ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this 1st day of
January, 1999 by and between The AAL Mutual Funds, a Massachusetts business
trust (the "Fund") and Aid Association for Lutherans, a Wisconsin Corporation
("AAL" "Administrator").
WHEREAS, AAL has offered to provide fund accounting and pricing
services to the Fund at a fair and reasonable price and the Fund desires to have
AAL provide such services; and
WHEREAS, a majority of the Trustees of the Fund and a majority of the
disinterested Trustees of the Fund have approved this Agreement between AAL and
the Fund, and in so approving the Agreement made the following findings:
a. The Agreement is in the best interest of the Fund and its
Shareholders;
b. The services to be performed pursuant to the Agreement are services
required for the operation of the Fund;
c. AAL can provide services, the nature and quality of which are at least
equal to those provided by others offering the same or similar
services; and
d. The fees for such services are fair and reasonable in light of the
usual and customary charges made by others for services of the same
nature and quality.
WHEREAS, the Fund is authorized to issue shares in separate series with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund desires AAL to render the services to the Fund in the
manner and on the terms and conditions hereinafter set forth with respect to
each of the Fund's series identified on Schedule B attached hereto, as modified
from time to time by the mutual consent of the parties.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Services. The Fund hereby engages AAL, and AAL accepts such engagement, to
perform accounting and pricing services for the Fund as described in more
detail on Schedule A, as the same may be modified from time to time by vote
of a majority of the Fund's Trustees including a majority of those who are
not interested persons of AAL (the "Services"). The Fund agrees that AAL
shall have ready access to the Fund's agents, books, records, financial
information, management and resources at such times and for such periods as
AAL deems necessary to perform the Services.
2. Rate of Payment for the Services.
2.1 Contract Price. The Fund agrees to pay AAL for the Services at such rate,
not to exceed the rate charged by unaffiliated vendors for comparable
Services, as may be approved annually by a majority of the Fund's Trustees,
including a majority of Trustees who are not parties to this Agreement or
interested persons of AAL (the "Contract Price")(Schedule C). The Fund
shall also pay all expenses, as set forth in Section 2.2 below, applicable
taxes, duties and charges (including sales, use and excise taxes) levied or
assessed as a result of this Agreement, except those taxes measured solely
by the net income of AAL. The Contract Price shall be payable monthly
within ten (10) days of the date of invoice. The Contract Price shall be
adjusted annually by mutual agreement.
2.2 Reimbursement for Expenses. Subject to the Fund's prior approvals, AAL
shall be paid by the Fund for actual expenses and costs incurred by AAL in
the performance of the Services, including, but not limited to, long
distance telephone calls, postage, computer time and supplies.
3. Employees. All personnel assigned by AAL to perform the Services will be
employees of AAL or its affiliates. AAL will be considered, for all
purposes an independent contractor, and it will not, directly or
indirectly, act as an agent, servant or employee of the Fund, or make any
commitments or incur any liabilities on behalf of the Fund without its
prior written consent.
4. Administrator Use of the Services of Others. AAL may (at its costs except
as contemplated by Paragraph 2.2 of this Agreement) employ, retain or
otherwise avail itself of the Services or facilities of other persons or
organizations for the purpose of providing the Fund with such information
or Services as it may deem necessary, appropriate or convenient for the
discharge of its obligations hereunder or otherwise helpful to the Fund, or
in the discharge of its overall responsibilities with respect to the
Services to be provided to the Fund.
5. Ownership of Records. All records required to be maintained and preserved
by the Fund pursuant to the provisions of rules or regulations of the
Securities and Exchange Commission under Section 31(a) of the Investment
Company Act of 1940 (the "Act") and maintained and preserved by AAL on
behalf of the Fund are the property of the Fund and will be surrendered by
AAL promptly on request by the Fund.
6. Reports to Fund by AAL. AAL shall provide the Fund, at such times as the
Fund may reasonably require, with reports relating to the Services provided
by AAL under this Agreement. Such reports shall be of sufficient scope and
in sufficient detail, as may reasonably be required by the Fund.
7. Services to Other Clients. Nothing herein contained shall limit the freedom
of AAL or any affiliated person of AAL to render investment advice or
corporate administrative services to other investment companies, to act as
investment advisor or investment counselor to other persons, firms or
corporations, or to engage in other business activities.
8. Limitation of Liability of AAL. Neither AAL, nor any of its officers,
directors, or employees, not any person performing administrative or other
functions for the Fund (at the direction or request of AAL) in connection
with Administrator discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall 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 for
loss resulting from willful misfeasance, bad faith, or negligence in the
performance of its or their duties on behalf of the Fund or from reckless
disregard by AAL or any such person of the duties of AAL under this
Agreement.
9. Term of Agreement. The term of this Agreement shall begin on the date first
above written, and unless sooner terminated as hereinafter provided, this
Agreement shall be submitted for approval to the Board of Trustees and will
continue in effect from year to year as it pertains to each such series,
subject to the termination provisions and all other terms and conditions
hereof, so long as: (a) such continuation shall be specifically approved at
least annually by the Board of Trustees of the Fund including a majority of
the Trustees of the Fund who are not parties to this Agreement or
interested persons of any such party; and (b) AAL shall not have notified
the Fund, in writing, at least 60 days prior to October 31, 1999 or prior
to October 31 of any year thereafter, that it does not desire such
continuation. AAL shall furnish to the Fund, promptly upon its request,
such information as may reasonably be necessary to evaluate the terms of
this Agreement or any extension, renewal or amendment hereof.
10. Amendment and Assignment of Agreement. This Agreement may only be amended
or assigned either as it pertains generally to all of the series or as it
pertains to a particular series by a written agreement by each party.
11. Termination of Agreement. This Agreement may be terminated by any party
hereto either as it pertains generally to all of the series or as it
pertains to a particular series, without the payment of any penalty, upon
60 days' prior notice in writing to the other party; provided, that in the
case of termination by the Fund such action shall have been authorized by
resolution of a majority of the Trustees of the Fund who are not parties to
this Agreement or interested persons of any such party, or by vote of a
majority of the outstanding voting securities of each series affected by
such termination.
12. Miscellaneous.
12.1 Captions. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.2 Interpretation. Nothing herein contained shall be deemed to require the
Fund to take any action contrary to its Declaration of Trust or By-Laws, or
any applicable statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the Board of Trustees of
the Fund of its responsibility for and control of the conduct of the
affairs of the Fund.
12.3 Definitions. Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or
provision of the Act and to interpretations thereof if any, by the United
States courts or, in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the terms
"vote of a majority of the outstanding voting securities," "interested
person," "assignment," and "affiliated person," as used in Paragraphs 1,
2.1, 7, 9, 10, and 11 hereof, shall have the meanings assigned to them by
Section 2(a) of the Act. In addition, where the effect of a requirement of
the Act reflected in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
12.4 Governing Law. This Agreement shall be construed and governed by the laws
of the state of Wisconsin.
12.5 Amendment. This Agreement, including the Schedules hereto, may be amended
only by an instrument in writing executed by the parties or their permitted
assignees.
12.6 Notices. All communications or notices required permitted by this Agreement
shall be in writing and shall be deemed to have been give at the earlier of
the date when actually delivered to an officer of a party or when deposited
in the United States Mail, certified or registered mail, postage prepaid,
return receipt requested, and addressed to the principal place of business
of such parties notifies the parties in accordance with this section of
change of address.
12.7 Entire Agreement. This Agreement together with the Schedules hereto
constitutes the entire agreement between the Fund and AAL with respect to
the subject matter hereof. There are no restrictions, promises, warranties,
covenants or undertakings other than those expressly set forth herein and
therein. This Agreement supersedes all prior negotiations, agreements and
undertakings between the parties with respect to such subject matter.
12.8 Enforceability. The invalidity or unenforceability of any provision hereof
shall not affect or impair any other provisions.
12.9 Scope of Agreement. If the scope of any of the provisions of the Agreement
is to broaden any respect whatsoever to prevent enforcement to its full
extent, then such provisions shall be enforced to the maximum extent
permitted by law, and the parties hereto consent and agree that such scope
may be judicially modified accordingly and that the whole of such
provisions of this Agreement shall not thereby fail, but that the scope of
such provisions shall be curtailed only to the extent necessary to conform
to the law.
12.10 Agreement Binding Only on Trust Property. AAL understands that the
obligations of this Agreement are not binding upon any shareholder of the
Fund personally, but bind only the Fund's property; AAL represents that it
has notice of the Fund's Declaration of Trust disclaiming shareholder
liability for acts and obligations of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year first
above written.
THE AAL MUTUAL FUNDS
By: /s/Xxxxxx X. Xxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxx,
President
AID ASSOCIATION FOR LUTHERANS
By: /s/Xxxx X. Xxxxxxx
------------------------------
Xxxx X. Xxxxxxx,
President
SCHEDULE A
Services to be performed by AAL:
1. Portfolio Accounting Services. AAL shall provide the following portfolio
accounting and reporting services for each series of the Fund covered by
this Agreement:
(a) Maintain daily portfolio records for each series on a trade date basis
using security trade information obtained by it as Investment Advisor
to the Fund, or communicated from a Sub-Advisor for the series;
(b) On each business day record the prices of the portfolio positions of
each series as obtained from a source approved by the Board of
Trustees;
(c) Record interest and dividend accrual balances each business day on the
portfolio securities of each series and calculate and record each
series' gross earnings on investments for that day;
(d) Determine gains and losses on portfolio security sales on a daily
basis for each series and identify such gains and loses as
short-short, short or long-term. Account for periodic distributions of
gain to shareholders of each series and maintain undistributed gain or
loss balances as of each business day; and
(e) Provide each series with portfolio-based reports on the foregoing on a
periodic basis as mutually agreed upon between the Board of Trustees
and AAL.
2. Expense Accrual. AAL shall provide accounting and reporting services
relating to the accrual of expenses as described below for each series of
the Fund covered by this agreement:
(a) On each business day, calculate the amounts of expense accrual for
each series according to the methodology, rate or dollar amount
specified by the Board of Trustees;
(b) Account for expenditures and maintain expense accrual balances for
each series at a level of accounting detail specified by the Board of
Trustees;
(c) Conduct periodic expense accrual reviews for each series as requested
by the Board of Trustees comparing actual expenses to accrual amounts;
and
(d) Issue periodic reports for each series detailing expense accruals and
payments at the times requested by the Board of Trustees.
3. Valuation and Financial Reporting Services. AAL shall provide accounting
and reporting services relating to the net asset value of each series of
the Fund's covered by this Agreement as described below:
(a) Account for purchases, sales, exchanges, transfers, dividend
reinvestments and other activity relating to the shares of each series
as reported by the Fund's Transfer Agent on a daily basis;
(b) Provide the Investment Advisor and were applicable, the Sub Advisor a
daily report of cash reserves available for short term investing;
(c) Record daily the net investment income (earnings) for each series.
Account for periodic distributions of earnings to shareholders of each
series and maintain undistributed net investment income balances as of
each business day;
(d) Maintain a general ledger for each series in the form specified by the
Board of Trustees and produce a set of financial statements for each
series as requested from time to time by the Board of Trustees;
(e) On each business day of the Fund determine the net asset value of each
series in accordance with the accounting policies and procedures
described in the current Prospectus of the Fund;
(f) On each business day of the Fund, calculate the per share net asset
value, per share net earnings and other per share amounts reflective
of the operations of each series on the basis of the number of shares
outstanding as reported by the Transfer Agent;
(g) Issue daily reports detailing such per share information of each
series to such persons (including the Transfer Agent and AAL
Distributors, Inc. as Distributor of the Fund's shares) as directed by
the Board of Trustees; and
(h) Issue to the Board of Trustees monthly reports which document the
adequacy of the accounting detail necessary to support month-end
ledger balances for each series.
4. Tax Accounting Services. AAL shall provide the following tax accounting
services for each series of the Fund covered by this Agreement:
(a) Maintain tax accounting records for the investment portfolio of each
series necessary to support IRS tax reporting requirements for
regulated investment companies;
(b) Maintain tax lot detail for the investment portfolio of each series;
(c) Calculate taxable gains and losses on sales of portfolio securities
for each series using the tax cost basis defined for the particular
series;
(d) Issue reports to the Transfer Agent of each series detailing the
taxable components of income and capital gains distributions as
necessary to assist such Transfer Agent in issuing reports to
shareholders; and
(e) Provide any other reports relating to tax matters for each series as
reasonably requested from time to time by the Board of Trustees.
SCHEDULE B
Effective January 1, 1999
The AAL Capital Growth Fund
The AAL Bond Fund
The AAL Municipal Bond Fund
The AAL Money Market Fund
The AAL Mid Cap Stock Fund
The AAL Small Cap Stock Fund
The AAL International Fund
The AAL Equity Income Fund
The AAL Balanced Fund
The High Yield Bond Fund
The AAL U.S. Government Zero Coupon Target Fund Series 2001
The AAL U.S. Government Zero Coupon Target Fund Series 2006
SCHEDULE C
Contract Fee Schedule
Effective January 1, 1999
The AAL Capital Growth Fund $40,000
The AAL Bond Fund $40,000
The AAL Municipal Bond Fund $40,000
The AAL Money Market Fund $40,000
The AAL Mid Cap Stock Fund $40,000
The AAL Small Cap Stock Fund $40,000
The AAL International Fund $45,000
The AAL Equity Income Fund $40,000
The AAL Balanced Fund $40,000
The High Yield Bond Fund $40,000
The AAL U.S. Government Zero Coupon Target Fund, Series 2001 $ 2,500
The AAL U.S. Government Zero Coupon Target Fund, Series 2006 $ 2,500
