INVESTMENT ADVISORY AND
MANAGEMENT SERVICES
AGREEMENT
This Agreement made this 6th day of April, 1987, by and between FBL
VARIABLE INSURANCE SERIES FUND, a Massachusetts business trust (the "Fund"), and
FBL INVESTMENT ADVISORY SERVICES, INC., a Delaware corporation ("Adviser");
WITNESSETH:
In consideration of the mutual covenants herein contained, it is agreed as
follows:
1. ADVISORY SERVICES. Adviser shall furnish investment research and
advice to the Fund and shall manage the investment and reinvestment of the
assets of the portfolios currently offered by the Fund (the "Portfolios") and
its business affairs and matters incidental thereto, all subject to the
supervision of the Board of Trustees of the Fund, and the provisions of the
Declaration of Trust and By-Laws of the Fund and any resolutions, rules or
regulations adopted by the Board of Trustees of the Fund. Adviser shall for all
purposes herein provided be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized herein, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent for the
Fund. The Fund shall also be free to retain, at its own expense, other persons
to provide it with any services whatsoever including, but not limited to
statistical, factual or technical information or advice. The services of Adviser
herein provided are not to be deemed exclusive and Adviser shall be free to
render similar services or other services to others as long as its services
hereunder shall not be impaired thereby.
2. LIMITATIONS ON ADVISORY SERVICES. The Adviser shall perform the
services under this Agreement subject to the supervision and review of the Board
of Trustees and in a manner consistent with the objectives, policies, and
restrictions of each Portfolio of the Fund as stated in its Registration
Statement, as amended from time to time, the provisions of the Investment
Company Act and the applicable requirements of the Internal Revenue Code of
1986.
3. DUTIES OF ADVISER. In carrying out its obligations to manage the
investment and reinvestment of the assets of the Fund, the Adviser shall, as
appropriate and consistent with the limitations set forth in Paragraph 2 hereof:
(a) perform research and obtain and evaluate pertinent economic,
statistical, and financial data relevant to the investment
polices of each Portfolio of the Fund as set forth in the
prospectus for the Fund, as amended from time to time;
(b) consult with the Board and furnish to the Board
recommendations with respect to an overall investment strategy
for each Portfolio of the Fund for approval, modification, or
rejection by the Board;
(c) seek out specific investment opportunities and take such steps as
are necessary to implement any overall investment strategies
approved by the Board, including making and carrying out
day-to-day decisions to acquire or dispose of permissible
investments, management of investments and any other property of
the Fund, and providing or obtaining such services as may be
necessary in managing, acquiring or disposing of investments;
(d) regularly report to the Board with respect to the implementation
of any approved overall investment strategy and any other
activities in connection with management of the assets of the
Fund: and
(e) determine the composition of the assets of each of the
Portolios, including the purchase, retention or sale of the
securities and cash contained in those Portfolios.
4. REPORT TO BOARD. The Adviser, either through persons employed by it
or at its expense, shall furnish to the Board at least once every quarter a
schedule of investments and other assets held in the Portfolios and a statement
of all purchases and sales for the Portfolios, except short term money market
instruments, made during the period since the last report.
5. RECORDS. The Adviser agrees to preserve for the period prescribed by
the rules and regulations of the Securities and Exchange Commission all records
the Adviser maintains for the Fund as are required to be maintained pursuant to
said rules. The Adviser agrees that all such records shall be the property of
the Fund and shall be made available, within five (5) business days of the
request, to the Fund's accountants or auditors during regular business hours at
the Adviser's offices upon such prior written notice. In the event of
termination for any reason, all such records shall be returned promptly to the
Fund, free from any claim or retention of rights by the Adviser. In addition,
the Adviser will provide any materials, reasonably related to the investment
advisory services provided hereunder, as may be reasonably requested in writing
by the Trustees or officers of the Fund or as may be required by any
governmental agency having jurisdiction.
6. EXPENSES. Adviser shall at its expense furnish the Fund with office
space (in the offices of Adviser, or other such place or places as may be agreed
upon by the parties) and such office facilities, simple business equipment,
advisory, research and statistical facilities and clerical services and
personnel as
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may be necessary to administer the investment business of the Fund. Adviser
shall arrange, if desired by the Fund, for officers or employees of Adviser to
serve without salary from the Fund as Trustees, officers or agents of the Fund
if duly elected or appointed to such positions by the shareholders of the Fund
or by the Board of Trustees thereof and subject to their individual consent and
to any limitations imposed by law. Adviser will not be required to pay any other
expenses of the Fund other than those expressly enumerated herein; and in
particular, but without limiting the generality of the foregoing, Adviser will
not be required to pay any of the following Fund expenses: (1) expenses for
services rendered by a custodian including those for the safekeeping of the
Fund's securities or other property and for keeping its books of account, (2)
charges and expenses of independent auditors, of legal counsel, of any transfer
or dividend disbursing agent, or any registrar of the Fund, (3) costs of
acquiring and disposing of portfolio securities, (4) interest, if any, on the
obligations incurred by the Fund, (5) the cost of calculating the net asset
value of the Fund as provided in the Declaration of Trust and By-Laws of the
Fund, of stock certificates and of Trust reports, (6) membership dues in the
Investment Company Institute or any similar organization, (7) the cost of
reports, notices to shareholders and other shareholder communications and other
like miscellaneous expenses, (8) expenses of any registration and qualification
of shares of the Fund for sale under Federal Securities laws and the securities
laws of any state or other jurisdiction, (9) telephone and personnel costs
incurred by Adviser and allocable to the above, (10) taxes and fees payable to
Federal, State or other Governmental agencies or otherwise, and (11) expenses of
underwriting and selling shares of stock issued by the Fund. The Board shall
determine how expenses are to be allocated among the existing Portfolios, and
the determination of the Board shall be final and binding. The Fund shall not
pay or incur any obligation for any management or administrative expenses for
which the Fund intends to seek reimbursement from Adviser as herein provided
without first obtaining the written approval of Adviser.
7. COMPENSATION. For the services to be rendered and the charges and
expenses assumed and to be paid by the Adviser as provided herein, the Fund
shall pay the Adviser compensation based on an annual percentage of the average
daily net assets of each Portfolio as follows:
Average Daily Net Assets
First Second Over
$200 $200 $400
Portfolio Million Million Million
--------- ------- ------- -------
Managed . . . . . . . . . . . . . 0.55% 0.50% 0.45%
Aggressive Growth Common Stock . . 0.55% 0.50% 0.45%
Growth Common Stock . . . . . . . 0.50% 0.45% 0.40%
High Yield Bond . . . . . . . . . 0.50% 0.45% 0.40%
High Quality Bond. . . . . . . . . 0.30% 0.275% 0.25%
Money Market . . . . . . . . . . . 0.30% 0.275% 0.25%
Compensation under this Agreement shall be calculated and accrued for each
business day by applying the appropriate annual rates to the net assets of the
Portfolio in accordance with the formula set forth above as of the close of the
last business day preceding the day for which the fee is being calculated, and
dividing the sum so computed by the number of business days in the fiscal year.
The fees thus accrued shall be payable monthly, provided that such compensation
shall be paid proportionately for any other period ending with the termination
of this Agreement.
8. LIMITATION OF EXPENSES. In the event that expenses of any Portfolio
chargeable to its income account (including amounts payable hereunder but
exclusive of brokerage fees, interest, taxes and extraordinary expenses for any
fiscal year ending on a date at which this Agreement is in effect) shall exceed
1.50% of the average daily net assets of the Portfolio for said fiscal year,
calculated on the basis of the average of all of the daily valuations of the net
assets of the Fund in effect as of the close of each business day during said
fiscal year, Adviser shall pay to the Fund the amount by which such expenses
exceed the applicable limitation, within three days after the determination of
the amount thereof. In no event shall Adviser be required to reimburse the Fund
in an amount exceeding its compensation for such period under this Agreement.
9. FUND TRANSACTIONS AND BROKERAGE. The Adviser agrees to determine the
securities to be purchased or sold by each Portfolio of the Fund, subject to the
provisions of Paragraph 2 and 3 above, and to place orders pursuant to its
determinations either directly with the issuer, with any broker-dealer or
underwriter that specializes in the securities for which the order is made, or
with any other broker or dealer selected by the Adviser, subject to the
following limitations.
The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for each Portfolio of
the Fund and will use its best efforts to obtain the most favorable price and
efficient execution of the Fund's orders, taking into account all appropriate
factors, including: price; dealer spread or commission, if any; size and
difficulty of the transaction; the nature of the market for the security; the
reliability, financial condition and general execution and operational
capabilities of the broker-dealer; and the research, statistical, and economic
data furnished by the broker-dealer to the Fund.
If, in the judgment of the Adviser, the Fund would be benefited by
supplemental investment research, the Adviser is authorized to pay a reasonable
fee for such information. The expenses of the Adviser may not necessarily be
reduced as a result of receipt of such supplemental information. The Adviser or
any of its affiliates may also use any investment research obtained for the
benefit of the Fund in providing investment advice to its other investment
advisory accounts.
10. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither Adviser nor
any officer, director or shareholder of Adviser shall act as principal or
receive any commission other than its compensation provided for in this
Agreement. Such limitation, however, shall not prohibit the payment of the usual
and customary brokerage commissions to any of such parties in the proper case.
It is understood and agreed that Adviser, by virtue of a separate agreement with
the Fund, may also act as underwriter for the Fund.
Securities held by the Fund may also be held by separate investment
accounts or other investment companies for which the Adviser may act as an
adviser or by the Adviser or its affiliates. Because of different investment
objectives or other factors, a particular security may be bought by the Adviser
or its affiliates or for one or more clients when one or more clients are
selling the same security. If purchases or sales of securities for the Fund or
other entities for which the Adviser or its affiliates act as investment adviser
or for their advisory clients arise for consideration at or about the same time,
the Fund agrees that the Adviser may make transactions in such securities,
insofar as deemed equitable to all. To the extent that transactions on behalf of
more than one client of the Adviser during the same period may increase demand
for securities being purchased or the supply of securities being sold, the Fund
recognizes that there may be an adverse effect on price.
It is agreed that, on occasions when the Adviser deems the purchase or sale
of a security to be in the best interests of the Fund as well as other accounts
or companies, it may, to the extent permitted by applicable laws and
regulations, but not be obligated to, aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other accounts or
companies in order to obtain favorable execution and lower brokerage
commissions. In that event, allocation of the securities purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Adviser in
the manner it considers to be most equitable and consistent with its fiduciary
obligations to the Fund and to such other accounts or companies. The Fund
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for a Portfolio of the Fund.
11. LIMITATION OF LIABILITY OF ADVISER. Adviser shall not be liable for
any error ot judgment or mistake of law, or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Adviser in the performance of its obligations and duties or by reasons of its
reckless disregard of its obligations and duties under this Agreement. It is
understood that the officers, Trustees, agents and shareholders of the Fund are
or may become interested in
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of Adviser may become similarly
interested in the Fund; and that the existence of any such dual interest shall
not affect the validity of this Agreement or any transaction hereunder except as
provided in the Declaration of Trust or By-Laws of the Fund or Articles of
Incorporation of the Adviser, or by the specific provisions of applicable law.
Any person, even though also employed by Adviser, who may be or become an
employee of and paid by the Fund shall be deemed, when acting within the scope
of his employment by the Fund, to be acting in such employment solely for the
Fund and not as an employee or agent of Adviser.
12. EFFECTIVE DATE AND TERM. This Agreement shall not become effective
unless and until it is approved by the Fund's Board of Trustees, including a
majority of Trustees who are not parties to this Agreement or "interested
persons" (as defined in the Investment Company Act) of any such party to this
Agreement. This Agreement shall come into full force and effect on the date
which it is so approved, provided that it shall not become effective as to any
subsequently created Portfolio until it has been approved by the Board of
Trustees specifically for such Portfolio.
As to each Portfolio of the Fund, the Agreement shall continue in effect
until the date of the first annual or special meeting of shareholders of the
Portfolio subsequent to its creation, but not later than one year after the
effective date of the Securities Act of 1933 Registration Statement for the
class of shares representing interests in that Portfolio, and shall thereafter
continue in effect from year to year so long as its continuance is approved
annually by a majority of the votes cast by those persons having voting rights
in respect of the Portfolio or by a vote by a majority of the Trustees, but in
either event by the vote of a majority of the Board who are not parties to this
Agreement or "interested persons" (as defined in the Investment Company Act) of
any party to this Agreement, cast in person at a meeting called for such purpose
of voting such approval. In connection with such approvals, the Trustees shall
request, and the Adviser shall furnish, such information as may be necessary to
evaluate this Agreement.
As to each Portfolio of the Fund, this Agreement:
A. may be terminated without the payment of any penalty upon 60 days'
written notice to the Adviser either by the Board of Trustees or by a
majority vote of those persons having voting rights in respect of the
affected Portfolio(s) of the Fund;
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B. shall automatically terminate if it is assigned (within the meaning of
the Investment Company Act) by the Adviser;
C. may be terminated by the Adviser without payment of any penalty upon
60 days' written notice to the Secretary of the Board of Trustees of
the Fund; and
D. may be amended, changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. An amendment of this
Agreement shall not be effective until approved by (i) vote of the holders of a
majority of the outstanding voting securities of the Portfolio; and (ii) a
majority of those Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company Act) of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval.
13. NOTICES. Any notices 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 for the receipt of such notice.
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience or reference only and in no way define or limit any of the
provisions hereof or otherwise effect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
The Declaration of Trust establishing the Fund, a copy of which (together
with any and all amendments thereto) is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that all persons extending credit
to, contracting with or having any claim against the Fund or the Trustees shall
look only to the assets of the Fund for payment under such credit, contract or
claim, and that neither the shareholders nor the Trustees, nor any of their
agents, whether past, present or future, shall be personally liable therefor.
The obligations of the Fund hereunder may be satisfied only by resort to Fund
assets.
IN WITNESS WHEREOF, the Fund and Adviser have caused this Agreement to be
executed in their names and on their behalf and under their trust and corporate
seals by and through their duly authorized officers all on the day and year
first above written.
ATTEST: FBL VARIABLE INSURANCE SERIES FUND
/s/ Xxxxxx Xxxxxxx /s/ Xxxxxx X. Xxxxxx
--------------------------- ----------------------------
By: Its Secretary By: Its President
ATTEST: FBL INVESTMENT ADVISORY SERVICES, INC.
/s/ Xxxxxx X. Xxxxxx /s/ X.X. Xxxxxx
--------------------------- ----------------------------
By: Its Secretary By: Its President
