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 "Adviser").
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 Adviser to act as investment adviser 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 Adviser 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 Adviser may engage, on behalf
of the Trust or any Fund, the services of a Sub-Adviser, subject to any
limitations imposed by the Investment Company Act of 1940 (the "Act").
2. Duties and Obligations of the Adviser 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
Adviser (and the Sub-Adviser when authorized by the Adviser), 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
Adviser may select.
(b) Any investment purchases or sales made by the Adviser and/or any
Sub-Adviser 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 from 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 Adviser 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 Adviser
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 to other
communications of shareholders, if any, which are directed to the
Adviser, 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 Adviser'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 Adviser under this
Agreement may be furnished through the medium of any directors,
officers or employees of the Adviser.
(d) The Adviser 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 Adviser (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity
affiliated with the Adviser) the Adviser 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 or 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 Adviser (and its officers, directors,
agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Adviser) from any liability
arising from the Adviser'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 Adviser or any "affiliated
person" (as defined in the Act) of the Adviser from acting as
investment adviser or manager and/or principal underwriter for any
other person, firm or corporation and shall not in any way limit or
restrict the Adviser 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 Adviser 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 Adviser 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 Adviser 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 Adviser
and/or any Sub-Adviser shall select such broker-dealers ("brokers") as shall, in
the Adviser's or Sub-Adviser'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 Adviser and/or Sub-Adviser is
authorized to consider the reliability, integrity and financial condition of the
broker. The Adviser and/or Sub-Adviser is also authorized to consider whether
the broker provides brokerage and/or research services to the Trust and/or other
accounts of the Adviser or Sub-Adviser. The commissions paid to such brokers may
be higher than another broker would have charged is a good faith determination
is made by the Adviser and/or Sub-Adviser that the commission is reasonable in
relation to the services provided, viewed in terms of either that particular
transaction or the Adviser's or Sub-Adviser's overall responsibilities as to the
accounts as to which it exercises investment discretion. The Adviser and/or
Sub-Adviser 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 Adviser and/or Sub-Adviser shall be
prepared to show that commissions paid (i) were for purposes contemplated by
this Agreement; (ii) provide lawful and appropriate assistance to the Adviser
and/or Sub-Adviser in the performance of its decision-making responsibilities;
and (iii) were within a 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 Adviser and/or Sub-Adviser 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 Adviser agrees that it will furnish the Trust, at the Adviser's
expense, with all office space, facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. The Adviser will
also pay all compensation of all Trustees, officers and employees of the Trust
who are affiliated persons of the Adviser. All costs and expenses not expressly
assumed by the Adviser 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 Adviser; (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 Adviser
(a) The Trust agrees to pay the Adviser and the Adviser agrees to accept
as full compensation for all services rendered by the Adviser 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 Adviser
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 Adviser
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 int he 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 Adviser at any time without
penalty upon giving the Trust sixty (60) days' written notice (which
notice may be waived by the Trust) and may be terminated by the Trust
at any time without penalty upon giving the Adviser sixty (60) days'
written notice (which notice may be waived by the Adviser), 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 shares 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 Adviser ceases to act as
investment adviser to the Trust and (ii) continued use of the Trust's
present name would create confusion in the context of the Adviser'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 Adviser 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 Adviser 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
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Xxxxxx X. Same, Secretary Xxxxxxxx Xxxx Xxxxxxx, President
EXHIBIT A
TO
THE AAL MUTUAL FUNDS INVESTMENT ADVISORY AGREEMENT
(DATED NOVEMBER 28, 1990)
1. The AAL Capital Growth 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 0.75 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 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.
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.
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 5 of The AAL Mutual Funds Investment Advisory Agreement,
shall be at the annual rate of 0.50 of 1% of average daily net assets.
6. The AAL U.S. Government Zero Coupon Target Fund, Series 2006
(effective November 13, 1991)
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% of average daily net assets.
AMENDMENT NO. 12
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 31, 1999, as follows:
1. Schedule A attached to the Investment Advisory Agreement is
modified to add The AAL Large Company Index Fund, The AAL Mid Cap
Index Fund, and The AAL Bond Index Fund.
A revised Exhibit A, effective as of the date of this Amendment No. 12 is
attached and incorporated herein.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be signed by
the respective officers effective as of December 31, 1999.
ATTEST: THE AAL MUTUAL FUNDS
By: /s/Xxxxxxxxx X. Xxxxxxx By: /s/Xxxxxx X. Same
--------------------------- ---------------------------
Xxxxxxxxx X. Xxxxxxx Xxxxxx X. Same
ATTEST: AAL CAPITAL MANAGEMENT CORPORATION
By: /s/Xxxxxxxxx X. Xxxxxxx By: /s/Xxxxxx X. Same
--------------------------- ---------------------------
Xxxxxxxxx X. Xxxxxxx Xxxxxx X. Same
EXHIBIT A
TO
THE AAL MUTUAL FUNDS INVESTMENT ADVISORY AGREEMENT
Dated November 28, 1990
1. The AAL Capital Growth Fund (effective September 1, 1998)
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 0.65 of 1% on the first $500 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% of average
daily net assets over $1 billion.
2. The AAL Bond Fund (effective September 1, 1998)
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 0.45 of 1% of average daily net assets.
3. The AAL Municipal Bond Fund (effective September 1, 1998)
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 0.45 of 1% of average daily assets.
4. The AAL Money Market Fund (effective date 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% of average daily net assets 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 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at the annual rate
of 0.50 of 1% of average daily net assets.
6. The AAL U.S. Government Zero Coupon Target Fund, Series 2006 (effective
November 13, 1991)
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% of average daily net assets.
7. The AAL Mid Cap Stock Fund (effective September 1, 1998)
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 $200 million of average daily net assets and 0.65 of
1% of average daily net assets over $200 million.
8. The AAL Equity Income Fund (f/k/a Utilities Fund) (effective September 1,
1998)
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 0.45 of 1% of average daily net assets.
9. The AAL International Fund (effective November 1, 1998)
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 0.65 of 1% on the first $50 million of average daily net assets and .60 of 1%
of average daily net assets over $50 million.
10. The AAL Small Cap Stock Fund (effective September 1, 1998)
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 $200 million of average daily net assets and 0.65 of
1% of average daily net assets over $200 million.
11. The AAL High Yield Bond Fund (effective September 1, 1998)
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 0.55 of 1% of average daily net assets.
12. The AAL Balanced Fund (effective September 1, 1998)
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 0.55 of 1% of average daily net assets.
13. The AAL Large Company Index Fund (effective December 31, 1999)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at an annual rate
of 0.25 of 1% on the first $50 million of average daily net assets and 0.175 of
1% of average daily net assets over $50 million.
14. The AAL Mid Cap Index Fund (effective December 31, 1999)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at an annual rate
of 0.25 of 1% on the first $50 million of average daily net assets and 0.20 of
1% of average daily net assets over $50 million.
15. The AAL Bond Index Fund (effective December 31, 1999)
The management fee for this Fund, calculated in accordance with paragraph 5 of
The AAL Mutual Funds Investment Advisory Agreement, shall be at an annual rate
of 0.25 of 1% on the first $50 million of average daily net assets and 0.175 of
1% of average daily net assets over $50 million.
