<PAGE>
SM&R
EQUITY
FUNDS
/ / SM&R GROWTH FUND
/ / SM&R EQUITY INCOME
FUND
/ / SM&R BALANCED FUND
"These discussions and the
financial statements contained
herein are included for the
general information of our
shareholders. This annual
report is not authorized for
distribution to prospective
investors unless preceded or
accompanied by an effective
prospectus."
Annual Report
December 31, 1998
Form 9092
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
SM&R GROWTH FUND (FORMERLY AMERICAN NATIONAL GROWTH FUND)
In 1998, the U.S. economy exhibited steady growth, declining inflation (with a
threat of deflation), an end to the recurring budget deficit, large increases in
business profits, as well as increases in employment and real incomes, and a
continuation of unprecedented stock market gains. Interest rates declined over
the past year with help from the Federal Reserve. The Federal Reserve cut
interest rates a total of 50 basis points (0.5%) in 1998 primarily to ensure
liquidity for the markets. 1998 also introduced us to Long Term Capital
Management and emerging market risk. Long Term Capital Management is a hedge
fund that made strong bets on emerging markets that did not go their way. This
riled the markets in August and September of 1998 at a time when the markets
needed no additional help in terms of volatility. The Southeast Asia currency
crisis, Russia defaulting on its bonds, and renewed currency problems in Latin
America all contributed to a roller coaster like year in domestic U.S. equity
markets.
Although the market was volatile in 1998, it finished very strong, notching a
fourth consecutive year of +20% gains. This ended the best four year run for the
market since Standard and Poor's began tracking indices in 1923. In addition,
this was the first time that the S&P 500 produced 20% returns or better in four
consecutive calendar years For the fifth year in a row, large capitalization
stocks were the best performing category of stocks. This phenomenon became even
more pronounced in 1998 as the top 30 stocks were responsible for 40% of the
index's market value. The S&P 500 broke into record territory in 1998 but not
without going through some heart-stopping declines such as the 19.8% decline
during August and September which was just short of the 20% mark which
traditionally signifies a bear market. The 10% mark, which traditionally
signifies a market correction, was easily surpassed. Utilizing 20/20 hindsight,
and the fact that other indexes suffered a decline far greater than 20%, it is
safe to say that the market did in fact endure a very sharp, 31-day bear market.
The markets rebounded admirably by year-end and the average equity fund returned
11.17% for 1998.
For 1999, we believe the U.S. economy will continue to grow, but at a reduced
rate of approximately 2.0-2.5%. Inflation will likely remain historically low
(2.0%-2.5%) but will increase slightly over 1998. The threat of deflation will
actually increase but will be offset by inflationary increases in wages and
benefits.
SM&R funds and specifically the Growth Fund has the potential to do well in the
1999 economic environment. The SM&R Growth Fund historically performs better in
down markets due to the value based, defensive nature of our stock picking
methodologies. The SM&R Growth Fund seeks to identify superior stocks from
well-managed companies utilizing two valuation disciplines. Our disciplines
screen potential investments for both cash flow and earnings in order to select
undervalued securities to be purchased and held for long-term capital
appreciation. The purpose of this approach is to purchase future company
earnings at a discount relative to peer companies, all else being equal. The
disciplines provide a conservative and defensive group of stocks from which to
select for inclusion in the fund.
Within the Growth Fund, we noted particular strength from our holdings in the
consumer cyclicals, technology, communication services, utilities, and
transportation sectors. For 1998, our overweighing of technology relative to the
market helped our relative performance. For 1998, shareholders of the SM&R
Growth Fund enjoyed a total return of 18.3%. The fund's growth attributes are
achieved by investing primarily in large capitalization growth companies. The
fund makes an effort to overweight sectors by no more than twice the S&P 500
sector weights and underweight by no more than half the S&P 500 sector weights.
We continue to seek out undervalued companies undergoing positive changes in
fundamentals and selling those issues that have hit their price targets or whose
fundamentals do not warrant inclusion in our portfolio. This process has served
the fund well over the last several years and should continue to do so going
forward. Areas of the market that we will be watching closely in 1999 will be
healthcare, financials, capital goods, consumer cyclicals, technology,
communication services, and electric utilities. Uncharacteristically, one of the
top growth sectors for 1998 that also provided excellent value, was utilities.
1
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL COMPARISON OF CHANGE IN VALUE OF $10,000
<S> <C> <C> <C>
INVESTMENT IN SM&R GROWTH FUND AT OFFERING PRICE,
LIPPER GROWTH FUND INDEX AND THE S&P 500
Lipper Growth SM&R Growth
Fund Index S&P 500 Fund
12/31/88 $10,000 $10,000 $9,426
12/31/89 $12,747 $13,163 $11,719
12/31/90 $12,057 $12,754 $11,375
12/31/91 $16,437 $16,631 $15,581
12/31/92 $17,691 $17,896 $15,191
12/31/93 $19,810 $19,696 $16,432
12/31/94 $19,499 $19,955 $17,251
12/31/95 $25,866 $27,444 $21,598
12/31/96 $30,401 $33,742 $25,409
12/31/97 $38,924 $44,995 $31,060
12/31/98 $48,924 $57,864 $36,758
SEC AVERAGE ANNUAL RETURN
10 YEAR 13.90%
5 YEAR 16.10%
1 YEAR 11.53%
Past performance does not guarantee future results.
Investment return and principal value
of an investment will fluctuate,
and investments when redeemed,
may be worth more or less
than their original cost.
</TABLE>
SM&R Growth Fund performance figures are historical and reflect reinvestment of
all dividends and capital gains distributions, changes in net asset value, and
considers the effect of the Growth Fund's 5.75% maximum sales charge. All
performance figures are as of December 31, for the applicable year. The Growth
Fund's fiscal year end was as of October 31 for 1988-1989.
2
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND (FORMERLY AMERICAN NATIONAL INCOME FUND)
The SM&R Equity Income Fund (formerly the American National Income Fund) can be
described by examining the objectives and strategy of the fund set forth in the
prospectus. The fund's objective is to provide current income, along with an
opportunity for increased share price over time. The fund is guided by a
strategy of investing in select fixed income securities but primarily the stocks
of well-established companies with records of consistent and increasing dividend
payments. The fund produced a total return of 12.11% during 1998. The fund
continues to meet the goal of maintaining a dividend yield at least 50% greater
than that of the market, as represented by the Standard & Poor's 500 stock
market index. The current dividend yield on the fund is 2.2% (after expenses),
versus 1.3% for the S&P 500.
During 1998, the fund continued to benefit from its overweighted positions in
the finance and consumer cyclical sectors. The best performing sectors in the
fund during 1998 were healthcare and communication services, both high-flying
sectors of the market during the year. Within the fund, the healthcare holdings
produced a 67% return for the year while the communication services holdings
returned 41%. The worst-performing sector for the fund on the year was basic
materials. This sector suffered from excess capacity and commodity price
deflation, which impacted the group as a whole. Recently, a select group of
steel companies was added to the fund with the aim of boosting sector
performance, as the steel pricing trough appears to have bottomed and
improvements in industry fundamentals should lie ahead.
We currently expect the U.S. economy to continue moderate growth with low
inflation. While we foresee weaker profits (relative to 1998) in the short run,
we are optimistic long term. We believe that unless foreign economies fail to
recover from recent contagions, multinational companies will likely enjoy
accelerated earnings momentum between 1999 and 2002 as demographics ultimately
spur areas such as Asia to move higher.
Within this slow growth economy, we will continue endeavoring to achieve our
style specific goals by identifying stocks of superior companies utilizing our
conservative and defensive valuation disciplines. We continually seek out
undervalued companies undergoing positive changes in fundamentals and selling
those issues which have hit their price targets or whose fundamentals do not
warrant inclusion within the conservatively run Equity Income Fund. This process
has served the fund well over the last several years and should continue to do
so going forward.
3
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL COMPARISON OF CHANGE IN VALUE OF $10,000
<S> <C> <C> <C>
INVESTMENT IN SM&R EQUITY INCOME FUND AT OFFERING PRICE,
LIPPER EQUITY INCOME FUND INDEX AND THE S&P 500
Lipper Equity
Income Fund Index S&P 500 SM&R Equity Fund
12/31/88 $10,000 $10,000 $9,423
12/31/89 $12,264 $13,163 $12,073
12/31/90 $11,637 $12,754 $12,164
12/31/91 $14,742 $16,631 $15,669
12/31/92 $16,177 $17,896 $16,219
12/31/93 $18,579 $19,696 $17,942
12/31/94 $18,409 $19,955 $17,832
12/31/95 $23,900 $27,444 $23,025
12/31/96 $28,195 $33,742 $26,817
12/31/97 $35,853 $44,995 $32,910
12/31/98 $40,075 $57,864 $36,895
SEC AVERAGE
ANNUAL RETURN
10 YEAR 13.95%
5 YEAR 14.15%
1 YEAR 5.65%
Past performance does not guarantee future results.
Investment return and principal value
of an investment will fluctuate,
and investments when redeemed,
may be worth more or less
than their original cost.
</TABLE>
SM&R Equity Income Fund performance figures are historical and reflect
reinvestment of all dividends and capital gains distributions, changes in net
asset value, and considers the effect of the Equity Income Fund's 5.75% maximum
sales charge. All performance figures are as of December 31, for the applicable
year. The Equity Income Fund's fiscal year end was as of July 31 for 1988-1989.
4
<PAGE>
PORTFOLIO MANAGER'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
SM&R BALANCED FUND (FORMERLY TRIFLEX FUND)
The SM&R Balanced Fund (formerly the Triflex Fund) is the lowest risk fund in
the SM&R Equity Funds. The fund can best be described with the objective and
strategy outlined in the prospectus. The fund maintains the objective of
providing reasonable current income and share price appreciation, while
protecting the initial investment. The fund's investment strategy is to use a
balanced approach by investing in a combination of the high-yielding stock of
well-known companies, as well as bonds and money market instruments. Throughout
1998, the fund's conservative blend of about 60% stocks, 35% bonds and 5% money
market instruments has served the fund well. The equity portion of the fund
produced a total return (capital appreciation and dividend income) of about 20%
while the bond portion of the fund returned about 10%. Combined, the fund
produced a total return of 13.83% for the year.
Within the fund, we maintained our fixed income strategy of structuring
maturities at the mid-term to long end of the yield curve. Within the equity
portion of the fund, we utilize the same conservative and defensive stock
selection disciplines used in the SM&R Equity Income and Growth Funds. The key
is identifying stocks of superior companies and purchasing them at discounted
valuations. During 1998, we noted particular strength from our equity holdings
in the technology, communication services, and healthcare sectors. In all three
sectors, our holdings produced returns in excess of 35%.
On the negative side, a poorly performing sector for the fund on the year was
basic materials. This sector suffered from excess capacity and commodity price
deflation, which impacted the group as a whole. Recently, a select group of
steel companies was added to the fund with the aim of boosting sector
performance, as the steel pricing trough appears to have bottomed and
improvements in industry fundamentals should lie ahead.
Balanced Fund investors were rewarded again in 1998 by their investment in the
fund, with a fourth consecutive year of double-digit returns. Although the fund
has not produced the spectacular returns witnessed by some total equity funds
over the last year or two, we have achieved our goal of providing consistently
positive performance in the strong up market and believe the fund is well
positioned should equity markets turn downward. The conservative and low risk
balanced approach has enabled SM&R to provide upside potential while protecting
the downside via this uniquely positioned fund.
5
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<S> <C> <C> <C> <C>
IN SM&R BALANCED FUND AT OFFERING PRICE, LEHMAN
INTERMEDIATE GOVERNMENT/CORP INDEX, LIPPER
ANALYTICAL BALANCED FUND INDEX AND THE S&P 500
Lehman Int.
Gov/ Lipper Balanced SM&R Balanced
Corp Index* Fund Index** S&P 500 Fund
12/31/88 $10,000 $10,000 $10,000 $9,426
12/31/89 $11,276 $11,969 $13,163 $10,713
12/31/90 $12,309 $12,048 $12,754 $10,861
12/31/91 $14,109 $15,159 $16,631 $13,525
12/31/92 $15,121 $16,290 $17,896 $13,931
12/31/93 $16,449 $18,237 $19,696 $14,810
12/31/94 $16,132 $17,864 $19,955 $15,031
12/31/95 $18,606 $22,310 $27,444 $18,382
12/31/96 $19,359 $25,222 $33,742 $20,563
12/31/97 $20,882 $30,342 $44,995 $24,152
12/31/98 $22,644 $34,919 $57,864 $27,493
SEC AVERAGE
ANNUAL RETURN
10 YEAR 10.64%
5 YEAR 11.81%
1 YEAR 7.28%
Past performance does not guarantee future results.
Investment return and principal value
of an investment will fluctuate,
and investments when redeemed,
may be worth more or less
than their original cost.
</TABLE>
SM&R Balanced Fund performance figures are historical and reflect reinvestment
of all dividends and capital gains distributions, changes in net asset value,
and considers the effect of the Balanced Fund's 5.75% maximum sales charge. All
performance figures are as of December 31, for the applicable year. The Balanced
Fund's fiscal year end was as of July 31 for 1988-1989.
6
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R GROWTH FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
AUTO & TRUCK
MANUFACTURERS--1.64%
DaimlerChrysler AG * 8,541 $ 820,470
Ford Motor Company 24,800 1,455,450
General Motors Corporation 14,700 1,051,969
-----------
3,327,889
BANKS--6.83%
Banc One Corporation 38,500 1,965,906
BankAmerica Corporation 40,000 2,405,000
Comerica, Incorporated 40,000 2,727,500
Dime Bancorp, Incorporated 67,000 1,771,313
First Union Corporation 30,000 1,824,375
Morgan (J.P.) & Company 15,000 1,575,937
Wells Fargo Company 40,000 1,597,500
-----------
13,867,531
BEVERAGES--2.18%
Anheuser-Busch Companies,
Incorporated 37,000 2,428,125
Coca-Cola Company 30,000 2,006,250
-----------
4,434,375
CHEMICALS--1.52%
Cabot Corporation 30,000 838,125
Hercules, Incorporated 30,600 837,675
Praxair, Incorporated 40,000 1,410,000
-----------
3,085,800
COMMUNICATIONS EQUIPMENT--4.34%
Ascend Communications
Incorporated* 41,250 2,712,187
Lucent Technologies, Incorporated 40,000 4,400,000
Northern Telecom Limited 34,000 1,704,250
-----------
8,816,437
COMPUTER RELATED--4.24%
Cisco Systems, Incorporated* 37,500 3,480,469
Sun Microsystems, Incorporated* 60,000 5,137,500
-----------
8,617,969
COMPUTER SOFTWARE--10.63%
BMC Software, Incorporated* 80,000 3,565,000
HBO & Co 62,000 1,778,625
MAPICS, Incorporated* 80,000 1,320,000
Microsoft Corporation* 56,000 7,766,500
Network Associates, Incorporated* 22,500 1,490,625
Novell, Incorporated* 166,000 3,008,750
Synopsys, Incorporated* 49,000 2,658,250
-----------
21,587,750
CONSTRUCTION--0.62%
Centex Corporation 27,700 1,248,231
COSMETICS & TOILETRIES--2.70%
Procter & Gamble Company 60,000 5,478,750
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
DIVERSIFIED--1.22%
AlliedSignal, Incorporated 23,000 $ 1,019,187
Coltec Industries, Incorporated* 40,000 780,000
U.S. Industries, Incorporated 36,000 670,500
-----------
2,469,687
DRUGS--1.45%
Merck & Company, Incorporated 20,000 2,953,750
ELECTRICAL EQUIPMENT--3.97%
General Electric Company 63,000 6,429,938
York International Corporation 40,000 1,632,500
-----------
8,062,438
ELECTRONICS/INSTRUMENTS--1.19%
Avnet, Incorporated 40,000 2,420,000
ENVIRONMENTAL--1.33%
Waste Management, Incorporated 58,000 2,704,250
EXPLORATION & DRILLING--0.45%
Global Marine, Incorporated* 32,000 294,000
Tidewater, Incorporated 17,000 394,188
Union Pacific Resources Group,
Incorporated 25,408 230,260
-----------
918,448
FINANCIAL SERVICES--2.96%
Associates First Capital
Corporation 12,998 550,790
Countrywide Credit Industries,
Incorporated 44,000 2,208,250
Morgan Stanley, Dean Witter,
Discover and Company 20,000 1,420,000
Reliance Group Holdings,
Incorporated 142,000 1,828,250
-----------
6,007,290
FOOD PRODUCERS--5.11%
IBP, Incorporated 58,000 1,689,250
Interstate Bakeries Corporation 66,000 1,744,875
McCormick & Company, Incorporated 58,000 1,961,125
Smithfield Foods, Incorporated* 47,500 1,609,063
Tyson Foods, Incorporated 30,000 637,500
Universal Foods Corporation 100,000 2,743,750
-----------
10,385,563
FOOD RETAILERS--2.85%
Albertson's, Incorporated 40,000 2,547,500
Safeway, Incorporated* 53,000 3,229,688
-----------
5,777,188
INSURANCE COMPANIES--3.96%
American General Corporation 20,000 1,560,000
CIGNA Corporation 33,000 2,551,312
Citigroup, Incorporated 79,500 3,935,250
-----------
8,046,562
</TABLE>
7
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R GROWTH FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
LEISURE TIME--0.70%
<S> <C> <C>
Brunswick Corporation 57,000 $ 1,410,750
MACHINERY & EQUIPMENT--1.27%
Flowserve Corporation 47,000 778,437
Pall Corporation 71,000 1,797,187
-----------
2,575,624
MEDICAL PRODUCTS &
SUPPLIES--7.17%
Abbott Laboratories 100,000 4,900,000
Beckman Coulter, Incorporated 18,000 976,500
Bergen Brunswig Corporation (Class
A) 82,500 2,877,188
Biomet, Incorporated 82,000 3,300,500
Johnson & Johnson 30,000 2,516,250
-----------
14,570,438
MEDICAL SERVICES--2.83%
Aetna, Incorporated 23,000 1,808,375
PacifiCare Health Systems,
Incorporated (Class B)* 30,000 2,385,000
United Healthcare Corporation 36,000 1,550,250
-----------
5,743,625
METALS & MINING--0.27%
Kinross Gold Corporation* 240,120 555,277
NATURAL GAS--1.29%
Enron Corporation 46,000 2,624,875
OIL DOMESTIC--3.51%
Amoco Corporation 50,000 3,018,750
Kerr-McGee Corporation 13,000 497,250
Murphy Oil Corporation 17,000 701,250
Unocal Corporation 100,000 2,918,750
-----------
7,136,000
OIL INTERNATIONAL--3.39%
Chevron Corporation 42,000 3,483,375
Elf Aquitaine ADR 60,000 3,397,500
-----------
6,880,875
PAPER/FOREST PRODUCTS--0.41%
Caraustar Industries, Incorporated 29,000 828,313
PHOTOGRAPHY/IMAGING--1.40%
Xerox Corporation 24,000 2,832,000
PRINTING/PUBLISHING--0.78%
Banta Corporation 58,000 1,587,750
PROFESSIONAL SERVICE--1.07%
Service Corporation International 57,000 2,169,563
RETAIL DISCOUNT--1.20%
Wal-Mart Stores, Incorporated 30,000 2,443,125
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
RETAIL GENERAL--1.56%
Federated Department Stores,
Incorporated* 37,000 $ 1,611,812
J. C. Penney Company, Incorporated 33,200 1,556,250
-----------
3,168,062
RETAIL SPECIALTY--1.87%
Group 1 Automotive, Incorporated* 70,000 1,820,000
Officemax, Incorporated* 60,500 741,125
Tiffany & Company 24,000 1,245,000
-----------
3,806,125
SEMICONDUCTORS--2.92%
Intel Corporation 50,000 5,928,125
STEEL--1.52%
Allegheny Teledyne, Incorporated 53,000 1,083,188
LTV Corporation 180,000 1,046,250
USX-U. S. Steel Group 42,000 966,000
-----------
3,095,438
TELECOM--CELLULAR--1.64%
U S West, Incorporated New 51,365 3,319,463
TELEPHONE--2.54%
Alltel Corporation 47,000 2,811,187
MediaOne Group, Incorporated* 50,000 2,350,000
-----------
5,161,187
TRUCKING & SHIPPING--1.17%
Republic Services, Incorporated
(Class A)* 80,000 1,475,000
USFreightways Corporation 31,000 902,875
-----------
2,377,875
-----------
TOTAL COMMON STOCK--97.70%
(Cost $133,057,982) 198,424,398
-----------
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT
<S> <C> <C>
ELECTRIC POWER--1.00%
Kentucky Power Company, 6.25%,
01/05/99 $2,038,000 2,036,582
FINANCIAL SERVICES--0.50%
Dana Credit Corporation, 6.10%,
01/04/99 448,000 447,772
Ford Motor Credit Company, 6.00%,
01/07/99 565,000 564,435
-----------
1,012,207
</TABLE>
8
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R GROWTH FUND, CONTINUED
<TABLE>
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT VALUE
UTILITY--MISCELLANEOUS--0.77%
<S> <C> <C>
Orange & Rockland Utilities
Incorporated, 6.55%, 01/08/99 $1,569,000 $ 1,566,998
-----------
TOTAL COMMERCIAL PAPER--2.27%
(Cost $4,615,787) 4,615,787
-----------
TOTAL INVESTMENTS--99.97%
(Cost $137,673,769) 203,040,185
CASH AND OTHER ASSETS, LESS
LIABILITIES--0.03% 69,023
-----------
NET ASSETS--100.00% $203,109,208
-----------
-----------
ABBREVIATIONS
ADR -- American Depository Receipt
* -- Non-income producing securities
</TABLE>
See notes to financial statements.
9
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
AUTO & TRUCK
MANUFACTURERS--6.01%
DaimlerChrysler AG* 34,292 $ 3,294,175
Ford Motor Company 133,881 7,857,141
General Motors Corporation 28,000 2,003,750
-----------
13,155,066
BANKS--8.90%
Banc One Corporation 77,000 3,931,812
BankAmerica Corporation 60,000 3,607,500
Comerica, Incorporated 34,500 2,352,469
First Union Corporation 33,400 2,031,137
Morgan (J.P.) & Company 9,500 998,094
TCF Financial Corporation 90,000 2,176,875
Wells Fargo Company 110,000 4,393,125
-----------
19,491,012
BEVERAGES--1.50%
Anheuser-Busch Companies,
Incorporated 50,000 3,281,250
CHEMICALS--2.33%
Goodrich (B.F.) Company 75,000 2,690,625
Hercules, Incorporated 32,600 892,425
Praxair, Incorporated 43,000 1,515,750
-----------
5,098,800
DIVERSIFIED--0.85%
AlliedSignal, Incorporated 25,000 1,107,813
U.S. Industries, Incorporated 40,000 745,000
-----------
1,852,813
DRUGS--6.06%
Schering-Plough Corporation 240,000 13,260,000
ELECTRIC POWER--2.11%
Baltimore Gas & Electric Company 26,300 812,013
DTE Energy Company 65,000 2,786,875
UtiliCorp United, Incorporated 28,000 1,027,250
-----------
4,626,138
ELECTRICAL EQUIPMENT--0.80%
York International Corporation 43,000 1,754,937
ELECTRONICS/INSTRUMENTS--1.22%
Raytheon Company (Class B) 50,000 2,662,500
ENVIRONMENTAL--0.77%
Waste Management, Incorporated 36,250 1,690,156
EXPLORATION & DRILLING--0.67%
Tidewater, Incorporated 40,000 927,500
Union Pacific Resources Group,
Incorporated 60,000 543,750
-----------
1,471,250
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
FINANCIAL SERVICES--6.04%
Associates First Capital
Corporation 70,176 $ 2,973,708
Morgan Stanley, Dean Witter,
Discover and Company 90,000 6,390,000
Omega Healthcare Investors,
Incorporated 60,000 1,811,250
Omega Worldwide, Incorporated* 19,893 87,032
Reliance Group Holdings,
Incorporated 152,000 1,957,000
-----------
13,218,990
FOODS PRODUCERS--3.79%
ConAgra, Incorporated 40,000 1,260,000
Interstate Bakeries Corporation 73,000 1,929,937
McCormick & Company, Incorporated 70,000 2,366,875
Universal Foods Corporation 99,600 2,732,775
-----------
8,289,587
FOODS RETAILERS--1.60%
Albertson's, Incorporated 55,000 3,502,813
FURNITURE/APPLIANCES--1.52%
Whirlpool Corporation 60,000 3,322,500
INSURANCE--3.13%
CIGNA Corporation 36,600 2,829,638
Citigroup, Incorporated 81,500 4,034,250
-----------
6,863,888
LEISURE TIME--0.71%
Brunswick Corporation 63,200 1,564,200
MACHINERY & EQUIPMENT--3.17%
Aeroquip-Vickers, Incorporated 25,000 748,437
Deere & Company 100,000 3,312,500
Flowserve Corporation 51,000 844,687
Foster Wheeler Corporation 30,000 395,625
Pall Corporation 65,000 1,645,312
-----------
6,946,561
MEDICAL PRODUCTS &
SUPPLIES--4.70%
Abbott Laboratories 130,000 6,370,000
Bergen Brunswig Corporation (Class
A) 112,500 3,923,438
-----------
10,293,438
METALS & MINING--0.41%
Cyprus Amax Minerals Company 90,000 900,000
NATURAL GAS--1.28%
Enron Corporation 49,000 2,796,063
OIL DOMESTIC--1.76%
Amoco Corporation 35,600 2,149,350
Kerr-McGee Corporation 27,200 1,040,400
Murphy Oil Corporation 16,100 664,125
-----------
3,853,875
</TABLE>
10
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
OIL INTERNATIONAL--9.57%
<S> <C> <C>
Chevron Corporation 30,000 $ 2,488,125
Elf Aquitaine ADR 72,000 4,077,000
Exxon Corporation 40,000 2,925,000
Royal Dutch Petroleum Company 100,000 4,787,500
Schlumberger Limited 90,000 4,151,250
Texaco, Incorporated 48,000 2,538,000
-----------
20,966,875
PAPER/FOREST PRODUCTS--1.85%
Caraustar Industries, Incorporated 30,000 856,875
Glatfelter (P.H.) Company 94,000 1,163,250
Weyerhaeuser Company 40,000 2,032,500
-----------
4,052,625
PHOTOGRAPHY/IMAGING--1.40%
Xerox Corporation 26,000 3,068,000
PRINTING & PUBLISHING--1.62%
Banta Corporation 63,000 1,724,625
Deluxe Corporation 50,000 1,828,125
-----------
3,552,750
PROFESSIONAL SERVICE--1.11%
Service Corporation International 64,000 2,436,000
REAL ESTATE/REITS--3.69%
CenterPoint Properties Corporation 63,000 2,130,188
Crescent Real Estate Equities
Company 65,000 1,495,000
Health & Retirement Properties
Trust 100,000 1,406,250
Hospitality Properties Trust 50,000 1,206,250
Liberty Trust Properties 75,000 1,846,875
-----------
8,084,563
RESTAURANTS--0.34%
Applebee's International,
Incorporated 36,000 742,500
RETAIL GENERAL--1.42%
J. C. Penney Company, Incorporated 66,400 3,112,500
STEEL--1.60%
Allegheny Teledyne, Incorporated 60,000 1,226,250
LTV Corporation 200,000 1,162,500
USX-U. S. Steel Group 48,000 1,104,000
-----------
3,492,750
TELECOM--CELLULAR--3.26%
GTE Corporation 60,000 3,900,000
U S West Incorporated New 50,000 3,231,250
-----------
7,131,250
TELEPHONE UTILITY--1.39%
Alltel Corporation 51,000 3,050,438
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
TOBACCO--1.59%
RJR Nabisco Holdings Corporation 41,248 $ 1,224,550
UST, Incorporated 65,000 2,266,875
-----------
3,491,425
TRUCKING & SHIPPING--0.45%
USFreightways Corporation 34,000 990,250
-----------
TOTAL COMMON STOCK--88.62%
(Cost $133,388,708) 194,067,763
-----------
<CAPTION>
CONVERTIBLE PREFERRED STOCK
<S> <C> <C>
FINANCIAL SERVICES--0.57%
ProLogis Trust 47,000 1,239,625
INSURANCE COMPANIES--0.59%
St Paul Capital LLC 20,000 1,290,000
OIL DOMESTIC--1.36%
Unocal Capital Trust 61,000 2,981,375
-----------
TOTAL CONVERTIBLE PREFERRED STOCK--2.52%
(Cost $5,414,752) 5,511,000
-----------
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT
<S> <C> <C>
CONSTRUCTION--0.43%
Centex Corporation, 6.55%,
01/22/99 $ 945,000 944,140
ELECTRIC POWER--0.88%
Kentucky Power Company, 6.25%,
01/05/99 1,936,000 1,934,653
FINANCIAL SERVICES--5.73%
Ford Motor Credit Company, 6.00%,
01/07/99 1,843,000 1,841,156
Kerr-McGee Credit Corporation,
6.05%, 01/08/99 1,500,000 1,498,223
PS Colorado Credit Corporation,
6.00%, 01/14/99 2,645,000 2,639,242
Penn Power & Light Energy Trust,
6.10%, 01/12/99 3,061,000 3,055,257
Textron Financial Corporation,
6.05%, 01/04/99 1,298,000 1,297,340
Textron Financial Corporation,
5.92%, 01/15/99 2,215,000 2,209,882
-----------
12,541,100
METAL PRODUCTS--0.68%
Reynolds Metals Company, 5.83%,
01/06/99 1,487,000 1,485,794
</TABLE>
11
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND, CONTINUED
<TABLE>
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT VALUE
OIL DOMESTIC--1.06%
<S> <C> <C>
Anadarko Petroleum Corporation,
5.07%, 01/22/99 $1,976,000 $ 1,970,155
Questar Corporation, 5.65%,
01/19/99 350,000 349,010
-----------
2,319,165
-----------
TOTAL COMMERCIAL PAPER--8.78%
(Cost $19,224,852) 19,224,852
-----------
TOTAL INVESTMENTS--99.92%
(Cost $158,028,312) 218,803,615
CASH AND OTHER ASSETS, LESS
LIABILITIES--0.08% 176,356
-----------
NET ASSETS--100.00% $218,979,971
-----------
-----------
ABBREVIATIONS
ADR -- American Depository Receipt
REIT -- Real Estate Investment Trust
* -- Non-income producing securities
</TABLE>
See notes to financial statements.
12
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R BALANCED FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
AUTO & TRUCK
MANUFACTURERS--1.92%
DaimlerChrysler AG* 1,621 $ 155,717
Ford Motor Company 3,300 193,669
General Motors Corporation 3,000 214,687
----------
564,073
BANKS--4.18%
Banc One Corporation 3,410 174,123
BankAmerica Corporation 5,000 300,625
Comerica, Incorporated 3,750 255,703
Dime Bancorp, Incorporated 5,400 142,762
First Union Corporation 3,200 194,600
Wells Fargo Company 4,000 159,750
----------
1,227,563
BEVERAGES--0.67%
Anheuser-Busch Companies,
Incorporated 3,000 196,875
CHEMICALS--0.68%
Hercules, Incorporated 2,800 76,650
Praxair, Incorporated 3,500 123,375
----------
200,025
COMMUNICATIONS EQUIPMENT--1.49%
Lucent Technologies, Incorporated 3,300 363,000
Northern Telecom Limited 1,500 75,187
----------
438,187
COMPUTER RELATED--2.26%
Cisco Systems, Incorporated* 3,000 278,437
Sun Microsystems, Incorporated* 4,500 385,312
----------
663,749
COMPUTER SOFTWARE--4.35%
HBO & Company 2,700 77,456
Microsoft Corporation* 4,600 637,963
Network Associates, Incorporated* 3,000 198,750
Novell, Incorporated* 7,200 130,500
Synopsys, Incorporated* 4,300 233,275
----------
1,277,944
CONSTRUCTION--0.34%
Centex Corporation 2,200 99,137
COSMETICS & TOILETRIES--2.36%
Procter & Gamble Company 7,600 693,975
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
DIVERSIFIED--1.15%
AlliedSignal, Incorporated 3,100 $ 137,369
Coltec Industries, Incorporated* 5,600 109,200
U.S. Industries, Incorporated 4,900 91,263
----------
337,832
DRUGS--3.07%
Warner-Lambert Company 12,000 902,250
ELECTRIC POWER--1.12%
Allegheny Energy, Incorporated 2,100 72,450
DTE Energy Company 4,000 171,500
UtiliCorp United, Incorporated 2,300 84,381
----------
328,331
ELECTRICAL EQUIPMENT--2.36%
General Electric Company 5,400 551,137
York International Corporation 3,500 142,844
----------
693,981
ELECTRONICS/INSTRUMENTS--0.62%
Avnet, Incorporated 3,000 181,500
ENVIRONMENTAL--1.04%
Waste Management, Incorporated 6,525 304,228
EXPLORATION & DRILLING--0.26%
Global Marine, Incorporated* 2,800 25,725
Tidewater, Incorporated 1,500 34,781
Union Pacific Resources Group,
Incorporated 1,693 15,343
----------
75,849
FINANCIAL SERVICES--2.20%
Associates First Capital
Corporation 1,728 73,224
Countrywide Credit Industries,
Incorporated 6,000 301,125
Morgan Stanley, Dean Witter,
Discover and Company 1,600 113,600
Reliance Group Holdings,
Incorporated 12,400 159,650
----------
647,599
FOOD PRODUCERS--2.10%
IBP, Incorporated 5,500 160,187
Interstate Bakeries Corporation 9,000 237,936
Universal Foods Corporation 8,000 219,500
----------
617,623
FOOD RETAILERS--2.19%
Albertson's, Incorporated 3,100 197,431
Safeway, Incorporated* 7,300 444,844
----------
642,275
</TABLE>
13
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R BALANCED FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
INSURANCE COMPANIES--2.45%
<S> <C> <C>
American General Corporation 1,800 $ 140,400
CIGNA Corporation 3,000 231,938
Citigroup, Incorporated 7,000 346,500
----------
718,838
LEISURE TIME--0.42%
Brunswick Corporation 5,000 123,750
MACHINERY & EQUIPMENT--0.95%
Flowserve Corporation 4,200 69,563
Foster Wheeler Corporation 3,500 46,156
Pall Corporation 6,500 164,531
----------
280,250
MEDICAL PRODUCTS &
SUPPLIES--5.09%
Abbott Laboratories 6,000 294,000
Beckman Coulter, Incorporated 1,700 92,225
Bergen Brunswig Corporation (Class
A) 11,500 401,063
Biomet, Incorporated 7,100 285,775
Johnson & Johnson 5,000 419,375
----------
1,492,438
MEDICAL SERVICES--1.30%
Aetna, Incorporated 2,100 165,113
PacifiCare Health Systems,
Incorporated (Class B)* 1,000 79,500
United Healthcare Corporation 3,200 137,800
----------
382,413
NATURAL GAS--0.78%
Enron Corporation 4,000 228,250
OIL DOMESTIC--1.20%
Amoco Corporation 4,000 241,500
Kerr-McGee Corporation 1,200 45,900
Murphy Oil Corporation 1,600 66,000
----------
353,400
OIL INTERNATIONAL--2.44%
Chevron Corporation 4,400 364,925
Elf Aquitaine ADR 6,200 351,075
----------
716,000
PAPER/FOREST PRODUCTS--0.71%
Caraustar Industries, Incorporated 2,300 65,694
Weyerhaeuser Company 2,800 142,275
----------
207,969
PRINTING/PUBLISHING--0.51%
Banta Corporation 5,500 150,563
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
PROFESSIONAL SERVICES--0.65%
Service Corporation International 5,000 $ 190,313
RETAIL DISCOUNT--0.17%
Toys "R" Us, Incorporated* 3,000 50,625
RETAIL GENERAL--0.89%
Federated Department Stores,
Incorporated* 3,000 130,688
J. C. Penney Company, Incorporated 2,800 131,250
----------
261,938
RETAIL SPECIALTY--0.58%
Officemax, Incorporated* 4,900 60,025
Tiffany & Company 2,100 108,938
----------
168,963
SEMICONDUCTORS--1.61%
Intel Corporation 4,000 474,250
STEEL--0.91%
Allegheny Teledyne, Incorporated 4,000 81,750
LTV Corporation 16,000 93,000
USX-U. S. Steel Group 4,000 92,000
----------
266,750
TELECOM--CELLULAR--2.06%
GTE Corporation 4,000 260,000
U S West, Incorporated New 5,342 345,227
----------
605,227
TELEPHONE--1.73%
Alltel Corporation 4,400 263,175
MediaOne Group, Incorporated* 5,200 244,400
----------
507,575
TRUCKING & SHIPPING--0.27%
USFreightways Corporation 2,700 78,638
----------
TOTAL COMMON STOCK--59.08%
(Cost $11,331,157) 17,351,146
----------
<CAPTION>
CONVERTIBLE PREFERRED STOCK
<S> <C> <C>
OIL DOMESTIC--0.58%
Unocal Capital Trust 3,500 171,063
----------
TOTAL CONVERTIBLE PREFERRED STOCK--0.58%
(Cost $185,787) 171,063
----------
</TABLE>
14
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R BALANCED FUND, CONTINUED
<TABLE>
<CAPTION>
FACE
BONDS AND NOTES AMOUNT VALUE
FINANCIAL SERVICES--2.06%
<S> <C> <C>
Ford Motor Credit Company, 6.375%,
09/15/99 $ 600,000 $ 603,716
GOVERNMENT AGENCIES--20.01%
Federal Home Loan Mortgage
Corporation, 7.70%, 05/17/06 1,000,000 1,009,487
Federal Home Loan Mortgage
Corporation, 7.00%, 09/15/07 1,000,000 1,027,944
Federal Home Loan Mortgage
Corporation, Pool #284839, 8.50%,
01/01/17 45,780 47,942
Federal Home Loan Mortgage
Corporation, Pool #302886, 8.00%,
05/01/17 16,395 16,985
Federal Home Loan Mortgage
Corporation, Pool #298759, 8.00%,
08/01/17 106,123 109,940
Federal National Mortgage
Association, 7.55%, 04/22/02 685,000 734,708
Federal National Mortgage
Association, 7.55%, 06/10/04 1,250,000 1,263,286
Federal National Mortgage
Association, 7.70%, 04/10/07 1,500,000 1,540,539
Federal National Mortgage
Association, Pool #041669, 8.00%,
02/01/17 18,043 18,792
Federal National Mortgage
Association, Pool #48974, 8.00%,
06/01/17 103,666 107,971
----------
5,877,594
<CAPTION>
FACE
BONDS AND NOTES AMOUNT VALUE
<S> <C> <C>
U S TREASURY SECURITIES--12.33%
U S Treasury Bond, 6.000%, 02/15/26 $2,350,000 $2,564,438
U S Treasury Note, 5.875%, 02/15/04 1,000,000 1,055,313
----------
3,619,751
----------
TOTAL BONDS AND NOTES--34.40%
(Cost $9,293,376) 10,101,061
----------
<CAPTION>
COMMERCIAL PAPER
<S> <C> <C>
ELECTRIC POWER--0.41%
Indiana Michigan Power Company,
6.20%, 01/05/99 120,000 119,917
FINANCIAL SERVICES--1.70%
Ford Motor Credit, 6.00%, 01/06/99 500,000 499,583
FOOD PRODUCERS--2.96%
ConAgra, Incorporated, 5.87%,
01/04/99 870,000 869,574
----------
TOTAL COMMERCIAL PAPER--5.07%
(Cost $1,489,074) 1,489,074
----------
TOTAL INVESTMENTS--99.13%
(Cost $22,299,394) 29,112,344
CASH AND OTHER ASSETS, LESS LIABILITIES--0.87% 254,760
----------
NET ASSETS--100.00% $29,367,104
----------
----------
ABBREVIATIONS
ADR -- American Depository Receipt
* -- Non-income producing securities
</TABLE>
See notes to financial statements.
15
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH EQUITY INCOME BALANCED
<S> <C> <C> <C>
ASSETS
Investments in securities, at value $ 203,040,185 $ 218,803,615 $ 29,112,344
Cash 27,608 39,242 60,061
Receivable for:
Capital stock sold 534,098 475,554 56,089
Investment securities sold - - 33,081
Dividends 163,233 369,199 14,152
Interest - - 145,314
Other assets 122,086 95,016 22,238
-------------- -------------- ------------
TOTAL ASSETS 203,887,210 219,782,626 29,443,279
LIABILITIES
Capital stock reacquired 634,614 613,031 30,161
Accrued:
Investment advisory fee 77,886 121,718 16,976
Service fee 35,902 39,700 5,659
Other liabilities 29,600 28,206 23,379
-------------- -------------- ------------
TOTAL LIABILITIES 778,002 802,655 76,175
-------------- -------------- ------------
NET ASSETS $ 203,109,208 $ 218,979,971 $ 29,367,104
-------------- -------------- ------------
-------------- -------------- ------------
Shares of capital stock outstanding 35,722,663 7,813,950 1,496,411
-------------- -------------- ------------
-------------- -------------- ------------
Net asset value per share $ 5.69 $ 28.02 $ 19.63
-------------- -------------- ------------
-------------- -------------- ------------
Offering price per share
(Net asset value per share / 94.25%) $ 6.04 $ 29.73 $ 20.83
-------------- -------------- ------------
-------------- -------------- ------------
</TABLE>
STATEMENTS OF OPERATIONS Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
GROWTH INCOME BALANCED
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 2,338,773 $ 4,780,046 $ 259,664
Interest 526,397 2,075,598 756,839
------------ ------------ -----------
TOTAL INVESTMENT INCOME 2,865,170 6,855,644 1,016,503
EXPENSES
Investment advisory fee 922,010 1,426,042 198,438
Service fee 423,595 465,270 66,146
Insurance expenses 48,583 51,818 7,386
Directors' fees and expenses 26,669 26,669 26,669
Custody and transaction fees 76,335 84,113 24,919
Audit fees 13,500 13,500 10,000
Qualification fees 29,115 34,581 21,564
Shareholder reporting expenses 40,822 42,682 11,268
Other 1,865 1,246 1,246
------------ ------------ -----------
TOTAL EXPENSES 1,582,494 2,145,921 367,636
LESS EXPENSES REIMBURSED - - (33,454)
------------ ------------ -----------
NET EXPENSES 1,582,494 2,145,921 334,182
------------ ------------ -----------
INVESTMENT INCOME, NET 1,282,676 4,709,723 682,321
------------ ------------ -----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 8,728,659 7,281,961 482,000
Change in unrealized appreciation of investments for the year 21,620,022 11,740,055 2,417,733
------------ ------------ -----------
NET GAIN ON INVESTMENTS 30,348,681 19,022,016 2,899,733
------------ ------------ -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 31,631,357 $ 23,731,739 $ 3,582,054
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
See notes to financial statements.
16
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SM&R GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income, net $ 1,282,676 $ 1,741,364
Net realized gain on investments 8,728,659 24,950,387
Change in unrealized appreciation 21,620,022 6,796,148
-------------- --------------
Net increase in net assets resulting from operations 31,631,357 33,487,899
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income, net (1,255,603) (1,757,095)
Capital gains (13,647,821) (21,864,218)
-------------- --------------
Total distributions to shareholders (14,903,424) (23,621,313)
CAPITAL SHARE TRANSACTIONS, NET 8,037,187 15,719,205
-------------- --------------
TOTAL INCREASE 24,765,120 25,585,791
NET ASSETS
Beginning of year 178,344,088 152,758,297
-------------- --------------
End of year $ 203,109,208 $ 178,344,088
-------------- --------------
-------------- --------------
</TABLE>
SM&R EQUITY INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income, net $ 4,709,723 $ 4,185,807
Net realized gain on investments 7,281,961 23,033,015
Change in unrealized appreciation 11,740,055 10,366,823
-------------- --------------
Net increase in net assets resulting from operations 23,731,739 37,585,645
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income, net (4,712,876) (4,220,053)
Capital gains (10,909,343) (19,927,051)
-------------- --------------
Total distributions to shareholders (15,622,219) (24,147,104)
CAPITAL SHARE TRANSACTIONS, NET 12,183,537 19,462,475
-------------- --------------
TOTAL INCREASE 20,293,057 32,901,016
NET ASSETS
Beginning of year 198,686,914 165,785,898
-------------- --------------
End of year $ 218,979,971 $ 198,686,914
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
17
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SM&R BALANCED FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1998 1997
------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income, net $ 682,321 $ 751,773
Net realized gain on investments 482,000 2,950,385
Change in unrealized appreciation 2,417,733 277,845
------------- -------------
Net increase in net assets resulting from operations 3,582,054 3,980,003
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income, net (663,775) (756,610)
Capital gains (908,074) (2,597,856)
------------- -------------
Total distributions to shareholders (1,571,849) (3,354,466)
CAPITAL SHARE TRANSACTIONS, NET 1,518,827 2,024,691
------------- -------------
TOTAL INCREASE 3,529,032 2,650,228
NET ASSETS
Beginning of year 25,838,072 23,187,844
------------- -------------
End of year $ 29,367,104 $ 25,838,072
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
18
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the year.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
SM&R GROWTH FUND 1998 1997 1996 1995 1994
------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 5.24 $ 4.95 $ 4.39 $ 3.83 $ 4.15
Investment income, net 0.04 0.06 0.05 0.08 0.06
Net realized and unrealized gain on investments
during the year 0.85 1.03 0.73 0.88 0.15
------------- --------- --------- --------- ---------
Total from Investment Operations 0.89 1.09 0.78 0.96 0.21
Less distributions from
Investment income, net (0.04) (0.06) (0.05) (0.08) (0.06)
Capital gains (0.40) (0.74) (0.17) (0.32) (0.47)
------------- --------- --------- --------- ---------
Total distributions (0.44) (0.80) (0.22) (0.40) (0.53)
------------- --------- --------- --------- ---------
Net Asset Value, End of Year $ 5.69 $ 5.24 $ 4.95 $ 4.39 $ 3.83
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
Total return 18.35% 22.24% 17.64% 25.20% 4.98%
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of year (000's omitted) $ 203,109 $ 178,344 $ 152,758 $ 134,821 $ 113,250
Ratio of expenses to average net assets 0.85% 0.96% 1.15% 0.98% 0.97%
Ratio of net investment income to average net assets 0.69% 1.03% 1.02% 1.67% 1.46%
Portfolio turnover rate 27.31% 46.79% 18.72% 37.00% 46.26%
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
SM&R EQUITY INCOME FUND 1998 1997 1996 1995 1994
------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 26.99 $ 25.05 $ 22.59 $ 18.90 $ 21.66
Investment income, net 0.62 0.63 0.58 0.62 0.62
Net realized and unrealized gain/(loss) on
investments during the year 2.50 4.96 3.10 4.82 (0.75)
------------- --------- --------- --------- ---------
Total from Investment Operations 3.12 5.59 3.68 5.44 (0.13)
Less distributions from
Investment income, net (0.62) (0.64) (0.58) (0.63) (0.61)
Capital gains (1.47) (3.01) (0.64) (1.12) (2.02)
------------- --------- --------- --------- ---------
Total distributions (2.09) (3.65) (1.22) (1.75) (2.63)
------------- --------- --------- --------- ---------
Net Asset Value, End of Year $ 28.02 $ 26.99 $ 25.05 $ 22.59 $ 18.90
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
Total return 12.11% 22.72% 16.46% 29.12% (0.61)%
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of year (000's omitted) $ 218,980 $ 198,687 $ 165,786 $ 141,058 $ 114,231
Ratio of expenses to average net assets 1.01% 1.05% 1.10% 1.12% 1.12%
Ratio of net investment income to average net assets 2.22% 2.28% 2.42% 2.89% 2.86%
Portfolio turnover rate 19.29% 39.14% 27.07% 44.00% 52.46%
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
SM&R BALANCED FUND 1998 1997 1996 1995 1994
------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 18.32 $ 17.90 $ 16.85 $ 14.32 $ 15.35
Investment income, net 0.48 0.57 0.49 0.49 0.45
Net realized and unrealized gain/(loss) on
investments during the year 1.96 2.50 1.48 2.67 (0.22)
------------- --------- --------- --------- ---------
Total from Investment Operations 2.44 3.07 1.97 3.16 0.23
Less distributions from
Investment income, net (0.47) (0.59) (0.49) (0.49) (0.45)
Capital gains (0.66) (2.06) (0.43) (0.14) (0.81)
------------- --------- --------- --------- ---------
Total distributions (1.13) (2.65) (0.92) (0.63) (1.26)
------------- --------- --------- --------- ---------
Net Asset Value, End of Year $ 19.63 $ 18.32 $ 17.90 $ 16.85 $ 14.32
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
Total return 13.83% 17.46% 11.86% 22.29% 1.49%
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of year (000's omitted) $ 29,367 $ 25,838 $ 23,188 $ 21,757 $ 19,023
Ratio of expenses to average net assets(1) 1.25% 1.26% 1.21% 1.26% 1.25%
Ratio of net investment income to average net assets 2.55% 3.02% 2.83% 2.99% 2.91%
Portfolio turnover rate 16.01% 27.52% 23.78% 16.39% 46.95%
</TABLE>
(1) Expenses for these calculations are net of a reimbursement from Securities
Management and Research, Inc. Without these reimbursements, the ratio of
expenses to average net assets would have been 1.37%, 1.36%, 1.34%, 1.46%
and 1.45% for the years ended December 31, 1998, 1997, 1996, 1995 and 1994,
respectively.
See notes to financial statements.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS December 31, 1998
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
The SM&R Equity Funds (formerly the American National Funds Group) (the "Funds")
are diversified open-end management investment companies registered under the
Investment Company Act of 1940, as amended. The Funds are comprised of the SM&R
Growth Fund, Inc. (formerly American National Growth Fund, Inc.), SM&R Equity
Income Fund, Inc. (formerly American National Income Fund, Inc.) and SM&R
Balanced Fund, Inc. (formerly the Triflex Fund, Inc.). The following is a
summary of significant accounting policies consistently followed by the Funds in
the preparation of financial statements. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
INVESTMENT VALUATIONS:
Investments listed on national exchanges are valued at the last sales price of
the day, or if there were no sales, then at the last bid price. Debt obligations
that are issued or guaranteed by the U.S. Government, its agencies, authorities,
and instrumentalities are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices and may reflect
appropriate factors such as yield, type of issue, coupon rate, maturity and
seasoning differential. Securities for which market quotations are not readily
available are valued at fair value as determined by the Board of Directors.
Commercial paper is stated at amortized cost, which is equivalent to fair value.
INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:
Investment transactions are accounted for on the trade date (date order to buy
or sell is executed). Dividend income is recognized on the ex-dividend date, and
interest income is recognized on an accrual basis. Realized gains and losses
from security transactions are reported on the basis of specific identification
for financial reporting and federal income tax purposes.
FEDERAL INCOME TAXES:
For federal income tax purposes, each fund is treated as a separate entity. The
Funds intend to comply with requirements of the Internal Revenue Code relating
to regulated investment companies and intend to distribute substantially all of
its taxable income to its shareholders. Therefore, no provision for federal
income taxes is recorded in the accompanying financial statements.
CAPITAL STOCK TRANSACTIONS AND DISTRIBUTIONS TO SHAREHOLDERS:
Fund shares are sold in a continuous public offering at net asset value plus a
sales charge. The Funds repurchase shares at net asset value. Dividends and
other distributions are recorded by the Funds on the ex-dividend date and may be
reinvested at net asset value.
EXPENSES:
Operating expenses not directly attributable to a Fund's operations are prorated
among the Funds based on the relative net assets or shareholders of each Fund.
NOTE 2--INVESTMENT ADVISORY AND SERVICE FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
Securities Management and Research, Inc. ("SM&R") is the investment advisor and
principal underwriter for the Funds. Investment advisory and service fees paid
to SM&R are computed as a percentage of the average daily net assets as follows:
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY
FEE SERVICE FEE
<S> <C> <C>
Net Assets
Not exceeding $100,000,000 0.750% 0.250%
Exceeding $100,000,000 but not exceeding $200,000,000 0.625% 0.200%
Exceeding $200,000,000 but not exceeding $300,000,000 0.500% 0.150%
Exceeding $300,000,000 0.400% 0.100%
</TABLE>
The investment advisory agreement for the Growth Fund provides for incentive
fees that will increase or decrease the basic investment advisory fee, based on
the performance of the fund in relation to a specified industry index for the
funds with similar objectives over a rolling 36-month period. For the period
ended December 31, 1998 the investment advisory fee was decreased by
approximately $370,400.
SM&R has agreed to reimburse the Funds for all expenses, other than taxes,
interest, and expenses directly related to the purchase and sale of investment
securities, in excess of 1.25% per annum of the average daily net assets.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
During the period ended December 31, 1998, SM&R, as principal underwriter,
received as sales charges on sale of shares of capital stock of the Funds and
made reallowances to dealers as follows:
<TABLE>
<CAPTION>
SALES CHARGES
SALES CHARGES REALLOWED TO
RECEIVED BY SM&R DEALERS
<S> <C> <C>
Growth $ 441,976 $ 5,175
Equity Income 830,130 10,123
Balanced 76,199 346
</TABLE>
SM&R is a wholly-owned subsidiary of American National Insurance Company
("American National"). As of December 31, 1998, SM&R and American National had
the following ownership in the Funds:
<TABLE>
<CAPTION>
AMERICAN NATIONAL
SM&R ----------------------------
------------------------------ PERCENT OF
PERCENT OF SHARES
SHARES SHARES OUTSTANDING SHARES OUTSTANDING
<S> <C> <C> <C> <C>
Growth 356,504 1.00% 1,262,169 3.53%
Equity Income 17,408 0.22% -- --
Balanced 127,405 8.51% 213,182 14.25%
</TABLE>
NOTE 3--COST, PURCHASES AND SALES OF INVESTMENTS
Investments have the same cost for tax and financial statement purposes.
Aggregate purchases and sales of investments in securities, other than
commercial paper and short-term bonds and notes, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Growth $58,419,623 $48,282,938
Equity Income 45,582,329 33,752,421
Balanced 4,722,637 4,082,106
</TABLE>
Gross unrealized appreciation and depreciation as of December 31, 1998, were as
follows:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION
<S> <C> <C>
Growth 7$3,458,373 $8,091,957
Equity Income 69,066,864 8,291,561
Balanced 7,507,420 694,470
</TABLE>
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
NOTE 4--CAPITAL STOCK
SM&R GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sales of capital shares 3,216,790 $17,622,633 2,618,034 $14,523,030
Investment income dividends reinvested 218,060 1,223,816 319,910 1,712,682
Distributions from net realized gains reinvested 2,698,983 13,324,090 4,145,887 21,351,396
--------- ----------- --------- -----------
Subtotals 6,133,833 32,170,539 7,083,831 37,587,108
Redemptions of capital shares (4,442,745) (24,133,352) (3,923,677) (21,867,903)
--------- ----------- --------- -----------
Net increase in capital shares outstanding 1,691,088 $ 8,037,187 3,160,154 $15,719,205
----------- -----------
----------- -----------
Shares outstanding at beginning of year 34,031,575 30,871,421
--------- ---------
Shares outstanding at end of year 35,722,663 34,031,575
--------- ---------
--------- ---------
The components of net assets at December 31, 1998, are as
follows:
Capital Stock--35,722,663 shares of $1.00 par value
outstanding (2,000,000,000 authorized) (par and
additional paid-in capital) $137,691,667
Accumulated net realized gain on investments 51,125
Net unrealized appreciation of investments 65,366,416
-----------
Net Assets $203,109,208
-----------
-----------
</TABLE>
SM&R EQUITY INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sales of capital shares 1,059,139 $29,994,912 767,255 $20,997,880
Investment income dividends reinvested 161,711 4,549,911 149,320 4,073,432
Distributions from net realized gains reinvested 404,882 10,559,672 729,218 19,360,438
--------- ----------- --------- -----------
Subtotals 1,625,732 45,104,495 1,645,793 44,431,750
Redemptions of capital shares (1,172,234) (32,920,958) (903,658) (24,969,275)
--------- ----------- --------- -----------
Net increase in capital shares outstanding 453,498 $12,183,537 742,135 $19,462,475
----------- -----------
----------- -----------
Shares outstanding at beginning of year 7,360,452 6,618,317
--------- ---------
Shares outstanding at end of year 7,813,950 7,360,452
--------- ---------
--------- ---------
The components of net assets at December 31, 1998, are as
follows:
Capital Stock--7,813,950 shares of $1.00 par value
outstanding (2,000,000,000 authorized) (par and
additional paid-in capital) $158,143,459
Accumulated net realized gain on investments 61,209
Net unrealized appreciation of investments 60,775,303
-----------
Net Assets $218,979,971
-----------
-----------
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
SM&R BALANCED FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Sales of capital shares 204,284 $3,794,519 96,421 $1,864,777
Investment income dividends reinvested 33,827 644,627 38,357 728,301
Distributions from net realized gains reinvested 50,226 901,681 139,275 2,529,231
--------- ---------- --------- ----------
Subtotals 288,337 5,340,827 274,053 5,122,309
Redemptions of capital shares (202,186) (3,822,000) (159,550) (3,097,618)
--------- ---------- --------- ----------
Net increase in capital shares outstanding 86,151 $1,518,827 114,503 $2,024,691
---------- ----------
---------- ----------
Shares outstanding at beginning of year 1,410,260 1,295,757
--------- ---------
Shares outstanding at end of year 1,496,411 1,410,260
--------- ---------
--------- ---------
The components of net assets at December 31, 1998, are as
follows:
Capital Stock--1,496,411 shares of $1.00 par value
outstanding (2,000,000,000 authorized) (par and additional
paid-in capital) $22,542,755
Accumulated net realized gain on investments 11,399
Net unrealized appreciation of investments 6,812,950
----------
Net Assets $29,367,104
----------
----------
</TABLE>
23
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
SM&R Equity Funds
We have audited the accompanying statements of assets and liabilities of SM&R
Equity Funds (formerly American National Funds Group) comprised of SM&R Growth
Fund, Inc. (formerly American National Growth Fund, Inc.), SM&R Equity Income
Fund, Inc. (formerly American National Income Fund, Inc.) and SM&R Balanced
Fund, Inc. (formerly the Triflex Fund, Inc.), including the schedule of
investments as of December 31, 1998, the related statements of operations for
the year then ended, the statements of changes in net assets and the financial
highlights for each of the two years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for each of the three years in the period ended December 31, 1996
were audited by other auditors whose report dated February 7, 1997 issued an
unqualified opinion.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of SM&R
Equity Funds as of December 31, 1998, the results of its operations for the year
then ended, the changes in its net assets and the financial highlights for each
of the two years in the periods then ended, in conformity with generally
accepted accounting principles.
Tait, Weller & Baker, CPA
Philadelphia, Pennsylvania
January 29, 1999
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions per share for the year ended December 31, 1998.
<TABLE>
<CAPTION>
LONG-TERM SHORT-TERM
RECORD INVESTMENT CAPITAL CAPITAL
DATE INCOME GAIN GAIN
<S> <C> <C> <C> <C>
SM&R Growth Fund, Inc. 6/22/98 $ 0.02500
9/14/98 $ 0.3364 $ 0.0171
12/21/98 $ 0.01180 $ 0.0514
SM&R Equity Income Fund, Inc. 3/23/98 $ 0.14000
6/22/98 $ 0.16800
9/14/98 $ 1.0035 $ 0.3587
9/22/98 $ 0.16300
12/21/98 $ 0.15000 $ 0.0835 $ 0.0207
SM&R Balanced Fund, Inc. 3/23/98 $ 0.12400
6/22/98 $ 0.13000
9/14/98 $ 0.5571 $ 0.1004
9/22/98 $ 0.11300
12/21/98 $ 0.10200
</TABLE>
24
<PAGE>
SM&R EQUITY FUNDS 2450 South Shore Blvd, League City, Texas 77573
- --------------------------------------------------------------------------------
DIRECTORS
Ralph S. Clifford
Paul D. Cummings
Jack T. Currie
Michael W. McCroskey
Ira W. Painton
Donald P. Stevens
Steven H. Stubbs
OFFICERS
Michael W. McCroskey, President
Gordon D. Dixon, Vice President and
Portfolio Manager
Brenda T. Koelemay, Vice President and Treasurer
Emerson V. Unger, Vice President
Teresa E. Axelson, Vice President and Secretary
INVESTMENT ADVISOR AND MANAGER
Securities Management and Research, Inc.
P.O. Box 58969
Houston, Texas 77258-8969
CUSTODIAN
Securities Management and Research, Inc.
P.O. Box 58969
Houston, Texas 77258-8969
LEGAL COUNSEL
Greer, Herz & Adams, L.L.P.
One Moody Plaza
Galveston, Texas 77550
UNDERWRITER AND REDEMPTION AGENT
Securities Management and Research, Inc.
P.O. Box 58969
Houston, Texas 77258-8969
TRANSFER AGENT, REGISTRAR AND DIVIDEND PAYING AGENT
Securities Management and Research, Inc.
P.O. Box 58969
Houston, Texas 77258-8969
INDEPENDENT AUDITORS
Tait, Weller & Baker
8 Penn Center
Philadelphia, Pennsylvania 19103
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000005529
<NAME> AMERICAN NATIONAL GROWTH FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 137673769
<INVESTMENTS-AT-VALUE> 203040185
<RECEIVABLES> 697331
<ASSETS-OTHER> 122086
<OTHER-ITEMS-ASSETS> 27608
<TOTAL-ASSETS> 203887210
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 778002
<TOTAL-LIABILITIES> 778002
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 101969004
<SHARES-COMMON-STOCK> 35722663
<SHARES-COMMON-PRIOR> 34031575
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 51125
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 65366416
<NET-ASSETS> 203109208
<DIVIDEND-INCOME> 2338773
<INTEREST-INCOME> 526397
<OTHER-INCOME> 0
<EXPENSES-NET> 1582494
<NET-INVESTMENT-INCOME> 1282676
<REALIZED-GAINS-CURRENT> 8728659
<APPREC-INCREASE-CURRENT> 21620022
<NET-CHANGE-FROM-OPS> 31631357
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1255603
<DISTRIBUTIONS-OF-GAINS> 13647821
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3216790
<NUMBER-OF-SHARES-REDEEMED> 4442745
<SHARES-REINVESTED> 2917043
<NET-CHANGE-IN-ASSETS> 8037187
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4943214
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 922010
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1582494
<AVERAGE-NET-ASSETS> 186837421
<PER-SHARE-NAV-BEGIN> 5.24
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.85
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.40
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.69
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
