Exhibit 24(b)(5)(a)
THE AAL MUTUAL FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 28th day of November, 1990, by and between THE AAL
MUTUAL FUNDS (the "Trust"), a Massachusetts Business Trust, and AAL ADVISORS
INC. (the "Advisor").
WITNESSETH:
In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:
1. In General
The Trust hereby appoints the Advisor to act as investment advisor to the
Trust with respect to its series of shares described on Exhibit A attached
hereto. Each series is referred to herein individually as "a Fund" and
collectively as "the Funds." The Advisor agrees, all as more fully set forth
herein, to provide professional investment management with respect to the
investment of the assets of each Fund and to supervise and arrange the purchase
and sale of securities and other assets held in the portfolio of each Fund and
generally administer the affairs of the Trust. The Advisor may engage, on behalf
of the Trust or any Fund, the services of a Sub-Advisor, subject to any
limitations imposed by the Investment Company Act of 1940 (the "Act").
2. Duties and Obligations of the Advisor With Respect to Management of
the Trust
(a) Subject to the succeeding provisions of this section and subject to the
direction and control of the Board of Trustees of the Trust, the Advisor (and
the Sub-Advisor when authorized by the Advisor), as agent and attorney-in-fact
with respect to the Trust, is authorized, in its discretion and without prior
consultation with the Trust to:
(i) Buy, sell, exchange, convert, lend and otherwise trade in any
stocks, bonds and any other securities or assets; and
(ii) Place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or through
such brokers, dealers, underwriters or issuers as the Advisor may select.
(b) Any investment purchases or sales made by the Advisor and/or any
Sub-Advisor shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the provisions of the Act and of any rules or
regulations in force thereunder; (2) any other applicable provisions of law; (3)
the provisions of the Declaration of Trust and By-Laws of the Trust as amended
form time to time; (4) any policies and determinations of the Board of Trustees
of the Trust; and (5) the fundamental policies of the Trust, as reflected in its
Registration Statement under the Act, or as amended by the shareholders of the
Trust.
(c) The Advisor shall also administer the affairs of the Trust and, in
connection therewith, shall be responsible for (i) maintaining the Trust's books
and records (other than financial or accounting books and records maintained by
any accounting services agent and such records maintained by the Trust's
custodian or transfer agent); (ii) overseeing the Trust's insurance
relationships; (iii) preparing for the Trust (or assisting counsel and/or
auditors in the preparation of) all required tax returns, proxy statements and
reports to the Trust's shareholders and Trustees and reports to and other
filings with the Securities and Exchange Commission and any other governmental
agency (the Trust agreeing to supply or cause to be supplied to the Advisor all
necessary financial and other information in connection with the foregoing);
(iv) preparing such applications and reports as may be necessary to register or
maintain the Trust's registration and/or the registration of the shares of the
Funds under the securities or "Blue Sky" laws of the various states selected by
the Trust's distributor (a Fund or Funds agreeing to pay all filing fees or
other similar fees in connection therewith); (v) responding to all inquiries or
other communications of shareholders, if any, which are directed to the Advisor,
or if any such inquiry or communication is more properly to be responded to by
the Trust's custodian, transfer agent or accounting services agent, overseeing
their response thereto; (vi) overseeing all relationships between the Trust and
its custodian(s), transfer agent(s) and accounting services agent(s), including
the negotiation of agreements and the supervision of the performance of such
agreements; and (vii) authorizing and directing any of the Advisor's directors,
officers and employees who may be elected as Trustees or officers of the Trust
to serve in the capacities in which they are elected. All services to be
furnished by the Advisor under this Agreement may be furnished through the
medium of any directors, officers or employees of the Advisor.
(d) The Advisor shall give the Trust the benefit of its best judgment and
effort in rendering services hereunder. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of the Advisor (and its officers,
directors, agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Advisor) the Advisor shall not be subject
to liability to the Trust or to any shareholder of the Trust for any act or
omission in the course of, or connected with rendering services hereunder,
including without limitation, any error of judgment or mistake of law of for any
loss suffered by any of them in connection with the matters to which this
Agreement is related, except to the extent specified in Section 36(b) of the Act
concerning loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services. Except for such disabling conduct, the
Trust shall indemnify the Advisor (and its officers directors, agents,
employees, controlling persons, shareholders and any other person or entity
affiliated with the Advisor) from any liability arising from the Advisor's
conduct under the Agreement to the extent permitted by the Declaration of Trust
and applicable law.
(e) Nothing in this Agreement shall prevent the Advisor or any "affiliated
person" (as defined in the Act) of the Advisor from acting as investment advisor
or manager and/or principal underwriter for an other person, firm or corporation
and shall not in any way limit or restrict the Advisor or any such affiliated
person from buying, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Advisor expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the performance of its
obligations to the Trust under this Agreement.
(f) It is agreed that the Advisor shall have no responsibility or liability
for the accuracy or completeness of the Funds' Registration Statement under the
Act or the Securities Act of 1933 except for information supplied by the Advisor
for inclusion therein.
3. Broker-Dealer Relationships
In connection with its duties set forth in Section 2(a) (ii) of this
Agreement to arrange for the purchase and sale of securities and other assets
held by each Fund by placing purchase and sale orders for the Fund, the Advisor
and/or any Sub-Advisor shall select such broker-dealers ("brokers") and shall,
in the Advisor's or Sub-Advisor's judgment, implement the policy of the Trust to
achieve "best execution," i.e., prompt and efficient execution at the most
favorable net price. In making such selection, the Advisor and/or Sub-Advisor is
authorized to consider the reliability, integrity and financial condition of the
broker. The Advisor and/or Sub-Advisor is also authorized to consider whether
the broker provides brokerage and/or research services to the Trust and/or other
accounts of the Advisor or Sub-Advisor. The commissions paid to such brokers may
be higher than another broker would have charged if a good faith determination
is made by the Advisor and/or Sub-Advisor that the commission is reasonable in
relation to the services provided, viewed in terms of either that particular
transaction or the Advisor's or Sub-Advisor's overall responsibilities as to the
accounts as to which it exercises investment discretion. The Advisor and/or
Sub-Advisor shall use its judgment in determining that the amount of commissions
paid are reasonable in relation to the value of brokerage and research services
provided and need not place or attempt to place a specific dollar value on such
services or on the portion of commission rates reflecting such services. To
demonstrate that such determinations were in good faith, and to show the overall
reasonableness of commissions paid, the Advisor and/or Sub-Advisor shall be
prepared to show that commissions paid (i) were for purposes contemplated by
this Agreement; (ii) provide lawful and appropriate assistance to the Advisor
and/or Sub-Advisor in the performance of its decision-making responsibilities;
and (iii) were within a d reasonable range as compared to the rates charged by
qualified brokers to other institutional investors as such rates may become
known from available information. The Trust recognizes that, on any particular
transaction, a higher than usual commission may be paid due to the difficulty of
the transaction in question. The Advisor and/or Sub-Advisor is also authorized
to consider sales of shares as a factor in the selection of brokers to execute
brokerage and principal transactions, subject to the requirements of "best
execution," as defined above.
4. Allocation of Expenses
The Advisor agrees that it will furnish the Trust, at the Advisor's
expense, with all office space, facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. The Advisor will
also pay all compensation of all Trustees, officers and employees of the Trust
who are affiliated persons of the Advisor. All costs and expenses not expressly
assumed by the Advisor under this Agreement shall be paid by the Trust,
including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
Trustees other than those affiliated with the Advisor; (v) legal and audit
expenses; (vi) fees and expenses of the Trust's custodian, shareholder servicing
or transfer agent and accounting services agent; (vii) expenses incident to the
issuance of its shares, including stock certificates and issuance of shares on
the payment of, or reinvestment of, dividends; (viii) fees and expenses incident
to the registration under Federal or state securities laws of the Trust or its
shares; (ix) expenses of preparing, printing and mailing reports and notices,
proxy material and prospectuses to shareholders of the Trust; (x) all other
expenses incidental to holding meetings of the Trust's shareholders; (xi) dues
or assessments of or contributions to the Investment Company Institute or any
successor or other industry association; (xii) such non-recurring expenses as
may arise, including litigation affecting the Trust and the legal obligations
which the Trust may have to indemnify its officers and Trustees with respect
thereto; and (xiii) all expenses which the Trust or a Fund agrees to bear in any
distribution agreement or in any plan adopted by the Trust and/or a Fund
pursuant to Rule 12b-1 under the Act.
5. Compensation of the Advisor
(a) The Trust agrees to pay the Advisor and the Advisor agrees to accept as
full compensation for all services rendered by the Advisor as such, an annual
management fee, payable monthly and computed on the average daily net asset
value of each Fund as shown on Exhibit A attached hereto.
(b) In the event the expenses of a Fund (including the fees of the Advisor
and amortization of organization expenses, but excluding interest, taxes,
brokerage commissions, extraordinary expenses and sales charges and distribution
fees) for any fiscal year exceed the limits set by applicable regulations of
state securities commissions, the Advisor will reduce its fee by up to the
amount of such excess. Any such reductions are subject to readjustment during
the year. The payment of the management fee at the end of any month will be
reduced or postponed or, if necessary, a refund will be made to a Fund so that
at no time will there be any accrued, but unpaid, liability under this expense
limitation.
6. Duration and Termination
(a) This Agreement shall go into effect for The AAL Capital Growth Fund,
The AAL Income Fund, The AAL Municipal Bond Fund and The AAL Money Market Fund
on the first business day following approval by a vote of a "majority" (as
defined in the Act) of the outstanding voting securities of the Fund, replacing
any prior agreement; and for additional funds initiated after the date of this
Agreement, on such date as specified on Schedule A hereto; and shall, unless
terminated as hereinafter provided, continue in effect thereafter from year to
year, but only so long as such continuance is specifically approved at least
annually by a majority of the Trust's Board of Trustees, or by the vote of the
holders of a "majority" (as defined in the Act) of the outstanding voting
securities of the Fund, and, in either case, a majority of the Trustees who are
not parties to this Agreement or "interested persons" (as defined in the Act) of
any such party cast in person at a meeting called for the purpose of voting on
such approval.
(b) This Agreement may be terminated by the Advisor at any time without
penalty upon giving the Trust sixty (60) days' written notice (which may be
waived by the Trust) and may be terminated by the Trust at any time without
penalty upon giving the Advisor sixty (60 days' written notice (which notice may
be waived by the Advisor), provided that such termination by the Trust shall be
directed or approved by the vote of a majority of all of its Trustees in office
at the time or by the vote of the holders of a majority of the outstanding
voting securities of the Trust, or with respect to any Fund by the vote of a
majority of the outstanding voting share of such Fund. This Agreement shall
automatically terminate in the event of its "assignment" (as defined in the
Act).
(c) The Trust hereby agrees that if (i) the Advisor ceases to act as
investment advisor to the Trust and (ii) continued use of the Trust's present
name would create confusion in the context of the Advisor's business or that of
Aid Association for Lutherans or its affiliates, the Trust will use its best
efforts to change its name in order to delete the abbreviation "AAL" from its
name.
7. Agreement Binding Only on Trust Property
The Advisor understands that the obligations of this Agreement are not
binding upon any shareholder of the Trust personally, but bind only the Trust's
property; the advisor represents that it has notice of the provisions of the
Trust's Declaration of Trust disclaiming shareholder liability for acts or
obligations of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons and their seals to be
hereunto affixed, all as of the day and year first above written.
ATTEST: THE AAL MUTUAL FUNDS
/s/ Xxxxxx X. Same /s/ Xxxx X. Xxxxxx
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Xxxxxx X. Same, Secretary Xxxx X. Xxxxxx, President
ATTEST: AAL ADVISORS INC.
/s/ Xxxxxx X. Same /s/ Xxxxxxxx Xxxx Xxxxxxx
----------------------------- -------------------------------
Xxxxxx X. Same, Secretary Xxxxxxxx Xxxx Xxxxxxx, President
EXHIBIT A TO THE AAL MUTUAL FUNDS
INVESTMENT ADVISORY AGREEMENT
1. The AAL Capital Growth Fund (effective December 21, 1990)
The management fee for this Fund, calculated in accordance with paragraph 5
of The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual
rate of 0.75 of 1% on the first $250 million of average daily net assets and
0.65 of 1% on average daily net assets over $250 million.
2. The AAL Income Fund (effective December 21, 1990)
The management fee for this Fund, calculated in accordance with paragraph 5
of The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual
rate of 0.60 of 1% on the first $250 million of average daily net assets and
0.525 of 1% on average daily net assets over $250 million.
3. The AAL Municipal Bond Fund (effective November 28, 1990)
The management fee for this Fund, calculated in accordance with paragraph 5
of The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual
rate of 0.60 of 1% on the first $250 million of average daily net assets and
0.525 of 1% on average daily net assets over $250 million.
4. The AAL Money Market Fund (effective December 21, 1990)
The management fee for this Fund, calculated in accordance with paragraph 5
of The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual
rate of 0.50 of 1% on the first $500 million of average daily net assets and
0.45 of 1% on average daily net assets over $500 million.
AMENDMENT NO. 9
TO
INVESTMENT ADVISORY AGREEMENT
The Investment Advisory Agreement between The AAL Mutual Funds and AAL Capital
Management Corporation (f/k/a AAL Advisors, Inc.), effective November 28, 1990,
is hereby amended, effective December 29, 1997, as follows:
1. Schedule A attached to the Investment Advisory Agreement is modified to
add The AAL Balanced Fund and a revised fee schedule for The AAL Bond
and Municipal Bond Funds (effective September 1, 1997).
An amended Schedule A, December 29, 1997, is attached hereto.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be signed by
the respective officers effective as of December 29, 1997.
ATTEST: THE AAL MUTUAL FUNDS
/s/ Xxxxxx X. Same /s/ Xxxxxx X. Xxxxxxxx
----------------------------- -------------------------------
Xxxxxx X. Same, Secretary Xxxxxx X. Xxxxxxxx, President
ATTEST: AAL CAPITAL MANAGEMENT
CORPORATION
/s/ Xxxxxx X. Same /s/ Xxxxxx X. Xxxxxxxx
----------------------------- -------------------------------
Xxxxxx X. Same, Secretary Xxxxxx X. Xxxxxxxx, President
EXHIBIT A
AMENDMENT NO. 9
TO
THE AAL MUTUAL FUNDS INVESTMENT ADVISORY AGREEMENT
DATED NOVEMBER 28, 1990
1. The AAL Capital Growth Fund (effective November 1, 1995)
The Management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.70 of 1% on the first $250 million of average daily net assets, 0.65 of 1%
on average daily net assets on the next $250 million of average daily net
assets, 0.575 of 1% on the next $500 million of average daily net assets and
0.50 of 1% on the average daily net assets over $1 billion.
2. The AAL Bond Fund (f/k/a The AAL Income Fund) (effective September 1, 1997)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% on the first $250 million of average daily net assets and 0.45 of
1% on average daily net assets over $250 million.
3. The AAL Municipal Bond Fund (effective September 1, 1997)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% on the first $250 million of average daily net assets and 0.45 of
1% on average daily net assets over $250 million.
4. The AAL Money Market Fund (effective December 21, 1990)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% on the first $500 million of average daily net assets and 0.45 of
1% on average daily net over $500 million.
5. The AAL U.S. Government Zero Coupon Target Fund, Series 2001 (effective
November 13, 1991)
The management fee for this Fund, calculated in accordance with paragraph t of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% on average daily net assets.
6. The AAL U.S. Government Zero Coupon Target Fund, Series 2006 (effective
November 13, 1991)
7. The AAL Mid Cap Stock Fund (f/k/a The AAL Small Company Stock Fund )
(effective November 1, 1995)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.75 of 1% on the first $200 million of average daily net assets and 0.65 of
1% on average daily net assets over $200 million.
8. The AAL Equity Income Fund (f/k/a The AAL Utilities Fund) (effective
November 1, 1995)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% on the first $250 million and 0.45 of 1% on average daily net
assets over $250 million.
9. The AAL International fund (effective August 1, 1995)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 1% of average daily net assets.
10. The AAL Small Cap Stock Fund (effective July 1, 1996)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.75 of 1% on the first $200 million of average daily net assets and 0.65 of
1% on average daily net assets over $200 million.
11. The AAL High Yield Bond Fund (effective January 8, 1997)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.60 of 1% on average daily net assets.
12. The AAL Balanced Fund (effective December 29, 1997)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.60 of 1% on average daily net assets.
