INVESTMENT ADVISORY AND
MANAGEMENT SERVICES AGREEMENT
This Agreement made this 11th day of November, 1987, by and between FARM
BUREAU GROWTH FUND, INC., a Maryland corporation (the "Fund"), and FBL
INVESTMENT ADVISORY SERVICES, INC., a Delaware corporation ("Adviser");
WITNESSETH:
In consideration of the mutual covenants herein contained, it is agreed as
follows:
1. ADVISORY SERVICES. Adviser shall furnish investment research and
advice to the Fund and shall manage the investment and reinvestment of the
assets of the investment portfolios currently offered and to be offered by the
Fund (the "Portfolios") and its business affairs and matters incidental thereto,
all subject to the supervision of the Board of Directors of the Fund, and the
provisions of the Articles of Incorporation and By-Laws of the Fund and any
resolutions, rules or regulations adopted by the Board of Directors of the Fund.
Adviser shall for all purposes herein provided be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized herein,
have no authority to act for or represent the Fund in any way or otherwise be
deemed an agent for the Fund. The Fund shall also be free to retain, at its own
expense, other persons to provide it with any services whatsoever including, but
not limited to, statistical, factual or technical information or advice. The
services of Adviser herein provided are not to be deemed exclusive and Adviser
shall be free to render similar services or other services to others so long as
its services hereunder shall not be impaired thereby.
2. LIMITATIONS ON ADVISORY SERVICES. The Adviser shall perform the
services under this Agreement subject to the supervision and review of the Board
of Directors and in a manner consistent with the objectives, policies, and
restrictions of each Portfolio of the Fund as stated in its Registration
Statement, as amended from time to time, the provisions of the Investment
Company Act of 1940 ("ICA") and the applicable requirements of the Internal
Revenue Code of 1986.
3. DUTIES OF ADVISER. In carrying out its obligations to manage the
investment and reinvestment of the assets of the Fund, the Adviser shall, as
appropriate and consistent with the limitations set forth in Paragraph 2 hereof:
(a) perform research and obtain and evaluate pertinent economic,
statistical, and financial data relevant to the investment
policies of each Portfolio of the Fund as set forth in the
prospectus for the Fund, as amended from time to time;
(b) make and carry out day-to-day decisions to acquire or dispose of
permissible investments, manage the investments and any other
property of the Fund, and provide or obtain such services as may
be necessary in managing, acquiring or disposing of investments;
and
(c) determine the composition of the assets of each of the
Portfolios, including the purchase, retention or sale of the
securities and cash contained in those Portfolios.
4. REPORT TO BOARD. The Adviser, either through persons employed by it
or at its expense, shall furnish to the Board at least once every quarter a
schedule of investments and other assets held in the Portfolios and a statement
of all purchases and sales for the Portfolios, except short term money market
instruments, made during the period since the last report.
5. RECORDS. The Adviser agrees to preserve for the period prescribed by
the rules and regulations of the Securities and Exchange Commission all records
the Adviser maintains for the Fund as are required to be maintained pursuant to
said rules. The Adviser agrees that all such records shall be the property of
the Fund and shall be made available, within five (5) business days of the
request, to the Fund's accountants or auditors during regular business hours at
the Adviser's offices upon prior written notice. In the event of termination of
this Agreement for any reason, all such records shall be returned promptly to
the Fund, free from any claim or retention of rights by the Adviser. In
addition, the Adviser will provide any materials, reasonably related to the
investment advisory services provided hereunder, as may be reasonably requested
in writing by the Directors or officers of the Fund or as may be required by any
governmental agency having jurisdiction.
6. EXPENSES. Adviser shall at its expense furnish the Fund with office
space (in the offices of Adviser, or other such place or places as may be agreed
upon by the parties) and such office facilities, simple business equipment,
advisory, research and statistical facilities and clerical services and
personnel as may be necessary to administer the investment business of the Fund.
Adviser shall arrange, if desired by the fund, for officers or employees of
Adviser to serve without salary from the Fund as Directors, officers or agents
of the Fund if duly elected or appointed to such positions by the shareholders
of the Fund or by the Board of Directors thereof and subject to their individual
consent and to any limitations imposed by law. Adviser will not be required to
pay any other expenses of the Fund other than those expressly enumerated herein;
and in particular, but without limiting the generality of the foregoing, Adviser
will not be required to pay any of the following fund expenses: (1) expenses for
services rendered by a custodian including those for the safekeeping of the
Fund's securities or other property and for keeping its books of account, (2)
charges and expenses of independent auditors, legal counsel, any transfer or
dividend disbursing agent or any registrar of the Fund, (3) costs of acquiring
and disposing of portfolio
securities, (4) interest, if any, on obligations incurred by the Fund, (5) the
cost of calculating the net asset value of the Fund as provided in the Articles
of Incorporation and By-Laws of the Fund, of stock certificates and of corporate
reports, (6) membership dues in the Investment Company Institute or any similar
organization, (7) the cost of reports, notices to shareholders and other
shareholder communications and other like miscellaneous expenses, (8) expenses
of any registration and qualification of shares of the Fund for sale under
Federal securities laws and the securities laws of any State or other
jurisdiction, (9) telephone and personnel costs incurred by Adviser and
allocable to the above, (10) taxes and fees payable to Federal, State or other
Governmental agencies or otherwise, and (11) expenses of underwriting and
selling shares of stock issued by the Fund. The Board shall determine how
expenses are to be allocated among the existing Portfolios, and the
determination of the Board shall be final and binding. The Fund shall not pay
or incur any obligation for any management or administrative expenses for which
the Fund intends to seek reimbursement from Adviser as herein provided without
first obtaining the written approval of Adviser.
7. COMPENSATION. For the services to be rendered and the charges and
expenses assumed and to be paid by the Adviser as provided herein, the Fund
shall pay the Adviser compensation based on an annual percentage of the average
daily net assets of each Portfolio as follows:
Average Daily Net Assets
-----------------------------
First Second Over
$200 $200 $400
Portfolio Million Million Million
--------- ------- ------- -------
Managed. . . . . . . . . . . . . . . . . 0.60% 0.55% 0.50%
Aggressive Growth Common Stock . . . . . 0.60% 0.55% 0.50%
High Yield Bond. . . . . . . . . . . . . 0.55% 0.50% 0.45%
Growth Common Stock. . . . . . . . . . . 0.50% 0.45% 0.40%
Xxxxxx Xxx Portfolio . . . . . . . . . . 0.50% 0.45% 0.40%
High Quality Bond. . . . . . . . . . . . 0.40% 0.35% 0.30%
Money Market . . . . . . . . . . . . . . 0.40% 0.35% 0.30%
Blue Chip Index. . . . . . . . . . . . . 0.25% 0.25% 0.25%
Compensation under this Agreement shall be calculated and accrued for each
business day by applying the appropriate annual rates to the net assets of the
Portfolio in accordance with the formula set forth above as of the close of the
last business day preceding the day for which the fee is being calculated, and
dividing the sum so computed by the number of business days in the fiscal year.
The fees thus accrued shall be payable monthly, provided that such compensation
shall be paid proportionately for any other period ending with the termination
of this Agreement.
8. LIMITATION OF EXPENSES. In the event that expenses of any Portfolio
chargeable to its income account (including amounts payable hereunder but
exclusive of brokerage fees, distribution services fee, interest, taxes and
extraordinary expenses for any fiscal year ending on a date at which this
Agreement is in effect) shall exceed 1.50% of the average daily net assets of
the Portfolio for said fiscal year, calculated on the basis of the average of
all of the daily valuations of the net assets of the Portfolio in effect as of
the close of each business day
during said fiscal year, Adviser shall pay to the Portfolio the amount by which
such expenses exceed the applicable limitation, within three days after the
determination of the amount thereof. In no event shall Adviser be required to
reimburse the Portfolio in an amount exceeding its compensation for such period
from such Portfolio under this Agreement.
9. FUND TRANSACTIONS AND BROKERAGE. The Adviser agrees to determine the
securities to be purchased or sold by each Portfolio of the Fund, subject to the
provisions of Paragraphs 2 and 3 above, and to place orders pursuant to its
determinations either directly with the issuer, with any broker-dealer or
underwriter that specializes in the securities for which the order is made, or
with any other broker or dealer selected by the Adviser, subject to the
following limitations.
The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for each Portfolio of
the Fund and will use its best efforts to obtain the most favorable price and
efficient execution of the Fund's orders, taking into account all appropriate
factors, including: price; dealer spread or commission, if any; size and
difficulty of the transaction; the nature of the market for the security; the
reliability, financial condition and general execution and operational
capabilities of the broker-dealer; and the research, statistical, and economic
data or facilities furnished by the broker-dealer to the Fund.
If, in the judgment of the Adviser, the Fund or any Portfolio thereof would
be benefited by supplemental investment research, the Fund or such Portfolio may
pay reasonable increased transaction costs to obtain such information. The
expenses of the Adviser may not necessarily be reduced as a result of receipt of
such supplemental information. The Adviser or any of its affiliates may also
use any investment research obtained for the benefit of the Fund or any
Portfolio thereof in providing investment advice to its other investment
advisory accounts.
10. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or
sales of portfolio securities for the account of the Fund or any Portfolio
thereof, neither Adviser nor any officer, director or shareholder of Adviser
shall act as principal or receive any commission other than its compensation
provided for in this Agreement. Such limitation, however, shall not prohibit
the payment of the usual and customary brokerage commissions to any of such
parties in the proper case. It is understood and agreed that Adviser, by virtue
of a separate agreement or agreements with the Fund, may also act as
underwriter, distributor, transfer agent and/or shareholder service agent for
the Fund, and/or perform accounting services for the Fund, and may be
compensated therefor.
The same securities held by the Fund may also be held by separate
investment accounts or other investment companies for which the Adviser may act
as an adviser or by the Adviser or its affiliates. Because of different
investment objectives or other factors, a particular security may be bought by
the adviser or its affiliates
or for one or more clients when one or more clients are selling the same
security. If purchases or sales of securities for the Fund or other entities
for which the Adviser or its affiliates act as investment adviser or for their
advisory clients arise for consideration at or about the same time, the Fund
agrees that the Adviser may make transactions in such securities, in such manner
as is deemed equitable to all. To the extent that transactions on behalf of
more than one client of the Adviser during the same period may increase demand
for securities being purchased or the supply of securities being sold, the Fund
recognizes that there may be an adverse effect on price.
It is agreed that, on occasions when the Adviser deems the purchase or sale
of a security to be in the best interests of the Fund as well as other accounts
or companies, it may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be sold
or purchased for the Fund with those to be sold or purchased for other accounts
or companies in order to obtain favorable execution and lower brokerage
commissions. In that event, allocation of the securities purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Adviser
in the manner it considers to be most equitable and consistent with its
fiduciary obligations to the Fund and to such other accounts or companies. The
Fund recognizes that in some cases this procedure may adversely affect the size
of the position obtainable for a Portfolio of the Fund.
11. LIMITATION OF LIABILITY OF ADVISER. Adviser shall not be liable for
any error of judgment or mistake of law, or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except loss to the
Fund resulting from willful misfeasance, bad faith or gross negligence on the
part of Adviser in the performance of its obligations and duties under this
Agreement. It is understood that the officers, directors, agents and
shareholders of the Fund are or may become interested in Adviser as officers,
directors, agents, shareholders, or otherwise, and that the officers, directors,
shareholders and agents of Adviser may become similarly interested in the Fund;
and that the existence of any such dual interest shall not affect the validity
of this Agreement or any transaction hereunder except as a provided in the
Articles of Incorporation or By-Laws of the Fund or Articles of Incorporation of
the Adviser, or by the specific provisions of applicable law. Any person, even
though also employed by Adviser, who may be or become an employee of and paid by
the Fund shall be deemed, when acting within the scope of his employment by the
Fund, to be acting in such employment solely for the Fund and not as a an
employee or agent of Adviser.
12. EFFECTIVE DATE AND TERM. This Agreement shall not become effective
unless and until it is approved by the Fund's Board of Directors, including a
majority of Directors who are not parties to this Agreement or "interested
persons" (as defined in the ICA) of any such party to this Agreement and, as to
the Growth Common Stock Portfolio, a vote of a "majority of the outstanding
voting securities" (as defined in the ICA) of such Portfolio. This Agreement
shall come into full force and effect on December 1, 1987, provided that it
shall not become effective as to any subsequently created Portfolio until it has
been approved by the Board of Directors specifically for such Portfolio.
As to each Portfolio of the Fund, the Agreement shall continue in effect
until November 30, 1988, and shall thereafter continue in effect from year to
year so long as its continuance is approved at least annually in the manner
required by the ICA and the rules and regulations thereunder; provided however
that if the continuation of this Agreement is not approved for a Portfolio, the
Adviser may continue to serve in such capacity for such Portfolio in the manner
and to the extent permitted by the ICA and the rules and regulations thereunder.
In connection with such approvals, the Directors shall request, and the Adviser
shall furnish, such information as may be necessary to evaluate this Agreement.
As to each Portfolio of the Fund, this Agreement:
A. may be terminated without the payment of any penalty upon 60 days'
written notice to the Adviser either by the Board of Directors or by a
majority vote of those persons having voting rights in respect of the
affected Portfolio(s) of the Fund;
B. shall automatically terminate if it is assigned (within the meaning of
the ICA) by the Adviser;
C. may be terminated by the Adviser without payment of any penalty upon
60 days' written notice to the Secretary of the Board of Directors of
the Fund; and
D. may be amended, changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought. An amendment
of this Agreement shall not be effective until approved by (i) a vote
of the holders of a majority of the outstanding voting securities of
the Portfolio; and (ii) a majority of those Directors of the Fund who
are not parties to this Agreement or "interested persons" (as defined
in the ICA) of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
13. NOTICES. Any notices under this Agreement shall be in writing
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience or reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Fund and Adviser have caused this Agreement to be
executed in their
names and on their behalf and under their corporate seals by and through their
duly authorized officers all on the day and year first above written.
ATTEST: FARM BUREAU GROWTH FUND, INC.
----------------------------------- -------------------------------------
By: Its Assistant Secrtary By: Its Vice President
ATTEST: FBL INVESTMENT ADVISORY SERVICES, INC.
----------------------------------- -------------------------------------
By: Its Assistant Secretary By: Its Vice President
