INVESTMENT ADVISORY AGREEMENT

                             BRAZOS INSURANCE FUNDS
                        BRAZOS SMALL CAP GROWTH PORTFOLIO

AGREEMENT made this 21st day of January, 2000 by and between Brazos Insurance
Funds, a Delaware business trust (the "Trust") and John McStay Investment
Counsel, L.P., a limited partnership (the "Adviser").



         1.   DUTIES OF ADVISER. The Trust hereby appoints the Adviser to act as
investment adviser to the Trust for the period and on such terms as set forth in
this Agreement. The Trust employs the Adviser to manage the investment and
reinvestment of the assets of its portfolios of securities, to continuously
review, supervise and administer the investment program of the portfolios, to
determine in its discretion the securities to be purchased or sold and the
portion of the Trust's assets to be held uninvested, to provide the Trust with
records concerning the Adviser's activities which the Trust is required to
maintain, and to render regular reports to the Trust's officers and Board of
Trustees concerning the Adviser's discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the officers and the Board of Trustees of the Trust, and in
compliance with the objectives, policies and limitations set forth in the
Trust's prospectus and applicable laws and regulations. Notwithstanding any
provision of this Agreement to the contrary, the Adviser will not be required to
perform its services under this Agreement in accordance with any such objective,
policy, or limitation if performance of the Adviser's services in accordance



therewith would, in the judgment of the Adviser, prevent the investments of a
"segregated asset account" (within the meaning of section 817(h) of the Internal
Revenue Code of 1986, as amended) investing solely in the shares of any Fund
from being "adequately diversified" within the meaning of such section 817(h)
and the regulations prescribed by the Secretary of the Treasury thereunder. The
Adviser accepts such employment and agrees to render the services and to
provide, at its own expense, the office space, furnishings and equipment and the
personnel required by it to perform the services on the terms and for the
compensation provided herein.

         2.   PORTFOLIO TRANSACTIONS. The Adviser is responsible for decisions
to buy or sell securities and other investments for the assets of a Portfolio,
broker-dealers and futures commission merchants' selection, and negotiation of
brokerage commission and futures commission merchants' rates. As a general
matter, in executing Portfolio transactions, the Adviser may employ or deal with
such broker-dealers or futures commission merchants as may, in the Adviser's
best judgment, provide prompt and reliable execution of the transactions at
favorable prices and reasonable commission rates. In selecting such
broker-dealers or futures commission merchants, the Adviser shall consider all
relevant factors including price (including the applicable brokerage commission,
dealer spread or futures commission merchant rate), the size of the order, the
nature of the market for the security or other investment, the timing of the
transaction, the reputation, experience and financial stability of the
broker-dealer or futures commission merchant involved, the quality of the
service, the difficult of execution, the execution capabilities and operational
facilities of the firm involved, and, in the case of securities, the firm's risk
in positioning a block of securities. Subject to such policies as the Trustees
may determine and consistent with Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the Adviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or



otherwise solely by reason of the Adviser's having caused a Portfolio to pay a
member of an exchange, broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
if the Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member of an exchange, broker or dealer viewed in terms of
either that particular transaction or the Adviser's overall responsibility with
respect to such Portfolio and to other clients as to which the Adviser exercises
investment discretion. In accordance with Section 11(a) of the 1934 Act and Rule
11a2-2(T) thereunder, and subject to any other applicable laws and regulations
including Section 17(e) of the Act and Rule 17e-1 thereunder, the Adviser may
engage its affiliates or any other subadviser to the Trust and its respective
affiliates, as broker-dealers or futures commission merchants to effect
Portfolio transactions in securities and other investments for a Portfolio. The
Adviser will promptly communicate to the officers and the Trustees of the Trust
such information relating to Portfolio transactions as they may reasonably
request. To the extent consistent with applicable law, the Adviser may aggregate
purchase or sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Adviser or its affiliated persons. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Adviser in the manner the
Adviser determines to be equitable and consistent with its and its affiliates'
fiduciary obligations to the Portfolio and to such other clients. The Adviser
hereby acknowledges that such aggregation of orders may not result in more
favorable pricing or lower brokerage commissions in all instances.



         3.   COMPENSATION OF THE ADVISER. For the services to be rendered by
the Adviser as provided in Section 1 of this Agreement, the Trust shall pay to
the Adviser in monthly installments, an advisory fee calculated by applying the
following annual percentage rates to the Trust's average daily net assets for
the month:


         Brazos Small Cap Growth Portfolio           1.25%


     The Adviser may voluntarily or contractually agree to reduce any portion of
the compensation or reimbursement of expenses, including organizational
expenses, due to it pursuant to this Agreement and may similarly agree to make
payments to limit expenses which are the responsibility of the Trust under this
Agreement. Any voluntary reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Adviser hereunder or to
continue future payments. Any such reduction will be agreed upon prior to
accrual of the related expense or fee and will be estimated daily. Any fee
withheld shall be voluntarily reduced and any Fund expense paid by the Adviser
voluntarily or pursuant to an agreed expense limitation shall be reimbursed by
the Trust to the Adviser in the first, second, or third (or any combination
thereof) fiscal year next succeeding the fiscal year of the withholding
reduction, or payment to the extent permitted by applicable law if the aggregate
expenses for the next succeeding fiscal year, second fiscal year or third
succeeding fiscal year do not exceed any limitation to which the Adviser has
agreed. Such reimbursement may be paid prior to the Trust's payment of current
expenses if so requested by the Adviser if such payment may require the Adviser
to waive or reduce its fees hereunder or to pay current Trust Expenses.

         In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current fiscal month as a percentage of the
total number of days in such month.

         4.   OTHER SERVICES. At the request of the Trust, the Adviser in its
discretion may make available to the Trust office facilities, equipment,
personnel and other services. Such office facilities, equipment, personnel and
services shall be provided for or rendered by the Adviser and billed to the
Trust at the Adviser's cost.

         5.   REPORTS. The Trust and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.

         6.   STATUS OF ADVISER. The services of the Adviser to the Trust are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not impaired
thereby.

         7.   LIABILITY OF ADVISER. In the absence of (i) willful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of


fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940
Act"), the Adviser shall not be subject to any liability whatsoever to the
Trust, or to any shareholder of the Trust, for any error or judgment, mistake of
law or any other act or omission in the course of, or connected with, rendering
services hereunder including, without limitation, for any losses that may be
sustained in connection with the purchase, holding, redemption or sale of any
security on behalf of the Trust.

         8.   PERMISSIBLE INTERESTS. Subject to and in accordance with the
Certificate of Trust and Agreement and Declaration of Trust of the Trust and the
Certificate of Limited Partnership and Partnership Agreement of the Adviser,
Trustees, officers, agents and shareholders of the Trust are or may be
interested in the Adviser (or any successor thereof) as Trustees, officers,
agents, shareholders or otherwise; Trustees, officers, agents and shareholders
of the Adviser are or may be interested in the Trust as Trustees, officers,
agents, shareholders or otherwise; and the Adviser (or any successor) is or may
be interested in the Trust as a shareholder or otherwise; and the effect of any
such interrelationships shall be governed by said organizational documents and
the provisions of the 1940 Act.

         9.   DURATION AND TERMINATION. This Agreement, unless sooner terminated
as provided herein, shall continue until the earlier of January 21, 2002 or the
date of the first annual or special meeting of the shareholders of the Trust, if
any, and, if approved by a majority of the outstanding voting securities of the
Trust, thereafter shall continue for periods of one year so long as such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Trustees of the Trust 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, and (b)
by the Board of Trustees of the Trust or (c) by vote of a majority of the
outstanding voting securities of the Trust; PROVIDED HOWEVER, that if the
shareholders of the Trust fail to approve the Agreement as provided herein, the
Adviser may continue to serve in such capacity in the manner and to the extent
permitted by the 1940 Act and rules thereunder. This Agreement may be terminated
by the Trust at any time, without the payment of any penalty, by vote of a
majority of the entire Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Trust on 60 days' written notice to
the Adviser. This Agreement may be terminated by the Adviser at any time,
without the payment of any penalty, upon 90 days' written notice to the Trust.
This agreement will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing, addressed
and delivered or mailed postpaid, to the other party at the principal office of
such party.

         As used in this Section 9, the terms "assignment," "interested
persons,", and "a vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and
Section 2(a)(42) of the 1940 Act.

         10.  AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved (a) by vote of a majority
of those members of the Board of Trustees of the Trust 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 amendment, and (b) by vote of a
majority of the outstanding voting securities of the Trust.

         11.  SEVERABILITY. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.




         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this __ day of January, 2000.



JOHN McSTAY INVESTMENT COUNSEL, L.P.           BRAZOS INSURANCE FUNDS



By /s/ Wayne Willems                          By /s/ Dan L. Hockenbrough
  ---------------------------------              --------------------------
  Wayne Willems, Managing Director              Dan L. Hockenbrough, President