EXHIBIT 99.B5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
AMERICAN NATIONAL GROWTH FUND, INC. AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS AGREEMENT made and entered into this 30th day of November, 1989, by
and between AMERICAN NATIONAL GROWTH FUND, INC. a MARYLAND Corporation
(hereinafter referred to as the "Fund"), and SECURITIES MANAGEMENT AND
RESEARCH, INC., a Florida Corporation (hereinafter referred to as the
"Adviser").
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 Fund and shall, in
such capacity, supervise the investment and reinvestment of the cash,
securities and other properties comprising the assets of the Fund, subject at
all times to the policies and approval of the Board of Directors 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 Fund, and whether concerning the
individual companies whose securities are included in the Fund's
portfolio, or the industries in which they engage, or with respect
to securities which the Adviser considers desirable for inclusion
in the Fund's portfolio.
(b) Determine what industries and companies shall be represented in
the Fund's portfolio 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 Fund, 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.
The Adviser, as agent for the Fund, shall keep the Fund's 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 Fund 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.
3. Except for those investment-related expenses hereafter expressly
reserved to the Fund, the Adviser will furnish all investment-related
management, executive, administrative and operational services reasonably
necessary to the Fund, either by furnishing the same directly to the Fund or
by reimbursing the Fund for any such investment-related expense not so
excepted but paid by the Fund. 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 Fund's
investment operations; and
(b) Suitable office space, necessary office equipment and utilities
required in connection with the Fund's investment operations.
4. The investment-related expenses reserved to the Fund are as
follows:
(a) Commissions and other expenses incidental to portfolio
transactions;
(b) The charges of the custodian for the Fund's assets (including the
sums, if any, charged to the Fund 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.
5. As its sole compensation for the services, expenses, facilities
and materials supplied to the Fund hereunder, the Fund shall pay to the
Adviser a monthly advisory fee payable as soon as practicable after the last
day of each Monthly Period as defined below. The advisory fee shall be
composed of a basic advisory fee ("Basic Advisory Fee") and a performance
adjustment to the Basic Advisory Fee. The performance adjustment to the Basic
Advisory Fee shall be based upon the investment performance of the Fund
compared to the Lipper Growth Fund Index (the "Lipper Index") published by
Lipper Analytical Services, Inc. The Basic Advisory Fee will be computed as
follows:
BASIC ADVISORY FEE
The Basic Advisory Fee shall be computed each Monthly Period by
applying to the average daily net asset value of the Fund (computed in
the manner set forth herein) determined each day throughout the Monthly
Period one-twelfth (1/12th) of the annual rate as follows:
On the Portion of the Fund's Basic Advisory Fee
Average Daily Net Assets Annual 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 the Fund 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 Fund shares shall be determined
each day by adding the market value of its portfolio securities and
other assets,
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subtracting liabilities and dividing the result by the
number of Fund shares outstanding. Expense and fees of the Fund,
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.
PERFORMANCE ADJUSTMENT OF BASIC ADVISORY FEE
The Basic Advisory Fee annual rate will be adjusted each Monthly
Period by adding to or subtracting from such rate, when appropriate, the
applicable performance adjustment rate percentage shown in the table
below. The resulting advisory fee rate will then be applied to the
average daily net asset value of the Fund for the succeeding Monthly
Period. The advisory fee for such Monthly Period will be one-twelfth
(1/12th) of the resulting dollar figure.
The performance adjustment rate shall vary with the Fund's
performance as compared to the Lipper Index as shown by the following
table:
Percentage
Performance Compared Performance
To Lipper Index Adjustment Rate
-------------------- ---------------
0.10% to 0.99% above +0.02%
1.00% to 1.99% above +0.04%
2.00% to 2.99% above +0.06%
3.00% to 3.99% above +0.08%
4.00% to 4.99% above +0.10%
5.00% to 5.99% above +0.12%
6.00% to 6.99% above +0.14%
7.00% to 7.99% above +0.16%
8.00% to 8.99% above +0.18%
9.00% and above +0.20%
Percentage
Performance Compared Performance
To Lipper Index Adjustment Rate
-------------------- ----------------
0.10% to 0.99% below -0.02%
1.00% to 1.99% below -0.04%
2.00% to 2.99% below -0.06%
3.00% to 3.99% below -0.08%
4.00% to 4.99% below -0.10%
5.00% to 5.99% below -0.12%
6.00% to 6.99% below -0.14%
7.00% to 7.99% below -0.16%
8.00% to 8.99% below -0.18%
9.00% and below -0.20%
The performance period will be calculated as of the last Thursday
of each January through November and the last business day of each
December. The time period between the
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last business day in December and the last Thursday in January, the ten
(10) time periods between the last Thursday in January through October
and the last Thursday of the immediately succeeding month, and the time
period between the last Thursday in November and the last business day
in December shall be referred to herein as the "Monthly Periods". The
performance period which forms the basis for each monthly fee
adjustment calculation shall end on each such last Thursday and last
business day and shall be the immediately preceding thirty-five (35)
Monthly Periods plus the current Monthly Period.
To determine how the Fund's performance compares to the Lipper
Index, the Adviser will determine a monthly percentage change for the
Fund and for the Lipper Index. These percentage changes will be
calculated for each Monthly Period other than January by dividing the
year-to-date percentage changes through the end of each of the Monthly
Periods by the year-to-date percentage changes through the end of the
preceding Monthly Period. The monthly percentage and the year-to-date
percentage change for January will always be the same and will not have
to be calculated separately. A cumulative percentage change for the
Performance Period will then be calculated by compounding the monthly
percentage changes for the preceding thirty-five (35) Monthly Periods
and multiplying that product by the current Monthly Period's percentage
change. After such cumulative percentage change has been calculated for
the Fund and the Lipper Index, such percentage changes are then
compared. The percentage differential resulting from such comparison
shall be the percentage used in the Percentage Performance Compared To
Lipper Index table above.
The adjustment to the Basic Advisory Fee will not be cumulative.
An increased fee will result even though the performance of the Fund
over some period of time shorter than the Performance Period has been
behind that of the Lipper Index, and ,conversely, a reduction in the
Basic Advisory Fee will be made for a month even though the performance
of the Fund over some period of time shorter than the Performance Period
has been ahead of that of the Lipper Index.
As indicated above, the Fund's expenses (including the monthly
Basic Advisory Fee) will be accrued daily. The performance adjustment
for each performance fee period will be computed monthly and accrued
daily in the subsequent monthly period and taken into account in
computing the daily net asset value of a Fund share. However, expenses
in excess of the maximum expense limitation shall not be accrued for the
purpose of computing the daily net asset value of a Fund share.
In the case of termination of this Agreement during any Monthly
Period, the fee for that Monthly Period shall be reduced proportionately
on the basis of the number of business days during which it is in effect
for that Monthly Period. The fee rate will be computed on the basis of
and applied to net assets averaged over that Monthly Period ending on
the last business day on which this Agreement is in effect. The amount
of any performance adjustment to the Basic Advisory Fee will be computed
on the basis of the thirty-six (36) Monthly Periods ending on the last
business day on which this Agreement is in effect provided that if this
Agreement has been in effect less than thirty-six (36) Monthly Periods,
the computation will be made on the basis of the period of time during
which it has been in effect.
The investment advisory fee for each month shall each be payable
as soon as practicable after the last business day of such month.
6. Advisor is affiliated with American National Insurance Company, a
Texas insurance corporation ("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,
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investment information and resources, services, equipment, materials and
facilities to Adviser, some of which will or may be used by Adviser in
meeting its obligations to the Fund 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 Fund pursuant thereto, shall at all times be subject to the Articles of
Incorporation and the current prospectus of the Fund, 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; and
(e) Any other applicable provisions of state or federal laws.
In connection with purchases or sales of portfolio securities for the
account 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 5. hereof.
9. The Adviser shall not be liable for any error of judgement or
mistake of law or for any loss suffered by the Fund 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 August 15, 1990. 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
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.
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 Fund, or
by the Adviser, on sixty (60) 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.
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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 Xxx Xxxxx Xxxxx, Xxxxxxxxx, Xxxxx
00000.
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 Fund.
15. 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.
AMERICAN NATIONAL GROWTH FUND, INC.
By: XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: XXX X. XXXX, XX.
Xxx X. Xxxx, Xx.
Senior Vice President
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