EXHIBIT 99.B(d)5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
(SMALL-CAP/MID-CAP PORTFOLIO)
AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made and
entered into this 28th day of April, 2000, by and between AMERICAN NATIONAL
INVESTMENT ACCOUNTS, INC., a Maryland corporation hereinafter referred to as the
"Fund", on behalf of American National Small-Cap/Mid-Cap Portfolio (the
"Small-Cap/Mid-Cap Portfolio") and SECURITIES MANAGEMENT AND RESEARCH, INC., a
Florida corporation hereinafter referred to as the "Adviser".
The Small-Cap/Mid-Cap Portfolio is a portfolio of the Fund with
different investment objectives than the other portfolios of the Fund which
it pursues through separate investment policies.
SM&R is engaged in the business of rendering investment advisory and
related services to investment companies and desires to provide such services to
the Small-Cap/Mid-Cap Portfolio.
In consideration of the mutual covenants contained in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Adviser and the Fund hereby agree as follows:
1. Adviser shall act as investment adviser for the Small-Cap/Mid-Cap
Portfolio and shall, in such capacity, supervise the investment and reinvestment
of the cash, securities and other properties comprising the assets of the
Small-Cap/Mid-Cap Portfolio, subject at all times to the objectives, policies
and restrictions of the Small-Cap/Mid-Cap Portfolio and to the policies and
approval of the Board of Directors of the Fund. Adviser shall give the
Small-Cap/Mid-Cap Portfolio the benefit of its best judgment and efforts in
rendering its services as investment adviser. In carrying out its obligations in
this Agreement, the Advisor shall be deemed to be an independent contractor and,
except as expressly provided or authorized by the Fund (whether in this
Agreement or otherwise), shall have no authority to act for or represent the
Fund in any way or otherwise be deemed to be an agent of the Fund.
2. In carrying out its obligations under paragraph (1) hereof, Adviser
shall:
(a) Obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
portfolio of the Small-Cap/Mid-Cap Portfolio, and whether concerning
the individual companies whose securities are included in the
Small-Cap/Mid-Cap Portfolio's portfolio, or the industries in which
they engage, or with respect to securities which the Adviser considers
desirable for inclusion in the Small-Cap/Mid-Cap Portfolio's portfolio.
(b) Determine what industries and companies shall be represented in the
Small-Cap/Mid-Cap Portfolio and regularly report them to the Board of
Directors of the Fund.
(c) After such determination, formulate and implement programs for the
purchases and sales of the securities of such companies and regularly
report thereon to the Board of Directors of the Fund.
(d) Take, on behalf of the Small-Cap/Mid-Cap Portfolio of the Fund, all
actions which appear to the Adviser to be necessary to carry into
effect such purchase and sale programs, and all related supervisory and
other functions, including the placing of orders for the purchase and
sale of portfolio securities for the Small-Cap/Mid-Cap Portfolio.
(e) Maintain all internal bookkeeping, accounting and auditing services
and records in connection with the investment activities of the
Small-Cap/Mid-Cap Portfolio and the computation of the
Small-Cap/Mid-Cap Portfolio's net asset value. As required by the rules
and regulations under the Investment Company Act of 1940, as amended
(the "`40 Act"), the Adviser agrees that all records which it may
maintain for the Fund or the Small-Cap/Mid-Cap Portfolio thereof are
the property of the Fund and the Small-Cap/Mid-Cap Portfolio and
further agrees to promptly surrender to the Fund any of such records
1
upon the Fund's request. The Adviser further agrees to preserve for the
periods prescribed by such rules and regulations any such records as
are required to be preserved.
3. As its sole compensation for the services supplied to the Fund
hereunder, the Small-Cap/Mid-Cap Portfolio shall pay to the Adviser an
investment advisory fee equal to 1.25% annually. The investment advisory fee
shall be paid monthly and shall be computed by applying to the average daily
net asset value of the Small-Cap/Mid-Cap Portfolio each month one-twelfth
(1/12th) of the annual rate.
The "average daily net asset value" of the Small-Cap/Mid-Cap Portfolio
of the Fund for a particular period shall be determined by adding net asset
values as regularly computed by the Fund each day during such period and
dividing the resulting total by the number of days during such period.
The investment advisory fee for each month shall each be payable as
soon as practical after the last business day of such month.
4. Any investment program undertaken by the Adviser pursuant to this
Agreement, as well as any other activities undertaken by the Adviser on behalf
of the Fund pursuant hereto, shall at all times be subject to any directives of
the Board of Directors of the Fund, any Committee of the Fund's Board of
Directors acting pursuant to authority of the Board, and any officer of the Fund
acting pursuant to authority of the Board of Directors.
5. In carrying out its obligations under this Agreement, Adviser shall at
all times conform to:
(a) All applicable provisions of the Investment Company Act of 1940, as
amended, and any rules and regulations adopted thereunder;
(b) The provisions of the Articles of Incorporation of the Fund as
amended from time to time;
(c) The provisions of the By-Laws of the Fund as amended from time to
time;
(d) The provisions of the registration statements of the Fund under the
Securities Act of 1933 and the Investment Company Act of 1940, as
amended from time to time;
(e) Any other applicable provisions of state or federal law.
In connection with purchases or sales of portfolio securities for the
account of the Small-Cap/Mid-Cap Portfolio of the Fund, neither the Adviser nor
any officer or director of the Adviser shall act as a principal or receive any
commission other than its compensation provided for in paragraph (3) hereof.
6. Decisions with respect to placement of the Small-Cap/Mid-Cap Portfolio
transactions will be made by the Adviser. The primary consideration in making
these decisions will be efficiency in the execution of orders and obtaining the
most favorable net prices for the Small-Cap/Mid-Cap Portfolio. When consistent
with these objectives, business may be placed with brokers and dealers who
furnish investment research services to the Adviser. Such research services
include advice, both directly and in writing, as to the value of securities, or
purchasers or sellers of securities, as well as analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts. The investment research furnished by such
brokers and dealers allows the Adviser to supplement its own research activities
and enables the Adviser to obtain the views and information of individuals and
research staffs of many different securities firms prior to making investment
decisions for the Small-Cap/Mid-Cap Portfolio. To the extent portfolio
transactions are effected by dealers who furnish research services to it, the
Adviser receives a benefit not susceptible of evaluation in dollar amounts,
without providing any direct monetary benefit to the Fund from these
transactions. The Adviser believes that most research obtained by it generally
benefits several or all of the investment companies which it manages, as opposed
to solely benefiting one specific fund.
Consistent with the foregoing, the Adviser may recommend that the
Small-Cap/Mid-Cap Portfolio execute portfolio transactions through brokers and
dealers who have sold shares of other investment companies managed by the
Adviser, but in no event will any such recommendation be intended as a reward or
compensation for sales of such other funds' shares, nor will such sales be
considered by the Adviser as either a qualifying or disqualifying factor in the
selection of executing broker/dealers.
2
The Adviser shall render regular reports to the Fund, not more
frequently than monthly, regarding the total brokerage business placed with
brokers falling into either of the foregoing categories and the manner in which
the allocation has been accomplished.
The Adviser agrees that no investment recommendation will be made or
influenced by a desire to provide brokerage for allocation, except in accordance
with the foregoing, and that the recommendations for such allocation or
brokerage shall not interfere with the Adviser's paramount consideration of
obtaining the best possible price and execution for the Fund.
7. The Fund understands and acknowledges that the Adviser furnishes
investment advisory, management and underwriting services to a number of
other clients including but not limited to, the four (4) mutual funds known
as the SM&R Growth Fund, Inc., SM&R Equity Income Fund, Inc., SM&R Balanced
Fund, Inc. and SM&R Investments, Inc. and often referred to as the "SM&R
Mutual Funds". Accordingly, the Fund agrees that the services of the Adviser
to the Fund hereunder are not deemed to be exclusive and the Adviser is and
shall continue to be free to render such services and services related
thereto to others.
The SM&R Mutual Funds and other clients for which the Adviser is
investment advisor may own securities of the same companies from time to
time. However, the Small-Cap/Mid-Cap Portfolio's security transactions will
be conducted independently, except when decisions are made to purchase or
sell portfolio securities of or for the Small-Cap/Mid-Cap Portfolio, the
other portfolios of the Fund, the SM&R Mutual Funds and/or other clients of
the Adviser simultaneously. In such event, the transactions will be averaged
as to price and allocated as to amount (according to the proportionate share
of the total commitment) in accordance with the daily purchase or sale orders
actually executed.
In authorizing the execution of this Agreement, the Fund's Board of
Directors and the initial shareholders have determined that such ability to
effect simultaneous transactions may be in the best interest of the Fund and
the Small-Cap/Mid-Cap Portfolio thereof. It is recognized that in some cases
these practices could have a detrimental effect upon the price and volume of
securities being bought and sold by the Fund or the Small-Cap/Mid-Cap
Portfolio thereof, while in other cases these practices could produce better
executions.
8. The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund or the Small-Cap/Mid-Cap
Portfolio thereof in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, 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.
9. This Agreement shall become effective on the date set forth above and
shall continue in effect until May 1, 2002. Thereafter, this Agreement will
continue in effect for additional one year periods only so long as such
continuance is specifically approved at least annually by the Board of Directors
of the Fund or by vote of a majority of the outstanding voting securities of the
Small-Cap/Mid-Cap Portfolio of the Fund, and in either case by the specific
approval of a majority of the directors who are not parties to such contract or
agreement, or "interested" persons of any such parties, cast in person at a
meeting called for the purpose of voting on such approval, the term "interested"
persons for this purpose having the meaning defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended.
10. This Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding voting securities of the
Small-Cap/Mid-Cap Portfolio of the Fund, or by the Adviser, on sixty days'
written notice to the other party.
11. This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940.
12. Any notice under this Agreement shall be in writing addressed and
delivered or mailed postage paid to the other party, at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Fund, the
Small-Cap/Mid-Cap Portfolio of the Fund, and that of the Adviser for this
purpose shall be 0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxx
00000.
13. No amendment to this Agreement shall be effective until approved by
vote of the holders of a majority of the outstanding shares of the Fund as
defined in the Investment Company Act of 1940.
3
14. This Investment Advisory Agreement is separate and distinct from, and
neither affects nor is affected by, the Underwriting Agreement or the
Administrative Service Agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on the day and year first above written.
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
By: ___________________________________________
Xxxxxxx X. XxXxxxxxx, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: ___________________________________________
Xxxxxx X. Xxxxx, Senior Vice President
