EXHIBIT (5)
MASTER ADVISORY CONTRACT
AGREEMENT made as of the day of , 1993 between
Brotherhood Research Corp., a corporation organized under the laws of the
State of Minnesota and having its principal place of business in
Minneapolis, Minnesota (the "Adviser"), and The Lutheran Brotherhood Family
of Funds, a Delaware business trust having its principal place of business
in Minneapolis, Minnesota (the "Trust").
WHEREAS, the Adviser is engaged principally in the business of rendering
investment management services and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust engages in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust presently offers shares in six series, the Lutheran
Brotherhood Fund, Lutheran Brotherhood Opportunity Growth Fund, Lutheran
Brotherhood Income Fund, Lutheran Brotherhood Municipal Bond Fund, Lutheran
Brotherhood Money Market Fund and Lutheran Brotherhood High Yield Fund, such
six series (the "Initial Funds"), together with all other series
subsequently established by the Trust with respect to which the Adviser
renders investment advisory services pursuant to the terms of this
Agreement, being herein collectively referred to as the "Funds" and
individually as a "Fund".
NOW THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF ADVISER.
(a) Initial Funds. The Trust hereby appoints the Adviser to act as
investment adviser to the Initial Funds for the period and on the terms
herein set forth. The Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
(b) Additional Funds. In the event that the Trust establishes one or more
series of shares other than the Initial Funds with respect to which it
desires to retain the Adviser to render management and investment advisory
services hereunder, it shall so notify the Adviser in writing (the
"Notice"), indicating the advisory fee to be payable with respect to the
additional series of shares. If the Adviser is willing to render such
services on the terms provided for herein, it shall execute and deliver the
Notice to the Trust, whereupon such series of shares shall become a Fund
hereunder and said Notice shall be attached to this agreement and when
attached shall be a part hereof.
2. DUTIES OF ADVISER.
The Adviser, at its own expense, shall furnish the following services and
facilities to the Trust and each of the Funds:
(a) Investment Program. The Adviser shall, subject to the provisions of
paragraph 11 hereof, (i) furnish continuously an investment program for each
Fund in compliance with that Fund's investment objective and policies as set
forth in the Trust's current Registration Statement, (ii) determine (subject
to the overall supervision and review of the Board of Trustees of the Trust)
what investments shall be purchased, held, sold or exchanged by each Fund
and what portion if any, of the assets of each Fund shall be held
uninvested, and (iii) make changes on behalf of the Trust in the investments
of each Fund.
3. ALLOCATION OF EXPENSES.
Except for the services or facilities to be provided by the Adviser set
forth in Paragraph 2 above, the Trust and Funds assume and shall pay all
expenses for all other Trust and Funds operations and activities and shall
reimburse the Adviser for any such expense incurred by the Adviser (it being
understood that the Trust shall allocate such expenses between or among its
funds to the extent contemplated by its Master Trust Agreement). The
expenses to be borne by the Trust and Funds shall include, without
limitation:
(a) all expenses of organizing the Trust or forming any series thereof;
(b) all expenses (including information, materials and services other than
services of the Adviser) of preparing, printing and mailing all annual,
semiannual and periodic reports, proxy materials and other communications
(including registration statements, prospectuses and amendments and
revisions thereto) furnished to existing shareholders of the Trust and/or
regulatory authorities;
(c) fees involved in registering and maintaining registration of the Trust
and its shares with the Securities and Exchange Commission and state
regulatory authorities;
(d) any other registration, filing or other fees in connection with
requirements of regulatory authorities;
(e) expenses, including the cost of printing of certificates relating to
the issuance of shares of the Trust and the Funds;
(f) to the extent not paid by the Trust's distributor, the expenses of
maintaining a shareholder account and furnishing, or causing to be
furnished, to each shareholder a statement of account, including the expense
of mailing such statements;
(g) taxes and fees payable by the Trust to federal, state or other
governmental agencies;
(h) expenses related to the redemption of its shares, including expenses
attributable to any program of periodic redemption;
(i) all issue and transfer taxes, brokers' commissions and other costs
chargeable to the Trust or the Funds in connection with securities
transactions to which the Trust is a party, including any portion of such
commissions attributable to research and brokerage services as defined by
Section 28(e) of the Securities Exchange Act of 1934, as amended from time
to time;
(j) the charges and expenses of the custodian appointed by the Trust, or
any depository utilized by such custodian, for the safekeeping of its
property;
(k) charges and expenses of any shareholder servicing agents, transfer
agents and registrars appointed by the Trust, including costs of servicing
shareholder investment accounts;
(l) charges and expenses of independent accountants retained by the Trust;
(m) legal fees and expenses in connection with the affairs of the Trust,
including legal fees and expenses in connection with registering and
qualifying its shares with federal and state regulatory authorities;
(n) compensation and expenses of Trustees of the Trust who are not
"interested persons" of the Trust (as defined in the 0000 Xxx);
(o) expenses of shareholders' and Trustees' meetings;
(p) membership dues in, and assessments of, the Investment Company
Institute or similar organizations;
(q) insurance premiums on fidelity, errors and omissions and other
coverages;
(r) expenses incurred in connection with any distribution plan adopted by
the Trust in compliance with Rule 12b-1 of the 1940 Act; and
(s) such other non-recurring expenses of the Trust as may arise, including
expenses of actions, suits, or proceedings to which the Trust is a party and
the legal obligation which the Trust may have to indemnify its Trustees or
shareholders with respect thereto.
4. ADVISORY FEE.
For the services and facilities to be provided by the Adviser as set forth
in Paragraph 2 hereof, the Funds shall pay to the Adviser and the Adviser
agrees to accept as full compensation for all services rendered hereunder,
an annual investment advisory fee equal to a percentage of the average daily
net assets of the applicable Fund as set forth on the following Annexes
hereto.
Lutheran Brotherhood Fund - Annex A
Lutheran Brotherhood Opportunity Growth Fund - Annex B
Lutheran Brotherhood Income Fund - Annex C
Lutheran Brotherhood Municipal Bond Fund - Annex D
Lutheran Brotherhood Money Market Fund - Annex E
Lutheran Brotherhood High Yield Fund - Annex F
The advisory fee of each Fund shall be accrued at the rate of 1/365th of the
annual rates shown in the aforementioned Annexes applied to the daily net
assets of such Fund computed as of the close of the New York Stock Exchange
on each day on which the Exchange is open and in the case of Saturdays,
Sundays and other days on which said Exchange will not be open, as of the
close of the last preceding day on which the Exchange shall have been open.
The fee so accrued during each calendar month shall be paid to the Adviser
monthly in arrears.
In the case of commencement or termination of this Agreement with respect to
any Fund during any calendar month, the fee with respect to such Fund for
that month shall be reduced proportionately based upon the number of
calendar days during which it is in effect, and the fee shall be computed
upon the average daily net assets of such Fund for the days during which it
is in effect.
The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation hereunder to the extent the Adviser may,
by notice to the Trust, voluntarily declare.
The Adviser agrees that if the total expenses of any Fund (exclusive of
interest, taxes, brokerage expenses, distribution expenses, extraordinary
items and any other items allowed to be excluded by applicable state law)
for any fiscal year of the Trust exceed the lowest expense limitation
imposed in any jurisdiction in which such Fund is then making sales of its
shares or in which its shares are then qualified for sale, the Adviser will
pay or reimburse such Fund for that excess up to the amount of its advisory
fee payable with respect to that Fund during that fiscal year. The amount
of the monthly advisory fee payable hereunder shall be reduced to the extent
that the monthly expenses of any Fund, on an annualized basis, would exceed
the foregoing limitation. At the end of each fiscal year of the Trust, if
the aggregate annual expenses chargeable to any Fund for that year exceed
the foregoing limitation based upon the average of the monthly average net
asset value of such Fund for the year, the Adviser will promptly reimburse
such Fund for the amount of such excess to the extent not already reimbursed
by reduction of the monthly advisory fee, but if such expenses are within
the foregoing limitation, any excess amount previously withheld from the
advisory fee during that fiscal year will be promptly paid over to the
Adviser.
In the event that this Agreement (i) is terminated with respect to any Fund
as of a date other than the last day of the fiscal year of the Trust or (ii)
commences with respect to any Fund as of a date other than the first day of
the fiscal year of the Trust, then the expenses of such Fund shall be
annualized and the Adviser shall pay to, or receive from, such Fund a pro
rata portion of the amount that the Adviser would have been required to pay
or would have received, if any, had this Agreement remained in effect with
respect to such Fund for the full fiscal year.
5. PORTFOLIO TRANSACTIONS.
In connection with the management of the investment and reinvestment of the
assets of the Trust, the Adviser, acting by its own officers, directors or
employees or by a duly authorized subcontractor, is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Trust. In executing portfolio transactions and selecting brokers or
dealers, if any, the Adviser will use reasonable efforts to seek on behalf
of a Fund the best overall terms available. In assessing the best overall
terms available for any transaction, the Adviser shall consider all factors
it deems relevant, including the breadth of the market in and the price of
the 'security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any (for the
specific transaction and on a continuing basis). In evaluating the best
overall terms available, and in selecting the broker or dealer, if any, to
execute a particular transaction, the Adviser may also consider the
brokerage and research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934) provided to any Fund of the Trust
and/or other accounts over which the Adviser or an affiliate of the Adviser
exercises investment discretion. The Adviser may pay to a broker or dealer
who provides such brokerage and research services a commission for executing
a portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if, but only if, the Adviser determines in good faith that such commission
was reasonable in relation to the value of the brokerage and research
services provided.
6. RELATIONS WITH TRUST.
Subject to and in accordance with the Master Trust Agreement and By-laws of
the Trust it is understood that Trustees, officers, agents and shareholders
of the Trust are or may be interested in the Adviser (or any successor
thereof) as directors, officers, or otherwise, that directors, officers,
agents and shareholders of the Adviser (or any successor) are or may be
interested in the Trust as Trustees, officers, shareholders or otherwise,
that the Adviser (or any such successor thereof) is or may be interested in
the Trust as a shareholder or otherwise and that the effect of any such
adverse interests shall be governed by said Agreement and Declaration of
Trust.
7. LIABILITY OF ADVISER.
Neither the Adviser nor its officers, directors, employees, agents or
controlling persons or assigns shall be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust or its shareholders in
connection with the matters to which this Agreement relates; provided that
no provision of this Agreement shall be deemed to protect the Adviser
against any liability to the Trust or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence in the performance of its duties or the reckless disregard
of its obligations and duties under this Agreement.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Initial Funds on the date hereof and, with respect to any additional Fund,
on the date of receipt by the Trust of the Notice in accordance with
paragraph l(b) hereof that the Adviser is willing to serve as Adviser with
respect to such Fund. Unless terminated as herein provided, this Agreement
shall remain in full force and effect for two years from the date hereof
with respect to the Initial Funds and, with respect to each additional Fund,
for two years from the date on which such Fund becomes a Fund hereunder.
Subsequent to such initial periods of effectiveness, this Agreement shall
continue in full force and effect for periods of one year thereafter with
respect to each Fund so long as such continuance with respect to such Fund
is approved at least annually (a) by either the Trustees of the Trust or by
vote of a majority of the, outstanding voting securities (as defined in the
0000 Xxx) of such Fund, and (b), in either event, by the vote of a majority
of the Trustees of the Trust who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(b) Amendment. Any amendment to this Agreement shall become effective with
respect to a Fund upon approval of the Adviser and a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of that Fund.
(c) Termination. This Agreement may be terminated with 'respect to any
Fund at any time, without payment of any penalty, by vote of the Trustees or
by vote of a majority of the outstanding voting securities (as defined in
the 0000 Xxx) of that Fund, or by the Adviser, in each case on sixty (60)
days' prior written notice to the other party.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
(e) Approval, Amendment or Termination by Individual Fund. Any approval,
amendment or termination of this Agreement by the holders of a majority of
the outstanding voting securities (as defined in the 0000 Xxx) of any Fund
shall be effective to continue, amend or terminate this Agreement with
respect to any such Fund notwithstanding (i) that such action has not been
approved by the holders of a majority of the outstanding voting securities
of any other Fund affected thereby, and (ii) that such action has not been
approved by the vote of a majority of the outstanding voting securities of
the Trust, unless such action shall be required by any applicable law or
otherwise.
9. SERVICES NOT EXCLUSIVE.
The services of the Adviser to the Trust hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to
others so long as its services hereunder are not impaired thereby.
10. SUBCONTRACTORS.
The Trust hereby agrees that the Adviser may subcontract for the performance
of any of the services contemplated to be rendered by the Adviser to any
Fund hereunder.
11. LIMITATION OF LIABILITY.
The term "The Lutheran Brotherhood Family of Funds" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the
Trust dated July 15, 1993 as the same may subsequently thereto have been, or
subsequently hereto may be, amended. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust
personally, but shall bind only the trust property of the Trust, as provided
in the Master Trust Agreement. The execution and delivery of this Agreement
have been authorized by the Trustees and signed by the President of the
Trust, acting as such, and neither such authorization by such Trustees and
shareholder nor such execution and delivery by such officer shall be deemed
to have been made by any of them individually or to impose any liability on
any of them personally, but shall bind only the trust property of the Trust
as provided in its Master Trust Agreement. The obligations of any Fund
hereunder shall be the exclusive obligation of that Fund and the Adviser can
only look to the assets of that Fund to satisfy any debt or obligation
incurred by that Fund hereunder.
12. RESERVATION OF NAME.
The parties hereby acknowledge that Lutheran Brotherhood has reserved the
right to grant the non-exclusive use of the name "Lutheran Brotherhood" or
any derivative thereof to any other investment company, investment adviser,
distributor or other business enterprise, and to withdraw from the Trust the
use of the name "Lutheran Brotherhood". The name "Lutheran Brotherhood"
will continue to be used by the Trust and any Fund hereunder only so long as
such use is agreeable to Lutheran Brotherhood.
13. MISCELLANEOUS
(a) Notice. Any notice 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 in writing for the receipt of such
notices.
(b) Severability. I any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall
not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
ATTEST: THE LUTHERAN BROTHERHOOD FAMILY
OF FUNDS
--------------------------------- By: ----------------------------------
, Secretary , President
ATTEST: LUTHERAN BROTHERHOOD RESEARCH CORP.
--------------------------------- By: ----------------------------------
, Secretary , President
ANNEX A
Lutheran Brotherhood Fund
Rates of Annual
Advisory Fee as
a Percentage of
Average Daily Average Daily
Net Assets Net Assets
------------- ---------------
On the portion of the Fund which is:
$500,000,000 or less .65%
over $500,000,000 but not over $1,000,000,000 .60%
Over $1,000,000,000 .55%
ANNEX B
Lutheran Brotherhood Opportunity Growth Fund
Rates of Annual
Advisory Fee as
a Percentage of
Average Daily Average Daily
Net Assets Net Assets
------------- ---------------
On the portion of the Fund which is:
$100.000.000 or less .75%
Over $100,000,000 but not over $250,000,000 .65%
Over $250,000,000 but not over $500,000,000 .60%
Over $500,000,000 but not over $1,000,000,000 .55%
Over $1,000,000,000 .50%
ANNEX C
Lutheran Brotherhood Income Fund
Rates of Annual
Advisory Fee as
a Percentage of
Average Daily Average Daily
Net Assets Net Assets
------------- ---------------
On the portion of the Fund which is:
$500,000.000 or less .60%
Over $500,000,000 but not over $1,000,000,000 .575%
Over $1,000,000,000 .55%
ANNEX D
Lutheran Brotherhood Municipal Bond Fund
Rates of Annual
Advisory Fee as
a Percentage of
Average Daily Average Daily
Net Assets Net Assets
------------- ---------------
On the portion of the Fund which is:
$500,000,000 or less .575%
Over $500,000,000 but not over $1,000,000,000 .5625%
Over $1,000,000,000 .55%
ANNEX E
Lutheran Brotherhood Money Market Fund
Rates of Annual
Advisory Fee as
a Percentage of
Average Daily Average Daily
Net Assets Net Assets
------------- ---------------
On the portion of the Fund which is:
$500,000,000 or less .50%
Over $500,000,000 but not over $1,000,000,000 .475%
Over $1,000,000,000 but not over $1,500,000,000 .45%
Over $1,500,000,000 but not over $2,000,000,000 .425%
Over $2,000,000,000 .40%
ANNEX F
Lutheran Brotherhood High Yield Fund
Rates of Annual
Advisory Fee as
a Percentage of
Average Daily Average Daily
Net Assets Net Assets
------------- ---------------
On the portion of the Fund which is:
$500,000,000 or less .65%
Over $500,000,000 but not over $1,000,000,000 .60%
Over $1,000,000,000 .55%
