EXHIBIT 99.B5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SM&R CAPITAL FUNDS, INC.
AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made and entered
into this 1st day of July, 1993, by and between SM&R CAPITAL FUNDS, INC., a
Maryland corporation hereinafter referred to as the "Fund", on behalf of the
American National Tax Free Fund Series (the "Tax Free Series" or the "Series")
and SECURITIES MANAGEMENT AND RESEARCH, INC., a Florida corporation hereinafter
referred to as the "Adviser".
The Tax Free Series is a series of the Fund with different investment
objectives than the other series 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 Series.
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 Series and shall, in such
capacity, supervise the investment and reinvestment of the cash, securities and
other properties comprising the assets of the Series, subject at all times to
the objectives, policies and restrictions of the Series and to the policies and
approval of the Board of Directors of the Fund. Adviser shall give the Series
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 Series, and whether concerning the individual companies
whose securities are included in the Series' portfolio, or the industries
in which the Series engages, or with respect to securities which the
Adviser considers desirable for inclusion in the Series' portfolio.
(b) Determine what industries and companies shall be represented in
the Series' 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 Tax Free Series 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 Series.
(e) Maintain all internal bookkeeping, account and auditing services and
records in connection with the investment activities of the Series and the
computation of the Series' 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 Series thereof are the
property of the Fund and the Series and further agrees to promptly
surrender to the Fund any of such records upon the Funds 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 Series shall pay to the Adviser an investment advisory fee as follows:
A monthly investment advisory fee computed by applying to the average
daily net asset value of the Series each month one-twelfth (1/12th) of the
annual rate as follows:
=============================================================================================
ON THE PORTION OF THE SERIES'AVERAGE DAILY NET ASSETS | INVESTMENT ADVISORY FEE ANNUAL RATE
-------------------------------------------------------|-------------------------------------
|
Not exceeding $100,000,000 | .50 of 1%
Exceeding $100,000,000 but not exceeding $300,000,000 | .45 of 1%
Exceeding $300,000,000 | .40 of 1%
=============================================================================================
The "average daily net asset value" of the Series 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 Tax Free Series 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 Series' 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 Series. 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 Series. 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
Series 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.
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, the three (3) mutual funds known as the "American
National Funds Group". 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 American National Funds Group and other clients for which the
Adviser is investment advisor may own securities of the same companies from
time to time. However, the Series' portfolio security transactions will be
conducted independently, except when decisions are made to purchase or sell
portfolio securities of or for the Series, the other series of the Fund, the
American National Funds Group 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 Funds Board of
Directors and shareholders have determined that such ability to effect
simultaneous transactions may be in the best interest of the Fund and each
Series 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 a Series 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 any Series 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 July 1, 1995. 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 Series 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 Series 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
Series of the Fund, and that of the Adviser for this purpose shall be Xxx
Xxxxx Xxxxx, Xxxxxxxxx, 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.
14. This Investment Advisory Agreement is separate and distinct from, and
neither affects nor is affected by, the Underwriting Agreement to be entered
into 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 CAPITAL FUNDS, INC.
By: XXXXXX X. XXXXXX
President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: XXXXXX X. XXXXXXXX
Vice President
