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INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 20th day of March, 1995, by and between IDS
Investment Series, Inc. (the "Corporation") on behalf of its
underlying series funds IDS Mutual and IDS Diversified Equity
Income Fund (individually a "Fund" and collectively the "Funds"), a
Minnesota corporation, 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 all 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
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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 each Fund in full payment for
the services furnished, a fee composed of an asset charge, and for
Mutual only, 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.
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(ii) The asset charge shall be based on the net assets of each
Fund as set forth in the following table.
Asset Charge
Assets Annual Rate At Each Assets Annual Rate At Each
(Billions) Asset Level (Billions) Asset Level
Mutual DEI
First $1 0.530% First $0.5 0.530%
Next $1 0.505 Next $0.5 0.505
Next $1 0.480 Next $1 0.480
Next $3 0.455 Next $1 0.455
Over $6 0.430 Next $3 0.430
Over $6 0.400
(b)The performance incentive adjustment
(i) For Mutual, 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 and the performance of the Lipper Balanced Index (the
"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
0.0008 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.
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(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
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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.
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(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.
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Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until March 19,
1997, 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.
IDS INVESTMENT SERIES, INC.
IDS Mutual
IDS Diversified Equity Income
By /s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Vice President
