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Previous: INTERNET LAW LIBRARY INC, 8-A12G/A, 1999-10-04 |
Next: BETHLEHEM STEEL CORP /DE/, SC 13G, 1999-10-04 |
<PAGE>
SEMI-ANNUAL REPORT
[logo]
SM&R MUTUAL FUNDS
EQUITY FUNDS
GROWTH FUND
EQUITY INCOME FUND
BALANCED FUND
"Financial statements contained herein are included for the general
information of our shareholders. This report is not authorized for
distribution to prospective investors unless preceded or
accompanied by an effective prospectus."
Semi-Annual Report
June 30, 1999
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R GROWTH FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
AUTO & TRUCK MANUFACTURERS--1.46%
DaimlerChrysler AG 8,541 $ 759,081
Ford Motor Company 24,800 1,399,650
General Motors Corporation 14,700 970,200
-------------
3,128,931
AUTO PARTS MANUFACTURERS--0.09%
Delphi Automotive Systems
Corporation 10,274 190,711
BANKS--6.03%
Bank of America Corporation 40,000 2,932,500
Comerica, Incorporated 40,000 2,377,500
Morgan (J.P.) & Company 15,000 2,107,500
PNC Bank Corporation 30,000 1,728,750
U.S. Bancorp 60,700 2,063,800
Wells Fargo Company 40,000 1,710,000
-------------
12,920,050
BEVERAGES--2.10%
Anheuser-Busch Companies,
Incorporated 37,000 2,624,687
Coca-Cola Company 30,000 1,875,000
-------------
4,499,687
CHEMICALS--1.81%
Cabot Corporation 30,000 725,625
Hercules, Incorporated 30,600 1,202,962
Praxair, Incorporated 40,000 1,957,500
-------------
3,886,087
COMMUNICATIONS EQUIPMENT--6.03%
Lucent Technologies,
Incorporated 148,063 9,984,965
Nortel Networks Corporation 34,000 2,951,625
-------------
12,936,590
COMPUTER RELATED--7.79%
Apple Computer, Incorporated* 24,200 1,120,763
Cisco Systems, Incorporated* 75,000 4,837,500
EMC Corporation* 45,000 2,475,000
Sun Microsystems,
Incorporated* 120,000 8,265,000
-------------
16,698,263
COMPUTER SOFTWARE--9.83%
BMC Software, Incorporated* 80,000 4,320,000
Microsoft Corporation* 98,000 8,838,375
Network Associates,
Incorporated* 22,500 330,469
Novell, Incorporated* 166,000 4,399,000
VERITAS Software Corporation* 30,800 2,924,075
ZipLink, Incorporated* 20,000 250,000
-------------
21,061,919
COSMETICS & TOILETRIES--1.84%
Procter & Gamble Company 44,200 3,944,850
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
DIVERSIFIED--1.08%
AlliedSignal, Incorporated 23,000 $ 1,449,000
Coltec Industries,
Incorporated* 40,000 867,500
-------------
2,316,500
DRUGS--1.38%
Merck & Company, Incorporated 40,000 2,960,000
ELECTRICAL EQUIPMENT--4.05%
General Electric Company 63,000 7,119,000
Solectron Corporation* 23,300 1,553,819
-------------
8,672,819
ENVIRONMENTAL--2.38%
Republic Services,
Incorporated (Class A)* 80,000 1,980,000
Waste Management,
Incorporated 58,000 3,117,500
-------------
5,097,500
EXPLORATION & DRILLING--0.97%
Global Marine, Incorporated* 32,000 494,000
Kerr-McGee Corporation 13,000 652,438
Tidewater, Incorporated 17,000 518,500
Union Pacific Resources
Group, Incorporated 25,408 414,468
-------------
2,079,406
FINANCIAL SERVICES--3.30%
American General Corporation 20,000 1,507,500
Associates First Capital
Corporation 12,998 575,974
Countrywide Credit
Industries, Incorporated 44,000 1,881,000
Morgan Stanley, Dean Witter,
Discover and Company 20,000 2,050,000
Reliance Group Holdings,
Incorporated 142,000 1,056,125
-------------
7,070,599
FOOD PRODUCERS--4.50%
IBP, Incorporated 58,000 1,377,500
Interstate Bakeries
Corporation 66,000 1,480,875
McCormick & Company,
Incorporated 58,000 1,830,625
Smithfield Foods,
Incorporated* 65,000 2,173,438
Tyson Foods, Incorporated 30,000 675,000
Universal Foods Corporation 100,000 2,112,500
-------------
9,649,938
FOOD RETAILERS--2.19%
Albertson's, Incorporated 40,000 2,062,500
Safeway, Incorporated* 53,000 2,623,500
-------------
4,686,000
FURNITURE/APPLIANCE/TOOLS--1.12%
Black & Decker Corporation 38,200 2,411,375
</TABLE>
1
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R GROWTH FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
HEALTHCARE DISTRIBUTORS--1.01%
Bergen Brunswig Corporation
(Class A) 82,500 $ 1,423,125
McKesson HBOC, Incorporated 22,940 736,947
-------------
2,160,072
HOMEBUILDING/SUPPLIES--0.48%
Centex Corporation 27,700 1,040,481
INSURANCE COMPANIES--4.42%
CIGNA Corporation 33,000 2,937,000
Citigroup, Incorporated 119,250 5,664,375
Conseco, Incorporated 28,800 876,600
-------------
9,477,975
LEISURE TIME--0.74%
Brunswick Corporation 57,000 1,588,875
MACHINERY & EQUIPMENT--0.41%
Flowserve Corporation 47,000 890,062
MEDIA-TV/RADIO/CABLE--1.73%
MediaOne Group, Incorporated* 50,000 3,718,750
MEDICAL PRODUCTS & SUPPLIES--4.15%
Abbott Laboratories 40,000 1,820,000
Beckman Coulter, Incorporated 18,000 875,250
Biomet, Incorporated 82,000 3,259,500
Johnson & Johnson 30,000 2,940,000
-------------
8,894,750
MEDICAL SERVICES--3.02%
Aetna, Incorporated 23,000 2,057,063
PacifiCare Health Systems,
Incorporated (Class B)* 30,000 2,158,125
United Healthcare Corporation 36,000 2,254,500
-------------
6,469,688
METALS & MINING--0.19%
Kinross Gold Corporation* 240,120 405,202
NATURAL GAS--1.75%
Enron Corporation 46,000 3,760,500
OIL DOMESTIC--2.24%
Murphy Oil Corporation 17,000 829,812
Unocal Corporation 100,000 3,962,500
-------------
4,792,312
OIL INTERNATIONAL--5.60%
BP Amoco p.l.c. 33,083 3,589,506
Chevron Corporation 42,000 3,997,875
Elf Aquitaine ADR 60,000 4,413,750
-------------
12,001,131
PHOTOGRAPHY/IMAGING--1.32%
Xerox Corporation 48,000 2,835,000
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
RETAIL - DISCOUNT--1.35%
Wal-Mart Stores, Incorporated 60,000 $ 2,895,000
RETAIL - GENERAL--1.67%
Federated Department Stores,
Incorporated* 37,000 1,958,687
J. C. Penney Company,
Incorporated 33,200 1,612,275
-------------
3,570,962
RETAIL - SPECIALTY--1.03%
Group 1 Automotive,
Incorporated* 70,000 1,478,750
Officemax, Incorporated* 60,500 726,000
-------------
2,204,750
SEMICONDUCTORS--1.86%
Intel Corporation 67,000 3,986,500
SPECIALTY PRINTING/SERVICES--0.57%
Banta Corporation 58,000 1,218,000
STEEL--1.65%
Allegheny Teledyne,
Incorporated 53,000 1,199,125
LTV Corporation 180,000 1,203,750
USX-U. S. Steel Group 42,000 1,134,000
-------------
3,536,875
TELEPHONE--2.98%
Alltel Corporation 47,000 3,360,500
U S West, Incorporated New 51,365 3,017,694
-------------
6,378,194
TRUCKING & SHIPPING--0.67%
USFreightways Corporation 31,000 1,435,688
-------------
TOTAL COMMON STOCK--96.79%
(Cost $127,474,159) 207,471,992
-------------
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT
<S> <C> <C>
ELECTRIC POWER--0.60%
Arizona Public Service,
5.70%, 07/02/99 $ 1,280,000 1,279,797
FINANCIAL SERVICES--1.39%
Case Credit, 5.42%, 07/14/99 810,000 808,413
Penn Power & Light Energy
Trust, 5.50%, 07/07/99 2,175,000 2,173,005
-------------
2,981,418
</TABLE>
2
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R GROWTH FUND, CONTINUED
<TABLE>
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT VALUE
RETAIL - SPECIALTY--1.20%
<S> <C> <C>
AutoZone, Incorporated,
5.75%, 07/06/99 $ 465,000 $ 464,629
The Limited, Incorporated,
5.30%, 07/01/99 2,097,000 2,097,000
-------------
2,561,629
-------------
TOTAL COMMERCIAL PAPER--3.19%
(Cost $6,822,844) 6,822,844
-------------
TOTAL INVESTMENTS--99.98%
(Cost $134,297,003) 214,294,836
CASH AND OTHER ASSETS, LESS
LIABILITIES--0.02% 47,217
-------------
NET ASSETS--100.00% $ 214,342,053
-------------
-------------
ABBREVIATIONS
ADR--American Depository Receipt
*--Non-income producing securities
</TABLE>
See notes to financial statements.
3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R GROWTH FUND
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value $ 214,294,836
Cash 21,433
Prepaid Expenses 82,792
Receivable for:
Capital stock sold 98,213
Dividends 120,496
Expense reimbursement 3,761
Other assets 93,341
---------------
TOTAL ASSETS 214,714,872
---------------
LIABILITIES
Capital stock reacquired 220,698
Accrued:
Investment advisory fee 90,841
Service fee 41,981
Distribution fee 1,875
Other liabilities 17,424
---------------
TOTAL LIABILITIES 372,819
---------------
NET ASSETS (applicable to shares outstanding) $ 214,342,053
---------------
---------------
NET ASSETS:
Class A $ 1,607,040
- -----------------------------------------------------------------------------------------------------------
Class B $ 782,125
- -----------------------------------------------------------------------------------------------------------
Class C $ 73,031
- -----------------------------------------------------------------------------------------------------------
Class T $ 211,879,857
- -----------------------------------------------------------------------------------------------------------
CAPITAL STOCK, $0.01 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000.000
Outstanding 255,590.934
- -----------------------------------------------------------------------------------------------------------
Class B:
Authorized 200,000,000.000
Outstanding 126,800.816
- -----------------------------------------------------------------------------------------------------------
Class C:
Authorized 200,000,000.000
Outstanding 11,390.245
- -----------------------------------------------------------------------------------------------------------
Class T:
Authorized 100,000,000.000
Outstanding 33,778,101.953
- -----------------------------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share $ 6.29
Offering price per share: (Net Assets value of $6.29 / 95.00%) $ 6.62
- -----------------------------------------------------------------------------------------------------------
Class B:
Net asset value and offering price per share $ 6.17
- -----------------------------------------------------------------------------------------------------------
Class C:
Net asset value and redemption price per share $ 6.41
Offering price per share: (Net Assets value of $6.41 / 99.00%) $ 6.47
- -----------------------------------------------------------------------------------------------------------
Class T:
Net asset value and redemption price per share $ 6.27
Offering price per share: (Net Assets value of $6.27 / 94.25%) $ 6.65
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
4
<PAGE>
STATEMENT OF OPERATIONS Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R GROWTH FUND
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,079,465
Interest 173,240
------------------
TOTAL INVESTMENT INCOME 1,252,705
EXPENSES
Investment advisory fees 490,861
Service fees 226,757
Directors' fees 11,583
Custodian and transactions fees 39,764
Audit fees 11,000
Qualification fees 41,801
Shareholder reporting expenses 25,387
Insurance expenses 22,112
Distribution fees 1,875
Other 124
------------------
TOTAL EXPENSES 871,264
LESS EXPENSES REIMBURSED (19,407)
------------------
NET EXPENSES 851,857
------------------
INVESTMENT INCOME--NET 400,848
------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 5,713,774
Change in unrealized appreciation of investments for the period 14,631,417
------------------
NET GAIN ON INVESTMENTS 20,345,191
------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 20,746,039
------------------
------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
--------------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income--net $ 400,848 $ 1,282,676
Net realized gain on investments 5,713,774 8,728,659
Change in unrealized appreciation 14,631,417 21,620,022
--------------- ------------
Net increase in net assets resulting from operations 20,746,039 31,631,357
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income--net
Class A -- --
Class B -- --
Class C -- --
Class T (439,038) (1,255,603)
Capital gains
Class T -- (13,647,821)
--------------- ------------
Total distributions to shareholders (439,038) (14,903,424)
CAPITAL SHARE TRANSACTIONS--NET
Class A 1,496,654 --
Class B 737,510 --
Class C 66,294 --
Class T (11,374,614) 8,037,187
--------------- ------------
Total net capital share transactions (9,074,156) 8,037,187
--------------- ------------
TOTAL INCREASE 11,232,845 24,765,120
NET ASSETS
Beginning of period 203,109,208 178,344,088
--------------- ------------
End of period $ 214,342,053 $203,109,208
--------------- ------------
--------------- ------------
</TABLE>
See notes to financial statements.
5
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the period.
SM&R GROWTH FUND
<TABLE>
<CAPTION>
CLASS T SHARES
----------------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------- -------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 5.69 $ 5.24 $ 4.95 $ 4.39 $ 3.83 $ 4.15
Investment income--net 0.01 0.04 0.06 0.05 0.08 0.06
Net realized and unrealized gain
(loss)
on investments 0.58 0.85 1.03 0.73 0.88 0.15
------------- ------------- ------------- ------------- ------------- -------------
Total from Investment Operations 0.59 0.89 1.09 0.78 0.96 0.21
Less distributions from
Investment income--net (0.01) (0.04) (0.06) (0.05) (0.08) (0.06)
Capital gains -- (0.40) (0.74) (0.17) (0.32) (0.47)
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions (0.01) (0.44) (0.80) (0.22) (0.40) (0.53)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period $ 6.27 $ 5.69 $ 5.24 $ 4.95 $ 4.39 $ 3.83
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
Total Return 10.43%** 18.35% 22.24% 17.64% 25.20% 4.98%
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL
DATA
Net Assets, end of period (000's
omitted) $ 211,880 $ 203,109 $ 178,344 $ 152,758 $ 134,821 $ 113,250
Ratio of expenses to average
net assets 0.85%* 0.85% 0.96% 1.15% 0.98% 0.97%
Ratio of net investment income to
average net assets 0.40%* 0.69% 1.03% 1.02% 1.67% 1.46%
Portfolio turnover rate 7.63% 27.31% 46.79% 18.72% 37.00% 46.26%
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED)
-------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
--------------- --------------- ---------------
<S> <C> <C> <C>
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 1, 1999 JANUARY 1, 1999 JANUARY 1, 1999
TO TO TO
JUNE 30, JUNE 30, JUNE 30,
--------------- --------------- ---------------
<CAPTION>
1999 1999 1999
--------------- --------------- ---------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 5.69 $ 5.69 $ 5.69
Investment income--net -- (0.01) (0.02)
Net realized and unrealized gain (loss) on investments 0.60 0.49 0.74
------- ------- -------
Total from Investment Operations 0.60 0.48 0.72
Less distributions from
Investment income--net -- -- --
------- ------- -------
Total Distributions 0.00 0.00 0.00
------- ------- -------
Net Asset Value, End of Period $ 6.29 $ 6.17 $ 6.41
------- ------- -------
------- ------- -------
Total Return ** 10.54% 8.44% 12.65%
------- ------- -------
------- ------- -------
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's omitted) $ 1,607 $ 782 $ 73
Ratio of expenses to average net assets * 1.48% 1.97% 2.23%
Ratio of net investment income to average net assets * (0.34)% (0.82)% (1.01)%
Portfolio turnover rate 7.63% 7.63% 7.63%
</TABLE>
* Ratios annualized
** Returns are not annualized
See notes to financial statements.
6
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
AUTO & TRUCK MANUFACTURERS--5.42%
DaimlerChrysler AG 34,292 $ 3,047,702
Ford Motor Company 133,881 7,555,909
General Motors Corporation 28,000 1,848,000
-------------
12,451,611
AUTO PARTS MANUFACTURERS--0.16%
Delphi Automotive Systems
Corporation 19,570 363,268
BANKS--9.16%
Bank of America Corporation 60,000 4,398,750
Comerica, Incorporated 34,500 2,050,594
Morgan (J.P.) & Company 9,500 1,334,750
PNC Bank Corporation 33,400 1,924,675
TCF Financial Corporation 90,000 2,508,750
U.S. Bancorp 121,400 4,127,600
Wells Fargo Company 110,000 4,702,500
-------------
21,047,619
BEVERAGES--1.54%
Anheuser-Busch Companies,
Incorporated 50,000 3,546,875
CHEMICALS--2.86%
Goodrich (B.F.) Company 75,000 3,187,500
Hercules, Incorporated 32,600 1,281,587
Praxair, Incorporated 43,000 2,104,313
-------------
6,573,400
CONSTRUCTION--0.18%
Foster Wheeler Corporation 30,000 423,750
DIVERSIFIED--0.69%
AlliedSignal, Incorporated 25,000 1,575,000
DRUGS--2.77%
Schering-Plough Corporation 120,000 6,360,000
ELECTRICAL EQUIPMENT--0.80%
York International
Corporation 43,000 1,840,938
ELECTRIC POWER--1.91%
Constellation Energy Group 26,300 779,137
DTE Energy Company 65,000 2,600,000
UtiliCorp United,
Incorporated 42,000 1,021,125
-------------
4,400,262
ELECTRONICS/INSTRUMENTS--1.53%
Raytheon Company (Class B) 50,000 3,518,750
ENVIRONMENTAL--0.85%
Waste Management,
Incorporated 36,250 1,948,438
EXPLORATION & DRILLING--1.55%
Kerr-McGee Corporation 27,200 1,365,100
Tidewater, Incorporated 40,000 1,220,000
Union Pacific Resources
Group, Incorporated 60,000 978,750
-------------
3,563,850
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
FINANCIAL SERVICES--6.57%
Associates First Capital
Corporation 70,176 $ 3,109,674
Morgan Stanley, Dean Witter,
Discover and Company 90,000 9,225,000
Omega Healthcare Investors,
Incorporated 60,000 1,548,750
Omega Worldwide,
Incorporated* 19,893 80,815
Reliance Group Holdings,
Incorporated 152,000 1,130,500
-------------
15,094,739
FOODS PRODUCERS--3.05%
ConAgra, Incorporated 40,000 1,065,000
Interstate Bakeries
Corporation 73,000 1,637,938
McCormick & Company,
Incorporated 70,000 2,209,375
Universal Foods Corporation 99,600 2,104,050
-------------
7,016,363
FOODS RETAILERS--1.23%
Albertson's, Incorporated 55,000 2,835,937
FURNITURE/APPLIANCES--3.03%
Black & Decker Corporation 40,000 2,525,000
Whirlpool Corporation 60,000 4,440,000
-------------
6,965,000
HEALTHCARE DISTRIBUTORS--0.85%
Bergen Brunswig Corporation
(Class A) 112,500 1,940,625
INSURANCE--4.36%
CIGNA Corporation 36,600 3,257,400
Citigroup, Incorporated 122,250 5,806,875
Conseco, Incorporated 31,100 946,606
-------------
10,010,881
LEISURE TIME--0.77%
Brunswick Corporation 63,200 1,761,700
MACHINERY & EQUIPMENT--2.14%
Deere & Company 100,000 3,962,500
Flowserve Corporation 51,000 965,812
-------------
4,928,312
MEDICAL PRODUCTS & SUPPLIES--2.57%
Abbott Laboratories 130,000 5,915,000
METALS & MINING--0.59%
Cyprus Amax Minerals Company 90,000 1,366,875
NATURAL GAS--1.74%
Enron Corporation 49,000 4,005,750
OIL DOMESTIC--0.34%
Murphy Oil Corporation 16,100 785,881
</TABLE>
7
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
OIL INTERNATIONAL--12.42%
BP Amoco p.l.c. 23,555 $ 2,555,718
Chevron Corporation 30,000 2,855,625
Elf Aquitaine ADR 72,000 5,296,500
Exxon Corporation 40,000 3,085,000
Royal Dutch Petroleum Company 100,000 6,025,000
Schlumberger Limited 90,000 5,731,875
Texaco, Incorporated 48,000 3,000,000
-------------
28,549,718
PAPER/FOREST PRODUCTS--1.79%
Glatfelter (P.H.) Company 94,000 1,374,750
Weyerhaeuser Company 40,000 2,750,000
-------------
4,124,750
PHOTOGRAPHY/IMAGING--1.34%
Xerox Corporation 52,000 3,071,250
PRINTING & PUBLISHING--0.85%
Deluxe Corporation 50,000 1,946,875
REAL ESTATE/REITS--3.74%
CenterPoint Properties
Corporation 63,000 2,307,375
Crescent Real Estate Equities
Company 65,000 1,543,750
HRPT Properties Trust 100,000 1,531,250
Hospitality Properties Trust 50,000 1,356,250
Liberty Trust Properties 75,000 1,865,625
-------------
8,604,250
RESTAURANTS--0.47%
Applebee's International,
Incorporated 36,000 1,084,500
RETAIL - GENERAL--1.40%
J. C. Penney Company,
Incorporated 66,400 3,224,550
SPECIALTY PRINTING/SERVICES--0.58%
Banta Corporation 63,000 1,323,000
STEEL--1.74%
Allegheny Teledyne,
Incorporated 60,000 1,357,500
LTV Corporation 200,000 1,337,500
USX-U. S. Steel Group 48,000 1,296,000
-------------
3,991,000
TELECOM - CELLULAR--1.98%
GTE Corporation 60,000 4,545,000
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
TELEPHONE UTILITY--2.86%
Alltel Corporation 51,000 $ 3,646,500
US West, Incorporated New 50,000 2,937,500
-------------
6,584,000
TOBACCO--1.37%
Nabisco Group Holdings
Corporation 41,248 806,914
R.J. Reynolds Tobacco
Holdings, Incorporated 13,749 433,104
UST, Incorporated 65,000 1,901,250
-------------
3,141,268
TRANSPORT, TRUCKING & SHIPPING--0.69%
USFreightways Corporation 34,000 1,574,625
-------------
TOTAL COMMON STOCK--87.89%
(Cost $130,335,348) 202,005,610
-------------
<CAPTION>
CONVERTIBLE PREFERRED STOCK
<S> <C> <C>
FINANCIAL SERVICES--0.53%
ProLogis Trust 47,000 1,219,062
INSURANCE COMPANIES--0.51%
St Paul Capital LLC 20,000 1,175,000
OIL DOMESTIC--1.49%
Unocal Capital Trust 61,000 3,416,000
-------------
TOTAL CONVERTIBLE
PREFERRED STOCK--2.53%
(Cost $5,414,752) 5,810,062
-------------
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT
<S> <C> <C>
CONTAINERS--0.87%
Crown Cork & Seal Company,
Incorporated, 5.10%,
07/02/99 $ 2,000,000 1,999,715
ELECTRIC POWER--0.54%
Indiana Michigan Power
Company, 5.65%, 07/13/99 1,233,000 1,230,677
FINANCIAL SERVICES--4.92%
Case Credit, 5.42%, 07/14/99 2,684,000 2,678,741
Case Credit, 5.50%, 07/20/99 1,606,000 1,601,334
Penn Power & Light Energy
Trust, 5.15%, 07/01/99 1,784,000 1,784,000
</TABLE>
8
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND, CONTINUED
<TABLE>
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT VALUE
<S> <C> <C>
Penn Power & Light Energy
Trust, 5.47%, 07/21/99 $ 2,855,000 $ 2,846,323
Textron Financial
Corporation, 5.12%, 07/07/99 2,405,000 2,402,942
-------------
11,313,340
METAL PRODUCTS--0.97%
Reynolds Metals Company,
5.15%, 07/06/99 2,242,000 2,240,393
PROFESSIONAL SERVICE--1.24%
Service Corp International,
5.45%, 07/08/99 2,851,000 2,847,975
RETAIL - SPECIALTY--1.00%
Mattel, Incorporated, 5.18%,
07/12/99 1,042,000 1,040,349
The Limited, Incorported,
5.30%, 07/09/99 1,257,000 1,255,519
-------------
2,295,868
-------------
TOTAL COMMERCIAL PAPER--9.54%
(Cost $21,927,968) 21,927,968
-------------
TOTAL INVESTMENTS--99.96%
(Cost $157,678,068) 229,743,640
CASH AND OTHER ASSETS, LESS
LIABILITIES--0.04% 90,270
-------------
NET ASSETS--100.00% $ 229,833,910
-------------
-------------
ABBREVIATIONS
ADR--American Depository Receipt
REIT--Real Estate Investment Trust
*--Non-income producing securities
</TABLE>
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value $ 229,743,640
Cash 8,147
Prepaid Expenses 57,181
Receivable for:
Capital stock sold 98,029
Dividends 282,928
Expense reimbursement 3,417
Other assets 62,725
---------------
TOTAL ASSETS 230,256,067
---------------
LIABILITIES
Capital stock reacquired 219,762
Accrued:
Investment advisory fee 136,737
Service fee 44,510
Distribution fee 4,725
Other liabilities 16,423
---------------
TOTAL LIABILITIES 422,157
---------------
NET ASSETS (applicable to shares outstanding) $ 229,833,910
---------------
---------------
NET ASSETS:
Class A $ 2,227,494
- -----------------------------------------------------------------------------------------------------------
Class B $ 2,911,944
- -----------------------------------------------------------------------------------------------------------
Class C $ 203,502
- -----------------------------------------------------------------------------------------------------------
Class T $ 224,490,970
- -----------------------------------------------------------------------------------------------------------
CAPITAL STOCK, $0.01 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000.000
Outstanding 74,213.989
- -----------------------------------------------------------------------------------------------------------
Class B:
Authorized 200,000,000.000
Outstanding 98,898.961
- -----------------------------------------------------------------------------------------------------------
Class C:
Authorized 200,000,000.000
Outstanding 6,797.596
- -----------------------------------------------------------------------------------------------------------
Class T:
Authorized 50,000,000.000
Outstanding 7,435,170.476
- -----------------------------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share $ 30.01
Offering price per share: (Net Assets value of $30.01 / 95.00%) $ 31.59
- -----------------------------------------------------------------------------------------------------------
Class B:
Net asset value and offering price per share $ 29.44
- -----------------------------------------------------------------------------------------------------------
Class C:
Net asset value and redemption price per share $ 29.94
Offering price per share: (Net Assets value of $29.94 / 99.00%) $ 30.24
- -----------------------------------------------------------------------------------------------------------
Class T:
Net asset value and redemption price per share $ 30.19
Offering price per share: (Net Assets value of $30.19 / 94.25%) $ 32.03
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R EQUITY INCOME FUND
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 2,594,699
Interest 553,362
-----------
TOTAL INVESTMENT INCOME 3,148,061
EXPENSES
Investment advisory fees 737,338
Service fees 240,014
Directors' fees 12,583
Custodian and transactions fees 42,031
Audit fees 11,000
Qualification fees 39,003
Shareholder reporting expenses 22,272
Insurance expenses 24,972
Distribution fees 4,725
Other 124
-----------
TOTAL EXPENSES 1,134,062
LESS EXPENSES REIMBURSED (17,895)
-----------
NET EXPENSES 1,116,167
-----------
INVESTMENT INCOME--NET 2,031,894
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 5,278,038
Change in unrealized appreciation of investments for the period 11,290,269
-----------
NET GAIN ON INVESTMENTS 16,568,307
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $18,600,201
-----------
-----------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
--------------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income--net $ 2,031,894 $ 4,709,723
Net realized gain on investments 5,278,038 7,281,961
Change in unrealized appreciation 11,290,269 11,740,055
--------------- ------------
Net increase in net assets resulting from operations 18,600,201 23,731,739
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income--net
Class A (5,419) --
Class B (4,325) --
Class C (285) --
Class T (1,968,374) (4,712,876)
Capital gains
Class T -- (10,909,343)
--------------- ------------
Total distributions to shareholders (1,978,403) (15,622,219)
CAPITAL SHARE TRANSACTIONS--NET
Class A 2,126,201 --
Class B 2,797,490 --
Class C 195,951 --
Class T (10,887,501) 12,183,537
--------------- ------------
Total net capital share transactions (5,767,859) 12,183,537
--------------- ------------
TOTAL INCREASE 10,853,939 20,293,057
NET ASSETS
Beginning of period 218,979,971 198,686,914
--------------- ------------
End of period $ 229,833,910 $218,979,971
--------------- ------------
--------------- ------------
</TABLE>
See notes to financial statements.
11
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the period.
SM&R EQUITY INCOME FUND
<TABLE>
<CAPTION>
CLASS T SHARES
----------------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------- -------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 28.02 $ 26.99 $ 25.05 $ 22.59 $ 18.90 $ 21.66
Investment income--net 0.27 0.62 0.63 0.58 0.62 0.62
Net realized and unrealized gain
(loss) on investments 2.16 2.50 4.96 3.10 4.82 (0.75)
------------- ------------- ------------- ------------- ------------- -------------
Total from Investment Operations 2.43 3.12 5.59 3.68 5.44 (0.13)
Less distributions from
Investment income--net (0.26) (0.62) (0.64) (0.58) (0.63) (0.61)
Capital gains -- (1.47) (3.01) (0.64) (1.12) (2.02)
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions (0.26) (2.09) (3.65) (1.22) (1.75) (2.63)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period $ 30.19 $ 28.02 $ 26.99 $ 25.05 $ 22.59 $ 18.90
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
Total Return 8.72%** 12.11% 22.72% 16.46% 29.12% (0.61)%
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
RATIOS (IN PERCENTAGES)/
SUPPLEMENTAL DATA
Net Assets, end of period (000's
omitted) $ 224,491 $ 218,980 $ 198,687 $ 165,786 $ 141,058 $ 114,231
Ratio of expenses to average net
assets 1.05%* 1.01% 1.05% 1.10% 1.12% 1.12%
Ratio of net investment income
to average net assets 1.87%* 2.22% 2.28% 2.42% 2.89% 2.86%
Portfolio turnover rate 4.77% 19.29% 39.14% 27.07% 44.00% 52.46%
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED)
-------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
----------------- ----------------- -----------------
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 1, 1999 JANUARY 1, 1999 JANUARY 1, 1999
TO TO TO
JUNE 30, JUNE 30, JUNE 30,
----------------- ----------------- -----------------
1999 1999 1999
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 28.02 $ 28.02 $ 28.02
Investment income--net 0.10 0.06 0.05
Net realized and unrealized gain (loss) on investments 1.99 1.42 1.92
------ ------ ------
Total from Investment Operations 2.09 1.48 1.97
Less distributions from
Investment income--net (0.10) (0.06) (0.05)
------ ------ ------
Total Distributions (0.10) (0.06) (0.05)
------ ------ ------
Net Asset Value, End of Period $ 30.01 $ 29.44 $ 29.94
------ ------ ------
------ ------ ------
Total Return ** 7.45% 5.28% 7.02%
------ ------ ------
------ ------ ------
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's omitted) $ 2,227 $ 2,912 $ 204
Ratio of expenses to average net assets * 1.48% 1.97% 2.22%
Ratio of net investment income to average net assets * 1.33% 0.86% 0.64%
Portfolio turnover rate 4.77% 4.77% 4.77%
</TABLE>
* Ratios annualized
** Returns are not annualized
See notes to financial statements.
12
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R BALANCED FUND
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
AUTO & TRUCK MANUFACTURERS--1.75%
DaimlerChrysler AG 1,621 $ 144,066
Ford Motor Company 3,300 186,244
General Motors Corporation 3,000 198,000
------------
528,310
AUTO PARTS MANUFACTURERS--0.13%
Delphi Automotive Systems
Corporation 2,096 38,907
BANKS--3.72%
Bank of America Corporation 5,000 366,562
Comerica, Incorporated 3,750 222,891
PNC Bank Corporation 3,200 184,400
U.S. Bancorp 5,300 180,200
Wells Fargo Company 4,000 171,000
------------
1,125,053
BEVERAGES--0.70%
Anheuser-Busch Companies,
Incorporated 3,000 212,812
CHEMICALS--0.93%
Hercules, Incorporated 2,800 110,075
Praxair, Incorporated 3,500 171,281
------------
281,356
COMMUNICATIONS EQUIPMENT--1.90%
Lucent Technologies,
Incorporated 6,600 445,087
Nortel Networks Corporation 1,500 130,219
------------
575,306
COMPUTER RELATED--4.53%
Cisco Systems, Incorporated* 6,000 387,000
EMC Corporation* 6,600 363,000
Sun Microsystems, Incorporated* 9,000 619,875
------------
1,369,875
COMPUTER SOFTWARE--4.75%
Microsoft Corporation* 8,800 793,650
Network Associates,
Incorporated* 3,000 44,062
Novell, Incorporated* 7,200 190,800
VERITAS Software Corporation* 4,300 408,231
------------
1,436,743
CONSTRUCTION--0.16%
Foster Wheeler Corporation 3,500 49,437
COSMETICS & TOILETRIES--2.24%
Procter & Gamble Company 7,600 678,300
DIVERSIFIED--1.05%
AlliedSignal, Incorporated 3,100 195,300
Coltec Industries,
Incorporated* 5,600 121,450
------------
316,750
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
DRUGS--2.75%
Warner-Lambert Company 12,000 $ 832,500
ELECTRICAL EQUIPMENT--2.75%
General Electric Company 5,400 610,200
Solectron Corporation* 3,300 220,069
------------
830,269
ELECTRIC POWER--1.03%
Allegheny Energy, Incorporated 2,100 67,331
DTE Energy Company 4,000 160,000
UtiliCorp United, Incorporated 3,450 83,878
------------
311,209
ENVIRONMENTAL--1.16%
Waste Management, Incorporated 6,525 350,719
EXPLORATION & DRILLING--0.59%
Global Marine, Incorporated* 2,800 43,225
Kerr-McGee Corporation 1,200 60,225
Tidewater, Incorporated 1,500 45,750
Union Pacific Resources Group,
Incorporated 1,693 27,617
------------
176,817
FINANCIAL SERVICES--2.40%
American General Corporation 1,800 135,675
Associates First Capital
Corporation 1,728 76,572
Countrywide Credit Industries,
Incorporated 6,000 256,500
Morgan Stanley, Dean Witter,
Discover and Company 1,600 164,000
Reliance Group Holdings,
Incorporated 12,400 92,225
------------
724,972
FOOD PRODUCERS--2.21%
IBP, Incorporated 5,500 130,625
Interstate Bakeries Corporation 9,000 201,937
Smithfield Foods, Incorporated* 5,000 167,187
Universal Foods Corporation 8,000 169,000
------------
668,749
FOOD RETAILERS--1.73%
Albertson's, Incorporated 3,100 159,844
Safeway, Incorporated* 7,300 361,350
------------
521,194
HEALTHCARE DISTRIBUTORS--0.76%
Bergen Brunswig Corporation
(Class A) 11,500 198,375
McKesson HBOC, Incorporated 999 32,093
------------
230,468
HOMEBUILDING/SUPPLIES--0.27%
Centex Corporation 2,200 82,638
</TABLE>
13
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R BALANCED FUND, CONTINUED
<TABLE>
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
INSURANCE COMPANIES--2.95%
CIGNA Corporation 3,000 $ 267,000
Citigroup, Incorporated 10,500 498,750
Conseco, Incorporated 4,200 127,838
------------
893,588
LEISURE TIME--0.46%
Brunswick Corporation 5,000 139,375
MACHINERY & EQUIPMENT--0.26%
Flowserve Corporation 4,200 79,538
MEDIA - TV/RADIO/CABLE--1.28%
MediaOne Group, Incorporated* 5,200 386,750
MEDICAL PRODUCTS & SUPPLIES--3.73%
Abbott Laboratories 6,000 273,000
Beckman Coulter, Incorporated 1,700 82,663
Biomet, Incorporated 7,100 282,225
Johnson & Johnson 5,000 490,000
------------
1,127,888
MEDICAL SERVICES--1.52%
Aetna, Incorporated 2,100 187,819
PacifiCare Health Systems,
Incorporated (Class B)* 1,000 71,937
United Healthcare Corporation 3,200 200,400
------------
460,156
NATURAL GAS--1.08%
Enron Corporation 4,000 327,000
OIL DOMESTIC--0.26%
Murphy Oil Corporation 1,600 78,100
OIL INTERNATIONAL--3.84%
BP Amoco p.l.c. 2,646 287,091
Chevron Corporation 4,400 418,825
Elf Aquitaine ADR 6,200 456,088
------------
1,162,004
PAPER/FOREST PRODUCTS--0.64%
Weyerhaeuser Company 2,800 192,500
PROFESSIONAL SERVICES--0.56%
Korn/Ferry International 10,000 170,000
<CAPTION>
COMMON STOCK SHARES VALUE
<S> <C> <C>
RETAIL GENERAL--0.98%
Federated Department Stores,
Incorporated* 3,000 $ 158,812
J. C. Penney Company,
Incorporated 2,800 135,975
------------
294,787
RETAIL - SPECIALTY--0.19%
Officemax, Incorporated* 4,900 58,800
SEMICONDUCTORS--1.10%
Intel Corporation 5,600 333,200
SPECIALTY PRINTING/SERVICES--0.59%
Banta Corporation 5,500 115,500
Toys 'R' Us, Incorporated* 3,000 62,063
------------
177,563
STEEL--1.01%
Allegheny Teledyne,
Incorporated 4,000 90,500
LTV Corporation 16,000 107,000
USX-U. S. Steel Group 4,000 108,000
------------
305,500
TELECOM - CELLULAR--1.00%
GTE Corporation 4,000 303,000
TELEPHONE--2.08%
Alltel Corporation 4,400 314,600
US West, Incorporated New 5,342 313,843
------------
628,443
TRUCKING & SHIPPING--0.41%
USFreightways Corporation 2,700 125,044
------------
TOTAL COMMON STOCK--61.45%
(Cost $11,396,463) 18,585,620
------------
<CAPTION>
CONVERTIBLE PREFERRED STOCK
<S> <C> <C>
OIL DOMESTIC--0.65%
Unocal Capital Trust 3,500 196,000
------------
TOTAL CONVERTIBLE
PREFERRED STOCK--0.65%
(Cost $185,787) 196,000
------------
</TABLE>
14
<PAGE>
SCHEDULE OF INVESTMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R BALANCED FUND, CONTINUED
<TABLE>
<CAPTION>
FACE
BONDS AND NOTES AMOUNT VALUE
<S> <C> <C>
FINANCIAL SERVICES--1.99%
Ford Motor Credit Company,
6.375%, 09/15/99 $ 600,000 $ 600,685
GOVERNMENT AGENCIES--11.58%
Federal Home Loan Mortgage
Corporation, 7.00%, 09/15/07 1,000,000 1,011,698
Federal Home Loan Mortgage
Corporation, Pool #302886,
8.00%, 05/01/17 16,213 16,706
Federal Home Loan Mortgage
Corporation, Pool #298759,
8.00%, 08/01/17 101,928 105,029
Federal Home Loan Mortgage
Corporation, Pool #284839,
8.50%, 01/01/17 36,051 37,899
Federal National Mortgage
Association, 7.55%, 04/22/02 685,000 712,651
Federal National Mortgage
Association, 7.70%, 04/10/07 1,500,000 1,496,870
Federal National Mortgage
Association, Pool #041669,
8.00%, 02/01/17 17,697 18,286
Federal National Mortgage
Association, Pool #48974,
8.00%, 06/01/17 101,751 105,141
------------
3,504,280
U S TREASURY SECURITIES--10.88%
U S Treasury Bond, 6.000%,
02/15/26 2,350,000 2,285,375
U S Treasury Note, 5.875%,
02/15/04 1,000,000 1,005,313
------------
3,290,688
------------
TOTAL BONDS AND NOTES--24.45%
(Cost $7,076,038) 7,395,653
------------
<CAPTION>
FACE
COMMERCIAL PAPER AMOUNT VALUE
<S> <C> <C>
ELECTRIC POWER--2.68%
Indiana Michigan Power Company,
5.70%, 07/06/99 $ 810,000 $ 809,359
ENERGY - MISCELLANEOUS--1.90%
Penn Fuel Corporation, 5.30%,
07/01/99 576,000 576,000
FINANCIAL SERVICES--4.25%
Case Credit, 5.42%, 07/14/99 419,000 418,179
Case Credit, 5.50%, 07/20/99 870,000 867,472
------------
1,285,651
PRINTING/PUBLISHING/NEWSPAPER--1.24%
Cox Enterprises, Incorporated,
5.75%, 07/07/99 374,000 373,642
RETAIL - SPECIALTY--2.80%
The Limited, Incorporated,
5.30%, 07/02/99 847,000 846,875
------------
TOTAL COMMERCIAL PAPER--12.87%
(Cost $3,891,527) 3,891,527
------------
TOTAL INVESTMENTS--99.42%
(Cost $22,549,815) 30,068,800
CASH AND OTHER ASSETS, LESS
LIABILITIES--0.58% 177,027
------------
NET ASSETS--100.00% $ 30,245,827
------------
------------
ABBREVIATIONS
ADR--American Depository Receipt
*--Non-income producing securities
</TABLE>
See notes to financial statements.
15
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R BALANCED FUND
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value $ 30,068,800
Cash 100
Prepaid Expenses 38,696
Receivable for:
Capital stock sold 6,628
Investment securities sold 1,916
Dividends 10,333
Interest 129,879
Expense reimbursement 8,762
Other assets 15,067
---------------
TOTAL ASSETS 30,280,181
---------------
LIABILITIES
Capital stock reacquired 6,148
Accrued:
Investment advisory fee 20,061
Service fee 6,687
Distribution fee 1,035
Other liabilities 423
---------------
TOTAL LIABILITIES 34,354
---------------
NET ASSETS (applicable to shares outstanding) $ 30,245,827
---------------
---------------
NET ASSETS:
Class A $ 902,617
- -----------------------------------------------------------------------------------------------------------
Class B $ 644,783
- -----------------------------------------------------------------------------------------------------------
Class C $ 1,233
- -----------------------------------------------------------------------------------------------------------
Class T $ 28,697,194
- -----------------------------------------------------------------------------------------------------------
CAPITAL STOCK, $0.01 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000.000
Outstanding 44,820.871
- -----------------------------------------------------------------------------------------------------------
Class B:
Authorized 200,000,000.000
Outstanding 31,686.894
- -----------------------------------------------------------------------------------------------------------
Class C:
Authorized 200,000,000.000
Outstanding 61.299
- -----------------------------------------------------------------------------------------------------------
Class T:
Authorized 50,000,000.000
Outstanding 1,420,182.985
- -----------------------------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share $ 20.14
Offering price per share: (Net Assets value of $20.14 / 95.00%) $ 21.20
- -----------------------------------------------------------------------------------------------------------
Class B:
Net asset value and offering price per share $ 20.35
- -----------------------------------------------------------------------------------------------------------
Class C:
Net asset value and redemption price per share $ 20.12
Offering price per share: (Net Assets value of $20.12 / 99.00%) $ 20.32
- -----------------------------------------------------------------------------------------------------------
Class T:
Net asset value and redemption price per share $ 20.21
Offering price per share: (Net Assets value of $20.21 / 94.25%) $ 21.44
- -----------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
16
<PAGE>
STATEMENT OF OPERATIONS Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R BALANCED FUND
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 119,223
Interest 365,907
----------
TOTAL INVESTMENT INCOME 485,130
EXPENSES
Investment advisory fees 105,974
Service fees 35,336
Directors' fees 11,598
Custodian and transactions fees 13,003
Audit fees 9,000
Qualification fees 27,295
Shareholder reporting expenses 3,940
Insurance expenses 4,156
Distribution fees 1,035
Other 124
----------
TOTAL EXPENSES 211,461
LESS EXPENSES REIMBURSED (31,897)
----------
NET EXPENSES 179,564
----------
INVESTMENT INCOME--NET 305,566
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 192,611
Change in unrealized appreciation of investments for the period 706,035
----------
NET GAIN ON INVESTMENTS 898,646
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,204,212
----------
----------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1999 1998
--------------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income--net $ 305,566 $ 682,321
Net realized gain on investments 192,611 482,000
Change in unrealized appreciation 706,035 2,417,733
--------------- ------------
Net increase in net assets resulting from operations 1,204,212 3,582,054
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income--net
Class A (2,187) --
Class B (1,227) --
Class C (6) --
Class T (312,345) (663,775)
Capital gains
Class T -- (908,074)
--------------- ------------
Total distributions to shareholders (315,765) (1,571,849)
CAPITAL SHARE TRANSACTIONS--NET
Class A 880,631 --
Class B 631,333 --
Class C 1,206 --
Class T (1,522,894) 1,518,827
--------------- ------------
Total net capital share transactions (9,724) 1,518,827
--------------- ------------
TOTAL INCREASE 878,723 3,529,032
NET ASSETS
Beginning of period 29,367,104 25,838,072
--------------- ------------
End of period $ 30,245,827 $29,367,104
--------------- ------------
--------------- ------------
</TABLE>
See notes to financial statements.
17
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the period.
SM&R BALANCED FUND
<TABLE>
<CAPTION>
CLASS T SHARES
----------------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------- -------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 19.63 $ 18.32 $ 17.90 $ 16.85 $ 14.32 $ 15.35
Investment income--net 0.21 0.48 0.57 0.49 0.49 0.45
Net realized and unrealized gain
(loss) on investments 0.59 1.96 2.50 1.48 2.67 (0.22)
------------- ------------- ------------- ------------- ------------- -------------
Total from Investment Operations 0.80 2.44 3.07 1.97 3.16 0.23
Less distributions from
Investment income--net (0.22) (0.47) (0.59) (0.49) (0.49) (0.45)
Capital gains -- (0.66) (2.06) (0.43) (0.14) (0.81)
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions (0.22) (1.13) (2.65) (0.92) (0.63) (1.26)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period $ 20.21 $ 19.63 $ 18.32 $ 17.90 $ 16.85 $ 14.32
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
Total Return 4.10%** 13.83% 17.46% 11.86% 22.29% 1.49%
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL
DATA
Net Assets, end of period (000's
omitted) $ 28,697 $ 29,367 $ 25,838 $ 23,188 $ 21,757 $ 19,023
Ratio of expenses to average net
assets 1.25%* 1.25% 1.26% 1.21% 1.26% 1.25%
Ratio of net investment income to
average net assets 2.13%* 2.55% 3.02% 2.83% 2.99% 2.91%
Portfolio turnover rate 5.91% 16.01% 27.52% 23.78% 16.39% 46.95%
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED)
-------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
----------------- ----------------- -----------------
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 1, 1999 JANUARY 1, 1999 JANUARY 1, 1999
TO TO TO
JUNE 30, JUNE 30, JUNE 30,
----------------- ----------------- -----------------
1999 1999 1999
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 19.63 $ 19.63 $ 19.63
Investment income--net 0.07 0.05 0.10
Net realized and unrealized gain (loss) on investments 0.51 0.72 0.49
------ ------ ------
Total from Investment Operations 0.58 0.77 0.59
Less distributions from
Investment income--net (0.07) (0.05) (0.10)
------ ------ ------
Total Distributions (0.07) (0.05) (0.10)
------ ------ ------
Net Asset Value, End of Period $ 20.14 $ 20.35 $ 20.12
------ ------ ------
------ ------ ------
Total Return ** 2.95% 3.92% 3.03%
------ ------ ------
------ ------ ------
RATIOS (IN PERCENTAGES) SUPPLEMENTAL DATA
Net Assets, end of period (000's omitted) $ 903 $ 645 $ 1
Ratio of expenses to average net assets * 1.47% 1.97% 2.24%
Ratio of net investment income to average net assets * 1.64% 1.18% 1.12%
Portfolio turnover rate 5.91% 5.91% 5.91%
</TABLE>
* Ratios annualized
** Returns are not annualized
See notes to financial statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
The SM&R Equity Funds (the "Funds") are diversified open-end management
investment companies registered under the Investment Company Act of 1940, as
amended. The Funds are comprised of the SM&R Growth Fund, Inc., SM&R Equity
Income Fund, Inc. and SM&R Balanced Fund, Inc.
The Funds have adopted a Multiple Class Plan under the Investment Company Act of
1940, as amended. Each had a single class of shares, and began offering five new
classes as of January 1, 1999. The existing shares are the Class T shares, and
the newly offered classes are: the Class A shares subject to an initial sales
charge of up to 5.00% and a distribution and shareholder servicing plan ("12b-1
Plan"); the Class B shares subject to a contingent deferred sales charge and a
12b-1 Plan; the Class C shares subject to an initial sales charge of 1.00%, a
contingent deferred sales charge, and a 12b-1 Plan; the Class J shares (Network
class) subject to a 12b-1 Plan, only; and the Class Y shares (Institutional
class) subject to no charges. The Class J and Y shares have not commenced
operations.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION:
Investments in securities 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 represent valuations at bid prices or on a basis determined without
exclusive reliance on quoted prices and may reflect appropriate factors such as
institution-size trading in similar groups of securities, yield quality, coupon
rate, maturity, type of issue, individual trading characteristics and other
market data. Securities for which market quotations are not readily available
are valued as determined by the Board of Directors. Commercial paper is stated
at amortized cost, which is equivalent to value.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME:
Investment transactions are accounted for on the trade date (date order to buy
or sell is executed). Dividend income is recognized on the ex-dividend date, and
interest income is recognized on an accrual basis. Realized gains and losses
from security transactions are reported on the basis of identified cost for
financial reporting and federal income tax purposes.
FEDERAL INCOME TAXES:
For federal income tax purposes, each fund is treated as a separate entity. The
Funds intend to comply with requirements of the Internal Revenue Code relating
to regulated investment companies and intend to distribute substantially all of
its taxable income to its shareholders. Therefore, no provision for federal
income taxes is recorded in the accompanying financial statements.
CAPITAL STOCK TRANSACTIONS AND DISTRIBUTIONS TO SHAREHOLDERS:
Fund shares are sold in a continuous public offering at net asset value plus a
sales charge. The Funds repurchase shares at net asset value. Dividends and
other distributions are recorded by the Funds on the ex-dividend date and may be
reinvested at net asset value.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES--CONTINUED
EXPENSES:
Distribution, qualification fees or other fees directly attributable to the
funds' class of shares are charged to that funds class operations. All other
operating expenses not directly attributable to a Funds' operations are prorated
among the Funds based on the relative amount of each Funds' net assets or
shareholders, and then allocated among the classes of that fund.
NOTE 2--OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICE FEES:
Securities Management and Research, Inc. ("SM&R") is the investment advisor and
principal underwriter for the Funds. Investment advisory and service fees paid
to SM&R are computed as a percentage of the average daily net assets as follows:
<TABLE>
<CAPTION>
INVESTMENT SERVICE
NET ASSETS ADVISORY FEE FEE
<S> <C> <C>
Not exceeding $100,000,000 0.750% 0.250%
Exceeding $100,000,000 but not exceeding $200,000,000 0.625% 0.200%
Exceeding $200,000,000 but not exceeding $300,000,000 0.500% 0.150%
Exceeding $300,000,000 0.400% 0.100%
</TABLE>
The investment advisory agreement for the Growth Fund provides for incentive
fees that will increase or decrease the basic investment advisory fee, based on
the performance of the fund in relation to a specified industry index for the
funds with similar objectives over a rolling 36-month period. For the six months
ended June 30, 1999, the investment advisory fee was decreased by approximately
$202,743.
SM&R has agreed to reimburse the Funds for regular operating 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. Regular operating expenses include the advisory fee and administrative
service fee, but does not include the distribution and shareholder servicing
fee.
DISTRIBUTION AND SHAREHOLDER SERVICING FEES:
The Funds have adopted a 12b-1 Plan, with respect to the Funds' Class A shares,
Class B shares and Class C shares (the "Class A Plan, the "Class B Plan" and the
"Class C Plan", respectively and collectively, the "Plans"). The Plans permit
each class a distribution fee to compensate SM&R, or enable SM&R to compensate
other persons, including Distributors, for distribution costs such as service
fees paid to dealers, printing and distribution of prospectuses to prospective
investors, sales literature and other sales and distribution related activities.
The Funds pay compensation for Class A shares at 0.25% per annum of the average
daily net assets, for Class B shares at 0.50% per annum of the average daily net
assets and for Class C shares at 0.75% per annum of the average daily net
assets.
The Class B and Class C Plans also permit a shareholder servicing fee of 0.25%
per annum of the average daily net assets to compensate SM&R, or enable SM&R to
compensate Service Providers, for providing ongoing servicing to shareholders of
the Funds. For the six months ended June 30, 1999, no payments were made as
compensation under the Plans.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
NOTE 2--OTHER TRANSACTIONS WITH AFFILIATES--CONTINUED
SALES CHARGES:
During the six months ended June 30, 1999, 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
SALES CHARGES
CHARGES REALLOWED TO
RECEIVED BY SM&R DEALERS
<S> <C> <C>
Growth $ 162,815 $ 1,429
Equity Income $ 255,323 $ 1,294
Balanced $ 45,853 $ 174
</TABLE>
SM&R is a wholly-owned subsidiary of American National Insurance Company
("American National"). As of June 30, 1999, SM&R and American National had the
following ownership in the Funds:
<TABLE>
<CAPTION>
SM&R AMERICAN NATIONAL
-------------------------- ------------------------
PERCENT OF PERCENT OF
SHARES SHARES
SHARES OUTSTANDING SHARES OUTSTANDING
<S> <C> <C> <C> <C>
Growth 269,742 0.79% 1,264,885 3.70%
Equity Income 17,566 0.23% -- --
Balanced 128,822 8.61% 215,553 14.40%
</TABLE>
NOTE 3--COST, PURCHASES AND SALES OF INVESTMENTS
Investments have the same cost for tax and financial statement purposes.
Aggregate purchases and sales of investments in securities, other than
commercial paper and short-term bonds and notes, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Growth $ 15,057,590 $ 25,536,502
Equity Income $ 9,100,479 $ 17,426,425
Balanced $ 1,606,358 $ 3,957,464
</TABLE>
Gross unrealized appreciation and depreciation as of June 30, 1999, were as
follows:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION
<S> <C> <C>
Growth $ 87,566,428 $ 7,568,595
Equity Income $ 77,802,962 $ 5,737,390
Balanced $ 8,168,522 $ 649,537
</TABLE>
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
NOTE 4--CAPITAL STOCK
SM&R GROWTH FUND
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sale of capital shares:
Class T 1,155,634 $ 6,667,622 3,216,790 $ 17,622,633
Class A 271,149 1,588,491 -- --
Class B 131,245 763,449 -- --
Class C 18,274 107,115 -- --
Investment income dividends reinvested:
Class T 70,836 427,848 218,060 1,223,816
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Distributions from net realized gains reinvested:
Class T -- -- 2,698,983 13,324,090
Redemptions of capital shares outstanding:
Class T (3,171,031) (18,470,084) (4,442,745) (24,133,352)
Class A (15,558) (91,837) -- --
Class B (4,444) (25,939) -- --
Class C (6,884) (40,821) -- --
------------ ------------- ------------ -------------
Net increase (decrease) in capital shares outstanding (1,550,779) $ (9,074,156) 1,691,088 $ 8,037,187
------------- -------------
------------- -------------
Shares outstanding at beginning of period 35,722,663 34,031,575
------------ ------------
Shares outstanding at end of period 34,171,884 35,722,663
------------ ------------
------------ ------------
Net assets as of June 30, 1999, are comprised of the following:
Capital (par value and additional paid-in) $ 128,579,321
Accumulated net realized gain on investments 5,764,899
Net unrealized appreciation of investments 79,997,833
-------------
Net Assets $ 214,342,053
-------------
-------------
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
NOTE 4--CAPITAL STOCK--CONTINUED
<TABLE>
<CAPTION>
SM&R EQUITY INCOME FUND
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sales of capital shares:
Class T 270,696 $ 7,737,627 1,059,139 $ 29,994,912
Class A 76,994 2,208,493 -- --
Class B 100,372 2,839,746 -- --
Class C 6,836 197,080 -- --
Investment income dividends reinvested:
Class T 65,665 1,895,213 161,711 4,549,911
Class A 187 5,419 -- --
Class B 152 4,320 -- --
Class C 10 285 -- --
Distributions from net realized gains reinvested:
Class T -- -- 404,882 10,559,672
Redemptions of capital shares outstanding:
Class T (715,141) (20,520,341) (1,172,234) (32,920,958)
Class A (2,967) (87,711) -- --
Class B (1,625) (46,576) -- --
Class C (48) (1,414) -- --
------------ ------------- ------------ -------------
Net increase (decrease) in capital shares outstanding (198,869) $ (5,767,859) 453,498 $ 12,183,537
------------- -------------
------------- -------------
Shares outstanding at beginning of period 7,813,950 7,360,452
------------ ------------
Shares outstanding at end of period 7,615,081 7,813,950
------------ ------------
------------ ------------
Net assets as of June 30, 1999, are comprised of the following:
Capital (par value and additional paid-in) $ 152,375,600
Undistributed net investment income 53,491
Accumulated net realized gain on investments 5,339,247
Net unrealized appreciation of investments 72,065,572
-------------
Net Assets $ 229,833,910
-------------
-------------
</TABLE>
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
SM&R EQUITY FUNDS
NOTE 4--CAPITAL STOCK--CONTINUED
<TABLE>
<CAPTION>
SM&R BALANCED FUND
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Sales of capital shares:
Class T 47,428 $ 927,056 204,284 $ 3,794,519
Class A 47,497 932,946 -- --
Class B 31,656 630,738 -- --
Class C 61 1,200 -- --
Investment income dividends reinvested:
Class T 15,442 303,448 33,827 644,627
Class A 112 2,187 -- --
Class B 62 1,227 -- --
Class C -- 6 -- --
Distributions from net realized gains reinvested:
Class T -- -- 50,226 901,681
Redemptions of capital shares outstanding:
Class T (139,098) (2,753,398) (202,186) (3,822,000)
Class A (2,788) (54,502) -- --
Class B (31) (632) -- --
Class C -- -- -- --
---------- ----------- ----------- ------------
Net increase in capital shares outstanding 341 (9,724) 86,151 $ 1,518,827
----------- ------------
----------- ------------
Shares outstanding at beginning of period 1,496,411 1,410,260
---------- -----------
---------- -----------
Shares outstanding at end of period 1,496,752 1,496,411
---------- -----------
---------- -----------
Net assets as of June 30, 1999, are comprised of the following:
Capital (par value and additional paid-in capital) $ 22,522,832
Accumulated net realized gain on investments 204,010
Net unrealized appreciation of investments 7,518,985
------------
Net Assets $ 30,245,827
------------
------------
</TABLE>
24
<PAGE>
SM&R EQUITY FUNDS 2450 South Shore Blvd, League City, Texas 77573
- --------------------------------------------------------------------------------
DIRECTORS
Ralph S. Clifford
Paul D. Cummings
Jack T. Currie
Michael W. McCroskey
Ira W. Painton
Donald P. Stevens
Steven H. Stubbs
OFFICERS
Michael W. McCroskey, President
Gordon D. Dixon, Vice President and Portfolio Manager
Brenda T. Koelemay, Vice President and Treasurer
Emerson V. Unger, Vice President
Teresa E. Axelson, Vice President and Secretary
INVESTMENT ADVISOR AND MANAGER
Securities Management and Research, Inc.
P.O. Box 58969
Houston, Texas 77258-8969
CUSTODIAN
Securities Management and Research, Inc.
P.O. Box 58969
Houston, Texas 77258-8969
LEGAL COUNSEL
Greer, Herz & Adams, L.L.P.
One Moody Plaza
Galveston, Texas 77550
UNDERWRITER AND REDEMPTION AGENT
Securities Management and Research, Inc.
P.O. Box 58969
Houston, Texas 77258-8969
TRANSFER AGENT, REGISTRAR AND DIVIDEND PAYING AGENT
Securities Management and Research, Inc.
P.O. Box 58969
Houston, Texas 77258-8969
INDEPENDENT AUDITORS
Tait, Weller & Baker, CPA
8 Penn Center, Suite 800
Philadelphia, Pennsylvania 19103-2108
<PAGE>
SM&R EQUITY FUNDS
LONG TERM CAPITAL APPRECIATION
SM&R Growth Fund, Inc.
CURRENT INCOME AND CAPITAL APPRECIATION
SM&R Equity Income Fund, Inc.
GROWTH AND INCOME WITH LOWER RISK
SM&R Balanced Fund, Inc.
SM&R INVESTMENTS, INC.
CURRENT INCOME AND HIGH DEGREE OF SAFETY
SM&R Government Bond Fund
CURRENT TAX FREE INCOME
SM&R Tax Free Fund
STABILITY, LIQUIDITY AND CURRENT INCOME
SM&R Primary Fund
STABILITY, LIQUIDITY AND CURRENT INCOME
SM&R Money Market Fund
HOW TO REACH US:
SHAREHOLDER SERVICES
(800)231-4639
FUND QUOTES
(800)526-8346 ext.1
SALES AND MARKETING
(800)526-8346
TO REQUEST A PROSPECTUS
(800)231-4639
[LOGO] SECURITIES MANAGEMENT
AND RESEARCH, INC.
MANAGER & DISTRIBUTOR
______________________
MEMBER NASD, SIPC
2450 South Shore Blvd. - League City, TX 77573
(281)334-2469
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