period between the performance of one Class A
share of the Fund and the change in performance of the Index. The performance
difference will then be used to determine the adjustment rate.
The adjustment rate, computed to five decimal places, is determined in
accordance with table below, and is applied against average daily net assets for
the applicable rolling 12-month period.
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Equity Funds
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Performance Difference Adjustment Rate
-------------------------------- ----------------------------------------------------------------------
-------------------------------- ----------------------------------------------------------------------
0.00%-0.50% 0
-------------------------------- ----------------------------------------------------------------------
-------------------------------- ----------------------------------------------------------------------
0.50%-1.00% 6 basis points times the performance difference over 0.50% (maximum
of 3 basis points if a 1% performance difference)
-------------------------------- ----------------------------------------------------------------------
-------------------------------- ----------------------------------------------------------------------
1.00%-2.00% 3 basis points, plus 3 basis points times the
performance difference over 1.00% (maximum 6
basis points if a 2% performance difference)
-------------------------------- ----------------------------------------------------------------------
-------------------------------- ----------------------------------------------------------------------
2.00%-4.00% 6 basis points, plus 2 basis points times the
performance difference over 2.00% (maximum 10
basis points if a 4% performance difference)
-------------------------------- ----------------------------------------------------------------------
-------------------------------- ----------------------------------------------------------------------
4.00%-6.00% 10 basis points, plus 1 basis point times the
performance difference over 4.00% (maximum 12
basis points if a 6% performance difference)
-------------------------------- ----------------------------------------------------------------------
-------------------------------- ----------------------------------------------------------------------
6.00% or more 12 basis points
-------------------------------- ----------------------------------------------------------------------
For example, if the performance difference is 2.38%, the adjustment rate is
0.000676 (0.0006 [6 basis points] plus 0.0038 [the 0.38% performance difference
over 2.00%] x 0.0002 [2 basis points] x 100 (0.000076)). Rounded to five decimal
places, the adjustment rate is 0.00068. Where the Fund's Class A performance
exceeds that of the Index, the fee paid to the Investment Manager will increase
by the adjustment rate. Where the performance of the Index exceeds the
performance of the Fund's Class A shares, the fee paid to the Investment Manager
will decrease by the adjustment rate.
The 12-month comparison period rolls over with each succeeding month, so that it
always equals 12 months, ending with the month for which the performance
adjustment is being computed.
Change in Index
If an Index ceases to be published for a period of more than 90 days, changes in
any material respect, otherwise becomes impracticable or, at the discretion of
the Board, is no longer appropriate to use for purposes of a performance
incentive adjustment, for example, if Lipper reclassifies the Fund from one peer
group to another, the Board may take action it deems appropriate and in the best
interests of shareholders, including: (1) discontinuance of the performance
incentive adjustment until such time as it approves a substitute index, or (2)
adoption of a methodology to transition to a substitute index it has approved.
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