<PAGE>
Registration No. 2-35602
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 35
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22
(Check appropriate box or boxes)
AMERICAN NATIONAL INCOME FUND, INC.
(Exact Name of Registrant as Specified in Charter)
One Moody Plaza, Galveston, Texas 77550
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (409) 763-2767
Michael W. McCroskey Jerry L. Adams
One Moody Plaza WITH COPY TO: Greer, Herz & Adams, L.L.P.
Galveston, Texas 77550 One Moody Plaza
(Name and Address of Agent for Service) Galveston, Texas 77550
- ------------------------------------------------------------------------------
DECLARATION REQUIRED BY RULE 24f-2(a)(1): An indefinite number of securities
of the Registrant has been registered under the Securities Act of 1933
pursuant to Rule 24f-2 under the Investment Company Act of 1940. Notice
required by Rule 24f-2(b)(1) was filed in the Office of the Securities and
Exchange Commission on February 26, 1996.
It is proposed that this filing will become effective (check appropriate box):
[ ] 75 days after filing pursuant to paragraph (a) Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 1, 1996 pursuant to paragraph (b) of Rule 485
- ------------------------------------------------------------------------------
If appropriate, check the following box:
[ ] this Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.
- ------------------------------------------------------------------------------
EXHIBIT INDEX located at Page _______.
<PAGE>
AMERICAN NATIONAL INCOME FUND, INC.
CROSS-REFERENCE SHEET
(Pursuant to Rule 495(a))
Showing Location of Information
Required by FORM N-1A
<TABLE>
<S> <C>
PART A ITEM AND CAPTION PROSPECTUS CAPTION
ITEM 1. COVER PAGE
(a)(i) Front Cover
(ii) Front Cover
(iii) Front Cover
(iv) Front Cover
(v) Front Cover
(vi) Not Applicable
(vii) Front Cover
(b) Front Cover
ITEM 2. SYNOPSIS
(a)(i) Table of Fees and Expenses
(ii) Not Applicable
(b) The Funds at a Glance
(c) The Funds at a Glance
ITEM 3. CONDENSED FINANCIAL INFORMATION
(a) Financial Highlights -- American National Income Fund,
Inc.
(b) Financial Highlights -- American National Income Fund,
Inc.
(c) Funds Performance
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT
(a)(i) The Funds at a Glance
(ii) The Funds at a Glance; Investment Objectives and Policies
(b)(i) Investment Objectives And Policies
(ii) Investment Objectives And Policies
(c) Investment Objectives And Policies
ITEM 5. MANAGEMENT OF THE FUND
(a) The Funds and Their Management
(b)(i) The Funds and Their Management
(ii) The Funds and Their Management
(iii) The Funds and Their Management
(c) The Funds and Their Management
(d) The Funds and Their Management
(e) The Funds and Their Management
(f) The Funds and Their Management
(g)(i) The Funds and Their Management
(ii) The Funds and Their Management
ITEM 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
(a) Contained in the Fund's Annual Report
(b) Contained in the Fund's Annual Report
(c) Contained in the Fund's Annual Report
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES
(a)(i) Purchase of Shares
(ii) Purchase of Shares; How To Redeem; Special Purchase Plans
(iii) Cover
(b) Not Applicable
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(c) Not Applicable
(d) Not Applicable
(e) Cover Page
(f) Dividends, Capital Gains and Federal Taxes
(g)(i) Dividends, Capital Gains and Federal Taxes
(ii) Dividends, Capital Gains and Federal Taxes
(iii) Dividends, Capital Gains and Federal Taxes
(h) Not Applicable
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED
(a) Purchase of Shares
(b)(i) Determination of Offering Price
(ii) When Are Purchases Effective?; Determination of Offering
Price
(iii) Determination of Offering Price
(iv) Determination of Offering Price
(v) Not Applicable
(c) Special Purchase Plans; Determination of Offering Price
(d) Purchase of Shares
(e) Not Applicable
(f)(i) Not Applicable
(ii) Not Applicable
(iii) Not Applicable
(g) Not Applicable
ITEM 8. REDEMPTION OR REPURCHASE
(a) How To Redeem
(b) Not Applicable
(c) How To Redeem
(d) How To Redeem
ITEM 9. PENDING LEGAL PROCEEDINGS
Not Applicable
PART B ITEM AND CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
ITEM 10. COVER PAGE
(a)(i) Cover Page
(ii) Cover Page
(iii) Cover Page
(iv) Cover Page
(b) Cover Page
ITEM 11. TABLE OF CONTENTS
Table of Contents
ITEM 12. GENERAL INFORMATION AND HISTORY
The Fund
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES
(a) Investment Objective and Policies; Investment
Restrictions
(b) Investment Objective and Policies; Investment
Restrictions
(c) Not Applicable
(d) Investment Objective and Policies
ITEM 14. MANAGEMENT OF THE FUND
(a) Management of The Fund
(b) Management of The Fund
(c) Management of The Fund
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(a) Not Applicable
(b) Not Applicable
(c) Control Persons and Principal Holders of
Securities
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES
(a)(i) Control and Management of SM&R
(ii) Control and Management of SM&R
(iii) Investment Advisory Agreement
(b) Investment Advisory Agreement
(c) Not Applicable
(d) Administrative Service Agreement
(e)(i) Not Applicable
(ii) Not Applicable
(iii) Not Applicable
(f)(i) Not Applicable
(ii) Not Applicable
(iii) Not Applicable
(g) Custodian
(h) Custodian;Counsel and Auditors
(i) Investment Advisory Agreement; Administrative
Service Agreement; Custodian; Transfer and
Dividend Paying Agent
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES
(a) Portfolio Transactions and Brokerage Allocation
(b)(i) Portfolio Transactions and Brokerage Allocation
(ii) Portfolio Transactions and Brokerage Allocation
(iii) Portfolio Transactions and Brokerage Allocation
(c) Portfolio Transactions and Brokerage Allocation
(d) Portfolio Transactions and Brokerage Allocation
(e) Not Applicable
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES
(a)(i) Capital Stock
(ii) Capital Stock
(b) Not Applicable
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
(a) Purchasing Shares;Special Purchase Plans
(b) Determination of Net Asset Value; Offering Price; Reduced
Sales Charge
(c) Not Applicable
ITEM 20. TAX STATUS
Tax Status
ITEM 21. UNDERWRITERS
(a)(i) The Underwriter
(ii) The Underwriter
(iii) The Underwriter
(b) The Underwriter
(c)(i) The Underwriter
(ii) The Underwriter
(iii) The Underwriter
ITEM 22. CALCULATIONS OF PERFORMANCE DATA
(a)(i) Not Applicable
(ii) Not Applicable
(iii) Not Applicable
(iv) Not Applicable
(b)(i) Performance Data;Cumulative Total Return;
Average Annual Return; Comparisons
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(ii) Not Applicable
(iii) Not Applicable
(iv) Not Applicable
ITEM 23. FINANCIAL STATEMENTS
Financial Statements are attached hereto as Exhibit "1"
to Part B, Statement of Additional Information.
</TABLE>
PART C OTHER INFORMATION
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
P R O S P E C T U S
AMERICAN NATIONAL FUNDS GROUP
[AMERICAN NATIONAL]
APRIL 1, 1996
AMERICAN NATIONAL GROWTH FUND, INC.
AMERICAN NATIONAL INCOME FUND, INC.
TRIFLEX FUND, INC.
ONE MOODY PLAZA, GALVESTON, TEXAS 77550
TELEPHONE NUMBER: (409) 763-8272 - TOLL FREE:
1 (800) 231-4639
DIRECTORS
<TABLE>
<S> <C>
Ralph S. Clifford Ira W. Painton
Paul D. Cummings Donald P. Stevens
Jack T. Currie Steven H. Stubbs
Michael W. McCroskey
</TABLE>
<TABLE>
<S> <C>
INVESTMENT ADVISOR AND MANAGER LEGAL COUNSEL
Securities Management and Research, Inc. Greer, Herz & Adams, L.L.P.
One Moody Plaza One Moody Plaza
Galveston, Texas 77550 Galveston, Texas 77550
UNDERWRITER AND REDEMPTION AGENT INDEPENDENT AUDIOTRS
Securities Management and Research, Inc. KPMG Peat Marwick LLP
One Moody Plaza 700 Louisiana
Galveston, Texas 77550 Houston, Texas 77002
CUSTODIAN TRANSER AGENT, REGISTRAR AND
Securities Management and Research, Inc. DIVIDEND PAYING AGENT
One Moody Plaza Securities Management and Research, Inc.
Galveston, Texas 77550 One Moody Plaza
Galveston, Texas 77550
</TABLE>
This Prospectus concisely sets forth the information a prospective investor
should know about the American National Growth Fund, Inc. ("Growth Fund"), a
long-term growth fund; American National Income Fund, Inc. ("Income Fund"), an
income fund with appreciation secondary and the Triflex Fund, Inc. ("Triflex
Fund") a balanced fund seeking conservation of principal, current income and
long-term capital appreciation, (together "the Funds" or the "American National
Funds Group") before investing. Please read and retain this Prospectus for
future reference. A Statement of Additional Information for each Fund dated
April 1, 1996, has been filed with the Securities and Exchange Commission and is
available free of charge by writing Securities Management and Research, Inc.
("SM&R") at One Moody Plaza, Galveston, Texas 77550 or calling 1-800-231-4639.
The Statements of Additional Information are incorporated herein by reference in
accordance with the Commission's rules.
While the use of this combined Prospectus subjects each Fund to possible
liability as the result of statements or omissions regarding another Fund, the
Board of Directors of each Fund considers the benefits to the respective Fund of
using a combined Prospectus to outweigh the risk.
No dealer, sales representative, or other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus (and/or each Fund's Statement of Additional Information referred
to above) and if given or made, such information or representations must not be
relied upon as having been authorized by the Funds or SM&R, the Fund's
investment adviser, manager and principal underwriter. This Prospectus does not
constitute an offer or solicitation by anyone in any state in which such offer
or solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to your registered representative,
or to the Funds at the telephone numbers or mailing address listed above.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK. FURTHER, SHARES OF THE FUNDS ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Form 9090(4/96)
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SHAREHOLDER INQUIRIES..................................................... 1
THE FUNDS AT A GLANCE..................................................... 2
TABLE OF FEES AND EXPENSES................................................ 4
FINANCIAL HIGHLIGHTS...................................................... 5
PERFORMANCE............................................................... 8
INVESTMENT OBJECTIVES AND POLICIES........................................ 8
THE FUNDS AND THEIR MANAGEMENT............................................ 12
PURCHASE OF SHARES........................................................ 15
WHEN ARE PURCHASES EFFECTIVE?............................................. 15
DETERMINATION OF OFFERING PRICE........................................... 16
SPECIAL PURCHASE PLANS.................................................... 17
RETIREMENT PLANS.......................................................... 20
DIVIDENDS, CAPITAL GAINS AND FEDERAL TAXES................................ 20
HOW TO REDEEM............................................................. 24
PERFORMANCE ILLUSTRATIONS................................................. 24
APPENDIX.................................................................. 27
APPLICATION
</TABLE>
THE FUNDS AT A GLANCE
The Funds were originally incorporated as follows: Growth Fund, State of
Florida, May 5, 1953; Income Fund, State of Texas, May 1, 1970 and the Triflex
Fund, State of Texas, November 20, 1987. The Funds were subsequently
reincorporated in the State of Maryland on November 30, 1989. They are
diversified, open-end management investment companies (mutual funds) which
continuously sell and redeem their shares of common stock at the current per
share offering price.
MINIMUM PURCHASE: $100 minimum initial investment and $20 minimum for each
subsequent investment as described under "Special Purchase Plans".
INVESTMENT OBJECTIVES AND INVESTOR SUITABILITY PROFILE:
AMERICAN NATIONAL GROWTH FUND, INC. ("GROWTH FUND")
OBJECTIVE: The Growth Fund seeks long-term capital growth by investing its
assets in securities that provide an opportunity for capital appreciation.
INVESTOR SUITABILITY PROFILE: The Growth Fund is designed for investors with
modest means who want to invest small amounts of money over a period of time to
build capital for their long-range goals. These long-range goals may include
such plans as giving their children the finest education possible, retiring in
comfort, building an estate or other important long-range goals.
AMERICAN NATIONAL INCOME FUND, INC. ("INCOME FUND")
OBJECTIVE: The Income Fund seeks current income with a secondary objective of
long-term capital appreciation to protect against inflation.
INVESTOR SUITABILITY PROFILE: The Income Fund is designed for investors who are
seeking to protect the future purchasing power of their money while availing
themselves of the potential for attractive growth while reducing their exposure
to the volatility of the market as a whole.
TRIFLEX FUND, INC. ("TRIFLEX FUND")
OBJECTIVE: The Triflex Fund seeks to conserve principal, produce current income
and achieve long-term capital appreciation.
2
<PAGE>
INVESTOR SUITABILITY PROFILE: The Triflex Fund is designed for retirees, widows
or anyone seeking supplemental income and conservation of the purchasing power
of their capital.
MANAGEMENT: Securities Management and Research, Inc. ("SM&R") makes the
investment choices for the Funds. SM&R has served as investment adviser, manager
and distributor of mutual funds since 1966. Refer to "THE FUNDS AND THEIR
MANAGEMENT" for additional information.
PORTFOLIO MANAGEMENT PERSONAL INVESTING: The Funds' Boards of Directors have
approved a Code of Ethics which prescribes policies governing the personal
investment practices of its portfolio management. These policies are stated in
each of the Fund's Statement of Additional Information.
REDEMPTIONS: Procedures may be found under "HOW TO REDEEM".
DERIVATIVE INVESTMENTS: The Funds do not invest in interest only (IO) or
principal only (PO) securities. The Triflex Fund may invest in collateralized
mortgage obligations (CMO) from time to time. An explanation of CMO's can be
found in the Triflex Fund's Statement of Additional Information.
RISKS: Each Fund can be expected to have different investment results based on
its investment objective and different financial and market risks. Financial
risk refers to the ability of an issuer of a debt security to pay principal and
interest, and to the earnings stability and overall financial soundness of an
issuer of an equity security. Market risk refers to the degree to which the
price of a security will react to changes in conditions in securities market in
general, and with particular reference to debt securities, to changes in the
overall level of interest rates. As a result of these and other risks, the value
of the shares owned may be higher or lower than their cost.
PORTFOLIO TURNOVER RATES: Each Fund's portfolio turnover rates for the last ten
years are included in the Financial Highlights tables herein. A security will be
sold, and the proceeds reinvested, whenever it is considered prudent to do so
from the viewpoint of a Fund's objectives, regardless of the holding period of
the security. A higher rate of portfolio turnover may result in higher
transaction costs. Additionally, higher portfolio turnover may, in some cases,
have adverse tax effects on the Funds and their shareholders. Portfolio
turnovers are expected to be less than 90% per year for each of the Funds. An
explanation of turnover rate calculations and brokerage fees can be found in
each Fund's Statement of Additional Information.
3
<PAGE>
TABLE OF FEES AND EXPENSES
- --------------------------------------------------------------------------------
The purpose of the following table is to assist the investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly. See "PURCHASE OF SHARES" in this Prospectus. The example is
included to provide a means for the investor to compare expense levels of funds
with different fee structures over varying investment periods.
SHAREHOLDER TRANSACTION EXPENSES(1)
<TABLE>
<CAPTION>
Growth Income Triflex
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 5.75% 5.75% 5.75%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None None
Deferred Sales Load None None None
Redemption Fees(1) None None None
Exchange Fees None None None
</TABLE>
ANNUAL OPERATING EXPENSES
(as a Percentage of average net assets)
<TABLE>
<CAPTION>
Growth Income Triflex
<S> <C> <C> <C>
Investment Advisory Fee After Expense Reimbursement .58% .72% .55%(2)
Service Fee .24% .24% .25%
Other Expenses .16% .16% .46%
Total Operating Expenses After Expense Reimbursement .98% 1.12% 1.26%(2)
</TABLE>
The table shows actual expenses paid by shareholders. (See "THE FUNDS AND THEIR
MANAGEMENT" in this Prospectus for more information).
(1) An $8.00 transaction fee is charged for each expedited wire redemption.
(2) Without the reimbursement, the percentages shown for the Triflex Fund's
Investment Advisory Fees and Total Operating Expenses would have been .75%
and 1.46%, respectively.
This table is not intended to reflect in detail the fees and expenses associated
with an individual shareholder's investment in any of the Funds listed. It is
being provided to assist investors in gaining a more complete understanding of
fees, charges and expenses which are discussed in greater detail in the
appropriate sections of this Prospectus.
EXAMPLE OF EXPENSES
The following example illustrates the expenses an investor would pay on a
$1,000 investment in each Fund listed over various time periods assuming (i) 5%
annual return and (ii) redemption at the end of each period. Because the Funds
have no redemption fee, you would pay the same expenses whether or not you
redeemed your investment at the end of each period. An investor should not view
this example as a representation of past or future expenses and actual expenses
may be more or less than those shown.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Growth $67 $87 $109 $171
Income 68 91 116 186
Triflex 70 95 123 201
</TABLE>
4
<PAGE>
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout each period)
AMERICAN NATIONAL GROWTH FUND, INC.
The table that follows, for the periods after October 31, 1988, has been
audited by KPMG Peat Marwick LLP, independent auditors, whose unqualified report
thereon appears in the Statement of Additional Information. This information
should be read in conjunction with the related financial statements and notes
hereto included in the Statement of Additional Information. The information for
years prior to October 31, 1989, has been audited by the Funds former
independent Auditors.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
------------ ------------ ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 3.83 $ 4.15 $ 4.51 $ 5.07 $ 3.95 $ 4.25
Net investment income 0.08 0.06 0.06 0.08 0.08 0.10
Net realized and unrealized
gain (loss) on investments
during the period 0.88 0.15 0.31 (0.20) 1.38 (0.22)
------ ------ ------ ------ ---------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.96 0.21 0.37 (0.12) 1.46 (0.12)
Less distributions
Distributions from net
investment income (0.08) (0.06) (0.06) (0.08) (0.06) (0.09)
Distributions from capital
gains (0.32) (0.47) (0.67) (0.36) (0.28) (0.09)
------ ------ ------ ------ ---------- ---------
TOTAL DISTRIBUTIONS (0.40) (0.53) (0.73) (0.44) (0.34) (0.18)
------ ------ ------ ------ ---------- ---------
Net Asset Value,
End of Period $ 4.39 $ 3.83 $ 4.15 $ 4.51 $ 5.07 $ 3.95
------ ------ ------ ------ ---------- ---------
------ ------ ------ ------ ---------- ---------
TOTAL RETURN 25.20% 4.98% 8.17% (2.50)% 36.98% (2.94)%
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period
(000's omitted) $134,821 $113,250 $113,135 $111,811 $125,837 $97,298
Ratio of expenses to average
net assets 0.98 0.97 1.00 1.07 1.04 1.03
Ratio of net investment
income to average net assets 1.67 1.46 1.31 1.42 1.63 2.41
Portfolio turnover rate 37.00 46.26 59.67 92.28 55.95 152.13
<CAPTION>
Two Months
Ended Dec.
31, Year Ended October 31,
----------- -----------------------------------------------
1989 1989 1988 1987 1986
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 4.85 $ 4.48 $ 5.14 $ 5.05 $ 4.02
Net investment income 0.03 0.13 0.09 0.06 0.06
Net realized and unrealized
gain (loss) on investments
during the period 0.17 0.67 0.13 0.53 1.06
----------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.20 0.80 0.22 0.59 1.12
Less distributions
Distributions from net
investment income (0.07) (0.12) (0.10) (0.06) (0.06)
Distributions from capital
gains (0.73) (0.31) (0.78) (0.44) (0.03)
----------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.80) (0.43) (0.88) (0.50) (0.09)
----------- -------- -------- -------- --------
Net Asset Value,
End of Period $ 4.25 $ 4.85 $ 4.48 $ 5.14 $ 5.05
----------- -------- -------- -------- --------
----------- -------- -------- -------- --------
TOTAL RETURN 4.07%** 19.90% 5.88% 12.57% 28.13%
RATIOS (IN PERCENTAGES)/SUPPL
Net Assets, end of period
(000's omitted) $108,058 $104,897 $97,302 $99,413 $94,937
Ratio of expenses to average
net assets 1.06* 1.09 1.23 1.00 0.97
Ratio of net investment
income to average net assets 3.24* 2.93 2.07 1.14 1.25
Portfolio turnover rate 13.74 70.94 46.79 44.95 25.52
</TABLE>
*Ratios annualized
**Returns are not annualized
5
<PAGE>
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout each period)
AMERICAN NATIONAL INCOME FUND, INC.
The table that follows, for the periods after July 31, 1988, has been audited
by KPMG Peat Marwick LLP, independent auditors, whose unqualified report thereon
appears in the statement of Additional Information. This information should be
read in conjunction with the related financial statements and notes thereto
included in the Statement of Additional Information. The information that
follows for years prior to July 31, 1989, has been audited by the Funds former
independent Auditors.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
----------- ----------- --------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 18.90 $ 21.66 $ 22.09 $ 22.94 $ 19.35 $ 20.11
Net investment income 0.62 0.62 0.56 0.57 0.69 0.79
Net realized and unrealized
gain (loss) on investments
during the period 4.82 (0.75) 1.75 0.17 4.85 (0.67)
----------- ----------- --------- --------- -------- -------
TOTAL FROM INVESTMENT
OPERATIONS 5.44 (0.13) 2.31 0.74 5.54 0.12
Less distributions
Distributions from net
investment income (0.63) (0.61) (0.60) (0.53) (0.64) (0.81)
Distributions from capital
gains (1.12) (2.02) (2.14) (1.06) (1.31) (0.07)
----------- ----------- --------- --------- -------- -------
TOTAL DISTRIBUTIONS (1.75) (2.63) (2.74) (1.59) (1.95) (0.88)
----------- ----------- --------- --------- -------- -------
Net Asset Value,
End of period $ 22.59 $ 18.90 $ 21.66 $ 22.09 $ 22.94 $ 19.35
----------- ----------- --------- --------- -------- -------
----------- ----------- --------- --------- -------- -------
TOTAL RETURN 29.12% (0.61)% 10.63% 3.31% 29.06% 0.75%
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period
(000's omitted) $141,058 $114,231 $119,956 $108,076 $99,192 $74,329
Ratio of expenses to average
net assets 1.12 1.12 1.17 1.18 1.23 1.22
Ratio of net investment
income to average net assets 2.89 2.86 2.51 2.56 3.25 4.14
Portfolio turnover rate 44.00 52.46 70.71 44.03 40.23 37.51
<CAPTION>
Five
Months
Ended Dec.
31, Year Ended July 31,
---------- -----------------------------------------------
1989 1989 1988 1987 1986
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 20.75 $ 19.80 $ 23.77 $ 21.52 $ 19.67
Net investment income 0.38 0.74 0.70 0.63 0.76
Net realized and unrealized
gain (loss) on investments
during the period 1.06 3.09 (3.31) 4.33 2.88
---------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 1.44 3.83 (2.61) 4.96 3.64
Less distributions
Distributions from net
investment income (0.44) (0.74) (0.83) (0.68) (0.77)
Distributions from capital
gains (1.64) (2.14) (0.53) (2.03) (1.02)
---------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (2.08) (2.88) (1.36) (2.71) (1.79)
---------- -------- -------- -------- --------
Net Asset Value,
End of period $ 20.11 $ 20.75 $ 19.80 $ 23.77 $ 21.52
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
TOTAL RETURN 6.99%** 32.31% (11.20)% 25.71% 19.90%
RATIOS (IN PERCENTAGES)/SUPPL
Net Assets, end of period
(000's omitted) $69,579 $67,765 $65,789 $85,817 $60,510
Ratio of expenses to average
net assets 1.17* 1.18 1.10 1.00 0.99
Ratio of net investment
income to average net assets 3.92* 3.82 3.46 3.00 3.78
Portfolio turnover rate 14.62 31.02 56.63 24.71 17.11
</TABLE>
* Ratios annualized
** Returns are not annualized
6
<PAGE>
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout each period)
TRIFLEX FUND, INC.
The table that follows, for the periods after July 31, 1988, has been audited
by KPMG Peat Marwick, LLP, independent auditors, whose unqualified report
thereon appears in the Statement of Additional Information. This information
should be read in conjunction with the related financial statements and notes
thereto included in this Statement of Additional Information. The information
that follows for years prior to July 31, 1989, has been audited by the Funds
former independent Auditors.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 14.32 $ 15.35 $ 15.81 $ 16.20 $ 13.98 $ 14.62
Net investment income 0.49 0.45 0.41 0.46 0.61 0.80
Net realized and unrealized gain
(loss) on investments during the
period 2.67 (0.22) 0.58 0.01 2.79 (0.66)
------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 3.16 0.23 0.99 0.47 3.40 0.14
Less distributions
Distributions from net investment
income (0.49) (0.45) (0.41) (0.35) (0.62) (0.70)
Distributions from capital gains (0.14) (0.81) (1.04) (0.51) (0.56) (0.08)
------- -------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.63) (1.26) (1.45) (0.86) (1.18) (0.78)
------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period $ 16.85 $ 14.32 $ 15.35 $ 15.81 $ 16.20 $ 13.98
------- -------- -------- -------- -------- --------
------- -------- -------- -------- -------- --------
TOTAL RETURN 22.29% 1.49% 6.31% 3.00% 24.53% 1.37%
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period
(000's omitted) $21,757 $19,023 $20,469 $21,482 $21,916 $19,328
Ratio of expenses to average net
assets 1.26(1) 1.25(1) 1.32(1) 1.15(1) 1.28(1) 1.31
Ratio of net investment income to
average net assets 2.99 2.91 2.49 2.96 3.95 5.57
Portfolio turnover rate 16.39 46.95 70.98 61.66 104.21 184.54
<CAPTION>
Five Months
Ended Dec.
31, Year Ended July 31,
----------- -----------------------------------------------
1989 1989 1988 1987 1986
----------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 15.90 $ 14.90 $ 14.59 $ 15.30 $ 14.65
Net investment income 0.37 0.89 0.88 1.18 1.40
Net realized and unrealized gain
(loss) on investments during the
period (0.33) 1.34 0.54 (0.67) 0.65
----------- --------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS 0.04 2.23 1.42 0.51 2.05
Less distributions
Distributions from net investment
income (0.39) (0.90) (1.11) (1.22) (1.40)
Distributions from capital gains (0.93) (0.33) 0.00 0.00 0.00
----------- --------- -------- -------- -------
TOTAL DISTRIBUTIONS (1.32) (1.23) (1.11) (1.22) (1.40)
----------- --------- -------- -------- -------
Net Asset Value,
End of Period $ 14.62 $ 15.90 $ 14.90 $ 14.59 $ 15.30
----------- --------- -------- -------- -------
----------- --------- -------- -------- -------
TOTAL RETURN 0.32%** 15.94% 10.18% 3.48% 11.94%
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL
Net Assets, end of period
(000's omitted) $21,382 $21,002 $19,687 $10,396 $7,856
Ratio of expenses to average net
assets 1.31* 1.28 1.00 0.96 0.98
Ratio of net investment income to
average net assets 5.75* 5.99 6.01 7.84 9.21
Portfolio turnover rate 116.16 36.93 130.95 27.02 11.25
</TABLE>
The shaded area on the chart represents data for fiscal years prior to the
change in investment objectives of the Fund.
(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 1.46%, 1.45%, 1.39%, 1.32% and
1.49% for the years ended December 31, 1995, 1994, 1993, 1992 and 1991,
respectively.
* Ratios annualized
**Returns are not annualized
7
<PAGE>
PERFORMANCE
Each Fund may include in advertisements, sales literature, shareholder reports
or other communications, total rate of return quotations and the Funds rankings
in the relevant fund category from sources such as the Lipper Analytical
Services, Inc. ("Lipper") and Weisenberger Investment Company Service
("Weisenberger"). If any advertised performance data does not reflect the
maximum sales charge, such advertisements will disclose that the sales charge
has not been deducted in computing the performance data, and that, if reflected,
the maximum sales charge would reduce the performance quoted. Additional
performance information is contained in the Funds Group Annual Report to
shareholders which is available upon request without charge.
The Funds may also include data comparing their performance with the
performance of non-related investment media, published editorial comments,
publications that monitor the performance of other mutual funds or mutual fund
indexes with similar objectives and policies. (See "COMPARISONS" in each of the
Funds Statement of Additional Information for a list of various media used).
Performance information may be quoted numerically or may be presented in table,
graph or other illustration.
The total return data represents past performance, which may vary for
different periods. Actual total return and principal value of an investment will
fluctuate so that investor's shares, when redeemed, may be worth more or less
than their cost. Returns include the effects of the Growth, Income and Triflex
Fund's maximum sales charge of 5.75% applied to the initial investment amount,
the change in the share price and the reinvestment at net asset value of all
dividends and capital gains (both of which are subject to applicable federal,
state and local income taxes).
AVERAGE ANNUAL RETURN
Each Fund's average annual return during specified time periods reflects the
hypothetical annually compounded return that would equate an initial one
thousand dollar investment by adding one to the computed average annual total
return, raising the sums to a power equal to the number of years covered by the
computation and multiplying the result by the one thousand dollar initial
investment. The calculation assumes deduction of the maximum sales charge from
the initial amount invested and reinvestment of all investment income dividends
and capital gain distributions on the reinvestment dates at the net asset value.
Because average annual returns tend to smooth out variations in each Fund's
return, you should recognize that they are not the same as actual year-by-year
results.
Average Annual Total Return
For the Period Ending 12/31/95
<TABLE>
<CAPTION>
20-year 10-year 5-year 1-year
<S> <C> <C> <C> <C>
Growth Fund 15.03% 11.07% 12.35% 18.11%
Income Fund 14.71% 11.03% 12.27% 21.71%
Triflex Fund -- -- 9.80% 15.29%
</TABLE>
Each Fund's performance will vary from time to time and past results are not
necessarily indicative of future results. Performance is a function of a fund's
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of a Fund, market conditions and interest
rates.
CUMULATIVE TOTAL RETURN
The charts in the back of this prospectus describe the total return results of
a hypothetical $10,000 investment in each Fund for the 10-year period from
January 1, 1986 through December 31, 1995 with a maximum sales charge of 5.75%.
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has different investment objectives which it pursues through the
investment policies and techniques described below. These policies and
techniques are not fundamental and may be changed by the Board of Directors of
the Funds without shareholder approval. In addition, each Fund has adopted
certain restrictions as fundamental policies which will not be changed unless
approved by the vote, at a special meeting of stockholders, of (i) 67% of the
shares present at a meeting, at which more than 50% of each Fund's outstanding
shares are present or represented by
8
<PAGE>
proxy, or (ii) more than 50% of each Fund's outstanding shares. Each Fund's
investment restrictions adopted as fundamental policies are stated in each
Fund's Statement of Additional Information.
GROWTH FUND
The Growth Fund's portfolio investments and the composition of its total
portfolio are considered from the viewpoint of potential capital appreciation.
This composition will be adjusted from time to time to best accomplish its
investment objective under current conditions. In pursuing its objective, the
Growth Fund will invest primarily in common stocks selected in accordance with
its investment objective.
The Growth Fund may invest in convertible preferred stocks rated at least "B"
by Standard and Poor's Corporation ("S&P") or at least "b" by Moody's Investors
Service, Inc. ("Moody's") preferred stock ratings, and convertible debentures
and notes rated at least "B" by S&P's and Moody's corporate bond ratings
("convertible securities").(1) Investments in convertible securities having
these ratings may involve greater risks than convertible securities having
higher ratings. Common stocks and convertible securities purchased will be of
companies which are believed by SM&R to provide an opportunity for capital
appreciation. The proportion of assets invested in any particular type of
security can be expected to vary, depending on SM&R's appraisal of market and
economic conditions. Under normal conditions at least 50% of the Growth Fund's
total assets will be invested in common stocks. On a temporary basis the Growth
Fund may invest, in commercial paper which at the date of such investment, is
rated in one of the two top categories by one or more of the nationally
recognized statistical rating organizations ("NRSRO's"), in certificates of
deposit in domestic banks and savings institutions having at least $1 billion of
total assets and in repurchase agreements which are discussed under "Other
Investment Strategies".
INCOME FUND
The Income Fund's portfolio investments and the composition of its total
portfolio are considered not only from the viewpoint of present and potential
yield, but also from the viewpoint of potential capital appreciation. This
composition of portfolio investments will be adjusted from time to time to best
accomplish its investment objectives under current conditions.
In pursuit of its objectives, the Income Fund will invest in common stocks,
preferred stocks and marketable debt securities selected in accordance with the
Income Fund's investment objectives. Common and preferred stocks purchased will
generally be of companies with consistent and increasing dividend payment
histories which are believed by SM&R to have further earnings potential
sufficient to continue such dividend payments. Debt securities will include
publicly traded corporate bonds, debentures, notes, commercial paper, repurchase
agreements, and certificates of deposit in domestic banks and savings
institutions having at least $1 billion of total assets. The proportion of
assets invested in any particular type of security can be expected to vary,
depending on SM&R's appraisal of market and economic conditions. Under normal
conditions at least 50% of the Income Fund's assets will be invested in equity
securities rather than debt securities.
Corporate debt obligations purchased by the Income Fund will consist only of
obligations rated either Baa or better by Moody's or BBB or better by S&P. Bonds
which are rated Baa by Moody's are considered as medium grade obligations, that
is, they are neither highly protected nor poorly secured. Bonds rated BBB by S&P
are regarded as having an adequate capacity to pay interest and repay principal.
Commercial paper and notes will consist only of direct obligations of
corporations whose bonds and/or debentures are rated as set forth above.
TRIFLEX FUND
The Triflex Fund seeks to achieve its objectives by flexibly managing a
balanced portfolio of fixed-income securities such as bonds, commercial paper,
preferred stock and short-term obligations combined with common stocks and
securities convertible into common stocks. The Triflex Fund will only purchase
common stocks and convertible securities of corporations having a market
capitalization of at least $100 million, an operating history of
(1) See Appendix for a description of these ratings
9
<PAGE>
at least three (3) years and a listing on the New York Stock Exchange, American
Stock Exchange or Over-The-Counter markets. Corporate bonds purchased will
consist of obligations rated either Baa or better by Moody's or BBB or better by
S&P. Bonds which are rated Baa by Moody's are considered as medium grade
obligations, that is, they are neither highly protected nor poorly secured.
Bonds rated BBB by S&P are regarded as having an adequate capacity to pay
interest and repay principal. Commercial paper and notes will consist only of
direct obligations of corporations whose bonds and/or debentures are rated as
set forth above. The Triflex Fund may also invest in repurchase agreements. This
balanced investment policy is intended to reduce risk and to obtain results in
keeping with its objectives.
The Triflex Fund's investments will be in fixed-income securities and equity
securities as described above. However, the Triflex Fund will sometimes be more
heavily invested in equity securities and at other times it will be more heavily
invested in fixed-income securities, depending on management's appraisal of
market and economic conditions. SM&R believes that a fund that is wholly
invested in fixed-income securities carries a large interest rate risk. Interest
rate risk is the uncertainty about losses due to changes in the rate of interest
on debt instruments. The major interest rate risk for investors, however, is not
in the interest rate itself, but in the change in the market price of bonds that
results from changes in the prevailing interest rate. Higher interest rates
would mean lower bond prices and lower net asset value for the Triflex Fund's
shareholders assuming no change in its current investment objective and
portfolio. Diversifying the Triflex Fund's portfolio with investments such as
commercial paper, convertible securities and common stocks may reduce the
decline in value attributable to the increase in interest rate and resulting
decrease in the market value of bonds and will reduce the interest rate risk.
However, stock prices also fluctuate in response to a number of factors,
including, changes in general level of interest rates, economic and political
developments and other factors which impact individual companies or specific
types of companies. Such market risks cannot be avoided but can be limited
through a program of diversification and a careful and consistent evaluation of
trends in the capital market and fundamental analysis of individual equity
holdings.
The Triflex Fund's goal of preservation of capital while owning common stocks
is dependent upon various factors, including the sustained long-term growth of
the United States economy. SM&R recognizes that recessions occur but also
recognizes that the economy historically has come back from those recessions.
Therefore, SM&R believes that the United States economy will continue to grow,
that the political environment will continue to be relatively stable and that
the financial markets will continue to function in a reasonably orderly fashion.
As long as these factors occur, SM&R believes that there is a reasonable
likelihood the Triflex Fund can reach its goal of preservation of capital while
at the same time investing in common stock.
SM&R, through an ongoing program of asset allocation, will determine the
appropriate level of equity holding consistent with SM&R's outlook and
evaluation of trends in the economy and the financial markets. The Triflex
Fund's level of commitment to common stocks and specific common stock
investments will be determined as a result of this process. For example, within
an environment of rising inflation, common stocks historically have preserved
their value better than bonds; therefore, inclusion of common stocks could tend
to conserve principal better than a portfolio consisting entirely of bonds and
other debt obligations. In addition, within an environment of accelerating
growth in the economy, common stocks historically have conserved their value
better than bonds in part due to a rise in interest rates that occur
coincidentally with accelerating growth and profitability of the companies.
The Triflex Fund will not purchase a security if as a result of such purchase
less than 25% of its total assets will be in fixed-income senior securities
(including short and long-term securities, preferred stocks and convertible debt
securities and preferred stocks to the extent their value is attributable to
their fixed-income characteristics).
10
<PAGE>
OTHER INVESTMENT STRATEGIES
Each Fund, consistent with its objectives and policies, may employ one or more
of the following strategies to enhance investment results.
COMMERCIAL PAPER--Commercial paper is short-term unsecured promissory notes
issued by corporations to finance short-term credit needs. Commercial paper is
usually sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. The Fund will not invest in variable amount master demand
notes which are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between the
issuer and a commercial bank acting as agent for the payees of such notes,
whereby both parties have the right to buy the amount of the outstanding
indebtedness on the notes.
REPURCHASE AGREEMENTS--Each Fund may occasionally purchase repurchase agreements
in which a Fund purchases a U.S. government security subject to resale to a bank
or dealer at an agreed upon price and date. These repurchase agreements will be
entered into only with government securities dealers recognized by the Federal
Reserve Board or with member banks of the Federal Reserve System. During the
holding period, the seller must provide additional collateral if the market
value of the obligation falls below the repurchase price. The custodian for the
Fund purchasing such agreement will take title to, or actual delivery of the
security. A default by the seller might cause a Fund to experience a loss or
delay in the liquidation of the collateral securing the repurchase agreement. A
Fund might also incur disposition costs in liquidating the collateral. The Funds
will purchase only repurchase agreements maturing in seven (7) days or less of
such purchase.
CERTIFICATE OF DEPOSIT--A certificate of deposit is generally a short-term,
interest-bearing negotiable certificate issued by a commercial bank or savings
and loan association against funds deposited in the issuing institution. The
interest rate may be fixed for the stated term or may be periodically adjusted
prior to the instrument's stated maturity, based upon a specified market rate. A
bankers' acceptance is a time draft drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction to finance
the import, export, transfer or storage of goods. The borrower is liable for
payment, as is the bank, which unconditionally guarantees to pay the draft at
its face amount on the maturity date. Most bankers' acceptances have maturities
of six months or less and are traded in secondary markets prior to maturity.
Savings and loan associations whose certificates of deposit may be purchased
by the Funds are subject to regulation and examination by the Office of Thrift
Supervision. Such certificates of deposit held by the Funds do not benefit
materially from insurance from the Federal Deposit Insurance Corporation.
AMERICAN DEPOSITORY RECEIPTS ("ADRS")--ADRs are U.S. dollar-denominated
securities of foreign corporations which are traded in the U.S. on national
securities exchanges or over-the-counter and are issued by domestic banks. The
banks act as custodian of the shares of the foreign stock and collect dividends
on the stock which are either reinvested or distributed to the ADR holder in
U.S. dollars. While ADRs are not considered foreign securities, they may entail
certain political, economic and regulatory risks. Such risks may include
political or social instability, excessive taxation and limitations on the
removal of funds or other assets which could adversely affect the value of a
Fund's investments. The economies of many countries in which a Fund may invest
may not be as developed as the U.S. economy and may be subject to significantly
different forces. Foreign companies are not registered with the commission and
are not generally subject to the regulatory controls imposed on U.S. issuers.
Consequently, there is generally less public information available on foreign
securities. Foreign companies are not subject to uniform accounting, auditing,
and financial reporting standards. Income from foreign securities owned may be
reduced by a withholding tax at the source, which tax would reduce income
payable to a Fund's shareholders.
11
<PAGE>
These strategies and other investment restrictions are more fully discussed in
each Fund's Statement of Additional Information under "INVESTMENT OBJECTIVES AND
POLICIES."
THE FUNDS AND THEIR MANAGEMENT
A Board consisting of seven directors has overall responsibility for
overseeing the affairs of each Fund in a manner reasonably believed to be in the
best interest of each Fund. The Boards have delegated to SM&R, the adviser, the
management of each Fund's day to day business and affairs. In addition, SM&R
invests each Fund's assets, provides administrative services and serves as
transfer agent, dividend payment agent and underwriter.
SM&R, is a wholly-owned subsidiary of American National Insurance Company
("American National"). The Moody Foundation, a private foundation, owns
approximately 23.7% of American National's common stock and the Moody National
Bank as trustee of the Libbie Shearn Moody Trust, a private trust, owns
approximately 37.6% of such shares. SM&R was incorporated in 1964 and has
managed investment companies since 1966. SM&R is also investment adviser to
American National, a Texas insurance company having its principal office in
Galveston, Texas, the American National Investment Accounts, Inc. an investment
company used to fund benefits under variable contracts issued by American
National, SM&R Capital Funds, Inc., an investment company and for the Moody
National Bank of Galveston (the "Bank"), a national bank. SM&R may, from time to
time, serve as investment adviser to other clients including banks, employee
benefit plans, other investment companies, foundations and endowment funds.
The following persons are affiliated with SM&R and the Funds as officers:
Michael W. McCroskey, Gordon D. Dixon, Emerson V. Unger, Teresa E. Axelson and
Brenda T. Koelemay.
PORTFOLIO MANAGEMENT
SM&R's portfolio management team uses a disciplined, team approach in
providing investment advisory services to the Funds. While the following
individuals are primarily responsible for the day-to-day portfolio management of
their respective Fund, all accounts are reviewed on a regular basis by SM&R's
Investment Committee to ensure that they are being invested in accordance with
investment policies.
GORDON D. DIXON, SENIOR VICE PRESIDENT, CHIEF INVESTMENT OFFICER OF
SECURITIES MANAGEMENT AND RESEARCH, INC., VICE PRESIDENT, PORTFOLIO MANAGER OF
THE GROWTH FUND. Mr. Dixon joined Securities Management and Research, Inc. in
1993. He graduated from the University of South Dakota with a B.A. in Finance
and Accounting and from Northwestern University in 1972 with an M.B.A in Finance
and Accounting. Mr. Dixon began his investment career in 1972 as an
Administrative and Research Manager with Penmark Investments. In 1979 he began
working for American Airlines in the management of the $600 million American
Airlines Pension Portfolio, of which approximately $100 million was equities. In
1984 he was employed by C&S/ Sovran Bank in Atlanta, Georgia as Director of
Equity Strategy where he had responsibility for all research, equity trading and
quantitative services groups as well as investment policy input of a portfolio
of approximately $7 billion, of which $3.5 billion was equities.
DAVID ZIMANSKY, VICE PRESIDENT, PORTFOLIO MANAGER OF THE INCOME FUND. Mr.
Zimansky joined Securities Management and Research, Inc. in 1990. He graduated
from Stanford University with an M.B.A after graduating Magna Cum Laude with
Highest Honors in History from Harvard. He began his investment career in 1982
with Goldman, Sachs & Company in the institutional equity sales department. In
1986 he began working for First Boston Corporation as Vice President, Securities
Sales responsible for convertible securities sales, business development for
options, futures and programs business in the Dallas region. In 1987 he joined
Shearson Lehman Hutton in New York as Vice President, Convertible Arbitrage
where he worked in convertible securities with clients throughout the United
States.
WILLIAM R. BERGER, C.F.A., VICE PRESIDENT, PORTFOLIO MANAGER OF THE TRIFLEX
FUND. Mr. Berger joined Securities Management and Research, Inc.
12
<PAGE>
in 1993. He graduated from Miami University, Oxford, Ohio in 1985 with a B.S.
with Honors in Accounting and Finance and from The Wharton School, University of
Pennsylvania in 1988 with an M.B.A. in Finance and Investment Management. Mr.
Berger began his investment career in 1989 with Trinity Investment Management
Corporation as an equity and balanced portfolio manager for various
discretionary accounts worth more than $80 million for corporate, endowment,
religious and public funds. Prior to joining Trinity Investment Management
Corporation Mr. Berger was a Senior Auditor for Coopers & Lybrand. Mr. Berger is
a Chartered Financial Analyst and a Certified Public Accountant.
ADVISORY AGREEMENTS
GROWTH FUND
Under the Growth Fund Investment Advisory Agreement ("Advisory Agreement"),
dated November 30, 1989, SM&R receives a basic advisory fee (the "Basic Advisory
Fee") which is adjusted for an upward or downward movement in the investment
performance during the previous thirty-six (36) monthly periods of the Fund as
compared to the Lipper Growth Fund Index (the "Lipper Index") published by
Lipper Analytical Services, Inc. This Basic Advisory Fee is computed each month
by applying to the average daily net asset value of the Fund (computed by adding
the daily net asset values for the month and dividing the resulting total by the
number of days in the month) one-twelfth (1/12th) of the annual rate as follows:
<TABLE>
<CAPTION>
On the Portion of the Fund's Basic Advisory
Average Daily Net Assets Fee Annual Rate
<S> <C>
Not exceeding $100,000,000 .750 of 1%
Exceeding $100,000,000 but
not exceeding $200,000,000 .625 of 1%
Exceeding $200,000,000 but
not exceeding $300,000,000 .500 of 1%
Exceeding $300,000,000 .400 of 1%
</TABLE>
The Basic Advisory Fee annual rate is adjusted each month by adding to or
subtracting from such rate, when appropriate, the applicable performance
adjustment amount percentage shown in the table below. The resulting advisory
fee rate is then applied to the average daily net asset value of the Fund for
the succeeding month. The advisory fee for such month will be one-twelfth
(1/12th) of the resulting dollar figure.
The performance adjustment amount will vary with the Fund's performance as
compared to the Lipper Index as shown by the following table:
<TABLE>
<CAPTION>
Performance Performance
Compared To Lipper Adjustment
Index Amount
<S> <C>
0.10% to 0.99% above +0.02%
1.00% to 1.99% above +0.04%
2.00% to 2.99% above +0.06%
3.00% to 3.99% above +0.08%
4.00% to 4.99% above +0.10%
5.00% to 5.99% above +0.12%
6.00% to 6.99% above +0.14%
7.00% to 7.99% above +0.16%
8.00% to 8.99% above +0.18%
9.00% and above +0.20%
<CAPTION>
Performance Performance
Compared To Lipper Adjustment
Index Amount
<S> <C>
0.10% to 0.99% below -0.02%
1.00% to 1.99% below -0.04%
2.00% to 2.99% below -0.06%
3.00% to 3.99% below -0.08%
4.00% to 4.99% below -0.10%
5.00% to 5.99% below -0.12%
6.00% to 6.99% below -0.14%
7.00% to 7.99% below -0.16%
8.00% to 8.99% below -0.18%
9.00% and below -0.20%
</TABLE>
See "INVESTMENT ADVISORY AND OTHER SERVICES" in the Growth Fund's Statement of
Additional Information for a more detailed description of the method used in
calculating the performance adjustment.
13
<PAGE>
AMERICAN NATIONAL FUNDS GROUP APPLICATION
Complete This Form and Mail To:
<TABLE>
<S> <C> <C>
Home Office Use (4/96)
</TABLE>
Securities Management and Research, Inc.
<TABLE>
<S> <C> <C>
Account Number
</TABLE>
One Moody Plaza
<TABLE>
<S> <C> <C>
Account Type Social Code
</TABLE>
Galveston, TX 77550
<TABLE>
<S> <C> <C>
FI Number LOI Amount
</TABLE>
To establish IRA, SEP and TSA Plans use the special forms kit developed for
their establishment.
- --------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION
Select ONLY ONE type of registration and complete the information associated
with that section.
- --------------------------------------------------------------------------------
/ / -- INDIVIDUAL / / -- JOINT TENANT WITH "RIGHTS OF SURVIVORSHIP"
If this is to be a Joint Tenant Account, complete all information in this
section.
<TABLE>
<S> <C> <C>
- -------------------------------------------------- ------------------------------ --------------------
Individual (First, Middle, Last) Social Security Number DOB (MM/DD/YY)
- -------------------------------------------------- ------------------------------ --------------------
Joint Tenant (First, Middle, Last) Relationship Social Security Number DOB (MM/DD/YY)
</TABLE>
- --------------------------------------------------------------------------------
/ / -- UNIFORM GIFT/TRANSFER TO MINORS
<TABLE>
<S> <C> <C>
- -------------------------------------------------- ------------------------------
Name of Custodian (One Only) (First, Middle, Last) Minor's State of Residence
- -------------------------------------------------- ------------------------------ --------------------
Minor's DOB
(MM/DD/YY)
Name of Minor (One Only) (First, Middle, Last) Minor's Social Security Number
</TABLE>
- --------------------------------------------------------------------------------
/ / -- PENSION/PROFIT SHARING, DEFERRED COMPENSATION PLANS
Plan Type: / / 401(k) / / Profit Sharing / / Money Purchase / / Defined Benefit
/ / Deferred Comp / / Other _______
<TABLE>
<S> <C> <C>
- -------------------------------------------------- ------------------------------ --------------------
Trustee(s)/Custodian Tax I.D. Number Trust Dated
- -------------------------------------------------- --------------------------------------------------------
Name of Plan For the Benefit of
</TABLE>
- --------------------------------------------------------------------------------
/ / -- INDIVIDUAL TRUST, NON-QUALIFIED, CORPORATION, ESTATES, ASSOCIATIONS,
COMPANIES, OTHERS
<TABLE>
<S> <C> <C>
- -------------------------------------------------- ------------------------------
Name(s) of Trustee(s) Tax I.D. Number
- -------------------------------------------------- --------------------------------------------------------
Name of Company or Trust For the Benefit of
</TABLE>
- --------------------------------------------------------------------------------
2 MAILING ADDRESS
----------------------------------------------------------------------------
Street Address (P.O. Box acceptable if street address
given) Apt.# City State Zip Code
----------------------------------------------------------------------------
Residence Address
<TABLE>
<S> <C> <C> <C>
( ) ( ) Citizenship: / / U.S. / / Non-U.S.
----------------------------- ------------------------- ------------------
Business Phone Home Phone Indicate Country
</TABLE>
<PAGE>
3 INITIAL INVESTMENT (CHECK ONE)
- --------------------------------------------------------------------------------
/ / MAIL ORDER
Enclosed is/are my check(s) made payable to SECURITIES MANAGEMENT AND
RESEARCH, INC. for investment.
- --------------------------------------------------------------------------------
/ / TELEPHONE BUY ORDER (Not Applicable to Primary Series)
Date: __________________Fund: __________________Person Taking Order:
_____________________
- --------------------------------------------------------------------------------
/ / FEDERAL FUND WIRE
Before making an initial investment by wire, SM&R must receive an
executed application and suitability form with proper taxpayer I.D.
certification. Then direct your Federal funds wire to Moody National
Bank Galveston, Texas. Attention: Securities Management and Research,
Inc., ABA 113100091, Wire Account #035 868 9. Include the Fund name,
your Account Number and the Account Registration.
- --------------------------------------------------------------------------------
/ / PRE-AUTHORIZED CHECKS (Complete #8 below)
This is a service available to shareholders, making possible regular
monthly purchases of Fund shares to allow dollar cost averaging. You will
receive a monthly confirmation reflecting each purchase and your bank
account will reflect the amount of the draft.
Please draw $__________________ from my checking account Monthly beginning
__________________ / / 7th / / 21st
$ ______________________________ ($20 minimum) into the
______________________________ Fund
$ ______________________________ ($20 minimum) into the
______________________________ Fund
$ ______________________________ ($20 minimum) into the
______________________________ Fund
$ ______________________________ into ANICO insurance policy
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
/ / OTHER PAYMENT METHODS
/ / Billing-Franchise # ------ / / Military Allotment / / Civil Service Allotment
Complete Form 9341 Complete Form 9340
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4 FUND SELECTION(S) & DISTRIBUTION OPTION
Please check the box beside the name of each fund being purchased, select
reinvest or cash for dividends and capital gains, and specify the dollar
amount of each purchase.
<TABLE>
<C> <S> <C> <C> <C>
X FUND NAME DIVIDENDS CAPITAL GAINS AMOUNT
Growth Fund ($100 min) / / Reinvest / / Cash / / Reinvest / / Cash $
Income Fund ($100 min) / / Reinvest / / Cash / / Reinvest / / Cash $
Triflex Fund ($100 min) / / Reinvest / / Cash / / Reinvest / / Cash $
Insurance, if any $
</TABLE>
ALL DISTRIBUTIONS MUST BE REINVESTED IF A WITHDRAWAL PLAN IS ELECTED. ALL
DISTRIBUTIONS WILL BE REINVESTED UNLESS CASH IS CHECKED ABOVE.
----------------------------------------------------------------------------
Fill in ONLY if distribution checks are to be mailed to you at another
address or paid to someone other than the registered owner(s) as shown
above.
Name: ____________________________________________________________________
Address: ___________________________________________________________________
- --------------------------------------------------------------------------------
5 SYSTEMATIC WITHDRAWAL
A Systematic Withdrawal Plan (SWP) is available to shareholders who own
shares of the Fund worth $5,000 or more. SWP is subject to restrictions
described in the Fund's Prospectus.
THIS OPTION WILL BEGIN THE MONTH FOLLOWING RECEIPT OF THIS REQUEST.
1. The amount of each withdrawal shall be $______________________________.
2. Systematic withdrawals shall be made (choose one only):
/ / Monthly / / Quarterly (Mar, June, Sept,
Dec) / / Semi-Annually / / Annually
3. Please have my withdrawals mailed. I understand that the SWP checks will
be made payable to me and sent to my account mailing address unless a
special designation is referenced below:
Withdrawals are to commence on or around the 20th of _______________
(Month, Year).
- --------------------------------------------------------------------------------
Fill in ONLY if SWP checks are to be mailed to you at another address or
paid to someone other than the registered owner(s) as shown above. If
check is to be sent to a bank account, provide a void check.
Name: __________________________________________________________________
Address: _________________________________________________________________
<PAGE>
- --------------------------------------------------------------------------------
6 LETTER OF INTENT (Not Applicable to Primary Series)
Under the terms of the current prospectus, I intend to purchase, within
thirteen months from the date of receipt, shares of one or more of the
American National Funds Group and/or Government Income and/or Tax Free
Series (Excluding the Primary Series). The total amount of my purchase (at
the offering price on the date of receipt by the transfer agent) will equal
an aggregate amount not less than:
<TABLE>
<S> <C> <C> <C> <C> <C>
/ / $50,000* / / $100,000** / / $250,000 / / $500,000 / / $1,000,000 / / $1,500,000
</TABLE>
(*Growth, Income and Triflex Funds Only) (**Government Income Series and Tax
Free Series Only)
Shares of the named Funds owned by me at the date of this Letter (including
shares owned by my spouse and our children who are under the age of majority or
such other persons as described in a "single purchaser" in the current
prospectus) are held in the below-specified accounts (Please Print):
<TABLE>
<S> <C> <C> <C>
FUND NAME ACCOUNT NUMBER ACCOUNT REGISTRATION OWNER'S RELATIONSHIP TO INVESTOR*
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
*Must be self, spouse or child; if child, indicate current age
/ / This is a new Letter of Intent. Date
- ------------------------------.
/ / This is an existing Letter of Intent. The Letter of Intent was signed on
(date) __________________ for (amount) $__________________
This LOI expires on the earlier of (1) 13-months from the date of first
purchase, or (2) the release to me of my shares held in escrow.
Additionally, escrow shares are not subject to the exchange privilege and,
unless agreed to by SM&R, will not be released unless my intended
investment, equals or exceeds the specified amount.
- --------------------------------------------------------------------------------
7 RIGHT OF ACCUMULATION (Not Applicable to Primary Series)
If account is entitled to a Reduced Sales Charge under the terms of the
current Prospectus, please provide the following information.
<TABLE>
<S> <C> <C> <C>
FUND NAME ACCOUNT NUMBER ACCOUNT REGISTRATION OWNER'S RELATIONSHIP TO INVESTOR
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8 BANK OF RECORD (Please attach a voided check)
<TABLE>
<S> <C> <C>
- -------------------------------------------------- --------------------------------------------------------
Name of Bank Bank ABA Number
- -------------------------------------------------- --------------------------------------------------------
Address Bank Account Number
- -------------------------------------------------- --------------------------------------------------------
City, State, Zip Account Name
</TABLE>
- --------------------------------------------------------------------------------
9 SIGNATURE(S) & CERTIFICATION
I/We hereby authorize Securities Management and Research, Inc. ("SM&R"), or
its duly authorized agents, as agent for the American National Funds Group,
to honor any requests made in accordance with the terms of this application,
and I/we further affirm that neither SM&R ("Transfer Agent") nor the
American National Funds Group shall be held liable for any loss, liability,
cost or expense for acting in accordance with this application, or any
section thereof. I/We certify that I/we have full right, power, authority
and legal capacity to purchase shares and affirm that I/we have received and
read the Prospectus and agree to its terms. Under penalties of perjury, I/we
certify (1) that the number shown on this form is my/our correct taxpayer
identification number and (2) that I/ we are not subject to backup
withholding either because (a) I/we are exempt from backup withholding, or
(b) I/we have not been notified by the Internal Revenue Service that I/we
are subject to backup withholding as a result of a failure to report all
interest or dividends, or the Internal Revenue Service has notified me/us
that I/we are no longer subject to backup withholding. If you have been
notified by the Internal Revenue Service that you are currently subject to
backup withholding, strike out phrase (2) above.
- --------------------------------------------------------------------------------
INDIVIDUAL (OR CUSTODIAN) DATE
- --------------------------------------------------------------------------------
CO-OWNER (OR CORPORATE OFFICER, PARTNER OR TRUSTEE) DATE
- --------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
- --------------------------------------------------------------------------------
(IF APPLICABLE, TRUSTEE) DATE
- --------------------------------------------------------------------------------
<PAGE>
10 REPRESENTATIVE INFORMATION
/ / Yes, I have completed and attached "Investor Suitability Form" new
account information (Form 8045).
----------------------------------------------------------------------------
Representative Name (print)
---------------------------------------------------------------------------
Representative Signature
---------------------------------------------------------------------------
SM&R Representative Social Security Number
- --------------------------------------------------------------------------------
11 BROKER-DEALER USE ONLY -- Please Print
We hereby submit this application for the purchase of shares of the Fund(s)
indicated in accordance with the terms of our selling agreement with
Securities Management and Research, Inc. ("SM&R"), and with the prospectus
for the Fund(s). We agree to notify SM&R of any purchases of shares made
under a Letter of Intent or Rights of Accumulation or otherwise eligible for
reduced or eliminated sales charges. If this Application includes a
Systematic Withdrawal Plan request, we guarantee the signature(s) in this
Application.
----------------------------------------------------------------------------
Dealer Name
---------------------------------------------------------------------------
Main Office Adress
---------------------------------------------------------------------------
Branch # Rep # Representative Name (print)
---------------------------------------------------------------------------
Branch Address Phone Number
---------------------------------------------------------------------------
Authorized Signature Securities Dealer Title
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACCEPTED: Securities Management and Research, Inc. By
- ------------------------ Date
- ------------------------
- --------------------------------------------------------------------------------
<PAGE>
PRE-AUTHORIZED CHECK PLAN
AUTHORIZATION
I hereby authorize _____________________________________________________________
Name of bank Branch
of ____________________________________________________________________ to honor
City State
pre-authorized checks drawn on me by SECURITIES MANAGEMENT & RESEARCH, INC., One
Moody Plaza, Galveston, Texas 77550, and to charge such checks against my
checking account until further notice to you from me. I agree there will be no
liability incurred by you for payment or non-payment of any such checks drawn on
me.
_______________ ___________________________________________________
Date Signature of Customer
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(To be completed by SM&R Home Office)
---------------------------------------------------------------------------------- ----------------------------------
Date first check to be deposited by SM&R Transit Number
32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13
</TABLE>
- --------------------------------------------------------------------------------
Securities Management & Research, Inc. - One Moody Plaza - Galveston, Texas
77550
AUTHORIZATION
I hereby authorize SECURITIES MANAGEMENT & RESEARCH, INC. to deposit
pre-authorized checks:
<TABLE>
<S> <C>
/ / Monthly / / New Account
/ / Quarterly / / Existing Account
/ / 7th / / Bank Change
/ / 21st / / Accumulation Account
/ / Growth Fund $ ------------ / / IRA Account
/ / Income Fund $ ------------ / / Profit Sharing Account
/ / Triflex Fund $ ------------ / / Pension Account
/ / Government Income Series $ ------------
/ / Tax Free Series $ ------------
$20 minimum per Fund.
/ / Primary Series $ ------------
$100 minimum investment.
</TABLE>
Credit to the Account of:
- ------------------------------------ ---------------------------
Exact Name on Registration Fund Account No.(s), if known
I agree that if, at any time, such checks are not honored for payment by said
bank, the pre-authorized check plan shall be discontinued. I further understand
that all shares purchased and credited to the above named are conditional, being
subject to checks being honored for payment by said bank.
- ------------------ ---------------------------------------
Date Signature of Customer
A "VOIDED" CHECK MUST BE ATTACHED TO REVERSE OF BOTTOM HALF OF AUTHORIZATION.
Form 8006
Rev. 8/93
<PAGE>
To: The bank named on the reverse side
In order to induce you to comply with the request of your customer to provide
the service authorized on the other side of this card, Securities Management &
Research, Inc. of Galveston, Texas, (the "Company") undertakes and agrees:
(1) To indemnify you and hold harmless from any loss you may suffer as a conse-
quence of your action resulting from or in connection with the execution and
issuance of any check or drafts, whether or not genuine, purporting to be
executed or issued by or on behalf of the Company and received by you in the
regular course of business for the purpose of payment in connection with the
authorization signed by your depositors, including any costs or expenses
reasonably incurred in connection therewith. In the event that any such check or
drafts should be dishonored, whether with or without cause and whether
intentionally or inadvertently, to indemnify you for any loss even though
dishonor results in the forfeiture of insurance.
(1) To refund to you any amount erroneously paid by you to the Company on any
such check or draft if claim for the amount of such erroneous payment is made by
you within twelve months of the date of check or drafts on which such erroneous
payment was made.
Michael W. McCroskey, President
Securities Management & Research, Inc.
Authorized in a resolution adopted by the Board of Directors of Securities
Management & Research, Inc., of Galveston, Texas on September 14, 1967.
STAPLE VOIDED CHECK BELOW
- --------------------------------------------------------------------------------
<PAGE>
SM&R REPRESENTATIVE USE ONLY
INVESTOR SUITABILITY FORM--NEW ACCOUNT INFORMATION
Article III, Sections 2 & 21 of the Rules of Fair Practice require a
Representative to obtain the information contained in this form in order to
accept a new account in the American National Funds Group, SM&R Capital Funds,
Inc., and other mutual funds sold by SM&R Representatives.
FOR OUTSIDE FUNDS, ALL INFORMATION REQUESTED ON THIS FORM MUST BE COMPLETED--NO
EXCEPTIONS.
- --------------------------------------------------------------------------------
ORDER RECEIVED BY: Telephone
- --------- Letter
- --------- In Person
- --------- Other
- ---------
- ------------------ Shares or $
- ------------------ of
- --------------------------------------------- (Security Being Purchased)
SOURCE OF CUSTOMER: / / Referral / / Advertising / / Direct Mail Reply / /
Existing Client / / Friend/Relative / /
- ------------------
- --------------------------------------------------------------------------------
A. ACCOUNT TYPE:
------------------------ Individual
------------------------ Joint
Distribution Option
------------------------ Corporation
/ / Cash (Indicate
------------------------ Partnership
/ / Mo. / / Qtrly
------------------------ Other Legal Entity (Type)
------------------------
/ / Semi-Annual)
------------------------
/ / Reinvest
SIGNATORS:
------------------------------ ----------------------------------
------------------------------ ----------------------------------
- --------------------------------------------------------------------------------
B. SECURITIES REGISTRATION OF CUSTOMER
Name(s) DOB: Purchaser
DOB: Joint Owner
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Social Security No. (Individual, Joint Accounts, Taxpayer ID No. (Trust, Estate, Pension Trust,
Custodial Accounts for Minors) Corporation, Partnership, etc.)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
C. SOURCES OF FUNDS FOR INVESTMENT
A. / / Current Earnings C. / / Gift or Inheritance E. / / Death Benefit G. / / Other Policy Proceeds
B. / / Savings D. / / Sale of Assets F. / / Maturity Proceeds H. / / ---------------------
</TABLE>
- --------------------------------------------------------------------------------
D. Is the Customer or proposed Customer employed by or associated with a member
of the NASD or NYSE? / / Yes / / No
If yes, provide the name, address and phone number of the firm:
----------------------------------------------------------------------------
What is Customer's occupation?
----------------------------------------------------------
Name and Address of Customer's Employer:
- --------------------------------------------------------------------------------
E. Does Customer have other securities holdings?: / / Yes / / No
Types: / / Stocks / / Bonds / / Mutual Funds / / Variable
Products / / Other
Are they redeeming other mutual fund shares to make this purchase? / /
Yes / / No
- --------------------------------------------------------------------------------
F. PERTINENT ADDITIONAL INFORMATION (CHECK APPROPRIATE BOXES)
<TABLE>
<S> <C>
/ / Application Attached / / Check Attached Payable To:
/ / Prototype Attached (IRA, TSA, Pension/Profit Sharing) ----------------------------------------
/ / Letter of Intent Dated ------------ for $ ------------ / / Other ------------------------------------
/ / Signed Arbitration Agreement (reverse side.)
/ / Signed Statement of Refusal to Provide Financial Information, if applicable (reverse side.)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Registered Representative's Name (print) Representative Social Security Number
Registered Representative Signature Date
</TABLE>
- --------------------------------------------------------------------------------
ACCEPTED: Securities Management and Research, Inc. By:
- ------------------------------------ Date:
- ------------------
PURCHASER SIGNATURE REQUIRED ON REVERSE SIDE
<PAGE>
INVESTMENT SUITABILITY--TO BE COMPLETED BY REGISTERED REPRESENTATIVE AND
INDIVIDUAL INVESTOR.
NASD rules require the Registered Representative to have reasonable grounds for
believing that any sale is suitable for the customer. Therefore, Registered
Representatives are required to make inquiries concerning the financial
condition of a proposed purchaser (the "Purchaser") of securities. Purchasers
are urged to supply such information so that the representative can make an
informed judgment as to the suitability for a particular Purchaser of
securities. However, Purchasers are not required to divulge such information. If
the Purchaser chooses not to do so, the Purchaser must execute Statement of
Refusal to Provide Financial Information below signifying his/ her refusal and
acknowledge that the representative requested the suitability information.
1. OCCUPATION _______________________ Phone No. Employer ______________________
Name and Address of Employer _______________________________________________
____________________________________________________________________________
<TABLE>
<S> <C> <C> <C> <C>
2. TAX STATUS
/ / Single / / Head of Household / / Married filing separate / / Other -----------------
/ / Married filing joint / / Corporation return
return or Qualifying widow(er)
with dependent child
3. MARITAL STATUS
A. / / Married B. / / Single C. / / Widowed
4. DEPENDENTS
A. / / Spouse B. / / Children: Ages ----------------- C. / / Other -----------------
5. PRIMARY PURPOSE OF INVESTMENT:
INDIVIDUAL BUSINESS
A. / / Education D. / / Tax Shelter A. / / Retirement Plan D. / / Buy-Sell
B. / / Savings E. / / Retirement B. / / Key Man E. / / Depreciation Reserve
C. / / Estate Plan F. / / ------------- C. / / Deferred Compensation F. / / -----------------
6. INVESTMENT PROFILE
1. What is your current investment preference?
/ / High Growth Potential / / Income and Growth Potential / / Maximum Safety/Modest Return
2. What is your Risk comfort level?
/ / High / / Moderate / / Limited
3. What is your financial goal time horizon?
/ / 1-5 Years / / 5-10 Years / / 10 Years and Beyond
4. What is your age range?
/ / 21-40 / / 41-59 / / 60+
5. What is your tax bracket?
/ / 15% / / 28% / / 28%+
<CAPTION>
6.
</TABLE>
<TABLE>
<S> <C>
7. Are you responsible for the financial welfare of anyone other than your immediate family (i.e. alimony, child, or
parental support, etc.)? / / Yes / / No
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Estimated Annual Income *Estimated Net Worth Life Insurance Face Amount Is the applicant a policyholder of
$ $ $ American National?
/ / Yes / / No
</TABLE>
- --------------------------------------------------------------------------------
*Net Worth is exclusive of home, furnishings and automobile
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Purchaser Signature Joint Owner Signature
</TABLE>
- --------------------------------------------------------------------------------
FOR THE AMERICAN NATIONAL FUNDS GROUP AND SM&R CAPITAL FUNDS ONLY!
STATEMENT OF REFUSAL TO PROVIDE FINANCIAL INFORMATION (SIGNATURES REQUIRED ONLY
IF INFORMATION NOT PROVIDED.)
I(we) fully understand that the Representative, acting on behalf of Securities
Management and Research, Inc., has requested the above suitability information
to determine whether my/our purchase of securities is an appropriate investment
considering my/our financial condition. I(we) refuse to provide the requested
information and by my/our signature(s) below agree not to seek recission of the
policy or mutual fund investment or damages based on its unsuitability.
<TABLE>
<S> <C>
- ------------------------------------------------------------------ ----------------------------------------------------------
Signature of Purchaser Signature Joint Owner (Must sign)
</TABLE>
REPRESENTATIVE EXPLANATION OF CUSTOMERS REFUSAL TO PROVIDE INFORMATION ON THIS
FORM.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PURCHASERS AGREEMENT TO ARBITRATION
THIS SECTION IS NOT APPLICABLE TO MISSOURI RESIDENTS!
The following conditions are agreed to by all parties to this agreement.
1. Arbitration is final and binding on the parties.
2. The parties are waiving their right to seek remedies in court, including the
right to jury trial
3. Pre-arbitration discovery is generally more limited than and different from
court proceedings
4. The arbitrators' award is not required to include factual findings or legal
reasoning and any party's right to appeal or to seek modification of rulings
by the arbitrators is strictly limited.
5. The panel of arbitrators will typically include a minority of arbitrators
who were or are affiliated with the securities industry
By signature below, I(we) understand that I(we) have the right to any dispute
between us arising under the federal securities laws to be resolved through
litigation in the courts. In lieu of using the courts, I(we) may agree, after
any such dispute has arisen, to settle it by arbitration before an appropriate
group of arbitrators. However, I(we) understand that any other dispute between
us arising out of any transaction or this agreement shall be settled by
arbitration before the National Association of Securities Dealers, Inc., which
must be commenced by a written notice of intent to arbitrate. Judgment upon any
award rendered may be entered in any appropriate court.
I(we) further understand that we may not bring a putative or certified class
action to arbitration, nor seek to enforce any pre-dispute arbitration agreement
against anyone who has initiated in court a putative class action; or who is a
member of a putative class action until (a) the class certification is denied;
or (2) the class is decertified; or (3) I(we) are excluded from the class by the
court. Such forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of any rights under this agreement except to the extent
stated herein.
<TABLE>
<S> <C>
- --------------------------------------------- ---------------------------------------------
Signature of Purchaser Signature Joint Owner (Must sign)
</TABLE>
Form 8045
Rev. 4/96
<PAGE>
INCOME FUND AND TRIFLEX FUND--Under the Income and Triflex Funds Advisory
Agreements dated November 30, 1989, SM&R receives from each Fund an investment
advisory fee computed by applying to the average daily net asset value of each
Fund each month one-twelfth (1/12th) of the annual rate as follows:
<TABLE>
<CAPTION>
On the Portion of the Fund's Basic Advisory
Average Daily Net Assets Fee Annual Rate
<S> <C>
Not exceeding $100,000,000 .750 of 1%
Exceeding $100,000,000 but not
exceeding $200,000,000 .625 of 1%
Exceeding $300,000,000 .400 of 1%
</TABLE>
As compensation for its services, SM&R is paid an investment advisory fee,
which is calculated as indicated above for each Fund. SM&R received total
advisory fees from the Growth, Income and Triflex Funds for the fiscal year
ended December 31, 1995 which represented .58%, .72%, and .55%, respectively of
each Fund's average daily net assets. The ratio of total expenses to average net
assets for each Fund for the same period are 0.98%, 1.12%, and 1.26%,
respectively.
The fees payable under each Fund's Advisory Agreement are higher than the fees
paid by most other mutual funds.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, the
Funds may give consideration to sales of their shares as a factor in the
selection of brokers and dealers to execute each Fund's portfolio transactions
when it is believed by SM&R that this can be done without causing the Funds to
pay more in brokerage commissions than they would otherwise.
ADMINISTRATIVE SERVICE AGREEMENTS
The administrative service agreements with the Funds provide for payment of an
administrative service fee to SM&R which is computed by applying to the average
daily net asset value of each Fund each month one-twelfth of the annual rate as
follows:
<TABLE>
<CAPTION>
On the Portion of of the Administrative
Fund's Average Daily Service Fee Annual
Net Assets Rate
<S> <C>
Not exceeding $100,000,000 .25 of 1%
Exceeding $100,000,000 but not
exceeding $200,000,000 .20 of 1%
Exceeding $200,000,000 but not
exceeding $300,000,000 .15 of 1%
Exceeding $300,000,000 .10 of 1%
</TABLE>
SM&R has agreed in each Fund's administrative service agreement to pay (or to
reimburse each Fund for) the Fund's expenses (including the advisory fee and
administrative service fee, if any, paid to SM&R, but exclusive of interest,
taxes, commissions and other expenses incidental to portfolio transactions) in
excess of 1.25% per year of each Fund's average daily net assets. Such
reimbursement obligation is more restrictive than required by California, the
only state still having an expense reimbursement provision applicable to the
Funds. (See "Administrative Service Agreement" in each Fund's Statement of
Additional Information for the fees paid by the Funds thereunder.)
14
<PAGE>
PURCHASE OF SHARES
Shares of the Funds may be purchased from registered representatives of SM&R
and certain other authorized broker-dealers. Such purchases will be at the
offering price for such shares determined as provided under the caption
"DETERMINATION OF OFFERING PRICE" in this Prospectus. A monthly confirmation
will be sent to the investor. Initial and subsequent purchases are to be sent
directly to SM&R at the following address:
Securities Management and Research, Inc.,
One Moody Plaza, 14th Floor
Galveston, Texas 77550.
Each Fund's shares of authorized capital stock are all common stock, are
nonassessable and fully transferable, and each has one vote.
Certificates are not normally issued for shares of the Funds in an effort to
minimize the risk of loss or theft. However, purchases are confirmed to
investors and credited to their accounts on the books maintained by SM&R and an
investor has the same rights of share ownership as if certificates had been
issued. Furthermore, a lost, stolen or destroyed certificate cannot be replaced
without obtaining a sufficient indemnity bond. The cost of such a bond is borne
by the investor and can be 2% or more of the value of the lost, stolen or
destroyed certificate.
OPENING AN ACCOUNT
Initial purchases must include a completed Fund application and completed
Investor Suitability Form. Special forms are required when establishing an
IRA/SEP or 403(b) plan. Call Investor Services at (800) 231-4639 and request
forms for establishing these plans.
SUBSEQUENT PURCHASES BY MAIL
Investors must include their name, the account number and the name of the Fund
being purchased. The investor can use the account identification form detached
from the investor's confirmation statement.
PURCHASED BY WIRE
To ensure proper crediting of the investment, an investor must have an
executed Application and Investor Suitability Form on file with the transfer
agent. The investor may then wire his investment using the following
instructions:
The Moody National Bank of Galveston
2302 Postoffice Street
Galveston, Texas 77550
For the Account of Securities Management and Research, Inc.
ABA 113100091, Wire Account #035 868 9
FBO Name of Fund/Account Number
Investor's Name
If wires are received after 3:00 p.m. Central Time or during a bank holiday or
SM&R business holiday, purchases will be made at the price determined on the
next business day.
PURCHASE AMOUNTS
The minimum initial purchase amount for each Fund is $100 and $20 for
subsequent purchases (except certain systematic investment programs, see
"SPECIAL PURCHASE PLANS" for additional information on reduction of the
minimums). The Funds reserve the right to reject any purchase.
IMPORTANT: The Funds reserve the right to (1) refuse to open an account for any
person failing to provide a taxpayer identification number, certified as correct
and (2) close an account by redeeming its shares in full, at the then current
net asset value upon receipt of notice from the IRS that the taxpayer
identification number certified as correct by the shareholder is in fact
incorrect.
WHEN ARE PURCHASES EFFECTIVE?
Purchases received in proper form by SM&R prior to the close of the New York
Stock Exchange (currently 3:00 p.m., Central Time) (the "Exchange") on any SM&R
business day, or received prior thereto on any SM&R business day by a securities
dealer having a dealer contract with SM&R and reported to SM&R prior to SM&R's
close of business (currently 4:30 p.m., Central Time) on the same day, will be
effective and executed at the applicable Offering Price determined at the close
of the Exchange on that day. It is the responsibility of any such
15
<PAGE>
dealer, and not SM&R, to establish procedures to assure that purchases received
before the close of the Exchange on an SM&R business day will be reported to
SM&R before SM&R's close of business on that same day. Purchases received after
the close of the Exchange, or customary national business holidays, or on an
SM&R holiday will be effective upon and made at the Offering Price determined as
of the close of the Exchange on SM&R's next business day such Exchange is open
for trading.
If payments for purchases are transmitted by bank wire to the Bank and
reported to SM&R prior to the close of the Exchange on any SM&R business day,
the investor will purchase at the Offering Price determined and become a
shareholder as of the close of the Exchange on that same day. Purchases by wire
payments reported by the Bank to SM&R after the close of the Exchange or on an
SM&R holiday, will be effective on and made at the Offering Price determined on
SM&R's next business day. Procedures for transmitting Federal Funds by wire are
available at any national bank, or any state bank which is a member of the
Federal Reserve System.
SM&R's business holiday's are Good Friday, Labor Day, Thanksgiving Day and the
Friday following Thanksgiving Day, two (2) days at Christmas and New Years Day.
If Christmas Day is a weekday other than Monday, Christmas Day and Christmas Eve
Day are business holidays. If Christmas Day is Monday, Christmas Day and the
preceding Friday will be business holidays. If Christmas Day is a Saturday, the
preceding Thursday and Friday will be business holidays. If Christmas Day is a
Sunday, the preceding Friday and the following Monday will be business holidays.
If New Years Day is a Saturday, the preceding Friday will be a business holiday.
If New Years Day is a Sunday the following Monday will be a business holiday.
DETERMINATION OF OFFERING PRICE
The offering price of each Fund's shares is determined once each day that such
Funds net asset value is determined, by adding a sales charge (computed at the
rates set forth in the applicable tables below) to the net asset value of the
shares. Each Fund's net asset value per share is determined by dividing the
market value of the securities owned by each Fund, plus any cash or other assets
(including dividends accrued but not collected), less all liabilities (including
accrued expenses but excluding capital and surplus), by the number of each
Fund's shares outstanding. Net asset value is currently determined as of 3:00
p.m., Central Time on each business day and on any other day in which there is a
sufficient degree of trading in each Fund's investment securities that the
current net asset value of each Fund's shares might be materially affected by
changes in the value of its portfolio of investment securities. Each Fund
reserves the right to compute its net asset value at a different time, or to
compute such value more after than once daily as provided in the Funds Group
current prospectus.
For a more complete description of the procedures involved in valuing various
Fund assets, see "Offering Price" in the Growth, Income and Triflex Funds'
Statements of Additional Information.
<TABLE>
<CAPTION>
Total Sales Charge
-----------------------------------------------------------------------------------
Dealer Concession as
Amount of Investment as a Percentage of as a Percentage of a Percentage of
at Offering Price Offering Price Net Amount Invested Offering Price
- --------------------------------------------- --------------------- ----------------------------- -----------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.1% 4.75%
$50,000 but less than $100,000 4.5% 4.7% 4.0%
$100,000 but less than $250,000 3.5% 3.6% 3.0%
$250,000 but less than $500,000 2.5% 2.6% 2.0%
$500,000 and over* None None None
</TABLE>
16
<PAGE>
*In connection with purchases of $500,000 or more, SM&R may pay its
representatives and broker-dealers, in quarterly installments, from its own
profits and resources, a per annum percent of the amount invested as set forth
as follows: Year 1 - 0.35% and Year 2 - 0.25%. In the third and subsequent
years, SM&R may pay 0.075% per annum, in quarterly installments, to those
representatives and broker-dealers with accounts totaling assets of $1 million
or more.
The above breakpoints apply to purchases made at one time by the following:
(1) Any individual; (2) Any individual, his or her spouse, and trusts or
custodial agreements for their minor children; (3) A trustee or fiduciary of a
single trust estate or single fiduciary account; (4) Tax-exempt organizations
specified in Sections 501(c)(3) or (13) of the Internal Revenue Code, or
employees' trusts, pension, profit-sharing, or other employee benefit plans
qualified under Section 401 of the Internal Revenue Code; and (5) Employees or
employers on behalf of employees under any employee benefit plan not qualified
under Section 401 of the Internal Revenue Code.
Purchases by any "company" or employee benefit plans not qualified under
Section 401 of the Internal Revenue Code will qualify for the above quantity
discounts only if the Fund will realize economies of scale in sales effort and
sales related expenses as a result of the employer's or the plan's bearing the
expense of any payroll deduction plan, making the Funds prospectus available to
individual investors or employees, forwarding investments by such employees to
the Funds, and the like.
THE EDUCATION FUNDING INVESTMENT ACCOUNT PROGRAM
The following breakpoints apply to purchases made by individuals investing in
the Funds through the use of The Education Funding Investment Account Program.
<TABLE>
<CAPTION>
Total Sales Charge
-------------------------------------------------------------------------------------
Dealer Concession as a
Amount of Investment as a Percentage of as a Percentage of Percentage of Offering
as Offering Price Offering Price Net Amount Invested Price
- ------------------------------------------- --------------------- ----------------------------- -------------------------------
<S> <C> <C> <C>
Less than $100,000 4.5% 4.7% 4.0%
$100,000 but less than $250,000 3.5% 3.6% 3.0%
$250,000 but less than $500,000 2.5% 2.6% 2.0%
$500,000 and over* None None None
</TABLE>
*In connection with purchases of $500,000 or more, SM&R may pay its
representatives and broker-dealers, in quarterly installments, from its own
profits and resources, a per annum percent of the amount invested as set forth
as follows: Year 1 - 0.35% and Year 2 - 0.25%. In the third and subsequent
years, SM&R may pay 0.075% per annum, in quarterly installments, to those
representatives and broker-dealers with accounts totaling assets of $1 million
or more.
The Education Funding Investment Account Program is a service expressly
created to help investors accumulate funds for their children's or
grandchildren's college education. The maximum sales charge is 4.5% on the
purchase of shares of the Funds. To participate in this special plan, investors
must complete the special Education Funding Investment Account application
designed specifically for the Program.
All direct sales expenses, including the cost of prospectuses for prospective
shareholders, are paid by SM&R, and no sales expense is borne by any of the
Funds.
SPECIAL PURCHASE PLANS
The Funds offer the following services to their shareholders to facilitate
investment in the Funds. At this time, there is no charge to the shareholder for
these services. For additional information contact your registered
representative or SM&R. It is recommended that a shareholder considering any of
the plans described below consult a tax advisor before beginning a plan.
17
<PAGE>
RIGHT OF ACCUMULATION
Dollar amount(s) of shares being purchased plus the current offering value of
your combined holdings in the American National Funds Group, the American
National Government Income Fund Series and the American National Tax Free Fund
Series (the Government Income Fund Series, Tax Free Fund Series and the funds in
the American National Funds Group, shall be collectively referred to herein as
the "Group"). Shareholders must, at the time of purchase, give their
representative or SM&R a list of other accounts maintained in the Group to
qualify for this privilege. THERE IS NO RETROACTIVE REDUCTION OF THE SALES
CHARGE FOR SHARES PREVIOUSLY PURCHASED.
When necessary, SM&R has the right to require verification of holdings to be
included in determining the applicable sales charge rate.
LETTER OF INTENT
An investor may immediately qualify for a reduced sales charge on purchases of
shares of the Group by completing the Letter of Intent section of the
application. Under a Letter of Intent an investor expresses an intention to
invest during the next 13 months a specified amount in the Group which, if made
at one time, would qualify for a reduced sales charge. A minimum initial
investment equal to ten percent (10%) of the amount necessary for the applicable
reduced sales charge is required when a Letter of Intent is executed. Five
percent (5%) of the total intended purchase amount will be held in escrow in
shares of the Group registered in the investor's name to assure that the full
applicable sales charge will be paid if the intended purchase is not completed.
Shares held in escrow under a Letter of Intent are not subject to the exchange
privilege until the Letter of Intent is completed or canceled. A Letter of
Intent does not represent a binding obligation on the part of the investor to
purchase or the Group to sell the full amount of shares specified. (See the
Investor's Letter of Intent on the Application and "SPECIAL PURCHASE PLANS" in
the Statement of Additional Information.)
GROUP SYSTEMATIC INVESTMENT PLAN
A group of 5 or more employees may initially invest a minimum of $100 ($20 per
individual) in the Funds followed by additional payments of at least $20 for
each individual investing under a single payroll deduction plan. Any such plan
may be terminated by SM&R or the Shareholder at any time upon sixty (60) days
written notice.
PURCHASES AT NET ASSET VALUE
After receipt of a written request by SM&R, no sales charge will be imposed on
sales charge shares of the Group to: (a) present and retired directors, officers
and full-time employees of the Group; (b) present and retired directors,
officers, registered representatives and full-time employees of SM&R and their
spouses; (c) present and retired officers, directors, insurance agents and
full-time employees and their spouses of American National and its subsidiaries
and its "affiliated persons", as defined in the Investment Company Act of 1940,
and of any corporation or partnership for which any of American National's
present directors serve as a director or partner, and their spouses; (d) present
and retired partners and full-time employees of legal counsel to SM&R and
officers and directors of any professional corporations which are partners of
such legal counsel and their spouses; (e) any child, step-child, grandchild,
parent, grandparent, brother or sister of any person named in (a), (b), (c) or
(d) above and their spouses; (f) any trust, pension, profit-sharing, IRA or
other benefit plan for any of such persons mentioned in (a), (b), (c), (d), or
(e) above; (g) custodial accounts for minor children of such persons mentioned
in (a), (b), (c), (d), or (e) pursuant to the Uniform Gifts to Minors or Uniform
Transfers to Minors Acts; (h) persons who have received a distribution from a
pension profit-sharing or other benefit plan to the extent such distribution
represents the proceeds of a redemption of shares of any fund in the Group; (i)
persons receiving rebated amounts through ANPAC's "Cash Back Program" to the
extent the proceeds represent the amount of the rebate; (j) trust companies and
bank trust departments for funds over which they exercise exlusive discretionary
investment authority or they serve as a directed trustee and which are held in a
fiduciary, agency, advisory, custodial or similar capacity; (k) accounts managed
by Securities Management and Research, Inc.; (l) stockholders of American
National Insurance Company;
18
<PAGE>
(m) policyholders of American National subsidiaries who have entered into an NAV
agreement with SM&R; (n) registered representatives and employees of securities
dealers with whom SM&R has a selling agreement; and (o) officers, directors,
trustees, employees and members of any non-profit business, trade, professional
charitable, civic or similar associations and clubs with an active membership of
at least 100 persons.
Neither the Funds nor SM&R are responsible for determining whether or not a
prospective investor qualifies under any of the above categories for receipt of
net asset value. This determination is the sole responsibility of the
prospective investor.
PRE-AUTHORIZED CHECK PLANS
An investor may invest in shares of the Funds through a pre-authorized check
plan ($20 or more). Such purchases are processed on or about the 7th and 21st of
each month and each investor may invest in up to five different accounts in the
Group on either date. Such purchases enable the investor to lower his or her
average cost per share through the principle of "dollar cost averaging". (See
"SPECIAL PURCHASE PLANS" in each Fund's Statement of Additional Information.)
WEALTH ACCUMULATION PLAN
Shareholders having account balances of at least $5,000 in the SM&R Capital
Funds American National Primary Fund Series ("Primary Series") may open a Wealth
Accumulation Account, which will provide them with an automatic dollar cost
averaging plan. Automatic monthly purchases of the shares of other funds in the
American National Funds Group will be made by exchanges from the shareholder's
Primary Series Wealth Accumulation Account. Purchases of the other funds must be
at least $100 and, unless terminated by the shareholder, will continue as long
as the balance of the Primary Series Wealth Accumulation Account is sufficient.
Additional investments may be made to a Primary Series account designated as a
Wealth Accumulation Account to extend the purchase period under the plan.
However, if additional investments are received by SM&R less than fifteen (15)
days prior to the 20th of the month, such investments will not be available for
use under the Wealth Accumulation Account until the 20th of the following month.
If the 20th of the month is an SM&R holiday, the purchase will be processed on
the next business day.
Purchases made will be subject to the applicable sales charge of the fund
whose shares are being purchased. Changes in amounts to be purchased, the funds
being purchased, and termination of a Wealth Accumulation Account will be made
within five (5) business days after written instructions are received by SM&R in
proper form (ie: signed by the owner(s) of record exactly as registered).
Shareholders' rights to make additional investments in any of the American
National Funds Group, to exchange shares within the American National Funds
Group, and to redeem shares are not affected by a shareholder's participation in
a Wealth Accumulation Plan. However, check writing privileges and expedited
redemption by telephone are not available for the Primary Series accounts
designated as a part of the Wealth Accumulation Plan.
EXCHANGE PRIVILEGE
Shareholders of the American National Funds Group and the SM&R Capital Funds,
Inc. may exchange between the Funds or series' without the payment of an
exchange fee. However, because of the variable sales charges between the Funds
or series', the following procedures have been adopted to treat all shareholders
fairly.
Shares held in accounts opened for more than one (1) year may be exchanged on
the basis of their respective net asset values, without a sales charge. THIS
PRIVILEGE IS ONLY AVAILABLE IN STATES WHERE THE VARIOUS MEMBERS OF THE GROUP ARE
REGISTERED AND THE EXCHANGE MAY BE LEGALLY MADE.
Shares of the Primary Series acquired through an exchange from one of the
members of the two groups and all additional shares acquired through reinvested
dividends on such exchanged shares may be RE-EXCHANGED for shares of the members
of the two groups. RE-EXCHANGES may not be effected through the use of the
Primary Series' check writing options (See "Check Writing Option").
19
<PAGE>
Shares of any Fund or Series in the two groups held in escrow under a Letter
of Intent are not subject to the exchange privilege and will not be released
unless the Letter of Intent balance invested during the period equals or exceeds
the Letter of Intent amount or the shareholder requests, in writing that the
Letter of Intent be canceled and adjustments made prior to the exchange.
To effect an exchange or re-exchange (a) a prospectus must be provided to the
investor covering the shares to be taken in exchange or re-exchange; (b) written
authorization requesting the exchange or re-exchange and advising that such
exchange or re-exchange is eligible for reduced or no sales charge must be
received by SM&R; (c) an appropriate application must be completed if an account
does not presently exist in the Fund or series shares are being exchanged or
re-exchanged to; and (d) the amount being exchanged or re-exchanged must at
least equal the minimum initial or subsequent investment amounts, whichever is
applicable. SM&R reserves the right, upon sixty (60) days prior written notice,
to restrict the frequency of or to otherwise modify, condition, terminate or
impose additional charges upon the exchange privilege. Furthermore, the exchange
or re-exchange of shares between a fund or a series in the groups may constitute
a sale of shares which represents a taxable event.
Any gain or loss realized on an exchange or re-exchange may have tax
consequences, therefore an investor should consult a tax advisor for information
on the tax treatment of exchanges.
RETIREMENT PLANS
An account may be established in Individual Retirement Accounts (IRAs);
Simplified Employee Pension Plans (SEPs); 403(b)(7) Custodial Accounts (TSAs)
and corporate retirement plans. These plans allow you to shelter investment
income from federal income tax while saving for retirement. The minimum initial
purchase for the Funds is $100 (if investing by Pre-Authorized Check $20). SM&R
acts as trustee or custodian for IRAs, SEPs and TSAs for the Funds. An annual
custodial fee of $7.50 will be charged for any part of a calendar year in which
an investor has an IRA, SEP or TSA in the Funds and will be automatically
deducted from each account. Documents and forms containing detailed information
regarding these plans are available from your representative or SM&R. An
individual considering a retirement plan may also wish to consult with an
attorney or tax advisor.
DIVIDENDS, CAPITAL GAINS AND FEDERAL TAXES
The Income and Triflex Funds will pay dividends from investment income, if
any, quarterly, during the months of March, June, September and December, and
distribute capital gains, if any, in December. The Growth Fund will pay
dividends from investment income, if any, semi-annually during the months of
June and December and distribute capital gains, if any, in December. Dividends
from net investment income may include net short-term capital gains, if any.
Dividends and capital gains distributions may also be made at such other times
as may be necessary to comply with the Internal Revenue Code of 1986, as amended
from time to time (the "Code").
Dividends and capital gains distributions will be automatically reinvested in
shares at net asset value unless SM&R is instructed otherwise in writing.
Dividends and capital gains declared in December to shareholders of record in
December and paid the following January will be taxable to shareholders as if
received in December.
After a dividend or capital gains distribution is paid, each Fund's share
price will drop by the amount of the dividend or distribution. Thus, a dividend
or capital gains distribution paid shortly after purchasing shares would
represent, in substance, a return of capital (to the extent it is paid on the
shares purchased), even though subject to income taxes as discussed below.
Shareholders and the IRS will be furnished an annual statement detailing federal
tax information, including information relative to dividends and distributions
paid to such shareholder during the preceding year.
INFORMATION COMMON TO THE FUNDS
Each Fund has qualified and intends to continue to qualify for treatment as a
"regulated investment company" under Subchapter M of the Code. Each Fund intends
to distribute all of its net investment
20
<PAGE>
income and net realized capital gains to shareholders in a timely manner,
therefore, it is not expected that the Funds will be required to pay any federal
income taxes.
Each Fund intends to distribute substantially all of its ordinary income and
net realized short-term and long-term capital gains, if any, before the end of
the calendar year in accordance with minimum distribution requirements of the
Code. In the event the Funds fail to do so, the Funds will be subject to a four
percent (4%) excise tax on a portion of their undistributed income and capital
gains.
The Funds or the securities dealer effecting a redemption transaction is
required to file an informational return (1099-B) with the Internal Revenue
Service ("IRS") with respect to each sale of Funds shares by a shareholder. The
year-end statement provided to each shareholder will serve as a substitute
1099-B for purposes of reporting any gain or loss on the tax return filed by the
shareholder.
IRS WITHHOLDING INFORMATION--Each Fund and other payers are required, according
to IRS regulations), to withhold 31% of redemption payments and reportable
dividends paid to shareholders who have failed to provide a Fund with a TIN and
a certification that he is not subject to backup withholding. You will be asked
to certify on your account application or on a separate W-9 form that the tax
identification number you provided is correct and that you are exempt from
backup withholding for previous underreporting to the IRS.
Retirement plan distributions may be subject to federal income tax
withholding. Therefore, you should consult with your tax advisor prior to making
withdrawals from your account.
The foregoing description relates only to federal income tax consequences for
shareholders who are U.S. citizens or corporations. You should consult your own
tax advisor regarding state, local and other applicable tax laws. Information as
to the federal tax status of distributions will be provided to shareholders
annually.
NON-RESIDENT ALIENS--Shareholders who are classified as non-resident alien's for
purposes of federal income taxation and do not furnish a valid and effective
Form W-8 will be subject to backup withholding at a rate of 31% on dividends
received from the Funds and on proceeds from redemptions of their shares. Form
W-8 may be obtained from your local IRS office and remains in effect for three
calendar years beginning in the calendar year in which it is received by the
Fund. Regardless of whether a valid and effective Form W-8 is furnished,
non-resident aliens may be subject to U.S. withholding taxes on their account
unless such withholding taxes are reduced or eliminated under the terms of an
applicable U.S. income tax treaty and the shareholder complies with all
procedures for claiming the benefits of such a treaty. Non-resident shareholders
should consult with their financial or tax advisors with respect to the
specifications and applicability of this tax.
HOW TO REDEEM
Shares of the Funds will be redeemed at the net asset value determined on the
date the request is received in "Proper Form" as defined in "Proper Form" below,
at no extra charge. A redemption request should be addressed to Securities
Management and Research, Inc., One Moody Plaza, 14th Floor, Galveston, Texas
77550.
If uncertain of the redemption requirements investors should call or write
SM&R. Payment will be made as soon as practicable and normally within seven days
after receipt of a redemption request in Proper Form.
If the shares being redeemed were purchased by wire, certified check, money
order, or other immediately available funds, redemption proceeds will be
available immediately. For shares purchased by non-guaranteed funds (such as a
personal check), the Funds reserve the right to hold the proceeds until such
time as the Funds have received assurance that an investment check has cleared
the bank on which it was drawn.
SYSTEMATIC WITHDRAWAL PLAN
Each Fund has a "Systematic Withdrawal Plan" ("Withdrawal Account"), which
permits shareholders having an account value of $5,000 or more to automatically
withdraw a minimum of $50 monthly or each calendar quarter. The Funds and SM&R
21
<PAGE>
discourage shareholders from maintaining a Withdrawal Account while concurrently
purchasing shares of the Funds because of the sales charge involved in
additional purchases. Dividends and capital gains distributions will
automatically be reinvested in additional shares at net asset value. As with
other redemptions, a withdrawal payment is a sale for federal income tax
purposes. The Systematic Withdrawal Plan will automatically terminate if all
shares are liquidated or withdrawn from the account. Certificates are not issued
for shares held in a withdrawal account and certificates held, if any, must be
surrendered when shares are transferred to a Withdrawal Account. No account
covered by a Letter of Intent can be changed to a Systematic Withdrawal Plan
until such time as the Letter of Intent is fulfilled or terminated, nor can an
account under a Systematic Withdrawal Plan be placed under a Letter of Intent.
REINVESTMENT PRIVILEGE
Within ninety (90) days of a redemption (sixty (60) days for qualified plans),
a shareholder may invest all or part of the redemption proceeds in shares of any
of the Funds managed by SM&R at the net asset value next computed after receipt
of the proceeds to be reinvested by SM&R. The shareholder must ask SM&R for this
privilege at the time of reinvestment. Prior to reinvestment of redemption
proceeds, a shareholder is encouraged to consult with his accountant or tax
advisor to determine any possible tax ramifications of such a transaction. Each
Fund managed by SM&R may amend, suspend, or cease offering this privilege at any
time as to shares redeemed after the date of the amendment, suspension or
cessation.
For further information about the "Systematic Withdrawal Plan" and
"Reinvestment Privilege", contact a registered representative or SM&R.
Any gain or loss on the redemption of the shares is recognized for income tax
purposes, whether or not the proceeds are reinvested in accordance with this
privilege, subject, however to the "wash sale" rule described under "Exchange
Privilege" in the Statement of Additional Information.
"PROPER FORM"--means the request for redemption must include: 1) your share
certificates, if issued; 2) your letter of instruction or a stock assignment
specifying the Fund, account number, and number of shares or dollar amount to be
redeemed. Both share certificates and stock powers, if any, must be endorsed and
executed exactly as the Fund shares are registered. It is suggested that
certificates be returned by certified mail for your protection; 3) any required
signature guarantees (see "Signature Guarantees" below); and 4) other supporting
legal documents, if required in the case of estates, trusts, guardianships,
divorce, custodianships, corporations, partnerships, pension or profit sharing
plans, retirement plans and other organizations.
Please keep in mind that as a shareholder, it is your responsibility to ensure
requests are submitted to the Funds' transfer agent in Proper Form for
processing.
TEXAS OPTIONAL RETIREMENT PROGRAM
Shares in an account established under the Texas Optional Retirement Program
may not be redeemed unless satisfactory evidence is received by SM&R from the
State that one of the following conditions exists: (1) death of the employee;
(2) termination of service with the employer; or (3) retirement of the employee.
SIGNATURE GUARANTEES
This guarantee carries with it certain statutory warranties which are relied
upon by the transfer agent. This guarantee is designed to protect the investor,
the Fund, SM&R and its representatives through the signature verification of
each investor wishing to redeem or exchange shares. Signature guarantees are
required when: (1) the proceeds of the redemption exceed $25,000; (2) the
proceeds (in any amount) are to be paid to someone OTHER THAN the registered
owner(s) of the account; (3) the proceeds (in any amount) are to be sent to any
address OTHER THAN the shareholder's address of record, pre-authorized bank
account or exchanged to one of the other funds managed by SM&R; (4) in
transactions involving share certificates, if the redemption proceeds are in
excess of $25,000; or (5) the Fund or its transfer agent believes a signature
would protect against potential claims based on the transfer instructions,
including, when (a) the current address of one or more joint
22
<PAGE>
owners of an account cannot be confirmed, (b) multiple owners have a dispute or
give inconsistent instructions, (c) the Fund or transfer agent have been
notified of an adverse claim, (d) the instructions received by the Fund or
transfer agent are given by an agent, not the actual registered owner, (e) it is
determined that joint owners who are married to each other are separated or may
be subject to divorce proceedings, or (f) the authority of a representative of a
corporation, partnership, association or other entity has not been established
to the satisfaction of the Fund or transfer agent.
Acceptable guarantees can be obtained from an "eligible guarantor institution"
as defined in rules adopted by the Securities and Exchange Commission. Eligible
guarantor institutions include banks, brokers, dealers, municipal securities
dealers or brokers, government securities dealers or brokers, credit unions (if
authorized under state law), national securities exchanges, registered
securities associations and institutions that participate in the Securities
Transfer Agent Medallion Program ("STAMP") or other recognized signature
guarantee medallion program or an SM&R representative who has executed an
agreement and received authorization from SM&R. IMPORTANT: Witnessing or
notarization is not sufficient.
REDEMPTION OF SMALL ACCOUNTS
If your account balance falls below $100 as a result of redeeming shares, you
will be notified that the value of your account is less than the required
minimum indicated above and allowed given (60) days' to make an additional
investment to increase the value of your account above the required minimum.
23
<PAGE>
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000 OF
AMERICAN NATIONAL GROWTH FUND, INC.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN CAPITAL APPRECIATION ASSUMING DIVIDENDS TAKEN IN CASH
<S> <C> <C>
1986 10458 10334
1987 11765 11431
1988 12471 11845
1989 15505 14350
1990 15049 13636
1991 20613 18457
1992 20098 17702
1993 21740 18899
1994 22822 19558
1995 28573 24084
</TABLE>
SUMMARY OF RESULTS FOR CALENDAR YEAR
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income dividends
paid and reinvested during
year $ 126 $ 200 $ 282 $ 385 $ 325 $ 220 $ 318 $ 270 $ 319
Capital gains distributions
reinvested during year 908 1,826 874 2,240 324 1,058 1,454 3,001 2,463
Value of investment at year
end assuming reinvestment
of investment income
dividends and capital gains
distributions 10,458 11,765 12,471 15,505 15,049 20,613 20,098 21,740 22,822
Value of investment at year
end assuming investment
income dividends taken in
cash $ 10,334 $ 11,431 $ 11,845 $ 14,350 $ 13,636 $ 18,457 $ 17,702 $ 18,899 $ 19,558
PERCENTAGES
- ------------------------------------------------------------------------------------------------------------------------------
Income Return 1.26% 1.91% 2.40% 3.08% 2.10% 1.46% 1.54% 1.35% 1.47%
Appreciation 3.32% 10.59% 3.60% 21.25% -5.04% 35.52% -4.03% 6.82% 3.51%
-------------------------------------------------------------------------------------------------
Total Return 4.58% 12.50% 6.00% 24.33% -2.94% 36.98% -2.49% 8.17% 4.98%
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Sales Charge 5.75%
Total Return
*(excluding sales charge) 10.97%
<CAPTION>
- ---------------------------
1995
- ---------------------------
<S> <C>
Investment income dividends
paid and reinvested during
year $ 450
Capital gains distributions
reinvested during year 1,938
Value of investment at year
end assuming reinvestment
of investment income
dividends and capital gains
distributions 28,573
Value of investment at year
end assuming investment
income dividends taken in
cash $ 24,084
PERCENTAGES
- ---------------------------
Income Return 1.97%
Appreciation 23.23%
Total Return 25.20%
Sales Charge
Total Return
*(excluding sales charge)
</TABLE>
All performance figures are as of December 31 for the applicable year. Growth
Fund's fiscal year was as of October 31 for 1986-1989.
<TABLE>
<S> <C> <C>
SUMMARY
Original Investment.....................$10,000
Dividends Paid and Reinvested............$2,895
Capital Gains Paid and Reinvested.......$16,086
Depreciation (Unrealized Capital
Losses)..................................$(408)
Total Value.............................$28,573
</TABLE>
24
<PAGE>
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
OF AMERICAN NATIONAL INCOME FUND, INC.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN CAPITAL APPRECIATION ASSUMING DIVIDENDS TAKEN IN CASH
<S> <C> <C>
1986 10207 9844
1987 10591 9837
1988 11656 10434
1989 14934 12852
1990 15047 12412
1991 19419 15561
1992 20062 15698
1993 22194 16917
1994 22058 16339
1995 28481 20502
</TABLE>
SUMMARY OF RESULTS FOR CALENDAR YEAR
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income dividends
paid and reinvested during
year $ 366 $ 426 $ 420 $ 536 $ 610 $ 503 $ 454 $ 548 $ 629
Capital gains distributions
reinvested during year 967 287 1,249 1,115 55 1,043 912 1,987 2,117
Value of investment at year
end assuming reinvestment
of investment income
dividends and capital gains
distributions 10,207 10,591 11,656 14,934 15,047 19,419 20,062 22,194 22,058
Value of investment at year
end assuming investment
income dividends taken in
cash $ 9,844 $ 9,837 $ 10,434 $ 12,852 $ 12,412 $ 15,561 $ 15,698 $ 16,917 $ 16,339
PERCENTAGES
- ------------------------------------------------------------------------------------------------------------------------------
Income Return 3.66% 4.17% 3.98% 4.59% 4.08% 3.34% 2.34% 2.73% 2.83%
Appreciation -1.59% -0.40% 6.09% 23.53% -3.33% 25.72% 0.98% 7.90% -3.44%
-------------------------------------------------------------------------------------------------
Total Return 2.07% 3.77% 10.07% 28.12% 0.75% 29.06% 3.32% 10.63% -0.61%
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Sales Charge 5.75%
Total Return
*(excluding sales charge) 8.29%
<CAPTION>
- ---------------------------
1995
- ---------------------------
<S> <C>
Investment income dividends
paid and reinvested during
year $ 746
Capital gains distributions
reinvested during year 1,330
Value of investment at year
end assuming reinvestment
of investment income
dividends and capital gains
distributions 28,481
Value of investment at year
end assuming investment
income dividends taken in
cash $ 20,502
PERCENTAGES
- ---------------------------
Income Return 3.38%
Appreciation 25.74%
Total Return 29.12%
Sales Charge
Total Return
*(excluding sales charge)
</TABLE>
All performance figures are as of December 31 for the applicable year. Income
Fund's fiscal year was as of July 31 for 1986-1989.
<TABLE>
<S> <C> <C>
SUMMARY
Original Investment.....................$10,000
Dividends Paid and Reinvested............$5,238
Capital Gains Paid and Reinvested.......$11,062
Depreciation (Unrealized Capital
Losses)..................................$2,181
Total Value.............................$28,481
</TABLE>
25
<PAGE>
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
OF TRIFLEX FUND, INC.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN CAPITAL APPRECIATION ASSUMING DIVIDENDS TAKEN IN CASH
<S> <C> <C>
1987 9599 9499
1988 10596 9925
1989 12043 10676
1990 12209 10290
1991 15204 12318
1992 15659 12492
1993 16647 12852
1994 16895 12662
1995 20662 15024
</TABLE>
SUMMARY OF RESULTS FOR CALENDAR YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1987 1988 1989 1990 1991 1992 1993 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income dividends paid
and reinvested during year $ 99 $ 565 $ 632 $ 589 $ 548 $ 334 $ 411 $ 497
Capital gains distributions
reinvested during year -0- 230 715 69 501 493 1,046 892
Value of investment at year end
assuming reinvestment of investment
income dividends and capital gains
distributions 9,599 10,596 12,043 12,209 15,204 15,659 16,647 16,895
Value of investment at year end
assuming investment income
dividends taken in cash $ 9,499 $ 9,925 $ 10,676 $ 10,290 $ 12,318 $ 12,492 $ 12,852 $ 12,662
PERCENTAGES
- ---------------------------------------------------------------------------------------------------------------------------
Income Return 0.98% 5.88% 5.97% 4.90% 4.49% 2.20% 2.62% 2.94%
Appreciation -4.99% 4.50% 7.69% -3.53% 20.04% .80% 3.69% -1.45%
--------------------------------------------------------------------------------------
Total Return -4.01% 10.38% 13.66% 1.37% 24.53% 3.00% 6.31% 1.49%
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------
1995
- -----------------------------------
<S> <C>
Investment income dividends paid
and reinvested during year $ 582
Capital gains distributions
reinvested during year 169
Value of investment at year end
assuming reinvestment of investment
income dividends and capital gains
distributions 20,662
Value of investment at year end
assuming investment income
dividends taken in cash $ 15,024
PERCENTAGES
- -----------------------------------
Income Return 3.15%
Appreciation 19.14%
Total Return 22.29%
</TABLE>
All performance figures are as of December 31 for the applicable year. Triflex
Fund's fiscal year was as of July 31 for 1987-1989.
<TABLE>
<S> <C> <C>
SUMMARY
Original Investment.....................$10,000
Dividends Paid and Reinvested............$4,257
Capital Gains Paid and Reinvested........$4,115
Depreciation (Unrealized Capital
Losses)..................................$2,290
Total Value.............................$20,662
</TABLE>
26
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX
(Description of Ratings Used in Prospectus)
- --------------------------------------------------------------------------------
BOND RATINGS
Description of Standard & Poor's Corporation's bond rating:
AAA Bonds rated "AAA" have the highest rating assigned by Standard & Poor's to
debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A Bonds rated "A" have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher
rated categories.
BBB Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing cir-
cumstances are more likely to lead to a weakened capacity to pay interest
and repay principal for bonds in this category than for bonds in higher
rated categories.
BB,B Bonds rated "BB,B" are regarded, on balance, as predominantly speculative
with respect to capacity to pay interest and repay principal in accordance
with the terms of the obligation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
Description of Moody's Investor's Service, Inc.'s bond ratings:
AAA Bonds which are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt-edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
AA Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds be-
cause margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear
somewhat greater than in Aaa securities.
A Bonds which are rated "A" possess many favorable investment attributes are
to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in
the future.
BAA Bonds which are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
27
<PAGE>
<TABLE>
<S> <C>
outstanding investment characteristics and in fact have speculative
characteristics as well.
BA Bonds which are rated "Ba" are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated "B" generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
</TABLE>
PREFERRED STOCK RATING.
Description of Standard & Poor's Corporation's preferred stock rating:
B Preferred stock rated "B" are regarded on balance, as predominately
speculative with respect to the issuer's capacity to pay preferred stock
obligations. While such issues will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
Description of Moody's Investors Service, Inc.'s preferred stock rating:
B An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.
FEDERAL FUNDS
As used in this Prospectus and in each Fund's Statement of Additional
Information, "Federal Funds" means a commercial bank's deposits in a Federal
Reserve Bank which can be transferred from one member bank's account to that of
another member bank on the same day. Federal Funds are considered to be
immediately available funds.
28
<PAGE>
PROSPECTUS
[American National Logo]
American
National
Funds
Group
// American National Growth Fund
// American National Income Fund
// Triflex Fund
Securities Management & Research, Inc.
One Moody Plaza
Galveston, TX 77550
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 14
GALVESTON, TEXAS
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated April 1, 1996
- ------------------------------------------------------------------------------
AMERICAN NATIONAL INCOME FUND, INC.
(an income fund with appreciation secondary)
Mailing and Street Address: Telephone Number: (409) 763-8272
One Moody Plaza Toll Free 1-(800) 231-4639
Galveston, Texas 77550
- ------------------------------------------------------------------------------
This Statement of Additional Information is NOT a prospectus, but should
be read in conjunction with the American National Funds Group Prospectus (the
"Prospectus") dated April 1, 1996. A copy of the Prospectus may be
obtained from your registered representative or Securities Management and
Research, Inc. ("SM&R"), One Moody Plaza, Galveston, Texas 77550 (Telephone
No. (409) 763-8272 or Toll Free 1-(800)-231-4639).
----------------------------------------------------------------------
No dealer, sales representative, or other person has been
authorized to give any information or to make any representations
other than those contained in this Statement of Additional Information
(and/or the Prospectus referred to above), and if given or made, such
information or representations must not be relied upon as having been
authorized by the Fund or SM&R. Neither the American National Funds
Group Prospectus nor this Statement of Additional Information
constitutes an offer or solicitation by anyone in any state in which
such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to any
person to whom it is unlawful to make such offer or solicitation.
----------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE FUND................................................................. 2
INVESTMENT OBJECTIVE AND POLICIES........................................ 2
MANAGEMENT OF THE FUND................................................... 3
POLICY ON PERSONAL INVESTING............................................. 5
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...................... 5
INVESTMENT ADVISORY AND OTHER SERVICES................................... 6
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION.......................... 8
CAPITAL STOCK............................................................ 9
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED............. 10
SPECIAL PURCHASE PLANS................................................... 12
REDEMPTION............................................................... 14
TAX STATUS............................................................... 15
THE UNDERWRITER.......................................................... 16
FINANCIAL STATEMENTS..................................................... 16
CUSTODIAN................................................................ 17
COUNSEL AND AUDITORS..................................................... 17
TRANSFER AGENT AND DIVIDEND PAYING AGENT................................. 17
PERFORMANCE DATA......................................................... 17
COMPARISONS.............................................................. 18
EXHIBIT "1" TO STATEMENT OF ADDITIONAL INFORMATION
</TABLE>
1
<PAGE>
THE FUND
On August 23, 1989, the Board of Directors of the American National
Income Fund, Inc. (the "Predecessor Fund"), a Texas corporation incorporated
on July 15, 1969 caused the Fund to be incorporated under the laws of the
State of Maryland. The purpose of forming the Fund was to permit the
Predecessor Fund to change its domiciliary state from Texas to Maryland by
merging into the Fund. On November 16, 1989, the Predecessor Fund's
stockholders approved such merger and it was consummated on November 30,
1989. At that time, the Fund, as the survivor of the merger, succeeded to
all of the assets and assumed all of the liabilities of the Predecessor Fund,
which was then dissolved. The Predecessor Fund's investment objectives and
policies and investment restrictions were unchanged and are now the Fund's
investment objectives and policies and the Fund is now subject to such
investment restrictions. Accordingly, and because the Fund is essentially
the same as the Predecessor Fund, no distinction is made in this Prospectus
between the two and, unless required by the context thereof, disclosures are
made as though the change of domicile had not occurred.
The Fund is a diversified open-end investment company commonly known as
a mutual fund. A mutual fund is a company in which a number of persons
invest in the securities of other companies. The Fund is an open-end
investment company because it generally must redeem an investor's shares upon
request. The Fund is a diversified investment company because it offers
investors an opportunity to minimize the risk inherent in all investments in
securities by spreading their investment over a number of companies in
various industries. However, diversification cannot eliminate such risks.
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT RESTRICTIONS
The following investment restrictions and the policies stated above are
deemed to be fundamental policies. They may be changed only by the vote of a
"majority" of the Fund's outstanding shares, which as used herein, means the
lesser of (i) 67% of the Fund's outstanding shares present at a meeting of
the holders if more than 50% of the outstanding shares are present in person
or by proxy or (ii) more than 50% of the Fund's outstanding shares.
The Fund does not:
1. Issue senior securities.
2. Make short sales of securities.
3. Purchase securities on margin.
4. Buy or sell real estate.
5. Write or purchase from others put and call options or any combination
thereof.
6. Purchase or sell commodities or commodity contracts including future
contracts.
7. Invest in companies for the purpose of exercising management or
control.
8. Invest in oil, gas or other mineral leases, rights or royalty
contracts or in real estate or real estate limited partnerships.
9. Engage in the underwriting of securities of other companies.
10. Borrow money except from banks for temporary or emergency purposes,
but not for investment purposes nor in any amount exceeding 5% of
the value of its total assets.
11. Make loans to other persons, except through the purchase of bonds,
debentures, and other debt securities which are publicly distributed
and customarily purchased by institutional investors.
12. Mortgage, pledge or hypothecate any of its assets.
13. Purchase the securities of any one issuer (other than those issued
or guaranteed by the U.S. Government), if immediately after and as a
result of such purchase the market value of the Fund's holding in
the securities of such issuer exceeds 5% of the market value of the
Fund's total assets.
14. Purchase the securities of an issuer if the purchase will cause the
Fund to own more than 10% of the outstanding voting securities of
the issuer.
2
<PAGE>
15. Concentrate its investments in any particular industry or groups
of industries; however, it may invest up to 25% of the value of its
total assets in the securities of issuers in any one industry.
Utility companies, for example, such as gas, electric, water, and
telephone companies will be considered as separate industries.
16. Invest in securities of a company having a record of less than three
years of continuous operation, including the operations of any
predecessor company or enterprise to which the company has succeeded
by merger, consolidation, reorganization or purchase of assets.
17. Purchase or retain securities of any issuer if any officer or
director of the Fund or SM&R owns more than 1/2 of 1% of the
securities of such issuer and such officers or directors together
own more than 5% of the securities of such issuer.
18. Invest in securities of another investment company except pursuant
to a plan of merger, consolidation or acquisition of assets approved
by shareholders of the Fund.
19. Invest in securities which have been acquired through private
placement transactions ("restricted securities") or in real estate
mortgage loans although it may invest in securities which are secured
by real estate or real estate mortgages and securities of issuers
which invest or deal in real estate and/or real estate mortgages,
provided such securities meet the criteria set forth in the Prospectus
under "What Are The Funds Investment Objectives and Policies?".
20. Invest in securities which are not readily marketable, such as
restricted securities or foreign securities not listed on a recognized
securities exchange.
21. Any warrants purchased by the Fund must be marketable warrants and
the Fund's investment in warrants, valued at the lower of cost or
market, may not exceed 5% of the Fund's total assets. Not more than
2% of the Fund's total assets may be invested in warrants which are
not listed on the New York or American Stock Exchange.
22. Participate on a joint or a joint and several basis in any trading
account in securities.
Any investment policy or restriction which involves a maximum percentage
of securities or assets, shall not be considered to be violated unless an
excess over the percentage occurs immediately after an acquisition of
securities or utilization of assets and results therefrom.
Portfolio turnover is calculated by dividing the lesser of annual
purchases or sales of portfolio securities by the monthly average of the
value of the Fund's portfolio securities excluding securities whose
maturities at the time of purchase are one year or less. A 100% portfolio
turnover rate would occur, for example, if all of the Fund's portfolio
securities were replaced within one year.
MANAGEMENT OF THE FUND
The names, addresses, principal occupations, and other affiliations of
the Fund's directors and executive officers are given below. Unless
otherwise specifically noted, each has had the same or similar employment or
position for at least the past five years and occupies the identical position
with the American National Growth Fund, Inc., and the Triflex Fund, Inc.,
(hereinafter, sometimes collectively referred to as the "American National
Funds Group" or the "American National Family of Funds").
(1)(2)RALPH S. CLIFFORD (715 24TH AVE., COURT, MOLINE, ILLINOIS), Director of
the Fund; Retired attorney, Clifford, Clifford & Olson and Parsons &
Clifford; Retired Director of Henry County Bank; Retired Director of
Illini Beef Packers, Inc.; Retired Director of Industrial Relations of
Deere & Company.
(2)PAUL D.CUMMINGS (3102 BELLAIRE DRIVE, OKLAHOMA CITY, OKLAHOMA), Director
of the Fund; Retired President and Director of Globe Life and Accident
Insurance Company.
3
<PAGE>
(1)JACK T. CURRIE (515 POST OAK BOULEVARD, SUITE 750, HOUSTON, TEXAS),
Director of the Fund; Personal Investments; Director of American
Indemnity Financial Corporation, holding company for casualty insurance
company; Director of Stewart & Stevenson Services, Inc., designs and
constructs power generating systems.
* MICHAEL W. McCROSKEY (ONE MOODY PLAZA, GALVESTON, TEXAS 77550), President
and Director of the Fund; President, Chief Executive Officer and member
of the Executive Committee of SM&R; President and Director of the SM&R
Capital Funds, Inc.; President and Director of the American National
Investment Accounts, Inc.; Executive Vice President, American National;
Vice President of Standard Life and Accident Insurance Company; Assistant
Secretary of American National Life Insurance Company of Texas, life,
health and accident insurance companies in the American National Family
of Companies; Vice President, Garden State Life Insurance Company;
Director, ANREM Corporation; President, ANTAC Corporation, 1994 to
present.
(1)IRA W. PAINTON, C.L.U. (12004 DAHOON DRIVE, OKLAHOMA CITY, OKLAHOMA),
Chairman of the Board and Director of the Fund; Retired President of the
Fund and the other American National Funds; Retired President and
Director of SM&R.
(2)DONALD P. STEVENS (13105 JOHN REYNOLDS DRIVE, GALVESTON, TEXAS), Director
of the Fund; Assistant to the President for Governmental Relations of
The University of Texas Medical Branch, a medical school and hospital
system; Vice President of Jamail Galveston Foundation.
*STEVEN H. STUBBS, C.F.A. (2885 DOMINIQUE DR., GALVESTON, TEXAS), Director of
the Fund; Former President and Chief Executive Officer of The Westcap
Corporation; and Former President and Chief Executive Officer of SM&R and
the Fund.
DAVID ZIMANSKY (ONE MOODY PLAZA, GALVESTON, TEXAS), Vice President and
Portfolio Manager of the Fund; Former, Vice President, convertible
arbitrage, Shearson Lehman Hutton, New York, N.Y.
EMERSON V. UNGER, C.L.U. (ONE MOODY PLAZA, GALVESTON, TEXAS), Vice President
of the Fund and SM&R; Vice President of the American National Investment
Accounts, Inc. and SM&R Capital Funds, Inc.
BRENDA T. KOELEMAY (ONE MOODY PLAZA, GALVESTON, TEXAS), Vice President and
Treasurer of the Fund and SM&R; Vice President and Treasurer of the
American National Investment Accounts, Inc. and SM&R Capital Funds, Inc.;
Senior Manager, KPMG Peat Marwick, July 1980 to April 1992.
TERESA E. AXELSON (ONE MOODY PLAZA, GALVESTON, TEXAS), Vice President and
Secretary of the Fund and SM&R; Vice President and Secretary of the
American National Investment Accounts, Inc. and SM&R Capital Funds, Inc.
* "Interested persons" as defined by the Investment Company Act of 1940.
(1) Member of the Fund's nominating committee.
(2) Member of the Fund's audit committee.
Officers and directors of the Fund affiliated with SM&R may receive
indirect compensation from the Fund to the extent of underwriting commissions
and investment advisory and service fees paid to SM&R.
By resolution of the Board of Directors, the Fund pays the fees and
expenses of only those directors who are not officers or employees of SM&R or
the Fund. During the fiscal year ended December 31, 1995, the Fund paid
$19,231 to such directors for fees and expenses in attending meetings of the
Board of Directors.
4
<PAGE>
Remuneration of Directors
Each director is reimbursed for expenses incurred in connection with
each meeting of the Board of Directors or any Committee attended. Each
director receives a fee, allocated among the American National Funds for
which he serves as a director, which consists of an annual retainer component
and a meeting fee component. Set forth below is information regarding
compensation paid or accrued during the fiscal year ended December 31, 1995
for each director of the Fund.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION TOTAL COMPENSATION FROM ALL
DIRECTOR FROM FUND AMERICAN NATIONAL FUNDS
----------------- ---------------------- ----------------------------
<S> <C> <C>
Ralph S. Clifford $3,162 $ 9,485
Paul D. Cummings $2,945 $ 8,836
Jack T. Currie $2,833 $ 8,500
Michael W. McCroskey -- --
Ira W. Painton $4,102 $12,305
Donald P. Stevens $2,933 $ 8,800
Steven H. Stubbs $2,833 $ 8,500
</TABLE>
POLICY REGARDING PERSONAL INVESTING
The following policies have been made a part of the Fund's Code of
Ethics. Personal Investing by Portfolio Managers A portfolio manager must
use extreme care to avoid even the appearance of a conflict of interest in
trading in any personal account (or an account in which he has a beneficial
interest). Accordingly, a portfolio manager may not trade in (or otherwise
acquire) any security for his personal account if that same security is held
in, or is being considered as a potential acquisition by, any of the Funds.
Any beneficial interest in a security held by a portfolio manager must be
sold at least 24 hours prior to any investment by the Funds. The following
exceptions apply:
1. Any beneficial interest in a security owned at the time of employment
may be held or traded at any time other than within 24 hours of a
trade in the Funds for the same or related security. Dividends in
that security may be re-invested in accordance with a formal plan
offered by the issuer.
2. Any beneficial interest in a security acquired by devise or bequeath
may be held or traded at any time other than within 24 hours of a
trade in the Funds for the same or related security.
3. Any beneficial interest in a security issued by the Government or any
Agency of the United States, a State, or any political subdivision
thereof may be traded or held.
4. Any beneficial interest in a security for which a written approval
is first obtained from the President & CEO may be traded or held.
PERSONAL INVESTING BY OTHER SM&R OFFICERS AND EMPLOYEES:
Officers and employees of the Company other than portfolio managers may
trade in (or otherwise acquire) or hold any security for his own account (or
an account in which he has beneficial interest). However, the trade must not
occur within 24 hours of a trade in the Funds for the same or related
security.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The officers and directors of the Income Fund as a group owned .59%
of the outstanding shares of the Income Fund as of February 29, 1996.
5
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
CONTROL AND MANAGEMENT OF SM&R
SM&R has been the investment adviser, manager and underwriter of the
Fund since the Fund began business in 1969. SM&R acts pursuant to a written
agreement periodically approved by the directors or shareholders of the Fund.
SM&R is also the investment adviser, manager and underwriter of the other
Funds in the American National Funds Group, the American National Investment
Accounts, Inc., and the SM&R Capital Funds, Inc. SM&R's address is that of
the Fund.
SM&R is a wholly-owned subsidiary of American National Insurance Company
("American National"), a Texas life insurance company with its principal
offices in Galveston, Texas. The Moody Foundation (the "Foundation"), a
charitable foundation established for charitable and educational purposes,
owns approximately 23.7% of American National's common stock and the Libbie
S. Moody Trust, a private trust, owns approximately 37.6% of such shares.
The trustees of the Moody Foundation are Robert L. Moody ("RLM"), Chairman of
the Board of Directors of American National, Frances Moody Newman and Ross R.
Moody.
The Moody National Bank of Galveston (the "Bank") is trustee of the
Libbie S. Moody Trust. RLM is Chairman of the Board and President, Chief
Executive Officer of the Bank, President and Director of Moody Bancshares,
Inc. ("Bancshares"), the sole shareholder of Moody Bank Holding Company, Inc.
("MBHC"), and President and Director of MBHC, the Bank's controlling
stockholder. The Three R Trusts, trusts established by RLM for the benefit
of his children, owns 100% of Bancshares' Class B stock (which elects a
majority of Bancshares' and MBHC's directors) and 47.5% of its Class A Stock.
The trustee of the Three R Trusts is Irwin M. Herz, Jr., who is also a
director of American National and a partner in Greer, Herz & Adams, L.L.P.,
18th Floor, One Moody Plaza, Galveston, Texas, General Counsel to American
National, the Bank, Bancshares, MBHC, the Fund, the other American National
Funds, the American National Investment Accounts, Inc., the SM&R Capital
Funds, Inc., and SM&R.
Michael W. McCroskey, President of the Fund, is also President, Chief
Executive Officer, director and a member of the executive committee of SM&R,
and President and director of the other members of the American National
Funds Group, the American National Investment Accounts, Inc. and the SM&R
Capital Funds, Inc.; Gordon D. Dixon, Senior Vice President, Chief Investment
Officer and a member of the investment committees of SM&R and Vice President,
Portfolio Manager of the American National Investment Accounts, Inc. - Growth
Portfolio; Emerson V. Unger, Vice President of the Fund, is also Vice
President of SM&R and Vice President of the other members of the American
National Funds Group, the American National Investment Accounts, Inc. and the
SM&R Capital Funds, Inc.; Teresa E. Axelson, Vice President and Secretary of
the Fund and the other members of the American National Funds Group, is also
Vice President and Secretary of SM&R, the American National Investment
Accounts, Inc. and the SM&R Capital Fund, Inc.; and Brenda T. Koelemay, Vice
President and Treasurer of the Fund, is also Vice President and Treasurer of
SM&R, the other members of the American National Funds Group, the American
National Investment Accounts, Inc. and the SM&R Capital Funds, Inc.
INVESTMENT ADVISORY AGREEMENT
Under an Investment Advisory Agreement (the "Advisory Agreement")
between the Fund and SM&R dated November 30, 1989, SM&R acts as investment
adviser for and provides certain investment-related administrative services
to the Fund.
As investment adviser, SM&R manages the investment and reinvestment of
the Fund's assets, including the placing of orders for the purchase and sale
of portfolio securities. SM&R provides and evaluates economic, statistical
and financial information to formulate and implement Fund investment
programs. All investments are reviewed quarterly by the Fund's Board of
Directors to determine whether or not such investments are within the
policies, objectives and restrictions of the Fund.
6
<PAGE>
Under the Advisory Agreement, SM&R receives from the Fund an investment
advisory fee for acting as investment adviser computed by applying to the
average daily net asset value of the Fund each month one-twelfth of the
annual rate as follows:
<TABLE>
<CAPTION>
ON THE PORTION OF THE FUND'S BASIC ADVISORY
AVERAGE DAILY NET ASSETS FEE ANNUAL RATE
---------------------------- ---------------
<S> <C>
Not exceeding $100,000,000 .750 of 1%
Exceeding $100,000,000 but not exceeding $200,000,000 .625 of 1%
Exceeding $200,000,000 but not exceeding $300,000,000 .500 of 1%
Exceeding $300,000,000 .400 of 1%
</TABLE>
This fee is higher than the fee paid by most other mutual funds.
The average daily net asset value of the Fund shall be computed by
adding the net asset values computed by SM&R each day during the month and
dividing the resulting total by the number of days in the month. The net
asset value per share of Fund shares shall be determined each day by adding
the market value of its portfolio securities and other assets, subtracting
liabilities and dividing the result by the number of Fund shares outstanding.
Expenses and fees of the Fund, including the advisory and administrative
service fee, will be accrued daily and taken into account in determining net
asset value. The portfolio securities of the Fund will be valued as of the
close of trading on each day when the New York Stock Exchange is open for
trading. Securities listed on national securities exchanges will be valued
at the last sales price on such day, or if there is no sale, then at the
closing bid price therefor on such day on such exchange. The value of
unlisted securities will be determined on the basis of the latest bid prices
therefor on such day. If no quotations are available for a security or other
property, it will be valued at fair value as determined in good faith by SM&R
on a consistent basis.
For the fiscal years ended December 31, 1993, 1994, and 1995, SM&R
accrued investment advisory fees from the Fund of $854,021, $860,027, and
$927,331, respectively. The net assets of the Fund were $141,058,032 as of
December 31, 1995.
The Advisory Agreement was effective on November 30, 1989 and will
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by the Board of Directors of the Fund
or by vote of a majority of the outstanding voting securities of the Fund,
and, in either case, by the specific approval of a majority of directors who
are not parties to the Advisory Agreement or not "interested" persons (as
defined in the Investment Company Act of 1940, as amended) of any such
parties, cast in person at a meeting called for the purpose of voting on such
approval. Absent proposed changes, it is the policy of Fund management to
submit continuation of the Advisory Agreement annually only to the Fund's
Board of Directors for their approval or disapproval. The Advisory Agreement
was approved by the Board of Directors on July 20, 1995, and by
the Fund's shareholders on November 16, 1989. The Advisory Agreement may be
terminated without penalty by vote of the Board of Directors or by vote of
the holders of a majority of the outstanding voting securities of the Fund,
or by SM&R, upon sixty (60) days' written notice and will automatically
terminate if assigned.
As used herein, the term "majority" when referring to approval to be
obtained from shareholders means the vote of the lesser of (1) 67% of the
Fund's shares present at a meeting if the owners of more than 50% of the
outstanding shares are present in person or by proxy; or (2) more than 50% of
the Fund's outstanding shares.
ADMINISTRATIVE SERVICE AGREEMENT
Under an Administrative Service Agreement between the Fund and SM&R
dated November 30, 1989, SM&R acts as transfer agent and provides all
management, operational and executive services to the Fund. SM&R pays the
salaries of all officers and employees administering the Fund's affairs and
maintains office facilities, furnishes statistical and research data,
clerical help, accounting, data processing, bookkeeping, transfer agency
services, dividend disbursements and certain other services required by the
Fund. The Fund has agreed to pay other expenses incurred in the operation of
the Fund, such as interest, taxes, commissions and other expenses incidental
to portfolio
7
<PAGE>
transactions, Securities and Exchange Commission fees, fees of the Custodian
(See "CUSTODIAN" herein), auditing and legal expenses, fees and expenses of
qualifying Fund shares for sale and maintaining such qualifications under the
various state securities laws where Fund shares are offered for sale, fees
and expenses of directors not affiliated with SM&R, costs of maintaining
corporate existence, costs of printing and mailing prospectuses and
shareholder reports to existing shareholders and expenses of shareholders'
meetings.
SM&R has agreed in its Administrative Service Agreement with the Fund to
pay (or to reimburse the Fund for) the Fund's expenses of any kind, exclusive
of interest, taxes, commissions and other expenses incidental to portfolio
transactions (and, with the prior approval of any state securities
commissioner deemed by the Fund's counsel to be required by law,
extraordinary expenses beyond SM&R's control), but including the advisory
fee, in excess of 1.25% per year of the Fund's average daily net assets. Such
reimbursements, when required, will be made monthly. Such reimbursement
obligation is more restrictive than required by California, the only state
still having an expense reimbursement provision applicable to the Fund. No
reimbursement to the Fund under the 1.25% expense limitation was required for
the fiscal years ended December 31, 1993, 1994, and 1995.
Under the Administrative Service Agreement, SM&R receives from the Fund
a service fee for providing administrative services. The fee is computed by
applying to the average daily net asset value of the Fund each month
one-twelfth of the annual rate as follows:
<TABLE>
<CAPTION>
ADMINISTRATIVE
ON THE PORTION OF THE FUND'S SERVICE FEE ANNUAL
AVERAGE DAILY NET ASSETS RATE
---------------------------- ------------------
<S> <C>
Not exceeding $100,000,000 .25 of 1%
Exceeding $100,000,000 but not exceeding $200,000,000 .20 of 1%
Exceeding $200,000,000 but not exceeding $300,000,000 .15 of 1%
Exceeding $300,000,000 .10 of 1%
</TABLE>
The administrative service fee is payable to SM&R whether or not the
actual expenses to SM&R for providing administrative services is more or less
than the amount of such fee.
For the fiscal years ended December 31, 1993, 1994, and 1995, SM&R
received Administrative Service fees pursuant to the Administrative Service
Agreement. During such periods, SM&R received administrative service fees
from the Fund of $283,313, $285,208, and $306,746, respectively.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
SM&R, which supervises the Fund's investments, is responsible for
effecting portfolio transactions through eligible securities brokers and
dealers, subject to the general supervision of the Fund's Board of Directors.
Investment decisions are made by an Investment Committee of SM&R, and orders
are placed by persons supervised by that committee.
There is no arrangement or intention to place orders with any specific
broker or group of brokers. The paramount factors considered by SM&R in
placing orders are efficiency in the execution of orders and obtaining the
most favorable prices for the Fund in both purchases and sales of portfolio
securities. In seeking the best prices and executions, purchases and sales
of securities which are not listed or traded on a securities exchange are
generally executed with a principal market maker acting as principal. SM&R
evaluates the brokerage fees paid by the Fund to any affiliated person by
comparing such fees to those paid by other investment companies for similar
transactions as reported in various industry surveys.
Whenever the primary consideration of best price and best execution is
met to the satisfaction of SM&R, the brokers and dealers selected will
include those who provide supplementary statistical and research services.
Such research services include advice as to the advisability of investing in,
purchasing or selling securities, as well as
8
<PAGE>
analyses and reports concerning securities, economic factors and trends.
While SM&R is able to fulfill its obligation to the Fund without such
information, its expenses might be materially increased if it had to obtain
and assemble such information through its staff. However, the value of such
information is not determinable. SM&R also uses such information when
rendering investment advisory services to the other American National Funds,
the American National Investment Accounts, Inc., the SM&R Capital Funds,
Inc., and to American National and its other accounts. SM&R will authorize
the Fund to pay an amount of commission for effecting a securities
transaction in excess of the amount of commission another broker-dealer would
have charged only if it determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer. Generally, the Fund pays
higher than the lowest commission rates available.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, and subject to seeking the best price and execution,
the Fund may give consideration to sales of shares of the Fund as a factor in
the selection of brokers and dealers to execute Fund portfolio transactions.
Brokerage fees paid by the Fund on the purchase and sale of
portfolio securities for the fiscal years ended December 31, 1993,
1994, and 1995, amounted to approximately $322,000, $160,000, and
$165,000, respectively. Portfolio turnover rates for these periods
were 71%, 52%, and 44%, respectively. No brokerage commissions have
been paid during the Fund's three most recent periods to any broker
which is an affiliated person of the Fund, which is an affiliated
person of a broker which is an affiliated person of the Fund or an
affiliated person of which is an affiliated person of the Fund or SM&R.
The other members of the American National Funds Group, the American
National Investment Accounts, Inc., and the SM&R Capital Funds, Inc., for
which SM&R is also investment adviser, may own securities of the same
companies from time to time. However, the Fund's portfolio security
transactions will be conducted independently, except when decisions are made
to purchase or sell portfolio securities of the Fund, the other American
National Funds, the American National Investment Accounts, Inc., and the SM&R
Capital Funds, Inc., simultaneously. In such event, the transactions will be
averaged as to price and allocated as to amount (according to the
proportionate share of the total combined commitment) in accordance with the
daily purchase or sale orders actually executed.
The Fund's Board of Directors has determined that such ability to effect
simultaneous transactions may be in the best interests of the Fund. It is
recognized that in some cases these practices could have a detrimental effect
upon the price and volume of securities being bought and sold by the Fund,
while in other cases these practices could produce better executions.
CAPITAL STOCK
The Fund's authorized capital stock consists of 50,000,000 common shares
with a par value of $1.00 each. All shares are equal with respect to
distributions from income and capital gains. There are no conversion,
pre-emptive or other subscription rights. In the event of liquidation, each
share is entitled to an equal portion of all the Fund's assets after all
debts and expenses have been paid.
Each share is entitled to one vote, and the Fund's shares have
non-cumulative voting rights with respect to election of directors. This
means that the holders of more than 50% of the shares voting for the election
of directors can elect 100% of the directors if they so choose, and in such
event, holders of the remaining shares will not be able to elect any
directors.
9
<PAGE>
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
PURCHASING SHARES
Shares of the Fund may be purchased at a public offering price which is
based on the net asset value of each share of the Fund next determined plus a
sales charge. Shares may be purchased through agents of American National
who are also registered representatives of SM&R, or through authorized
investment dealers. Remittances for additional investments may be submitted
directly to SM&R. Except for certain systematic investment programs (see
"SPECIAL PURCHASE PLANS" herein), the minimum initial investment is $100 and
additional shares may be purchased through investment of $20 or more at any
time thereafter.
In the interest of economy, certificates representing shares purchased
are not ordinarily issued. Most investors do not choose to receive
certificates for their shares as this eliminates the problem of safekeeping
and facilitates redemptions and transfers. However, a confirmation will be
sent to the investor promptly after each share purchase. The investor will
have the same ownership rights with respect to shares purchased as if
certificates had been issued. Investors may receive a certificate
representing shares by making written request to SM&R. If a certificate is
requested, it will normally be forwarded to the investor within 14 days after
receipt of the request. SM&R reserves the right to charge a small
administrative fee for issuance of any certificates. Certificates will not
be issued for fractional shares (although fractional shares remain in your
account on the books of the Fund).
DETERMINATION OF NET ASSET VALUE
The net asset value per share of Fund shares is determined by adding the
market value of its portfolio securities and other assets, subtracting
liabilities, and dividing the result by the number of the Fund shares
outstanding. Expenses and fees of the Fund, including the advisory fee and
the expense limitation reimbursement, if any, are accrued daily and taken
into account in determining net asset value. The portfolio securities of the
Fund are valued as of the close of trading on each day when the New York
Stock Exchange is open for trading other than SM&R's business holidays
described below. Securities listed on national securities exchanges are
valued at the last sales price on such day, or if there is no sale, then at
the closing bid price therefor on such day on such exchange. The value of
unlisted securities is determined on the basis of the latest bid prices
therefor on such day. If no quotations are available for a security or other
property, it is valued at fair value as determined in good faith by the Board
of Directors of the Fund on a consistent basis.
SM&R's business holidays are Good Friday, Labor Day, Thanksgiving Day
and the Friday following Thanksgiving Day, two business days at Christmas and
New Years Day. If Christmas Day is a weekday other than Monday, Christmas
Day and Christmas Eve Day are business holidays. If Christmas Day is a
Monday, Christmas Day and the preceding Friday will be business holidays. If
Christmas Day is a Saturday, the preceding Thursday and Friday will be
business holidays. If Christmas Day is a Sunday, the preceding Friday and
following Monday will be business holidays. If New Years Day is a Saturday,
the preceding Friday will be a business holiday. If New Years Day is a
Sunday the following Monday will be a business holiday.
OFFERING PRICE
Full and fractional shares are purchased at the offering price, which is
the net asset value next determined after receipt of a purchase plus the
sales charge. The sales charge is a percentage of the net asset value per
share and will vary as shown below. Purchases received by SM&R at its office
in Galveston, Texas prior to 3:00 p.m., Central Time, will be executed at the
applicable offering price determined on that day. Purchases received
thereafter will be executed at the offering price determined on the next
business day.
The offering price is the net asset value per share plus a sales charge
computed at the rates set forth in the following table:
10
<PAGE>
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
--------------------------------------------------------------------
AMOUNT OF INVESTMENT AS A PERCENTAGE AS A PERCENTAGE DEALER CONCESSION AS A
AT OFFERING PRICE OF OFFERING PRICE OF NET AMOUNT PERCENTAGE OF OFFERING
INVESTED PRICE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.1% 4.75%
$50,000 but less than 4.5% 4.7% 4.0%
$100,000
$100,000 but less than 3.5% 3.6% 3.0%
$250,000
$250,000 but less than 2.5% 2.6% 2.0%
$500,000
$500,000 and over* None None None
- ------------------------------------------------------------------------------------------------
</TABLE>
*In connection with purchases of $500,000 or more, SM&R may pay its
representatives and broker-dealers, in quarterly installments, from its own
profits and resources, a per annum percent of the amount invested as follows:
Year 1 - 0.35% and Year 2 - 0.25% for the Growth Fund, Income Fund and Triflex
Fund, respectively. In the third and subsequent years, SM&R may pay 0.075%
per annum, in quarterly installments, to those representatives and broker-
dealers with accounts totaling assets of $1 million or more.
The following is an illustration of the calculation of the net asset
value and offering price per share at December 31, 1995:
Net Assets ($141,058,032) = Net Asset Value Per Share ($22.59)
-------------------------
Shares outstanding (6,244,669)
---------
To obtain the public offering price per share, the Fund's 5.75% sales
charge as of December 31, 1995 must be added to the net asset value obtained
above:
$22.59 = Public Offering Price Per Share ($23.97)
------
.9425
REDUCED SALES CHARGE
The reduced sales charge rates set forth in the table above apply to
purchases of shares of the Fund, either singly or in combination with
purchases of shares of the American National Growth Fund, Inc. (the "Growth
Fund"), the Triflex Fund, Inc. (the "Triflex Fund"), the American National
Government Income Series (the "Government Income Series"), and the American
National Tax Free Fund Series (the "Tax Free Series")of the SM&R Capital
Funds, Inc. at the respective sales charges applicable to each, made at one
time by: (1) Any individual; (2) Any individual, his or her spouse, and
trusts or custodial agreements for their minor children; (3) A trustee or
fiduciary of a single trust estate or single fiduciary account; (4)
Tax-exempt organizations specified in Sections 501(c)(3) or (13) of the
Internal Revenue Code, or employees' trusts, pension, profit-sharing, or
other employee benefit plans qualified under Section 401 of the Internal
Revenue Code; and (5) Employees or employers on behalf of employees under any
employee benefit plan not qualified under Section 401 of the Internal Revenue
Code.
Purchases by any "company" or employee benefit plans not qualified under
Section 401 of the Internal Revenue Code will qualify for the above quantity
discounts only if the Fund will realize economies of scale in sales effort
and sales related expenses as a result of the employer's or the plan's
bearing the expense of any payroll deduction plan, making the Fund's
prospectus available to individual investors or employees, forwarding
investments by such employees to the Fund, and the like.
The rates set forth above are applicable to single, lump sum purchases
made under the provisions of the preceding paragraphs 1, 2 and 3 and to
qualified investments under a "Letter of Intent" or under the "Accumulation
Privilege" as described below.
THE EDUCATION FUNDING INVESTMENT ACCOUNT PROGRAM
The following breakpoints apply to purchases made by individuals
investing in the Funds through the use of The Education Funding Investment
Account Program.
11
<PAGE>
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
-------------------------------------------------------------
AMOUNT OF INVESTMENT AS A PERCENTAGE AS A PERCENTAGE DEALER CONCESSION
AT OFFERING PRICE OF OFFERING OF NET AMOUNT AS A PERCENTAGE OF
PRICE INVESTED OFFERING PRICE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.5% 4.7% 4.0%
$100,000 but less 3.5% 3.6% 3.0%
than $250,000
$250,000 but less 2.5% 2.6% 2.0%
than $500,000
$500,000 and over* None None None
- -----------------------------------------------------------------------------------------
</TABLE>
*In connection with purchases of $500,000 or more, SM&R may pay its
representatives and broker-dealers, in quarterly installments, from its own
profits and resources, a per annum percent of the amount invested as set
forth as follows: Year 1 - 0.35% and Year 2 - 0.25%. In the third and
subsequent years, SM&R may pay 0.075% per annum, in quarterly installments,
to those representatives and broker-dealers with accounts totaling
assets of $1 million or more.
The Education Funding Investment Account Program is a service expressly
created to help investors accumulate funds for their children's or
grandchildren's college education. The maximum sales charge is 4.5% on the
purchase of shares of the Funds. To participate in this special plan,
investors must complete the special Education Funding Investment Account
application designed specifically for the Program.
All direct sales expenses, including the cost of prospectuses for
prospective shareholders, are paid by SM&R, and no sales expense is borne by
any of the Funds.
SPECIAL PURCHASE PLANS
LETTER OF INTENT -- As indicated in the Prospectus under the heading "Letter
of Intent", investors may qualify for a reduced sales charge on the Fund
either singly or in combination with the purchase and holding of shares of
the Growth Fund, the Triflex Fund, the Government Income Series or the Tax
Free Series. A minimum initial investment equal to 10% of the amount
necessary for the applicable reduced sales charge is required when a Letter
of Intent is executed. Investments made under a Letter of Intent will
purchase shares at the total sales charge rate applicable to the specified
total investment. SM&R will hold in escrow from the initial investment
shares equal to 5% of the amount of the total intended investment. Such
escrow shares may not be exchanged for or reinvested in shares of another
Fund, or the Government Income Series or the Tax Free Series and, subject to
the right of early cancellation described below, will not be released until
the amount purchased equals the commitment set forth in the Letter of Intent.
If the intended investment is not completed during the 13 month period, the
difference between the sales charge actually paid and the sales charge
applicable to the total of such purchases made will be deducted from the
escrow shares if not paid by the investor within twenty (20) days after the
date notice thereof has been mailed to such investor.
A Letter of Intent agreement can be canceled prior to the end of the
13-month period and escrow shares released to the investor if the investor
pays the difference between the sales charge paid and the sales charge
applicable to the amount actually invested and agrees that such Letter of
Intent agreement is canceled and no longer in effect.
The offering value of the shares of the Fund, the Growth Fund, the
Triflex Fund, the Government Income Series and the Tax Free Series currently
owned may also be included in the aggregate amount of an investment covered
by a Letter of Intent. For example, if an investor owns shares of the Fund
or shares of the Growth Fund, the Triflex Fund, the Government Income Series,
the Tax Free Series or some combination of these funds, currently valued at
$80,000 and intends to invest $25,000 over the next thirteen months, such
investor may execute a Letter of Intent and the entire $25,000 will purchase
shares of either or all of such funds at the reduced sales charge rate
applicable to an investment of $100,000 or more. A Letter of Intent does not
represent
12
<PAGE>
a binding obligation on the part of the investor to purchase or the Fund to
sell the full amount of shares specified.
SYSTEMATIC INVESTMENT AND PRE-AUTHORIZED CHECK PLANS -- The Fund provides a
convenient, voluntary method of purchasing shares in the Fund through its
"Systematic Investment and Pre-Authorized Check Plans" (a "Plan" or "Plans").
The principal purposes of the Plans are to encourage thrift by enabling
investors to make regular purchases in amounts less than normally required,
and to employ the principle of dollar cost averaging, described below.
By acquiring Fund shares on a regular basis pursuant to a Plan, or
investing regularly on any other systematic plan, the investor takes
advantage of the principle of Dollar Cost Averaging. Under Dollar Cost
Averaging, if a constant amount is invested at regular intervals at varying
price levels, the average cost of all the shares will be lower than the
average of the price levels. This is because the same fixed number of
dollars buys more shares when price levels are low and fewer shares when
price levels are high. It is essential that the investor consider his or her
financial ability to continue this investment program during times of market
decline as well as market rise. The principle of Dollar Cost Averaging will
not protect against loss in a declining market, as a loss will result if the
plan is discontinued when the market value is less than cost.
After the initial minimum investment of $100 has been met, a Plan may be
opened by indicating an intention to make subsequent investments of $20 or
more monthly for at least one year. The investor will receive a confirmation
showing the number of shares purchased, purchase price, and subsequent new
balance of shares accumulated.
An investor has no obligation to invest regularly or to continue
participating in a Plan, which may be terminated by the investor at any time
without penalty. Under a Plan, any distributions of income and realized
capital gains will be reinvested in additional shares at net asset value
unless a shareholder instructs SM&R in writing to pay them in cash. SM&R
reserves the right to increase or decrease the amount required to open and
continue the Plan, and to terminate any shareholder's right to participate in
the Plan if after one year the value of the amount invested is less than $100.
GROUP SYSTEMATIC INVESTMENT PLAN -- This Plan provides employers and
employees with a convenient means for purchasing shares of the Fund under
various types of employee benefit and thrift plans, including payroll
deduction and bonus incentive plans. The plan may be started with an initial
cash investment of $20 per participant for a group consisting of five or more
participants. The shares purchased by each participant under the plan will
be credited to a separate account in the name of each investor in which all
dividends and capital gains will be reinvested in additional shares of the
Fund at net asset value. Such reinvestments will be made at the start of
business on the day following the record date for such dividends and capital
gains distributions. To keep his or her account open, subsequent payments,
each totaling $20 or more, must be made into each participant's account
monthly. If the group is reduced to less than five participants, the
minimums set forth under "Systematic Investment and Pre-Authorized Check
Plans" shall apply. The plan may be terminated by SM&R or the shareholder at
any time upon sixty (60) days' prior written notice.
EXCHANGE PRIVILEGE -- As provided in the Prospectus under "Exchange
Privilege" investors owning shares of the Fund can exchange such
share for shares of the other funds in the American National Funds Group and
the SM&R Capital Funds, Inc. There is no administrative charge for this
privilege at this time, however, the Fund reserves the right to charge a fee
in the future.
Such exchange privileges are not options or rights to purchase such
securities, but are revocable privileges permitted under the present policies
of each of these funds, and are not available in any state or other
jurisdiction where the shares of the fund into which transfer is to be made
are not registered for sale. SM&R reserves the right to restrict the
frequency of or otherwise modify, condition, terminate or impose additional
charges upon the exchange privilege.
13
<PAGE>
The minimum number of shares that may be exchanged is the number of
shares of the fund whose shares are being exchanged which have a net asset
value on the date of such exchange equal to the minimum initial or subsequent
investment, as the case may be, of the fund into which the exchange is being
made.
Any gain or loss realized on such an exchange is recognized for income
tax purposes, subject, however, to the "wash sale" rule that if and to the
extent the investor reinvests in the Fund originally held within thirty (30)
days after the redemption, losses will not be recognized.
REDEMPTION
Any shareholder may redeem all or any part of his shares by submitting a
written request to SM&R as the Fund's agent for such purpose. Such requests
must be duly executed by each registered owner and must be accompanied by
certificates endorsed for transfer, if certificates have been issued, with
signatures guaranteed by a commercial bank or securities firm. No signature
guarantees are required on the written request for redemption by a
shareholder of record when payment is to be made to such shareholder of
record at such shareholder's address of record and the value of the shares
redeemed is $25,000 or less. In all other cases the signatures on the
request for redemption, as well as on certificates being tendered, must be
guaranteed. On all redemption requests for joint accounts, the signatures of
all joint owners are required. Corporations, executors, divorced persons,
administrators, trustees or guardians will be required to submit further
documentation. Refer to the American National Funds Group prospectus for
signature guarantee requirements.
Shares are redeemed at the net asset value per share next computed after
the request and certificates, if any, are received in "Proper Form". (See
"HOW TO REDEEM" in the Prospectus). A shareholder may receive more or less
than he paid for his shares, depending on the prevailing market value of the
Fund's portfolio securities. Redemption checks are delivered as soon as
practicable and normally will be sent to the investor within seven days
following the date on which redemption is made.
At various times the Fund may be requested to redeem shares for which it
has not yet received good payment for prior purchases of Fund shares.
Accordingly, proceeds of the Fund will not be paid until good payment has
been received which could be as much as fifteen (15) business days after the
purchase, or until SM&R can verify that good payment (for example, cash or
certified check on a United States bank) has been, or will be, collected for
the purchase of such shares.
The right of redemption is subject to suspension and payment postponed
during any period when the New York Stock Exchange is closed other than
customary weekend or holiday closings, or during which trading on such
Exchange is restricted; for any period during which an emergency exists, as a
result of which disposal by the Fund of its securities is not reasonably
practicable or it is not reasonably practicable for the Fund to fairly
determine the value of its net assets; or for such other periods as the
Commission has by order permitted such suspension for the protection of the
Fund's security holders.
The Fund has made an election under the Investment Company Act of 1940,
as amended, to pay in cash all requests for redemption by any shareholder of
record, limited in amount with respect to each shareholder during any
ninety-day period to the lesser of (i) $250,000 or (ii) 1% of the net asset
value of the Fund at the beginning of such period. The Fund may pay the
redemption price, if any, in excess of the amounts described above in whole
or in part in portfolio securities, at the market value thereof determined as
of the close of business next following receipt of the request in proper
form, if deemed advisable by the Board of Directors. In such case a
shareholder would incur brokerage costs if he sold the securities received.
There is presently no charge for redeeming Fund shares. However, the
Fund reserves the right to charge for any redemption an amount, to be
determined by the Board of Directors, not to exceed 1% of the net asset value
of the shares being
14
<PAGE>
redeemed, but it is not the present intent of the Board of Directors to make
such a charge.
SYSTEMATIC WITHDRAWAL PLAN
As described in the Prospectus under "Systematic Withdrawal Plan", the
Fund has a Systematic Withdrawal Plan which allows shareholders having an
account value of $5,000 or more to automatically withdraw a minimum of $50
monthly or quarterly.
A Systematic Withdrawal Plan provides for regular monthly or quarterly
payments to the account investor or his designee through redemption of a
portion of the shares held in the account. Some portion of each withdrawal
may be taxable gain or loss to the account investor at the time of the
withdrawal, the amount of the gain or loss being determined by the investment
in the Fund shares. The minimum, though not necessarily recommended,
withdrawal amount is $50. Shares sufficient to provide the designated
withdrawal payment are redeemed each month or quarterly on the 20th, or the
next succeeding business day, and checks are mailed to reach the investor on
or about the lst of the following month. All income dividends and capital
gains distributions are automatically reinvested at net asset value, without
sales charge. Since each withdrawal check represents proceeds from the sale
of sufficient shares equal to the withdrawal, there can be a reduction of
invested capital, particularly in a declining market. If redemptions are
consistently in excess of shares added through reinvestment of distributions,
the withdrawals will ultimately exhaust the capital.
The shareholder may designate withdrawal payments for a fixed dollar
amount, as stated in the preceding paragraph, or a variable dollar amount
based on (1) redemption of a fixed number of shares at monthly or quarterly
intervals, or (2) redemption of a specified and increasing fraction of shares
held at monthly or quarterly intervals. To illustrate the latter option, if
an investor wanted quarterly payments for a ten-year period, the first
withdrawal payment would be the proceeds from redemption of 1/40th of the
shares held in the account. The second payment would be 1/39th of the
remaining shares; the third payment would be 1/38th of the remaining shares,
etc. Under this option, all shares would be redeemed over the ten-year
period, and the payment amount would vary each quarter, depending upon the
number of shares redeemed and the redemption price.
No charge is made for a non-qualified Systematic Withdrawal Plan, and
the account investor may change the option or payment amount at any time upon
written request received by SM&R no later than the month prior to the month
of a scheduled redemption for a withdrawal payment. A Systematic Withdrawal
Plan may also be terminated at any time by the account investor of the Fund
without penalty.
Occasionally certain limited types of qualified retirement plans are
involved in making investments and withdrawals during the same year. Under
such an arrangement, it is possible for the plan to be, in effect, charged
duplicate sales charges. In order to eliminate this possibility, the Fund
will permit additional investments, without sales charge, equal to all sums
withdrawn, providing the additional investments are made during the next
twelve months following the withdrawal or redemption, and providing that all
funds withdrawn were for the specific purpose of satisfying plan benefits of
participants who have retired, become disabled or left the plan.
Furthermore, for a qualified plan to qualify under this provision, the plan
must include at least one participant who is a non-owner employee. The Fund
and SM&R discourage shareholders from maintaining a withdrawal account while
concurrently and regularly purchasing shares of the Fund, although such
practice is not prohibited.
TAX STATUS
Shareholders are reminded that dividends are taxable whether received in
cash or reinvested and received in the form of additional shares.
Furthermore, any distribution received shortly after a 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 the distributions. Such distributions, although
in effect a return of capital, are subject to taxes. Furthermore, if the net
asset value of each share is reduced below the
15
<PAGE>
shareholder's cost as a result of a distribution, such distribution would be
a return of capital although taxed at applicable rates.
The Fund or the securities dealer effecting a redemption transaction is
required to file an information return (1099-B) with the IRS with respect to
each sale of Fund shares by a shareholder. The year-end statement provided
to each shareholder will serve as a substitute 1099-B for purposes of
reporting any gain or loss on the tax return filed by the shareholder. In
addition, the Fund is required by law and IRS regulations to withhold 31% of
the dividends, redemptions and other payments made to non-exempt accounts
unless shareholders have provided a corrected taxpayer identification number
and made the certifications required by the IRS as indicated in the
shareholder application when opening an account.
Distributions from the Fund may also be subject to state and local
taxes. Shareholders should consult their own tax adviser concerning tax
consequences of an investment in the Fund.
THE UNDERWRITER
SM&R serves as principal underwriter of the shares of the Fund pursuant
to an Underwriting Agreement dated May 1, 1993 (the "Underwriting
Agreement"). Such Underwriting Agreement provides that it shall continue in
effect only so long as such continuance is specifically approved at least
annually by the Board of Directors of the Fund or by vote of a majority of
the outstanding voting securities of the Fund and, in either case, by the
specific approval of a majority of directors who are not parties to such
agreement or not "interested" persons (as defined in the Investment Company
Act of 1940, as amended) of any such parties, cast in person at a meeting
called for the purpose of voting on such approval. The Underwriting
Agreement was approved by the Board of Directors of the Fund in accordance
with such procedures at a meeting held on July 20, 1995. The Underwriting
Agreement may be terminated without penalty by vote of the Board of Directors
or by vote of the holders of a majority of the outstanding voting securities
of the Fund, or by SM&R, upon sixty (60) days' written notice and will
automatically terminate if assigned (as provided in the Investment Company
Act of 1940, as amended).
As principal underwriter, SM&R continuously offers and sells shares of
the Fund through its own sales representatives and broker-dealers. As
compensation for such services, SM&R receives the sales charge, which is the
difference between the offering price at which shares are issued and the net
asset value. Prior to April 1, 1996, the sales charge allowance to
broker-dealers, ranges from a maximum of 6.1% to a minimum of .50% of the net
amount invested and from a maximum of 4.75% to a minimum of .30% of the
public offering price. Effective April 1, 1996, SM&R allows varying
portions of such sales charge to broker-dealers, ranging from a maximum of
6.1 to a minimum of 2.6% of the net amount invested, and from a maximum of
4.75% to a minimum of 2.0% of the public offering price. In connection with
purchases of $500,000 or more, SM&R may pay broker-dealers, in quarterly
installments, from its own profits and resources, a per annum percent of the
amount invested as follows: Year 1 - 0.35% and Year 2 - 0.25%. In the third
and subsequent years, SM&R may pay 0.075% per annum, in quarterly
installments, to those broker-dealers with accounts totaling assets of
$1 million or more. Such allowances are the same for all broker-dealers.
The amount of such sales charge received by SM&R from the sale of Fund
shares for the fiscal years ended December 31, 1993, 1994, and 1995 was
$506,990, $392,019, and $327,908, respectively. Of such amounts received
during such periods, SM&R retained approximately $120,000, $89,000, and
$67,000, respectively and $11,000, $7,000, and $5,830, was reallowed to
dealers.
FINANCIAL STATEMENTS
The financial statements included as part of the Fund's Annual Report
dated December 31, 1995, filed with the Securities and Exchange Commission
on February 29, 1996, are attached hereto as "EXHIBIT 1".
16
<PAGE>
CUSTODIAN
The cash and securities of the Fund are held by SM&R pursuant to a
Custodian Agreement dated September 12, 1991. As custodian, SM&R will hold
and administer the Fund's cash and securities and maintain certain financial
and accounting books and records as provided for in such Custodian Agreement.
The compensation paid to the Custodian is paid by the Fund and is based upon
and varies with the number, type and amount of transactions conducted by the
Custodian.
SM&R has entered into a sub-custodial agreement with Moody National Bank
of Galveston (the "Bank") effective July 1, 1991. Under the sub-custodian
agreement the cash and securities of the Fund will be held by the Bank which
will be authorized to use the facilities of the Depository Trust Company and
the facilities of the book-entry system of the Federal Reserve Bank with
respect to securities of the Fund held by it on behalf of SM&R for the Fund.
COUNSEL AND AUDITORS
The Fund's General Counsel is Greer, Herz & Adams, L.L.P., 18th Floor,
One Moody Plaza, Galveston, Texas 77550. KPMG Peat Marwick LLP, 700
Louisiana, Houston, Texas 77002, are the Fund's independent auditors and
perform annual audits of the Fund's financial statements.
TRANSFER AGENT AND DIVIDEND PAYING AGENT
SM&R is the transfer agent and dividend paying agent for the Fund, the
American National Growth Fund, Inc., the Triflex Fund, Inc., the American
National Investments Accounts, Inc. and the SM&R Capital Funds, Inc.
PERFORMANCE DATA
CUMULATIVE TOTAL RETURN
The cumulative return reflects each year's hypothetical annually
compounded return that would equate a ten thousand dollar investment on
January 1, 1986 to the redeemable value on December 31 of each of the next
ten years by adding one to the computed average annual total return
multiplied by:
1. the $10,000 hypothetical investment for the first year, or;
2. the redeemable value of the $10,000 investment as of December 31 of
the preceding year for years two through ten.
The total return percentage calculations assume the maximum sales charge
was deducted from the initial amount invested and that all income dividends
and capital gain distributions are reinvested on the reinvestment dates at
the net asset value.
The income return percentage reflects the income dividends paid during
the year divided by:
1. the $10,000 hypothetical investment for the first year, or;
2. the redeemable value of the $10,000 investment as of December 31 of
the preceding year for years two through ten.
The appreciation percentage represents the change in the net asset value
during the year less the income dividends paid during the year divided by:
1. the $10,000 hypothetical investment for the first year, or;
2. the redeemable value of the $10,000 investment as of December 31 of
the preceding year for years two through ten.
17
<PAGE>
The total return on the net amount invested reflects the hypothetical
return that would equate a January 1, 1986 initial ten thousand dollar
investment less the maximum $575 sales load to the redeemable value on
December 31, 1986 by adding one to the computed total return and multiplying
the result by $9,425 (the initial ten thousand dollar investment less the
maximum sales load).
AVERAGE ANNUAL RETURN
The Fund's average annual return during specified time periods reflects
the hypothetical annually compounded return that would equate an initial one
thousand dollar investment to the ending redeemable value of such investment
by adding one to the compounded average annual total return, raising the sum
to a power equal to the number of years covered by the computation and
multiplying the result by the one thousand dollar initial investment. The
calculation assumes deduction of the maximum sales charge from the initial
amount invested and reinvestment of all investment income dividends and
capital gains distributions on the reinvestment dates at the net asset value.
COMPARISONS
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, advertisements and other materials
regarding the Fund may discuss various measures of the performance as
reported by various financial publications. Materials may also compare
performance (as calculated above) to performance as reported by other
investments, indices, and averages. The following publications, indices, and
averages may be used:
Dow Jones Composite Average or its component averages - an unmanaged index
composed of 30 blue-chip industrial corporation stocks (Dow Jones Industrial
Average), 15 utilities company stocks (Dow Jones Utilities Average), and 20
transportation company stocks. Comparisons of performance assume
reinvestment of dividends.
Standard & Poor's 500 Stock Index or its component indices - an unmanaged
index composed of 400 industrial stocks, 40 financial stocks, 40 utilities
stocks, and 20 transportation stocks. Comparisons of performance assume
reinvestment of dividends.
The New York Stock Exchange composite or component indices - unmanaged
indices of all industrial, utilities, transportation, and finance stocks
listed on the New York Stock Exchange.
Wilshire 5000 Equity Index - represents the return on the market value of all
common equity securities for which daily pricing is available. Comparisons of
performance assume reinvestment of dividends.
Lipper - Mutual Fund Performance Analysis and Lipper - Fixed Income Fund
Performance Analysis - measure total return and average current yield for the
mutual fund industry. Rank individual mutual fund performance over specified
time periods, assuming reinvestment of all distributions, exclusive of any
applicable sales charges.
CDA Mutual Fund Report, published by CDA Investment Technologies, Inc.
analyzes price, current yield, risk, total return, and average rate of return
(average annual compounded growth rate) over specified time periods for the
mutual fund industry.
Mutual Fund Source Book, published by Morningstar, Inc. - analyzes price,
yield, risk and total return for equity funds.
Financial publications: The Wall Street Journal and Business Week, Changing
Times, Financial World, Forbes, Fortune, and Money magazines provide
performance statistics over specified time periods.
Consumer Price Index (or Cost of Living Index), published by the U.S. Bureau
of Labor Statistics - a statistical measure of change, over time, in the
price of goods and services in major expenditure groups.
18
<PAGE>
Salomon Brothers Broad Bond Index or its component indices - The Aggregate
Bond Index measures yield, price and total return for Treasury, Agency,
Corporate, Mortgage, and Yankee bonds.
Standard & Poor's Bond Indices - measures yield and price of Corporate,
Municipal, and Government bonds.
In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the portfolio of the Fund, that the averages are
generally unmanaged, and that the items included in the calculations of such
averages may not be identical to the formula used by the Fund to calculate
its figures. In addition there can be no assurance that the Fund will
continue this performance as compared to such other averages.
19
<PAGE>
- --------------------------------------------------------------------------------
A N N U A L R E P O R T
<TABLE>
<S> <C>
DIRECTORS
[LOGO] Ralph S. Clifford
Paul D. Cummings
AMERICAN Jack T. Currie
NATIONAL Michael W. McCroskey
FUNDS Ira W. Painton
GROUP Donald P. Stevens
/ / AMERICAN NATIONAL GROWTH FUND Steven H. Stubbs
/ / AMERICAN NATIONAL INCOME FUND OFFICERS
/ / TRIFLEX FUND Michael W. McCroskey, President
ANNUAL REPORT Gordon D. Dixon, Vice President and
DECEMBER 31, 1995 Portfolio Manager, Growth Fund
FORM 9092-S David Zimansky, Vice President and
RE-1 12/95 Portfolio Manager, Income Fund
William R. Berger, Vice President and
Portfolio Manager, Triflex Fund
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.
One Moody Plaza
Galveston, Texas 77550
CUSTODIAN
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
LEGAL COUNSEL
Greer, Herz & Adams, L.L.P.
One Moody Plaza
Galveston, Texas 77550
UNDERWRITER AND REDEMPTION AGENT
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
TRANSFER AGENT, REGISTRAR
AND DIVIDEND PAYING AGENT
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
700 Louisiana
Houston, Texas 77002
</TABLE>
This Annual Report must be preceded or accompanied by a Prospectus of the
American National Funds Group.
<PAGE>
PORTFOLIO MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
AMERICAN NATIONAL GROWTH FUND, INC.
This was a very good year for investors as both the fixed-income and stock
markets registered strong double-digit rates of return. These strong returns
point out the importance of investing in and staying in long-term financial
assets like stocks and bonds. Recall that 1994 was not a particularly good year
for financial assets. For example an average stock mutual fund produced a
negative 2% last year and many investors reduced their stock and bond
investments at that time in favor of safe short-term money market investments.
This "timing the market" strategy proved to be very expensive given the large
unusual returns or stocks and bonds in 1995.
In order to achieve the higher rates of returns available in the stock market
over time, you have to be invested when these large returns occur and it is
impossible to know precisely when that will happen.
The consensus outlook for the economy in 1996 is for slower growth with
inflation remaining in check. The consumer has piled on an increasing amount of
debt over the past few years and will likely curtail spending. Business capital
spending is also slowing from the torrent pace of the past few years. Monetary
and fiscal policy will capture most of the headlines due to election year
debates and posturing on those significant economic variables. As we have seen,
the financial markets react and respond with sharp price moves as they adjust to
increases or decreases in the risks associated with expected or announced
governmental actions.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN AMERICAN NATIONAL GROWTH FUND, INC. AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
<S> <C> <C> <C> <C> <C> <C>
American National Growth Fund, Inc. 10,000 12,377 13,735 15,451 16,378 20,363
S&P 500 10,000 13,216 15,657 16,476 19,245 25,306
1990 1991 1992 1993 1994 1995
19,764 27,072 26,395 28,551 29,972 37525
24,504 31,990 34,443 37,884 38,380 52722
Average Annual Return
10 Year 11.07%
5 Year 12.36%
1 Year 18.11%
Past performance is not predictive of future
performance.
</TABLE>
American National Growth Fund, Inc.'s performance figures are historical and
reflect reinvestment of all dividends and capital gains distribution, changes
in net asset value and considers the effect of the Fund's 5.75% maximum sales
charge. All performance figures are as of December 31 for the applicable year.
The Fund's fiscal year was as of October 31 for 1985-1989.
2
<PAGE>
The Growth Fund is heavily diversified with an emphasis, in general, on
companies that are exposed to growth once the economy begins to expand. Another
characteristic of the current portfolio structure is that we have not paid much
of a premium price for that growth potential. For example, the consensus long
term growth rate of the companies in the portfolio is 86% higher than the
expected growth rate of average stock in the market, but the price paid for that
superior growth potential is only 8% higher! Our systematic and disciplined
approach to investing means that we will process information during 1996 in the
same manner as 1995 and 1994. We will continue to purchase companies that meet
our specific investment criteria, while companies that reach our predetermined
price targets and companies that no longer meet our specific investment criteria
will be sold.
QUARTERLY COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN AMERICAN NATIONAL GROWTH FUND, INC. AND LIPPER ANALYTICAL
AVERAGE GROWTH FUND (LAST NINE QUARTERS)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
09/30/93 12/31/93 03/31/94 06/30/94 09/30/94
<S> <C> <C> <C> <C> <C>
American National Growth Fund, Inc. 10,000 10,804 10,622 10,636 11,317
Lipper Analytical Average Growth Fund 10,000 10,226 9,875 9,617 10,136
12/30/94 03/31/95 06/30/95 09/29/95 12/29/95
11,342 12,230 12,958 13,644 14,198
10,001 10,739 11,741 12,748 13,049
Past performance is not predictive of future
performance.
</TABLE>
3
<PAGE>
PORTFOLIO MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
AMERICAN NATIONAL INCOME FUND, INC.
The American National Income Fund produced a total return of 29.12% in 1995, in
what can only be described as an outstanding environment for mutual fund
investors. The major stock market indexes, and most categories of equity mutual
funds, earned solid positive gains in each of the year's four quarters, and our
fund was no exception. The American National Income Fund's performance was quite
favorable compared with the return of 25.05% earned by the average of all equity
funds as measured by Lipper Analytical Services. It was also comparable to the
29.72% returned by the Lipper Index of Equity Income Funds. Total return is
the change in value of an investment in the Fund over a given period, assuming
reinvestment of any dividends and capital gains.
The stock market rally of 1995 was remarkable for the absence of any significant
corrections over the course of the twelve months, and for the highly visible
rally in the technology sector of the market. That the American National Income
Fund was able to produce the returns it did in that environment is a story in
itself. We had entered the year holding above average cash reserves in response
to a soft market environment in 1994 and the anticipation that greater buying
opportunities would arrive at some point. The absence of any meaningful
pullbacks made it difficult for the fund to invest at low points in the market,
and we found ourselves in a continual position of holding more cash than we
would have wished, in retrospect, as market levels continued to discourage us
from adding more stocks that might otherwise have fit our value-based stock
selection disciplines.
A second hindrance stems from our desire to reduce risk in the fund. We also
believe that many shareholders wish to view the American National Income Fund as
less risky than other types of stock funds. The fund invests in a portfolio of
stocks and convertible securities with a higher current dividend
COMPARISON OF CHANGES IN VALUE OF $10,000 INVESTMENT
IN AMERICAN NATIONAL INCOME FUND, INC. AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989
<S> <C> <C> <C> <C> <C> <C>
American National Income Fund, Inc. 10,000 12,055 13,054 13,546 14,909 19,101
S&P 500 10,000 13,216 15,657 16,476 19,245 25,306
1990 1991 1992 1993 1994 1995
19,245 24,837 25,660 28,386 28,212 36426
24,504 31,990 34,443 37,884 38,380 52722
Average Annual Return
10 Year 11.03%
5 Year 12.27%
1 Year 21.71%
Past performance is not predictive of future
performance.
</TABLE>
American National Income Fund, Inc.'s 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 Fund's 5.75% maximum sales
charge. All performance figures are as of December 31 for the applicable year.
The Fund's fiscal year end was as of July 31 for 1985-1989.
4
<PAGE>
yield than the stock market as a whole, so that a relatively greater portion of
the securities' total return will be more assured in the form of income, with
capital appreciation being an important second consideration. It is important,
therefore, that in trying to provide for a meaningful current income to a
somewhat risk adverse investor the fund should avoid excessively speculative or
overheated issues in a volatile environment such as we have had in 1995. This
created a particular problem in that technology stocks were among the best
performers in the stock market last year, but the fact that very few issues in
that sector meet our dividend requirements made it very difficult to participate
in that rally.
The fact is that despite their well publicized strength, by year end technology
was only the third best performing of the ten major stock market segments for
1995. Recent earnings shortfalls and worries about weaker demand and inventory
building on the part of various computer related companies suggest that in 1996
investors may be quite pleased that the American National Income Fund has only a
minimal exposure to the technology sector.
The fund's strong positive returns were generated largely by our decision to go
from an underweighting in the financial sector, which had produced negative
returns in 1994, to a 50 percent overweighting in that group in 1995. It was, in
fact, the finance sector, with total return of 51.01% for the year as measured
by Lipper Analytical Services, not technology, which was the top stock market
performer for the year.
Other industry groups where the Fund maintained a significant overweighting
which proved advantageous to our investors included railroads, which returned
43.0% as a group according to Standard & Poor's, engineering/construction, which
returned 40.2% and hospital management, which returned 39.3% We continue to hold
a significant weighting of Real Estate Investment Trust issues, which we believe
are the single most attractive segment of the higher yielding universe of
stocks.
We appreciate your continued confidence in the American National Income Fund and
will do everything possible to reward that confidence in the future.
QUARTERLY COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN AMERICAN NATIONAL INCOME FUND, INC. AND LIPPER ANALYTICAL
AVERAGE EQUITY INCOME FUND (LAST NINE QUARTERS)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
09/30/93 12/31/93 03/31/94 06/30/94 09/30/94
<S> <C> <C> <C> <C> <C>
American National Income Fund, Inc. 10,000 10,402 10,029 10,081 10,433
Lipper Analytical Avg. Equity Income Fund 10,000 10,126 9,752 9,764 10,145
12/31/94 03/31/95 06/30/95 09/30/95 12/31/95
10,339 11,180 11,919 12,786 13,348
9,885 10,615 11,316 12,135 12,825
Past performance is not predictive of future
performance.
</TABLE>
5
<PAGE>
PORTFOLIO MANAGERS' DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
TRIFLEX FUND INC.
1995 was a remarkable year for both the stock and bond markets and the
Triflex Fund participated in the good fortune. For the year the Fund produced
a total rate of return of 22.3%, scoring positive returns in all four
quarters of 1995. Total return is the change in value of an investment in the
Fund over a given period, assuming reinvestment of any dividends and capital
gains. After outperforming the Lipper Balanced Fund Index in
1994's weak markets, the Triflex Fund lagged the Lipper Benchmark by 2.3
percentage points in 1995's strong market environment.
Within the financial markets, stocks produced returns of more than 30% in
1995 (37.4% for the Standard[nb]& Poor's 500 and 36.7% for the Dow Jones
Industrials), or three times the long-term average return for common stocks
of around 10% per year, according to Ibbotson Associates. The stellar returns
from stocks reflected a very strong bond market, which returned more than 15%
for the year (15.3% for the Lehman Intermediate Government/Corporate
Index)--also about three times the long-term average according to Ibbotson.
Notwithstanding a brief back-up in July, interest rates dropped consistently
throughout the year, with the yield on the 30-year U.S. Treasury bond falling
two full percentage points from 7.9% in January to 5.9% at the end of
December.
Within the equity market, the interest rate sensitive sectors like finance
and utilities were among the market's best performers for the year, with
strength also evident in healthcare and capital goods. Among the market's
laggards were the economically sensitive consumer cyclicals and basic
materials. All market sectors produced positive double digit returns for the
year. Interestingly, the technology sector, which had led the market in the
first half of 1995, dramatically underperformed in the second half, finishing
sixth among the 11 Indata sectors for the full year.
COMPARISON OF CHANGES IN VALUE OF $10,000 INVESTMENT IN
TRIFLEX FUND, INC., S&P 500 AND LEHMAN INTERMEDIATE GOVERNMENT/CORP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Triflex Fund, Inc. 10,406 11,827 11,990 14,931 15,379 16,350 16,593 20,292
S&P 500 11,681 15,359 14,872 19,416 20,905 22,994 23,295 32,000
Lehman Intermediate Gov't/Corp 10,668 12,030 13,133 15,054 16,133 17,533 17,214 19,852
Average Annual Return
5 Year 9.80%
1 Year 15.29%
</TABLE>
Triflex Fund, Inc.'s performance figures are historical and reflect
reinvetment of all dividends and capital gains distributions, changes in net
asset value and considers the effect of the Fund's 5.75% maximum sales
charge. All performance figures are as of December 31 for the applicable
year. The Fund's fiscal year end was as of July 31 for 1988-1989.
6
<PAGE>
Within the Triflex Fund, our best performing sectors were finance (with
our holdings up an average of 52% for the year), healthcare (up 44%) and
technology (up 40%). On the flip side, our consumer cyclicals,
transportation, and energy holdings produced the lowest returns. Our
overweighted position in capital goods benefited the Fund while our
underweightings in the strong performing finance and utilities sectors proved
costly. The Fund's three best stocks were Sun Microsystems (up 157% for the
year), Bay Networks (up 109%) and Amgen (up 101%).
Within the Fund's fixed income portfolio, our decision to lengthen
maturities in late 1994 proved beneficial in 1995's declining interest rate
environment. Our bond portfolio outperformed the broad market indices, with
the best performance coming from our longer-dated U.S. treasuries and
agencies as well as our convertible corporate bonds. The Triflex Fund's bond
portfolio appears to be well positioned for the slow growth, low inflationary
environment that we foresee in 1996.
The outlook for 1996 is for more moderate returns than we were fortunate
to witness in 1995. The U.S. economy appears sluggish, as are the economies
of our major trading partners in North America, Europe and Japan. Interest
rates have been falling across the globe and may well continue to do so as
long as economies remain weak and inflation is under control. This
environment bodes well for bonds and, if corporate earnings continue to
advance, equities.
The Triflex Fund remains well diversified, with about 64% in equities, 30%
in bonds and 6% in cash. We are maintaining our systematic and disciplined
search for undervalued equities and a focus on high quality, intermediate
term bonds. In markets that appear to be fully valued based on their
fundamentals, this defensive and somewhat conservative strategy should
continue to reward our shareholders over the long term, much as it did in
1995.
We appreciate the confidence you have placed in us with your investment in
the Triflex Fund.
QUARTERLY COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN TRIFLEX FUND, INC. AND LIPPER ANALYTICAL AVERAGE BALANCED FUND
(LAST NINE QUARTERS)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
9/30/93 12/31/93 3/31/94 6/30/94 9/30/94
<S> <C> <C> <C> <C> <C>
Triflex Fund, Inc. 10,000 10,000 10,000 10,000 10,000
Lipper Analytical Avg. Balanced Fund 10,000 10,119 9791 9,679 9,972
12/31/94 3/31/95 6/30/95 9/30/95 12/31/95
10,339 10,990 11,681 12,159 12,641
9,862 10,462 11,205 11,824 12,324
</TABLE>
Past performance is not predictive of future performance.
7
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
AMERICAN NATIONAL GROWTH FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
APPAREL, TEXTILE--1.12%
Guilford Mills, Incorporated 40,000 $ 815,000
Phillips-Van Heusen Corporation 70,000 691,250
-----------
1,506,250
AUTO TRUCK & PARTS MANUFACTURER--2.72%
Arvin Industries, Incorporated 46,900 773,850
Chrysler Corporation 11,000 609,125
Eaton Corporation 12,000 643,500
Ford Motor Company 20,000 580,000
General Motors Corporation 20,000 1,057,500
-----------
3,663,975
BANKS--3.41%
Comerica, Incorporated 40,000 1,605,000
Morgan (J.P.) & Company 20,000 1,605,000
NationsBank Corporation 20,000 1,392,500
-----------
4,602,500
BEVERAGES--3.13%
Coca-Cola Company 15,000 1,113,750
Cott Corporation 58,000 319,000
PepsiCo, Incorporated 50,000 2,793,750
-----------
4,226,500
BUILDING CONSTRUCTION & SUPPLIES--3.93%
Fluor Corporation 40,000 2,640,000
Foster Wheeler Corporation 45,000 1,912,500
Giant Cement Holding, Incorporated* 65,000 747,500
-----------
5,300,000
CHEMICALS--4.72%
Air Products & Chemicals,
Incorporated 25,000 1,318,750
Cabot Corporation 15,000 808,125
Du Pont (E.I.) de Nemours & Company 25,000 1,746,875
Ethyl Corporation 75,000 937,500
The Geon Company 11,500 280,313
Lyondell Petrochemical Company 10,000 228,750
Occidental Petroleum Corporation 49,000 1,047,375
-----------
6,367,688
COAL, GAS, PIPE--2.18%
Sonat, Incorporated 45,000 1,603,125
Tenneco, Incorporated 27,000 1,339,875
-----------
2,943,000
COMPUTER SOFTWARE & SERVICES--4.36%
Bay Networks, Incorporated* 15,000 616,875
BMC Software, Incorporated* 20,000 855,000
General Motors Corporation (Class E) 21,600 1,123,200
Microtest, Incorporated* 25,000 250,000
Newbridge Networks Corporation* 16,000 662,000
Sequent Computer Systems,
Incorporated* 65,000 942,500
Western Digital Corporation* 80,000 1,430,000
-----------
5,879,575
DRUGS--4.14%
Abbott Laboratories 50,000 2,087,500
Amgen, Incorporated* 20,000 1,187,500
Merck & Company, Incorporated 35,000 2,301,250
-----------
5,576,250
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
ELECTRONICS--2.35%
General Signal Corporation 45,000 $ 1,456,875
Motorola, Incorporated 30,000 1,710,000
-----------
3,166,875
ENVIRONMENTAL--3.27%
Wheelabrator Technologies,
Incorporated 85,000 1,423,750
WMX Technologies, Incorporated 100,000 2,987,500
-----------
4,411,250
EXPLORATION & DRILLING--1.21%
Noble Affiliates, Incorporated 24,000 717,000
Pogo Producing Company 5,000 141,250
Union Texas Petroleum Holdings,
Incorporated 40,000 775,000
-----------
1,633,250
FOOD PRODUCERS & RETAILERS--6.71%
Albertson's, Incorporated 40,000 1,315,000
General Mills, Incorporated 45,000 2,598,750
Hudson Foods, Incorporated (Class A) 100,000 1,725,000
McCormick & Company, Incorporated 58,000 1,399,250
Universal Foods Corporation 50,000 2,006,250
-----------
9,044,250
HOSPITAL SUPPLIES & SERVICES--4.62%
Ornda Healthcorp 34,000 790,500
Pacificare Health Systems,
Incorporated* 10,000 870,000
Tenet Healthcare Corporation 100,000 2,075,000
United Healthcare Corporation 38,000 2,489,000
-----------
6,224,500
HOUSEHOLD FURNITURE/APPLIANCES--3.24%
Black & Decker Corporation 40,000 1,410,000
Masco Corporation 20,000 627,500
The Singer Company N.V. 55,000 1,533,125
Whirlpool Corporation 15,000 798,750
-----------
4,369,375
INSURANCE--2.29%
American Re Corporation 50,000 2,043,750
The Paul Revere Corporation 50,000 1,037,500
-----------
3,081,250
MEDICAL SUPPLIES & SERVICES--1.63%
Johnson & Johnson 15,000 1,284,375
Mallinckrodt Group, Incorporated 25,000 909,375
-----------
2,193,750
METALS & MINING--1.98%
Cyprus Amax Minerals Company 40,000 1,045,000
Huntco, Incorporated (Class A) 30,000 461,250
J&L Specialty Steel, Incorporated 20,000 375,000
Quanex Corporation 20,000 387,500
Reynolds Metals Company 7,000 396,375
-----------
2,665,125
MISCELLANEOUS--6.11%
Commercial Metals Company 15,000 371,250
Dean Witter Discover and Company 15,000 705,000
Disney (Walt) Company 30,000 1,770,000
The Dun & Bradstreet Corporation 20,000 1,295,000
Procter & Gamble Company 30,000 2,490,000
Sturm, Ruger & Company, Incorporated 22,000 602,250
UST, Incorporated 30,000 1,001,250
-----------
8,234,750
</TABLE>
See notes to financial statements.
8
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
AMERICAN NATIONAL GROWTH FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
OFFICE EQUIPMENT/SERVICES--3.32%
<S> <C> <C>
COMPAQ Computer Corporation* 35,000 $ 1,680,000
Sun Microsystems, Incorporated* 30,000 1,368,750
Tandem Computers, Incorporated* 135,000 1,434,375
-----------
4,483,125
OIL DOMESTIC & INTERNATIONAL--7.81%
Amoco Corporation 25,000 1,796,875
Ashland Oil, Incorporated 40,000 1,405,000
Chevron Corporation 42,000 2,205,000
Societe Nationale Elf Aquitaine 60,000 2,205,000
Unocal Corporation 100,000 2,912,500
-----------
10,524,375
PAPER/FOREST PRODUCTS--2.03%
Louisiana-Pacific Corporation 35,000 848,750
Mead Corporation 24,000 1,254,000
Potlatch Corporation 5,000 200,000
Temple-Inland, Incorporated 10,000 441,250
-----------
2,744,000
RAILROADS--2.34%
Burlington Northern, Incorporated 15,000 1,170,000
Union Pacific Corporation 30,000 1,980,000
-----------
3,150,000
RETAIL DISCOUNT/SPECIALTY--3.26%
Price/Costco, Incorporated* 75,000 1,143,750
Toys "R" Us, Incorporated* 26,000 565,500
Wal-Mart Stores, Incorporated 120,000 2,685,000
-----------
4,394,250
SEMICONDUCTORS--1.82%
Advanced Micro Devices Incorporated 40,000 660,000
Avnet, Incorporated 40,000 1,790,000
-----------
2,450,000
TELECOMMUNICATIONS--2.91%
AT&T Company 55,000 3,561,250
VTEL Corporation* 20,000 370,000
-----------
3,931,250
TRANSPORT, TRUCKING & SHIPPING--1.19%
Arnold Industries, Incorporation 20,000 347,500
Covenant Transport, Incorporation
(Class A)* 20,000 240,000
Greenbrier Companies, Incorporated 55,000 666,875
TNT Freightways Corporation 17,500 352,187
-----------
1,606,562
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
UTILITY--TELEPHONE--2.50%
Telefonos de Mexico (Class L) ADR 20,000 $ 637,500
US West, Incorporated 50,000 1,787,500
US West Media Group, Incorporated* 50,000 950,000
-----------
3,375,000
-----------
TOTAL COMMON STOCK--90.30%
(Cost $102,237,684) 121,748,675
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT
<S> <C> <C>
ELECTRIC UTILITIES--3.47%
Commonwealth Edison Company, 6.05%,
1/05/96 $1,684,000 1,682,868
Commonwealth Edison Company, 5.95%,
1/10/96 1,855,000 1,852,241
Kentucky Power Company, 5.90%,
01/04/96 389,000 388,809
Public Service Company of Colorado,
6.20%, 01/09/96 750,000 748,967
-----------
4,672,885
FINANCIAL SERVICES--0.42%
Sunoco Credit Corporation, 6.30%,
01/04/96 569,000 568,701
FOODS--1.82%
Conagra, Incorporated, 6.07%,
01/03/96 2,325,000 2,324,216
Conagra, Incorporated, 5.90%,
01/04/96 124,000 123,939
-----------
2,448,155
RETAIL, DISCOUNT--3.10%
Rite Aid Corporation, 6.10%, 01/02/96 2,000,000 1,999,660
Rite Aid Corporation, 6.02%, 01/08/96 2,185,000 2,182,442
-----------
4,182,102
TRANSPORT MISCELLANEOUS--0.74%
Xtra, Incorporated, 6.15%, 01/11/96 1,000,000 998,292
-----------
TOTAL COMMERCIAL PAPER--9.55%
(Cost $12,870,135) 12,870,135
-----------
TOTAL INVESTMENTS--99.85%
(Cost $115,107,819) 134,618,810
CASH AND OTHER ASSETS, LESS LIABILITIES--0.15% 202,335
-----------
NET ASSETS--100% $134,821,145
-----------
-----------
ABBREVIATIONS
ADR--American Depository Receipt
*--Non-income producing securities
</TABLE>
See notes to financial statements.
9
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
AMERICAN NATIONAL INCOME FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
AUTO TRUCK & PARTS MANUFACTURER--1.11%
Arvin Industries, Incorporated 30,000 $ 495,000
Eaton Corporation 20,000 1,072,500
-----------
1,567,500
BANKS--6.36%
Comerica, Incorporated 70,000 2,808,750
Fleet Financial Group, Incorporated 51,747 2,108,690
Morgan (J.P.) & Company 24,500 1,966,125
NationsBank Corporation 30,000 2,088,750
-----------
8,972,315
BUILDING CONSTRUCTION & SUPPLIES--2.78%
Fluor Corporation 40,000 2,640,000
Foster Wheeler Corporation 30,000 1,275,000
-----------
3,915,000
CHEMICALS--4.57%
Du Pont (E.I.) de Nemours & Company 40,000 2,795,000
Ethyl Corporation 100,000 1,250,000
The Geon Company 36,500 889,688
Mississippi Chemical Corporation 65,000 1,511,250
-----------
6,445,938
COAL, GAS, PIPE--2.42%
Sonat, Incorporated 40,000 1,425,000
Tenneco, Incorporated 40,000 1,985,000
-----------
3,410,000
DRUGS--4.25%
Abbott Laboratories 65,000 2,713,750
Schering-Plough Corporation 60,000 3,285,000
-----------
5,998,750
ELECTRONICS--2.99%
General Signal Corporation 60,000 1,942,500
Motorola, Incorporated 40,000 2,280,000
-----------
4,222,500
FOODS PRODUCERS & RETAILERS--3.89%
Albertson's, Incorporated 55,000 1,808,125
McCormick & Company, Incorporated 70,000 1,688,750
Universal Foods Corporation 49,800 1,998,225
-----------
5,495,100
HOSPITAL SUPPLIES & SERVICES--2.76%
Columbia/HCA Healthcare Corporation 25,000 1,268,750
United Healthcare Corporation 40,000 2,620,000
-----------
3,888,750
HOUSEHOLD FURNITURE/APPLIANCES--3.47%
La-Z Boy Chair Company 55,000 1,698,125
Whirlpool Corporation 60,000 3,195,000
-----------
4,893,125
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
MISCELLANEOUS--15.97%
AT&T Company 50,000 $ 3,237,500
Cyprus Amax Minerals Company 90,000 2,351,250
Dean Witter Discover and Company 45,000 2,115,000
The Dun & Bradstreet Corporation 40,000 2,590,000
Eastman Kodak Company 35,000 2,345,000
Guilford Mills, Incorporated 50,000 1,018,750
PepsiCo, Incorporated 70,000 3,911,250
Raytheon Company 50,000 2,362,500
Sturm, Ruger & Company, Incorporated 40,000 1,095,000
WMX Technologies, Incorporated 50,000 1,493,750
-----------
22,520,000
OIL DOMESTIC & INTERNATIONAL--6.75%
Atlantic Richfield Company 15,000 1,661,250
Societe Nationale Elf Aquitaine 25,000 918,750
Texaco, Incorporated 55,000 4,317,500
Unocal Corporation 90,000 2,621,250
-----------
9,518,750
PAPER/FOREST PRODUCTS--2.52%
Mead Corporation 35,000 1,828,750
Weyerhaeuser Company 40,000 1,730,000
-----------
3,558,750
RAILROADS--4.44%
Burlington Northern, Incorporated 55,000 4,290,000
Union Pacific Corporation 30,000 1,980,000
-----------
6,270,000
REAL ESTATE/REITS--7.64%
CenterPoint Properties Corporation 63,000 1,456,875
Health & Rehabilitation Properties
Trust 100,000 1,625,000
Highwood Properties, Incorporated 18,500 522,625
Hospitality Properties Trust 50,000 1,337,500
Liberty Trust Properties 50,000 1,037,500
Oasis Residential, Incorporated 55,000 1,251,250
Omega Healthcare Investors,
Incorporated 60,000 1,597,500
Post Properties, Incorporated 28,000 892,500
Security Capital Industrial Trust 60,000 1,050,000
-----------
10,770,750
TOBACCO--2.44%
RJR Nabisco Holdings Corporation 41,248 1,273,532
UST, Incorporated 65,000 2,169,375
-----------
3,442,907
TRUCKING & SHIPPING--0.89%
Arnold Industries, Incorporated 35,000 608,125
TNT Freightways Corporation 32,000 644,000
-----------
1,252,125
</TABLE>
See notes to financial statements.
10
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
AMERICAN NATIONAL INCOME FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
UTILITY ELECTRIC/GAS/TELEPHONE--7.67%
<S> <C> <C>
The Detroit Edison Company 65,000 $ 2,242,500
GTE Corporation 60,000 2,640,000
The Montana Power Company 40,000 905,000
Telefonos de Mexico (Class L) ADR 20,000 637,500
UGI Corporation 80,000 1,660,000
US West, Incorporated 50,000 1,787,500
US West Media Group, Incorporated* 50,000 950,000
-----------
10,822,500
-----------
TOTAL COMMON STOCK--82.92%
(Cost $95,770,145) 116,964,760
-----------
<CAPTION>
PREFERRED STOCK
<S> <C> <C>
AUTO & TRUCK MANUFACTURER--2.75%
Ford Motor Company (Convertible) 41,000 3,884,750
COAL, GAS, PIPE--0.70%
Western Gas Resources, Incorporated
(Convertible) 28,000 980,000
INSURANCE COMPANIES--0.80%
St Paul Capital LLC (Convertible) 20,000 1,125,000
OIL--1.46%
Ashland Oil, Incorporated
(Convertible) 35,000 2,060,625
-----------
TOTAL PREFERRED STOCK--5.71%
(Cost $6,457,764) 8,050,375
-----------
<CAPTION>
FACE
CORPORATE BONDS AMOUNT
<S> <C> <C>
AUTO RELATED--1.09%
Magna International, 5.00%, 10/15/02 $1,500,000 1,537,500
HOUSEHOLD FURNITURE/APPLIANCES--1.04%
Masco Corporation, 5.25%, 02/15/12, 1,500,000 1,470,000
Subordinated Convertible Debentures
REAL ESTATE/REITS--0.37%
Liberty Property Trust, 8.00%,
07/01/01, Subordinated Debentures 500,000 515,625
-----------
TOTAL CORPORATE BONDS--2.50%
(Cost $3,323,000) 3,523,125
-----------
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT VALUE
<S> <C> <C>
ELECTRIC UTILITIES--4.10%
Commonwealth Edison Company, 6.05%,
1/05/96 $2,135,000 $ 2,133,565
Commonwealth Edison Company, 5.95%,
1/10/96 281,000 280,582
Kentucky Power Company, 5.90%,
01/04/96 893,000 892,561
Public Service Company of Colorado,
6.20%, 01/09/96 2,480,000 2,476,583
-----------
5,783,291
FINANCIAL SERVICES--0.26%
Sunoco Credit Corporation, 6.30%,
01/04/96 365,000 364,808
FOODS--0.82%
Conagra, Incorporated, 6.07%,
01/03/96 597,000 596,799
Conagra, Incorporated, 5.90%,
01/04/96 558,000 557,726
-----------
1,154,525
RETAIL, DISCOUNT--1.88%
Rite Aid Corporation, 6.10%, 01/02/96 2,000,000 1,999,661
Rite Aid Corporation, 6.02%, 01/08/96 655,000 654,233
-----------
2,653,894
TRANSPORT MISCELLANEOUS--1.41%
Xtra, Incorporated, 6.15%, 01/11/96 2,000,000 1,996,583
-----------
TOTAL COMMERCIAL PAPER--8.47%
(Cost $11,953,101) 11,953,101
-----------
TOTAL INVESTMENTS--99.60%
(Cost $117,504,010) 140,491,361
CASH AND OTHER ASSETS, LESS LIABILITIES--0.40% 566,671
-----------
NET ASSETS--100.00% $141,058,032
-----------
-----------
ABBREVIATIONS
ADR--American Depository Receipt
REIT--Real Estate Investment Trust
*--Non-income producing security
</TABLE>
See notes to financial statements.
11
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
TRIFLEX FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
AUTO TRUCK & PARTS MANUFACTURER--2.42%
Arvin Industries, Incorporated 4,000 $ 66,000
Chrysler Corporation 1,300 71,988
Eaton Corporation 2,500 134,062
Ford Motor Company 3,300 95,700
General Motors Corporation 3,000 158,625
-----------
526,375
BANKS--3.89%
Comerica, Incorporated 5,000 200,625
NationsBank Corporation 5,000 348,125
Norwest Corporation 9,000 297,000
-----------
845,750
BEVERAGES--1.45%
Cott Corporation 6,800 37,400
PepsiCo, Incorporated 5,000 279,375
-----------
316,775
BUILDING CONSTRUCTION & SUPPLIES--3.61%
Fluor Corporation 5,000 330,000
Foster Wheeler Corporation 5,000 212,500
Giant Cement Holding, Incorporated* 8,500 97,750
Granite Construction, Incorporated 4,600 144,900
-----------
785,150
CHEMICALS--5.11%
Air Products & Chemicals,
Incorporated 6,500 342,875
Cabot Corporation 1,800 96,975
Du Pont (E.I.) de Nemours & Company 4,000 279,500
Ethyl Corporation 8,200 102,500
The Geon Company 1,000 24,375
Mississippi Chemical Corporation 4,400 102,300
Occidental Petroleum Corporation 7,600 162,450
-----------
1,110,975
COAL, GAS, PIPE--1.43%
Sonat, Incorporated 4,300 153,188
Tenneco, Incorporated 3,200 158,800
-----------
311,988
COMPUTER SOFTWARE & SERVICES--2.29%
Bay Networks, Incorporated* 2,175 89,447
BMC Software, Incorporated* 2,600 111,150
General Motors Corporation (Class E) 2,300 119,600
Sequent Computer Systems,
Incorporated* 6,200 89,900
Western Digital Corporation* 4,900 87,588
-----------
497,685
DRUGS--3.42%
Abbott Laboratories 8,000 334,000
Amgen, Incorporated* 2,000 118,750
Warner-Lambert Company 3,000 291,375
-----------
744,125
ELECTRONICS--1.15%
General Signal Corporation 4,200 135,975
Motorola, Incorporated 2,000 114,000
-----------
249,975
ENVIRONMENTAL--2.06%
Wheelabrator Technologies,
Incorporated 9,000 150,750
WMX Technologies, Incorporated 10,000 298,750
-----------
449,500
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
EXPLORATION & DRILLING--0.84%
Noble Affiliates, Incorporated 1,700 $ 50,787
Pogo Producing Company 2,500 70,625
Union Texas Petroleum Holdings,
Incorporated 3,200 62,000
-----------
183,412
FOOD PRODUCERS & RETAILERS--3.54%
Albertson's, Incorporated 4,200 138,075
General Mills, Incorporated 5,000 288,750
Hudson Foods, Incorporated (Class A) 4,500 77,625
Ralston Purina Company 1,700 106,037
Universal Foods Corporation 4,000 160,500
-----------
770,987
HOSPITAL SUPPLIES & SERVICES--2.39%
Columbia/HCA Healthcare Corporation 1,500 76,125
Ornda Healthcorp* 3,500 81,375
Pacificare Health Systems,
Incorporated* 1,000 87,000
Tenet Healthcare Corporation 7,900 163,925
United Healthcare Corporaton 1,700 111,350
-----------
519,775
HOUSEHOLD FURNITURE/APPLIANCES--1.80%
Armstrong World Industries,
Incorporated 1,500 93,000
La-Z Boy Chair Company 2,600 80,275
Masco Corporation 2,600 81,575
The Singer Company N.V. 4,900 136,588
-----------
391,438
MEDIA--1.20%
Disney (Walt) Company 3,800 224,200
Grupo Televisa S.A 1,600 36,000
-----------
260,200
MISCELLANEOUS--9.14%
AT&T Company 4,800 310,800
Cypress Amax Minerals Company 5,500 143,687
Dean Witter Discover and Company 1,800 84,600
The Dun & Bradstreet Corporation 3,000 194,250
Eastman Kodak Company 2,800 187,600
Guilford Mills, Incorporated 3,400 69,275
Johnson & Johnson 2,500 214,062
Procter & Gamble Company 5,000 415,000
Sturm, Ruger & Company, Incorporated 2,300 62,962
Union Pacific Corporation 2,000 132,000
UST, Incorporated 5,200 173,550
-----------
1,987,786
OFFICE EQUIPMENT/SERVICES--1.45%
Sun Microsystems, Incorporated* 4,600 209,875
Tandem Computers, Incorporated* 10,000 106,250
-----------
316,125
OIL DOMESTIC & INTERNATIONAL--4.05%
Amoco Corporation 2,000 143,750
Ashland Oil, Incorporated 3,600 126,450
Chevron Corporation 4,400 231,000
Societe Nationale Elf Aquitaine 6,200 227,850
Unocal Corporation 5,200 151,450
-----------
880,500
</TABLE>
See notes to financial statements.
12
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
- --------------------------------------------------------------------------------
TRIFLEX FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
PAPER/FOREST PRODUCTS--1.61%
<S> <C> <C>
Louisiana-Pacific Corporation 5,100 $ 123,675
Mead Corporation 2,000 104,500
Weyerhaeuser Company 2,800 121,100
-----------
349,275
REAL ESTATE/REITS--0.92%
Health & Rehabilitation Properties
Trust 8,900 144,625
Highwood Properties, Incorporated 2,000 56,500
-----------
201,125
RETAIL DISCOUNT/GENERAL/SPECIALTY--0.89%
Price/Costco, Incorporated* 8,400 128,100
Toys "R" Us, Incorporated* 3,000 65,250
-----------
193,350
SEMICONDUCTORS--2.27%
Advanced Micro Devices, Incorporated 2,800 46,200
Avnet, Incorporated 10,000 447,500
-----------
493,700
TRANSPORT, TRUCKING & SHIPPING--1.07%
Arnold Industries, Incorporated 2,200 38,225
Covenant Transport, Incorporated
(Class A)* 3,500 42,000
Greenbrier Companies, Incorporated 5,600 67,900
TNT Freightways, Corporation 2,000 40,250
Transportacion Maritima Mexicana S.A
de C.V.* 5,300 44,388
-----------
232,763
UTILITY ELECTRIC/GAS/TELEPHONE--3.86%
GTE Corporation 4,000 176,000
PacifiCorp 3,500 74,375
Public Service Enterprise Group,
Incorporated 3,500 107,187
Telefonos de Mexico (Class L) ADR 1,500 47,813
United Illuminating Company 2,000 74,750
US West, Incorporated 5,200 185,900
US West Media Group, Incorporated* 5,200 98,800
Washington Water Power Company 4,300 75,250
-----------
840,075
-----------
TOTAL COMMON STOCK--61.86%
(Cost $10,944,991) 13,458,809
<CAPTION>
PREFERRED STOCK
<S> <C> <C>
COAL, GAS, PIPE--0.42%
Western Gas Resources, Incorporated
(Convertible) 2,600 91,000
-----------
TOTAL PREFERRED STOCK--0.42%
(Cost $128,279) 91,000
<CAPTION>
FACE
BONDS AND NOTES AMOUNT
<S> <C> <C>
FINANCIAL SERVICES--2.81%
Ford Motor Credit Company, 6.375%,
09/15/99 $ 600,000 611,250
RETAIL-DISCOUNT--2.19%
Costco Wholesalers Corporation,
5.75%, 05/15/02, Subordinated
Convertible Debentures 500,000 477,500
<CAPTION>
FACE
BONDS AND NOTES AMOUNT VALUE
<S> <C> <C>
GOVERNMENT AGENCIES--27.06%
Federal Home Loan Mortgage
Corporation, 7.00%, 09/15/07 $1,000,000 $ 1,041,780
Federal Home Loan Mortgage
Corporation, Pool #284839, 8.50%,
01/01/17 71,185 73,921
Federal Home Loan Mortgage
Corporation, Pool #302886, 8.00%,
05/01/17 131,700 135,898
Federal Home Loan Mortgage
Corporation, Pool #298759, 8.00%,
08/01/17 216,221 223,114
Federal National Mortgage
Association, 7.55%, 04/22/02 685,000 749,356
Federal National Mortgage
Association, 7.65%, 04/29/04 1,000,000 1,022,370
Federal National Mortgage
Association, 7.55%, 06/10/04 1,250,000 1,307,350
Federal National Mortgage
Association, Pool #041669, 8.00%,
02/01/17 105,633 109,528
Federal National Mortgage
Association, Pool #48974, 8.00%,
06/01/17 194,723 201,904
U S Treasury Note, 5.875%, 02/15/04 1,000,000 1,021,590
-----------
5,886,811
-----------
TOTAL BONDS AND NOTES--32.06%
(Cost $6,615,589) 6,975,561
<CAPTION>
COMMERCIAL PAPER
<S> <C> <C>
ELECTRIC UTILITIES--3.15%
Commonwealth Edison Company, 5.95%,
01/10/96 150,000 149,777
Pennsylvania Power and Light Company,
5.95%, 01/05/96 100,000 99,934
Pennsylvania Power and Light Company,
6.20%, 01/11/96 107,000 106,816
Public Service Company of Colorado,
6.20%, 01/09/96 330,000 329,545
-----------
686,072
FOODS--2.05%
Conagra, Incorporated, 5.90%,
01/04/96 445,000 444,781
-----------
TOTAL COMMERCIAL PAPER--5.20%
(Cost $1,130,853) 1,130,853
-----------
TOTAL INVESTMENTS--99.54%
(Cost $18,819,712) 21,656,223
CASH AND OTHER ASSETS, LESS LIABILITIES--0.46% 100,469
-----------
NET ASSETS--100.00% $21,756,692
-----------
-----------
ABBREVIATIONS
ADR--American Depository Receipt
REIT--Real Estate Investment Trust
*--Non-income producing securities
</TABLE>
See notes to financial statements.
13
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INCOME TRIFLEX
<S> <C> <C> <C>
ASSETS
Investments, at value $134,618,810 $140,491,361 $21,656,223
Cash 797 84 22,064
Receivable for:
Dividends 215,582 444,397 24,902
Interest -- 65,320 71,336
Investments sold 3,768 98,126 --
Other assets 133,115 120,218 24,898
------------ ------------ -----------
TOTAL ASSETS 134,972,072 141,219,506 21,799,423
LIABILITIES
Payable for:
Fund shares redeemed 42,070 28,115 --
Accrued investment advisory fee 59,041 85,260 13,829
Accrued service fee 27,035 28,133 4,610
Other liabilities 22,781 19,966 24,292
------------ ------------ -----------
TOTAL LIABILITIES 150,927 161,474 42,731
------------ ------------ -----------
Net assets at value $134,821,145 $141,058,032 $21,756,692
------------ ------------ -----------
------------ ------------ -----------
Shares outstanding 30,699,798 6,244,669 1,290,857
------------ ------------ -----------
------------ ------------ -----------
Net asset value per share $ 4.39 $ 22.59 $ 16.85
------------ ------------ -----------
------------ ------------ -----------
Offering price per share
(Net asset value per share DIVIDED BY 94.25%) $ 4.66 $ 23.97 $ 17.88
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
STATEMENTS OF OPERATIONS Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INCOME TRIFLEX
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 2,640,506 $ 4,271,258 $ 325,731
Interest 689,491 885,891 547,057
Other 357 -- --
------------ ------------ -----------
TOTAL INVESTMENT INCOME 3,330,354 5,157,149 872,788
EXPENSES
Investment advisory fee 732,251 927,331 153,930
Service fee 301,526 306,746 51,310
Insurance 63,290 64,759 11,744
Directors' fees and expenses 19,231 19,231 19,231
Custodian fees 60,275 58,872 22,532
Audit fees 13,800 13,800 11,800
Qualification fees 19,563 20,617 15,373
Shareholder reporting expenses 14,985 13,856 2,311
Reorganization expenses -- 9,476 4,711
Other 4,715 8,018 6,009
------------ ------------ -----------
TOTAL EXPENSES 1,229,636 1,442,706 298,951
LESS EXPENSES REIMBURSED -- -- 40,894
------------ ------------ -----------
NET EXPENSES 1,229,636 1,442,706 258,057
------------ ------------ -----------
NET INVESTMENT INCOME 2,100,718 3,714,443 614,731
------------ ------------ -----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 8,778,428 6,691,546 352,817
Net unrealized appreciation of investments during the year 17,009,120 21,966,913 3,149,441
------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 25,787,548 28,658,459 3,502,258
------------ ------------ -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 27,888,266 $ 32,372,902 $ 4,116,989
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
See notes to financial statements.
14
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
AMERICAN NATIONAL GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994
--------------- ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 2,100,718 $ 1,650,229
Net realized gain on investments 8,778,428 15,927,429
Net unrealized appreciation (depreciation) of investments during the year 17,009,120 (11,860,622)
--------------- ------------
Net increase in net assets resulting from operations 27,888,266 5,717,036
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (2,151,434) (1,606,828)
Capital gains distributions (9,178,995) (12,218,934)
--------------- ------------
Total distributions to shareholders (11,330,429) (13,825,762)
CAPITAL SHARE TRANSACTIONS
Increase in net assets from capital share transactions 5,013,300 8,223,613
--------------- ------------
NET INCREASE IN NET ASSETS 21,571,137 114,887
TOTAL NET ASSETS
Beginning of year 113,250,008 113,135,121
--------------- ------------
End of year $ 134,821,145 $113,250,008
--------------- ------------
--------------- ------------
</TABLE>
AMERICAN NATIONAL INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994
--------------- ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 3,714,443 $ 3,363,890
Net realized gain on investments 6,691,546 10,595,949
Net unrealized appreciation (depreciation) of
investments during the year 21,966,913 (14,753,416)
--------------- ------------
Net increase (decrease) in net assets resulting from operations 32,372,902 (793,577)
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (3,750,365) (3,332,642)
Capital gains distributions (6,611,754) (10,992,106)
--------------- ------------
Total distributions to shareholders (10,362,119) (14,324,748)
CAPITAL SHARE TRANSACTIONS
Increase in net assets from capital share transactions 4,816,388 9,392,935
--------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS 26,827,171 (5,725,390)
TOTAL NET ASSETS
Beginning of year 114,230,861 119,956,251
--------------- ------------
End of year $ 141,058,032 $114,230,861
--------------- ------------
--------------- ------------
</TABLE>
TRIFLEX FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994
--------------- ------------
<S> <C> <C>
OPERATIONS
Net investment income $ 614,731 $ 574,841
Net realized gain on investments 352,817 555,090
Net unrealized appreciation (depreciation) of investments
during the year 3,149,441 (852,194)
--------------- ------------
Net increase in net assets resulting from operations 4,116,989 277,737
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (627,120) (569,246)
Capital gains distributions (178,979) (1,019,270)
--------------- ------------
Total distributions to shareholders (806,099) (1,588,516)
CAPITAL SHARE TRANSACTIONS
Decrease in net assets from capital share transactions (576,725) (135,766)
--------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS 2,734,165 (1,446,545)
TOTAL NET ASSETS
Beginning of year 19,022,527 20,469,072
--------------- ------------
End of year $ 21,756,692 $ 19,022,527
--------------- ------------
--------------- ------------
</TABLE>
See notes to financial statements.
15
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of capital stock outstanding throughout the period
AMERICAN NATIONAL GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 3.83 $ 4.15 $ 4.51 $ 5.07 $ 3.95
Net investment income 0.08 0.06 0.06 0.08 0.08
Net realized and unrealized gain (loss) on investments during the
period 0.88 0.15 0.31 (0.20) 1.38
--------- --------- --------- --------- ---------
Total from investment operations 0.96 0.21 0.37 (0.12) 1.46
Less distributions
Distributions from net investment income (0.08) (0.06) (0.06) (0.08) (0.06)
Distributions from capital gains (0.32) (0.47) (0.67) (0.36) (0.28)
--------- --------- --------- --------- ---------
Total distributions (0.40) (0.53) (0.73) (0.44) (0.34)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period $ 4.39 $ 3.83 $ 4.15 $ 4.51 $ 5.07
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total return 25.20% 4.98% 8.17% (2.50)% 36.98%
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's omitted) $ 134,821 $ 113,250 $ 113,135 $ 111,811 $ 125,837
Ratio of expenses to average net assets 0.98 0.97 1.00 1.07 1.04
Ratio of net investment income to average net assets 1.67 1.46 1.31 1.42 1.63
Portfolio turnover rate 37.00 46.26 59.67 92.28 55.95
</TABLE>
AMERICAN NATIONAL INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.90 $ 21.66 $ 22.09 $ 22.94 $ 19.35
Net investment income 0.62 0.62 0.56 0.57 0.69
Net realized and unrealized gain (loss) on investments during the
period 4.82 (0.75) 1.75 0.17 4.85
--------- --------- --------- --------- ---------
Total from investment operations 5.44 (0.13) 2.31 0.74 5.54
Less distributions
Distributions from net investment income (0.63) (0.61) (0.60) (0.53) (0.64)
Distributions from capital gains (1.12) (2.02) (2.14) (1.06) (1.31)
--------- --------- --------- --------- ---------
Total distributions (1.75) (2.63) (2.74) (1.59) (1.95)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period $ 22.59 $ 18.90 $ 21.66 $ 22.09 $ 22.94
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total return 29.12% (0.61)% 10.63% 3.31% 29.06%
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's omitted) $ 141,058 $ 114,231 $ 119,956 $ 108,076 $ 99,192
Ratio of expenses to average net assets 1.12 1.12 1.17 1.18 1.23
Ratio of net investment income to average net assets 2.89 2.86 2.51 2.56 3.25
Portfolio turnover rate 44.00 52.46 70.71 44.03 40.23
</TABLE>
TRIFLEX FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 14.32 $ 15.35 $ 15.81 $ 16.20 $ 13.98
Net investment income 0.49 0.45 0.41 0.46 0.61
Net realized and unrealized gain (loss) on investments during the
period 2.67 (0.22) 0.58 0.01 2.79
--------- --------- --------- --------- ---------
Total from investment operations 3.16 0.23 0.99 0.47 3.40
Less distributions
Distributions from net investment income (0.49) (0.45) (0.41) (0.35) (0.62)
Distributions from capital gains (0.14) (0.81) (1.04) (0.51) (0.56)
--------- --------- --------- --------- ---------
Total distributions (0.63) (1.26) (1.45) (0.86) (1.18)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period $ 16.85 $ 14.32 $ 15.35 $ 15.81 $ 16.20
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total return 22.29% 1.49% 6.31% 3.00% 24.53%
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's omitted) $ 21,757 $ 19,023 $ 20,469 $ 21,482 $ 21,916
Ratio of expenses to average net assets (1) 1.26 1.25 1.32 1.15 1.28
Ratio of net investment income to average net assets 2.99 2.91 2.49 2.96 3.95
Portfolio turnover rate 16.39 46.95 70.98 61.66 104.21
</TABLE>
(1) Expenses for these calculations are net of a reimbursement from Securities
Management & Research, Inc. Without these reimbursements, the ratio of
expenses to average net assets would have been 1.46%, 1.45%, 1.39%, 1.32%
and 1.49%, for the years ended December 31, 1995, 1994, 1993, 1992, and
1991, respectively.
See notes to financial statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS December 31, 1995
- --------------------------------------------------------------------------------
AMERICAN NATIONAL FUNDS GROUP
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
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 American National Growth Fund,
Inc., American National Income Fund, Inc. and the Triflex Fund, Inc. The
following is a summary of significant accounting policies consistently followed
by the Funds in the preparation of their 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 VALUATION:
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. Investments for which market quotations are not readily
available are valued at fair value as determined by the Board of Directors.
Investments in commercial paper are valued at cost plus amortized discount,
which approximates market 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 recorded on the ex-dividend date for
financial reporting purposes. Interest income is accrued daily from settlement
date. 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 seperate 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 its shares at net asset value. Dividends and
other distibutions are recorded by the Fund on the ex-dividend date and may be
reinvested at the 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.
Reorganization expenses have been deferred and are being amortized over a five
year period.
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 Fund. Investment advisory fees paid to SM&R are
computed as a percentage of the average daily net assets as follows:
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY SERVICE
NET ASSETS FEE FEE
<S> <C> <C>
Not exceeding $100,000,000 .750% .250%
Exceeding $100,000,000 but not exceeding $200,000,000 .625% .200%
Exceeding $200,000,000 but not exceeding $300,000,000 .500% .150%
Exceeding $300,000,000 .400% .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. No incentive fees
were earned in 1995 and the investment advisory fee was reduced by approximately
$179,000.
SM&R has agreed to reimburse the Fund 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.
During the period ended December 31, 1995, 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 $ 244,914 $ 4,393
Income 327,908 5,830
Triflex 33,172 295
</TABLE>
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
AMERICAN NATIONAL FUNDS GROUP
SM&R is a wholly-owned subsidiary of American National Insurance Company
("American National"). As of December 31, 1995, SM&R and American National had
the following ownership in the Funds:
<TABLE>
<CAPTION>
SM&R AMERICAN NATIONAL
------------------------------ ----------------------------
PERCENT OF SHARES PERCENT OF SHARES
SHARES OUTSTANDING SHARES OUTSTANDING
<S> <C> <C> <C> <C>
Growth 271,507 0.88% 961,244 3.13%
Income 13,475 0.22% -- --
Triflex 99,240 7.69% 166,054 12.86%
</TABLE>
NOTE 3--COST, PURCHASES, AND SALES OF INVESTMENT SECURITIES
Investments have the same cost for tax and financial statement purposes.
Aggregate purchases and sales of investment securities, other than commercial
paper and corporate short-term bonds and notes were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Growth $41,923,710 $55,616,189
Income 50,726,517 54,735,964
Triflex 3,158,747 4,397,545
</TABLE>
Gross unrealized appreciation and depreciation as of December 31, 1995, were as
follows:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION
<S> <C> <C>
Growth $25,420,531 $5,909,540
Income 26,416,231 3,428,880
Triflex 3,412,857 576,346
</TABLE>
NOTE 4--CAPITAL STOCK
AMERICAN NATIONAL GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sale of capital shares 2,337,194 $ 10,021,158 1,827,872 $ 7,709,459
Investment income dividends reinvested 473,961 2,069,798 389,322 1,539,431
Distributions made from net realized gains reinvested 2,057,863 8,931,124 3,102,860 11,951,899
---------- ------------ ---------- ------------
Subtotals 4,869,018 21,022,080 5,320,054 21,200,789
Redemptions of capital shares (3,708,002) (16,008,780) (3,062,068) (12,977,176)
---------- ------------ ---------- ------------
Net increase in capital shares outstanding 1,161,016 $ 5,013,300 2,257,986 $ 8,223,613
------------ ------------
------------ ------------
Shares outstanding at beginning of period 29,538,782 27,280,796
---------- ----------
Shares outstanding at end of period 30,699,798 29,538,782
---------- ----------
---------- ----------
The components of net assets at December 31, 1995, are as follows:
Capital Stock--30,699,798 shares of $1.00 par value outstanding
(75,000,000 authorized) (par and additional paid-in capital) $112,154,840
Undistributed net investment income 656,259
Accumulated net realized gain on investments 2,499,055
Net unrealized appreciation of investments 19,510,991
------------
Net assets $134,821,145
------------
------------
</TABLE>
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
AMERICAN NATIONAL FUNDS GROUP
AMERICAN NATIONAL INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Sale of capital shares 560,583 $ 12,119,202 613,155 $13,077,315
Investment income dividends reinvested 166,234 3,617,673 156,088 3,207,065
Distributions made from net realized gains reinvested 286,368 6,408,920 560,907 10,618,904
--------- ------------- --------- -----------
Subtotals 1,013,185 22,145,795 1,330,150 26,903,284
Redemptions of capital shares (811,772) (17,329,407) (824,701) (17,510,349)
--------- ------------- --------- -----------
Net increase in capital shares outstanding 201,413 $ 4,816,388 505,449 $ 9,392,935
------------- -----------
------------- -----------
Shares outstanding at beginning of period 6,043,256 5,537,807
--------- ---------
Shares outstanding at end of period 6,244,669 6,043,256
--------- ---------
--------- ---------
The components of net assets at December 31, 1995, are as follows:
Capital Stock--6,244,669 shares of $1.00 par value outstanding
(50,000,000 authorized) (par and additional paid-in capital) $117,200,876
Undistributed net investment income 181,441
Accumulated net realized gain on investments 688,364
Net unrealized appreciation of investments 22,987,351
------------
Net assets $141,058,032
------------
------------
TRIFLEX FUND
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sale of capital shares 69,156 $ 1,102,436 133,602 $ 2,062,236
Investment income dividends reinvested 37,554 602,878 37,172 556,714
Distributions made from net realized gains reinvested 10,388 173,263 67,728 973,382
--------- ----------- --------- -----------
Subtotals 117,098 1,878,577 238,502 3,592,332
Redemptions of capital shares (154,950) (2,455,302) (243,603) (3,728,098)
--------- ----------- --------- -----------
Net decrease in capital shares outstanding (37,852) $ (576,725) (5,101) $ (135,766)
----------- -----------
----------- -----------
Shares outstanding at beginning of period 1,328,709 1,333,810
--------- ---------
Shares outstanding at end of period 1,290,857 1,328,709
--------- ---------
--------- ---------
The components of net assets at December 31, 1995, are as follows:
Capital Stock--1,290,857 shares of $1.00 par value outstanding
(50,000,000 authorized) (par and additional paid-in capital) $18,567,149
Undistributed net investment income 334,289
Accumulated net realized gain on investments 18,743
Net unrealized appreciation of investments 2,836,511
-----------
Net assets $21,756,692
-----------
-----------
</TABLE>
19
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
American National Funds Group
We have audited the accompanying statements of assets and liabilities of
American National Funds Group (comprised of American National Growth Fund, Inc.,
American National Income Fund, Inc. and Triflex Fund, Inc.), including the
schedule of investments as of December 31, 1995, the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year 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.
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, 1995, 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
American National Funds Group as of December 31, 1995, the results of its
operations for the year then ended and the changes in its net assets for each of
the years in the two-year period then ended and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 16, 1996
DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions per share for the year ended December 31, 1995.
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
RECORD INVESTMENT CAPITAL CAPITAL
DATE INCOME GAIN GAIN
<S> <C> <C> <C> <C>
American National Growth Fund, Inc. 06/21/95 $ 0.0364
12/20/95 $ 0.0388 $ 0.0608 $ 0.2618
American National Income Fund, Inc. 03/29/95 $ 0.1594
06/21/95 $ 0.1415
09/25/95 $ 0.1620
12/20/95 $ 0.1696 $ 0.2399 $ 0.8752
Triflex Fund, Inc. 03/29/95 $ 0.1232
06/21/95 $ 0.1111
09/25/95 $ 0.1230
12/20/95 $ 0.1307 $ 0.0935 $ 0.0469
</TABLE>
20
<PAGE>
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
The Financial Statements required in the instructions to Form N-1A are
included in the Annual Report, a copy of which is attached as Exhibit "1"
to the Statement of Additional Information.
Schedules II to VII, inclusive, are omitted because the required
information is included in the financial statements filed herewith, or
because the conditions requiring their filing do not exist.
(b) Exhibits
1. See Exhibit 99.B1 to this Post-Effective Amendment No. 35 to
Form N-1A for a copy of Registrant's current Articles of Incorporation.
2. See Exhibit 99.B2 to this Post-Effective Amendment No. 35 to
Form N-1A for a copy of Registrant's By-Laws.
3. None.
4. See Exhibit 99.B4 to this Post-Effective Amendment No. 35 to Form
N-1A, for a specimen of Registrant's stock certificate.
5. See Exhibit 99.B5 to this Post-Effective Amendment No. 35 to Form
N-1A for a copy of Registrant's current Investment Advisory Agreement.
6. See Exhibit 99.B6 to this Post-Effective Amendment No. 35 to Form
N-1A for a copy of Registrant's Underwriting Agreement.
7. None.
8. See Exhibit 99.B8a to this Post-Effective Amendment No. 35 to Form
N-1A for a copy of Registrant's Custodian Agreement and Exhibit
99.B8b for a copy of Registrant's Sub-Custodian Agreement.
9. None.
10. See Exhibit 99.B10 to this Post-Effective Amendment No. 35 to Form N-1A
for consent and opinion of Registrant's counsel, Greer, Herz &
Adams, L.L.P.
11. See Exhibit 99.B11 to this Post-Effective Amendment No. 35 to
Form N-1A for consent of KPMG Peat Marwick LLP, independent accountants
of Registrant.
12. Not Applicable.
13. None.
14. See Exhibit 99B.14a to this Post-Effective Amendment No. 35 to
Form N-1A for copies of documents used to establish Tax Sheltered
Custodial Accounts and Texas Optional Retirement Programs and
Exhibit 99.B14b for copies of documents used to establish Individual
Retirement Accounts in conjunction with which Registrant offers its
securities.
15. None.
21
<PAGE>
16. None.
17. See Exhibit 99.B16 to this Post-Effective Amendment No. 35 to
Form N-1A for schedule of computation of performance quotations provided
pursuant to Item 22. of Form N-1A.
18. See Exhibit 99.B17 to this Post-Effective Amendment No. 35 to
Form N1A for a Power of Attorney.
19. None.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
All persons under common control with the Registrant are shown on the
list attached hereto as Exhibit 99.B19.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of February 29, 1996, the number of record holders of
Registrant's common stock were as follows:
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
<S> <C>
Common Stock, 7,568
$1.00 par value
</TABLE>
ITEM 27. INDEMNIFICATION.
The Registrant has agreed to indemnify its directors to the maximum
extent permitted by applicable law against all costs and expenses (including,
but not limited to, counsel fees, amounts of judgments paid, and amounts paid
in settlement) reasonably incurred in connection with the defense of any
actual or threatened claim, action, suit or proceeding, whether civil,
criminal, administrative, or other, in which he or she may be involved by
virtue of such person being or having been such director. Such
indemnification is pursuant to Section 3.15 of the Registrant's By-Laws, a
copy of which is attached as Exhibit 99.B2 to this Post-Effective Amendment
No. 35 to Form N-1A.
Registrant, together with the American National Income Fund, Inc., and
the Triflex Fund, Inc., (collectively referred to as the "American National
Funds Group"), has purchased a directors' and officers' liability policy. At
a Joint Boards of Directors' Meeting of Registrant and the other American
National Funds Group held on July 20, 1995 the Boards of Directors authorized
the renewal of an ICI Mutual Insurance Company Directors and Officers/Errors
and Omissions Liability Insurance policy. The ICI Mutual Insurance Company,
1600 M Street - 5th Floor, Washington, D.C. 20036. The policy contains a
$5,000 per individual insured per loss deductible, a $25,000 aggregate all
individual insureds, each claim deductible, $100,000 company reimbursement,
each claim deductible and $100,000 company coverage, each claim deductible.
The aggregate limit of liability is $5,000,000. The annual premium for all
three American National Funds Group was $130,914. The Registrant's share of
such fee, based upon the proportion of its total assets to those of the other
American National Funds Group, is $60,923.
Additionally, the Registrant is required to maintain a secured letter of
credit. However, due to the restrictions on the making of loans, the
Registrant and SM&R have entered into an undertaking whereby SM&R has secured
a letter of credit from U.S. National Bank of Galveston, Texas for the
benefit of the Registrant. Pursuant to this arrangement, the Registrant will
reimburse SM&R for its proportionate share of any expenses incurred by SM&R
in the procurement of the letter of credit and for any annual renewal
premiums paid on behalf of the Registrant by SM&R.
22
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Securities Management and Research, Inc. ("SM&R") serves as investment
adviser to Registrant and the other American National Funds, the American
National Investment Accounts, Inc. and the SM&R Capital Funds, Inc. See "THE
FUNDS AND THEIR MANAGEMENT" in Part A and "Investment Advisory
and Other Services in Part B.
ROBERT A. FRUEND, CLU
DIRECTOR OF SM&R; Director of American National Investment Accounts,
Inc., One Moody Plaza, Galveston, Texas; Executive Vice President and
Director of Ordinary Agencies of American National Insurance Company,
One Moody Plaza, Galveston, Texas; Director and Vice President of
American National Insurance Company of Texas, One Moody Plaza,
Galveston, Texas; Director of American National Property and Casualty
Company, 1949 East Sunshine, Springfield, Missouri; Director of American
National General Insurance Company, 1949 East Sunshine, Springfield,
Missouri; and Director of American National Insurance Service Company,
1722 South Glenstone, Springfield, Missouri.
R. EUGENE LUCAS
DIRECTOR OF SM&R; Director of American National Insurance Company, One
Moody Plaza, Galveston, Texas; President and Director of Gal-Tex Hotel
Corporation, 504 Moody National Bank Tower, Galveston, Texas, Gal-Tenn
Hotel Corporation, 504 Moody National Bank Tower, Galveston, Texas;
Director of ANREM Corporation, One Moody Plaza, Galveston, Texas;
MICHAEL W. McCROSKEY
PRESIDENT, CHIEF EXECUTIVE OFFICER AND MEMBER OF THE EXECUTIVE COMMITTEE
OF SM&R, June 1994 to present; President and Director of the Fund, June
1994 to present; President and Director of the American National Income
Fund, Inc., and Triflex Fund, Inc. (hereinafter referred to as the
"American National Funds Group"), June 1994 to present; President and
Director of the American National Investment Accounts, Inc., June 1994
to present; President and Director of the SM&R Capital Funds, Inc., June
1994 to present; Executive Vice President, American National, 1971
to present; Vice President of Standard Life and Accident Insurance
Company, 1988 to present; Assistant Secretary of American National Life
Insurance Company of Texas, 1986 to present, life, health and accident
insurance companies in the American National Family of Companies; Vice
President, Garden State Life Insurance Company, 1994 to present;
Director, ANREM Corporation, 1977 to present; President, ANTAC
Corporation, 1994 to present.
CARL R. ROBERTSON
DIRECTOR OF SM&R; Director of American National Investment Accounts,
Inc., One Moody Plaza, Galveston, Texas; Senior Executive Vice
President, Home Office Administration of American National Insurance
Company, One Moody Plaza, Galveston, Texas; Director and Assistant
Secretary of Standard Life and Accident Insurance Company, 421 N.W. 13th
Street, Oklahoma City, Oklahoma; Director of American National Property
and Casualty Company, 1949 East Sunshine, Springfield, Missouri;
Director and Vice President of Administration of American National Life
Insurance Company of Texas, One Moody Plaza, Galveston, Texas; Director
of American National General Insurance Company, 1949 East Sunshine,
Springfield, Missouri; Director and Vice President of ANREM
Corporation, One Moody Plaza, Galveston, Texas; Director of Mainsail
Marina Services, Inc., 2400 South Shore Boulevard, League City, Texas;
Advisory Director of Garden State Life Insurance Company, 2450 South
Shore Blvd., Suite 301, League City, Texas.
23
<PAGE>
GORDON D. DIXON
SENIOR VICE PRESIDENT AND CHIEF INVESTMENT OFFICER OF SM&R; Vice
President and Portfolio Manager of the American National Growth Fund,
Inc.; Vice President, Portfolio Manager of the American National
Investment Accounts, Inc. - Growth Portfolio; Vice President of Stocks
for American National Insurance Company; Vice President of Investments
for Garden State Life Insurance Company; Former Director of Equity
Strategy for C&S/Soran Bank (now Nations Bank) Atlanta, Georgia.
VERA M. YOUNG
VICE PRESIDENT, PORTFOLIO MANAGER OF SM&R; Vice President, Portfolio
Manager of American National Investment Accounts, Inc., Money Market
Portfolio and the SM&R Capital Funds, Inc., Primary Fund Series, One
Moody Plaza, Galveston, Texas; Assistant Vice President, Securities of
American National Insurance Company, One Moody Plaza, Galveston, Texas.
EMERSON V. UNGER, C.L.U.
VICE PRESIDENT OF SM&R; Vice President of American National Funds
Group, American National Investment Accounts, Inc. and of SM&R Capital
Funds, Inc., One Moody Plaza, Galveston, Texas.
BRENDA T. KOELEMAY
VICE PRESIDENT AND TREASURER OF SM&R; Vice President and Treasurer of
American National Funds Group, American National Investments Accounts,
Inc. and SM&R Capital Funds, One Moody Plaza, Galveston, Texas.
TERESA E. AXELSON
VICE PRESIDENT AND SECRETARY OF SM&R; Vice President and Secretary of
American National Funds Group, American National Investment Accounts,
Inc. and SM&R Capital Funds, Inc., One Moody Plaza, Galveston, Texas.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) SM&R also serves as the principal underwriter for the Registrant,
the other American National Funds, the American National Investment
Accounts, Inc. and the SM&R Capital Funds, Inc. See "THE FUNDS AND
THEIR MANAGEMENT" in Part A.
24
<PAGE>
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICERS POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Robert A. Fruend, C.L.U. Director None
One Moody Plaza
Galveston, Texas
R. Eugene Lucas Director None
Moody National Bank Tower
Galveston, Texas
Carl R. Robertson Director None
One Moody Plaza
Galveston, Texas
Michael W. McCroskey Director and President, President
One Moody Plaza Chief Executive Officer and Director
Galveston, Texas
Gordon D. Dixon Senior Vice President, None
One Moody Plaza Chief Investment Officer
Galveston, Texas
Vera M. Young Vice President, None
One Moody Plaza Portfolio Manager
Galveston, Texas
Emerson V. Unger, C.L.U. Vice President Vice President
One Moody Plaza
Galveston, Texas
Brenda T. Koelemay Vice President and Vice President and
One Moody Plaza Treasurer Treasurer
Galveston, Texas
Teresa E. Axelson Vice President and Vice President and
One Moody Plaza Secretary Secretary
Galveston, Texas
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder will be maintained at the office of SM&R at One Moody Plaza,
Galveston, Texas 77550.
ITEM 31. MANAGEMENT SERVICES.
There are no management-related service contracts to which the Registrant
is a party not discussed under Part A or Part B of this Post-Effective
Amendment No. 35 to Registration Statement.
ITEM 32. UNDERTAKINGS.
The Registrant undertakes to provide a copy of the Registrant's latest
Annual Report to shareholders to whom a prospectus is delivered upon request
and without charge.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, AMERICAN NATIONAL GROWTH FUND, INC.,
certifies that it meets all of the requirements for effectiveness of this
POST-EFFECTIVE AMENDMENT NO. 35 to Registration Statement, pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
POST-EFFECTIVE AMENDMENT NO. 22 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Galveston and State of Texas, on the 20th day of March, 1996.
AMERICAN NATIONAL GROWTH FUND, INC.
By: MICHAEL W. MCCROSKEY
---------------------------------
Michael W. McCroskey, President
Pursuant to the requirements of the Securities Act of 1933, this
POST-EFFECTIVE AMENDMENT NO. 35 to Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated:
PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER: PRINCIPAL ACCOUNTING OFFICER:
MICHAEL W. MCCROSKEY BRENDA T. KOELEMAY
--------------------------------------- -------------------------------
Michael W. McCroskey, President Brenda T. Koelemay, Treasurer
Date: March 20, 1996 Date: March 20, 1996
DIRECTORS
<TABLE>
<CAPTION>
<S> <C>
X RALPH S. CLIFFORD X PAUL D. CUMMINGS
--------------------------------------- ---------------------------------------
Michael W. McCroskey, Power of Attorney Michael W. McCroskey, Power of Attorney
Date: March 20, 1996 Date: March 20, 1996
--------------------------------------- ---------------------------------------
X JACK T. CURRIE X IRA W. PAINTON
--------------------------------------- ---------------------------------------
* Jack T. Currie by * Ira W. Painton by
Michael W. McCroskey, Power of Attorney Michael W. McCroskey, Power of Attorney
Date: March 20, 1996 Date: March 20, 1996
--------------------------------------- ---------------------------------------
X DONALD P. STEVENS X STEVEN H. STUBBS
--------------------------------------- ---------------------------------------
* Donald P. Stevens by * Steven H. Stubbs by
Michael W. McCroskey, Power of Attorney Michael W. McCroskey, Power of Attorney
Date: March 20, 1996 Date: March 20, 1996
--------------------------------------- ---------------------------------------
X MICHAEL W. MCCROSKEY
---------------------------------------
Michael W. McCroskey
Date: March 20, 1996
---------------------------------------
</TABLE>
*Pursuant to a Power of Attorney executed by the Board of Directors dated
December 16, 1994. Attached as Exhibit 99.B17 to this Post-Effective
Amendment No. 35.
26
<PAGE>
EXHIBIT INDEX
TO
POST-EFFECTIVE AMENDMENT NO. 35
UNDER THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 22
UNDER INVESTMENT COMPANY ACT OF 1940
FOR
AMERICAN NATIONAL INCOME FUND, INC.
("REGISTRANT")
- -------------------------------------------------------------------------------
PART C ITEM AND CAPTION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS: - Attached as exhibit to Statement of Additional
Information
(b) EXHIBITS ATTACHED THIS FILING:
Exhibit 99.B1 Registrant's Articles of Incorporation
Exhibit 99.B2 Registrant's By-Laws
Exhibit 99.B4 Registrant's specimen stock certificate
Exhibit 99.B5 Registrant's Investment Advisory Agreement
Exhibit 99.B6 Registrant's Underwriting Agreement
Exhibit 99.B8a Registrant's Custodian Agreement
Exhibit 99.B8b Registrant's Sub-Custodian Agreement
Exhibit 99.B10 Opinion of Registrant's counsel, Greer, Herz & Adams, L.L.P.
Exhibit 99.B11 Consent of KPMG Peat Marwick LLP, independent accountants
of Registrant
Exhibit 99.B14a Documents used to establish TSA's
Exhibit 99.B14b Documents used to establish IRA's
Exhibit 99.B16 Schedule of computation of performance quotations
provided pursuant to Item 22. of Form N-1A
Exhibit 99.B17 Power of Attorney
Exhibit 99.B19 Control List
Exhibit 27 Income Fund Financial Data Schedules
27
<PAGE>
EXHIBIT 99.B1
ARTICLES OF INCORPORATION
AMERICAN NATIONAL INCOME FUND, INC.
TABLE OF CONTENTS
ARTICLE PAGE
I Identification of Incorporator. . . . . . . . . . . . . . . . . . . . . . 1
II Name of Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III Purpose & Powers of Corporation . . . . . . . . . . . . . . . . . . . . . 1
IV Principal Office & Resident Agent . . . . . . . . . . . . . . . . . . . . 2
V Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VI Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
VII Required Vote of Stockholders . . . . . . . . . . . . . . . . . . . . . . 4
VIII Number and Powers of Directors. . . . . . . . . . . . . . . . . . . . . . 5
IX Limitation of Directors and Officers Liability. . . . . . . . . . . . . . 5
X Perpetual Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
<PAGE>
ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INCOME FUND, INC.
ARTICLE I
The undersigned, Jerry L. Adams, whose address is c/o Greer, Herz &
Adams, One Moody Plaza, 14th Floor, Galveston, Texas 77550 and who is an
adult of full legal age, does hereby declare that he is an incorporator
intending to form a corporation under and by virtue of the Maryland General
Corporation Law authorizing the formation of corporations.
ARTICLE II
The name of the Corporation is AMERICAN NATIONAL INCOME FUND, INC.
ARTICLE III
Purposes and Powers
The purposes for which the Corporation is formed and its objects,
rights, power and privileges are:
(1) To conduct and carry on the business of an open-end, management
type investment company registered under the Investment Company Act of 1940
(as amended and together with any successor act thereto and all rules,
regulations and orders thereunder, referred to as the " '40 Act"), and to
have and exercise any and all rights and powers necessary and appropriate to
the conduct of such business or in any way incidental thereto;
(2) To subscribe for, or otherwise acquire, purchase, pledge, sell,
assign, transfer, exchange, distribute or otherwise dispose of, and generally
deal in and hold all forms of securities and other investments, including,
but not limited to, stocks (preferred and common), notes, bonds, debentures,
script, warrants, participation certificates, bankers acceptances, futures,
options of all types on securities and futures, mortgages, commercial paper,
choses in action, evidences of indebtedness and other obligations of every
kind and description, precious metals and contracts and rights to acquire or
dispose of precious metals, and in connection therewith to hold part or all
of its assets in cash or cash equivalents or money market instruments;
(3) To continuously issue and sell shares of its own capital stock (all
without the vote or consent of the stockholders of the Corporation) in such
amounts and on such terms and conditions, for such purposes and for such
amounts or kinds of consideration now or hereafter permitted by the Maryland
General Corporation Law and by the Articles of Incorporation of the
Corporation, as its Board of Directors may determine;
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue, retire or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner
and to the extent now or hereafter permitted by the laws of Maryland and by
the Articles of Incorporation of the Corporation;
(5) To borrow or raise money for any purpose of the Corporation and
from time to time to draw, make, accept, endorse, execute and issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures and
other negotiable and nonnegotiable instruments and evidences of indebtedness,
and to pledge, hypothecate and borrow upon the credit of the assets of the
Corporation;
1
<PAGE>
(6) To take all such action as shall be desirable and necessary to
cause its shares to be licensed or registered for sale under the laws of the
United States and in any state, country, city or other municipality of the
United States, the territories thereof, the District of Columbia or in any
foreign country and in any town, city or subdivision thereof;
(7) To make contracts and generally to do any and all acts and things
necessary or desirable in furtherance of any of the corporate purposes or
designed to protect, preserve and/or enhance the value of the corporate
assets, all to the extent permitted to business corporations authorized under
the laws of the State of Maryland, as now or may in the future be authorized
by said laws;
(8) To do all and everything necessary, suitable and proper for the
accomplishment of any of the purposes, objects or powers hereinbefore set
forth to the same extent and as fully as a natural person might or could do,
in any part of the world and either alone or in association or partnership
with other corporations, firms or individuals;
(9) To have all the rights, powers and privileges now or hereafter
conferred by the laws of the State of Maryland upon a corporation organized
under the Maryland General Corporation Law, or under any act amendatory
thereof, supplemental thereto or in substitution therefor; and
(10) To do any and all such further acts or things and to exercise any
and all such further powers or rights as may be necessary, incidental,
relative, conducive, appropriate or desirable for the accomplishment,
carrying out or attainment of all or any of the foregoing purposes, objects
or powers.
The foregoing clauses are and shall be regarded as independent and
separate, and the enumeration in any such clause of any specific objectives
and/or powers shall not be construed as limiting or restricting in any way
the general objectives and powers stated in any other clause; nor shall any
of the objectives and/or powers stated above, except when otherwise expressly
provided, be in any way limited or restricted by reference to, or inference
from, the terms of any other clause of these Articles of Incorporation.
ARTICLE IV
Principal Office and Resident Agent
The address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The resident agent of the Corporation in the
State of Maryland is The Corporation Trust Incorporated, a corporation of the
State of Maryland, whose address is 32 South Street, Baltimore, Maryland
21202.
ARTICLE V
Capital Stock
(1) The total number of shares of stock which the Corporation shall
have authority to issue is Fifty Million (50,000,000) shares of common stock
of the par value of one dollar ($1.00) each, such shares to be classified as
"Common Stock", and to be of the aggregate par value of Fifty Million Dollars
($50,000,000.00). Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end investment company under the '40
Act, the total number of shares of Common Stock which the Corporation is
authorized to issue may be increased or decreased by the Board of Directors
in accordance with the applicable provisions of the Maryland General
Corporation Law.
The number of shares of authorized Common Stock that may be issued shall
be such number as may be determined by the Board of Directors.
2
<PAGE>
Any Common Stock reacquired by the Corporation, from time to time, may
be held as treasury shares, reissued or cancelled as the Board of Directors
may determine.
Dividends and distributions on Common Stock may be paid with such
frequency as the Directors may determine, pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Board of
Directors may determine, to the holders of Common Stock from such of the
income and capital gains, accrued or realized, or from the assets of the
Corporation as the Directors may determine, after providing for actual and
accrued liabilities. All dividends and distributions on Common Stock shall be
distributed pro-rata to the stockholders in proportion to the number of
Common Stock held by such holders at the date and time of record established
for the payment of such dividends or distributions, except that in connection
with any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be payable on
shares as to which the stockholder's purchase order and/or payment has not
been received by the time or times established by the Board of Directors
under such program or procedure.
The Corporation intends to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, or any successor statute thereto,
and regulations promulgated thereunder. Inasmuch as the computation of net
income and gains for Federal income tax purposes may vary from the
computation thereof on the books of the Corporation, the Board of Directors
shall have the power, in its sole discretion, to distribute in any fiscal
year as dividends, including dividends designated in whole or in part as
capital gains distributions, amounts sufficient, in the opinion of the Board
of Directors, to enable it to qualify as regulated investment companies and
to avoid liability for Federal income tax in respect of that year. However,
nothing in the foregoing shall limit the authority of the Board of Directors
to make distributions greater than or less than the amount necessary to
qualify the Corporation as a regulated investment company and to avoid
liability of the Corporation for such tax.
Dividends and distributions may be made in cash, property or additional
shares, or a combination thereof, as determined by the Board of Directors or
pursuant to any program that the Board of Directors may have in effect at the
time for the election by each stockholder of the mode of the making of such
dividend or distribution to that stockholder. Any such dividend or
distribution paid in shares will be paid at the net asset value thereof as
defined in Section 2. of this Article V.
On all matters of the Corporation which require a vote of the
stockholders, each holder of a share shall be entitled to one vote for each
share standing in his name on the books of the Corporation. Cumulative
voting shall not be permitted.
2. The Corporation shall, upon due presentation of a share or shares
of stock for redemption, redeem such share or shares of stock at a redemption
price prescribed by the Board of Directors in accordance with applicable laws
and regulations; PROVIDED that in no event shall such price be less than the
applicable Net Asset Value per share as determined in accordance, with the
provisions of this Section 2., less such redemption charge, if any, as may be
from time to time determined by the Board of Directors. The Corporation may
also redeem, at the current Net Asset Value and to the extent and in the
manner permitted by the '40 Act, shares of its Common Stock not offered for
redemption held by any shareholder whose shares have a value less than such
minimum amount as may be fixed from time to time by the Board of Directors.
The Corporation shall pay redemption prices in cash, except that the
Corporation may pay redemption prices in kind in such manner as is permitted
by the '40 Act.
Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the stockholders to require
the Corporation to redeem shares during any period or at any time when and to
the extent permissible under the '40 Act.
3
<PAGE>
The Net Asset Value of a share of Common Stock of the Corporation shall
be determined in accordance with applicable laws and regulations and under
the supervision of such persons and at such time or times as shall from time
to time be prescribed by the Board of Directors. The Board of Directors of
the Corporation shall have the final decision upon questions concerning the
method of computing Net Asset Value, valuation of assets, procedure in
repurchase, and other matters in connection with placing in effect the
offering prices and repurchase of the Corporation's Common Stock.
3. The Corporation may issue, sell, redeem, repurchase and otherwise
deal in and with shares of its stock in fractional denominations. Such
fractional denominations shall, for all purposes, be shares of common stock
having, proportionately to the respective fractions represented thereby, all
the rights of whole shares, including without limitation, the right to vote,
the right to receive dividends and distributions and the right to participate
upon liquidation of the Corporation; PROVIDED that the issue of shares in
fractional denominations shall be limited to such transactions and be made
upon such terms as may be fixed by or under authority of the By-Laws.
4. The Corporation shall not be obligated to issue certificates
representing shares of its Common Stock unless it shall receive a written
request therefor from the record holder thereof in accordance with procedures
established in the By-Laws or by the Board of Directors.
ARTICLES VI
Preemptive Rights
No stockholder of the Corporation, whether now or hereafter authorized,
shall have any preemptive or preferential or other right of purchase of or
subscription to the Common Stock whether issued for cash, property, services or
otherwise, other than such, if any, as the Board of Directors in its discretion
may from time to time fix.
ARTICLE VII
Required Vote of Stockholders
Notwithstanding any provisions of Maryland law requiring the affirmative
vote of more than a majority of all the votes entitled to be cast on a
matter, the Corporation may take action on any such matter if such action is
approved by a majority of all the votes entitled to be cast on such matter.
Without intending any limitation of the foregoing sentence, such majority
approval shall be sufficient, valid and effective, after due authorization,
approval and/or other action by the Board of Directors, as required by law,
to approve and authorize the following acts of the Corporation:
(a) the amendment of the Charter of the Corporation;
(b) the consolidation of the Corporation with one or more corporations to
form a new consolidated corporation;
(c) the merger of the Corporation into another corporation or the merger
of one or more other corporations into the Corporation;
(d) the sale, lease, exchange or other transfer of all, or substantially
all, of the property and assets of the Corporation, including its
goodwill and franchises;
(e) the participation by the Corporation in a share exchange (as defined
in the Corporation and Associations Article of the Annotated Code of
Maryland) as the Corporation the stock of which is to be acquired;
4
<PAGE>
(f) the voluntary or involuntary liquidation, dissolution or winding-up of
the Corporation.
ARTICLES VIII
Number and Powers of Directors
(1) The number of directors of the Corporation shall be such number,
not less than three (3), as may be specified in or fixed in the manner
prescribed by the By-Laws of the Corporation. Until a different number is
fixed as provided by the By-Laws, the Corporation shall have nine (9)
directors. Unless otherwise provided by the By-Laws of the Corporation,
directors need not be stockholders thereof.
(2) The names of the initial directors who shall act until the first
annual meeting or until their successors are duly chosen and qualified are:
Ralph S. Clifford
Paul D. Cummings
Jack T. Currie
Ira H. Green
Eva W. Levy
William S. Mackey, Jr.
Ira W. Painton
Donald P. Stevens
Steven H. Stubbs
(3) So long as permitted by Maryland law by the '40 Act, directors elected
at a meeting of shareholders shall not have a specified term and shall
serve until their successors are elected and qualified.
(4) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of Common Stock,
whether now or hereafter authorized, for such consideration as the
Board of Directors may deem advisable, subject to such limitations as
may be set forth in the Charter or the By-Laws of the Corporation, in
the Maryland General Corporation Law or in the '40 Act.
(5) Each Director and each officer of the Corporation shall be indemnified
by the Corporation to the fullest extent permitted by the Maryland
General Corporation Law and the By-Laws of the Corporation, as such
Law and By-Laws may now or in the future be in effect, subject only to
such limitations as may be required by the '40 Act.
(6) The Board of Directors of the Corporation may make, alter or repeal
from time to time any of the By-Laws of the Corporation except any
particular By-Law which is specified as not subject to alteration or
repeal by the Board of Directors.
ARTICLE IX
Limitation of Directors and Officers Liability
The personal liability of the Corporation's directors and officers to the
Corporation or to its stockholders shall be limited to the fullest extent
permitted by the Maryland General Corporation Law
5
<PAGE>
now or hereafter in effect. In particular, but without limiting in any way
the preceding sentence, directors and officers of the Corporation shall not
be personally liable to the Corporation or to its stockholders for monetary
damages arising out of any act or omission in their capacity as director or
officer, except:
(1) To the extent that it is proved that a director or officer actually
received an improper benefit or profit in money, property, or services
for the amount of the benefit or profit in money, property, or
services actually received; or
(2) To the extent that a judgement or other final adjudication adverse to
a director or officer is entered in a proceeding based on a finding in
the proceeding that such director's or officer's action, or failure to
act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding.
ARTICLE X
Perpetual Existence
The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledge same to be my act on this 22nd day of August, 1989.
JERRY L. ADAMS
Jerry L. Adams, Incorporator
WITNESS:
SANDRA ANDERSON
STATE OF TEXAS
COUNTY OF GALVESTON
This instrument was acknowledged before me on the 22nd day of August,
1989, by JERRY L. ADAMS.
JOYCE E. RUTAN
Notary Public in and for
The State of Texas
JOYCE E. RUTAN
Printed or Typed Name of Notary
My Commission Expires:
JUNE 29, 1993
6
<PAGE>
EXHIBIT 99.B2
AMERICAN NATIONAL INCOME FUND, INC.
BY-LAWS
TABLE OF CONTENTS
PAGES
Article I - Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Article II - Stockholders' Meetings. . . . . . . . . . . . . . . . . . . . . 1-2
2.1 Place of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 Quorum & Adjournment of Meetings . . . . . . . . . . . . . . . . . . 2
2.6 Voting Rights, Proxies . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 Inspectors of Election . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 Action by Stockholders Without Meeting . . . . . . . . . . . . . . . 2
Article III - Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5
3.1 Number, Term and Qualification . . . . . . . . . . . . . . . . . . . 3
3.2 Chairman of the Board and Vice Chairman of the Board . . . . . . . . 3
3.3 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.6 Written Notice of Special Meetings . . . . . . . . . . . . . . . . . 3
3.7 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.8 Quorum, Voting and Adjournments of Meetings. . . . . . . . . . . . . 4
3.9 Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) By Stockholders
(b) By Directors
3.10 Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(1) Other than an increase in number of directors
(2) Increase in number of directors
3.11 Action by Directors Without Meeting. . . . . . . . . . . . . . . . . 4
3.12 Expenses and Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.13 Execution of Instruments and Documents and Signing of Checks and
Other Obligations and Transfers. . . . . . . . . . . . . . . . . . . 5
3.14 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.15 Indemnification of Directors, Officers, Employees and Agents . . . . 5
Article IV - Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Committee Action Without Meeting . . . . . . . . . . . . . . . . . . 8
Article V - Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-10
5.1 Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Other Officers and Agents. . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
5.3 Term, Removal and Vacancies. . . . . . . . . . . . . . . . . . . . . 9
5.4 Compensation of Officers . . . . . . . . . . . . . . . . . . . . . . 9
5.5 Power and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 The Chairman and Vice Chairman . . . . . . . . . . . . . . . . . . . 9
5.7 The President. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8 The Vice Presidents. . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9 The Assistant Vice Presidents. . . . . . . . . . . . . . . . . . . .10
5.10 The Secretary. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
5.11 The Assistant Secretaries. . . . . . . . . . . . . . . . . . . . . .10
5.12 The Treasurer. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
5.13 The Assistant Treasurer. . . . . . . . . . . . . . . . . . . . . . .10
5.14 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . .10
Articles VI - Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . 10-12
6.1 Issuance of Stock. . . . . . . . . . . . . . . . . . . . . . . . . .10
6.2 Certificates of Stock. . . . . . . . . . . . . . . . . . . . . . . .10
6.3 Transfer of Stock. . . . . . . . . . . . . . . . . . . . . . . . . .11
6.4 Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
6.5 Lost, Stolen, Destroyed and Mutilated Certificates . . . . . . . . .11
6.6 Registered Owners of Stock . . . . . . . . . . . . . . . . . . . . .11
6.7 Fractional Denominations . . . . . . . . . . . . . . . . . . . . . .12
Articles VII - Sale of Stock . . . . . . . . . . . . . . . . . . . . . . . . .12
Articles VII - Determination of Net Asset Value: Valuation of Portfolio
Securities
and Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . .12
8.1 Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . .12
8.2 Valuation of Portfolio Securities and Other Assets . . . . . . . . .12
Articles IX - Dividends and Distributions. . . . . . . . . . . . . . . . . . .13
Article X - Books and Records. . . . . . . . . . . . . . . . . . . . . . . . .13
10.1 Location. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
10.2 Stock Ledgers . . . . . . . . . . . . . . . . . . . . . . . . . . .13
10.3 Annual Statement. . . . . . . . . . . . . . . . . . . . . . . . . .13
Articles XI - Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . .13
Article XII - Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 13-14
12.1 Seal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
12.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
12.3 Orders for Payment of Money . . . . . . . . . . . . . . . . . . . .14
Article XIII - Compliance with Federal Regulations . . . . . . . . . . . . . .14
Article XIV - Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . .14
<PAGE>
BY-LAWS
OF
AMERICAN NATIONAL INCOME FUND, INC.
ARTICLE I
OFFICES
SECTION 1.1 Principal Office. The principal office of the Corporation in
the State of Maryland shall be in the City of Baltimore.
SECTION 1.2 Other Offices. In addition to its principal office in the
State of Maryland, the Corporation may have an office or offices in the City of
Galveston, State of Texas, and at such other places as the Board of Directors
may from time to time designate or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 2.1 Place of Meetings. Meetings of stockholders shall be held at
such place, within or without the State of Maryland, as may be designated from
time to time by the Board of Directors.
SECTION 2.2 Meetings. Unless required by the Investment Company Act of
1940 (as amended and together with any successor act thereto and all rules,
regulations and orders thereunder, referred to as the " `40 Act") or by the
Maryland General Corporation Law, it shall not be necessary for the Corporation
to hold annual or other meetings of stockholders. Such meetings may be held,
however, at such times and as often as the Directors may determine in their
discretion.
SECTION 2.3 Special Meetings. Special meetings of stockholders of the
Corporation shall be held whenever called by the Board of Directors or by the
Chairman of the Board or the President of the Corporation.
Special meetings of stockholders shall also be called by the Secretary upon
the written request of stockholders entitled to vote not less than ten percent
(10%) of all the votes entitled to be cast at such meeting. Such request shall
state the purpose or purposes of such meeting and the matters proposed to be
acted on thereat. The Secretary shall inform such stockholders of the
reasonable estimated cost of preparing and mailing such notice of the meeting,
and upon payment to the Corporation of such costs, the Secretary shall give
notice stating the purpose or purposes of the meeting to all entitled to a vote
at such meeting. Unless requested by stockholders entitled to cast a majority
of all the votes entitled to be cast at the meeting, a special meeting need not
be called to consider any matter which is substantially the same as a matter
voted upon at any special meeting of stockholders held during the preceding
twelve months.
SECTION 2.4 Notice of Meetings. Written or printed notice of every
stockholders' meeting stating the place, date and time, and in the case of a
special meeting the purpose and purposes thereof, shall be given by the
Secretary not less than ten (10) nor more than ninety (90) days before such
meeting to each stockholder entitled to vote at such meeting, either by mail or
by presenting it to him personally, or by leaving it at his residence or usual
place of business. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
1
<PAGE>
SECTION 2.5 Quorum and Adjournment of Meetings. Except as otherwise
provided by law, by the Charter of the Corporation, or by these By-Laws, at all
meetings of stockholders the holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum for the transaction of
business. In the absence of a quorum, the stockholders present or represented
by proxy and entitled to vote thereat shall have the power to adjourn the
meeting from time to time (but in no event to a date more than 120 days after
the original record date) without notice other than announcement at the meeting,
until a quorum shall be present. At any adjourned meeting at which a quorum
shall be present, any business may be transacted if the meeting had been held as
originally called.
SECTION 2.6 Voting Rights, Proxies. At each meeting of the stockholders
at which a quorum is present, each holder of record of stock entitled to vote
thereat shall be entitled to one vote in person or by proxy, executed in writing
by the stockholder or his duly authorized attorney-in-fact, for each share of
stock of the Corporation entitled to vote so registered in his name on the books
of the Corporation on the date fixed as the record date for the determination of
stockholders entitled to vote at such meeting. In all elections of directors,
each share of stock may be voted for as many individuals as there are directors
to be elected and for whose election such share is entitled to be voted. No
proxy shall be valid after eleven months from its date, unless otherwise
provided in the proxy. At all meetings of stockholders, unless the voting is
conducted by inspectors, all questions relating to the qualification of voters
and the validity of proxies and the acceptance or rejection of votes shall be
decided by the chairman of the meeting.
SECTION 2.7 Vote Required. Except as otherwise provided by law, by the
Charter of the Corporation, or by these By-Laws, at each meeting of stockholders
at which a quorum is present, all matters shall be decided by a majority of the
votes cast by the shareholders present in person or represented by proxy and
entitled to vote with respect to any such matter.
SECTION 2.8 Inspectors of Election. In advance of any meeting of
stockholders, the Directors may appoint Inspectors of Election to act at the
meeting or an adjournment thereof. If Inspectors of election are not so
appointed, the chairman of any meeting of stockholders may, and on the request
of any stockholder of his proxy shall, appoint Inspectors of Election of the
meeting. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Directors
in advance of the convening of the meeting or at the meeting by the person
acting as chairman. The Inspectors of election shall determine the number of
shares of stock outstanding, the shares of stock represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies, shall
receive votes, ballots or consents, shall hear and determine all challenges and
questions in any way arising in connection with the right to vote, shall count
and tabulate all votes or consents, determine the results, and do such other
acts as may be proper to conduct the election or vote with fairness to all
stockholders. On request of the chairman of the meeting or of any stockholder
or his proxy, the Inspectors of Election shall make a report in writing of any
challenge or question or matter determined by them and shall execute a
certificate of any facts found by them.
SECTION 2.9 Action by Stockholders Without Meeting. Except as otherwise
provided by law, the provisions of these By-Laws relating to notices and
meetings to the contrary notwithstanding, any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting if a consent
in writing setting forth the action shall be signed by all the stockholders
entitled to vote upon the action and such consent shall be filed with the
records of the Corporation.
2
<PAGE>
ARTICLE III
DIRECTORS
SECTION 3.1 Number, Term and Qualification. The Board of Directors shall
consist of such number of directors not less than three (3) nor more than
twenty-five (25) to be fixed from time to time by the affirmative vote of a
majority of the entire Board of Directors. Initially, the Board of Directors
shall consist of nine (9) directors. At the first meeting of stockholders, and
at each meeting thereafter called for the purpose of electing directors, the
stockholders shall elect directors to hold office until their successors are
elected and qualify. To qualify as a director, nominees must own shares of
either the Corporation or one of the other mutual funds in the American National
Family of Funds.
SECTION 3.2 Chairman of the Board and Vice Chairman of the Board. A
Chairman and Vice Chairman of the Board shall be appointed by the Board of
Directors. When present, the Chairman of the Board shall preside at all
meetings of the stockholders and Board of Directors of the Corporation. In the
Chairman's absence, the Vice Chairman of the Board shall preside at all such
meetings.
SECTION 3.3 Powers. The business of the Corporation shall be managed by
the Board of Directors which may exercise all powers of the Corporation and do
all lawful acts and things which are not by law or by the Charter of the
Corporation, or by these By-Laws, directed or required to be exercised or done
exclusively by the stockholders.
SECTION 3.4 Regular Meetings. Regular meetings of the Board of Directors
shall be held quarterly for the declaration of dividends and other business at
such times and at such places as shall be determined from time to time by the
Board of Directors without further notice.
SECTION 3.5 Special Meetings. Special meetings of the Board of Directors
may be held at any time when called by the Chairman of the Board of the
Corporation and, upon the written request of any two Directors, shall be called
by the Secretary of the Corporation. The officer calling any such special
meeting shall cause notice of such special meeting to be given to each Director
at least twenty-four (24) hours before such special meeting. Such notice may be
in writing or delivered orally in person or by telephone and need not specify
the business to be transacted at or the purpose of such special meeting.
Special meetings may be held without formal notice provided all Directors
are present or those not present have waived notice thereof in writing. Such
special meetings shall be held at such times and places as the notice thereof or
waiver shall specify.
SECTION 3.6 Written Notice of Special Meetings. When written notice is
given of a special meeting, such written notice shall state the place, date and
time thereof, shall be given not less than twenty-four (24) hours before such
meeting to each director, personally, by telegram, by mail or by leaving such
written notice at his place of residence or usual place of business. If mailed,
such written notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the director at his last address as it
appears on the records of the Corporation.
SECTION 3.7 Telephone Meetings. Any member or members of the Board of
Directors or of any committee designated by the Board, may participate in a
meeting of the Board, or any such committee, as the case may be, by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
Participation in a meeting by these means constitutes presence in person at the
meeting. This Section 3.7 shall not be applicable to meetings held for the
purpose of voting in respect of approval of
3
<PAGE>
contracts or agreements whereby a person undertakes to serve or act as
investment adviser of, or principal underwriter for, the Corporation.
SECTION 3.8 Quorum, Voting and Adjournments of Meetings. At all meetings
of the Board of Directors, one-third (1/3) of the Board shall be requisite to
and shall constitute a quorum for the transaction of business. If a quorum is
present, the affirmative vote of a majority of the directors present shall be
the act of the Board of Directors, unless the concurrence of a greater
proportion is expressly required for such action by law, the Charter of the
Corporation or these By-Laws. If at any meeting of the Board there be less than
a quorum present, the directors present thereat may adjourn the meeting which
may be held on a subsequent date, without further notice other than announcement
at the meeting until a quorum shall have been obtained.
SECTION 3.9 Removal.
(a) By Stockholders. Any one or more of the directors may be removed,
either with or without cause, at any special meeting of stockholders,
by the affirmative vote of the stockholders holding a majority of the
outstanding shares entitled to vote for the election of directors.
The notice calling such meeting shall give notice of the intention to
act upon such matter.
(b) By Directors. At a special meeting at which notice has been given of
the purpose thereof, the Board of Directors may remove any director
determined by the Board to be suffering from a physical or mental
injury, illness or infirmity which, in the sole discretion of the
Board, prevents such director from attending meetings or otherwise
performing his or her duties and responsibilities as a director of the
Corporation.
Except as provided by the Maryland General Corporation Law or the
Investment Company Act of 1940, as amended, the successor or successors of any
director or directors so removed shall be chosen by the Board of Directors.
SECTION 3.10 Vacancies. Except as otherwise provided by the Maryland
General Corporation Law or the Investment Company Act of 1940, as amended:
(1) any vacancy occurring in the Board of Directors which results from any
cause except an increase in the number of directors may be filled by a
majority of the remaining directors, whether or not sufficient to
constitute a quorum; and
(2) any vacancy occurring in the Board of Directors which results from an
increase in the number of directors may be filled by a majority of the
entire Board of Directors.
A director elected by the Board of Directors to fill a vacancy shall be elected
to hold office until the next meeting of stockholders or until his successor is
elected and qualifies.
SECTION 3.11 Action by Directors Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting if a consent in
writing setting forth the action shall be signed by all of the directors
entitled to vote upon the action and such written consent is filed with the
minutes of proceedings of the Board of Directors.
4
<PAGE>
SECTION 3.12 Expenses and Fees. Each director may be allowed expenses, if
any, for attendance at each regular or special meeting of the Board of Directors
and shall receive for services rendered as a director of the Corporation such
compensation as may be fixed by the Board of Directors. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 3.13 Execution of Instruments and Documents and Signing of Checks
and Other Obligations and Transfers. All instruments, documents and other paper
shall be executed in the name and on behalf of the Corporation and all checks,
notes, drafts and other obligations for the payment of money by the Corporation
shall be signed, and all transfer of securities standing in the name of the
Corporation shall be executed, by the President, any Vice President or the
Treasurer or by any one or more officers or agents of the Corporation as shall
be designated for that purpose by vote of the Board of Directors.
SECTION 3.14 Contracts. Except as otherwise provided by law or by the
Articles of Incorporation of the Corporation, no contract or transaction between
the Corporation and any partnership or corporation, and no act of the
Corporation, shall in any way be affected or invalidated by the fact that such
partnership or corporation is an "affiliate", as such term is defined in the `40
Act, of the Corporation, or that any officer or director of the Corporation is
pecuniarily or otherwise interested therein or is a member, officer or director
of such partnership or entity if such interest shall be known to the Board of
Directors of the Corporation.
SECTION 3.15 Indemnification of Directors, Officers, Employees and Agents.
The Corporation shall indemnify each Director and officer of the Corporation to
the fullest extent permitted by Maryland law, subject only, to such limitations
as may be required by the Investment Company Act of 1940, as amended. In
particular, but without intending any limitation on the preceding sentence, such
indemnification shall be as follows.
(a) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action suit, or proceeding, whether civil, criminal administrative, or
investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation. The indemnification
shall be against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement, actually and reasonably incurred by
him in connection with the action, suit, or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not of itself, create a
presumption that the person did not in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interest of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or on behalf of the Corporation to obtain a judgment
or decree in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the Corporation. The
indemnification shall be against expenses, including attorneys' fees
actually and reasonably incurred by him in connection with the defense
or settlement of the action
5
<PAGE>
or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Corporations; except that no indemnification shall be made in
respect of any claim, issue, or matter as to which the person
has been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Corporation, except to the extent that
the court in which the action or suit was brought, or a court of
equity in the county in which the Corporation has its principal
office, determines upon application that, despite the adjudication of
liability but in view of all circumstance of the case, the person is
fairly and reasonably entitled to indemnity for those expenses which
the court shall deem proper, provided such director or officer is not
adjudged to be liable by means of his willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office.
(c) To the extent that a Director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsection (a) or (b)
or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses, including attorney's fees, actually and
reasonable incurred by him in connection therewith.
(d) (1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the
Corporation only as authorized in the specific case after a
determination that indemnification of the director, officer,
employee, or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth subsections (a)
or (b).
(2) The 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
(ii) If the required quorum is not obtainable, or if a quorum of
disinterested directors so directs, by independent legal
counsel in a written opinion; or
(iii) By the stockholders.
(3) Notwithstanding the provisions of paragraphs (1) and (2) of this
subsection (d), no person shall be entitled aid indemnification
for any liability, whether or not there is an adjudication of
liability, arising by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of duties as subscribed
in section 17(h) and (i) of the Investment Company Act of 1940,
as amended ("disabling conduct"). A person shall be deemed not
liable by reason of disabling conduct if, either.
(i) a final decision on the merits is made by a court or other
body before whom the preceding was brought that the person
to be indemnified ("indemnitee") was not liable by reason of
disabling conduct; or
(ii) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the
indemnitee was not liable by reason of disabling conduct, is
made by either --
6
<PAGE>
(A) a majority of a quorum of directors who are neither
"interested persons" of the Corporation, as defined in
section 2(a)(19) of the Investment Company Act of 1940,
as amended, nor parties to the action, suit or
proceeding, or
(B) an independent legal counsel in a written opinion.
(e) Expenses, including attorney's fees, incurred by a director, officer,
employee or agent of the Corporation in defending a civil or criminal
action suit or proceeding may be paid by the Corporation in advance of
the final disposition thereof if:
(1) authorized in the specific case by the Board of Directors; and
(2) the Corporation receives an undertaking by or on behalf of the
director, officer, employee or agent of the Corporation to repay
the advance if it is not ultimately determined that such person
is entitled to be indemnified by the Corporation; and
(3) either
(i) such person provides a security for his undertaking, or
(ii) the Corporation is insured against losses by reason of any
lawful advances, or
(iii) a determination, based on a review of readily available
facts, that there is reason to believe that such
persons ultimately will be found entitled to
indemnification, is made by either--
(A) a majority of a quorum which consists of directors who
are neither "interested persons" of the Corporation, as
defined in Section 2 (a)(19) of the Investment Company
Act of 1940, as amended, nor parties to the action,
suit or proceeding, or
(B) an independent legal counsel in a written opinion.
(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in his official capacity and as to
action in another capacity while holding the office, and shall
continue as to a person who has ceased to be a director, officer,
employee, or agent and inure to the benefit of the heirs, executors
and administrators of such person.
(g) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the
Corporation, against any liability asserted against him and incurred
by him in any such capacity, or arising out of his status as such.
However, in no event will the Corporation purchase insurance to
indemnify any officer or director against liability for any act for
which the Corporation itself is not permitted to indemnify him.
(h) Nothing contained in this Section shall be construed to protect any
director or officer
7
<PAGE>
of the Corporation against any liability to the Corporation or to its
security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
ARTICLE IV
COMMITTEES
SECTION 4.1 Committees. The Board of Directors, by resolution adopted by
a majority of the whole Board, may designate committees, each of which shall
consist of two (2) or more of the Directors of the Corporation and may delegate
to such committees, in the intervals between meetings of the Board of Directors,
any or all of the powers of the Board of Directors in the management of the
business and affairs of the Corporation, except the power to: declare dividends
or distributions of stock; issue stock; recommend to stockholders any action
requiring stockholder approval; amend the By-Laws of the Corporation; or approve
any merger or share exchange which does not require shareholder approval. In
the absence of any member of any such committee, the members thereof present at
any meeting, whether or not they constitute a quorum, may appoint a member of
the Board of Directors to act in place of such absent member. Each such
committee shall keep a record of its proceedings.
Each committee appointed hereto shall fix its own rules or procedure, but
the presence of at least fifty percent (50%) of the members of the whole
committee shall in each case be necessary to constitute a quorum of the
committee and the affirmative vote of the majority of the members of the
committee present at the meeting be necessary to take action.
All actions of the committees appointed pursuant hereto shall be reported
to the Board of Directors at the meeting thereof next succeeding to the taking
of such action.
SECTION 4.2 Committee Action Without Meeting. The provisions of these By-
Laws covering notices and meetings to the contrary notwithstanding, and except
as required by law, any action required or permitted to be taken at any meeting
of any committee of the Board appointed pursuant to Section 4.1 of these By-Laws
may be taken without a meeting if the consent in writing setting forth the
action shall be signed by all members of the committee entitled to vote upon the
action and such written consent is filed with the records of the proceedings of
the committee.
ARTICLE V
OFFICERS
SECTION 5.1 Executive Officers. The executive officers of the Corporation
shall be a President, one or more Vice Presidents, a Secretary and a Treasurer.
The Board of Directors shall also elect a Chairman and a Vice Chairman of the
Board. The President, Chairman of the Board and Vice Chairman of the Board,
shall be selected from among the directors but none of the other executive
officers need be a member of the Board of Directors. Two or more offices,
except those of President and any Vice President, may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity. The executive officers of the Corporation shall be
elected annually by the Board of Directors and each executive officer so elected
shall hold office until his successor is elected and has qualified.
8
<PAGE>
SECTION 5.2 Other Officers and Agents. The Board of Directors may also
elect one or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers and may elect, or may delegate to the President the power to appoint
and fix the compensation of such officers, and such other officers and agents as
the Board of Directors shall at any time or from time to time deem advisable.
SECTION 5.3 Term, Removal and Vacancies. Each officer of the Corporation
shall hold office until his successor is elected by the Board of Directors and
has qualified. Any officer or agent of the Corporation may be removed by the
Board of Directors whenever, in its judgement, the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.
SECTION 5.4 Compensation of Officers. The compensation of officers and
agents of the Corporation shall be fixed by the Board of Directors, or by the
President to the extent provided by the Board of Directors with respect to
officers appointed by the President.
SECTION 5.5 Powers and Duties. All officers and agents of the
Corporation, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may be
provided in or pursuant to these By-Laws, or, to the extent not so provided, as
may be prescribed by the Board of Directors; PROVIDED, that no rights of any
third party shall be affected or impaired by any such By-Law or resolution of
the Board unless he has knowledge thereof.
SECTION 5.6 The Chairman and Vice Chairman. The Chairman, or in his
absence the Vice Chairman, shall preside at all meetings of the stockholders and
of the Board of Directors; and shall perform such other duties as the Board of
Directors may from time to time prescribe.
SECTION 5.7 The President. The President shall be the chief executive
officer of the Corporation; he shall have general and active management of the
business of the Corporation, shall see that all orders and resolutions of the
Board of Directors are carried into effect, and, in connection therewith, shall
be authorized to delegate to one or more Vice Presidents such of his powers and
duties at such times and in such manner as he may deem advisable. Subject to
the control of the Board of Directors and to the control of any Committees of
the Board of Directors, within their respective spheres, as provided by the
Board of Directors, he shall at all times exercise a general supervision and
direction over the affairs of the Corporation. He shall have the power to
employ attorneys and counsel for the Corporation and to employ such subordinate
officers, agents, clerks and employees as he may find necessary to transact the
business of the Corporation. He shall also have the power to grant, issue,
execute or sign such powers of attorney, proxies or other documents as may be
deemed advisable or necessary in furtherance of the interests of the
Corporation. The President shall have such other powers and duties, as from
time to time may be conferred upon or assigned to him by the Board of Directors.
SECTION 5.8 The Vice Presidents. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by the
Board of Directors. The Vice President or, if there be more than one, the Vice
Presidents in the order of their seniority as may be determined from time to
time by the Board of Directors, shall, in the absence or disability of the
President, exercise the powers and perform the duties of those officers; and he
or they shall perform such other duties as the Board of Directors may from time
to time prescribe.
9
<PAGE>
SECTION 5.9 The Assistant Vice Presidents. The Assistant Vice President
or, if there be more than one, the Assistant Vice Presidents, shall perform such
duties and have such powers as may be assigned them from time to time by the
Board of Directors.
SECTION 5.10 The Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the stockholders and of the Board of Directors in
a book to be kept for that purpose, and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties and have such powers as the Board
of Directors may, from time to time, prescribe. He shall keep in safe custody
the seal of the Corporation and affix or cause the same to be affixed to any
instrument requiring it, and, when so affixed, it shall be attested by his
signature or by the signature of an Assistant Secretary.
SECTION 5.11 The Assistant Secretaries. The Assistant Secretary or, if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
SECTION 5.12 The Treasurer. The Treasurer shall be the chief financial
officer of the Corporation. He shall keep or cause to be kept full and accurate
accounts or receipts and disbursements in books belonging to the Corporation,
and he shall render the Board of Directors, whenever they require it, an account
of his transactions as Treasurer and of the financial condition of the
Corporation; and he shall perform such other duties as the Board of Directors
may from time to time prescribe.
SECTION 5.13 The Assistant Treasurer. The Assistant Treasurer or, if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
SECTION 5.14 Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the Board of Directors may deem is
desirable, the Board may delegate the powers and duties of an officer to any
other officer or officers or to any Director or Directors.
ARTICLES VI
Capital Stock
SECTION 6.1. Issuance of Stock. The Corporation shall not issue its
shares of capital stock except as approved by the Board of Directors.
SECTION 6.2. Certificates of Stock. Certificates for shares of the
capital stock of the Corporation shall be issued, shall be in such form and of
such design as the Board of Directors shall approve, subject to the right of the
Board of Directors to change such form and design at any time or from time to
time, and shall be entered in the books of the Corporation as they are issued.
Each such certificate shall bear a distinguishing number; shall exhibit the
holder's name and certify the number of full and/or fractional shares owned by
such holder; shall be signed by or in the name of the Corporation by the
President or a Vice President, and countersigned by the Secretary or an
Assistant Secretary or the Treasurer and an Assistant Treasurer of the
Corporation; shall be sealed with the
10
<PAGE>
corporate seal; and shall contain such recitals as may be required by law.
Where any stock certificate is signed by a Transfer Agent or by a Registrar,
the signature of such corporate officers and the corporate seal may be
facsimile, printed or engraved. The Corporation may, at its option, defer
the issuance of a certificate or certificates to evidence shares of capital
stock owned of record by any stockholder until such time as written demand
therefor shall be made upon the Corporation or its Transfer Agent, but upon
the making of such demand each stockholder shall be entitled to such
certificate or certificates.
In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall appear on, any such certificate or
certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate
or certificates shall have been delivered by the Corporation, such
certificate or certificates shall, nevertheless, be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures shall appear therein had not ceased to be such officer or officers
of the Corporation.
No certificate shall be issued for any share of stock until such share is
fully paid.
SECTION 6.3. Transfer of Stock. Transfers of shares of the capital stock
of the Corporation shall be made only on the books of the Corporation by the
holder thereof, or by his attorney thereunto duly authorized by a power of
attorney duly executed and filed with the Corporation or a Transfer Agent of the
Corporation, if any, upon written request in proper form if no share certificate
has been issued, or in the event such certificate has been issued, upon
presentation and surrender in proper form of said certificate.
SECTION 6.4. Record Date. The Board of Directors may fix in advance a
date as the record date for the purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any rights, or in order
to make a determination of stockholders for any other proper purpose. Such
date, in any case, shall be not more than ninety (90) days, and in case of a
meeting of stockholders not less than (10) days prior to the date on which
particular action requiring such determination of stockholders is to be taken.
In lieu of fixing a record date the Board of Directors may provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case, twenty (20) days. If the stock transfer books are closed for the
purpose of determining stockholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting.
SECTION 6.5. Lost, Stolen, Destroyed and Mutilated Certificates. The
Board of Directors may direct a new certificate of certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon satisfactory proof of such
loss, theft, or destruction; and the Board of Directors may, in its discretion,
require the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give to the Corporation and to such Registrar, Transfer
Agent, and/or Transfer Clerk as may be authorized or required to countersign
such new certificate or certificates, a bond in such sum and of such type as
they may direct, and with such surety and sureties, as they may direct, as
indemnity against any claim that may be against them or any of them on account
of or in connection with the alleged loss, theft or destruction of any such
certificate.
SECTION 6.6. Registered Owners of Stock. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares of stock to receive dividends, and to vote as such owner,
and to hold liable for calls and assessments a person registered on its books as
the owner of shares of stock, and shall not be bound to recognize any equitable
or other
11
<PAGE>
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
SECTION 6.7. Fractional Denominations. Subject to any applicable
provisions of law and the Charter of the Corporation, the Corporation may issue
shares of is capital stock in fractional denominations, provided that the
transactions in which and the terms and conditions upon which shares in
fractional denominations may be issued may from time to time be limited or
determined by or under the authority of the Board of Directors.
ARTICLES VII
Sale of Stock
Upon the sale of each share of its Common Stock, except as otherwise
permitted by applicable laws and regulations, the Corporation shall receive in
cash or in securities valued as provided in Article VIII of these By-Laws, not
less than the current net asset value thereof, exclusive of any distributing
commission or discount, and in no event less than the par value thereof.
ARTICLES VIII
Determination of Net Asset Value:
Valuation Of Portfolio Securities and Other Assets
SECTION 8.1. Net Asset Value. The net asset value of a share of Common
Stock of the Corporation shall be determined in accordance with applicable laws
and regulations under the supervision of such persons and at such time or times
as shall from time to time be prescribed by the Board of Directors. The Board
of Directors of the Corporation shall have the final decision upon questions
concerning the method of computing net asset value, valuation of assets,
procedure and repurchase and other matters in connection with placing in effect
the offering prices and repurchase of the Corporation's Common Stock. Without
limiting the generality of the foregoing sentence, each such determination shall
be made by subtracting from the value of the assets of the Corporation (as
determined pursuant to Section 8.2 of these By-Laws) the amount of its
liabilities, dividing the remainder by the number of shares of Common Stock
issued and outstanding, and adjusting the results to the nearest full cent per
share.
SECTION 8.2. Valuation of Portfolio Securities and Other Assets. Except
as otherwise required by any applicable law or regulation of any regulatory
agency having jurisdiction over the activities of the Corporation, the
Corporation shall determine the value of its other portfolio securities and
other assets as follows:
(a) securities for which market quotations are readily available shall be
valued at current market value determined in such manner as the Board
of Directors may from time to time prescribe;
(b) all other securities and assets shall be valued at amounts deemed best
to reflect their fair value as determined in good faith by or under
the supervision of such persons and at such time or times as shall
from time to time be prescribed by the Board of Directors.
All quotations, sale prices, bid and asked prices and other information
shall be obtained from such sources as the persons making such determination
believe to be reliable and any determination of net asset value based thereon
shall be conclusive.
12
<PAGE>
ARTICLE IX
Dividends and Distributions
Subject to any applicable provisions of law and the Charter of the
Corporation, dividends and distributions upon the Common Stock of the
Corporation may be declared at such intervals as the Board of Directors may
determine, in cash, in securities or other property, or in shares of stock of
the Corporation, from any sources permitted by law, all as the Board of
Directors shall from time to time determine.
Inasmuch as the computation of net income and net profits from the sale of
securities or other properties for federal income tax purposes may vary from the
computation thereof on the books of the Corporation, the Board of Directors
shall have power, in its discretion, to distribute as income dividends and as
capital gains distributions, respectively, amounts sufficient to enable to the
Corporation to avoid or reduce liability for federal income taxes.
ARTICLE X
Books and Records
SECTION 10.1. Location. The books and records of the Corporation may be
kept outside the State of Maryland at such place or places as the Board of
Directors may from time to time determine, except as otherwise required by law.
SECTION 10.2. Stock Ledgers. The Corporation shall maintain at the office
of its transfer agent an original stock ledger containing the names and
addresses of all stockholders and the number of shares held by each stockholder.
Such stock ledger may be in written form or any other form capable of being
converted into written form within a reasonable time for visual inspection.
SECTION 10.3. Annual Statement. The President or a Vice President or the
Treasurer shall prepare or cause to be prepared annually a full and correct
statement of the affairs of the Corporation, including a statement of assets and
liabilities and a statement of operations for the preceding fiscal year, which
shall be submitted to the stockholders within sixty (60) days after the end of
the Corporation's fiscal year and which shall be filed within such sixty (60)
day period at the principal office of the Corporation in the State of Maryland.
ARTICLE XI
Waiver of Notice
Whenever any notice of the time, place or purpose of any meeting or
stockholders, directors, or of any committee is required to be given under the
provisions of the statute or under the provisions of the Charter of the
Corporation of these ByLaws, a waiver thereof in writing, signed by the person
or persons entitled to such notice and filed with the records of the meeting,
whether before or after the holding thereof, or actual attendance at the meeting
of Directors or committee in person, shall be deemed equivalent to the giving of
such notice to such person.
ARTICLE XII
Miscellaneous
SECTION 12.1. Seal. The Board of Directors shall adopt a corporate seal,
which shall be in the form of a circle, and shall have inscribed thereon the
name of the Corporation, the year of its incorporation, and the words "Corporate
Seal - Maryland". Said seal shall not be necessary in connection with the
execution of any instrument by the Corporation, but may be used by causing it
13
<PAGE>
or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 12.2. Fiscal Year. The fiscal year of the Corporation shall end on
December 31st of each year. The Board of Directors may by resolution change
such date for future fiscal years at any time and from time to time.
SECTION 12.3. Orders for Payment of Money. All orders or instructions for
the payment of money of the Corporation, and all notes or other evidences of
indebtedness issued in the name of the Corporation, and all notes or other
evidences of indebtedness issued in the name of the Corporation, shall be signed
by such officer or officers or such other person or persons as the Board of
Directors may from time to time designate, or as may be specified in or pursuant
to the agreement between the Corporation and the bank or trust company appointed
as Custodian of the securities and funds of the Corporation.
ARTICLES XIII
Compliance with Federal Regulations
The Board of Directors and officers of the Corporation are hereby empowered
to take such action as they may deem to be necessary, desirable or appropriate
so that the Corporation is or shall be in compliance with any federal or state
statute, rule or regulation with which compliance by the Corporation is
required.
ARTICLES XIV
Amendments
These By-Laws may be amended, altered, or repealed exclusively by the
Corporation's Board of Directors at any meeting of such Board.
14
<PAGE>
EXHIBIT 99.B4
REGISTRANTS STOCK CERTIFICATE
Incorporated Under the Laws of the State of Maryland
American National Income Fund, Inc.
Galveston, Texas
Common Stock Number Common Stock Shares
See Reverse for
Certain Definitions
This Certifies That is the owner of
fully paid and non-assessable shares of Common Stock of American National Income
Fund, Inc. of the par value of $1.00 per share, transferable on the books of the
Company in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. NOTE: this Certificate has restrictions on
transferability, whether by sale, pledge or otherwise. No pledge of this
certificate shall be valid unless prior written notice is given to the Company.
The Company will furnish all restriction information to the stockholder on
request and without charge. Additionally, this Certificate is issued by he
Company and accepted by the holder subject to all the terms and conditions
pertaining to the Common Stock of the Company contained in the Certificate of
Incorporation, and all amendments thereto and in the By Laws of the Company, and
all amendments thereto, copies[ of which are on file in the office of the
Company, and to which reference is hereby made.
This Certificate is not valid unless countersigned by the Transfer Agency-
Registrar. Witness the facsimile seal of the Company and facsimile signatures
of its duly authorized and designated officers.
Dated: Countersigned and Registered by:
Securities Management & Research, Inc.
Transfer Agent and Registrar
Authorized Signature
American National Income Fund, Inc.
Incorporated
SEAL
Maryland 1989
Teresa Axelson Steven H. Stubbs
Secretary President
<PAGE>
(back of certificate)
NO HOLDER OF ANY OF THE COMMON SHARES OF THE CORPORATION OR OTHER SECURITIES (IF
ANY) OF THE CORPORATION SHALL BE ENTITLED AS A MATTER OF RIGHT TO PURCHASE ANY
UNISSUED COMMON SHARES OR OTHER SECURITIES OF THE CORPORATION AT ANY TIME
AUTHORIZED; BUT ANY UNISSUED COMMON SHARES OR OTHER SECURITIES OF THE
CORPORATION MAY BE ISSUED AND DISPOSED OF BY THE BOARD OF DIRECTORS TO SUCH
PERSONS AS THE BOARD OF DIRECTORS MAY IN ITS SOLE DISCRETION DETERMINE WITHOUT
OFFERING ANY THEREOF TO HOLDERS OF COMMON SHARES OR OTHER SECURITIES[ OF THE
CORPORATION.
The following abbreviations when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT- _______ custodian ______ under
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of Uniform Gifts to Minors Act _________
and not as tenants in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ___________________ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
_______________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_____________________________________________________________________Attorney
to transfer the said stock on the books of the within named Company with full
power of substitution in the premises.
Dated _________________________________
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the certificate in every particular, without
alteration or enlargement or any change whatever.
_____________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE>
EXHIBIT 99.B5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
AMERICAN NATIONAL INCOME FUND, INC. AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS AGREEMENT made and entered into this 30th day of November, 1989, by
and between AMERICAN NATIONAL INCOME FUND, INC. a MARYLAND Corporation
(hereinafter referred to as the "Fund"), and SECURITIES MANAGEMENT AND RESEARCH,
INC., a Florida Corporation (hereinafter referred to as the "Adviser").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
FIRST: Adviser shall act as investment adviser for the Fund and shall, in
such capacity, supervise the investment and reinvestment of the cash, securities
and other properties comprising the assets of the Fund, subject at all times to
the policies and approval of the Board of Directors of the Fund. Adviser shall
give the Fund the benefit of its best judgement and efforts in rendering its
services as investment adviser.
SECOND: In carrying out its obligations under paragraph FIRST hereof,
Adviser shall:
(1) Obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
portfolio of the Fund, and whether concerning the individual companies
whose securities are included in the Fund's portfolio, or the
industries in which they engage, or with respect to securities which
the Adviser considers desirable for inclusion in the Fund's portfolio.
(2) Determine what industries and companies shall be represented in the
Fund's portfolio and regularly report them to the Board of Directors
of the Fund.
(3) Formulate and implement programs for the purchases and sales of the
securities of such companies and regularly report thereon to the Board
of Directors of the Fund.
(4) Take, on behalf of the Fund, all actions which appear to the Adviser
necessary to carry into effect such purchase and sale programs, and
supervisory functions including the placing of orders for the purchase
and sale of portfolio securities.
THIRD: As its sole compensation for the services supplied to the Fund
hereunder, the Fund shall pay to the Adviser an investment advisory fee computed
by applying to the average daily net asset value of the Fund each month one-
twelfth (1/12th) of each of the annual rate as set forth below:
On the Portion of the Fund's Investment Advisory Fee
Average Daily Net Assets Annual Rate
---------------------------- -----------------------
Not exceeding $100,000,000 .750 of 1%
Exceeding $100,000,000 but
not exceeding $200,000,000 .625 of 1%
Exceeding $200,000,000 but
not exceeding $300,000,000 .500 of 1%
Exceeding $300,000,000 .400 of 1%
<PAGE>
The "average daily net asset value" of the Fund for a particular
period shall be determined by adding the net asset values as regularly
computed by the Fund each day during such period and dividing the resulting
total by the number of days during such period.
The investment advisory fee for each month shall each be payable as
soon as practicable after the last business day of such month.
FOURTH: Any investment program undertaken by the Adviser pursuant to this
Agreement, as well as any other activities undertaken by the Adviser on behalf
of the Fund pursuant thereto, shall at all times be subject to any directives of
the Board of Directors of the Fund, the Executive Committee of said Board, any
other Committee or Committees of the Fund acting pursuant to authority of the
Board, or any officer of the Fund acting pursuant to authority of the Board, or
any officers of the Fund acting pursuant to like authority.
FIFTH: In carrying out its obligations under this Agreement, Adviser shall
at all times conform to:
(1) All applicable provisions of the Investment Company Act of 1940, as
amended, and any rules and regulations adopted thereunder;
(2) The provisions of the Articles of Incorporation of the Fund as amended
from time to time;
(3) The provisions of the By-Laws of the Fund as amended from time to
time;
(4) The provisions of the registration statements of the Fund under the
Securities Act of 1933 and the Investment Company Act of 1940, as
amended from time to time;
(5) Any other applicable provisions of state or federal laws.
In connection with purchases or sales of portfolio securities for the
account of the Fund neither the Adviser nor any officer or director of the
Adviser shall act as a principal or receive any commission other than its
compensation provided for in paragraph THIRD hereof.
SIXTH: The Adviser shall not be liable for any error of judgement or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by the Adviser of its
obligations and duties under this Agreement.
SEVENTH: This Agreement shall become effective on the date set forth above
and shall continue in effect until August 15, 1990. Thereafter, this Agreement
will continue in effect for additional one year periods only so long as such
continuance is specifically approved at least annually by the Board of Directors
or by vote of a majority of the outstanding voting securities of the Fund, and
in either case by the specific approval of a majority of the directors who are
not parties to such contract or agreement, or "interested" persons of any such
parties, cast in person at a meeting called for the purpose of voting on such
approval, the term "interested" persons for this purpose having the meaning
defined in Section 2 (a)(19) of the Investment Company Act of 1940, as amended.
EIGHTH: This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding voting securities of the Fund, or by
the Adviser, on sixty (60) days' written notice to the other party.
NINTH: This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2 (a)(4) of the Investment Company Act of 1940.
TENTH: Any notice under this Agreement shall be in writing addressed and
delivered or mailed postage paid to the other party, at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Fund and that of the
Adviser for this purpose shall be One Moody Plaza, Galveston, Texas 77550.
2
<PAGE>
ELEVENTH: No amendment to this Agreement shall be effective until approved
by vote of the holders of a majority of the outstanding shares of the Fund as
defined in the Investment Company Act of 1940.
TWELFTH: This Investment Advisory Agreement is separate and distinct from,
and neither affects nor is affected by, the Underwriting Agreement to be entered
into between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on the day and year first above written.
AMERICAN NATIONAL INCOME FUND, INC.
By: STEVEN H. STUBBS
Steven H. Stubbs, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: BEN A. HOCK, JR.
Ben A. Hock, Jr.
Senior Vice President
3
<PAGE>
EXHIBIT 99.B6
UNDERWRITING AGREEMENT
BETWEEN
AMERICAN NATIONAL INCOME FUND, INC.
AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS UNDERWRITING AGREEMENT (the "Agreement") is made and entered into
this 1st day of May, 1993, by and between AMERICAN NATIONAL INCOME FUND,
INC., a Maryland corporation hereinafter referred to as the "Fund", and
SECURITIES MANAGEMENT AND RESEARCH, INC., a Florida corporation hereinafter
referred to as the "Underwriter".
In consideration of the mutual covenants contained in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Underwriter and the Fund hereby agree as follows:
1. The Fund hereby appoints the Underwriter as exclusive distributor of the
shares of the Fund. During the term of this Agreement and any continuation
thereof, the Fund will sell or agree to sell any of its shares except to or
through the Underwriter at a public offering price determined in accordance
with Paragraph 3 hereof; PROVIDED, HOWEVER, that the Fund may issue shares at
net asset value:
(a) in connection with the merger or consolidation of any investment
company with the Fund or the acquisition by purchase or otherwise of
all or substantially all of the assets of any investment company by
the Fund;
(b) to the Fund's shareholders upon their reinvestment of dividends of the
Fund from net investment income or representing distributions of the
Fund from net realized capital gains;
(c) to the shareholders of the American National Growth Fund, Inc.,
Triflex Fund, Inc. and SM&R Capital Funds, Inc. (plus any differential
in sales charge in any series of the SM&R Capital Funds, Inc.)
pursuant to paragraph 5. hereof,
(d) to one or more unit investment trusts organized under the Investment
Company Act of 1940 and sponsored by the Underwriter; and
(e) to such other persons and entities approved or recommended by
Underwriter which the Fund's Board of Directors may from time to time
approve.
2. The Underwriter hereby accepts appointment as exclusive distributor of
the shares of the Fund and agrees that it will use its best efforts to sell
such shares; PROVIDED, HOWEVER, that by accepting this appointment as
exclusive distributor of the Fund shares, the Underwriter does not undertake
to sell all or any specified portion of the shares of the Fund.
3. The Underwriter agrees to offer shares of the capital stock of the Fund
to the public through its representatives and through dealers having sales
agreements with the Underwriter (PROVIDED, HOWEVER, that nothing provided for
in this Agreement shall obligate the Underwriter to execute sales agreements
with dealers or to sell any shares to dealers) at an offering price equal to
the sum of:
(a) the net asset value per share which is or becomes effective for such
order of the Fund shares, and
(b) such sales charge as may be fixed by the Underwriter with the approval
of the Board of Directors of the Fund but which shall in no event
exceed five and three-quarter percent (5 3/4%) of the offering price
of the Fund shares increased to the next higher even cent.
1
<PAGE>
The "net asset value" of the Fund shares shall be computed by or on behalf
of the Fund, subject to and in conformity with:
(a) the Fund's Articles of Incorporation and By-Laws; and
(b) the applicable rules and regulations under the Investment Company Act
of 1940 by the Securities and Exchange Commission or by any securities
association of which the Underwriter is a member and is registered
under Section 15A of the Securities Exchange Act of 1934.
The full net asset value for the Fund shares purchased shall be remitted
to the Fund promptly after payment is received by the Underwriter and in no
event later than twelve (12) days after each purchase. The sales charge
received shall be retained by the Underwriter, and the Underwriter may fix
the portion of the sales charge to be allowed to its representatives or to
dealers having sales agreements with the Underwriter.
4. The Underwriter shall require the Fund to issue shares only to the
extent necessary (except for reasonable allowances for clerical errors,
delays and errors of transmission and cancellation of orders) to fill
unconditional orders for shares of the Fund placed with the Underwriter by
investors and dealers and not in excess of such unconditional orders, and the
Underwriter will not avail itself of any opportunity of making a profit by
expediting or withholding orders. In the event payment is not received by
the Underwriter for shares so issued by the Fund, the Underwriter shall
reimburse the Fund for the net asset value applicable to such purchase, and
thereafter the shares so issued will be redeemed at the net asset value
applicable at the time of redemption.
5. The Fund, Triflex Fund, Inc., the American National Growth Fund, Inc.,
and SM&R Capital Funds, Inc. have agreed to extend the privilege to
shareholders of such corporations to exchange shares owned by a shareholder
of one of such corporations into shares of the other corporation. Such
exchanges shall be on terms recommended or approved by the Underwriter which
the Fund's Board of Directors may from time to time approve. It is
understood that the Underwriter has agreed to waive its right to that portion
of the sales charge on shares exchanged pursuant to such exchange privilege.
6. The Fund hereby authorizes the Underwriter to redeem upon the terms and
conditions hereinafter set forth, as agent of the Fund and for its account,
such shares of stock of the Fund as may be offered for redemption to the Fund
from time to time:
(a) The Underwriter may accept redemption requests from a stockholder of
record (including a request from an agent of such stockholder), to
redeem such shares at a price equal to the net asset value per share
which is or becomes effective for such redemption, computed as set
forth in paragraph 3. hereof.
(b) The Underwriter agrees that all redemptions of the Fund's shares made
by it after this Agreement becomes effective shall be made only as
agent for the account of the Fund and pursuant to the terms and
conditions herein set forth.
(c) The Fund reserves the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such
suspension or revocation shall be effective forthwith upon receipt of
notice by an officer of the Underwriter by telegraph or written
instrument from an officer of the Fund duly authorized by its Board of
Directors. In the event that the authorization of the Underwriter is,
by terms of such notice, suspended:
(i) for more than forty-eight (48) hours, excluding from such period
any day on which the New York Stock Exchange is not open, or
(ii) until further notice, the authorization given by this Article 6
shall not be revived except by vote of the Board of Directors of
the Fund.
(d) The Underwriter shall have the right to terminate the operation of
this Article 6. upon giving to the Fund thirty (30) days' written
notice thereof.
2
<PAGE>
(e) The Underwriter shall receive no commissions in respect of any
redemptions under the foregoing authorization and appointment as
agent.
7. The Underwriter covenants and agrees that in selling the shares of the
Fund, it will in all respects duly conform with all state and federal laws
relating to the sale of such securities, and will indemnify and save harmless
the Fund from any damage or expenses on account of any wrongful act by it or
its representatives. Neither the Underwriter nor any dealer nor any other
person is authorized by the Fund to give any information or to make any
representations other than those contained in the Registration Statement or
Prospectus filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (as said Registration Statement and
Prospectus may be amended from time to time), covering the shares of the Fund
or additional sales literature supplied by the Underwriter.
8. In connection with the purchase or sales of portfolio securities for the
account of the Fund, neither the Underwriter nor any officer or director of
the Underwriter shall act as principal.
9. This Agreement shall become effective on the date hereof and shall
continue in effect for a period of one (1) year and thereafter only so long
as such continuance is specifically approved at least annually by the Board
of Directors or by a vote of a majority of the outstanding voting securities
of the Fund, and in either case, by the specific approval by a majority of
the directors, who are not parties to such contract or agreement or
"interested" persons of any such parties, cast in person at a meeting called
for the purpose of voting on such approval, the term "interested" persons for
this purpose having the meaning defined in Section 2(a)(19) of the Investment
Company Act of 1940, as amended.
This Agreement may be terminated at any time without the payment of any
penalty, by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding shares of the Fund, or by the
Underwriter, on sixty (60) days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined
in Section 2(a)(4) of the Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized and their corporate
seals to be affixed as of the time, day and year first above written.
AMERICAN NATIONAL INCOME FUND, INC.
By: STEVEN H. STUBBS
Steven H. Stubbs, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: TERESA E. AXELSON
Teresa E. Axelson, Vice President
3
<PAGE>
EXHIBIT 99.B8a
CUSTODIAN CONTRACT
BETWEEN
AMERICAN NATIONAL INCOME FUND, INC.
AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS CONTRACT between AMERICAN NATIONAL INCOME FUND, INC., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at Two Moody Plaza, Galveston, Texas 77550, hereinafter called the
"Fund", and SECURITIES MANAGEMENT AND RESEARCH, INC., a Florida corporation
having its principal place of business at Two Moody Plaza, Galveston, Texas
77550, hereinafter called the "Custodian",
W I T N E S S E T H:
That in consideration of the mutual covenants and agreements hereinafter
contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT.
The Fund hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Articles of Incorporation. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock,
$1.00 par value ("Shares") of the Fund as may be issued or sold from time to
time. The Custodian shall not be responsible for any property of the Fund held
or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section 2.17),
the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with an applicable vote by the Board of Directors of the
Fund, and provided that the Custodian, while responsible for the actions for any
subcustodian shall have no more or less responsibility or liability to the Fund
on account of the use of the subcustodian. It is contemplated by the Fund and
the Custodian that the Custodian shall enter into a sub-custodian agreement with
the Moody National Bank of Galveston, a national bank, having it principal place
of business at 2302 Postoffice Street, Galveston, Texas 77550.
The Custodian shall indemnify and shall hold the Fund harmless for all acts
or omissions of any subcustodian and shall be responsible to the Fund for all
such acts or omissions of a subcustodian had been committed directly by the
Custodian.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE
CUSTODIAN.
2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of the Fund all non-cash property, including all
securities owned by the Fund, other than securities which are maintained
pursuant to Section 2.12 in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S. Department of
the Treasury, collectively referred to herein as "Securities System".
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions,which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
1
<PAGE>
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; PROVIDED, that
in any such case, the cash or other consideration is to be delivered
to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or Nominee name of any sub-
custodian appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence representing
the same aggregate face amount or number of units; provided, that in
any such case, the new securities are to be delivered to the
Custodian;
(7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; PROVIDED that in any
such case, the Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Custodian's own negligence or willful misconduct;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided, that in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; PROVIDED, that in any such
case, the new securities and cash, if any, are to be delivered to the
Custodian;
(10) For delivery in connection with any loans of securities made by
the Fund, BUT ONLY against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund, which may be in
the form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be credited to
the Custodian's account in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian will not be held liable
or responsible for the delivery of securities owned by the Fund prior
to the receipt of such collateral;
(11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, BUT ONLY against
receipt of amounts borrowed;
(12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
(13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission
2
<PAGE>
and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Fund;
(14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of Shares in connection with distributions in kind, as may be
described from time to time in the Fund's currently effective
prospectus and statement of additional information ("prospectus"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
(15) For any other proper corporate purpose, BUT ONLY upon receipt of,
in addition to Proper Instructions, a certified copy of a resolution
of the Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purposes to be proper corporate purposes, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Fund or in
the name of any nominee of the Fund or of any nominee of the Custodian
which nominee shall be assigned exclusively to the Fund, UNLESS the Fund
has authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.11 or in the name or nominee name of any sub-
custodian appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Fund under the terms of this Contract shall be
in "street name" or other good delivery form.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate
bank account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; PROVIDED, HOWEVER, that every such bank or trust company shall
be qualified to act as a custodian under the Investment Company Act of 1940
and that each such bank or trust company and the funds to be deposited with
each such bank or trust company shall be approved by vote of a majority of
the Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 PAYMENTS FOR SHARES. The Custodian shall receive from the
distributor for the Fund's Shares or from the Transfer Agent of the Fund
and deposit into the Fund's account such payments as are received for
Shares of the Fund issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund and the Transfer
Agent of any receipt by it of payments for Shares of the Fund.
2.6 INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the receipt
of Proper Instructions,
(1) invest in such instruments as may be set forth in such
instructions on the same day as received all federal funds received
after a time agreed upon between the Custodian and the Fund; and
(2) make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.7 COLLECTION OF INCOME. The Custodian shall collect on a timely basis
all income and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law
3
<PAGE>
or pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities are
held by the Custodian or agent thereof and shall credit such income, as
collected, to the Fund's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on securities
held hereunder. Income due the Fund on securities loaned pursuant to
the provisions of Section 2.2(10) shall be the responsibility of the
Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Fund is properly
entitled.
2.8 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
(1) Upon the purchase of securities, futures contracts or options on
futures contracts for the account of the Fund but only (a) against the
delivery of such securities, or evidence of title to futures contracts
or options on futures contracts, to the Custodian (or any bank,
banking firm or trust company doing business in the United States or
abroad which is qualified under the Investment Company Act of 1940, as
amended, to act as a custodian and has been designated by the
Custodian as its agent for this purpose) registered in the name of
the Fund or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in the case of
a purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof; or (c) in the case
of repurchase agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares issued by the Fund as
set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by the Fund,
including, but not limited to, the following payments for the account
of the Fund: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as
deferred expenses;
(5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors or of the Executive Committee of the Fund
signed by an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment, setting
forth the purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or persons to
whom such payment is to be made.
2.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of securities for the account of the Fund
is made by the Custodian in advance of receipt of the securities purchased
in the absence of specific written instructions from the Fund to so pay in
advance, the Custodian shall be
4
<PAGE>
absolutely liable to the Fund for such securities to the same extent as
if the securities had been received by the Custodian, EXCEPT that in the
case of repurchase agreements entered into by the Fund with a bank which
is a member of the Federal Reserve System, the Custodian may transfer
funds to the account of such bank prior to the receipt of written
evidence that the securities subject to such repurchase agreement have
been transferred by book-entry into a segregated non-proprietary account
of the Custodian maintained with the Federal Reserve Bank or of the
safe-keeping receipt, PROVIDED, that such securities have in fact been
so transferred by book- entry.
2.10 PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND. From
such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of
the Board of Directors of the Fund pursuant thereto, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds available
for payment to holders of Shares who have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In connection with
the redemption or repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares of
the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
2.11 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
PROVIDED, HOWEVER, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
2.12 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
(1) The Custodian may keep securities of the Fund in a Securities
System PROVIDED that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
(3) The Custodian shall pay for securities purchased for the account
of the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon (i) receipt
of advice from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment
for the account of the Fund. Copies of all advises from the
Securities System of transfers of securities for the account of the
Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund in the form of a written advice or
notice and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System for
the account of the Fund.
5
<PAGE>
(4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
(5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such loss
or damage if and to the extent that the Fund has not been made whole
for any such loss or damage.
2.13 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in an
account by the Custodian pursuant to Section 2.12 hereof, (i) in accordance
with the provisions of any agreement among the Fund, the Custodian and a
broker dealer registered under the Exchange Act and a member of the NASD
(or any futures commission merchant registered under The Commodity Exchange
Act), relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for purposes
of segregating cash or government securities in connection with options
purchased, sold or written by the Fund or commodity futures contracts or
options thereon purchased or sold by the Fund, (iii) for the purposes of
compliance by the Fund with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other
proper corporate purposes, BUT ONLY, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Directors or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper corporate purposes.
2.14 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
2.15 PROXIES. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.16 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The Custodian
shall transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of securities and
expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian from
issuers of the securities being held for the Fund. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
6
<PAGE>
2.17 PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Article 2 means a writing signed or initialled by one or more person or
persons as the Board of Directors shall have from time to time authorized.
Each such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered
Proper Instructions if the Custodian reasonably believes them to have been
given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of
the Fund accompanied by a detailed description of procedures approved by
the Board of Directors, Proper Instructions may include communications
effected directly between electro-mechanical or electronic devices provided
that the Board of Directors and the Custodian are satisfied that such
procedures afford adequate safeguards for the Fund's assets. For purposes
of this Section, Proper Instructions shall include instructions received by
the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.13.
2.18 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in
its discretion, without express authority from the Fund:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided, that all such payments shall be accounted for to
the Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments; and
(4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Directors of the Fund.
2.19 EVIDENCE OF AUTHORITY. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been properly
executed by or on behalf of the Fund. The Custodian may receive and accept
a certified copy of a vote of the Board of Directors of the Fund as
conclusive evidence (a) of the authority of any person to act in accordance
with such vote, or (b) of any determination or of any action by the Board
of Directors pursuant to the Articles of Incorporation as described in such
vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
3. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
NET ASSET VALUE AND NET INCOME.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. . The calculations of the net asset value per share and
the daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
4. RECORDS.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and
7
<PAGE>
state tax laws and any other law or administrative rules or procedures which
may be applicable to the Fund. All such records shall be the property of the
Fund and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund with
a tabulation of securities owned by the Fund and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include certificate
numbers in such tabulations.
5. OPINION OF FUND'S INDEPENDENT ACCOUNTANT.
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-1A, Form N-SAR or other
annual reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
6. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS.
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, which
shall be of sufficient scope and in sufficient detail, as may reasonably be
required by the Fund, to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no such
inadequacies, shall so state.
7. COMPENSATION OF CUSTODIAN.
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
8. RESPONSIBILITY OF CUSTODIAN.
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate agreement entered into between the
Custodian and the Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the
8
<PAGE>
Fund fail to repay the Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of the Fund assets to the extent necessary
to obtain reimbursement.
9. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT.
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; PROVIDED, HOWEVER, that the
Custodian shall not act under Section 2.12 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors of the Fund have approved the initial use of a particular
Securities System and the receipt of an annual certificate of the Secretary or
an Assistant Secretary that the Board of Directors have reviewed the use by the
Fund of such Securities System, to the extent required in each case by Rule 17f-
4 under the Investment Company Act of 1940, as amended; PROVIDED FURTHER,
HOWEVER, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation, and FURTHER PROVIDED, that the Fund may at any
time by action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
10. SUCCESSOR CUSTODIAN.
If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940, of
its own selection, having an aggregate capital, surplus and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian and all instruments
held by the Custodian relative thereto and all other property held by it under
this Contract and to transfer to an account of such successor custodian all of
the Fund's securities held in any Securities System. Thereafter, such bank or
trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of vote referred to or of the
Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint
9
<PAGE>
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in writing signed by both
parties and shall be annexed hereto, PROVIDED that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Articles of Incorporation of the Fund.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
12. TEXAS LAW TO APPLY.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The State of Texas.
13. ADDITIONAL REQUIREMENTS.
Notwithstanding anything to the contrary contained above, the Custodian
agrees that, until such time as it receives an opinion of counsel satisfying to
the Fund, that it is not an affiliate (as defined in the Investment Company Act
of 1940 and rules and regulations issued thereunder) of the Fund, the Custodian
and any sub-custodian employed by the Custodian agrees to comply with Rule 17f-2
under the Investment Company Act of 1940, as such rule may be amended and/or
superseded.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative on
September 12, 1991.
AMERICAN NATIONAL INCOME FUND, INC.
By: STEVEN H. STUBBS
------------------------
President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: GLEN W. FEAGINS
------------------------
Vice President
10
<PAGE>
EXHIBIT 99.B8b
SUB-CUSTODIAN AGREEMENT BETWEEN
THE MOODY NATIONAL BANK OF GALVESTON, TEXAS
AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
Securities Management and Research, Inc. (the "Custodian") requests that The
Moody National Bank of Galveston (the "Sub- Custodian") open a Custody Account
(the "Account") for and in the name of the Custodian on behalf of the American
National Growth Fund, Inc., American National Income Fund, Inc., and the Triflex
Fund, Inc., (the "Funds Group") and requests that the Sub-Custodian hold all
securities and other property now or hereafter deposited in or held by the Sub-
Custodian for each Account (the "Property"). The Sub-Custodian agrees to open
such Account and to provide safekeeping and accounting services, but no
investment services for each such series of the Account.
TERM OF THE AGREEMENT
The terms and conditions under which this Account shall be administered are as
follows:
HOLDING THE PROPERTY The Sub-Custodian holds the Property deposited into the
Account subject to future instructions by the Custodian. The Custodian may
deposit additional Property to the Account, subject to the Sub-Custodian's
acceptance thereof, and the Custodian may direct the Sub-Custodian to
immediately settle trades, sales or exchanges for the Account. The Sub-
Custodian shall not be liable for any losses or unfavorable result arising from
its prompt compliance with Custodian's directions.
The Custodian may withdraw all or any part of the Property from time to
time upon giving written notice and by giving the Sub-Custodian a receipt for
such withdrawn Property.
PROCEEDS FROM SALE Proceeds from the sale, redemption or exchange of securities
or other Properties held in the Account, including all receipts of principal,
shall be subject to the written instructions of the Custodian on behalf of the
Funds Group or as otherwise provided in this Agreement.
INCOME AND CASH BALANCES The Sub-Custodian shall use reasonable efforts to
collect principal and income on the Property, but in the absence of bad faith or
gross negligence, shall have no liability for sums not collected.
The income received by the Sub-Custodian from Property held in the Account
shall be held subject to further instructions of the Custodian.
OWNER; REGISTRATION; PROXIES The Property held in the Account shall be owned by
the Funds Group but, as a matter of convenience, any of the Property may be
registered or retained in the name of the Sub-Custodian's nominee. Proxies
received by the Sub-Custodian with respect to securities shall be promptly
forwarded to the Custodian.
<PAGE>
INFORMATION FURNISHED TO ISSUERS The Custodian has no objection to the Sub-
Custodian furnishing to the companies which issued securities held in this
Account the Customer's name, address and share position, all in accordance with
applicable SEC rules. (The purpose of the rule is to facilitate communications
between issuers of securities and shareholders.)
CUSTOMER'S INSTRUCTIONS All written directions in regard to this Account must
be personally signed by an authorized representative of the Custodian. Written
direction includes those directions received by facsimile transmission.
However, the Sub-Custodian, in its sole discretion, may act in accordance with
directions from the Custodian whether given orally, by telephone, telegraph,
cable radio or otherwise, if it believes such directions to be genuine; but if
such directions are not in writing then the Sub-Custodian shall not be liable
for executing, failure to execute, or for any mistake in the execution thereof,
except in the case of willful misconduct or gross negligence. Custodian agrees
to confirm all oral instructions in writing within a reasonable period of time.
STATEMENTS After the end of each month, the Sub-Custodian shall send to the
Custodian a statement listing all income and principal transactions of the
Account and a statement listing the Property owned by the Funds Group. Each
statement shall be conclusive as to its contents unless the Custodian shall
deliver written objections to the Sub-Custodian within sixty (60) days after
receipt of the statement.
NO TAX LIABILITY The Sub-Custodian shall not be responsible or liable for
determination or payment of any taxes assessed with respect to the Property or
the income thereof nor shall it be responsible for the preparation of filing of
any tax returns, other than withholding required by law.
FEES AND EXPENSES A schedule used in computing the Sub-Custodian's fee is
attached. Such schedule may be amended at any time upon mutual agreement of
both parties.
TERMINATION; INDEMNIFICATION; ETC. Custodian and the Sub-Custodian, upon
execution of this Agreement, agree to be bound by all of its terms and
provisions and further agree that the Agreement shall remain in full force and
effect until June 30, 1993, or until expressly revoked or amended in writing.
Either the Custodian or the Sub-Custodian may terminate or revoke this Agreement
upon written notice delivered to the other, and the Agreement may be amended
upon the mutual agreement of both, in writing.
ACCEPTED BY SUB-CUSTODIAN: ACCEPTED BY CUSTODIAN:
THE MOODY NATIONAL BANK OF SECURITIES MANAGEMENT AND
GALVESTON RESEARCH, INC.
2302 Postoffice One Moody Plaza
Galveston, Texas 77550 Galveston, Texas 77550
BY: CARROLL SUNSERI BY: MICHAEL W. McCROSKEY
------------------------- -------------------------
Michael W. McCroskey
TITLE: Executive Vice President TITLE: President
and Senior Trust Officer --------------------
------------------------- Tax I.D.#59-1145041
--------------------
<PAGE>
REVISED FEE SCHEDULE (MAY 31, 1994)
AMENDMENT NO.1
FEES AND EXPENSES
The following schedule shall be used in computing the Sub-Custodian's fee:
TRADES 25.00
HOLDING FEES 3.50
ASSET FEES .00030 (Includes all out of pocket expenses)
Any terminal or access to system changes shall be billed to Custodian.
<PAGE>
EXHIBIT 99.B10
LEGAL OPINION
March 20, 1996
American National Income Fund, Inc.
One Moody Plaza
Galveston, Texas 77550
RE: American National Income Fund, Inc. (the "Company") Post-Effective
Amendment No. 35 under the Securities Act of 1933 (the "33 Act") and
Post-Effective Amendment No. 22 to the Investment Company Act of 1940 (the
"40 Act")
Gentlemen:
We have assisted you in preparing the above referenced post-effective
amendments to your '33 Act and '40 Act Registration Statements referenced
above. In connection therewith, and in connection with our opinion
furnished in connection with your Rule 24f-2 Notice for your immediately
preceding fiscal year, we have examined the Company's Articles of
Incorporation and such other corporate records, prospectuses and other
material we deemed appropriate. On the basis of such examination, we are of
the opinion that the Company's shares, when sold, will be legally issued,
fully paid and non-assessable. We, of course, assume that the Company will
not sell more than the 50,000,000 shares authorized by its Articles of
Incorporation, and that all sales will be for full value received at the time
of sale.
We consent to the attachment of this opinion to and its use in connection
with the above referenced post-effective amendments.
Yours very truly,
/s/ JERRY L. ADAMS
--------------------
Jerry L. Adams
<PAGE>
EXHIBIT 99.B11
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
American National Funds Group
We consent to the use of our report on the American National Growth Fund,
American National Income Fund and Triflex Fund Inc. dated February 16, 1996
included herein and to the references to our firm under the headings "Financial
Highlights" in the Prospectus and "Counsel and Auditors" in the Statement
of Additional Information.
/s/ KPMG Peat Marwick LLP
Houston, Texas
March 20, 1996
<PAGE>
TIMELY ANSWERS TO SOME FREQUENTLY ASKED QUESTIONS ABOUT
TSA 403(b) CUSTODIAL ACCOUNTS
===============================================================================
This kit is designed to provide you with general information about the
American National Family of Funds TSA Plan. It is not intended as a complete
or definitive explanation of the plan, the provisions of the Employee
Retirement Income Security Act of 1973 or the Tax Code. Neither the Investment
Adviser nor the Custodian is in a position to render legal or tax advice.
Please consult your legal or tax professional if you have any questions in
this regard.
WHAT IS A TAX-SHELTERED 403(b) CUSTODIAL ACCOUNT?
A 403(b) is a voluntary tax-sheltered account (TSA) that allows you to set
aside pre-tax money for retirement through a salary reduction with your
Employer.
WHO IS ELIGIBLE TO PARTICIPATE IN THE PROGRAM?
Employees of a public school or a tax-exempt, non-profit organization which
qualifies under Section 501(c)(3) of the Internal Revenue Code. This includes
hospitals, research foundations, churches, symphony orchestras, scientific
foundations, private non-profit colleges and universities, museums and zoos.
WHY SHOULD I ESTABLISH A TSA?
Contributions to a TSA are deferred from current federal income tax. The
earnings on your TSA also accumulate on a tax-deferred basis allowing your
money to work its hardest for you until you withdraw it. Participation is
voluntary so you control when and how much is contributed.
HOW MUCH CAN I CONTRIBUTE TO MY TSA?
The maximum contribution amount is based on your gross compensation, the
length of time with your current employer, the amounts already contributed to
a TSA, and the type of your employer. A Salary Reduction Maximum Allowable
Deferral Worksheet is provided in the kit to assist you in determining the
maximum amount allowable.
WILL I EVER PAY TAXES ON THIS MONEY?
Yes, your TSA contributions and earnings are tax-deferred. However, you must
pay federal income tax on these amounts once you begin to take distributions.
Usually, due to retirement age and status, your tax bracket will be lower
when your distributions begin. State tax laws vary and you will want to
consult your tax adviser regarding your particular tax situation.
WHEN CAN I WITHDRAW FROM MY 403(b) ACCOUNT?
You may only withdraw from your account upon the occurrence of one of the
following events. Additional restrictions apply if you are a participant in
the State of Texas ORP Program, please refer to the Custodial Agreement for
such restrictions.
- You have separated from service with your employer
- You have become disabled
- You have attained the age 59 1/2
- You have encountered financial hardship within the meaning of code
section 403(b)(7)(ii)
- Your beneficiary may withdraw from your account if you have died
Refer to page 2 of this kit for an explanation of the 20% mandatory
withholding requirements on distributions from your TSA.
CAN I BORROW FROM MY TSA?
No, the American National Family of Funds 403(b) plan does not permit
borrowing.
CAN I TRANSFER AN EXISTING 403(b) ACCOUNT TO THE AMERICAN NATIONAL FAMILY
OF FUNDS?
Yes, you can easily transfer the assets of your existing plan to a Fund in
the American National Family by completing the 403(b)(7) Account Application
and Transfer of Assets Request in this kit.
HOW MAY MY ACCOUNT BE DISTRIBUTED?
Distributions may be taken in lump sum or systematic payments. These
systematic payments should be scheduled over the life expectancy of the
participant, the joint life expectancy of the participant and his or her
spouse, or a specified period not exceeding the combined life expectancy of
the participant and the participant's spouse.
WHEN CAN I ROLL OVER MY TSA INTO AN IRA?
A rollover of your TSA assets into an IRA can take place if you have
separated from service with your employer, attained age 59 1/2 or become
disabled. Such a rollover is permitted subject to certain restrictions which
should be discussed with your tax adviser for further details.
HOW CAN I WITHDRAW MONEY WITHOUT A PREMATURE DISTRIBUTION PENALTY PRIOR TO
AGE 59 1/2, IF NECESSARY?
Withdrawals without a penalty can be taken if you become permanently
disabled, receive substantially equal periodic payments beginning after
termination of employment, or when you reach age 55 and have terminated
employment. If you are a participant in the State of Texas ORP Program, see
the Custodial Agreement for additional restrictions. Consult your tax adviser
for answers to specific questions you may have.
1
<PAGE>
NEW TAX LAW IMPACTS 403(b) DISTRIBUTIONS
===============================================================================
New IRS rules have liberalized which distributions can be rolled over, but
now require plan custodians to automatically withhold 20% from all
distributions eligible for rollover received from 403(b) annuities or mutual
funds.
Under the new law effective January 1, 1993, 403(b) annuity and mutual fund
distributions that are eligible for rollover are subject to 20% mandatory
withholding unless they are directly rolled into an IRA or other eligible
plan. The 20% withholding tax is not a penalty and is paid to the IRS as a
credit toward the employee's income tax liability for that year.
The new law specifies that any 403(b) plan distribution--except those
listed below--is an "eligible rollover distribution." Distributions not
eligible for rollover that allow the participant to elect out of withholding
are:
- Required Minimum Distributions--Employees who reach age 70 1/2 are
required to take distributions. Required minimums have never been
eligible for rollover, and employees may still elect out of withholding
in these cases.
- Substantially equal periodic payments over a single or joint life
expectancy or over a period of at least 10 years--To receive a
substantially equal periodic payment, a participant must have
separated from service (for example, terminated employment).
Participants taking this type of distribution may elect out of
withholding.
- Certain excess, after-tax and "deemed" distributions--While these types
of distributions are not common, custodians should be aware that this
type of distribution cannot be rolled, therefore, is not subject to
the withholding rule, either.
Since all other distributions are eligible for rollover, the 20%
withholding tax can be avoided simply by directly rolling the distribution
into an IRA or another eligible plan.
A direct rollover is actually an easier transaction for an employee than a
"regular" rollover because the custodians do most of the work. The
custodians move the distribution directly between the two plans. The
employee avoids taking physical possession of the distribution and concern
about the 60-day rollover rule is lessened. If employees do choose a
"regular" rollover and take physical possession of the distribution before
rolling it into an IRA or other eligible plan within the allowable 60-day
period, the 20% withholding tax will be imposed.
Generally, employees will take a distribution when they change jobs or
terminate employment for other reasons, thus "triggering" the distribution.
Distributions made for other reasons, or because an employer discontinues a
plan, will generally be eligible for rollover and thus participants may not
elect out of withholding unless they chose the direct rollover option.
The following situations may assist you in understanding the new rules more
clearly.
How to Avoid 20% Withholding
IF you are changing jobs, have been laid off, have terminated
employment...
THEN you can directly roll over your distribution and avoid the mandatory
20% withholding requirement.
IF you are required to take distributions from your 403(b) plan because
you are age 70 1/2 or older...
THEN you may elect out of withholding, but you can't roll over your
distribution.
IF you are receiving "substantially equal" periodic payments because
you've separated from service...
THEN you may elect out of withholding, but you can't roll over your
distribution.
When The 20% Withholding Will Apply
IF you do not directly roll over your distribution and you decide to keep
it...
THEN you'll receive 20% less than you requested, and the entire
distribution will be subject to regular income and possible penalty
taxes as well.
IF you do not directly roll over your distribution but roll everything
you receive within the 60-day allowable time limit...
THEN this is a regular rollover (not a direct rollover), and you will
receive 20% less than you requested; you may make up the difference
from your own pocket and roll 100% of your distribution within the 60-day
limit.
IF you do not directly roll over your distribution and decide to keep
only part of what you receive and roll the rest...
THEN 20% federal income tax will be withheld on the entire distribution.
The portion of the entire distribution that is not rolled over is subject
to regular income and possible penalty taxes. You may also roll the 20%
withheld by making it up out of your own pocket.
The new withholding requirements make it important for you to receive
professional financial or tax advice before a distribution is taken, so that
20% withholding can be avoided.
2
<PAGE>
INSTRUCTIONS FOR ESTABLISHING A 403(b)(7) ACCOUNT IN THE AMERICAN NATIONAL
FAMILY OF FUNDS
_______________________________________________________________________________
TO ESTABLISH A NEW ACCOUNT
1. Complete 403(b)(7) Account Application (Numbers 1-3, 5-7, and 9)
2. Complete Beneficiary Information, page 4
3. Submit a check for $7.50 custodian fee
TO TRANSFER FROM ANOTHER INSTITUTION
1. Complete 403(b)(7) Account Application (Numbers 1-7, and 9)
2. Complete Transfer of Assets Request Form, page 9
3. Complete Beneficiary Information, page 4
4. Submit a check for $7.50 custodian fee
TO ROLLOVER ASSETS FROM ANOTHER INSTITUTION
1. Complete 403(b)(7) Account Application (Numbers 1-7, and 9)
2. Complete Beneficiary Information, page 4
3. Attach check for amount of rollover received from the institution
4. Submit a check for $7.50 custodian fee
TO ESTABLISH AN ORP (STATE OF TEXAS ONLY)
1. Complete 403(b)(7) Account Application (Numbers 1-9)
2. Complete Beneficiary Information, page 4
3. Complete ORP Participant Acknowledgement and Disclosure Statement below
4. If both the employee and state contributions will be invested in the
Primary Series, complete two separate applications, indicate "state" on
the application for the state contribution
5. Submit a check for $7.50 custodian fee
TWO APPLICATIONS HAVE BEEN INCLUDED IN THIS KIT TO ALLOW FOR THE
ESTABLISHMENT OF BOTH ORP (STATE OF TEXAS APPROVED INSTITUTIONS ONLY) AND TSA
ACCOUNTS FOR AN INDIVIDUAL.
Mail all completed documents to:
Securities Management & Research, Inc.
One Moody Plaza, 14th Floor
Galveston, TX 77550
_______________________________________________________________________________
ORP ONLY
ORP PARTICIPANT ACKNOWLEDGEMENT AND
DISCLOSURE STATEMENT
______________________________________________________________________________
THIS ACKNOWLEDGEMENT MUST ACCOMPANY ALL APPLICATIONS COMPLETED FOR
PARTICIPATION IN THE TEXAS OPTIONAL RETIREMENT PROGRAM.
I acknowledge that I have been informed of the restrictions imposed on
redemptions under ORP. I understand that no distribution from the custodial
account established under ORP shall be made unless satisfactory evidence of
one of the following conditions is provided to Securities Management &
Research, Inc., the Custodian, by my Employer.
1. Death of Participant
2. Termination of Service with Employer
3. Retirement of Participant
Furthermore, I understand that ORP does not allow the withdrawal of proceeds
from the Program for:
1. Financial hardship
2. Treatment as a premature distribution
3. Reaching age 59-1/2
_______________________________________
Participant's Signature
_______________________________________
Date
_______________________________________
Representative's Signature
_______________________________________
Date
3
<PAGE>
BENEFICIARY INFORMATION (TO BE COMPLETED AND SUBMITTED WITH APPLICATION(S))
_______________________________________________________________________________
The following designations(s) is (are) subject to the provisions of the Plan.
This designation of beneficiary(ies) remains in effect unless and until a new
designation of beneficiary form is sent, in writing, to the Custodian. This
designation may be revoked and a different beneficiary named by providing the
Custodian with a newly executed Designation of Beneficiary form. Indicate a
percentage amount for each named beneficiary to avoid the possibility of
court intervention. Special beneficiary arrangements should be outlined in
your will. If you are not survived by any designated beneficiary, your estate
will be your beneficiary.
PRIMARY BENEFICIARY
1. Name _______________________________
Date of Birth ______________________
Relationship________________________
Share %______________SSN____________
Address_____________________________
City________________________________
State___________________Zip_________
2. Name _______________________________
Date of Birth ______________________
Relationship________________________
Share %______________SSN____________
Address_____________________________
City________________________________
State___________________Zip_________
SECONDARY BENEFICIARY: (If the person(s) named above should fail to survive
me)
1. Name _______________________________
Date of Birth ______________________
Relationship________________________
Share %______________SSN____________
Address_____________________________
City________________________________
State___________________Zip_________
1. Name _______________________________
Date of Birth ______________________
Relationship________________________
Share %______________SSN____________
Address_____________________________
City________________________________
State___________________Zip_________
Payment will be made in equal shares to the primary beneficiary who survives
me, or if none, to the secondary beneficiary who survives me. If no
beneficiary survives me, payment will be made to my estate.
4
<PAGE>
|------------------------------------------|
403(b)(7) ACCOUNT APPLICATION | HOME OFFICE USE |
_________________________________ |------------------------------------------|
| Account Number |
|---------------------|--------------------|
| Account Type | Social Code |
|---------------------|--------------------|
| FI Number | LOI Amount |
|---------------------|--------------------|
______________________________________________________________________________
1. EMPLOYEE INFORMATION
Name _________________________________________________________________________
SSN _______________________________________________ Birthdate ________________
Address ______________________________________________________________________
City ______________________________________ State _______________ Zip ________
Phone Day _______________________________________________ Evening ____________
______________________________________________________________________________
2. EMPLOYER INFORMATION
Name _________________________________________________________________________
Address ______________________________________________________________________
City ______________________________________ State _______________ Zip ________
______________________________________________________________________________
3. ACCOUNT TYPE
/ / 403(b)(7)
/ / Texas Optional Retirement Program (ORP). An ORP is a 403(b) plan
available to institutions of higher education in the State of Texas. The
term 403(b) also applies to ORP accounts whenever mentioned in any 403(b)
documents in this Kit.
______________________________________________________________________________
4. TRANSFER OF ROLLOVER ACCOUNTS
Please complete this section ONLY if you are transferring your 403(b) account
to one of the Funds in the American National Family of Funds FROM ANOTHER
INSTITUTION.
/ / A transfer of funds from ANOTHER 403(b) account is pending. A transfer
request is attached and a check for the $7.50 custodian fee is enclosed.
/ / I am rolling over my 403(b) account to one of the Funds in the American
National Family of Funds from another institution. I have liquidated the
former account and attached a check for the proceeds, which are to be
invested in an American National 403(b) account. I have enclosed a check
for the $7.50 custodian fee.
PLEASE MAKE CHECK PAYABLE TO
SECURITIES MANAGEMENT & RESEARCH, INC.
______________________________________________________________________________
5. FUND SELECTION AND CONTRIBUTION INFORMATION (if more than one fund
selected, indicate amount or percentage to be invested in each fund or
series.)
Total Amount of Salary Reduction $____________________________________________
/ / 21 Growth Fund $_______________________ or ____________________%
/ / 22 Income Fund $_______________________ or ____________________%
/ / 23 Triflex Fund $_______________________ or ____________________%
/ / 26 Government
Income Series $_______________________ or ____________________%
/ / 27 Primary Series $_______________________ or ____________________%
SUBSEQUENT CONTRIBUTIONS $_____________________________________________
/ / monthly / / quarterly / / annually / / other _______________________
Billing Franchise # _________________________
______________________________________________________________________________
6. LETTER OF INTENT (Not applicable to Primary Series)
I agree to the terms of the Letter of Intent as set forth in the respective
Prospectus. Although I am not obligated to do so. It is my intention to
invest over a 13 month period in shares of one or more funds an aggregate
amount at least equal to that which is checked below. If existing accounts
are to be included, list under #7 below.
/ / $50,000 / / $100,000* / / $250,000
/ / $500,000 / / $1,000,000 / / $1,500,000
(*Government Income Series begins at $100,000)
______________________________________________________________________________
7. SALES CHARGE REDUCTION (Not applicable to Primary Series)
List all Existing Accounts. There will be no retroactive reduction of the
sales charge for shares previously purchased if this section is not completed.
Fund and Account Nos. ________________________________________________________
______________________________________________________________________________
5
<PAGE>
______________________________________________________________________________
8. ORP VESTING INFORMATION (complete only if you will be a State of Texas ORP
participant)
Please check the statement below that applies to your vesting status in the
Optional Retirement Plan (ORP).
/ / YES, I have participated in the ORP for one year and one day and am
vested in the Program.
/ / NO, I have not participated in the ORP Program long enough to have met
the vesting requirements (one year and one day).
I understand that:
1. The contributions made by my employer on my behalf will be invested in
the Primary Series until the vesting requirements have been met;
2. Once I am vested, the State's matching contributions may be exchanged
into another fund upon authorization; AND
3. I have received and read a current prospectus of the fund selected.
_____________________________________________________________________________
9. SIGNATURE
The Employee hereby: (a) appoints Securities Management and Research, Inc.
("SM&R") as Custodian of the account; (b) acknowledges that he/she has
received a current prospectus(es) of the American National Funds Group and/or
SM&R Capital Funds, Inc. and has selected and agreed to the terms as stated
in the prospectus; (c) consents to the $7.50 (per account) initial
installation fee, the $7.50 (per account) annual maintenance fee and the
$5.00 excess contribution adjustment fee. Such fees are subject to change on
30 days written notice to the Employee; (d) acknowledges that he/she has
received a copy of the Custodial Agreement; (e) has obtained Employer's
consent to participate in the Agreement and is an Employee of an Employer
defined in the Agreement; (f) acknowledges responsibility for computing the
maximum annual contribution and for notifying custodian of the amount of
excess contributions, if any; and (g) agrees to the conditions governing the
designation of beneficiary, and (h) certifies under penalty of perjury that
the information contained in this application and supporting documents, are
true, correct and complete.
Employee's Signature
______________________________________________________________________________
Date: ___________________________________
CUSTODIAN: SECURITIES MANAGEMENT AND RESEARCH, INC.
This account becomes effective on the date the Custodian, or its agent,
accepts the application by issuing an investment confirmation to the
Employee, provided the Employee is not notified to the contrary within 30
days.
REPRESENTATIVE INFORMATION
______________________________________________________________________________
Representative Name (Please Print)
______________________________________________________________________________
Representative Signature
______________________________________________________________________________
SM&R Rep. Social Security Number
DEALER INFORMATION
______________________________________________________________________________
Dealer/Representative Name & Number
______________________________________________________________________________
Dealer/Representative Signature
______________________________________________________________________________
SM&R Dealer No. (Internal Use Only)
6
<PAGE>
|------------------------------------------|
403(b)(7) ACCOUNT APPLICATION | HOME OFFICE USE |
_________________________________ |------------------------------------------|
| Account Number |
|---------------------|--------------------|
| Account Type | Social Code |
|---------------------|--------------------|
| FI Number | LOI Amount |
|---------------------|--------------------|
______________________________________________________________________________
1. EMPLOYEE INFORMATION
Name _________________________________________________________________________
SSN _______________________________________________ Birthdate ________________
Address ______________________________________________________________________
City ______________________________________ State _______________ Zip ________
Phone Day _______________________________________________ Evening ____________
______________________________________________________________________________
2. EMPLOYER INFORMATION
Name _________________________________________________________________________
Address ______________________________________________________________________
City ______________________________________ State _______________ Zip ________
______________________________________________________________________________
3. ACCOUNT TYPE
/ / 403(b)(7)
/ / Texas Optional Retirement Program (ORP). An ORP is a 403(b) plan
available to institutions of higher education in the State of Texas. The
term 403(b) also applies to ORP accounts whenever mentioned in any 403(b)
documents in this Kit.
______________________________________________________________________________
4. TRANSFER OF ROLLOVER ACCOUNTS
Please complete this section ONLY if you are transferring your 403(b) account
to one of the Funds in the American National Family of Funds FROM ANOTHER
INSTITUTION.
/ / A transfer of funds from ANOTHER 403(b) account is pending. A transfer
request is attached and a check for the $7.50 custodian fee is enclosed.
/ / I am rolling over my 403(b) account to one of the Funds in the American
National Family of Funds from another institution. I have liquidated the
former account and attached a check for the proceeds, which are to be
invested in an American National 403(b) account. I have enclosed a check
for the $7.50 custodian fee.
PLEASE MAKE CHECK PAYABLE TO
SECURITIES MANAGEMENT & RESEARCH, INC.
______________________________________________________________________________
5. FUND SELECTION AND CONTRIBUTION INFORMATION (if more than one fund
selected, indicate amount or percentage to be invested in each fund or
series.)
Total Amount of Salary Reduction $____________________________________________
/ / 21 Growth Fund $_______________________ or ____________________%
/ / 22 Income Fund $_______________________ or ____________________%
/ / 23 Triflex Fund $_______________________ or ____________________%
/ / 26 Government
Income Series $_______________________ or ____________________%
/ / 27 Primary Series $_______________________ or ____________________%
SUBSEQUENT CONTRIBUTIONS $_____________________________________________
/ / monthly / / quarterly / / annually / / other _______________________
Billing Franchise # _________________________
______________________________________________________________________________
6. LETTER OF INTENT (Not applicable to Primary Series)
I agree to the terms of the Letter of Intent as set forth in the respective
Prospectus. Although I am not obligated to do so. It is my intention to
invest over a 13 month period in shares of one or more funds an aggregate
amount at least equal to that which is checked below. If existing accounts
are to be included, list under #7 below.
/ / $50,000 / / $100,000* / / $250,000
/ / $500,000 / / $1,000,000 / / $1,500,000
(*Government Income Series begins at $100,000)
______________________________________________________________________________
7. SALES CHARGE REDUCTION (Not applicable to Primary Series)
List all Existing Accounts. There will be no retroactive reduction of the
sales charge for shares previously purchased if this section is not completed.
Fund and Account Nos. ________________________________________________________
______________________________________________________________________________
7
<PAGE>
______________________________________________________________________________
8. ORP VESTING INFORMATION (complete only if you will be a State of Texas ORP
participant)
Please check the statement below that applies to your vesting status in the
Optional Retirement Plan (ORP).
/ / YES, I have participated in the ORP for one year and one day and am
vested in the Program.
/ / NO, I have not participated in the ORP Program long enough to have met
the vesting requirements (one year and one day).
I understand that:
1. The contributions made by my employer on my behalf will be invested in
the Primary Series until the vesting requirements have been met;
2. Once I am vested, the State's matching contributions may be exchanged
into another fund upon authorization; AND
3. I have received and read a current prospectus of the fund selected.
_____________________________________________________________________________
9. SIGNATURE
The Employee hereby: (a) appoints Securities Management and Research, Inc.
("SM&R") as Custodian of the account; (b) acknowledges that he/she has
received a current prospectus(es) of the American National Funds Group and/or
SM&R Capital Funds, Inc. and has selected and agreed to the terms as stated
in the prospectus; (c) consents to the $7.50 (per account) initial
installation fee, the $7.50 (per account) annual maintenance fee and the
$5.00 excess contribution adjustment fee. Such fees are subject to change on
30 days written notice to the Employee; (d) acknowledges that he/she has
received a copy of the Custodial Agreement; (e) has obtained Employer's
consent to participate in the Agreement and is an Employee of an Employer
defined in the Agreement; (f) acknowledges responsibility for computing the
maximum annual contribution and for notifying custodian of the amount of
excess contributions, if any; and (g) agrees to the conditions governing the
designation of beneficiary, and (h) certifies under penalty of perjury that
the information contained in this application and supporting documents, are
true, correct and complete.
Employee's Signature
______________________________________________________________________________
Date: ___________________________________
CUSTODIAN: SECURITIES MANAGEMENT AND RESEARCH, INC.
This account becomes effective on the date the Custodian, or its agent,
accepts the application by issuing an investment confirmation to the
Employee, provided the Employee is not notified to the contrary within 30
days.
REPRESENTATIVE INFORMATION
______________________________________________________________________________
Representative Name (Please Print)
______________________________________________________________________________
Representative Signature
______________________________________________________________________________
SM&R Rep. Social Security Number
DEALER INFORMATION
______________________________________________________________________________
Dealer/Representative Name & Number
______________________________________________________________________________
Dealer/Representative Signature
______________________________________________________________________________
SM&R Dealer No. (Internal Use Only)
8
<PAGE>
TRANSFER OF ASSETS REQUEST
===============================================================================
Contact your current custodian or insurance company for their requirements
before completing.
Complete this form to transfer your present 403(b) account held at another
institution to one of the funds in the American National Family of Funds and
return to Securities Management and Research, Inc. Securities Management and
Research, Inc. will forward these instructions to your present custodian or
insurance company. Your current custodian may require a separate letter of
instruction, a signature guarantee or an annuity contract, if issued.
EMPLOYEE INFORMATION
Name:__________________________________________________________________________
Soc. Sec. #:___________________________________________________________________
Date of Birth: ________________________________________________________________
Address: ______________________________________________________________________
City, State, Zip ______________________________________________________________
TRANSFER FROM YOUR PRESENT 403(B) ACCOUNT
Name of insurance Company or Present Custodian:
_______________________________________________________________________________
Address: ______________________________________________________________________
City, State, Zip: _____________________________________________________________
Account Number(s): ____________________________________________________________
EMPLOYEE'S AUTHORIZATION FOR TRANSFER
To Resigning Custodian or Trustee:
I request / / FULL / / PARTIAL $___________________________________
Liquidation and transfer of my tax sheltered annuity or custodial account(s)
established pursuant to Internal Revenue Code Section 403(b) / / IMMEDIATELY
or / / AT MATURITY. I have established a 403(b) plan with the American
National Family of Funds and have appointed Securities Management and
Research, Inc. as the successor custodian to accept this tax-free transfer of
my present Account
_______________________________________________________________________________
Signature
_______________________________________________________________________________
Date
_______________________________________________________________________________
Signature guarantee, if required by Resigning Custodian
If you have any questions regarding the transfer request, please contact
/ / Securities Management and Research, Inc.
at 1-800-231-4639
/ / Shareholder (Daytime Phone) ( )_______________________-
INVESTMENT OF TRANSFERRED PROCEEDS
/ / I am opening a new account and have attached a completed application
/ / Please deposit the transferred proceeds in my existing 403(b) custodial
account number:
_______________________________________________________________________________
ACCEPTANCE BY NEW CUSTODIAN
Securities Management and Research, Inc. has agreed to serve as custodian for
the above individual's 403(b) custodial account. As custodian, Securities
Management and Research, Inc. will accept the transfer described above.
Please liquidate, and transfer on a custodian-to-custodian basis the amount
designated above and make check payable to Securities Management and
Research, Inc., for benefit of the above named individual account number
_________________________ and mail the check to Securities Management and
Research, Inc., One Moody Plaza, 14th Floor, Galveston, Texas 77550.
_______________________________________________________________________________
Authorized Signature Securities Management and Research, Inc.
_______________________________________________________________________________
Date
REQUIRED MINIMUM DISTRIBUTION INFORMATION
NOTE TO PRESENT CUSTODIAN: If the Employee has reached age 70-1/2, please
complete the following Election made by the Employee as of the required
beginning date. Remaining Period over which required distributions are to be
made: ______________________________ (Number of Years)
Payment method: (Select one)
/ / Declining (elapsed) years
/ / Recalculation of life expectancy
Did Employee choose Joint Life Expectancy with a Designated Beneficiary?
/ / Yes / / No
If "YES" complete following
Beneficiary Name:______________________________________________________________
Date of Birth: ________________________________________________________________
Is Beneficiary Spouse? / / Yes / / No
9
<PAGE>
10
<PAGE>
SAMPLE SALARY REDUCTION AGREEMENT
===============================================================================
This form is provided as an example of a typical salary deferral agreement
available from your employer and may be used if acceptable to your employer.
Once completed the form will be retained by your employer as authorization to
begin salary deferrals. No representations as to the validity or accuracy of
the content of this form is being made by Securities Management & Research,
Inc. or its representatives. Be sure to confirm that the American National
Family of Funds (American National Funds Group and the SM&R Capital Funds,
(Inc.) have been approved by your employer for 403(b) Investments.
/ / New Reduction
/ / Increasing Existing Amount
/ / Decreasing Existing Amount
It is agreed by __________________________________________________________
hereinafter referred to as "Employer", and
____________________________________________________, hereinafter referred to
as "Employee", that the employment contract between them for the 19___
through 19___ tax year be amended in the following manner:
1. The salary to be paid to the Employee by the Employer shall be reduced by
the sum of $__________ per month.(______ payments) beginning with the check
payable on _______________________________________, 19___.
2. The salary to be paid to the Employee by the Employer shall be reduced by
the sum of $__________ per month, (______ payments) beginning with the check
payable on _______________________________________, 19___ and beginning
with the check payable on _______________________________________, 19___,
my salary shall be reduced by the sum of $__________ (______ payments).
3. The sum of $__________ per month resulting from such salary reduction
shall be transmitted by the Employer for the purchase of shares of the
American National Funds to be held in a Custodial account. Such Custodial
account shall be established for the Employee in accordance with the
provision of IRC 403(b)(7) and related sections.
4. The reduction amount will be forwarded on the ____________ of the month
following the payroll deduction to:
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550
5. The Employee releases any and all rights, present and future, to
receive payment of the sums from the Employer resulting from such salary
reduction in any form except: (1) the right of the Employee to designate
beneficiary of sums to be paid from the Employee's custodial account,
together with sums withheld by the Employer but not yet forwarded to the
designated regulated investment company, upon the Employee's death; (2)
the right of the Employee, upon termination of employment by reason other
than death, personally to receive all or any part of the amount specified
for which service has been rendered but which has not been transmitted
for the purchase of shares of a regulated investment company, together
with such amount as shall be in the Employee's custodial account; or (3)
the right of the Employee as to receipts of sums so paid upon his death.
6. The Employee acknowledges that the Employer has made no representation
to the Employee regarding the advisability, appropriateness or tax
consequences of the purchase of the shares described herein. The Employee
agrees that the Employer shall have no liability whatsoever for any and
all losses suffered by the Employee with regard to his selection of the
fund; the selection of the regulated investment company; the solvency of,
operation of, or benefits provided by said regulated investment company;
or his selection and purchase of shares of regulated investment companies.
7. This amendment shall automatically apply to the employment contract
entered into between the Employer and the Employee for each succeeding
tax year unless amended or terminated by written notice to the Employer
prior to the expiration of the then current tax year.
Date: ___________________________________________________________, 19 ___
_______________________________________________________________________________
Authorized Signature (Employer)
_______________________________________________________________________________
Employee Signature
_______________________________________________________________________________
Employee Social Security Number
RETAINED BY EMPLOYER
11
<PAGE>
12
<PAGE>
SALARY REDUCTION MAXIMUM ALLOWABLE DEFERRAL WORKSHEET
==============================================================================
The following deferral worksheet will help you determine the amount of your
maximum allowable salary reduction. However, you may be required to reduce
this amount further if your employer is making plan contributions in addition
to your deferrals or you are currently making salary deferral contributions
to other retirement plans. You may keep this worksheet for your own records.
Information Required for Deferral Computation:
CURRENT SALARY =$__________
Current Annual Salary (before Salary Reductions)
YEARS OF SERVICE =___________
Years of service with Current Employer (enter whole and fractional years;
however, if less than 1 year, use "1" year)
PRIOR CONTRIBUTIONS =$__________
All contributions (excluding salary deferrals) made by your present
employer to qualified plans, including 403(b) and SEP-IRA Plans, in
prior years for your benefit.
PRIOR DEFERRALS =$__________
All salary deferrals made to 403(b) Plans (including tax-sheltered
annuities) 457 Plans (relating to State deferred compensation plans),
SAR-SEP, and 401(k) Plans on your behalf by your present employer in
prior years.
_______________________________________________________________________________
BASIC EXCLUSION ALLOWANCE FOR DEFERRALS:
1. $___________________=$___________________times________________times .20
Current Salary Years of Service
2. $___________________=$___________________plus $________________
Prior Contributions Prior Deferrals
3. $___________________= #1 minus #2
4. ____________________=(___________________times .20) plus 1
Years of Service
5. $___________________= #3 divided by #4
Basic Exclusion Allowance
6. $___________________= Enter amount in #5 or $9,500, whichever is less
Maximum Allowable Deferral
_______________________________________________________________________________
It is important that you do not exceed your maximum annual contribution with
respect to any tax year. Any such excesses may be subject to penalty taxes
and/or interest charges on unpaid taxes. Alternative calculation methods are
available to certain plan participants which may result in a larger allowance
if you are an employee of a "qualified organization".
The use of this calculation method may not be appropriate for you if you are
a church employee or if you participate in any other salary reduction plan.
PLEASE NOTE: Neither Securities Management and Research, Inc. nor its
Registered Representatives give legal or tax advice or are authorized to do
so. This Salary Reduction Maximum Allowable Deferral Worksheet is not
intended as legal advice and is a brief summary of applicable law, which is
complex and subject to change. For complete details, you should consult with
your legal and tax advisors.
RETAINED BY EMPLOYEE
13
<PAGE>
AMERICAN NATIONAL FAMILY OF FUNDS 403(b)(7)
CUSTODIAL AGREEMENT
- -------------------------------------------------------------------------------
The American National Family of Funds (herein referred to as "Funds",
"American National Funds" or "American National Family of Funds") 403(b)(7)
Custodial Agreement (the "Agreement") is intended for use by Employers and by
eligible employees who may wish to have their Employer's contributions held
for their benefit in an account invested in shares of eligible American
National Funds, all of which are regulated investment companies, upon the
terms and conditions set forth in this Agreement and in accordance with the
applicable provisions of the Internal Revenue Code of 1986, as amended.
This Agreement is authorized for distribution only if accompanied or
preceded by a current prospectus of one of the American National Funds, in
which a participant invests, in accordance with Section 4. Such prospectuses
contain information concerning the applicable sales charge and other
important facts.
The Employer is an organization described in Section 403(b)(1)(A) of the
Internal Revenue Code of 1986 (the "Code") and desires to provide benefits
for certain of its employees by establishing with the Custodian a custodial
account which satisfies the requirements of Section 401(f)(2) of the Code.
The Custodian is willing to accept its appointment as Custodian of such
custodial account.
Accordingly, the Employer and the Custodian agree as follows:
SECTION 1. DEFINITIONS:
As used in this Agreement, the following terms have the meaning set forth
below, unless a different meaning is clearly required by the context:
1.1 "Account" or "Accounts" means the separate account(s) established and
maintained under this Agreement in accordance with Section 403(b)(7) of
the Code to hold and manage the contributions made hereunder for the
benefit of an Employee.
1.2 "Agreement" means this American National Family of Funds 403(b)(7)
Custodial Agreement, which may constitute an amendment and restatement
of the Agreement in effect immediately prior to this custodial
agreement (the "Former Agreement"), including the information and
provisions set forth in the account application executed to establish the
Employees Account(s). The Agreement, including the account application
and any designation of beneficiary filed with the Custodian, may be
proved either by an original copy or a reproduced copy thereof.
1.3 "Application" means the Application for American National Family of
Funds 403(b)(7) Custodial Account Application executed by the Employee
providing for the establishment of the Account(s) in accordance with
the terms and conditions of the Agreement and if applicable, such other
or additional documents as may be required. The Application is attached
to, and made a part of, this Agreement.
1.4 "Beneficiary" or "Beneficiaries" means the individual or individuals
currently designated by the Employee or, where applicable, by his
surviving spouse, as the beneficiary or beneficiaries on the form
provided for this purpose and then currently on file with the
Custodian, or if no such beneficiary is alive or no designation is in
effect at the time of the Employee's death, the Employee's estate.
1.5 "Code" means the Internal Revenue Code of 1986, as amended and Treasury
Department regulations issued thereunder and applicable Internal
Revenue Service rulings.
1.6 "Contribution" means any salary reduction contribution amount transmitted
by the Employer to the Custodian, and any rollover or transfer
contribution, to be credited to the Employee's Account in accordance
with Section 3.
1.7 "Custodian" means Securities Management and Research, Inc. or any
successor Custodian, as provided in Section 8.
1.8 "Disabled" means, an individual who is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death
or to be of long-continued and indefinite duration. An individual shall
not be considered disabled unless he furnishes proof of the disability,
as required.
1.9 "Employee" means an individual employed by the Employer who has
obtained the Employer's consent to participate under this Agreement and
who has properly executed the Application.
1.10 "Employer" means the employer named in the Application and as described
in Section 501(c)(3) of the Code and exempt from tax under Section
501(a) of the Code; or a State, a political subdivision of a State, or
any agency or instrumentality thereof, but only with respect to
employees who perform or have performed services for an educational
organization described in Section 170(b)(1)(A)(1) of the Code.
1.11 "Financial Hardship" The determination by the Employer of the existence
of financial hardship and the amount required to be distributed to meet
the need created by the financial hardship shall be made in accordance
with the following standards: a financial need of the Employee because of
(i) a personal accident or illness of the Employee or a person in the
Employee's immediate family, (ii) the death of a person in the Employee's
immediate family, (iii) the need for funds to acquire, construct or
reconstruct or substantially rehabilitate any dwelling unit which
within a reasonable time is to be used (determined at the time the
distribution is made) as a principal residence of the Employee or a person
in the Employee's immediate family or educational expenses of the Employee
or a person in the Employee's immediate family. Distributions made for
financial hardship purposes are subject to mandatory 20% withholding. A
distribution based upon financial hardship cannot exceed the amount
required to meet the immediate financial need created by the financial
hardship and not reasonably available from other resources of the
Employee. Distributions on account of financial hardship after December
31, 1986, shall only be made in the case of contributions made pursuant to
a Salary Reduction Agreement. The Custodian shall have no responsibility
for obtaining the determination from the Employer or evaluating the
financial hardship or the independence of the individual making the
determination. The determination of the Employer shall be final.
1.12 "Funds", "American National Funds" or "American National Family of
Funds" means the regulated investment companies, as defined in Section
851(a) of the Code, whose investment adviser and shareholder servicing
agent is Securities Management and Research, Inc., and whose shares are
authorized for purchase under this Agreement.
1.13 "Salary Reduction Agreement" means a legal binding agreement between
the Employer and the Employee whereby the Employee irrevocably agrees to
take a reduction in salary or forego an increase in salary with respect to
amounts earned after the Agreement's effective date, and whereby the
Employer agrees to contribute the amount of salary reduced or foregone by
the Employee to the Account(s). The Salary Reduction
14
<PAGE>
Agreement may be terminated at any time by either the Employer or the
Employee with respect to amounts not yet earned by the Employee.
SECTION 2. ESTABLISHMENT OF ACCOUNT(S).
2.1 The Custodian shall, in accordance with the terms of this Agreement,
open and maintain an Account for the exclusive benefit of each Employee
who has properly become a party to this Agreement and the Employee's
designated beneficiaries. The Custodian shall hold and administer, in
accordance with the terms hereof, contributions to the Account(s) and any
gain or income from the investment thereof.
2.2 The Application and the Salary Reduction Agreement are incorporated
herein by reference as part of the Agreement. The Employer shall be
deemed to have established this Account for the Employee upon the
Employer's payment to the Custodian of the initial contribution specified
in Section 3. The Account will become effective upon acceptance of the
Application by or on behalf of the Custodian at its offices, as evidenced
by a written notice to the Employee. Notice may be given by confirmation
statement confirming the establishment of the Account.
2.3 Requirements for Establishment of Texas Optional Retirement
Program Accounts. The Custodian shall open and maintain two separate
accounts for each Employee electing to invest in the State of Texas
Optional Retirement Program (ORP). The Custodian shall hold the State's
matching contribution in an SM&R Capital Funds, Inc.--American National
Primary Fund Series account for the Employee for a period of one year
and one day; and contributions made by salary reduction for the employee
will be invested in the Fund of his choice pursuant to the conditions of
ORP. The State of Texas shall maintain sole discretion over all separate
accounts containing State ORP contributions until such time as the
Custodian is directed otherwise by the State.
SECTION 3. CONTRIBUTIONS
3.1 The Custodian shall accept cash contributions from the Employer on
behalf of Employee. Each such contribution shall be accompanied by
specific written instructions from the Employer specifying the
Employees' separate accounts to which is to be credited. Employer
contributions shall be made only pursuant to a written salary reduction
agreement between the Employer and Employee.
The Employee shall have sole responsibility for determining the
amount an Employer may contribute on his behalf. The Custodian shall not
be responsible to recommend or compel Employer contributions to the
Account. If during any taxable year the Employer contributes an amount
which is an "excess contribution," such excess contribution and any
income attributable thereto shall, upon the written request of the
Employee to the Custodian specifying the specific amount of such excess
contribution and income, be paid to the Employee by the Custodian.
3.2 The Employer or the Employee may transfer cash from another
custodial account qualified under Section 403(b)(7) of the Code and/or
from an annuity contract qualified under Section 403(b) of the Code to
the Account if the Employee certifies that the transaction meets the
requirements for a tax-free transfer of annuity contract under
Section 1035 of the Code and other applicable laws or rulings of the
Internal Revenue Service, or is a rollover contribution described in
Sections 403(b)(8), 408(d)(3)(A)(iii) or any other appropriate section
of the Code. Once transferred, such assets shall be treated as a
contribution on behalf of such Employee for purposes of this Agreement
and shall be invested, distributed and otherwise dealt with as such. The
Custodian shall not have any responsibility to the Employee for the tax
treatment of any such transfer or rollover.
3.3 The Employer or the Employee may cause the transfer, in cash, of
the balance credited to the Employee's separate account from this
Account directly to the Custodian of another custodial account qualified
under Section 403(b)(7)of the Code or to an insurance company designated
by the Employee for the purchase, for the benefit of the Employee of an
annuity contract qualified under Section 403(b) of the Code if the
Employee certifies that the transaction meets the requirements for a
tax-free transfer of annuity contracts under Section 1035 of the Code
and other applicable laws or rulings of the Internal Revenue Service.
Once transferred, such assets shall be treated as a contribution on
behalf of the Employee for purposes of the successor custodial account
and/or annuity contract and shall be invested, distributed and otherwise
dealt with as such.
3.4 Neither the Custodian nor the Distributor or its agents shall be
liable for losses arising from the acts, omissions, or delays or other
inaction of any party transferring assets to the Account or receiving
assets transferred from the Account pursuant to this Section 3 nor shall
they have responsibility for the tax treatment to the Employee of any
rollover or transfer of assets.
SECTION 4. INVESTMENT OF ACCOUNT ASSETS.
4.1 Contributions credited to the Employee's Account(s) shall be
applied by the Custodian solely to the purchase of shares, including
fractional shares earned to the third decimal place in one or more of
the Funds.
4.2 The Employer (upon request of the Employee) and/or the Employee
may direct the Custodian at any time and from time to time to exchange
any shares held in the Account for other shares of Funds in the American
National Family of Funds in accordance with the then current
prospectuses relating to such shares.
4.3 All dividends and capital gains or other distributions shall be
reinvested in additional fund shares which shall be credited to the
Employee's account.
4.4 All shares credited to the Employee's Account shall be registered
in the name of the Custodian or its registered nominee.
4.5 The Employee may not borrow funds from his account, nor may he use
the funds as security for any loan or extension of credit.
4.6 The Custodian shall not have any duty to question the directions
of the Employee or the Employee's Beneficiary, executor or administrator
regarding the investment of the assets in the Account or to advise such
persons regarding the purchase, retention or sale of such investments,
nor shall the Custodian be liable for any loss that results from the
exercise of control over the Account by the Employee or the Employee's
Beneficiary, executor or administrator. By giving investment
instructions the Employee or the Employee's Beneficiary, executor or
administrator will be deemed to have acknowledged receipt of the then
current prospectus in which the Employee or the Employee's Beneficiary,
executor or administrator instructs the Custodian to invest
contributions or assets under the terms of this Agreement.
SECTION 5. DISTRIBUTIONS
5.1 Distribution from the Account shall be made by the Custodian only
to an Employee, his surviving spouse or Beneficiary (as defined in
Section 1), and no purported sale, transfer, pledge or assignment by the
Employee, his spouse or Beneficiary of all or any part of an interest in
the Account shall be recognized by the Custodian except as provided in
Section 3.2. The interest of a
15
<PAGE>
Employee, his spouse or Beneficiary in the Account shall not be subject to
the debts, contracts, liabilities, engagements or torts of such person or to
attachment or legal process against such person. This Section 5.1 shall be
subject to such exceptions as may be required by law, including without
limitation, any requirements as to the withholding of any amounts from such
distributions for federal and, if applicable, state income taxes.
5.2 "Events of Distributions" The Custodian shall distribute, or
commence distribution of, the balance credited to an Employee's
account only upon request of the Employee after receipt of written
certification and evidence satisfactory to the Custodian from the
Employee that one or more of the following events have occurred:
(a) the Employee has reached his Normal Retirement Date or
has actually reached age 70-1/2;
(b) the Employee has attained age 59-1/2;
(c) the Employee has become disabled (refer to Section 1 for
definition of disabled);
(d) the Employee has separated from service with the Employer;
(e) the Employee has died.
5.3 Restrictions on ORP Distributions. Notwithstanding any
limitations contained in this paragraph 5.2, and in accordance with
the rules and regulations promulgated by the State of Texas in
connection with optional retirement programs, no distribution from
the custodial account shall be made unless written authorization of
one of the following three conditions is provided by the Employer
to the Custodian:
1. Death of Employee;
2. Termination of service with Employer;
3. Retirement of Employee.
Furthermore, whereby state matching contributions has been invested
in a separate account on behalf of an Employee and such Employee
terminates his employment prior to one year and one day of employment,
the distribution will be made payable and forwarded to the State.
5.4 Whether or not the distribution have commenced pursuant to
Section 5.2, all or a portion of an Employee's interest in the
Account shall be distributed to him by the Custodian upon receipt
of written notice from the Employer (following application by the
Employee) that such distribution has been authorized by the
Employer for reason of Financial hardship (as defined in Section 1).
Any such distribution shall be paid to the Employee in cash
after receipt of certification by the Employee that the
distribution amount is only of salary reduction contributions and
not earnings. Such distribution will be subject to the 20%
mandatory withholding pursuant to the Unemployment Compensation Act
of 1992.
5.5 If the distribution occurs before the Employee is age 59-1/2
(and is not directly rolled over to another qualifying plan), the
distribution is subject to a 10% federal excise tax plus a 20%
mandatory withholding, in addition to ordinary income tax, unless
the distribution is: (a) made on account of separation of service
occurring after attainment of age 55; (b) attributable to
disability; (c) made to a beneficiary or to the Employee's estate
following the death of the Employee; (d) made to an alternate payee
pursuant to a qualified domestic relations order, or (e) part of a
series of substantially equal periodic payments (commencing after
separation of service) over the Employee's single or joint life
expectancy. Such payment schedule must remain uninterrupted through
the later of attainment of age 59-1/2 or five (5) years from the
date of the first payment.
5.6 "Required Distributions" The Employee must begin receiving
distribution from his Account not later than April 1 following the
calendar year in which the Employee attains age 70-1/2, hereinafter
termed the "required beginning date". At least 30 days prior to
that date, the Employee must elect to have the balance in the
Account distributed in: (i) a single sum payment; (ii) equal, or
substantially equal, monthly, quarterly, or annual payments
commencing not later than the required beginning date and not
extending beyond the life expectancy of the Employee; or (iii)
equal, or substantially equal, monthly, quarterly, or annual
payments commencing not later than the required beginning date and
not extending beyond the joint and survivor expectancy of the lives
of the Employee and the designated Beneficiary, provided. However,
if the Employee's spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least 50% of
the present value (determined at the time the distribution
commences) of the account available for distribution is paid within
the life expectancy of the Employee.
The minimum amount that must be distributed each year,
beginning with the date payments commence, is the balance in the
Account immediately prior to the distribution (to include payments
withdrawn during that year) divided by the life expectancy of the
Employee or joint life expectancy of the Employee and his/her
designated Beneficiary computed at the end of each year.
Notwithstanding that distributions may have commenced pursuant to
(i) or (ii) above, the Employee may receive a larger distribution
from the Account upon written request to the Custodian.
It shall be the duty of the Employee or, when applicable, the
Employee's Beneficiary to determine the amount of distributions
hereunder, and the Custodian shall not be liable to the Employee or
any other person for taxes or other penalties incurred as a result
of failing to distribute any minimum amount required by the Code.
5.7 "Death Benefits" If the Employee dies before receiving full
distribution of the Account, the balance in the Account must be
distributed in the following manner:
(a) If the Employee died after his/her required beginning date
for distributions, the Beneficiary will continue to receive
distributions at least as rapidly as under the method of
distribution in use prior to the Employee's death and may request
larger distributions, including a single sum payment of the balance.
(b) If the Employee died prior to his/her required beginning date, and
the designated Beneficiary is the surviving spouse, the spouse may
receive the balance in the Account:
(i) over a period (or in a single sum payment) and not extending
beyond December 31 of the fifth year following the Employee's
death, or
(ii) over a period or in a single sum payment commencing not later
than December 31 of the year in which the Employee would have
attained age 70-1/2 and not extending beyond the life expectancy
of the surviving spouse.
Distributions will be treated as having been paid to the surviving
spouse even if paid to a child if the balance will be paid to the
spouse when the child reaches the age of majority.
(c) If the Employee died prior to his/her required beginning date,
and the designated Beneficiary is not the surviving spouse, the
Beneficiary must receive the balance of the Account
(i) over a period or in a single sum payment not extending beyond
December 31 or the fifth year following the
16
<PAGE>
Employee's death, or
(ii) over a period commencing not later than December 31 of the
year following the year of the Employee's death and not
extending beyond the life expectancy of the Beneficiary.
5.8 "Computation of life expectancy" Life expectancies of the Employee
and Beneficiary shall be determined pursuant to tables contained in
Section 1.72-9 of the Treasury Regulations. Unless an election to
recalculate life expectancy is made by the Employee (or surviving spouse
in the case of distributions described in Section 4.4(b)(ii) above) not
later than the required beginning date, payments for any
12-consecutive-month period will be based on life expectancy, computed
prior to the first payment, minus the number of whole years passed since
the payments first commenced.
5.9 "Miscellaneous" Any distribution payment made by the Custodian
shall be subject to withholding of any income or other taxes required by
law.
SECTION 6. NONFORFEITABILITY.
A Participant's interest in the balance of his account shall at all
times be nonforfeitable.
SECTION 7. BENEFICIARY DESIGNATION.
The Employee may designate the Beneficiary of his Account by completing
a beneficiary designation form acceptable to and filed with the Custodian.
If the Employee designates more than one Beneficiary, he shall
designate the percentage interest that each such Beneficiary shall
receive from his Account upon distribution. In the event no such
percentage interest is designated, the interest of each Beneficiary
shall be equal.
If the Employee predeceases his/her spouse before his/her entire
Account is distributed in accordance with Article 4(c) of the Plan and
the spouse is entitled to distributions and the Employee has designated
no Beneficiary for the remaining interest and if the spouse should die
before the Account is fully distributed or all such Beneficiaries shall
have predeceased the Employee's spouse, then the interest of the
Employee's spouse in the Account shall be fully vested and subject to
the terms and conditions of this Article and the Employee's spouse shall
be entitled to designate the Beneficiary of Account in accordance with
this Article.
The Employee may, at any time, change or revoke any designation made
under this Section by completing a beneficiary designation form
acceptable to and filed with the Custodian. Upon the death of the
Employee, the designation or designations made hereunder shall be
irrevocable. A change of beneficiary designation shall be effective only
if received by the Custodian prior to the death of the Employee.
If the Employee fails to designate any Beneficiary or if the Employee
revokes the designation of Beneficiary or if all Beneficiaries
designated predeceases the Employee, then the entire interest of the
Employee in his/her Account shall pass to the Employee's estate.
SECTION 8. RESPONSIBILITY AND DUTIES OF CUSTODIAN.
8.1 "Agency" The Custodian shall be an agent for the Employer and the
Employee to receive and invest contributions as directed by the
Employee, hold and distribute investments, and keep adequate records and
report thereon, all in accordance with the Agreement. The parties do not
intend to confer any fiduciary duties on the Custodian and none shall be
implied.
8.2 "Delegation of Authority" The Custodian may perform any of its
administrative duties through other persons designated by it from time
to time, except that shares must be registered as stated in Section 5.4;
but no such delegation or future change therein shall be considered as an
amendment of the Agreement.
8.3 "Written Communications" All notices, requests and other
communications to the Custodian by the Employer or any Employee (or his
spouse or Beneficiary) shall be in writing and in such form as the
Custodian may from time to time prescribe. The Custodian shall be
entitled to rely on any such instrument believed by it to be genuine.
8.4 Except as provided in Section 9.2, the Custodian shall have the
power and authority in the administration of the Account to do all acts,
to execute and deliver all instruments and to exercise for the benefit
of the Employee's and their Beneficiaries any and all powers which would
be lawful, were it in its own right the actual owner of the property
held.
8.5 "Custodian Fees" The Custodian shall receive such compensation for
its services hereunder as may be agreed upon from time to time by the
Custodian and the Employee. At least thirty (30) days notice shall be
given of any increase in the Custodian's compensation and the Employee
shall have made no objection thereto within such 30-day period. Such
compensation and any expenses incurred by the Custodian in the
administration of the Account shall be paid from the Account and shall,
unless allocable to the accounts of specific Employee's be charged
proportionately to the accounts of all Employee's.
8.6 "Resignation or Removal" The Custodian may resign at any time upon
thirty (30) days' notice in writing to the Employee and may be removed by
the Employer at any time upon thirty (30) days' notice in writing to the
Custodian and the other party. Upon such resignation or removal, the
Employer shall appoint a successor custodian, which successor shall be a
"bank" as defined in Section 501(d)(1) of the Code or such other person
who is eligible to be a custodian under Section 401(f)(2) of the Code,
if within thirty (30) days after the Custodian's resignation or removal,
the Employer has not appointed a qualified successor custodian which has
accepted such appointment, the Custodian may appoint, or may apply to a
court of competent jurisdiction for appointment of a successor custodian
which shall be a "bank" as defined in Section 401(d)(1) of the Code or
such other person eligible to be a custodian under Section 401(f)(2) of
the Code. Upon receipt by the Custodian of written acceptance of
appointment by the successor custodian, the Custodian shall transfer and
pay over to such successor the assets of the Account and all records
pertaining thereto, reserving such sum as it may deem advisable for
payment of all its fees, compensation, costs and expenses and any other
liabilities constituting a charge on or against the assets of the
Account or on or against the Custodian. The successor custodian shall
thereafter be the Custodian under this Agreement. Upon its resignation or
removal, the Custodian shall not be liable for the acts or omissions of
any successor Custodian. Upon the transfer of the assets of the Account
to a successor Custodian, the resigning or removed Custodian shall be
relieved of all further liability with respect to this Agreement, the
Account and the assets thereof.
8.7 "Liability of Custodian" the Custodian shall not be liable in any
way for the determination or collection of contributions provided for
under this Agreement, the selection of the investments for the Account,
the purpose or propriety of any distribution made pursuant to Section 5
hereof, or any other section taken at the direction of the Employer, the
Employee (or Beneficiary, where applicable) or other authorized
representative. The Custodian shall not be obliged to take any action
whatsoever with respect to the Account except upon the receipt of written
directions from the Employee (or Beneficiary, where applicable) or other
authorized representative. The Custodian
17
<PAGE>
shall be under no obligation to determine the accuracy or propriety of
any such directions and shall be fully protected in acting in
accordance therewith. Subject to applicable law, the Custodian shall
not be liable for taking or omitting to take any action under this
Agreement. The Custodian shall not be obligated or expected to
commence or defend any legal action or proceeding in connection with
this Agreement.
SECTION 9. REPORTS AND RETURNS.
9.1 The Custodian shall:
(a) maintain separate records of the interest of each
Employee (or his surviving spouse or Beneficiary) in the Account
indicating (i) the amounts and dates of all contributions, (ii)
the investment of such contributions, (iii) the earnings on such
investments, (iv) the amounts and dates of all distributions, and
(v) such other data as the Custodian deems useful in carrying out
its duties hereunder, and
(b) mail at least once during each calendar year a statement
of all transactions in the Account during the preceding year and a
statement showing the value of the assets held in the Account as of
the end of such year. Unless the Employee sends the Custodian
written objection to a report within sixty (60) days after its
receipt, the Employee shall be deemed to have approved such report;
and, in such case, the Custodian shall be forever released and
discharged from all liability and accountability to anyone with
respect to all matters and things included therein. The Custodian
may seek a judicial settlement of its accounts. In any such
proceeding the only necessary party thereto in addition to the
Custodian shall be the Employee.
9.2 Shares in the Account shall be voted by, or in accordance with
the instructions of, the Employee of whose benefit they are held, or
by, or in accordance with the instructions, of his surviving spouse or
Beneficiary; and the Custodian shall deliver, or cause to be delivered
to the Employee or his surviving spouse or Beneficiary all notices,
financial statements, proxies and proxy materials relating to such
Shares.
9.3 The Custodian shall file such returns or reports with respect to
the Account as are required to be filed by it under the Code and the
regulations thereunder, or by the Department of Labor, and the
Employer and each Employee shall provide the Custodian with such
information available to them as the Custodian may require to file
such reports.
SECTION 10. AMENDMENT AND TERMINATION.
10.1 This Custodial Agreement may be amended by written instrument to
any extent upon thirty (30) days written notice to the Employee.
Notwithholding the foregoing, such amendment shall be effective upon
adoption if designated by the Custodian as necessary to qualify under
Section 403(b) of the Code.
10.2 This Agreement shall terminate upon the complete distribution of
the Account or in the event that a determination is made by the
Internal Revenue Service that the Account does not satisfy the
requirements of Section 401(f)(2), Paragraph 11.70D of the Code or
that contributions thereto are not treated under Section 403(b)(7)(A)
of the Code as contributed for annuity contracts. In the event of
termination as aforesaid, the balance in the Account shall be
distributed to the Employee's (or their respective surviving spouses
or Beneficiaries, as the case may be) in accordance with their
interests in the Account.
10.3 "Salary Reduction Agreement" The Employee and the Employer may
agree to amend the Salary Reduction Agreement at any time. The
Employee and Employer shall not enter into more than one Salary
Reduction Agreement in any one taxable year.
SECTION 11. MISCELLANEOUS.
11.1 "Applicable Law" The Account is established with the intention
that it qualify as a custodial account under Section 401(f)(2) of the
Code and that contributions thereto be treated under Section
403(b)(7)(A) of the Code as amounts contributed for annuity contracts,
and the provisions of this Agreement shall be construed in accordance
with such intention. This Agreement shall be governed by the laws of
the State of Texas insofar as election of such laws is permitted.
11.2 "Pronouns" Whenever used in this Agreement, the masculine
pronoun is to be deemed to include the feminine. The singular form,
whenever used herein, shall mean or include the plural form where
applicable, and vice versa.
11.3 "Notices" Any notice, accounting, or other communication which
the Custodian may give the Employer or the Employee shall be deemed
given when mailed to the Employer or Employee at the latest address
which has been furnished to the Custodian. Any notice or other
communication which the Employer or Employee may give to the Custodian
shall not become effective until actual receipt of said notice by the
Custodian.
11.4 "No Employment Contract" This Agreement shall not be deemed to
constitute a contract of employment between the Employer and Employee,
nor shall any provision hereof restrict the right of the Employer to
discharge the Employee or of the Employee to terminate his employment.
11.5 "Disqualification" This Agreement is established and created
with the intent that it shall meet the terms of Section 403(b)(7) of
the Code. Notwithstanding any other provision contained herein, if
it is determined by the Internal Revenue Service that the Agreement is
not qualified initially and is not amended to retroactively qualify
under such Section of the Code, all assets acquired with contributions
hereunder together with income earned thereon less reasonable expense
and agreed Custodian fees, shall be distributed to the Employees and
the Agreement shall be considered to be rescinded and of no force and
effect. If the Agreement, after qualifying initially or
retroactively, shall fail to remain qualified under Section 403(b)(7)
of the Code, the assets held hereunder shall be segregated by the
Custodian, or otherwise disposed of for the exclusive benefit of
Employees within 30 days following the custodian's receipt of notice
of determination of such disqualifications.
11.6 "Tax Treatment" The tax treatment of any contributions to the
Custodial Account and of any earnings of the Custodial Account
depends, among other things, upon the tax status of the Employer and
the amount of contributions made in any year to the Account (and to
other plans, accounts, or contracts with the benefit of special tax
treatment) for the benefit of the Employee. The Custodian, and the
American National Funds and SM&R Capital Funds assume no
responsibility with respect to such matters, nor shall any term or
provision of this Agreement be construed so as to place any such
responsibility upon any of them.
11.7 The American National Family of Funds 403(b)(7) Custodial
Agreement and related documents are intended to comply with current
provisions of the Internal Revenue Code. However, the Funds
comprising the American National Family of Funds assume no
responsibility as to the effect or legal sufficiency under federal,
state or other applicable law of this Agreement in any particular
case. This Agreement is not a prototype, master plan or other similar
document approved as to form by the Internal Revenue Service.
Further information regarding 403(b) plans may be obtained from any
district office of the Internal Revenue Service.
18
<PAGE>
TSA
403(b)(7)
FORMS
KIT
----------------------------------
Everything you need to:
- Open a new SM&R TSA
403(b) account
- Transfer your present TSA
403(b) account to SM&R
- Directly roll over assets
from another institution
- Establish an ORP (State of
Texas only)
----------------------------------
SECURITIES MANAGEMENT & RESEARCH, INC.
One Moody Plaza // Galveston, Texas 77550
(409) 763-2767
[LOGO]
Member NASD SIPC
Form 9343-94
Rev. 9/95 1500
<PAGE>
IT'S AS EASY AS "ABC" TO ESTABLISH AN IRA
===============================================================================
After reviewing a current prospectus for the American National Funds Group
and/or SM&R Capital Funds, Inc., carefully complete the IRA APPLICATION found
on page 3.
To make it as easy as "ABC" to establish an IRA in our family of funds,
Securities Managment & Research, Inc. ("SM&R") has placed all forms required
to establish an IRA in this kit. The forms included are:
1. IRA DIRECT TRANSFER REQUEST--Complete this form, found on page 5, if you
wish to have a Trustee-to-Trustee transfer of your current IRA to SM&R
from another institution.
2. DIRECT ROLLOVER REQUEST FORM--If you wish to roll funds directly from a
qualified retirement plan or 403(b) plan (TSA) to an IRA in the American
National family of funds, complete and return this form, found on page 6.
3. IRA ROLLOVER STATEMENT--Complete this form if you have already received a
distribution from an IRA, qualified retirement plan or 403(b) (TSA) and are
rolling the proceeds into an IRA in the American National family of funds
within the 60th day of receiving the funds. (Page 7)
IRA CONTRIBUTION DEADLINE
Contributions may be made all year long but must be completed by your tax
filing deadline (not including extensions) in order to deduct them for the
prior year. The IRS has stated that a contribution postmarked April 15 may be
considered a prior year contribution. This position is subject to change at
any time.
Furthermore, all contributions made by pre-authorized check, payroll
allotments, etc., are deemed to be current year contributions ONLY.
If you have any questions please contact your representative or call SM&R,
toll free, at 1-800-231-4839.
* IMPORTANT NOTE: EFFECTIVE JANUARY 1, 1993, ELIGIBLE ROLLOVER DISTRIBUTIONS
FROM QUALIFIED PLANS AND 403(b) PLANS ARE SUBJECT TO A 20% MANDATORY
WITHHOLDING TAX UNLESS ROLLED OVER DIRECTLY TO AN IRA OR TO ANOTHER QUALIFIED
RETIREMENT PLAN. PLEASE REVIEW PAGES 2 AND 3 FOR FURTHER EXPLANATION.
1
<PAGE>
IS IT A TRANSFER OR A ROLLOVER?
===============================================================================
These two terms have been used interchangeably to apply to any movement of
funds between retirement plans for years. However, there exists a major
difference--A Rollover is a reportable transaction. Below is a more thorough
explanation of the difference between the two.
TRANSFER
A transfer is essentially the movement of all or part of the assets in a
retirement plan from its current trustee or custodian to a successor trustee
or custodian. Because the assets remain in the same type of plan and are not
received by the participant, they are not reportable to the government.
To transfer IRA assets from another institution to Securities Management &
Research, Inc. ("SM&R"), you will need to complete the Transfer Request Form
on page 5 of this kit. If you have an existing IRA you may choose to invest
the proceeds from your transfer to that account in which case you would not
need to complete the IRA Application. However, if the proceeds are to be
invested in a new IRA, complete the Application in its entirety, and give
both the Application and Transfer Request to your representative or mail them
directly to Securities Management & Research, Inc. at the address indicated
on the Application. SM&R will handle the transfer for you and send a
confirmation statement when the transfer is completed.
ROLLOVER
A rollover occurs when plan assets become payable to a participant in a
reportable transaction and these funds are redeposited into another retirement
plan. A participant in a qualified plan or 403(b) plan can choose either to
have the distribution rolled over directly by the current plan's trustee or
custodian (a "Direct Rollover") or to receive the distribution, less a
mandatory 20% federal withholding tax, and complete the rollover within (60)
sixty days. Beginning in 1993 distributions received from qualified
retirement plans, including 403(b) plans, that are eligible for rollover
treatment are subject to a mandatory 20% federal withholding tax, unless the
distribution is rolled over directly to an IRA or another qualified plan from
the plan's trustee or custodian.
Although the amount rolled over is not subject to current taxes, the trustee
or custodian of the distribution retirement plan is required to issue IRS
Form 1099R showing the full amount of the distribution. When you roll over
the amount to an IRA, SM&R will issue a confirming Form 5498 to both you and
the IRS. Additionally, you will have to reflect the information regarding the
rollover on your tax return for the year in which the distribution occurred.
To "roll over" to an IRA, complete the IRA Rollover Statement on page 7,
unless you are requesting a "Direct Rollover" in which case you should
complete the Direct Rollover Request Form. Attach the appropriate form to a
completed IRA Application and give both to your representative or mail
directly to Securities Management & Research, Inc. If you have an existing
IRA, you may choose to roll over the proceeds to that IRA account; however,
by doing so, you waive the right to later "roll" the funds back into a new
employer's qualified plan and retain certain beneficial tax treatment on the
ultimate distribution of this account.
Because of the possible tax implications of transfers and rollovers, you
are encouraged to consult with your tax adviser.
PLEASE BE REMINDED--YOU ARE ALLOWED ONLY ONE IRA TO IRA ROLLOVER IN A
12-MONTH PERIOD.
2
<PAGE>
|------------------------------------------|
| HOME OFFICE USE |
|------------------------------------------|
| Account Number |
|---------------------|--------------------|
| Account Type |Social Code |
|---------------------|--------------------|
IRA APPLICATION | FI Number |LOI Amount |
__________________________________|---------------------|--------------------|
American National Funds Group and SM&R Capital Funds, Inc.
______________________________________________________________________________
ACCOUNT REGISTRATION
SM&R, Inc., Cust for
______________________________________________________________________________
First Name M.I. Last Name
Birthdate_____________________________________________________________________
Soc Sec No.___________________________________________________________________
Street Address________________________________________________________________
City, State, Zip______________________________________________________________
Phone, Day____________________________________________________________________
Evening________________________________________________________________
______________________________________________________________________________
ACCOUNT TYPE
/ / Contributory IA ($2,000 limit/$2,250 for Spousal IRAs:
Spousal IRAs require one application per spouse)
/ / Deductible IRA / / Non-Deductible IRA / / Spousal IRA
/ / Transfer IRA (no dollar limit) (IRA to IRA)
Transfer Request (page 5) attached
/ / Rollover IRA (no dollar limit) (Qualified Plan to IRA)
Check one: / / Check & Rollover Statement (page 7) attached
/ / Direct Rollover Request (page 6) attached
/ / SEP-IRA (5305-SEP, page 19, attached)
______________________________________________________________________________
FUND SELECTION & INVESTMENT AMOUNT
Tax Year of
Contribution Contribution
/ / 21 Growth Fund $_________________________ __________________________
/ / 22 Income Fund $_________________________ __________________________
/ / 23 Triflex Fund $_________________________ __________________________
/ / 26 Government
Income Series $_________________________ __________________________
/ / 27 Primary Series $_________________________ __________________________
______________________________________________________________________________
MAKE CHECK PAYABLE TO SECURITIES MANAGEMENT & RESEARCH, INC.
Check is not enclosed because:
/ / A Transfer Request is attached
/ / A Direct Rollover Request is attached
All dividends and capital gains will be automatically reinvested into
the account.
______________________________________________________________________________
PAYMENT METHODS
/ / Pre-Authorized Check:
Please draw on my bank account a check for $______________________________
each month on the date indicated: / / 7th / / 21st
(Form 8008 from the Prospectus has been completed and attached)
/ / Billing-Franchise No.______________
/ / Military Allotment (Complete Form 9341)
______________________________________________________________________________
LETTER OF INTENT (Not applicable to Primary Series)
I agree to the terms of the Letter of Intent as set forth in the Prospectus.
Although I am not obligated to do so, it is my intention to invest over a
13-month period in shares of one or more funds an aggregate amount at least
equal to that which is checked below.
/ / $50,000 / / $100,000* / / $250,000
/ / $500,000 / / $1,000,000 / / $1,500,000
(*Government Income Series begins at $100,000)
Please write in your existing account numbers:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
SALES CHARGE REDUCTION (Not applicable to Primary Series)
List all existing accounts to be included for sales charge reduction. There
will be no retroactive reduction of the sales charge for shares previously
purchased if this section is not completed.
Account Nos.__________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3
<PAGE>
==============================================================================
BENEFICIARY INFORMATION
PRIMARY:
NAME RELATIONSHIP SS# BIRTHDATE
______________________________________________________________________________
______________________________________________________________________________
SECONDARY (If the person(s) named above should fail to survive me)
______________________________________________________________________________
______________________________________________________________________________
If you are married, live in a community property state, and your spouse is not
designated as the only primary beneficiary, your spouse must sign below.
I hereby consent to the designation of beneficiary as stated above.
Signature of Spouse___________________________________________________________
Date__________________________________________________________________________
______________________________________________________________________________
INVESTMENT SUITABILITY
Complete the Investor Suitability Form found in the Prospectus.
______________________________________________________________________________
SIGNATURE
SM&R reserves the right to refuse to open an account without a taxpayer
identification number (TIN). Failure to provide the TIN may result in backup
withholding on payments relating to your account and/or in your inability to
qualify for any applicable treaty withholding rates.
The Participant hereby: (a) appoints SM&R as Custodian of the account; (b)
acknowledges that he/she has received a current prospectus(es) of the
American National Funds Group and/or SM&R Capital Funds, Inc. and has
selected and agreed to the terms as stated in the prospectus; (c) consents to
the $7.50 (per account) initial installation fee, the $7.50 (per account)
annual maintenance fee and the $5.00 excess contribution adjustment fee. Such
fees are subject to change on 30 days written notice to the Participant, (d)
acknowledges that he/she has read and accepts the IRA Disclosure Statement and
the reproduction of the IRS Form 5305-A (rev. 10/92); (e) agrees to the
conditions governing the designation of beneficiary, and (f) CERTIFIES UNDER
PENALTY OF PERJURY THAT THE INFORMATION CONTAINED IN THIS APPLICATION AND
SUPPORTING DOCUMENTS, IF APPLICABLE, ARE TRUE, CORRECT AND COMPLETE.
______________________________________________________________________________
Participant's Signature
______________________________________________________________________________
Date
CUSTODIAN: SECURITIES MANAGEMENT AND RESEARCH, INC.
REPRESENTATIVE INFORMATION
______________________________________________________________________________
Representative Name (please print)
______________________________________________________________________________
Representative Signature
______________________________________________________________________________
SM&R Rep. Social Security Number
DEALER INFORMATION
______________________________________________________________________________
Dealer/Representative Name & Number
______________________________________________________________________________
Dealer/Representative Signature
______________________________________________________________________________
SM&R Dealer Number (Internal Use Only)
If applicable, detach and submit to SM&R.
4
<PAGE>
IRA TRANSFER REQUEST
==============================================================================
This form is to be used ONLY when transferring assets from an existing IRA
to an IRA with Securities Management and Research, Inc. ("SM&R"). If you do
not have an existing IRA, an IRA Application must be completed prior to the
transfer. If you have any questions, please contact your SM&R representative
or SM&R directly for assistance.
- ------------------------------------------------------------------------------
PARTICIPANT INFORMATION
Name_____________________________________________________________
Address__________________________________________________________
City, State, Zip_________________________________________________
Social Security Number___________________________________________
Daytime Phone ( )_______________________________________
______________________________________________________________________________
TRANSFER FROM ACCOUNT INFORMATION
Name of Current Trustee/Custodian
_________________________________________________________________
Address__________________________________________________________
City, State, Zip_________________________________________________
Name of mutual fund or savings association, if applicable
_________________________________________________________________
_________________________________________________________________
EXECUTE LIQUIDATION/TRANSFER AS FOLLOWS
/ / Liquidate all assets and transfer proceeds
/ / Liquidate $___________ and transfer proceeds
/ / The Transfer should be made IMMEDIATELY.
I realize early withdrawal penalties may apply.
/ / Transfer should be made upon maturity of the current
investment. The maturity date is_____________________________
Account number(s): (attach a copy of recent statement, if
possible)
__________________________________________________________________
__________________________________________________________________
______________________________________________________________________________
PARTICIPANT'S SIGNATURE AND AUTHORIZATION TO TRANSFER
Please accept this as your authorization and instruction to liquidate the
assets noted above, which your company presently holds for me, and transfer
as indicated. If a required minimum distribution is required, forward this
amount to me at my address of record. I have established an IRA with
Securities Management & Research, Inc. as the successor Custodian. I am
aware of and acknowledge early withdrawal penalties that may apply.
Signature_________________________________________________________
Signature Guarantee, if necessary
If applicable, detach and submit to SM&R
REQUIRED DISTRIBUTION ELECTION INFORMATION
This information is to be completed by the current Trustee or Custodian. If
the participant is age 70 1/2 or older this year, this section must be
completed by an authorized representative of the resigning Trustee/Custodian
indicating the Election made by the Participant. NOTE: DO NOT TRANSFER ANY
PORTION OF THE PLAN WHICH REPRESENTS THE RMD AMOUNT.
CALCULATION METHOD / / Recalculation / / Declining Years
LIFE EXPECTANCY / / Single Life / / Joint Life*
CURRENT YEAR $______________ amount was withheld from this transfer to
satisfy RMD for 19______.
REQUIRED DISTRIBUTION (RMD) $___________ of any previous distributions made
to participant this year, if applicable.
The factor used to calculate the RMD payment was
_________________________________________________________________
______________________________________________________________________________
*DESIGNATED BENEFICIARY INFORMATION:
Name_____________________________________________________________
Relationship_____________________________________________________
Date of Birth (M/D/Y)____________________________________________
__________________________________________________________________
Authorized Representative Signature
__________________________________________________________________
Printed Name
__________________________________________________________________
ACCEPTANCE: Securities Management & Research, Inc. accepts the transfer and
will serve as Custodian under the applicable section of the Internal Revenue
Code. Please forward the assets with a copy of this form to:
Securities Management & Research, Inc.
One Moody Plaza, Galveston, Texas 77550
FBO_______________________________________________________________
Account No._______________________________________________________
Authorized Signature
Securities Management & Research, Inc.
__________________________________________________________________
Date:_____________________________________________________________
5
<PAGE>
DIRECT ROLLOVER REQUEST FORM
==============================================================================
Account No.___________________
For SM&R Use Only
Complete sections 1-3 of this form if you wish to have an eligible
distribution from your qualified retirement plan, including a 403(b) plan,
directly rolled over to a Rollover IRA. Then, send it to Securities
Management and Research, Inc., along with a completed IRA application and
the distribution request form required by your plan's Trustee or Custodian.
Please ask your current Trustee/Custodian about any additional requirements.
==============================================================================
1) PARTICIPANT INFORMATION (Please Print)
Name______________________________________________________________
Address___________________________________________________________
City, State, Zip__________________________________________________
Daytime Phone No._________________________________________________
Social Security No._______________________________________________
______________________________________________________________________________
2) ROLLOVER INFORMATION (Please check one, and complete)
/ / Rollover of qualified retirement plan funds*
/ / Rollover of 403(b) plan funds*
*You will need to reflect this rollover on your current year tax return in
order to properly offset the amount shown on the Form 1099R you will receive
from your Trustee/Custodian.
Current Trustee/Custodian_________________________________________
Address___________________________________________________________
City, State, Zip__________________________________________________
Account Number(s)_________________________________________________
I am requesting a / / Full / / Partial $______________________
distribution from the above-referenced account(s).
Is a completed distribution request form (obtained from your employer or plan
administrator) attached? / / Yes / / No Please explain.
______________________________________________________________________________
3) PARTICIPANT'S AUTHORIZATION
I hereby authorize the above named Trustee/Custodian to roll over my plan
distribution directly to (check one):
/ / My existing American National Fund IRA/Rollover IRA account no.__________
/ / A new American National Fund Rollover IRA, I have attached a completed
American National IRA Application.
By signing this Direct Rollover Request, I agree to the following:
1) I am irrevocably electing to have funds from my former employer's
retirement plan directly rolled over to an American National Rollover IRA.
2) The amount being rolled over, to the best of my knowledge, qualifies for
rollover treatment and does not include any after-tax employee
contributions;
3) I understand that if I commingle the rollover funds from my employer's
retirement plan with my Contributory IRA funds held at American National,
these rollover funds no longer qualify for rollover treatment back into a
new employer's retirement plan at a later date; and
4) I understand that neither the Custodian, its agent, nor the American
National Group of Funds warrants this rollover's eligibility for
tax-deferred status.
______________________________________________________________________________
Signature of Participant
______________________________________________________________________________
Date
______________________________________________________________________________
SECURITIES MANAGEMENT AND RESEARCH, INC. agrees to serve as custodian and
accept the direct rollover as indicated above. Please liquidate and transfer
all or part of the designated account as instructed above.
______________________________________________________________________________
Authorized Signature
______________________________________________________________________________
Date
Please make check payable to SECURITIES MANAGEMENT and RESEARCH, INC. and
include Account Number (shown above) and NAME OF PARTICIPANT on the check.
Please send check with a copy of this form to the address show below.
REQUIRED DISTRIBUTION INFORMATION: IF THE PARTICIPANT HAS REACHED AGE 70 1/2,
PLEASE COMPLETE THE FOLLOWING:
Election made by Participant as of his/her required beginning date.
1. Period over which required distributions are to be made:
_____________________ Years
2. Payment method (check one):
/ / Declining (elapsed) years
/ / Recalculation of life expectancy
3. Has Participant chosen Joint Life Expectancy with a Designated
Beneficiary? / / Yes / / No
If "Yes", please complete:
Beneficiary___________________________________________________
Spouse? / / Yes / / No
MAIL TO: SECURITIES MANAGEMENT AND RESEARCH, INC.
ONE MOODY PLAZA
GALVESTON, TEXAS 77550
6
<PAGE>
IRA ROLLOVER STATEMENT (INDIRECT ROLLOVER)
==============================================================================
This form MUST be completed in its entirety when depositing proceeds
you've already received (not a Direct Rollover) from another IRA or a
qualified retirement plan to be deposited into a new or existing IRA or
Rollover IRA account in the American National family of funds. AN IRA
APPLICATION IS ALSO REQUIRED WHEN ESTABLISHING A NEW IRA ACCOUNT. This form,
the check, a completed Investor Suitability form and a completed application,
if applicable, is to be mailed to:
Securities Management and Research, Inc.
One Moody Plaza, Galveston, Texas 77550
- ------------------------------------------------------------------------------
THE PROCEEDS BEING DEPOSITED in this IRA represent all or a portion of (check
one of the following):
/ / A distribution from a Contributory IRA or Individual Retirement Annuity
(R4)
/ / An eligible rollover distribution from a qualified retirement plan [IRC
401(a)] (R8)
/ / An eligible rollover distribution from a TSA [403(b)] custodial account
or annuity (R8)
/ / A distribution as a result of a Qualified Domestic Relations Order
[IRC 414(p)] (R8)
/ / A beneficiary distribution from my deceased spouse's IRA, TSA [403(b)],
or qualified plan (R8)
FURTHERMORE:
- - I understand that the proceeds being invested must be invested within 60
days of my receiving them from a retirement plan. I am investing the
proceeds within this 60 day period.
- - I understand that my election to invest these proceeds in a Rollover IRA in
the American National family of funds is irrevocable.
- - I understand that no after-tax employee contributions originating from a
qualified plan or TSA are allowed to be rolled over and these proceeds do
not contain any after-tax employee contributions.
- - I UNDERSTAND THAT I AM PERMITTED ONLY ONE TAX-FREE ROLLOVER FROM AN IRA I
HOLD IN ANOTHER INSTITUTION DURING A TWELVE MONTH PERIOD.
- - I understand that commingling rollover proceeds from a retirement plan or
TSA with contributory IRA proceeds held in any of the American National
funds prevents me from rolling the proceeds back into a new retirement plan
or TSA at a later date.
- - I understand the tax consequences of commingling rollover proceeds with a
Contributory IRA.
- - I understand that neither the Custodian, its agent or the American National
family of funds warrant the eligibility for tax-deferred status of rollover
proceeds.
- ------------------------------------------------------------------------------
The attached check is to be deposited as indicated below:
ACCOUNT INFORMATION
/ / Existing IRA No. ____________________________
/ / New IRA Rollover account (completed IRA application and Investor
Suitability form must be attached)
REQUIRED DISTRIBUTION INFORMATION
This information is to be completed by the investor. If you are age 70-1/2 or
older this year, this section must be completed indicating the Distribution
Options you made with the previous Trustee or Custodian. NOTE: DO NOT FORWARD
ANY PORTION OF THE PROCEEDS REPRESENTING THE RMD AMOUNT.
CALCULATION METHOD / / Recalculation / / Declining Years
LIFE EXPECTANCY / / Single Life / / Joint Life
Factor used to calculate RMD __________ years
IRA HOLDER INFORMATION
Signature _____________________________________
Please print name _____________________________
Social Security Number ________________________
Daytime Phone Number __________________________
Should you require assistance in completing his form, please feel free to
contact a SM&R representative or SM&R.
7 10/94
<PAGE>
IRA ROLLOVER STATEMENT TAX IMPLICATIONS
==============================================================================
20% MANDATORY WITHHOLDING
Effective January 1, 1993, distributions received from qualified
retirement plans and 403(b) plans that are eligible for rollover treatment
are subject to a mandatory 20% federal withholding tax, unless the
distribution is rolled over DIRECTLY from the plan's custodian or trustee to
an IRA or another qualified plan.
For example, if you change jobs and are entitled to $50,000 from your
former company's pension or 401(k) plan and you choose to receive this amount
in full, you would receive a check for only $40,000. The amount would be less
the $10,000 withheld for federal taxes which you, in turn, will apply towards
the income tax you owe when filing your tax return.
However, you intended to roll over the distribution within 60 days to a
qualified retirement plan with your new employer or an IRA, how can you roll
over the full amount ($50,000) when you only received $40,000? You will have
to come up with the missing $10,000 (20%) yourself or owe taxes on the
$10,000 in addition to possible tax penalties if you are under age 59-1/2.
YOU CAN AVOID THIS TRAP
By requesting that the plan's trustee/custodian directly roll the plan
distribution to an IRA or to another qualified plan, you can avoid the
mandatory 20% withholding tax. If your plan allows and you are over age
59-1/2, you may consider leaving your money in the plan and begin taking a
series of payments over a period of ten or more years. Remember, unless you
need immediate use of the money, you do not want to take a check for any
amount that could be directly rolled over by your plan's trustee/custodian.
DISTRIBUTIONS NOT ELIGIBLE FOR ROLLOVER TREATMENT
The following types of distributions are not eligible for rollover
therefore exempt from the 20% withholding tax.
- - Periodic payments made over the participant's single or joint life
expectancy, or a period not less than 10 years
- - Any distribution required under the required minimum distribution (RMD)
rules under Internal Revenue Code (IRC) 401(a)(9)
- - The portion of any distribution that is not includible in gross income,
such as a return of the employee's after-tax contributions
- - Returns of excess deferrals or excess aggregate contributions made to a
qualified cash-or-deferred arrangement, such as a 401(k) plan, together
with the income allocable to these corrective distributions.
- - Loans treated as distributions under IRC 72(p) and not excepted by IRC
72(p)(2)
- - Any distribution to a non-spouse beneficiary (upon death of participant) or
to a non-spouse payee under a Qualified Domestic Relations Order
- - Loans in default that are deemed distributions
- - Dividends paid on employer securities as described in IRC 404(k)
- - The costs of life insurance coverage (P.S. 58 costs)
- - Similar items designated by the Commissioner in revenue rulings, notices and
any other guidance
Source: Treasury Regulations 1.401(a)(31)-17; O&As 3, 4 & 10
8
<PAGE>
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FORM 5305-A
(REV OCT 1992) INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT DO NOT FILE
DEPARTMENT OF TREASURY (UNDER SECTION 408(a) OF THE INTERNAL REVENUE CODE WITH THE INTERNAL
INTERNAL REVENUE SERVICE REVENUE SERVICE
</TABLE>
Custodian's name SECURITIES MANAGEMENT AND RESEARCH, INC. Custodian's
principal place of business GALVESTON, TEXAS
The Custodian named herein has given to the Depositor a Disclosure Statement
required under section 1.408-6 of the Internal Revenue Code (the "Code").
The Depositor whose name appears on the IRA Application hereby establishes an
Individual Retirement Account under section 408(a) of the Code to provide for
his or her retirement and for the support of his or her beneficiaries after
death. The Depositor has given to Securities Management and Research, Inc.
the sum listed on the IRA Application (in cash) to establish an Individual
Retirement Custodial Account for the Depositor under this agreement and the
Depositor and the Custodian agree to the following:
- -------------------------------------------------------------------------------
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992).
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3) of the Code, or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled
with other property except in a common trust fund or common investment
fund (within the meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles
(within the meaning of section 408(m) of the Code).
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall
be made in accordance with the following requirements and shall
otherwise comply with section 408(a)(6) and Proposed Regulations section
1.408-8, including the incidental death benefit provisions of Proposed
Regulations section 1.401(a)(9)-2, the provisions of which are
incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under paragraph 3, or to the surviving spouse
under paragraph 4, other than in the case of a life annuity, life
expectancies shall be recalculated annually. Such election shall be
irrevocable as to the Depositor and the surviving spouse and shall apply
to all subsequent years. The life expectancy of a nonspouse beneficiary
may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date,
(April 1 following the calendar year end in which the Depositor reaches
age 70 1/2). By that date, the Depositor may elect, in a manner
acceptable to the Custodian, to have the balance in the custodial
account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially
equal monthly, quarterly, or annual payments over the life of the
Depositor.
(c) An annuity contract that provides equal or substantially
equal monthly, quarterly, or annual payments over the joint and
last survivor lives of the Depositor and his or her designated
beneficiary. Payments must begin by April 1 following the calendar
year end in which the Depositor reaches age 70 1/2.
(d) Equal or substantially equal monthly, quarterly, or
annual payments over a specified period that may not be longer
than the Depositor's life expectancy.
(e) Equal or substantially equal monthly, quarterly, or
annual payments over a specified period that may not be longer
then the joint life and last survivor expectancy of the Depositor
and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is
distributed to him or her, the entire remaining interest will be
distributed as follows:
(a) If the Depositor dies on or after distribution of his or
her interest has begun, distribution must continue to be made in
accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her
required beginning date, the entire remaining interest will, at
the election of the Depositor or, if the Depositor has not so
elected, at the election of the beneficiary or beneficiaries,
either:
(i) Be distributed by the December 31 of the year
containing the fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments
over the life or life expectancy of the designated bene-
9
<PAGE>
ficiary or beneficiaries starting by December 31 of the year
following the year of the Depositor's death. If the Depositor's
spouse is the beneficiary, distributions need not commence until
December 31 of the year the Depositor would have attained age
70 1/2, if later.
(iii) Spouse may rollover entire interest to own IRA.
(c) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving
spouse, no additional cash contributions or rollover contributions
may be accepted in the account.
5. In the case of a distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each
year, divide the Depositor's entire interest in the Custodial account as
of the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor
expectancy of the Depositor and the Depositor's designated beneficiary, or
the life expectancy of the designated beneficiary, whichever applies). In
the case of distributions under paragraph 3, determine the initial life
expectancy (or joint life and last survivor expectancy) using the attained
ages of the Depositor and designated beneficiary as of their birthdays in
the year the Depositor reaches age 70 1/2. In the case of a distribution
in accordance with paragraph 4(b)(ii), determine life expectancy using the
attained age of the designated beneficiary as of the beneficiary's
birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 624, to
satisfy the minimum distribution requirements described above. This method
permits an individual to satisfy these requirements by taking from one
individual retirement account the amount required to satisfy the requirement
for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) of
the Code and related regulations.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with section 408(a) and the
related regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the Depositor.
ARTICLE VIII
CUSTODIAL ACCOUNT AGREEMENT
1. The Depositor appoints Securities Management and Research, Inc. as
Custodian of this Account. After deduction of all appropriate fees and
charges, the balance of Depositor's contributions shall be invested as is
hereinafter provided.
2. The Depositor directs the Custodian to invest contributions and reinvest
dividends and capital gains distributions in shares of American National
Funds as directed on the application. The designated fund(s) may be any
one or more of mutual funds sponsored, distributed or underwritten by
Securities Management and Research, Inc.
3. The Custodian shall have no investment responsibility or discretion with
respect to this individual Retirement Custodian Account and shall not
vote the shares held therein, except as directed by Depositor.
4. This document constitutes the entire contract between Depositor and
Custodian and no representative of Securities Management and Research,
Inc., nor any broker-dealer shall be deemed to be a representative of or
acting on behalf of the Custodian nor shall any representative have any
authority to make representations or to bind the Custodian beyond the
terms of this document.
5. The Depositor shall have the right, by written notice to the Custodian,
to designate or to change a Beneficiary to receive any benefit to which
the Depositor may be entitled in the event of his death prior to the
complete distribution of such benefits. IF NO SUCH DESIGNATION IS IN
EFFECT UPON THE DEPOSITOR'S DEATH, HIS BENEFICIARY SHALL BE HIS ESTATE.
6. The Depositor shall provide information to the Custodian at such times
and in such manner and containing such information as will enable the
Custodian to prepare reports required by the Internal Revenue Service
pursuant to section 408(i) of the Revenue Code of 1954, as amended and
regulations promulgated thereunder.
7. The Custodian shall submit such reports to the Internal Revenue Service
and the Depositor, the Depositor's surviving spouse or beneficiaries by
either in such manner as may be required by the Internal Revenue Service
from time to time.
8. Any income taxes or other taxes of any kind whatsoever that may be levied
or accessed upon or in respect to the Custodial Account, any transfer taxes
incurred in connection with the investment and reinvestment of the assets
of the Custodial Account, other administrative expenses incurred by the
Custodian in the performance of its duties including fees for legal
services rendered to the Custodian, and the compensation to the Custodian
shall be paid from the assets of the Account.
9. Securities Management and Research, Inc., as Custodian and as sponsor
assumes no responsibility to make any distribution unless and until such
order specifies the occasion for such distribution, the elected manner of
distribution as described in Article IV, Section 3, (a), (d), or (e) or
any declaration required by Article V. Further, the Custodian and the
Sponsor shall not be responsible to make distribution at age 70 1/2
unless written notice is given by the Depositor. This Custodian
Agreement shall terminate upon the complete distribution of the Account
to the Depositor or his beneficiaries or to such successor individual
retirement accounts or annuities.
10. Rollover contributions will be received in cash and the
10
<PAGE>
Depositor will instruct the Custodian as to which investment the proceeds
are to be deposited.
11. The Custodian may resign at any time upon written notice to the Depositor
or any current beneficiary or may be removed by the Depositor or any
current beneficiary at any time upon 30 days notice in writing to the
Custodian. Upon such resignation or removal the Depositor or current
beneficiary shall appoint a successor Custodian. If within 30 days after
the Custodian's resignation or removal, the Depositor or current
beneficiary has not appointed a successor Custodian which has accepted
such appointment, the Custodian will liquidate the assets and forward the
proceeds to the Depositor or current beneficiary.
12. The Custodian's fees shall be as published and amended from time to time.
13. If, because of an erroneous assumption as to earned income or for any
other reason, a contribution which is an excess contribution is made on
behalf of the Depositor for any year, adjustment of such excess
contribution shall be made in accordance with provisions of this
paragraph. The full amount of such excess contribution and any net income
attributable thereto shall be distributed to the Depositor, in cash or in
kind upon written notice to the Custodian from the Depositor which
states the amount of such excess contribution.
14. By execution of this Agreement Depositor consents to the amendment of
this Article VIII by the Custodian to make any changes herein which the
Custodian determines in its discretion as necessary or desirable.
15. Notwithstanding anything to the contrary, this Individual Retirement
Custodial Account Agreement shall be deemed accepted by the Custodian
when either (i) the Individual Retirement Custodial Account Application
is executed by an authorized representative of the Custodian, or (ii) the
Custodian accepts for investment Depositor's initial contribution made
in accordance with the terms of this Agreement and the Individual
Retirement Custodial Account Application.
16. This contract shall be construed under the laws of the State of Texas and
shall become effective upon execution of the Account Application by the
Custodian.
17. The acceptance of this Individual Retirement Custodial Account by the
Depositor is indicated by execution of the signature section on page 4 of
the Application.
18. The acceptance of this account by the Custodian shall be considered
effective upon establishment of the account.
11
<PAGE>
IRA DISCLOSURE STATEMENT
==============================================================================
This disclosure statement describes the official government rules
applicable to the operation and tax treatment of individual retirement
accounts. Because legal and tax consequences may vary for each individual,
you should consult your tax adviser on whether your contributions are tax
deductible. PLEASE KEEP THIS DOCUMENT FOR FUTURE REFERENCE.
YOUR RIGHT TO REVOKE: You may revoke your individual retirement account
within seven (7) days after the date the account is established only by
mailing or delivering written notice of your intent to revoke to:
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
(409) 763-8272
(800) 231-4839
The notice shall be deemed mailed on the date of the postmark, if
deposited in the mail in the United States, first class postage prepaid,
properly addressed to the address above. Upon revocation, the entire amount
contributed will be returned. Subsequent payments to existing IRA's cannot be
revoked.
ELIGIBILITY: Any individual who will not attain the age of 70 1/2 years before
the end of his current taxable year and who has compensation which is
includible in gross income (including an individual who is a participant in an
employer's retirement plan or a government pension plan) may contribute to an
IRA. Compensation is defined to include salaries, wages, professional fees,
self-employment income, alimony and separate maintenance payments includible
in gross income and other income for personal services included in gross
income. Income from property, such as dividends, interest or rent, does not
qualify as compensation under an IRA Plan.
LIMITATION ON CONTRIBUTIONS: Contributions must be made in cash and cannot
exceed the lesser of $2,000 or the amount of your compensation (except
rollover or SEP contributions) for any taxable year. If one spouse has no
compensation, the other spouse may contribute to an IRA for such spouse;
provided two separate IRA accounts exist, the total amount contributed does
not exceed the lesser of $2,250 or 100% of the working spouse's compensation,
a joint income tax return is filed and no more than $2,000 is contributed to
any one account. If a husband and wife each receive compensation as defined
in the preceding paragraph during the year and are otherwise eligible, each
may establish his or her own IRA. The contribution limitations are applicable
to the separate compensation of each individual without regard to any state
community property laws. Your contribution may or may not be deductible for
income tax purposes. Consult your tax adviser.
If you are not eligible to make a deductible contribution to your IRA, you
may make a non-deductible contribution not to exceed the lesser of $2,000 or
100% of your compensation. Earnings on non-deductible contributions are tax
deferred until distributed.
You must indicate on your tax return the extent to which your IRA
contribution is non-deductible by filing Form 8606 with your return. If you
overstate the amount of your non-deductible contribution, a penalty of
$100 will be assessed unless it is due to reasonable cause.
INVESTMENT OF FUNDS IN LIFE INSURANCE: No part of the custodial funds may be
invested in life insurance contracts.
INVESTMENT AND HOLDING OF CONTRIBUTIONS: Contributions in an IRA are held in
a custodial account for the exclusive benefit of the investor, his surviving
spouse and his beneficiaries who may include his estate, his dependents or
any other persons he may designate in writing delivered to the custodian. Your
interest in the account is fully vested and nonforfeitable. The custodian
maintains a separate account or record for each investor and such account or
record is available for inspection during regular business hours. The
contributions will be invested in the funds described in the Application
completed by the investor.
DISTRIBUTION OF FUNDS: Distributions of benefits without a penalty tax may
begin as soon as the investor attains age 59 1/2, but they MUST begin on or
before April 1 of the calendar year following the calendar year in which
the investor attains 70 1/2. An investor may elect to receive benefits if he
becomes disabled, without regard to age. A "minimum distribution" is required
to be made each year beginning on or before April 1 of the calendar year
following the calendar year in which the investor attains age 70 1/2. These
distributions are determined by dividing the entire balance in the IRA at the
beginning of each year by the life expectancy of the investor (or joint life
and last survivor expectancy of investor and beneficiary, if applicable)
determined as of the date the investor attains age 70, reduced by the number
of whole years elapsed since the investor attained age 70 1/12.
DISTRIBUTION OF FUNDS IN THE EVENT OF INVESTOR'S DEATH: If distributions have
begun and the investor dies before his entire interest has been distributed,
the remaining interest in the investor's account shall be distributed to the
investor's beneficiary at least as rapidly as under the method of
distribution being used as of the date of the investor's death. If
distribution has not begun prior to the investor's death, then the investor's
entire interest in the IRA must be distributed to the investor's beneficiary
within five (5) years after the death of the investor, provided that, if a
distribution begins within one (1) year after the investor's death to or for
the benefit of the investor's beneficiary over the longer of the life or life
expectancy of the investor's beneficiary, such distribution will be
considered to be distributed within such five (5) year period. If the
beneficiary is the investor's surviving spouse, the surviving spouse may
elect within the five (5) year period to have distributions begin at any time
before the date on which the investor would have attained the age of 70 1/2
and, if the surviving spouse dies prior to distribution, such surviving
spouse shall be considered as if the spouse were the investor and the
distribution rules that applied to the investor shall be the same rules that
apply to the deceased spouse. A beneficiary or surviving spouse may elect to
accelerate payments.
REQUIRED MINIMUM DISTRIBUTIONS (RMDs): IRA investors who reach age 70 1/2
must begin taking distributions for that year
12
<PAGE>
and every year thereafter. The distribution for the first year may be
delayed until April 1 of the year following the 70-1/2 year. All subsequent
year distributions must be taken by December 31 of each year. This
distribution can be based on the single or joint life expectancies of the
investor and/or the designated beneficiary. A 50% penalty will be applied to
amounts not withdrawn.
TAXPAYER REPORTING REQUIREMENTS: If a transaction has occurred for which a
penalty tax is imposed, such as an excess contribution, a premature
distribution or an excess accumulation (insufficient distribution), the
investor is required by the Internal Revenue Service to attach to his annual
income tax return an information return (Form 5329) prescribed for reporting
such transaction and calculating the penalty tax due.
TAX TREATMENT OR WITHDRAWALS AND DISTRIBUTIONS: Funds generally cannot be
withdrawn from the IRA without adverse tax consequences prior to the date on
which the investor attains age 59-1/2 (with the exception of the rollovers
later described, returns of excess contributions and payments on account of
the participant's death, certified disability or divorce). Any distributions
prior to that time (including amounts deemed distributed as a result of
prohibited transactions or use of part or all of the IRA as security for a
loan) are considered to be premature distributions. In addition to being
fully taxable to the investor as ordinary income at the time of distribution,
such premature distributions are subject to a penalty tax or 10% of the
amount distributed. Distributions occurring after the investor reaches
59-1/2, dies or is disabled are taxable to the recipient at ordinary income
tax rates. However, no penalty taxes are applied in the case of such
distributions.
ROLLOVER CONTRIBUTIONS: Effective January 1, 1993, UCA-92 mandates a 20%
withholding on all eligible rollover distributions from qualified retirement
plans which are not directly rolled to an IRA or a similar qualified
retirement plan. An eligible rollover distribution consists of all or any
portion of the proceeds in a qualified retirement plan other than:
a) a distribution which is part of a series of substantially equal
periodic payments made over the life or life expectancy of the
participant, the joint lives or life expectancies of the participant
and his or her beneficiary, for a period of 5 years or to age 59-1/2,
whichever is later;
b) distributions which are not includable in the recipients' taxable
income; or
c) distributions which represent RMDs made to individuals 70-1/2 years
of age.
An eligible retirement plan is an IRA, a qualified plan, or tax sheltered
annuity which accepts rollover contributions.
Prior to effecting a direct rollover the custodian will distribute any
required minimum distribution amount, if applicable, payable to the investor.
Rollover distribution received by the investor must be invested within sixty
(60) days from the date of distribution in certain other IRA approved
retirement plans, including IRAs in order to retain its tax deferred status.
All contributions and rollover contributions to an IRA must be made in cash.
No tax deduction, however, is allowed to the investor for the amount of a
rollover contribution contributed to an IRA.
ROLLOVERS BY SURVIVING SPOUSE: A rollover of part or all of a lump sum
distribution or part or all of a qualified partial distribution (subject to
certain limitations provided by section 405(a)(5)(D) of the Code) may be made
by a qualified plan investor or by the surviving spouse of a deceased
qualified plan investor. The surviving spouse may roll over only into an IRA
and may not roll over into a qualified plan in which the spouse is an
investor. Beneficiaries other than the surviving spouse may not roll over.
Whether an individual can receive a qualified lump sum, a qualified partial
distribution or plan termination distribution depends upon the provisions of
the employee benefit plan in which the individual or the spouse was a
participant.
QUALIFIED PLAN ROLLOVER: A qualified plan distribution rolled into an IRA
may be rolled back into another qualified plan under certain circumstances.
In the case of rollovers from qualified plans, the amount rolled over must
consist solely of employer and qualified deductible voluntary employee
contributions, interest earned thereon, and interest earned on other employee
contributions. Any part of the distribution retained by the investor except
his own tax-paid contributions is subject to income tax, while amounts rolled
over are not taxed until distributed from the rollover account. An investor
otherwise eligible to do so may make deductible IRA contributions to a
rollover IRA established with a qualified plan or section 403(b) annuity
distribution, but if this occurs, the law may preclude future rollover of the
funds back into a qualified plan or section 403(b) annuity. An investor may
also withdraw all or part of the funds from another IRA or individual
retirement annuity for rollover into an IRA within a one-year period. This
limitation does not, however, apply to rollovers of funds between a qualified
employer plan or annuity and an IRA. An investor may convert non-cash
property distributed from a qualified plan into cash by means of a bona fide
sale and roll over part or all of the proceeds into an IRA or another
qualified plan within the sixty (60) day period after the distribution.
PROHIBITED TRANSACTIONS: An IRA prohibits the investor, his spouse or
beneficiaries from engaging in any prohibited transactions (within the
meaning of the Internal Revenue Code section 4975). Prohibited transactions
include, but are not limited to, the sale or exchange of property, the
lending of money or other extension of credit, the furnishing of goods,
services or facilities and the transfer of income or assets to or from the
IRA to or for the benefit of his own interest or receive any compensation
from any transaction which involves the IRA assets. A disqualified person
includes, but is not limited to, the investor, his family (including other
individuals as defined in section 4975(e)(16) of the Code) and persons or
other entities (corporations, trusts, estates or partnerships) which stand in
a close relationship to the investor. If such transactions occur, the IRA will
cease to be qualified and will be treated as having been distributed and
subject to the income and penalty taxes discussed above, and the fair market
value of the account must be included in the investor's gross income. In
addition, the custodian and other disqualified parties may not engage in any
prohibited transactions with respect to the custodial account and will be
subject to penalties if any such prohibited transactions are engaged in
without a statutory or administrative exemption.
USE OF IRA ACCOUNT ASSETS AS SECURITY FOR LOANS: If the investor borrows
money and used all or any portion of his interest
13
<PAGE>
in the IRA as security, the portion of the IRA used will be deemed to be
distributed to the investor. If the investor has not attained age 59 1/2 or
is not disabled, the distribution will not only be fully taxable at ordinary
income tax rates but will incur the 10% premature distribution penalty tax
discussed above. CONSEQUENTLY, PLEDGING IRA ASSETS AS SECURITY FOR A LOAN IS
SPECIFICALLY PROHIBITED.
PENALTY FOR EXCESS CONTRIBUTIONS: An "excess contribution" is a contribution
to an IRA in a taxable year in excess of the maximum amount deductible or
permitted to be rolled over into an IRA for the taxable year. A penalty tax
equal to 6% of the amount of the excess contribution is imposed on an
investor who has an excess contribution in his IRA as of the close of any
taxable year.
PENALTY FOR CERTAIN ACCUMULATIONS: After the investor reaches age 70 1/2, or
if he dies and payments are to be made to his beneficiary, if the required
"minimum distributions," described in "Distribution of Funds" above, do not
occur within the time required by law, a penalty tax may be incurred equal to
50% of the difference between the amount of the "minimum distribution" and the
amount actually distributed each year. The Secretary of the Treasury may waive
the penalty if the inadequate distribution is due to reasonable error and
reasonable steps are being taken to correct the situation.
PENALTY FOR EXCESS DISTRIBUTIONS: A 15% excise tax is imposed on the sum of
all annual distributions received during the calendar year in excess of
$150,000 (or $112,500, adjusted for cost of living increases in certain
circumstances). This 15% excise tax on excess distributions is reduced by the
10% tax on premature distributions, if any, that apply to excess
distribution. The excess distribution tax will not apply to a distribution
due to the investor's death (although the estate tax may be increased by 15%
of the "excess retirement accumulation"), the portion of the distribution
applying to nondeductible contributions, a distribution that is rolled over
tax free, or a distribution to an alternate payee under qualified domestic
relations order.
FINANCIAL DISCLOSURE: Earnings on the investor's IRA are the dividends and
capital gains distributions received on mutual fund shares held by the
investor's IRA, and are used to purchase additional mutual fund shares. A
sales charge is deducted on the purchase of shares of the funds being
offered. These sales charges are reduced under various circumstances
described in detail in each Fund's prospectus. YOU MUST HAVE RECEIVED A
PROSPECTUS PRIOR TO SUBMITTING YOUR APPLICATION TO CREATE AN IRA. The growth
in value of the mutual fund shares held in the investor's IRA can be neither
guaranteed nor projected.
WITHDRAWALS: Withdrawal requests MUST be presented to Securities Management
and Research, Inc., One Moody Plaza, Galveston, Texas 77550, with the
appropriate withdrawal forms properly executed. You should contact your
representative or Securities Management and Research, Inc. for the required
forms and procedures to avoid any delay in the expedition of withdrawals.
ESTATE AND GIFT TAXES: All amounts held by the investor at the investor's
death are includible in his estate for federal estate tax purposes, and the
beneficiary shall report distributions received as ordinary income, except a
surviving spouse may be able to roll over the distribution. Any transfers of
the benefits during the investor's lifetime are subject to applicable gift
taxes except certain transfers to a former spouse pursuant to a divorce
decree or written instrument incident to such divorce.
ADDITIONAL INFORMATION: Additional information regarding the application and
rules governing the IRA may be obtained from any district office of the
Internal Revenue Service and from IRS Publication 590.
14
<PAGE>
SIMPLIFIED EMPLOYEE PENSION
INDIVIDUAL RETIREMENT ACCOUNTS CONTRIBUTION AGREEMENT
===============================================================================
Form 5305-SEP Rev March 1994
_______________________________________________________________ makes the
(Business name--employer)
following agreement under the terms of section 408(k) of the Internal Revenue
Code and the instructions to this form.
The employer agrees to provide for discretionary contributions in each
calendar year to the Individual Retirement Accounts or Individual Annuities
(IRA's) of all eligible employees who are at least _______ years old (not
over 21 years old) and have performed services for the employer in at least
_______ years (not to exceed 3 years) of the immediately preceding 5 years.
This simplified employee pension (SEP) // includes // does not include
employees covered under a collective bargaining agreement and // includes
// does not include certain non resident aliens, and // includes // does
not include employees whose total compensation during the year is less than
$396*.
The employer agrees that contributions made on behalf of each eligible
employee will:
- - Be based only on the first $150,000* of compensation.
- - Be made in an amount that is the same percentage of total compensation for
every employee.
- - Be limited annually to the smaller of $30,000 or 15% of compensation.
- - Be paid to the employee's IRA trustee, custodian, or insurance company (for
an annuity contract).
_______________________________________________________________________________
Signature of employer
_______________________________________________________________________________
By
_______________________________________________________________________________
Date
_______________________________________________________________________________
* This amount reflects the cost-of-living increase under section 408(k)(8)
effective 1-1-91. This amount is adjusted annually. Each January, IRS
announces the increase, if any, in the Internal Revenue Bulletin.
If applicable, fill out this form and the form on the next page.
Submit this copy to SM&R.
15
<PAGE>
SIMPLIFIED EMPLOYEE PENSION
INDIVIDUAL RETIREMENT ACCOUNTS CONTRIBUTION AGREEMENT
==============================================================================
Form 5305-SEP Rev. March 1994
___________________________________________ makes the following agreement
(Business name-employer)
under the terms of section 408(k) of the Internal Revenue Code and the
instructions to this form.
The employer agrees to provide for discretionary contributions in each
calendar year to the Individual Retirement Accounts or Individual Annuities
(IRA's) of all eligible employees who are at least ________ years old (not
over 21 years old) and have performed services for the employer in at least
________ years (not to exceed 3 years) of the immediately preceding 5 years.
This simplified employee pension (SEP) / / includes / / does not include
employees covered under a collective bargaining agreement and / / includes
/ / does not include certain nonresident aliens, and / / inlcudes / / does
not include employees whose total compensation during the year is less than
$396*.
The employer agrees that contributions made on behalf of each eligible
employee will:
- - Be based only on the first $150,000* of compensation.
- - Be made in an amount that is the same percentage of total compensation for
every employee.
- - Be limited annually to the smaller of $30,000 or 15% of compensation.
- - Be paid to the employee's IRA trustee, custodian, or insurance company (for
an annuity contract).
_______________________________________________________
Signature of employer
_______________________________________________________
By
_______________________________________________________
Date
*This amount reflects the cost-of-living increase under section 408(k)(8)
effective 1-1-91. This amount is adjusted annually. Each January, IRS
announces the increase, if any, in the Internal Revenue Bulletin.
THIS FORM REMAINS WITH THE CLIENT, IN THIS KIT.
- ------------------------------------------------------------------------------
INSTRUCTIONS FOR THE EMPLOYER (Section references are to the Internal
Revenue Code, unless otherwise noted.)
PAPERWORK REDUCTION ACT NOTICE--We ask for the information on this form to
carry out the Internal Revenue laws of the United States. You are required to
give us the information. We need it to determine if you are entitled to a
deduction for contributions made to a Simplified Employee Pension (SEP).
Complete this form only if you want to establish a Model SEP.
The time needed to complete this form will vary depending on individual
circumstances. The estimated average time is:
Recordkeeping ........................................ 7 min.
Learning about the law or the form ................... 26 min.
Preparing the form ................................... 20 min.
If you have comments concerning the accuracy of these time estimates or
suggestions for making this form more simple, we would be happy to hear from
you. You can write to both the Internal Revenue Service, Washington, D.C.
20224. Attention: IRS Reports Clearance Officer, PC:FP, and the Office of
Management and Budget, Paperwork Reduction Project (1545-0499). Washington,
D.C. 20503. This form is NOT to be sent to either of these offices. The Form
5305-SEP is only to be kept for your records.
NOTE CHANGE IN COMPENSATION--For years beginning after December 31, 1993, the
Revenue Reconciliation Act of 1993 (the Act), reduced to $150,000 the annual
compensation of each employee to be taken into account in making
contributions to a SEP. The $150,000 amount will be indexed for inflation
after 1994 in increments of $10,000 that will be rounded to the next lowest
multiple of $10,000. See Act section 13212 for different effective dates and
the transition rules that apply to governmental plans and plans under a
collective bargaining agreement.
PURPOSE OF FORM--Form 5305-SEP (Model SEP) is used by an employer to make an
agreement to provide benefits to all eligible employees under a SEP described
in section 408(k). This form is NOT to be filed with IRS.
WHAT IS A SEP PLAN?--A SEP is a written agreement which provides an employer
with a simplified way to make contributions toward an employee's retirement
income. Under a SEP, the employer is permitted to contribute a certain amount
(see below) to an employee's Individual Retirement Account or Individual
Retirement Annuity (IRAs). The employer makes contributions directly to an
IRA set up by an employee with a bank, insurance company, or other qualified
financial institution. When using this form to establish a SEP, the IRA must
be a model IRA established on an IRA form or a master or prototype IRA for
which IRS has issued a favorable opinion letter. Making the agreement on Form
5305-SEP does not establish an employer IRA as described under section 408(c).
THIS FORM MAY NOT BE USED BY AN EMPLOYER WHO:
- - Currently maintains any other qualified retirement plan. However, you are
not prevented from maintaining a Model Elective SEP (Form 5305A-SEP) or
other SEP to which elective or nonelective contributions are made.
17
<PAGE>
- Has maintained in the past a defined benefit plan, even if now terminated.
- Has any eligible employees for whom IRAs have not been established.
- Uses the services of leased employees (as described in section 414(n)).
- Is a member of an affiliated service group (as described in section
414(m), a controlled group of corporations (as described in section
414(b)), or trades or businesses under common control (as described in
section 414(c) and 414(o)), unless all eligible employees of all the
members of such groups, trades or businesses, participate under the SEP.
- This form should only be used if the employer will pay the cost of the
SEP contributions. This form is not suitable for a SEP that provides for
contributions at the election of the employee whether no not made
pursuant to a salary reduction agreement.
WHO MAY PARTICIPATE--Any employee who is at least 21 years old and has
performed "service" for you in at least 3 years of the immediately preceding
5 years must be permitted to participate in the SEP. However, you may establish
less restrictive eligibility requirements if you choose. "Service" is any
work provided for you for any period of time, however short. If you are a
member of an affiliated service group, a controlled group of corporations, or
trades or businesses under common control, "service" includes any work
performed for any period of time for any other member of such group, trades,
or businesses. Generally, to make the agreement, all eligible employees
(including all eligible employees, if any, of other members of an affiliated
service group, a controlled group of corporations, or trades or businesses
under common control) must be allowed to participate in the plan. However,
employees covered under a collective bargaining agreement and certain
nonresident aliens may be excluded if section 410(b)(3)(A) or 410(b)(3)(C)
applies to them. Employees whose total compensation for the year is less than
$396* may be excluded.
AMOUNT OF CONTRIBUTIONS--You are not required to make any contributions to an
employee's SEP -IRA in a given year. However, if you do make contributions,
you must make them to the IRAs of all eligible employees who actually
performed services during the year, whether or not they are still employed at
the time contributions are made. The contributions made must be the same
percentage of each employee's total compensation (up to a maximum
compensation base of $150,000*). The contributions you make in a year for any
one employee may not be more than the smaller of $30,000 or 15% of that
employee's total compensation (figured without considering the SEP-IRA
contributions).
For this purpose, compensation includes:
- - Amounts received for personal services actually performed (see Regulations
section 1.219(c)); and
- - Earned income as defined under section 401(c)(2).
You may not discriminate in favor of any employee who is highly compensated
if you use Form 5305-SEP.
Under this form you may not integrate your SEP contributions with, or
offset them by, contributions made under the Federal Insurance Contributions
Act (FICA).
Currently, employees who have established a SEP using this agreement and
have provided each participant with a copy of this form, including the
questions and answers below, are not required to file the annual information
returns. Forms 5500, 5500-C/R, or 5500EZ for the SEP.
DEDUCTING CONTRIBUTIONS--You may deduct all contributions to a SEP subject to
the limitations of section 404(h). The SEP is maintained on a calendar year
basis and contributions to the SEP are deductible for your tax year with or
within which the calendar year ends. Contributions made for a particular
taxable year and contributed by the due date of your income tax return
(including extensions) shall be deemed made in that taxable year.
MAKING THE AGREEMENT--This agreement is considered made when (1) IRAs have
been established for all of your eligible employees, (2) you have completed
all blanks on the agreement form without modification, and (3) you have given
all of your eligible employees the following information:
- - A copy of Form 5305-SEP.
- - A statement that IRAs other than IRAs into which employer SEP contributions
will be made provide different rates of return and different terms concerning,
among other things, transfers and withdrawals of funds from the IRAs.
- - A statement that, in addition to the information provided to an employee at
the time the employee becomes eligible to participate, the administrator of
the SEP must furnish each participant within 30 days of the effective date
of any amendment to the SEP, a copy of the amendment and a written
explanation of the effects.
- - A statement that the administrator will give written notification to each
participant of any employer contributions made under the SEP to that
participant's IRA by the later of January 31 of the year following the year
for which a contribution is made or 30 days after the contribution is made.
Employers who have established a SEP using Form 5305-SEP and have given
each participant a copy of Form 5305-SEP are not required to file the annual
information returns, Forms 5500, 5500-C/R, or 5500-EZ. However, under Title 1
of ERISA, relief from the annual reporting requirements is not available to an
employer who selects, recommends, or influences its employees to choose IRAs
into which employer contributions will be made, if those IRAs are subject to
provisions that prohibit withdrawal of funds for any period.
INFORMATION FOR THE EMPLOYEE
The information provided below explains what a SEP is, how contributions
are made, and how to treat your employer's contributions for tax purposes.
Please read the questions and answers carefully. For more specific
information, also see the agreement form and instructions on page 1 of this
form.
QUESTIONS AND ANSWERS
1. Q. WHAT IS A SIMPLIFIED EMPLOYEE PENSION, OR SEP?
A. A SEP is a retirement income arrangement under which your
- - This amount reflects into cost of living increase under section 408(k)(8)
effective 1-1-91. This amount is adjusted annually. Each January IRS
announces the increase, if any, in the Internal Revenue Bulletin.
18
<PAGE>
employer may contribute any amount each year up to the smaller of
$30,000 or 15% of your compensations into your own Individual Retirement
Account/Annuity (IRA).
Your employer will provide you with a copy of the agreement containing
participation requirements and a description of the basis upon which
employer contributions may be made to your IRA.
All amounts contributed to your IRA by your employer belong to you,
even after you separate from service with that employer.
2. Q. MUST MY EMPLOYER CONTRIBUTE TO MY IRA UNDER THE SEP?
A. Whether or not your employer makes a contribution to the SEP is
entirely within the employer's discretion. If a contribution is made
under the SEP, it must be allocated to all the eligible employees
according to the SEP agreement. The Model SEP specifies that the
contribution on behalf of each eligible employee will be the same
percentage of compensation (excluding compensation higher than
$222.220*) for all employees.
3. Q. HOW MUCH MAY MY EMPLOYER CONTRIBUTE TO MY SEP-IRA IN ANY YEAR?
A. Under the Model SEP (Form 5305-SEP) that your employer has
adopted, your employer will determine the amount of contribution to be
made to your IRA each year. However, the contribution for any year is
limited to the smaller of $30,000 of 15% of your compensation for that
year. The compensation used to determine this limit does not include any
amount which is contributed by your employer to your IRA under the SEP.
The agreement does not require an employer to maintain a particular
level of contributions. It is possible that for a given year no employer
contribution will be made on an employee's behalf. Also see Question 5.
4. Q. HOW DO I TREAT MY EMPLOYER'S SEP CONTRIBUTIONS FOR MY TAXES?
A. The amount your employer contributes for years beginning after
1986 is excludible from your gross income subject to certain limitations
including the lesser of $30,000 or 15% of compensation mentioned in 1.A.
above and is not includible as taxable wages on your Form W-2.
5. Q. MAY I ALSO CONTRIBUTE TO MY IRA IF I AM A PARTICIPANT IN A SEP?
A. Yes. You may still contribute the lesser of $2,000 or 100% of
your compensation to an IRA. However, the amount which is deductible
is subject to various limitations. Also see Question 11.
6. Q. ARE THERE ANY RESTRICTIONS ON THE IRA I SELECT TO DEPOSIT MY SEP
CONTRIBUTIONS IN?
A. Under the Model SEP that is approved by IRS, contributions must
be made to either a Model IRA which is executed on an IRS form or a
master or prototype IRA for which IRS has issued a favorable opinion
letter.
7. Q. WHAT IF I DON'T WANT TO PARTICIPATE IN A SEP?
A. Your employer may require that you become a participant in such
an arrangement as a condition of employment. However, if the employer
does not require all eligible employees to become participants and an
eligible employee elects not to participate, all other employees of the
same employer may be prohibited from entering into a SEP-IRA arrangement
with that employer. If one or more eligible employees do not participate
and the employer attempts to establish a SEP-IRA agreement with the
remaining employees, the resulting arrangement may result in adverse tax
consequences to the participating employees.
8. Q. CAN I MOVE FUNDS FROM MY SEP-IRA TO ANOTHER TAX-SHELTERED IRA?
A. Yes, it is permissible for you to withdraw, or receive, funds
from your SEP-IRA, and no more than 60 days later, place such funds in
another IRA, or SEP-IRA. This is called a "rollover" and may not be
done without penalty more frequently than at one-year intervals.
However, there are no restrictions on the number of times you may make
"transfers" if you arrange to have such funds transferred between the
trustees, so that you never have possession.
9. Q. WHAT HAPPENS IF I WITHDRAW MY EMPLOYER'S CONTRIBUTION FROM MY
IRA?
A. If you don't want to leave the employer's contribution in your
IRA, you may withdraw it at any time, but any amount withdrawn is
includible in your income. Also, if withdrawals occur before attainment
of age 59-1/2, and not on account of death or disability, you may be
subject to a penalty tax.
10. Q. MAY I PARTICIPATE IN A SEP EVEN THOUGH I'M COVERED BY ANOTHER
PLAN?
A. An employer may not adopt this IRS Model SEP (Form 5305-SEP) if
the employer maintains another qualified retirement plan or has ever
maintained a qualified defined benefit plan. However, if you work for
several employers you may be covered by a SEP of one employer and a
different SEP or pension or profit-sharing plan of another employer.
Also see Questions 11 and 12.
11. Q. WHAT HAPPENS IF TOO MUCH IS CONTRIBUTED TO MY SEP-IRA IN ONE
YEAR?
A. Any contribution that is more than the yearly limitations may be
withdrawn without penalty by the due date (plus extensions) for filing
your tax return (normally April 15th), for filing your gross income.
Excess contributions left in your SEP-IRA account after that time may
have adverse tax consequences. Withdrawals of those contributions may
be taxed as premature withdrawals. Also see Question 10.
12. Q. IS MY EMPLOYER REQUIRED TO PROVIDE ME WITH INFORMATION ABOUT
SEP-IRAs and SEP AGREEMENT?
A. Yes, your employer must provide you with a copy of the executed
SEP agreement (Form 5305-SEP), these Questions and Answers, and
provide a statement each year showing any contribution to your IRA.
Also see Question 4.
13. Q. IS THE FINANCIAL INSTITUTION WHERE I ESTABLISH MY IRA ALSO
REQUIRED TO PROVIDE ME WITH INFORMATION?
A. Yes, it must provide you with a disclosure statement which
19
<PAGE>
contains the following items of information in plain, nontechnical language:
(1) the statutory requirements which relate to your IRA; (2) the tax
consequences which follow the exercise of various options and what those
options are; (3) participant eligibility rules, and rules on the
deductibility and nondeductibility of retirement savings; (4) the
circumstances and procedures under which you may revoke your IRA. Including
the name, address, and telephone number of the person designated to receive
notice of revocation (this explanation must be prominently displayed at the
beginning of the disclosure statement); (5) explanations of when penalties
may be assessed against you because of specified prohibited or penalized
activities concerning your IRA; and (6) financial disclosure information
which; (a) either projects value growth rates of your IRA under various
contribution and retirement schedules, or describes the method of computing
and allocating annual earnings and charges which may be assessed; (b)
describe whether, and for what period, the growth projections for the plan
are guaranteed, or a statement of the earnings rate and terms on which the
project is based; (c) states the sales commission to be charged in each year
expressed as a percentage of $1,000; and (d) states the proportional amount
of any nondeductible life insurance which may be a feature of your IRA.
In addition to this disclosure statement, the financial institution is
required to provide you with a financial statement each year. It may be
necessary to retain and refer to statements for more than one year in order
to evaluate the investment performance of the IRA and for information on how
to report IRA distributions for tax purposes.
IRA
FORMS KIT
EVERYTHING YOU NEED TO:
- - OPEN A NEW SM&R IRA ACCOUNT
- - TRANSFER YOUR PRESENT IRA ACCOUNT(S) TO AN SM&R IRA
- - DIRECTLY ROLL OVER YOUR RETIREMENT PLAN DISTRIBUTION
- - OPEN OR TRANSFER AN SEP ACCOUNT
SECURITIES MANAGEMENT & RESEARCH, INC.
ONE MOODY PLAZA * GALVESTON TEXAS 77550
(409) 763-2767
[LOGO]
MEMBER NASD, SIPC
Form 9379
Rev. 10/94
<PAGE>
EXHIBIT 99.B16 - INCOME FUND SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
INITIAL INVESTMENT 10,000
MAXIMUM SALES LOAD 575
NET AMOUNT INVESTED 9,425
BEGINNING OF PERIOD 12/31/86
NAV, BEGINNING OF PERIOD 20.17
SHARES PURCHASED 467.278
COMPUTATION OF VALUE OF INVESTMENT AT YEAR END ASSUMING
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS:
<TABLE>
<CAPTION>
SHARES FROM
----------------------
INCOME CAP GAINS CUMULATIVE ENDING REDEEMABLE
REINVESTED REINVESTED SHARES NAV VALUE
<S> <C> <C> <C> <C> <C>
1986 18 49 534.093 19.11 10,207
1987 21 12 567.284 18.67 10,591
1988 22 71 660.038 17.66 11,656
1989 27 55 742.617 20.11 14,934
1990 32 3 777.599 19.35 15,047
1991 23 46 846.505 22.94 19,419
1992 21 41 908.192 22.09 20,062
1993 25 92 1,024.641 21.66 22,194
1994 31 112 1,167.087 18.90 22,058
1995 34 59 1,260.779 22.59 28,481
</TABLE>
<TABLE>
<CAPTION>
TOTAL INCOME
RETURN RETURN APPRECIATION
<S> <C> <C> <C>
1986 2.07% 3.66% -1.59%
1987 3.77% 4.17% -0.40%
1988 10.07% 3.98% 6.09%
1989 28.12% 4.59% 23.53%
1990 0.75% 4.08% -3.33%
1991 29.06% 3.34% 25.72%
1992 3.32% 2.34% 0.98%
1993 10.63% 2.73% 7.90%
1994 -0.61% 2.83% -3.44%
1995 29.12% 3.38% 25.74%
</TABLE>
COMPUTATION OF VALUE OF INVESTMENT AT YEAR END ASSUMING
INVESTMENT INCOME DIVIDEND TAKEN IN CASH:
<TABLE>
<CAPTION>
SHARES FROM
CAP GAINS CUMULATIVE ENDING REDEEMABLE
REINVESTED SHARES NAV VALUE
<S> <C> <C> <C> <C>
1986 48 515.086 19.11 9,843
1987 12 526.888 18.67 9,837
1988 64 590.839 17.66 10,434
1989 48 639.068 20.11 12,852
1990 2 641.443 19.35 12,412
1991 37 678.334 22.94 15,561
1992 32 710.646 22.09 15,698
1993 70 781.028 21.66 16,917
1994 83 864.500 18.90 16,339
1995 43 907.575 22.59 20,502
</TABLE>
<PAGE>
EXHIBIT 99.B17
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT THE AMERICAN NATIONAL INCOME
FUND, INC., a Maryland corporation, and its undersigned officers and
Directors each hereby nominate, constitute and appoint MICHAEL W. MCCROSKEY
its/his/her true and lawful attorney-in-fact and agent, for it/him/her and on
its/his/her name, place and stead in any and all capacities, to make, execute
and sign all amendments to the Fund's Registration on Form N-1A under the
Securities Act of 1933 and the Investment Company Act of 1940, and to file
with the Securities and Exchange Commission and any other regulatory
authority having jurisdiction over the offer and sale of shares of the Funds,
such amendments, and any and all amendments and supplements thereto, and any
and all exhibits and other documents requisite in connection therewith
granting unto said attorney, full power and authority to do and perform each
and every act necessary and/or appropriate as fully to all intents and
purposes as the Fund and the undersigned Officers and Directors themselves
might or could do.
IN WITNESS WHEREOF, the Fund has caused this power of attorney to be
executed in its name by its President and attested by its Secretary, and the
undersigned Officers and Directors have hereunto set their hands this 16th
16th day of December, 1994.
ATTEST: AMERICAN NATIONAL INCOME FUND, INC.
TERESA E. AXELSON MICHAEL W. MCCROSKEY
- ---------------------------------- ----------------------------------
Teresa E. Axelson, Vice Michael W. McCroskey, President
President and Secretary
MICHAEL W. MCCROSKEY BRENDA T. KOELEMAY
- ---------------------------------- ----------------------------------
Michael W. McCroskey, President & Brenda T. Koelemay, Treasurer, Principal
Principal Executive Officer Financial & Accounting Officer
RALPH S. CLIFFORD PAUL D. CUMMINGS
- ---------------------------------- ----------------------------------
Ralph S. Clifford, Director Paul D. Cummings, Director
JACK T. CURRIE MICHAEL W. MCCROSKEY
- ---------------------------------- ----------------------------------
Jack T. Currie, Director Michael W. McCroskey, Director
IRA W. PAINTON DONALD P. STEVENS
- ---------------------------------- ----------------------------------
Ira W. Painton, Director Donald P. Stevens, Director
STEVEN H. STUBBS
- ----------------------------------
Steven H. Stubbs, Director
<PAGE>
EXHIBIT 99.B19
CONTROL LIST
ENTITY: American National Income Fund, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Maryland
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
Investment Advisory Agreement with Securities Management and Research, Inc.
Securities Management and Research, Inc. and American National Insurance
Company may have start-up and/or other investments in this company from time
to time.
ENTITY: American National Growth Fund, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Maryland
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
Investment Advisory Agreement with Securities Management and Research, Inc.
Securities Management and Research, Inc. and American National Insurance
Company may have start-up and/or other investments in this company from time
to time.
ENTITY: Triflex Fund, Inc.
State under the laws of which Entity is Organized: Maryland
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
Investment Advisory Agreement with Securities Management and Research, Inc.
Securities Management and Research, Inc. and American National Insurance
Company may have start-up and/or other investments in this company from time
to time.
ENTITY: SM&R Capital Funds, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Maryland
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
Investment Advisory Agreement with Securities Management and Research, Inc.
Securities Management and Research, Inc. and American National Insurance
Company may have start-up and/or other investments in this company from time
to time.
ENTITY: Securities Management and Research, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Florida
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Insurance Company
ENTITY: American National Insurance Company
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 37.6%
of the voting securities are owned by the Libbie Shearn Moody Trust; 23.7% of
the voting securities are owned by The Moody Foundation. The trustees of the
Moody Foundation are Robert L. Moody, Frances Moody Newman (Robert L. Moody's
mother), and Ross Rankin Moody (Robert L. Moody's son). Robert L. Moody is
Chairman of the Board, Chief Executive Officer and a Director of American
National Insurance Company. Mr. Moody is also Chairman of the Board, a
Director and controlling shareholder of National Western Life Insurance
Company, a Colorado insurance company.
<PAGE>
ENTITY: Libbie Shearn Moody Trust
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Not Applicable
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: Robert
L. Moody is a beneficiary of the Trust. The Trustee of the Trust is The
Moody National Bank of Galveston (the "Bank"). Moody Bank Holding Company,
Inc. ("MBHC") owns approximately 97% of the outstanding stock of the Bank.
Moody Bancshares, Inc. ("MBI") owns all of the outstanding stock of MBHC.
Mr. Moody serves as Director and President of MBI and MBHC and as Chairman of
the Board, Director and Chief Executive Officer of the Bank. The Three R
Trusts, trusts created by Mr. Moody for the benefit of his children, own all
of the MBI Class B stock (which elects a majority of MBI directors) and 47.5%
of the MBI Class A stock.
ENTITY: American National Investment Accounts, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Maryland
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
Investment Advisory Agreement with Securities Management and Research, Inc.
Securities Management and Research, Inc. and American National Insurance
Company may have start-up and/or other investments in this company from time
to time.
ENTITY: ANREM Corp.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by Securities Management and Research, Inc.
ENTITY: Base Securities Systems, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by ANREM Corp.
ENTITY: ANTAC, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Insurance Company
ENTITY: Standard Life and Accident Insurance Company
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Oklahoma
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Insurance Company
2
<PAGE>
ENTITY: American National Life Insurance Company of Texas
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Insurance Company
ENTITY: Garden State Life Insurance Company
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: New Jersey
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Insurance Company
ENTITY: American National Property and Casualty Insurance Company
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Missouri
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Insurance Company
ENTITY: American National Insurance Services Company
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Missouri The Percentage of
Voting Securities Owned or Other Basis of Control: 100% owned by American
National Property and Casualty Insurance Company
ENTITY: American National General Insurance Company
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Missouri
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Property and Casualty Insurance Company
ENTITY: ANPAC General Agency of Texas, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Property and Casualty Insurance Company
ENTITY: ANPAC Lloyds Insurance Management, Inc.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Property and Casualty Insurance Company
3
<PAGE>
ENTITY: Gal-Tex Hotel Corp.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 34.0%
of the voting securities are owned by The Moody Foundation; 50.2% of the
voting securities are owned by the Libbie Shearn Moody Trust
ENTITY: Gal-Tenn Corp.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by Gal-Tex Hotel Corp.
ENTITY: Gal-Tex Management Company
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by Gal-Tex Hotel Corp.
ENTITY: New Paxton Hotel Corporation
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by Gal-Tex Hotel Corp.
ENTITY: GTG Corporation
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by Gal-Tex Hotel Corp.
ENTITY: Ridgedale Festival Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 50%
owned by American National Insurance Company
ENTITY: South Shore Harbour Development, Ltd.
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 95% limited partnership interest
4
<PAGE>
ENTITY: Harbour Title Company
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: South
Shore Harbour Development, Ltd. has a stock ownership interest
ENTITY: Gateway Park Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: South
Shore Harbour Development, Ltd. has a joint venture interest
ENTITY: Panther Creek Limited Partnership
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 99% limited partnership interest
ENTITY: Maya Energy Limited Partnership
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 99% limited partnership interest
ENTITY: Marina Plaza Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 50% interest
ENTITY: Terra Venture Bridgeton Project Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL: 100%
owned by American National Insurance Company
ENTITY: Rodeo Square
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 95% interest
5
<PAGE>
ENTITY: American Hampden Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 98% interest
ENTITY: Timberlake Associates Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns approximately 98% interest
ENTITY: Marina One Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 50% interest
ENTITY: Kearns Building Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 85% interest
ENTITY: American National - Clear Lake 2 Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 88% interest
ENTITY: Third and Catalina
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 49% limited partnership interest
ENTITY: Timbermill
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 99% limited partnership interest
6
<PAGE>
ENTITY: Town and Country Joint Venture
STATE UNDER THE LAWS OF WHICH ENTITY IS ORGANIZED: Texas
THE PERCENTAGE OF VOTING SECURITIES OWNED OR OTHER BASIS OF CONTROL:
American National Insurance Company owns a 99% limited partnership interest
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 117,504,010
<INVESTMENTS-AT-VALUE> 140,491,361
<RECEIVABLES> 607,843
<ASSETS-OTHER> 120,218
<OTHER-ITEMS-ASSETS> 84
<TOTAL-ASSETS> 141,219,506
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 161,474
<TOTAL-LIABILITIES> 161,474
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 110,956,207
<SHARES-COMMON-STOCK> 6,244,669
<SHARES-COMMON-PRIOR> 6,043,256
<ACCUMULATED-NII-CURRENT> 181,441
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 688,364
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,987,351
<NET-ASSETS> 141,058,032
<DIVIDEND-INCOME> 4,271,258
<INTEREST-INCOME> 885,891
<OTHER-INCOME> 0
<EXPENSES-NET> 1,442,706
<NET-INVESTMENT-INCOME> 3,714,443
<REALIZED-GAINS-CURRENT> 6,691,546
<APPREC-INCREASE-CURRENT> 21,966,913
<NET-CHANGE-FROM-OPS> 32,372,902
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,750,365
<DISTRIBUTIONS-OF-GAINS> 6,611,754
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 580,583
<NUMBER-OF-SHARES-REDEEMED> 811,772
<SHARES-REINVESTED> 452,602
<NET-CHANGE-IN-ASSETS> 26,827,171
<ACCUMULATED-NII-PRIOR> 217,363
<ACCUMULATED-GAINS-PRIOR> 608,572
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 927,331
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,442,706
<AVERAGE-NET-ASSETS> 128,445,843
<PER-SHARE-NAV-BEGIN> 18.90
<PER-SHARE-NII> .62
<PER-SHARE-GAIN-APPREC> 4.82
<PER-SHARE-DIVIDEND> .63
<PER-SHARE-DISTRIBUTIONS> 1.12
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.59
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
