FIDELITY BOND ALLOCATION AGREEMENT Pearl Mutual Funds, Pearl Management Company, and Pearl Management Company Retirement Plan Dated June 27, 2006

CPP 4.4B

FIDELITY BOND ALLOCATION AGREEMENT

Pearl Mutual Funds, Pearl Management Company, and

Pearl Management Company Retirement Plan

Dated June 27, 2006

PEARL MUTUAL FUNDS (“PMF”), a Massachusetts business trust registered under the Investment Company Act of 1940 as an open-end diversified management investment company (including its two Funds, Pearl Total Return Fund and Pearl Aggressive Growth Fund), PEARL MANAGEMENT COMPANY (“PMC”), an Iowa corporation, and PEARL MANAGEMENT COMPANY RETIREMENT PLAN (“PMCRP”), a retirement plan and trust established and maintained by Pearl Management Company (each an “Insured” and collectively the “Insureds”) make this Agreement:

1. Joint Insured Bond; Coverage Amounts. This Agreement applies to the current joint insured fidelity bond and any future joint insured fidelity bond insuring the same Insureds, all as modified from time to time. PMC shall administer this Agreement on behalf of each Insured.

PMF and PMCRP each shall have primary coverage (minimum assured limit of liability) under the fidelity bond in an amount at least equal to the amount required by applicable laws and regulations from time to time. PMC shall have primary coverage as determined and required by this Agreement.

The total coverage (aggregate limit of liability) of the fidelity bond shall be determined by PMF’s Board of Trustees from time to time and shall be equal to or in excess of the total of the required primary coverage amounts of the three Insureds.

Subject to paragraph 2, the current fidelity bond and current amounts as of June 27, 2006 are:

Bond: Financial Institution Bond, Standard Form 14, issued by The Cincinnati Insurance Company, including endorsements
Aggregate limit of liability: $ 3,000,000
Required primary coverage amounts:		PMF $525,000
		PMCRP 175,000
		PMC 500,000

Fidelity Bond Allocation Agreement 6-06 CPP 4.4B

2. Increased Coverage. The primary coverage amount of PMF and the primary coverage amount of PMCRP shall promptly be increased whenever required to comply with applicable federal statutes and regulations, including but not limited to Rule 17g-1 under the Investment Company Act of 1940. Each such increase shall automatically increase the amount stated in paragraph 1 above as the required primary coverage amount for that Insured, and this Agreement need not be amended to reflect the increased amount.

PMC shall promptly take action to increase the total coverage amount (aggregate limit of liability) of the fidelity bond when and to the extent that (a) PMF’s Board of Trustees decides to increase the total coverage amount or (b) an increase in the total coverage amount is necessary because a required increase in the primary coverage amount of PMF or PMCRP would otherwise cause the total of the required primary coverage amounts of the three Insureds to exceed the total coverage amount of the fidelity bond.

3. PMC Shall Pay All Premiums as PMC Expense. Effective January 1, 2006, all premiums for the fidelity bond, including the premium for each increase in the total coverage amount (aggregate limit of liability) and including each future initial or renewal premium, shall be paid by PMC as an expense of PMC. PMC waives with regard to the fidelity bond the provisions of paragraph 4(l) of the Investment Management Agreement between PMF and PMC, which provides that PMF shall pay “All expenses of bond and insurance coverage required by law or deemed advisable by the Board.”

4. Allocation of Proceeds of Bond. The fidelity bond is a “claims made” insurance policy. If a loss occurs, proceeds of the fidelity bond shall be allocated in this manner:

a. As used in this Agreement, a “policy year” is the period of twelve months beginning on the month and day on which the policy period begins. A “party loss” is the insured loss (including all related expenses) of a party (which includes the Trustees, Directors, Officers, and other insured employees and agents of a party) that relates to a claim made by that party under the fidelity bond relating to a particular policy year.

b. If only one Insured incurs a party loss relating to a particular policy year, the proceeds of the fidelity bond for that policy year are allocated to that Insured.

c. If more than one Insured incurs a party loss relating to a particular policy year, the proceeds of the fidelity bond for that policy year shall first

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Fidelity Bond Allocation Agreement 6-06 CPP 4.4B

be allocated among the Insureds in proportion to their required primary coverage amounts in effect as of the beginning of that policy year, but the allocation to each Insured shall not exceed that Insured’s party loss relating to that policy year. If for the particular policy year, after initial allocation, there are remaining proceeds of the fidelity bond and one or more Insureds have party losses that have not been paid in full, the remaining proceeds shall be further allocated to the Insured or Insureds having excess losses in proportion to their required primary coverage amounts, with such allocation repeated until all such losses have been paid or until the total coverage amount of the fidelity bond has been exhausted.

d. If all party losses relating to a particular policy year are not paid at the same time, the Insureds who claim party losses for that policy year shall make appropriate provisions which they deem suitable to the particular circumstances (taking into account the amount of any payment received, the amounts, nature, and expected results of any remaining claims, and all other relevant factors) to permit a later reallocation of the amounts paid.

5. Notices. Each Insured shall promptly give to the insurer all notices required of it under the fidelity bond and shall send a copy of each such notice to the other Insureds.

6. Effective Date. This Agreement shall be effective as of May 3, 2006, which is the effective date of the endorsement increasing the total coverage amount of the fidelity bond to $3,000,000. However, the effective date of paragraph 3 shall be January 1, 2006. This Agreement replaces the previous Fidelity Bond Allocation Agreement. This Agreement has been approved by PMF’s Board of Trustees.

7. Amendment. This Agreement may be amended from time to time by written agreement of all Insureds.

8. Termination. Any Insured may terminate this Agreement by giving the other Insureds at least sixty days written notice. This Agreement shall terminate as to any Insured as of the date when that Insured ceases to be an Insured under the fidelity bond. However, any termination shall not affect the rights and obligations that have attached under this Agreement to a terminating party before the termination becomes effective.

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Fidelity Bond Allocation Agreement 6-06 CPP 4.4B

Executed at Muscatine, Iowa, as of June 27, 2006. This Agreement is executed in multiple counterparts, each of which shall be deemed to be an original; but all counterparts together shall constitute only one instrument.

PEARL MUTUAL FUNDS
By:		/s/ Xxxxxx X. Xxxx
		Xxxxxx X. Xxxx
		President

PEARL MANAGEMENT COMPANY
By:		/s/ Xxxxxxx X. Xxxxxxxx
		Xxxxxxx X. Xxxxxxxx
		Vice President

PEARL MANAGEMENT COMPANY RETIREMENT PLAN

By:		/s/ Xxxxxx X. Xxxx
		Xxxxxx X. Xxxx
		Trustee and Plan Administrator

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