UNITED STATES
Securities and Exchange Commission
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 1
and
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 1
Alamo Growth Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
1777 N.E. Loop 410, Suite 1512
San Antonio, TX 78217
(Address of Principal Executive Offices)
210-829-1800
(Registrant's Telephone Number)
Jack E. Guenther, Jr. 1777 N.E. Loop 410, Suite 1512, San Antonio, TX 78217
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration.
Calculation of Registration Fee Under the Securities Act of 1933
Title of Securities Amount Being Proposed Max Proposed Max Amount of
Being Registered Registered Offering Offering Registration
Aggregate Price Fee
Price
Alamo Growth Fund, Inc. Indefinite $10.00* ** **
Common Stock $.01
par value
* Estimated. This is the actual net asset value per share as of the starting
date.
** Registrant elects to register an indefinite amount of its securities
under Rule 24f-2.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(A) of the
Securities Act of 1933 or until this Registration Statement shall become effect-
ive on such date as the Commission acting to Section 8(A) may determine.
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Cross Reference Sheet
INFORMATION REQUIRED CAPTIONS IN FILING
Part A: IN A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses
Item 3. Condensed Financial Information Not Applicable
Item 4. General Description of Registrant The Fund
Item 5. Management of the Fund Management of the Fund
Item 6. Capital Stock and Other Securities Capitalization
Item 7. Purchase of Securities Being Purchase of Shares -
Offered Reinvestments
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Legal Proceedings Litigation
Part B: STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Fund
Item 13. Investment Objectives and Policies Objectives and Policies
Item 14. Management of the Registrant Officers and Directors of the Fund
Item 15. Control Persons and Principal Control Person
Holders of Securities
Item 16. Investment Advisory and Other Investment Adviser
Services
Item 17. Brokerage Allocation Brokerage
Item 18. Capital Stock and Other Securities Capitalization
Item 19. Purchase, Redemption and Pricing Purchase of Shares
of Securities Being Offered
Item 19. Purchase, Redemption and Pricing Redemption of Shares
of Securities Being Offered
Item 19. Purchase, Redemption and Pricing Pricing of Shares
of Securities Being Offered
Item 20. Tax Status Tax Status
Item 21. Underwriters Not Applicable
Item 22. Calculation of Yield Quotations Not Applicable
of Money Market Funds
Item 23. Financial Statements Financial Statements
Part C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits Financial Statements and Exhibits
Item 25. Persons Controlled by/or under Control Persons
Common Control
Item 26. Number of Holders of Securities Number of Shareholders
Item 27. Indemnifications Indemnification
Item 28. Business and Other Connections Activities of Investment Adviser
of Adviser
Item 29. Principal Underwriters Principal Underwriter
Item 30. Location of Accounts and Records Location of Accounts and Records
Item 31. Management Services Not Applicable
Item 32. Undertakings Undertakings
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INVESTMENT ADVISER PROSPECTUS
ALAMO ADVISERS, INC. ALAMO GROWTH FUND, INC.
1777 N.E. Loop 410, Suite 1512 1777 N.E. Loop 410, Suite 1512
San Antonio, TX 78217 San Antonio, TX 78217
210-829-1800
TABLE OF CONTENTS July 1, 1997
The Fund and Investment Objective. . . 1
Fund Share Purchase. . . . . . . . . . 1
Additional Information . . . . . . . . 1
Fund Expenses. . . . . . . . . . . . . 2
The Fund . . . . . . . . . . . . . . . 2
Objective and Policies
Objective. . . . . . . . . . . . . . 2
Portfolio Turnover Policy. . . . . . 4
Non-Diversification Policy . . . . . 4
Tax Status . . . . . . . . . . . . . . 4
Investment Restrictions. . . . . . . . 5
Investment Adviser . . . . . . . . . . 5
Officers and Directors of the Fund . . 6
Capitalization
Description of Common Stock. . . . . 7
Voting Rights. . . . . . . . . . . . 7
Control Person . . . . . . . . . . . . 7
Purchase of Shares - Reinvestment
Initial Investments. . . . . . . . . 8
Retirement Plans . . . . . . . . . . 8
Reinvestments. . . . . . . . . . . . 8
Whole Shares . . . . . . . . . . . . 8
Pricing of Shares. . . . . . . . . . . 8
Redemption of Shares . . . . . . . . . 9
Brokerage. . . . . . . . . . . . . . . 9
Management of the Fund . . . . . . . . 11
Custodian and Transfer Agent . . . . . 11
Reports to Shareholders. . . . . . . . 11
Auditors . . . . . . . . . . . . . . . 11
Litigation . . . . . . . . . . . . . . 11
Additional Information . . . . . . . . 11
Share Purchase Application . . . . . . 12
Payer's Request for Taxpayer
ID Number. . . . . . . . . . . . . . 13
<PAGE>
ALAMO GROWTH FUND, INC.
SAN ANTONIO, TX 78217
210-829-1800
PROSPECTUS July 1, 1997
The Fund and Investment Objective
Alamo Growth Fund, Inc. ("the Fund") is an open-end non-diversified management
investment company that seeks capital appreciation through investment in the
common stock and/or securities convertible into the common stock of businesses
which the Adviser deems desirable to own. The criteria used by the Adviser will
be based on the Business Economics, Management Quality, Financial Condition and
Stock Price of each business. However, the Fund may invest in debt securities
(bonds) when the Adviser believes these securities offer greater total return
potential than common stocks. Bond investments when made will usually be in
debt securities with an Investment Grade rating by Standard & Poor's (BBB to
AAA). The Adviser may recommend purchase of lower or non-rated bonds when it
deems that the appreciation potential warrants such investments to be made.
Current income from investments will be a subordinate consideration, whereas
long-term appreciation will be the Fund's primary objective.
Fund Share Purchase
Capital shares of the Fund may only be purchased directly from the Fund at net
asset value as next determined after receipt of order. The Board of Directors
has established $10,000 as the minimum initial purchase and $1,000 for
subsequent purchases.
Additional Information
This Prospectus, which should be held for future reference, is designed to set
forth concisely the information that you should know before you invest. A
"Statement of Additional Information" containing more information about the Fund
has been filed with the Securities and Exchange Commission. Such Statement is
dated July 1, 1997, and has been incorporated by reference into the Prospectus.
A copy of the Statement may be obtained without charge, by writing to the Fund
or by calling the telephone number shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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FUND EXPENSES
The following illustrates all expenses and fees that a shareholder of Alamo
Growth Fund, Inc. will incur. The expenses and fees set forth below are the
Fund's estimated expenses for its first fiscal year.
Shareholder Transaction Expenses:
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fees None
IRA Trustee Fees None
Annual Fund Operating Expenses:
Management and Advisory Expenses 1.25%
12b-1 Fees None
Other Expenses after Expense Reimbursement 1.25%
Total Operating Expenses 2.5%
If the expense reimbursement were absent, it is estimated that the Fund's
Other Expenses in the above table would be 3.5%.
The following table is given to assist investors in understanding the various
costs and expenses that an investor in the Fund will bear directly and indir-
ectly. It illustrates the expenses paid on a $1,000 investment over various time
period assuming (a) 5% annual rate of return and (b) redemption at the end of
each time period. This example should not be considered a representation of
past or future expenses or performance. Actual expenses may be greater or less
than those shown.
1 Year 3 Years 5 Years 10 Years
$ 25 $ 77 $131 $280
THE FUND
The Fund was incorporated in Maryland on December 24, 1996, and is applying to
be registered under the Investment Company Act of 1940 (the "1940 Act").
OBJECTIVES AND POLICIES
Objective: The Fund's objective is capital appreciation through investment in
the common stock and/or securities convertible into the common stock of
businesses which the Adviser deems desirable to own. The criteria used by
the Adviser to evaluate investments will be based on Business Economics,
including market share, industry growth rate and circumstances which may
indicate a potential for earnings growth above the company's current trend;
Management Quality, including market leadership and technological leadership;
Financial Condition, including price-earnings ratio, debt-equity ratio and
interest coverage; and Stock Price, including comparisons to historical
levels, stock prices of companies in similar businesses, earnings growth rate,
cash flow, and book and asset values. On the basis of those criteria thought
to be applicable to a particular company, the Adviser will select investments
in companies which it believes are undervalued and have the most attractive
prospects for future appreciation.
The Fund may invest in debt securities (bonds) when the Adviser believes these
securities offer greater total return potential than common stocks. Bond
investments when made will usually be in debt securities with an Investment
Grade rating by Standard & Poor's (BBB to AAA). Although the Adviser may
recommend purchase of lower or non-rated bonds when it deems that the appre-
ciation potential warrants such investments to be made, the Fund will not
invest more than 5% of its assets in bonds rated below BBB, and it will not
invest in bonds with a Standard & Poor's rating below CCC. Bonds rated BBB
by Standard & Poor's may have speculative characteristics and a weaker ability
to pay interest or repay principal under adverse economic conditions or
changing circumstances. Bonds rated below BBB are considered speculative and
involve a significantly greater risk of default than higher rated securities,
and the Fund may lose interest and/or principal on such securities. Current
income from investments will be a subordinate consideration, where as long-
term appreciation will be the Fund's primary objective.
Since the major portion of the Fund's portfolio will normally be invested in
common stocks, the Fund's net asset value may be subject to greater fluctuation
than a portfolio containing a substantial amount of fixed income securities.
There can be no assurance that the primary objective of the Fund will be real-
ized or that any income will be earned nor can there be any assurance that the
Fund's portfolio will not decline in value.
Except for temporary defensive purposes, the Fund intends to have at all times
at least 70% of its investments in securities which the Adviser believes offer
opportunity for growth of capital. No minimum or maximum percentage of the
Fund's assets is required to be invested in common stocks or any other type of
security. When the Adviser believes that securities other than common stocks
offer opportunity for long-term capital appreciation, the Fund may invest in
publicly distributed debt securities, preferred stocks, particularly those which
are convertible into or carry rights to acquire commons stocks, and warrants.
Investments in publicly distributed debt securities and nonconvertible preferred
stocks offer an opportunity for growth of capital during periods of declining
interest rates, when the market value of such securities in general increases.
Except for temporary defensive purposes, cash and money market instruments will
be retained by the Fund only in amounts deemed adequate for current needs and to
permit the Fund to take advantage of investment opportunities. The money market
instruments in which the Fund may invest include conservative fixed-market
securities, such as United States Treasury Bills, certificates of deposit of
U.S. banks (provided that the bank has capital, surplus and undivided profits,
with a value in excess of $100,000,000 at the date of investment), commercial
paper rated A-1 or better by Standard & Poor's Corporation, and commercial paper
master notes.
The Fund will limit to 15% of its assets investments in securities of foreign
issuers or in American Depository Receipts of such issuers. Such investments
may involve risks which are in addition to the usual risks inherent in domestic
investments. In many countries, there is less publicly available information
about issuers than is available in the reports and ratings published about
companies in the United States. In addition, foreign companies may not be
subject to uniform accounting, auditing and financial reporting standards.
Dividends and interest on foreign securities may be subject to foreign with-
holding taxes, which would reduce the Fund's income without providing a tax
credit for the Fund's stockholders. Although the Fund intends to invest in
securities of foreign issuers domiciled in nations which the Fund's investment
adviser considers as having stable and friendly governments, there is the
possibility of expropriation, confiscatory taxation, currency blockage or polit-
ical or social instability which could affect investments in those nations.
Under certain circumstances the Fund may (a) invest in warrants, (b) temporarily
borrow money from banks for emergency or extraordinary borrowings, (c) pledge
its assets to secure borrowings, (d) purchase securities of other investment
companies, and (e) sell securities short. A more complete discussion of the
circumstances in which the Fund may engage in these activities is included in
the Fund's Statement of Additional Information. Except for the investment
policies listed in this paragraph, the investment objective and the other
policies described under this caption are not fundamental policies and may be
changed without stockholder approval. Such changes may result in the Fund
having investment objectives different from the objectives which the stockholder
considered appropriate at the time of investment in the Fund. Stockholders will
receive at least 30 days' prior written notice of any changes in the policies of
the Fund which are not fundamental.
Portfolio Turnover Policy: The Fund does not intend to emphasize short term
trading profits. Accordingly, it is expected that the annual turnover rate will
not exceed 200%. Turnover is computed by dividing the lesser of the Fund's
total purchases of sales of securities within the period by the average monthly
portfolio value of the Fund during such period. Portfolio turnover rates may
vary substantially from year to year, depending on market conditions and
prospects. A high turnover rate will result in higher brokerage expense, which
will be borne by the Fund, and a possible increase in short-term (rather than
long-term) capital gains (or losses).
Non-Diversification Policy: The Fund is classified as being non-diversified
which means that it may invest a relatively high percentage of its assets in the
obligations of a limited number of issues. The Fund, therefore, may be more
susceptible than a more widely diversified fund to any single economic,
political, or regulatory occurrence. The policy of the Fund, in the hope of
achieving its objective as stated above, is one of selective investments rather
than broad diversification. The Fund seeks only enough diversification for
adequate representation among what it considers to be the best performing
securities and to maintain its federal non-taxable status under Sub-Chapter M
of the Internal Revenue Code (see next paragraph).
TAX STATUS
Under provisions of Sub-Chapter M of the Internal Revenue Code of 1954 as
amended, the Fund, by paying out substantially all its investment income and
realized capital gains, expects to be relieved of federal income tax on the
amounts distributed to shareholders. In order to qualify as a "regulated
investment company" under Sub-Chapter M, at least 90% of the Fund's income must
be derived from dividends, interest and gains from securities transactions, no
more than 30% of the Fund's profits may be derived from sales of securities held
less than three months, and no more than 50% of the Fund's assets may be in
security holdings that exceed 5% of the total assets of the Fund at the time of
purchase.
Distribution of any net long term capital gains realized by the Fund in 1997
will be taxable to the shareholder as long term capital gains, regardless of the
length of time Fund shares have been held by the investor. All income realized
by the Fund, including short term capital gains, will be taxable to the share-
holder as ordinary income. Dividends from net income will be made annually or
more frequently at the discretion of the Fund's Board of Directors. Dividends
received shortly after purchase of shares by an investor will have the effect of
reducing the per share net asset value of his shares by the amount of such
dividends or distributions and, although in effect a return of capital, are
subject to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement, you must certify on a W-9 tax form supplied by the
Fund that your Social Security or Taxpayer Identification Number provided is
correct and that you are not currently subject to back-up withholding, or that
you are exempt from back-up withholding.
INVESTMENT RESTRICTIONS
By-laws of the Fund provide the following fundamental investment restrictions;
the Fund may not, except by the approval of a majority of the outstanding
shares; i.e. (a) 67% or more of the voting securities present at a duly called
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or (b) of more than 50% of the outstanding
voting securities, whichever is less:
(a) Act as underwriter for securities of other issuers except insofar as the
Fund may be deemed an underwriter in selling its own portfolio
securities.
(b) Borrow money or purchase securities on margin, but may obtain such short
term credit as may be necessary for clearance of purchases and sales of
securities for temporary or emergency purposes in an amount not exceeding
5% of the value of its total assets.
(c) Sell securities short in an aggregate amount in excess of 10% of the
total assets of the Fund.
(d) Invest in securities of other investment companies except as part of a
merger, consolidation, or purchase of assets approved by the Fund's
shareholders or by purchases with no more than 10% of the Fund's assets
in the open market involving only customary brokers commissions.
(e) Invest more than 25% of its assets at the time of purchase in any one
industry.
(f) Make investments in commodities, commodity contracts or real estate
although the Fund may purchase and sell securities of companies which
deal in real estate or interests therein.
(g) Make loans. The purchase of a portion of a readily marketable issue of
publicly distributed bonds, debentures or other debt securities will not
be considered the making of a loan.
(h) Acquire more than 10% of the securities of any class of another issuer,
treating all preferred securities of an issuer as a single class and all
debt securities as a single class, or acquire more than 10% of the voting
securities of another issuer.
(i) Invest in companies for the purpose of acquiring control.
(j) The Fund may not purchase or retain securities of any issuer if the
officers and directors of the Fund or its Investment Adviser own individ-
ually more than 1/2 of 1% of any class of security or collectively own
more than 5% of such class of securities of such issuer.
(k) Pledge, mortgage or hypothecate any of its assets.
(l) Invest in securities which may be subject to registration under the
Securities Act of 1933 prior to sale to the public or which are not at
the time of purchase readily salable.
(m) Invest more than 5% of the total Fund assets, taken at market value at
the time of purchase, in securities of companies with less than three
years' continuous operation, including the operations of any predecessor.
INVESTMENT ADVISER
Alamo Advisers, Inc. is a Texas corporation that acts as an Investment Adviser
to the Fund. Alamo Advisers, Inc. has no previous experience in advising a
mutual fund. Mr. Jack E. Guenther Jr. is the majority owner, a director and
President of the Investment Adviser and President of the Fund. Mr. Michael J.
Avellar is a 25% owner, a director and an officer of Alamo Advisers, Inc. and an
officer of the Fund. On June 9, 1997, an Investment Advisory Agreement with
Alamo Advisers, Inc. was unanimously approved by the Board of Directors of the
Fund. This Agreement will continue on a year to year basis provided that
approval is voted at least annually by specific approval 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, but, in either event, it must also be approved by
a majority of the directors of the Fund who are neither parties to the Agreement
nor interested persons as defined in the Investment Company Act of 1940 at a
meeting called for the purpose of voting on such approval. Under the Agreement
Alamo Advisers, Inc. will furnish investment advice to the Directors of the
Fund on the basis of a continuous review of the portfolio and recommend to the
Fund when and to what extent securities should be purchased or disposed. The
Agreement may be terminated at any time, without the payment of any penalty, by
the Board of Directors or by vote of a majority of the outstanding voting secur-
ities of the Fund on not more than 60 days' written notice to Alamo Advisers,
Inc. A fee of 1.25% per year on the net assets of the Fund is payable monthly.
Alamo Advisers, Inc. has agreed to absorb expenses of the Fund in excess of
2.5% of the Fund's average net assets, so that the total expenses of the Fund
(other than brokerage commissions, interest and taxes) during the first two
years of operations will not exceed 2.5% of the Fund's average net assets.
Pursuant to its contract with the Fund, the Investment Adviser is required to
render research, statistical, and Advisory services to the Fund; to make spec-
ific recommendations based on the Fund's investment requirements; and to pay the
salaries of those of the Funds employees who are affiliated with the Investment
Adviser. The Fund bears all expenses of its operations other than those borne
by the Investment Adviser. These expenses include, but are not limited to,
legal and accounting fees and compensation for directors who are not affiliated
with the Investment Adviser, administrative services fees and the cost of
printing and sending reports and proxy materials to shareholders, custodial
fees, interest, taxes and brokerage commissions. The Investment Adviser has
paid the initial organization costs of the Fund.
OFFICERS AND DIRECTORS OF THE FUND
Officers and Directors of the Fund, together with their addresses, principal
occupations during the past five years are:
Name and Address Position Principal Occupation Past 5 Yrs
Jack E. Guenther Jr. President Treasurer
1777 N.E. Loop 410, Interested Director Performance Management, Ltd.
Suite 1512 San Antonio, TX
San Antonio, TX 78217
Michael J. Avellar Vice President and Chief Operating Officer
1777 N.E. Loop 410, Secretary Performance Management, Ltd.
Suite 1512 Interested Director San Antonio, TX 78217
Abigail G. Kampmann Interested Director Attorney
112 E. Pecan, Suite 2300 Bayern, Paterson & Aycock
San Antonio, TX 78205 San Antonio, TX
Christopher Allison Director Investment Banker
112 E. Pecan, Suite 1200 M. E. Allison & Co.
San Antonio, TX 78205 San Antonio, TX
Edmund R. McKane Jr. Director Insurance Agent
2135 N.W. Military Drive, McKane, Morgan & Associates
Suite 101 San Antonio, TX
San Antonio, TX 78213
It is estimated that a total of less than $1,000 each will be paid to Mr.
Allison and Mr. McKane for their service to the Fund in 1997. The Fund does not
compensate its officers and directors that are affiliated with the Investment
Adviser except as they may benefit through payment of the advisory fee (see
page 6).
CAPITALIZATION
Description of Common Stock: The authorized capitalization of the Fund consists
of 10,000,000 shares of common stock of $0.01 par value per share. Each share
has equal dividend, distribution and liquidation rights. There are no conver-
sion or preemptive rights applicable to any shares of the Fund. All shares
issued are fully paid and non-assessable. At the date of this Prospectus, there
are no issued and outstanding shares of the Fund; however, Performance Plan,
Ltd. has subscribed for the purchase of 10,000 shares at the price of $10 per
share.
Voting Rights: Each holder of common stocks has one vote for each share held.
Voting rights are non-cumulative, which means that the holders of a majority of
shares of common stock can elect all directors of the Fund if they so choose,
and the holders of the remaining shares will not be able to elect any person as
a director.
The Maryland General Corporation Law permits registered investment companies,
such as the Fund, to operate without an annual meeting of stockholders under
specified circumstances if an annual meeting is not required by the Investment
Company Act of 1940. The Fund has adopted the appropriate provisions in its By-
Laws and does not anticipate holding an annual meeting in any year in which the
election of directors is not required to be acted on by stockholders under the
Investment Company Act of 1940. The Fund also has adopted provisions in its By-
Laws for the removal of directors by the stockholders.
CONTROL PERSON
At the date of this Prospectus, there are no issued and outstanding shares of
the Fund. When more than 25 percent of the Fund's shares are held by one
person, it is presumed that that person will be able to exercise voting control
of the Fund. So long as over 50 percent of the Fund's shares are owned by
five or fewer persons, the Fund will be subject to Personal Holding Company
Tax on any income not distributed to shareholders.
PURCHASE OF SHARES - REINVESTMENTS
Shares of Common Stock may be purchased directly from the Fund. A share
purchase application form is included at the back of the Prospectus. The price
per share is the next determined per share net asset value after receipt of an
application by the Fund. Additional purchase applications may be obtained from
the Fund. Purchase applications should be mailed directly to:
Alamo Growth Fund, Inc.
c/o American Data Services, Inc.
24 West Carver Street
Huntington, NY 11743.
All applications must be accompanied by payment in the form of a check drawn on
a U.S. bank payable to Alamo Growth Fund, Inc. No cash will be accepted. The
Fund will charge a $15 fee against a stockholder's account for any payment
check returned to the custodian. THE STOCKHOLDER WILL ALSO BE RESPONSIBLE
FOR ANY LOSSES SUFFERED BY THE FUND AS A RESULT.
Applications are subject to acceptance by the Fund and are not binding until
so accepted. The Fund does not accept telephone orders for purchase of shares.
The Fund reserves the right to reject applications in whole or part. Shares
of the Fund may also be purchased through a registered broker-dealer who may
charge the investor a fee either at the time of purchase or redemption. The
fee, if charged, is retained by the broker-dealer and not remitted to the Fund
or Adviser.
Initial Investments: THE BOARD OF DIRECTORS OF THE FUND HAS ESTABLISHED $10,000
AS THE MINIMUM INITIAL PURCHASE AND $1,000 AS THE MINIMUM FOR ANY SUBSEQUENT
PURCHASE (except through dividend reinvestment), which minimum amounts are
subject to change at any time. Stockholders will receive written notification
at least 30 days in advance of any changes in such minimum amounts. Shares of
the Fund may be purchased without regard to the foregoing minimum initial
investment by employees, officers and directors of the Fund or the Adviser or
firms providing contractual services to the Fund, and by members of their
"immediate families" (i.e., spouses, siblings, parents, children, grandchildren
and grandparents) and by retirement plans and trusts for their benefit. The
officers of the Fund in their discretion may waive the minimum initial invest-
ment. Stock certificates for shares purchased are not issued unless requested
in writing, and directed to Alamo Growth Fund, Inc. c/o American Data Services,
Inc., 24 West Carver Street, Huntington, NY 11743.
Retirement Plans: Employee benefit, profit-sharing, or retirement plans (such
as 401(k) plans) may purchase shares of Common Stock through financial institu-
tions or other service providers ("Processing Intermediaries"), which may become
stockholders of record of the shares and which may use procedures and impose
restrictions in addition to or different from those applicable to stockholders
who invest directly in the Fund. Processing Intermediaries may charge fees or
assess other charges for the services they provide to their customers. Any such
fee or charge is retained by the Processing Intermediary and is not remitted to
the Fund or its Adviser. Program materials provided by the Processing Inter-
mediary should be read in conjunction with this Prospectus before investing in
this manner. Shares of Common Stock may be purchased through Processing Inter-
mediaries without regard to the Fund's minimum purchase amounts.
Reinvestments: The Fund will automatically retain and reinvest dividends and
capital gains distributions in whole shares and use same for the purchase of
additional shares for the shareholder at net asset value as of the close of
business on the distribution date. Any surplus over whole shares will be held
in a cash account. A shareholder may at any time by letter or forms supplied by
the Fund direct the Fund to pay dividend and/or capital gains distributions, if
any, to such shareholder in cash.
Whole Shares: Only whole shares may be purchased from the Fund. No fractional
shares will be issued. The Fund will maintain an account for each shareholder
of shares for which no certificates have been issued.
PRICING OF SHARES
The net asset value of the Fund's shares is determined as of the close of
business of the New York Stock Exchange on each business day of which that
Exchange is open (presently 4:00 p.m.) Monday through Friday exclusive of
Washington's Birthday, Good Friday, Memorial Day, July 4th, Labor Day, Thanks-
giving, Christmas and New Year's Day. The price is determined by dividing the
value of its securities, plus any cash and other assets less all liabilities,
excluding capital surplus, by the number of shares outstanding. The market
value of securities listed on a national exchange is determined to be the last
recent sales price on such exchange. Listed securities that have not recently
traded and over-the-counter securities are valued at the last bid price in such
market.
Short term paper (debt obligations that mature in less than 60 days) are valued
at amortized cost which approximates market value. Other assets are valued at
fair market value. Other assets are valued at fair value as determined in good
faith by the Board of Directors.
REDEMPTION OF SHARES
The Fund will redeem all or any part of the shares of any shareholder who
tenders a request for redemption (if certificates have not been issued) or cert-
ificates with respect to shares for which certificates have been issued. In
either case, proper endorsements guaranteed either by a national bank or a
member firm of the New York Stock Exchange will be required if the proceeds of
redemption are to be sent to an address or to a person other than as the shares
to be redeemed are registered. The redemption price is the net asset value per
share next determined after notice is received by the Fund for redemption of
shares. The proceeds received by the shareholder may be more or less than his
cost of such shares, depending upon the next asset value per share at the time
of redemption and the difference should be treated by the shareholder as a
capital gain or loss for federal income tax purposes.
Redemption requests must be made in writing and directed to: Alamo Growth Fund,
Inc. c/o American Data Services, Inc., 24 West Carver Street, Huntington, NY
11743. Requests for redemption by telegram and requests which are subject to
any special conditions or which specify an effective date other than as
provided herein cannot be honored.
A request for redemption must be signed by the stockholder or stockholders
exactly as the shares are registered, including the signature of each joint
owner, and must specify either the number of shares or the dollar amount of
shares that are to be redeemed. Additional documentation may be required for
redemptions by corporations, executors, administrators, trustees, guardians,
or others who hold shares in a fiduciary or representative capacity or who are
not natural persons. In case of any questions concerning the nature of such
documentation, please contact the Fund's Transfer Agent at (516) 385-9580.
Redemptions will not be effective or complete until all of the foregoing con-
ditions, including receipt of all required documentation by the Fund, have
been satisfied.
Payment by the Fund will ordinarily be made within seven days after tender. The
Fund may suspend the right of redemption or postpone the date of payment if:
The New York Stock Exchange is closed for other than customary weekend or
holiday closings, or when trading on the New York Stock Exchange is restricted
as determined by the Securities and Exchange Commission or when the Securities
and Exchange Commission has determined that an emergency exists, making disposal
of Fund securities or valuation of net assets not reasonably practicable. The
Fund intends to make payments in cash, however, the Fund reserves the right to
make payments in kind.
BROKERAGE
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to review by the Fund's Board of Directors. In placing purchase and
sale orders for portfolio securities for the Fund, it is the policy of the
Adviser to seek the best execution of orders at the most favorable price in
light of the overall quality of brokerage and research services provided, as
described in this and the following paragraph. In selecting brokers to effect
portfolio transactions, the determination of what is expected to result in best
execution at the most favorable price involves a number of largely judgmental
considerations. Among these are the Adviser's evaluation of the broker's
efficiency in executing and clearing transactions, block trading capability
(including the broker's willingness to position securities) and the broker's
financial strength and stability. The most favorable price to the Fund means
the best net price without regard to the mix between purchase or sale price and
commission, if any. Over-the-counter securities may be purchased and sold
directly with principal market makers who retain the difference in their cost in
the security and its selling price.
In allocating brokerage business for the Fund, the Adviser will take into
consideration the research, analytical, statistical and other information and
services provided by the broker, such as general economic reports and
information, reports or analyses of particular companies or industry groups,
market timing and technical information, and the availability of the brokerage
firm's analysts for consultation. While considered supplemental to the
Adviser's own efforts in the performance of its duties under the Agreement.
Other clients of the Adviser may indirectly benefit from the availability of
these services to the Adviser, and the Fund may indirectly benefit from services
available to the Adviser as a result of transactions for other clients. The
Agreement provides that the Adviser may cause the Fund to pay a broker which
provides brokerage and research services to the Adviser a commission for
effecting a securities transaction in excess of the amount another broker would
have charged for effecting the transaction, if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the value of
brokerage and research services provided by the executing broker viewed in terms
of either the particular transaction or the Adviser's overall responsibilities
with respect to the Fund and the other accounts as to which he exercises invest-
ment discretion.
The Adviser also may take into account the sale of the Fund's shares when
allocating brokerage business for the Fund.
MANAGEMENT OF THE FUND
Shareholders meet in those years in which it is necessary to elect members of
the Board of Directors, select an independent auditor, or vote on any other
items deemed pertinent by the incumbent Board. The Directors are in turn
responsible for determining that the Fund operates in accordance with its stated
objectives, policies, and investment restrictions. The Board appoints officers
to run the Fund and selects an Investment Adviser to provide investment advice.
The Adviser supervises and manages the investment portfolio of the Fund and,
subject to such policies as the Board of Directors of the Fund may determine,
directs the purchase or sale of investment securities in the day-to-day manage-
ment of the Fund. All investment decisions for the Fund are made by an invest-
ment team of at least two analysts, and no single person is primarily
responsible for making investment recommendations to such teams. Under the
Agreement, the Adviser, at its own expense and without reimbursement from the
Fund, will furnish office space, and all necessary office facilities, equipment,
and executive personnel for making the investment decisions necessary for
managing the Fund and maintaining its organization, and will pay the salaries
and fees of all officers and directors of the Fund (except the fees paid to
disinterested directors). For the foregoing, the Adviser will receive a monthly
fee of 1/12 of 1.25% (1.25% per annum) on the daily net assets of the Fund.
The Fund has entered into an Administrative Service Agreement and Fund
Accounting Service Agreement with American Data Services, Inc., Huntington,
NY ("ADS"), pursuant to which ADS will (a) prepare and maintain financial state-
ments, books of account and related documents; (b) determine the Fund's daily
net asset value; and (c) provide data needed to prepare certain reports to be
filed with the Securities and Exchange Commission. The Fund will pay an annual
fee measured by the average net assets of the Fund, subject to certain minimum
fees. It is expected that the Fund will pay the minimum fees in its first year
of operation, which are $27,800.
CUSTODIAN AND TRANSFER AGENT
Crestar Bank, P.O. Box 26665, Richmond, Virginia 23261 acts as custodian of
the Fund's assets. American Data Services, Inc., 24 West Carver Street,
Huntington, New York 11743 acts as the transfer and dividend paying agent of
the Fund.
REPORTS TO SHAREHOLDERS
The Fund sends all shareholders annual reports containing certified financial
statements and other periodic reports, at least semiannually, containing
unaudited financial statements.
AUDITORS
McCurdy & Associates CPA's, Inc., Certified Public Accountants, Westlake, Ohio,
has been selected as the independent accountant and auditor of the Fund.
McCurdy & Associates CPA's, Inc. has no direct or indirect financial interest in
the Fund or the Adviser.
LITIGATION
As of the date of this Prospectus, there was no pending or threatened litigation
involving the Fund in any capacity whatsoever.
ADDITIONAL INFORMATION
This Prospectus omits certain information contained in the registration state-
ment on file with the Securities and Exchange Commission. The registration
statement may be inspected without charge at the principal office of the
Commission in Washington, D.C. and copies of all or part thereof may be obtained
upon payment of the fee prescribed by the Commission. Shareholders may also
direct inquiries to the Fund by phone or at the address given on page 1 of this
Prospectus.
<PAGE>
<PAGE>
SHARE PURCHASE APPLICATION
ALAMO GROWTH FUND, INC.
c/o American Data Services, Inc.
24 West Carver Street
Huntington, NY 11743
(A) Please fill out one of the following four types of accounts:
1. Individual
First Name MI Last Name Social Security Number
2. Joint Owner
First Name MI Last Name Social Security Number
3. Custodial Accounts
Custodian's First Name MI Custodian's Last Name
Minor's First Name MI Minor's Last Name Minor's
Social Security Number
4. All Other Accounts
Name of account Tax Identification Number
(Use this second line if you need it)
B) Biographical and other information about the new account:
Full Address:
Number and Street
City St Zip
Citizen of Home Phone Bus Phone
Dividend Direction: Reinvest all distributions Pay in Cash
Signature of Owner, Trustee or Custodian:
Signature of Joint Owner (if joint account):
Please make check payable to: ALAMO GROWTH FUND, INC.
Amount of Investment Attached $ (Minimum initial purchase $10,000)
All applications are subject to acceptance by the Fund.
<PAGE>
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER
Name as shown on account (if joint account, give name corresponding to TIN):
Street Address:
City, State and Zip Code:
Part 1. - Taxpayer Identification Number
Social Security Number or Employer ID Number
Part 2. - Certification
I certify under penalty of perjury that:
(1) The Social Security or other Tax I.D. Number stated above is correct.
(2) I am not subject to backup withholding because:
a. The IRS has not informed me that I am subject to backup withholding.
b. The IRS has notified me that I am no longer subject to backup
withholding.
OR
I am subject to backup withholding.
I am a U.S. Citizen. Yes No
Certification - Under the penalty of perjury, I certify that the information
provided on this form is true, correct and complete.
Signature Date
<PAGE>
ALAMO GROWTH FUND, INC.
1777 N.E. Loop 410, Suite 1512
San Antonio, TX 78217
210-829-1800
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
July 1, 1997
This Statement is not a prospectus, but should be read in conjunction with the
Fund's current Prospectus dated July 1, 1997. To obtain the Prospectus, please
write the Fund or call the telephone number shown above.
TABLE OF CONTENTS
The Fund . . . . . . . . . . . . . . . 2
Objectives and Policies
Objective . . . . . . . . . . . . 2
Portfolio Turnover Policy . . . . 3
Non-Diversification Policy. . . . 3
Tax Status . . . . . . . . . . . . . . 4
Investment Restrictions. . . . . . . . 4
Investment Adviser . . . . . . . . . . 6
Administrative Services. . . . . . . . 7
Officers and Directors of the Fund . . 7
Capitalization
Description of Common Stock . . . 8
Voting Rights . . . . . . . . . . 8
Control Person . . . . . . . . . . . . 8
Purchase of Shares - Reinvestment. . . 8
Initial Investments . . . . . . . 8
Retirement Plans. . . . . . . . . 9
Reinvestments . . . . . . . . . . 9
Whole Shares. . . . . . . . . . . 9
Redemption of Shares . . . . . . . . . 9
Brokerage. . . . . . . . . . . . . . .10
<PAGE>
<PAGE>
THE FUND
The Fund was incorporated in Maryland on December 24, 1996, and is applying to
be registered under the Investment Company Act of 1940 (the "1940 Act"). The
Fund has no prior business history.
OBJECTIVES AND POLICIES
Objective: The Fund's investment objectives is capital appreciation through
investment in the common stock and/or securities convertible into the common
stock of businesses which the Adviser deems desirable to own. The criteria
used by the Adviser to evaluate investments will be based on Business Economics,
including market share, industry growth rate and circumstances which may
indicate a potential for earnings growth above the company's current trend;
Management Quality, including market leadership and technological leadership;
Financial Condition, including price-earnings ratio, debt-equity ratio and
interest coverage; and Stock Price, including comparisons to historical levels,
stock prices of companies in similar businesses, earnings growth rate, cash
flow, and book and asset values. On the basis of those criteria thought to
be applicable to a particular company, the Adviser will select investments in
companies which it believes are undervalued and have the most attractive
prospects for future appreciation.
The Fund may invest in debt securities (bonds) when the Adviser believes these
securities offer greater total return potential than common stocks. Bond
investments when made will usually be in debt securities with an Investment
Grade rating by Standard & Poor's (BBB to AAA). Although the Adviser may
recommend purchase of lower or non-rated bonds when it deems that the appre-
ciation potential warrants such investments to be made, the Fund will not
invest more than 5% of its net assets in bonds rated below BBB, and it will
not invest in bonds with a Standard & Poor's rating below CCC. Bonds rated
BBB by Standard & Poor's may have speculative characteristics and a weaker
ability to pay interest or repay principal under adverse economic conditions
or changing circumstances. Bonds rated below BBB are considered speculative
and involve a significantly greater risk of default than higher rated securi-
ties, and the Fund may lose interest and/or principal on such securities.
Current income from investments will be a subordinate consideration, whereas
long-term appreciation will be the Fund's primary objective.
Since the major portion of the Fund's portfolio will normally be invested in
common stocks, the Fund's net asset value may be subject to greater fluctuation
than a portfolio containing a substantial amount of fixed income securities.
There can be no assurance that the primary amount of fixed income securities.
There can be no assurance that the primary objective of the Fund will be
realized or that any income will be earned nor can there be any assurance that
the Fund's portfolio will not decline in value.
Except for temporary defensive purposes, the Fund intends to have at all times
at least 70% of its investments in securities which the Adviser believes offer
opportunity for growth of capital. No minimum or maximum percentage of the
Fund's assets is required to be invested in common stocks or any other type of
security. When the Adviser believes that securities other than common stocks
offer opportunity for long-term capital appreciation, the Fund may invest in
publicly distributed debt securities, preferred stocks, particularly those which
are convertible into or carry rights to acquire commons stocks, and warrants.
Investments in publicly distributed debt securities and nonconvertible preferred
stocks offer an opportunity for growth of capital during periods of declining
interest rates, when the market value of such securities in general increases.
Except for temporary defensive purposes, cash and money market instruments will
be retained by the Fund only in amounts deemed adequate for current needs and to
permit the Fund to take advantage of investment opportunities. The money market
instruments in which the Fund may invest include conservative fixed-market
instruments in which the Fund may invest include conservative fixed-income
securities, such as United States Treasury Bills, certificates of deposit of
U.S. banks (provided that the bank has capital, surplus and undivided profits,
with a value in excess of $100,000,000 at the date of investment), commercial
paper rated A-1 or better by Standard & Poor's Corporation, and commercial paper
master notes.
The Fund will limit to 15% of its assets investments in securities of foreign
issuers or in American Depository Receipts of such issuers. Such investments
may involve risks which are in addition to the usual risks inherent in domestic
investments. In many countries, there is less publicly available information
about issuers than is available in the reports and ratings published about
companies in the United States. In addition, foreign companies may not be
subject to uniform accounting, auditing and financial reporting standards.
Dividends and interest on foreign securities may be subject to foreign with-
holding taxes, which would reduce the Fund's income without providing a tax
credit for the Fund's stockholders. Although the Fund intends to invest in
securities of foreign issuers domiciled in nations which the Fund's investment
adviser considers as having stable and friendly governments, there is the
possibility of expropriation, confiscatory taxation, currency blockage or
political or social instability which could affect investments in those nations.
Under certain circumstances the Fund may (a) invest in warrants, (b) temporarily
borrow money from banks for emergency or extraordinary borrowings, (c) pledge
its assets to secure borrowings, (d) purchase securities of other investment
companies, and (e) sell securities short. Except for the investment policies
listed in this paragraph, the investment objective and the other policies
described under this caption are not fundamental policies and may be changed
without stockholder approval. Such changes may result in the Fund having
investment objectives different from the objectives which the stockholder
considered appropriate at the time of investment in the Fund. Stockholders will
receive at least 30 days' prior written notice of any changes in the policies of
the Fund which are not fundamental.
Portfolio Turnover Policy: The Fund does not propose to purchase securities for
short term trading in the ordinary course of operations. Accordingly, it is
expected that the annual turnover rate will not exceed 200%, wherein turnover is
computed by dividing the lesser of the Fund's total purchases or sales of
securities within the period of the average monthly portfolio value of the Fund
during such period. There may be times when management deems it advisable to
substantially alter the composition of the portfolio, in which event, the
portfolio turnover rate might substantially exceed 200%; this would only result
from special circumstances and not from the Fund's normal operations. A high
turnover rate will result in higher brokerage expense, which will be borne by
the Fund, and a possible increase in short-term (rather than long-term)
capital gains (or losses).
Non-Diversification Policy: The Fund is classified as being non-diversified
which means that it may invest a relatively high percentage of its assets in the
obligations of a limited number of issuers. The Fund, therefore, may be more
susceptible than a more widely diversified fund to any single, economic,
political, or regulatory occurrence. The policy of the Fund, in the hope of
achieving its objective as stated above, is one of selective investments rather
than broad diversification. The Fund seeks only enough diversification for
adequate representation among what it considers to be best performing securities
and to maintain its federal non-taxable status under Sub-Chapter M of the
Internal Revenue Code (see next paragraph).
TAX STATUS
Under the provisions of Sub-Chapter M of the Internal Revenue Code of 1954 as
amended, the Fund intends to pay out substantially all its investment income and
realized capital gains, and intends to be relieved of federal income tax on the
amounts distributed to shareholders. In order to qualify as a "regulated
investment company" under Sub-Chapter M, at least 90% of the Fund's income must
be derived from dividends, interest, and gains from securities transactions, no
more than 30% of the Fund's profits may be derived from securities held less
than three months, and no more than 50% of the Fund assets may be held in
security holdings that exceed 5% of the total assets of the Fund at time of
purchase.
Distribution of any net long term capital gains realized by the Fund will be
taxable to the shareholder as long term capital gains, regardless of the length
of time Fund shares have been held by the investor. All income realized by the
Fund including short term capital gains, will be taxable to the shareholder as
ordinary income. Dividends from net income will be made annually or more
frequently at the discretion of the Fund's Board of Directors. Dividends
received shortly after purchase of shares by an investor will have the effect of
reducing the per share net asset value of his shares by the amount of such
dividends or distributions and, although in effect a return of capital, are
subject to federal income taxes.
The Fund is required by Federal Law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement, you must certify on a W-9 tax form supplied by the
Fund that your Social Security or Taxpayer Identification Number provided is
correct and that you are not subject to back-up withholding, or that you are
exempt from back-up withholding.
INVESTMENT RESTRICTIONS
As set forth in the Prospectus dated July 1, 1997, of the Fund, under the
caption "Investment Objective and Policies", the primary investment objective of
the Fund is to produce long-term capital appreciation principally through
investing in common stocks. Current income is a secondary consideration.
Consistent with its investment objective, the By-Laws of the Fund provide the
following investment restrictions which are matters of fundamental policy and
cannot be changed without approval of the holders of the lesser of: (i) 67% of
the Fund's shares present or represented at a stockholder's meeting at which the
holders of more than 50% of such shares are present or represented; or (ii) more
than 50% of the outstanding shares of the Fund.
1. The Fund will not act as an underwriter or distributor of securities other
than shares of the Fund and will not purchase any securities which are
restricted from sale to the public without registration under the Securities
Act of 1933, as amended.
2. The Fund will not borrow money or issue senior securities, except for
temporary bank borrowings or for emergency or extraordinary purposes (but not
for the purpose of purchase of investments) and then only in an amount not
in excess of 5% of the value of its net assets and will not pledge any of its
assets except to secure borrowings and then only to an extent not greater
than 10% of the value of the Fund's net assets. The Fund will not purchase
securities while it has any outstanding borrowings.
3. The Fund will not purchase securities on margin, participate in a joint-
trading account, or write or invest in put or call options. The Fund's
investments in warrants, valued at the lower of cost or market, will not
exceed 5% of the value of the Fund's net assets and of such 5% not more than
2% of the Fund's net assets at the time of purchase may be invested in
warrants that are not listed on the New York or American Stock Exchanges.
4. When the Fund effects a short sale, it must put in a segregated account (not
with the broker) an amount of cash or United States government securities
equal to the difference between (a) the market value of the securities sold
short at the time they were sold short and (b) any cash or United States
government securities required to be deposited as collateral with the broker
in connection with the short sale (not including the proceeds from the short
sale). In addition, until the Fund repurchases the security sold short, it
must daily maintain the segregated account at such a level that (1) the
amount deposited in it plus the amount deposited with the broker as
collateral will equal the current market value of the securities sold short,
and (2) the amount deposited in it plus the amount deposited with the broker
as collateral will not be less than the market value of the securities at the
time they were sold short. Short sales of securities by the Fund will not
result in collateral deposits plus separate account deposits exceeding, in
total, 10% of the total assets of the Fund.
5. The Fund will not purchase securities of other investment companies except
(a) as part of a plan of merger, consolidation or reorganization approved by
the stockholders of the Fund or (b) securities of registered closed-end
investment companies on the open market where no commission or profit
results, other than the usual and customary broker's commission and where as
a result of such purchase the Fund would hold less than 3% of any class of
securities, including voting securities, of any registered closed-end
investment company and less than 10% of the Fund's assets, taken at current
value, would be invested in securities of registered closed-end investment
companies.
6. The Fund will not concentrate 25% or more of the value of its total assets,
determined at the time an investment is made, exclusive of government
securities, in securities issued by companies engaged in the same industry.
7. The Fund will not purchase or sell commodities or commodities contracts.
8. The Fund will not purchase or sell real estate (including limited partnership
interests of limited partnerships investing in real estate, but not including
readily marketable investments in real estate investment trusts or readily
marketable securities of companies investing in real estate) or real estate
mortgage loans.
9. The Fund will not lend money (except by purchasing publicly distributed debt
securities or entering into repurchase agreements provided that repurchase
agreements maturing in more than seven days plus all other illiquid
securities will not exceed 10% of the Fund's total assets) and will not lend
its portfolio securities.
10. The Fund will not make investments for the purpose of exercising control
or management of any company.
11. The Fund will not acquire or retain any security issued by a company if
any of the directors or officers of the Fund, or directors, officers or
other affiliated persons of its investment adviser beneficially own more
than 1/2% of such company's securities and all of the above persons
owning more than 1/2% own together more than 5% of its securities.
12. The Fund will not acquire or retain any security issued by a company, an
officer or director of which is an officer or director of the Fund or an
officer director or other affiliated person of its investment adviser.
INVESTMENT ADVISER
Alamo Advisers, Inc. is a Texas corporation that acts as an Investment Adviser
to the Fund. Alamo Advisers, Inc. has no previous experience in advising a
mutual fund. Mr. Jack E. Guenther Jr. is the majority owner, director and
President of the Investment Adviser and is also a director and President of the
Fund. Mr. Michael J. Avellar is a 25% owner, a director and an officer of Alamo
Advisers, Inc. and a director and an officer of the Fund.
On June 9, 1997, an Investment Advisory Agreement with Alamo Advisers, Inc.
was approved by the Board of Directors of the Fund. This Agreement will
continue on a year-to-year basis provided that approval is voted at least
annually by specific approval 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,
but in either event, it must also be approved by a majority of the Directors of
the Fund who are neither parties to the Agreement nor interested persons as
defined in the Investment Company Act of 1940 at a meeting called for the
purpose of voting on such approval.
Under the Agreement, Alamo Advisers, Inc. will furnish investment advice to the
Fund's Directors on the basis of a continuous review of the portfolio and
recommend to the Fund when and to what extent securities should be purchased or
disposed. The Agreement may be terminated at any time, without payment of
penalty, by the Board of Directors or by vote of a majority of the outstanding
voting securities of the Fund on not more than 60 days' written notice to Alamo
Advisers, Inc. In the event of its assignment, the agreement will terminate
automatically. Ultimate decisions as to the investment policy and as to
individual purchases and sales of securities will be made by the Fund's officers
and directors. For these services the Fund has agreed to pay Alamo Advisers,
Inc. a fee of 1.25% per year of the Fund's net assets. All fees are computed on
the average daily closing net asset value of the Fund and are payable monthly.
Alamo Advisers, Inc. has agreed to absorb expenses of the Fund in excess of
2.5% of the Fund's average net assets, so that the total expenses of the Fund
(other than brokerage commissions, interest and taxes) during the first two
years of operations will not exceed 2.5% of the Fund's average net assets.
Pursuant to its contract with the Fund, the Investment Adviser is required to
render research, statistical, and advisory services to the Fund; to make
specific recommendations based on the Fund's investment requirements; and to pay
the salaries of the Fund's employees who are affiliated with the Investment
Adviser. The Fund bears all expenses of its operations other than those borne by
the Investment Adviser. These expenses include, but are not limited to, legal
and accounting fees and compensation for directors who are not affiliated with
the Investment Adviser, transfer agent fees and the cost of printing and sending
reports and proxy materials to shareholders, custodial fees, interest, taxes and
brokerage commissions. The Investment Adviser will pay the initial organiza-
tional costs of the Fund.
ADMINISTRATIVE SERVICES
The Fund has entered into an Administrative Service Agreement and Fund
Accounting Service Agreement with American Data Services, Inc., Huntington, NY
("ADS"), pursuant to which ADS will (a) prepare and maintain financial state-
ments, books of account and related documents; (b) determine the Fund's daily
net asset value; and (c) provide data needed to prepare certain reports to be
filed with the Securities and Exchange Commission. The Fund will pay an annual
fee measured by the average net assets of the Fund, subject to certain minimum
fees. It is expected that the Fund will pay the minimum fees in its first year
of operation, which are $27,800. The agreements may be cancelled by either
party upon 90 days' written notice. ADS provides similar services for other
companies.
OFFICERS AND DIRECTORS OF THE FUND
Officers and Directors of the Fund, together with their addresses, principal
occupations during the past five years are:
Name and Address Position Principal Occupation
Past Five Years
Jack E. Guenther Jr.1,2 President Treasurer
1777 N.E. Loop 410, Director Performance Management, Ltd.3
Suite 1512 Interested Person San Antonio, TX 78217
San Antonio, TX
Michael J. Avellar4 Vice President and Chief Operating Officer
1777 N.E. Loop 410, Secretary Performance Management, Ltd.3
Suite 1512 Director San Antonio, TX
San Antonio, TX 78217 Interested Person
Abigail G. Kampmann1,5 Director Attorney
112 E. Pecan, Suite 2300 Interested Person Bayern, Paterson & Aycock
San Antonio, TX 78205 San Antonio, TX
Christopher Allison Director Investment Banker
112 E. Pecan, Suite 1200 M. E. Allison & Co.
San Antonio, TX 78205 San Antonio, TX
Edmund R. McKane, Jr. Director Insurance Agent
2135 N.W. Military Drive, McKane, Morgan & Associates
Suite 101 San Antonio, TX
San Antonio, TX 78213
1 Mr. Guenther and Ms. Kampmann are siblings.
2 Mr. Guenther is President, Treasurer, Director and Majority Owner of Alamo
Advisers, Inc, the Fund's investment adviser.
3 Performance Management, Ltd. provides services to franchised automobile
dealerships.
4 Mr. Avellar is Vice President, Secretary, Director and minority owner of Alamo
Advisers, Inc.
5 Ms. Kampmann is a Director and a minority owner of Alamo Advisers, Inc.
It is estimated that a total of less than $1,000 each will be paid to Mr.
Allison and Mr. McKane for their service to the Fund in 1997. The Fund does not
compensate its officers and directors that are affiliated with the Investment
Adviser except as they may benefit through payment of the advisory fee.
CAPITALIZATION
Description of Common Stock: The authorized capitalization of the Fund consists
of 10,000,000 shares of common stock of $.01 par value per share. Each share
has equal dividend, distribution and liquidation rights. There are no conver-
sion or preemptive rights applicable to any shares of the Fund. All shares
issued are fully paid and non-assessable.
Voting Rights: Each holder of common stocks has one vote for each share held.
Voting rights are non-cumulative, which means that the holders of a majority of
shares can elect all the directors of the Fund if they so choose, and the
holders of the remaining shares will not be able to elect any person as a
director.
CONTROL PERSON
At the date of the Prospectus, there are no issued and outstanding shares of the
Fund. When more than 25 percent of the Fund's shares are held by one person,
it is presumed that that person will be able to exercise voting control of the
Fund. So long as over 50 percent of the Fund's shares are owned by five or
fewer persons, the Fund will be subject to Personal Holding Company Tax on any
income not distributed to shareholders.
PURCHASE OF SHARES - REINVESTMENTS
Shares of Common Stock may be purchased directly from the Fund. A share
purchase application form is included at the back of the Prospectus. The price
per share is the next determined per share net asset value after receipt of an
application by the Fund. Additional purchase applications may be obtained from
the Fund. Purchase applications should be mailed directly to:
Alamo Growth Fund, Inc.
c/o American Data Services, Inc.
24 West Carver Street
Huntington, NY 11743.
All applications must be accompanied by payment in the form of a check drawn on
a U.S. bank payable to Alamo Growth Fund, Inc. No cash will be accepted. The
Fund will charge a $15 fee against a stockholder's account for any payment
check returned to the custodian. THE STOCKHOLDER WILL ALSO BE RESPONSIBLE
FOR ANY LOSSES SUFFERED BY THE FUND AS A RESULT.
Applications are subject to acceptance by the Fund and are not binding until
so accepted. The Fund does not accept telephone orders for purchase of shares.
The Fund reserves the right to reject applications in whole or part. Shares
of the Fund may also be purchased through a registered broker-dealer who may
charge the investor a fee either at the time of purchase or redemption. The
fee, if charged, is retained by the broker-dealer and not remitted to the Fund
or Adviser.
Initial Investments: THE BOARD OF DIRECTORS OF THE FUND HAS ESTABLISHED $10,000
AS THE MINIMUM INITIAL PURCHASE AND $1,000 AS THE MINIMUM FOR ANY SUBSEQUENT
PURCHASE (except through dividend reinvestment), which minimum amounts are
subject to change at any time. Stockholders will receive written notification
at least 30 days in advance of any changes in such minimum amounts. Shares of
the Fund may be purchased without regard to the foregoing minimum initial
investment by employees, officers and directors of the Fund or the Adviser or
firms providing contractual services to the Fund, and by members of their
"immediate families" (i.e., spouses, siblings, parents, children, grandchildren
and grandparents) and by retirement plans and trusts for their benefit. The
officers of the Fund in their discretion may waive the minimum initial invest-
ment. Stock certificates for shares purchased are not issued unless requested
in writing, and directed to Alamo Growth Fund, Inc. c/o American Data
Services, Inc., 24 West Carver Street, Huntington, NY 11743.
Retirement Plans: Employee benefit, profit-sharing, or retirement plans (such
as 401(k) plans) may purchase shares of Common Stock through financial institu-
tions or other service providers ("Processing Intermediaries"), which may become
stockholders of record of the shares and which may use procedures and impose
restrictions in addition to or different from those applicable to stockholders
who invest directly in the Fund. Processing Intermediaries may charge fees or
assess other charges for the services they provide to their customers. Any such
fee or charge is retained by the Processing Intermediary and is not remitted to
the Fund or its Adviser. Program materials provided by the Processing Inter-
mediary should be read in conjunction with this Prospectus before investing in
this manner. Shares of Common Stock may be purchased through Processing Inter-
mediaries without regard to the Fund's minimum purchase amounts.
Reinvestments: The Fund will automatically retain and reinvest dividends and
capital gains distributions in whole shares and use same for the purchase of
additional shares for the shareholder at net asset value as of the close of
business on the distribution date. Any surplus over whole shares will be held
in a cash account. A shareholder may at any time by letter or forms supplied by
the Fund direct the Fund to pay dividends and/or capital gains distributions, if
any, to such shareholder in cash.
Whole Shares: Whole shares may be purchased from the Fund. No fractional
shares will be issued. The Fund will maintain an account for each shareholder
of shares for which no certificates have been issued.
REDEMPTION OF SHARES
The Fund will redeem all or any part of the shares of any shareholder who
tenders a request for redemption when certificates have not been issued. When
certificates have been issued then certificates need to accompany a request for
redemption. In either case, proper endorsements guaranteed either by a national
bank or member firm of the New York Stock Exchange will be required if the
proceeds of redemption are to be sent to an address or to a person other than as
the shares to be redeemed are registered.
The redemption price is the net asset value per share next determined after
notice is received by the Fund for redemption of shares. The proceeds received
by the shareholder may be more or less than his cost of such shares, depending
upon the net asset value per share at the time of redemption and the difference
should be treated by the shareholder as a capital gain or loss for income tax
purposes.
Redemption requests must be made in writing and directed to: Alamo Growth Fund,
Inc. c/o American Data Services, Inc., 24 West Carver Street, Huntington, NY
11743. Requests for redemption by telegram and requests which are subject to
any special conditions or which specify an effective date other than as pro-
vided herein cannot be honored.
A request for redemption must be signed by the stockholder or stockholders
exactly as the shares are registered, including the signature of each joint
owner, and must specify either the number of shares or the dollar amount of
shares that are to be redeemed. Additional documentation may be required for
redemptions by corporations, executors, administrators, trustees, guardians, or
others who hold shares in a fiduciary or representative capacity or who are not
natural persons. In case of any questions concerning the nature of such docu-
mentation, please contact the Fund's Transfer Agent at (516) 385-9580.
Redemptions will not be effective or complete until all of the foregoing
conditions, including receipt of all required documentation by the Fund, have
been satisfied.
Payment by the Fund will ordinarily be made within seven days after tender. The
Fund may suspend the right of redemption or postpone the date of payment if: The
New York Stock Exchange is closed for other than customary weekend or holiday
closings, or when trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission or when the Securities and
Exchange Commission has determined that an emergency exists, making disposal of
Fund securities or valuation of net assets not practicable. The Fund intends to
make payments in cash, to the extent possible; however, the Fund reserves the
right to make payments in kind.
BROKERAGE
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to review by the Fund's Board of Directors. In placing purchase and
sale orders for portfolio securities for the Fund, it is the policy of the
Adviser to seek the best execution of orders at the most favorable price in
light of the overall quality of brokerage and research services provided, as
described in this and the following paragraph. In selecting brokers to effect
portfolio transactions, the determination of what is expected to result in best
execution at the most favorable price involves a number of largely judgmental
considerations. Among these are the Adviser's evaluation of the broker's
efficiency in executing and clearing transactions, block trading capability
(including the broker's willingness to position securities) and the broker's
financial strength and stability. The most favorable price to the Fund means
the best net price without regard to the mix between purchase or sale price and
commission, if any. Over-the-counter securities may be purchased and sold
directly with principal market makers who retain the difference in their cost in
the security and its selling price.
In allocating brokerage business for the Fund, the Adviser will take into
consideration the research, analytical, statistical and other information and
services provided by the broker, such as general economic reports and informa-
tion, reports or analyses of particular companies or industry groups, market
timing and technical information, and the availability of the brokerage firm's
analysts for consultation. While considered supplemental to the Adviser's own
efforts in the performance of its duties under the Agreement. Other clients of
the Adviser may indirectly benefit from the availability of these services to
the Adviser, and the Fund may indirectly benefit from services available to the
Adviser as a result of transactions for other clients. The Agreement provides
that the Adviser may cause the Fund to pay a broker which provides brokerage and
research services to the Adviser a commission for effecting a securities trans-
action in excess of the amount another broker would have charged for effecting
the transaction, if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of brokerage and research
services provided by the executing broker viewed in terms of either the
particular transaction or the Adviser's overall responsibilities with respect to
the Fund and the other accounts as to which he exercises investment discretion.
The Adviser also may take into account the sale of the Fund's shares when
allocating brokerage business for the Fund.
<PAGE>
<PAGE>
ALAMO GROWTH FUND, INC.
1777 N.E. Loop 410, Suite 1512
San Antonio, TX 78217
210-829-1800
FORM N-1A
PART C - OTHER INFORMATION
Contents Page #
1. Financial Statements and Exhibits 1
2. Control Persons 1
3. Number of Shareholders 1
4. Indemnification 1
5. Activities of Investment Adviser 3
6. Principal Underwriters 4
7. Location of Accounts and Records 4
8. Management Services 4
9. Distribution Expenses 4
10. Undertakings 4
11. Signatures 5
Exhibits
<PAGE>
<PAGE>
1. a. Financial Statements - The Fund will file an amended Registration
Statement with certified financial statements in accordance with the
undertaking set forth below.
b. Exhibits
(1) Registrant's Articles of Incorporation; Exhibit 1 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under
the Securities Act of 1933.
(2) Registrant's By-Laws; Exhibit 2 to Registrant's Registra-
tion Statement on Form N-1A is incorporated by reference
pursuant to Rule 411 under the Securities Act of 1933.
(3) Investment Advisory Agreement dated June 9, 1997, is filed
herewith.
Expense Limitation Agreement dated June 9, 1997, is filed
herewith.
(8) Custody Service Agreement; Exhibit 5 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.
(9) Fund Accounting Service Agreement; Exhibit 6 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securites Act
of 1933.
Administrative Service Agreement; Exhibit 7 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.
(10) Opinion of Counsel for Registrant; Exhibit 8 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act of
1933.
(13) Subscription Agreement; Exhibit 9 to Registrant's Registra-
tion Statement on Form N-1A is incorporated by reference
pursuant to Rule 411 under the Securities Act of 1933.
2. Control Persons - not applicable
3. Number of Shareholders - Alamo Growth Fund, Inc. has no shareholders as
of filing.
4. Indemnification - Registrant's Board of Directors has adopted the
following By-Laws which is in full force and effect and has not been
modified:
Section 7. Indemnification.
A. The Corporation shall indemnify all of its corporate
representatives against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
them in connection with the defense of any action, suit or proceeding,
or threat or claim of such action, suit or proceeding, whether civil,
criminal, administrative, or legislative, no matter by whom brought, or
in any appeal in which they or any of them are made parties or a party
by reason of being or having been a corporate representative, if the
corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Corporation
and with respect to any criminal proceeding, if he had no reasonable
cause to believe his conduct was unlawful, provided that the Corporation
shall not indemnify corporate representatives in relation to matters as
to which any such corporate representative shall be adjudged in such
action, suit or proceeding to be liable for gross negligence, willful
misfeasance, bad faith, reckless disregard of the duties and obligations
involved in the conduct of his office or when indemnification is
otherwise not permitted by the Maryland General Corporation Law.
B. In the absence of any adjudication which expressly absolves the
corporate representative or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that
indemnification of the corporate representative is proper because he has
met the applicable standard of conduct set forth in paragraph A. Such
determination shall be made: (i) by the Board of Directors, by a
majority vote of a quorum which consists of directors who were not
parties to the action, suit or proceeding, or if such a quorum cannot be
obtained, then by a majority vote of a committee of the Board consisting
solely of two or more directors, not, at the time, parties to the action,
suit or proceeding and who were duly designated to act in the matter by
the full Board in which the designated directors who are parties to the
action, suit or proceeding may participate; or (ii) by special legal
counsel selected by the Board of Directors or a committee of the Board
by vote as set forth in (i) of this paragraph, or, if the requisite
quorum of the bull Board cannot be obtained therefor and the committee
cannot be established, by a majority vote of the full Board in which
directors who are parties to the action, suit or proceeding may
participate.
C. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall create a rebuttable presumption that the person was
guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard to the duties and obligations involved in the conduct of his
or her office, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his or her conduct was unlawful.
D. Expenses, including attorneys' fees, incurred in the preparation
of and/or presentation of the defense of a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the
manner provided in Section 2-418(F) of the Maryland General Corporation
Law upon receipt of: (i) an undertaking by or on behalf of the corporate
representative to repay such amount unless it shall ultimately be
determined that he or she is entitled to be indemnified by the
Corporation as authorized in this By-Law; and (ii) a written affirmation
by the corporate representative of the corporate representative's good
faith belief that the standard of conduct necessary for indemnification
by the Corporation has been met.
E. The indemnification provided by this By-Law shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under these By-Laws, any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person subject to the limitations imposed
form time to time by the Investment Company Act of 1940, as amended.
F. This Corporation shall have power to purchase and maintain
insurance on behalf of any corporate representative against any liability
asserted against him or her and incurred by him or her in such capacity
or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such
liability under this By-Law provided that no insurance may be purchased
or maintained to protect any corporate representative against liability
for gross negligence, willful misfeasance, bad faith or reckless
disregard of the duties and obligations involved in the conduct of his
or her office.
G. "Corporate Representative" means an individual who is or was a
director, officer agent or employee of the Corporation or who serves or
served another corporation, partnership, joint venture, trust or other
enterprise in one of these capacities at the request of the Corporation
and who, by reason of his or her position, is, was, or is threatened to
be made, a party to a proceeding described herein.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant, the registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
5. Activities of Investment Adviser - Alamo Advisers, Inc.'s activity at the
present time is performance of its Investment Advisory Agreement
currently effective with the Alamo Growth Fund, Inc. Alamo Advisers,
Inc. has no previous experience in advising a mutual fund.
Mr. Jack E. Guenther Jr., President of the Fund and of the Adviser is
employed as Treasurer of Performance Management, Ltd., 1777 N.E. Loop
410, Suite 1512, San Antonio, TX 78217, which provides management
services to businesses, including automobile dealerships. Mr. Guenther
also is an officer or director of 10 other privately held businesses.
Mr. Michael J. Avellar, Vice President of the Fund and of the Adviser is
employed as the Chief Operating Officer of Performance Management, Ltd.
Mr. Avellar also is an officer or director of 20 other privately held
businesses.
Ms. Abigail G. Kampmann is a Director of the Fund and of the Adviser.
Ms. Kampmann is employed as a lawyer by the firm of Bayern, Paterson &
Aycock, P.C., 112 E. Pecan, Suite 2300, San Antonio, TX 78205. Ms.
Kampmann is an officer or director of one other privately held business.
6. Principal Underwriter - The Fund acts as its own underwriter.
7. Location of Accounts and Records - Fund records concerning and generated
by the accounting, administrative and transfer agency activities per-
formed by American Data Services, Inc. are held at the offices of
American Data Services, Inc. at 24 West Carver Street, Huntington,
NY 11743. Securities and records related to custodial services pro-
vided to the Fund by Crestar Bank are held by Crestar Bank at 919 E.
Main Street, Richmond, VA 23261. All other Fund records are held in
the Fund's corporate headquarters at 1777 N.E. Loop 410, Suite 1512,
San Antonio, TX 78217.
8. Management Services - Not applicable.
9. Distribution Expenses - The Fund currently bears no distribution
expenses.
10. Undertakings - The Fund undertakes to file an amendment to the
Registration Statement with certified financial statements showing the
initial capital record before accepting subscriptions from any persons
in excess of 25. The Fund also undertakes to file a post-effective
amendment using financial statements, which need not be certified, within
four to six months from the effective date of the Fund's Registration
Statement.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Alamo Growth Fund, Inc. certifies that it meets all of
the requirements for effectiveness of this Registration Statement and has duly
caused this Amendment to Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of San Antonio and
State of Texas, on the 10th day of June 1997.
ALAMO GROWTH FUND, INC.
By: /s/ Jack E. Guenther Jr.
Jack E. Guenther Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
Signatures Title Date
Jack E. Guenther Jr. President, Treasurer and Director June 10, 1997
Michael J. Avellar Vice President, Secretary and Director June 10, 1997
Abigail G. Kampmann Director June 10, 1997
/s/ Jack E. Guenther Jr.
JACK E. GUENTHER JR.
/s/ Michael J. Avellar
MICHAEL J. AVELLAR
/s/ Abigail G. Kampmann
ABIGAIL G. KAMPMANN
ALAMO GROWTH FUND, INC.
FORM N-1A
EXHIBIT INDEX
1. Investment Advisory Agreement dated June 9, 1997
2. Expense Limitation Agreement dated June 9, 1997
Exhibit 1
INVESTMENT ADVISORY AGREEMENT
Agreement made this 9th day of June 1997 between Alamo Growth Fund,
Inc., a Maryland corporation (the "Fund"), and Alamo Advisers, Inc., a Texas
corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS the Fund is in the process of registering with the Securities
and Exchange Commission as an open-end management investment company under the
Investment Company Act of 1940 (the "Act");
WHEREAS upon so registering with the Securities and Exchange
Commission, the Fund will be a registered investment company satisfying the
conditions of Section 10(d) of the Act; and
WHEREAS the Fund desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940 and
which is engaged principally in the business of rendering investment supervisory
services within the meaning of Section 202(a)(13) of the Investment Advisers Act
of 1940, as its investment adviser.
NOW, THEREFORE, the Fund and the Adviser agree as follows:
1. Employment. The Fund hereby employs the Adviser to manage the
investment and reinvestment of the assets of the Fund for the period and on the
terms set forth in this Agreement. The Adviser hereby accepts such employment
for the compensation herein provided and agrees during such period to render the
services and to assume the obligations herein set forth.
2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Fund, and, subject to such policies as
the board of directors of the Fund may determine, direct the purchase and sale
of investment securities in the day to day management of the Fund. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund. However, one or more stockholders, officers, directors or employees of
the Adviser may serve as directors and/or officers of the Fund, but without
compensation or reimbursement of expenses for such services from the Fund.
Nothing herein contained shall be deemed to require the Fund to take any action
contrary to its Articles of Incorporation or any applicable statute or
regulation, or to relieve or deprive the board of directors of the Fund of its
responsibility for, and control of, the affairs of the Fund.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Fund, shall furnish office space, and all necessary
office facilities, equipment and executive personnel for managing the invest-
ments of the Fund. The Adviser shall pay the salaries and fees of all officers
and directors of the Fund (except the fees paid to those directors who are not
interested persons of the Adviser, as defined in the Act, and who are not
officers or employees of the Fund). The Adviser also shall bear all sales and
promotional expenses of the Fund, except for expenses incurred in complying with
laws regulating the issue or sale of securities. Fees paid for attendance at
meetings of the Fund's board of directors to directors of the Fund who are not
interested persons of the Adviser, as defined in the Act, as amended, shall be
borne by the Fund. The Fund shall bear all other expenses initially incurred by
it, provided that the total expenses borne by the Fund, including the Adviser's
fee but excluding all federal, state and local taxes, interest, brokerage
commissions and extraordinary items, shall not in any year exceed that percent-
age of the average net asset value of the Fund for such year, as determined by
valuations made as of the close of each business day, which is the most
restrictive percentage provided by the state laws of the various states in which
the Fund's common stock is qualified for sale. The expenses of the Fund's
operations borne by the Fund include by way of illustration and not limitation,
the costs of preparing and printing its registration statements required under
the Securities Act of 1933 and the Act (and amendments thereto), the expense of
registering its shares with the Securities and Exchange Commission and in the
various states, the printing and distribution cost of prospectuses mailed to
existing stockholders, the cost of stock certificates, director and officer
liability insurance, reports to stockholders, reports to government authorities
and proxy statements, interest charges, taxes, legal expenses, salaries of
administrative and clerical personnel, association membership dues, auditing and
accounting services, insurance premiums, brokerage and other expenses connected
with the execution of portfolio securities transactions, fees and expenses of
the custodian of the Fund's assets, expenses of calculating the net asset value
and repurchasing and redeeming shares, charges and expenses of dividend
disbursing agents, registrars and stock transfer agents and the cost of keeping
all necessary stockholder records and accounts.
4. Compensation of the Adviser. For the services and facilities
to be rendered and the charges and expenses to be assumed by the Adviser
hereunder, the Fund shall pay the Adviser an advisory fee, paid monthly in
arrears, based on the average net asset value of the Fund, as determined by
valuations made as of the close of each business day of the month. The advisory
fee shall be 1/12 of 1.25% of such net asset value. For any month in which this
Agreement is not in effect for the entire month, such fee shall be reduced
proportionately on the basis of the number of calendar days during which it is
in effect and the fee computed upon the average net asset value of the business
days during which it is so in effect.
5. Ownership of Shares of the Fund. Except in connection with the
initial capitalization of the Fund, the Adviser shall not take, and shall not
permit any of its stockholders, officers, directors or employees to take, a long
or short position in the shares of the Fund, except for the purchase of shares
of the Fund for investment purposes at the same price as that available to the
public at the time of purchase.
6. Exclusivity. The services of the Adviser to the Fund hereunder
are not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others as long as the services hereunder are not impaired thereby.
Although the Adviser has permitted and is permitting the Fund to use the name
"Alamo", it is understood and agreed that the Adviser reserves the right to use
and to permit other persons, firms or corporations, including investment
companies, to use such name, and that the Fund will not use such name if the
Adviser ceases to be the Fund's sole investment adviser. During the period that
this Agreement is in effect, the Adviser shall be the Fund's sole investment
adviser.
7. Liability. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Fund
or to any stockholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder, or for any losses that may be
sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Adviser may cause the Fund to pay
a broker-dealer which provides brokerage and research services, as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934 (the
"Exchange Act"), to the Adviser a commission for effecting a securities
transaction in excess of the amount another broker-dealer would have charged for
effecting such transaction, if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of brokerage and
research services provided by the executing broker-dealer viewed in terms of
either that particular transaction or his overall responsibilities with respect
to the accounts as to which he exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act).
9. Amendments. This Agreement constitutes the entire agreement
and understanding of the parties with respect to its subject matter, and
supersedes all other prior negotiations, understandings and agreements between
the parties concerning the subject matter hereof. This Agreement may be amended
by the mutual consent of the parties; provided, however, that in no event may it
be amended without the approval of the board of directors of the Fund in the
manner required by the Act, and by the vote of the majority of the outstanding
voting securities of the Fund, as defined in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the Fund or by
a vote of the majority of the outstanding voting securities of the Fund, as
defined in the Act, upon giving sixty (60) days' written notice to the Adviser.
This Agreement may be terminated by the Adviser at any time upon the giving of
sixty (60) days' written notice to the Fund. This Agreement shall terminate
automatically in the event of its assignment (as defined in Section 2(a)(4) of
the Act). Subject to prior termination as hereinbefore provided, this Agreement
shall continue in effect for two (2) years from the date hereof and indefinitely
thereafter, but only so long as the continuance after such two (2) year period
is specifically approved annually by (i) of the board of directors of the Fund
or by the vote of the majority of the outstanding voting securities of the Fund,
as defined in the Act, and (ii) the board of directors of the Fund in the manner
required by the Act, provided that any such approval may be made effective not
more than sixty (60) days thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be execute don the day first above written.
ALAMO ADVISERS, INC.
By: By:
Secretary President
ALAMO GROWTH FUND, INC.
By: By:
Secretary President
Exhibit 2
EXPENSE REIMBURSEMENT AGREEMENT
Agreement made this 9th day of June 1997 between Alamo Growth Fund,
Inc., a Maryland corporation (the "Fund"), and Alamo Advisers, Inc., a Texas
corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS the Fund proposes to enter into an Investment Advisory
Agreement (the "Advisory Agreement") with the Adviser simultaneously with the
execution of this Agreement;
WHEREAS it would be mutually advantageous to the Fund and the Adviser
to limit the expenses borne by the Fund during its start-up; and
WHEREAS the Adviser is willing to bear certain expenses of the Fund,
so long as the Advisory Agreement remains in effect.
NOW, THEREFORE, the Fund and the Adviser agree as follows:
1. Definitions.
a. "Average Net Assets" of the Fund for any year shall mean
the average of the net asset values of the Fund determined as of the close
of each business day of such year.
b. "Expense Ratio" shall mean, for any year, the ratio of
the Fund's Operating Expenses to the Average Net Assets of the Fund for
that year.
c. "Operating Expenses" shall mean the total expenses of
the Fund, including operating expenses, such as office expenses,
accounting fees, legal fees, custodial fees and employment expenses;
advisory fee, as provided in the Investment Advisory Agreement;
registration expenses, such as the cost of registration of the Fund with
the Securities and Exchange Commission and with the various state agencies;
and miscellaneous expenses, such as printing costs, insurance premiums and
all other expenses of operation of the Fund, excluding only brokerage
commissions, interest and taxes.
2. Expense Limitation. If for any fiscal year of the Fund ending
before December 31, 1999, the Expense Ratio of the Fund exceeds 2.5 percent,
then the Adviser will reimburse the Fund an amount which will cause the Expense
Ratio for such fiscal year not to exceed 2.5 percent. Reimbursement may be made
by waiving the Adviser's advisory fee, payment to the Fund or both, at the
option of the Adviser.
3. Termination. This Agreement may be terminated at any time,
without payment of any penalty, by the board of directors of the Fund or by a
vote of the majority of the outstanding voting securities of the Fund upon
giving sixty (60) days' written notice to the Adviser. This Agreement may be
terminated by the Adviser at any time upon the giving of 60 days' written notice
to the Fund. This Agreement shall automatically terminate upon the termination
of the Advisory Agreement.
4. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties with respect to its subject matter,
and supersedes all other prior negotiations, understandings and agreements
between the parties concerning the subject matter hereof.
5. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be execute don the day first above written.
ALAMO ADVISERS, INC.
By: By:
Secretary President
ALAMO GROWTH FUND, INC.
By: By:
Secretary President
