CMC FUND TRUST
CMC SHORT TERM BOND FUND
INVESTMENT ADVISORY CONTRACT
This Agreement is made the 9th day of January, 1998
between CMC FUND TRUST, an Oregon business trust, (the "Fund")
and COLUMBIA MANAGEMENT CO., an Oregon corporation having its
principal place of business in Portland, Oregon (the
"Adviser"). The Fund is registered as an open-end investment
company pursuant to the Investment Company Act of 1940 (the
"Act"). The Adviser is registered as an investment adviser
pursuant to the Investment Advisers Act of 1940. The Fund has
established a fourth series of shares, referred to as "CMC
Short Term Bond Fund" (the "Series"), and this Agreement
relates to services to be performed by the Adviser with respect
to that Series.
The parties agree as follows:
1. Duties of Adviser. With respect to the Series, the
Adviser shall regularly provide the Fund with research, advice,
and supervision with respect to investment matters and shall
furnish continuously an investment program, recommend what
securities shall be purchased or sold and what portion of the
Fund's assets shall be held invested or uninvested, subject
always to the provisions of the Act and the Fund's Declaration
of Trust and Bylaws, and amendments thereto, which amendments
shall be furnished to the Adviser by the Fund. The Adviser
shall take any steps necessary or appropriate to carry out its
decisions in regard to the foregoing matters and the general
conduct of the business of the Fund. The Adviser may take into
consideration receipt of research and statistical information
and other services rendered to the Fund in the allocation of
commissions from portfolio brokerage business.
2. Allocation of Charges and Expenses.
(a) With respect to the Series, the Adviser shall pay or
reimburse the Fund for payments made by the Fund for all
executive salaries and executive expenses, office rent of the
Fund, ordinary office expenses (other than the expense of
clerical services relating to the administration of the Fund),
and for any other expenses that, if otherwise borne by the
Fund, would cause the Fund to "be deemed to be acting as a
distributor of securities of which it is the issuer, other than
through an underwriter," pursuant to Rule 12b-1 under the Act.
The Adviser shall provide investment advisory, statistical, and
research facilities and all clerical services relating to
research, statistical, and investment work with respect to the
Series.
(b) The Adviser shall not be required to pay any expenses
of the Fund other than those enumerated in this Agreement. The
Fund will assume all other costs, including the cost of its
custodian, legal, auditing, and accounting expenses,
disinterested directors' fees, taxes, and governmental fees,
interest, brokers' commissions, transaction expenses, cost of
stock certificates, and any other expenses (including clerical
expenses) of issue, sale, repurchase, or redemption of shares,
expenses of registering or qualifying shares for sale, transfer
taxes, and all expenses of preparing the Fund's registration
statement and prospectus, and the cost of printing and
delivering to shareholders prospectuses and reports.
3. Compensation of the Adviser. For the services to be
rendered, the facilities to be furnished, and the payments to
be made by the Adviser, as provided in Sections 1 and 2 hereof,
for each calendar month the Fund shall pay to the Adviser a fee
computed at the annual rate of .25 of 1 percent of daily net
assets of the Series. If the asset value is not required to be
determined on any particular business day, then for the
purposes of this Section 3, the asset value of a share as last
determined shall be deemed to be the asset value of a share as
of the close of business on that day. If there is no business
day in any calendar month, the fee shall be computed on the
basis of the asset value of a share as last determined,
multiplied by the average number of shares outstanding on the
last day of the month.
4. Covenants of the Adviser. In connection with
purchases or sales of portfolio securities for the account of
the Fund, neither the Adviser nor any officer, director, or
employee of the Adviser shall act as a principal. The Adviser
covenants that it and its employees will comply with investment
restrictions of the Fund's Bylaws applicable to them. If the
Adviser or any of its affiliates give any advice to clients
concerning the shares of the Fund, it will act solely as
investment counsel for the clients and not on behalf of the
Fund.
5. Limitation on Liability of Adviser. The Adviser
shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the
matters to which this agreement relates, except a loss
resulting from willful malfeasance, bad faith, or gross
negligence on the part of the Adviser in the performance of its
duties or from reckless disregard by the Adviser of its
obligations and duties under this Agreement. The federal
securities laws impose liabilities under certain circumstances
on persons who act in good faith, and therefore nothing herein
shall in any way constitute a waiver or limitation of any
rights which the Fund may have under any federal securities
laws.
6. Duration and Termination of this Agreement.
(a) This Agreement shall remain in force for two years
from the date hereof, and it may be continued from year to year
thereafter if approved annually by a vote of a majority of the
Fund's shareholders or by its trustees and in either case a
vote of a majority of the trustees who are not parties to this
Agreement or interested persons 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 at any time without
the payment of any penalty by vote of the trustees of the Fund,
by vote of a majority of the outstanding shares of the Fund, or
by the Adviser, on 60 days written notice to the other party.
(c) This Agreement shall automatically terminate if it is
assigned. The Adviser shall notify the Fund of any change in
the officers or directors of the Adviser within a reasonable
time after the change. The terms "assignment," "vote of a
majority of the outstanding voting securities", and "interested
persons" shall have the meanings specified in the Act.
7. Applicable to Specific Series. The Adviser agrees
that, with respect to any obligation of the Fund under this
Agreement, the Adviser shall look only to the assets of the
Series to which this Agreement relates.
IN WITNESS WHEREOF the parties have caused this Agreement
to be executed as of the day and year first written above.
CMC FUND TRUST
By J. XXXXX XXXXXXX, XX.
Title: President
COLUMBIA MANAGEMENT CO.
By XXXXXX X. XXXXXXX
Title: Vice President
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