INVESTMENT ADVISORY AGREEMENT
AGREEMENT, effective commencing on July 21, 2003, between COUNTRY TRUST
BANK, a federal thrift, (the "Adviser") and COUNTRY MUTUAL FUNDS TRUST, a
Delaware statutory trust, (the "Fund"), on behalf of each Fund series set forth
in Appendix A (each, a "Portfolio").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end, diversified management investment
company;
WHEREAS, the Fund wishes to retain the Adviser to render investment
advisory services to the Portfolios, and the Adviser is willing to furnish such
services to the Portfolios;
WHEREAS, each Portfolio's shareholders will include: (i) separate accounts
maintained by insurance companies that have entered into participation
agreements with the Trust in order to fund variable life insurance policies and
variable annuity contracts; (ii) qualified retirement plans outside the separate
account context; and (iii) the Adviser and/or any of its affiliates;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Fund and the Adviser as follows:
1. Appointment. The Fund hereby appoints the Adviser to act as investment
adviser to the Portfolios for the periods and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the Trustees
of the Fund, the Adviser will (a) provide a program of continuous investment
management for each Portfolio in accordance with that Portfolio's investment
objectives, policies and limitations as stated in the Fund's Prospectus and
Statement of Additional Information included as part of the Fund's Registration
Statement filed with the Securities and Exchange Commission, as they may be
amended from time to time, copies of which shall be provided to the Adviser by
the Fund; (b) make investment decisions for the Fund; and (c) place orders to
purchase and sell securities for the Fund.
In performing its investment management services to the Fund hereunder, the
Adviser will provide the Fund with ongoing investment guidance and policy
direction, including oral and written research, analysis, advice, statistical
and economic data and judgments regarding individual investments, general
economic conditions and trends and long-range investment policy. The Adviser
will determine the securities, instruments, repurchase agreements, options and
other investments and techniques that each Portfolio will purchase, sell, enter
into or use, and will provide an ongoing evaluation of the portfolio assets and
liabilities of each Portfolio. The Adviser will determine what portion of the
portfolio of each Portfolio shall be invested in securities and other assets,
and what portion if any, should be held uninvested.
The Adviser further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Internal Revenue Code (the "Code") and all other applicable federal and state
laws and regulations, and with any applicable procedures adopted by the
Trustees;
(b) use reasonable efforts to manage each Portfolio so that it will
qualify, and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder, as well as to manage
each Portfolio in a manner that complies with the requirements of Section 817(h)
of the Code;
(c) place orders pursuant to its investment determinations for each
Portfolio directly with the issuer, or with any broker or dealer, in accordance
with applicable policies expressed in the Fund's Prospectus and/or Statement of
Additional Information and in accordance with applicable legal requirements;
(d) furnish to the Fund whatever statistical information the Fund may
reasonably request with respect to each Portfolio's assets or contemplated
investments. In addition, the Adviser will keep the Fund and the Trustees
informed of developments materially affecting the portfolio assets and
liabilities of each Portfolio and shall, on the Adviser's own initiative,
furnish to the Fund from time to time whatever information the Adviser believes
appropriate for this purpose;
(e) make available to the Fund's administrator, U.S. Bancorp Fund Services,
LLC (the "Administrator"), and the Fund, promptly upon their request, such
copies of its investment records and ledgers with respect to the Fund as may be
required to assist the Administrator and the Fund in their compliance with
applicable laws and regulations. The Adviser will furnish the Trustees with such
periodic and special reports regarding the Fund as they may reasonably request;
(f) immediately notify the Fund in the event that the Adviser or any of its
affiliates (1) becomes aware that it is subject to a statutory disqualification
that prevents the Adviser from serving as investment adviser pursuant to this
Agreement; or (2) becomes aware that it is the subject of an administrative
proceeding or enforcement action by the Securities and Exchange Commission
("SEC") or other regulatory authority; or (3) has a reasonable basis for
believing that any Portfolio has ceased to qualify under Subchapter M of the
Code or fails to comply with the requirements of Section 817(h) of the Code or
that such Portfolio might not so qualify or comply in the future. The Adviser
further agrees to notify the Fund immediately of any material fact known to the
Adviser respecting or relating to the Adviser that is not contained in the
Fund's Registration Statement regarding the Fund, or any amendment or supplement
thereto, but that is required to be disclosed thereon, and of any statement
contained therein that becomes untrue in any material respect; and
(g) vote proxies relating to the portfolio securities of each Portfolio in
the best interest of that Portfolio and its shareholders, and make available to
the Fund free of charge the Adviser's proxy voting policies and procedures, and
a record of all votes cast, with respect to such proxy voting on the Fund's
behalf.
3. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this Section 3, the Adviser shall pay the compensation and expenses,
including office expenses, of all its trustees, officers and employees who serve
as trustees, officers and employees of the Fund (including the Fund's share of
payroll taxes), and the Adviser shall make available, without expense to the
Fund, the service of its trustees, officers and employees who may be duly
elected trustees and officers of the Fund, subject to their individual consent
to serve and to any limitations imposed by law.
The Adviser shall not be required to pay any expenses of the Fund other
than those specifically allocated to the Adviser in this Section 3. In
particular, but without limiting the generality of the foregoing, the Adviser
shall not be responsible, except to the extent of the reasonable compensation of
such of the Fund's employees as are trustees, officers or employees of the
Adviser whose services may be involved, for the following expenses of the Fund:
organization and certain offering expenses of the Fund (including out-of-pocket
expenses, but not including the Adviser's overhead and employee costs); fees
payable to the Adviser and to any other Fund advisers or consultants; legal
expenses, auditing and accounting expenses; interest expenses; telephone, telex,
facsimile, postage and other communications expenses; taxes and governmental
fees; fees, dues and expenses incurred by or with respect to the Fund in
connection with membership in investment company trade organizations; fees
assessed against the Fund by the Public Company Accounting Oversight Board; cost
of insurance relating to fidelity coverage for the Fund's trustees, officers and
employees, fees and expenses of the Fund's Administrator or of any custodian,
subcustodian, transfer agent, registrar, or dividend disbursing agent of the
Fund; payments to the Administrator for maintaining the Fund's financial books
and records and calculating its daily net asset value; other payments for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates; other
expenses in connection with the issuance, offering, distribution or sale of
securities issued by the Fund; expenses relating to investor and public
relations; expenses of registering and qualifying shares of the Fund for sale;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; brokerage commissions or other costs of acquiring
or disposing of any portfolio securities or other assets of the Fund, or of
entering into other transactions or engaging in any investment practices with
respect to the Fund; expenses of printing and distributing Prospectuses,
Statements of Additional Information, reports, notices and dividends to
stockholders; costs of stationery; any litigation expenses; costs of
stockholders' and other meetings; the compensation and all expenses
(specifically including travel expenses relating to the Fund's business) of
officers, trustees and employees of the Fund who are not officers, trustees,
employees, or otherwise interested persons of the Adviser.
4. Compensation. As compensation for the services provided and expenses
assumed by the Adviser under this Agreement, the Fund will pay the Adviser on
the tenth day of each calendar month an advisory fee computed daily at an annual
rate equal to the percentage of each of the Portfolios' average daily net
assets, as listed on Exhibit A. The value of net assets of the Fund shall always
be determined pursuant to the applicable provisions of the Fund's Declaration of
Trust, the Registration Statement and the 1940 Act. If the determination of net
asset value of any Portfolio is suspended for any particular business day, then
for the purposes of this Section 4, the value of the net assets of that
Portfolio as last determined shall be deemed to be the value of its net assets
for that day. If the determination of the net asset value of the shares of any
Portfolio has been so suspended for a period including any month end when the
Adviser's compensation is payable at the end of such month, then such
compensation shall be computed on the basis of the value of the net assets of
the Fund as last determined (whether during or prior to such month). If the Fund
determines the value of the net assets of any Portfolio more than once on any
day, then the last such determination thereof on that day shall be deemed to be
the sole determination thereof on that day for the purposes of this Section 4.
5. Books and Records. The Adviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31 under the
1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. The Adviser also
agrees that records it maintains and preserves pursuant to Rules 31a-1 and 31a-2
under the 1940 Act and otherwise in connection with its services hereunder are
the property of the Fund and will be surrendered promptly to the Fund upon its
request. The Adviser further agrees that it will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Adviser shall exercise
its best judgment in rendering the services provided by it under this Agreement.
The Adviser shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund or the holders of the Fund's shares in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Fund or to holders of the Fund's shares to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or negligence on its part in the performance of its duties or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement. As used in this Section 6, the term "Adviser" shall include any
officers, trustees, employees, or other affiliates of the Adviser performing
services with respect to the Fund.
7. Services Not Exclusive. It is understood that the services of the
Adviser are not exclusive, and that nothing in this Agreement shall prevent the
Adviser from providing similar services to other investment companies or to
other series of investment companies, or from engaging in other activities,
provided such other services and activities do not, during the term of this
Agreement, interfere in a material manner with the Adviser's ability to meet its
obligations to the Fund hereunder. When the Adviser recommends the purchase or
sale of a security for other investment companies and other clients, and at the
same time the Adviser recommends the purchase or sale of the same security for
the Fund, it is understood that in light of its fiduciary duty to the Fund, such
transactions will be executed on a basis that is fair and equitable to the Fund.
In connection with purchases or sales of portfolio securities for the account of
the Fund, neither the Adviser nor any of its trustees, officers or employees
shall act as a principal or agent or receive any commission. If the Adviser
provides any advice to its clients concerning the shares of the Fund, the
Adviser shall act solely as investment counsel for such clients and not in any
way on behalf of the Fund.
8. Duration and Termination. This Agreement shall continue until July 31,
2005, and thereafter shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by (i) the
Trustees or (ii) a vote of a "majority" (as defined in the 0000 Xxx) of the
Fund's outstanding voting securities (as defined in the 1940 Act), provided that
in either event the continuance is also approved by a majority of the Trustees
who are not "interested persons" (as defined in the 0000 Xxx) of any party to
this Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated: (a) at any time without penalty by the Fund upon the vote of a
majority of the Trustees or by vote of the majority of the Fund's outstanding
voting securities, upon sixty (60) days' written notice to the Adviser or (b) by
the Adviser at any time without penalty, upon sixty (60) days' written notice to
the Fund. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).
9. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) a majority of the outstanding
voting securities of the Fund, and (ii) a majority of the Trustees, including a
majority of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
10. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of Illinois,
provided that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or rules or orders of the SEC thereunder. In addition, where the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is relaxed by a rule, regulation or order of the SEC, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
(b) The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the Adviser as an
agent of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of July 21, 2003.
COUNTRY TRUST BANK
By: /s/ Xxxxxx X. Xxxx, Xx.
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Xxxxxx X. Xxxx, Xx.
Executive Vice President & Trust Officer
COUNTRY MUTUAL FUNDS TRUST
By: /s/ Xxxxxx X. XxXxxx
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Xxxxxx X. XxXxxx
Vice President
EXHIBIT A
COUNTRY VP Growth Fund .75%
COUNTRY VP Balanced Fund .75%
COUNTRY VP Short-Term Bond Fund .50%
COUNTRY XX Xxxx Fund .75%
