Exhibit (d) 5.
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SM&R INVESTMENTS, INC.
(SM&R EQUITY FUNDS)
AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS AGREEMENT (the "Agreement") is made and entered into as of this
31st day of December, 2000, by and between SECURITIES MANAGEMENT AND RESEARCH,
INC., a Florida corporation hereinafter referred to as the "Adviser," and SM&R
INVESTMENTS, INC., a Maryland corporation hereinafter referred to as the "Fund,"
on behalf of the following three series of the Fund: the SM&R Growth Fund, the
SM&R Equity Income Fund, and the SM&R Balanced Fund (collectively the "SM&R
Equity Funds").
Each of the SM&R Equity Funds is a separate series of the Fund with
different investment objectives than the other series, which each pursues
through separate investment policies.
Adviser is engaged in the business of rendering investment advisory and
related services to investment companies and desires to provide such services to
the SM&R Equity Funds.
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. Adviser shall act as investment adviser for the SM&R Equity
Funds and shall, in such capacity, supervise the investment and
reinvestment of the cash, securities and other properties comprising
the assets of the SM&R Equity Funds, subject at all times to the
policies and approval of the Board of Directors of the Fund. Adviser
shall give the SM&R Equity Funds the benefit of its best judgment and
efforts in rendering its services as investment adviser. In carrying
out its obligations in this Agreement, the Adviser 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 portfolios of the SM&R Equity Funds,
and whether concerning the individual companies whose securities
are included in the SM&R Equity Funds' portfolios, or the
industries in which they engage, or with respect to securities
which the Adviser considers desirable for inclusion in one or
more of portfolios of the SM&R Equity Funds.
(b) Determine what industries and companies shall be
represented in the SM&R Equity Funds' portfolios and regularly
report them to the Board of Directors of the Fund.
(c) 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; and
(d) Take, on behalf of the SM&R Equity Funds, all actions
which appear to the Adviser necessary to carry into effect such
purchase and sale programs and supervisory functions, including
the placing of orders for the purchase and sale of portfolio
securities for the SM&R Equity Funds.
The Adviser, as agent for the Fund, shall keep the SM&R Equity Funds'
books of account. In compliance with the requirements of the rules and
regulations of the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, the Adviser hereby agrees that all records
which it maintains for the SM&R Equity Funds are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records 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
maintained.
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3. Except for those investment-related expenses hereafter expressly
reserved to the SM&R Equity Funds, the Adviser will furnish all
investment-related management, executive, administrative and
operational services reasonably necessary to the SM&R Equity Funds,
either by furnishing the same directly to the SM&R Equity Funds or by
reimbursing the SM&R Equity Funds for any such investment-related
expense not so excepted but paid by the SM&R Equity Funds. The
investment-related services and materials to be furnished by Adviser
include without limitation:
(a) The services of all persons necessary to perform the
executive, administrative, clerical and bookkeeping functions
for the SM&R Equity Funds' investment operations; and
(b) Suitable office space, necessary office equipment and
utilities required in connection with the SM&R Equity Funds'
investment operations.
4. The investment-related expenses reserved to the SM&R Equity
Funds are as follows:
(a) Commissions and other expenses incidental to portfolio
transactions;
(b) The charges of the custodian of the SM&R Equity Funds'
assets (including the sums, if any, charged to the SM&R Equity
Funds by such custodian for keeping books and similar services
with respect to the custodianship of such assets);
(c) Taxes;
(d) Related fees and expenses of the Fund's auditors, the
Fund's legal counsel and counsel for the not "interested"
directors; and
(e) The fees to the Adviser set forth below in paragraph 5.
As its sole compensation for the services, expenses, facilities and
materials supplied to the Fund hereunder, each of the SM&R Equity Funds shall
pay to the Adviser a monthly advisory fee according to the schedule below. The
advisory fee shall be paid monthly and shall be computed by applying to the
average daily net asset value of each of the SM&R Equity Funds each month
one-twelfth (1/12th) of the annual rate.
On the Portion of the Fund's Advisory Fee Annual
Average Daily Net Assets Rate
----------------------------------------------------------
Not exceeding $100,000,000 .750 of 1%
Exceeding $100,000,000 but
not exceeding $200,000,000 .625 of 1%
Exceeding $200,000,000 but
not exceeding $300,000,000 .500 of 1%
Exceeding $300,000,000 .400 of 1%
The average daily net asset value of each of the SM&R Equity Funds
shall be computed by adding the net asset values computed by the Adviser each
day during the month and dividing the resulting total by the number of days in
the month. The net asset value per share of shares of each of the SM&R Equity
Funds shall be determined each day by adding the market value of each SM&R
Equity Fund's portfolio securities and other assets, subtracting liabilities and
dividing the result by the number of each SM&R Equity Fund's shares outstanding.
Expenses and fees of the SM&R Equity Funds, including the advisory and
administrative service fee, will be accrued daily and taken into account in
determining net asset value.
The investment advisory fee for each month shall be payable as soon as
practicable after the last business day of such month.
6. Adviser is affiliated with American National Insurance Company,
a Texas insurance corporation
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("American National"). Adviser has entered into a contract dated
January 1, 1987 with American National pursuant to which contract
American National will furnish certain personnel, investment
information and resources, services, equipment, materials and
facilities to Adviser, some of which may be used by Adviser in meeting
its obligations to the SM&R Equity Funds hereunder.
7. 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 SM&R Equity Funds pursuant thereto, shall at
all times be subject to the Articles of Incorporation and the current
prospectus(es) of the SM&R Equity Funds, as well as any directives of
the Board of Directors of the Fund, the Executive Committee of said
Board, any other committee or committees of the Fund acting pursuant to
authority of the Board, or any officer of the Fund acting pursuant to
like authority.
8. 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 SM&R Equity Funds, 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 5 hereof.
9. The Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the SM&R Equity Funds 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.
10. This Agreement shall become effective on the date set forth
above and shall continue in effect until December 31, 2001.
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 or by vote of a majority of
the outstanding voting securities of the SM&R Equity Funds, 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.
11. 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 SM&R Equity Funds, or by the Adviser, on sixty days'
written notice to the other party.
12. 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.
13. 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 and that of the Adviser for this purpose shall be
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxx 00000.
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14. No amendment to this Agreement shall be effective until approved
by vote of the holders of a majority of the outstanding shares of the
SM&R Equity Funds.
15. This Investment Advisory Agreement is separate and distinct
from, and neither affects nor is affected by, the Underwriting
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.
SM&R INVESTMENTS, INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
---------------------------------------------
Xxxxxxx X. XxXxxxxxx, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Senior Vice President
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