INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 1st day of July, 1999, by and between AXP Strategy
Series, Inc. (the "Corporation"), a Minnesota Corporation, on behalf of its
underlying series funds AXP Equity Value Fund and AXP Strategy Aggressive Fund
(individually a "Fund" and collectively the "Funds"), and American Express
Financial Corporation, a Delaware corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation hereby retains American Express Financial
Corporation, and American Express Financial Corporation 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 Funds'
investment objectives and policies, which securities in American Express
Financial Corporation'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 Funds all necessary research and statistical
data in connection therewith; to furnish services of whatever nature
required in connection with the management of the Funds 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"), the Executive Committee and the authorized
officers of the Corporation. American Express Financial Corporation
agrees to maintain an adequate organization of competent persons to
provide the services and to perform the functions herein mentioned.
American Express Financial Corporation agrees to meet with any persons
at such times as the Board deems appropriate for the purpose of
reviewing American Express Financial Corporation's performance under
this Agreement.
(2) American Express Financial Corporation agrees that the investment
planning and investment decisions will be in accordance with general
investment policies of the Funds as disclosed to American Express
Financial Corporation from time to time by the Funds and as set forth in
its prospectuses and registration statements filed with the United
States Securities and Exchange Commission (the "SEC").
(3) American Express Financial Corporation agrees that it will maintain
all required records, memoranda, instructions or authorizations relating
to the acquisition or disposition of securities for the Funds.
(4) The Corporation agrees that it will furnish to American Express
Financial Corporation any information that the latter may reasonably
request with respect to the services performed or to be performed by
American Express Financial Corporation under this Agreement.
(5) American Express Financial Corporation is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Funds 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, American Express Financial Corporation 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 American Express Financial Corporation 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 overall responsibilities
with respect to the Funds and other funds for which it acts as
investment adviser.
(6) It is understood and agreed that in furnishing the Funds with the
services as herein provided, neither American Express Financial
Corporation, 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 American Express Financial
Corporation may rely upon information furnished to it reasonably
believed to be accurate and reliable.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Corporation agrees to pay to American Express Financial
Corporation, and American Express Financial Corporation 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
Funds recorded on the books of the Funds for that day.
(ii) The asset charge shall be based on the net
assets of each Fund as set forth in the following table.
Equity Value Strategy Aggressive
Assets Annual Rate At Each Assets Annual Rate At Each
(Billions) Asset Level (Billions) Asset Level
First $0.5 0.530% First $1 0.600%
Next 0.5 0.505 Next 1 0.575
Next 1 0.480 Next 1 0.550
Next 1 0.455 Next 3 0.525
Next 3 0.430 Over 6 0.500
Over 6 0.400
(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 and the
performance of an Index (the "Index"). The Index for AXP
Equity Value Fund is Lipper Growth and Income Fund Index. The
Index for AXP Strategy Aggressive Fund is Lipper Capital
Appreciation Fund Index. The performance of one Class A share
of a 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 0.0008 per year
for AXP Equity Value Fund and 0.0012 per year for AXP Strategy
Aggressive Fund.
(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 Funds to
American Express Financial Corporation 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 American Express Financial
Corporation 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 Funds 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 Corporation, its directors
and officers, (ii) it employs in conjunction with a
claim asserted by the Board against American Express
Financial Corporation, except that American Express
Financial Corporation shall reimburse the Corporation
for such fees and expenses if it is ultimately
determined by a court of competent jurisdiction, or
American Express Financial Corporation agrees, that
it is liable in whole or in part to the Corporation,
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 Funds 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 Funds.
(j) Directors, 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 directors,
officers and employees, directors and officers
liability insurance, errors and omissions liability
insurance, worker's compensation insurance and other
expenses applicable to the directors, officers and
employees, except the Corporation will not pay any
fees or expenses of any person who is an officer or
employee of American Express Financial Corporation or
its affiliates.
(k) Filing fees and charges incurred by the Corporation
in connection with filing any amendment to its
articles of incorporation, or incurred in filing any
other document with the State of Minnesota or its
political subdivisions.
(l) Organizational expenses of the Corporation.
(m) Expenses incurred in connection with lending
portfolio securities of the Funds.
(n) Expenses properly payable by the Funds, approved
by the Board.
(2) American Express Financial Corporation agrees to pay all expenses
associated with the services it provides under the terms of this
Agreement. Further, American Express Financial Corporation agrees that
if, at the end of any month, the expenses of a Fund under this Agreement
and any other agreement between the Fund and American Express Financial
Corporation, but excluding those expenses set forth in (1)(b) and (1)(c)
of this Part Three, exceed the most restrictive applicable state
expenses limitation, the Fund shall not pay those expenses set forth in
(1)(a) and (d) through (n) of this Part Three to the extent necessary to
keep the Fund's expenses from exceeding the limitation, it being
understood that American Express Financial Corporation will assume all
unpaid expenses and xxxx the Fund for them in subsequent months but in
no event can the accumulation of unpaid expenses or billing be carried
past the end of the Fund's fiscal year.
Part Four: MISCELLANEOUS
(1) American Express Financial Corporation 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
Funds.
(2) A "full business day" shall be as defined in the By-laws.
(3) Each Fund recognizes that American Express Financial Corporation 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 Funds and
that American Express Financial Corporation manages its own investments
and/or those of its subsidiaries. American Express Financial Corporation
shall be free to render such investment advice and other services and
each 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 Funds are or may be
interested in American Express Financial Corporation or any successor or
assignee thereof, as directors, officers, stockholders or otherwise;
that directors, officers, stockholders or agents of American Express
Financial Corporation are or may be interested in the Funds as
directors, officers, shareholders, or otherwise; or that American
Express Financial Corporation or any successor or assignee, is or may be
interested in the Funds as shareholder or otherwise, provided, however,
that neither American Express Financial Corporation, nor any officer,
director or employee thereof or of the Funds, shall sell to or buy from
the Funds any property or security other than shares issued by the
Funds, 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) American Express Financial Corporation agrees that no officer,
director or employee of American Express Financial Corporation will deal
for or on behalf of the Funds 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 American Express
Financial Corporation from having a financial interest in the
Funds or in American Express Financial Corporation.
(b) The purchase of securities for the Funds, or the sale of
securities owned by the Funds, through a security broker or
dealer, one or more of whose partners, officers, directors or
employees is an officer, director or employee of American
Express Financial Corporation, 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 Funds by a broker-dealer affiliate
of American Express Financial Corporation as may be allowed by
rule or order of the SEC and if made pursuant to procedures
adopted by the Board.
(7) American Express Financial Corporation agrees that, except as herein
otherwise expressly provided or as may be permitted consistent with the
use of a broker-dealer affiliate of American Express Financial
Corporation 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 Funds) or other assets by or for the Funds.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until June 30, 2001, or
until a new agreement is approved by a vote of the majority of the
outstanding shares of each Fund and by vote of the Fund'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 shares of the Funds 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 American
Express Financial Corporation 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 a 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 STRATEGY SERIES, INC.
AXP Equity Value Fund
AXP Strategy Aggressive Fund
By /s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President
