<PAGE>
[INVESTRAC GOLD LOGO APPEARS HERE]
PROSPECTUS FOR
AMERICAN NATIONAL
INVESTMENT ACCOUNTS, INC.
<PAGE>
PROSPECTUS
DATED: APRIL 30, 199 6
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
ONE MOODY PLAZA . GALVESTON, TEXAS 77550
1 (409) 763-2767 . TOLL FREE 1 (800) 526-8346
- --------------------------------------------------------------------------------
American National Investment Accounts, Inc. (the "Fund") is a diversified open-
end management investment company. The Fund consists of four separate
portfolios ("Portfolio" or, together with the other portfolios, "Portfolios")
each of which has its own investment objective designed to meet different
investment goals. For investment purposes, each Portfolio is, in effect, a
separate fund and a separate series of capital securities is issued for each
Portfolio.
The four Portfolios of the Fund and their respective investment objectives are
as follows:
GROWTH PORTFOLIO . . . seeks to achieve capital appreciation, normally through
the purchase of common stocks (although such Portfolio investments are not
restricted to any one type of security). Capital appreciation may also be
sought in other types of securities, including bonds and preferred stocks.
MANAGED PORTFOLIO . . . seeks to achieve growth of capital and/or current
income by investing in a diversified portfolio consisting of, at the Fund's
investment adviser's discretion, money market instruments, debt securities,
stock or a combination thereof. It is anticipated that over longer periods, a
larger portion of the Managed Portfolio will consist of equity securities.
BALANCED PORTFOLIO . . . seeks to provide conservation of principal, reasonable
current income and long-term capital appreciation by investing in a balanced
portfolio of fixed-income securities such as bonds, preferred stock and short-
term obligations combined with common stocks and securities convertible into
common stocks.
MONEY MARKET PORTFOLIO . . . seeks to obtain as high a level of current income
as is consistent with preserving capital and providing liquidity. The Money
Market Portfolio will invest only in money market instruments of high quality
determined by the Fund's investment adviser pursuant to guidelines established
by the Board of Directors.
Various levels of risks are involved with each Portfolio and there can be no
assurance that the objectives of any Portfolio will be realized. See INVESTMENT
OBJECTIVES AND POLICIES in this Prospectus.
INVESTMENTS IN THE FUND ARE AVAILABLE TO THE PUBLIC ONLY THROUGH THE PURCHASE
OF VARIABLE UNIVERSAL LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS
FROM AMERICAN NATIONAL INSURANCE COMPANY.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR GUARANTEED
AND THERE IS NO ASSURANCE THAT THE MONEY MARKET PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
Information contained in this Prospectus should be read carefully by a
prospective investor before an investment is made. Additional information about
the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information dated April 30, 1996, which information is
incorporated herein by reference and is available without charge upon written
request to American National Investment Accounts, Inc., One Moody Plaza,
Galveston, Texas 77550, or by phoning Toll Free 1-800-526-8346 or 1-409-763-
2767.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE FUND AT A GLANCE....................................................... 2
THE ACCOUNTS AND THE CONTRACTS............................................. 2
TABLE OF FEES AND EXPENSES................................................. 2
FINANCIAL HIGHLIGHTS....................................................... 3
PERFORMANCE................................................................ 5
INVESTMENT OBJECTIVES AND POLICIES......................................... 5
THE FUND AND ITS MANAGEMENT................................................ 8
INVESTMENT MANAGEMENT ARRANGEMENTS AND EXPENSES............................ 8
PURCHASE AND REDEMPTION OF SHARES.......................................... 9
DETERMINATION OF NET ASSET VALUE........................................... 9
DIVIDENDS, DISTRIBUTIONS AND TAXES......................................... 9
GENERAL INFORMATION........................................................ 9
</TABLE>
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK. FURTHER, SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. SHARES OF THE FUND 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.
1
<PAGE>
THE FUND AT A GLANCE
American National Investment Accounts, Inc. (the "Fund") is a diversified
open-end series management investment company incorporated under the laws of
Maryland on March 14, 1988. The Fund was established by Securities Management
and Research, Inc. ("SM&R") to provide for the investment of net premium
payments received by American National Insurance Company ("American National")
from the sale of variable universal life insurance and variable annuity
contracts and to serve as the investment medium for other variable products
issued by American National. The Fund consists of four separate portfolios:
the Growth Portfolio, the Managed Portfolio, the Balanced Portfolio, and the
Money Market Portfolio. Each Portfolio is, for investment purposes, in effect
a separate investment fund, and a separate class of capital stock is issued
for each. In other respects, the Fund is treated as one entity. Each share of
capital stock issued with respect to a Portfolio represents a pro-rata
interest in the assets of that Portfolio and has no interest in the assets of
any other Portfolio. Each Portfolio bears its own liabilities and also its
proportionate share of the general liabilities of the Fund.
THE ACCOUNTS AND THE CONTRACTS
Shares of the Fund are currently sold only to separate accounts of American
National Insurance Company ("American National") to fund benefits under
variable universal life insurance and variable annuity contracts issued by
American National. Such separate accounts are referred to as the "Separate
Accounts", and all of such insurance policies and variable annuity contracts
are referred to as the "Contract" or "Contracts". As permitted in their
Contracts, policy owners may allocate the net premiums and the assets relating
to their Contracts among four subaccounts of the Separate Accounts or in an
account which is part of the general account of American National (hereinafter
referred to as the "Fixed Account"). Such subaccounts then invest such amounts
in the corresponding Portfolio of the Fund. The attached prospectuses for the
Contracts describe the Contracts and the relationship between changes in the
value of shares of each Portfolio and changes in the benefits payable under
the Contracts. The rights of the Separate Accounts as a shareholder of the
Fund should be distinguished from the rights of a Contract owner which are
described in the Contracts. The terms "shareholder" or "shareholders" in this
Prospectus refer to the Separate Accounts.
TABLE OF FEES AND EXPENSES
The purpose of the following table is to assist an investor in understanding
the various costs and expenses that an investor will bear directly or
indirectly. See "INVESTMENT MANAGEMENT ARRANGEMENTS AND EXPENSES". The
"Example of Expenses" is included to provide a means for the investor to
compare expense levels of funds with different fee structures over varying
investment periods. To facilitate such comparison, all funds are required to
utilize a five percent annual return assumption. THIS ASSUMPTION IS UNRELATED
TO THE FUNDS' PRIOR PERFORMANCE AND IS NOT A PROJECTION OF FUTURE PERFORMANCE.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
GROWTH MANAGED BALANCED MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on
Purchases None None None None
Maximum Sales Load Imposed on Rein-
vested Dividends None None None None
Deferred Sales Load None None None None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL OPERATING EXPENSES (as a Percentage of
average net assets)
Management Fee without Expense
Reimbursement .50% .50% .50% .50%
---------------------------------------------------
---------------------------------------------------
Management Fee with Expense
Reimbursement .06% .18% .03% .16%
Service Fee .25% .25% .25% .25%
Other Expenses .56% .50% .62% .46%
---------------------------------------------------
Total Operating Expenses with
Expense Reimbursement* .87% .93% .90% .87%
</TABLE>
---------------------------------------------------
---------------------------------------------------
*The expense reimbursement represents the amount of reimbursement required for
restated expenses. Without the reimbursement, the percentage shown for Total
Operating Expenses would have been Growth Portfolio--1.32%, Managed
Portfolio--1.26%; Balanced Portfolio--1.37%, and Money Market Portfolio--
1.21%. (See "INVESTMENT MANAGEMENT ARRANGEMENTS AND EXPENSES" for more
information relating to the excess expense reimbursement and undertaking).
EXAMPLE OF EXPENSES
You would pay the following estimated expenses on a $1,000 investment assuming
(i)5% annual return and (ii)redemption at the end of each period. Because the
Portfolios have no redemption fee, you would pay the same expenses whether or
not you redeemed your investment at the end of each period.
<TABLE>
<CAPTION>
GROWTH MANAGED BALANCED MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
1 Year $ 9 $ 9 $ 9 $ 9
3 Years 28 30 29 28
5 Years 48 51 50 48
10 Years 107 114 111 107
</TABLE>
2
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.)
GROWTH PORTFOLIO
The table that follows has been audited by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report thereon appears in the Statement of
Additional Information, which is available upon request. This information
should be read in conjunction with the related financial statements and notes
thereto included in the Statement of Additional Information.
<TABLE>
<CAPTION>
March 1, 1991
(date operations
commenced) thru
Year Ended December 31, December 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------
Net Asset Value, Beginning
of Period $ 1.04 $ 1.08 $ 1.07 $ 1.12 $ 1.00
Net investment income 0.02 0.02 0.02 0.01 0.01
Net realized and unrealized
gain (loss) on investments
during the period 0.27 0.05 0.06 (0.05) 0.12
---------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 0.29 0.07 0.08 (0.04) 0.13
Less distributions
Distributions from net in-
vestment income (0.02) (0.02) (0.02) (0.01) (0.01)
Distributions from capital
gains (0.04) (0.09) (0.05) -- --
---------------------------------------------------------
TOTAL DISTRIBUTIONS (0.06) (0.11) (0.07) (0.01) (0.01)
Net Asset Value, end of pe-
riod $ 1.27 $ 1.04 $ 1.08 $ 1.07 $ 1.12
=========================================================
TOTAL RETURN--Variable
Universal Life 27.34% 7.10% 6.20% (3.90)% 13.50%**
===============================================
--Variable Annuity 26.52%
======
RATIOS (in
percentages)/SUPPLEMENTAL
DATA
Net Assets, end of period
(000's omitted) $4,781 $3,037 $2,748 $2,477 $2,572
Ratio of expenses to aver-
age net assets 0.87(/1/) 0.90(/1/) 0.91 1.38 1.50*(/1/)
Ratio of net investment in-
come to average net assets 1.99 2.04 1.65 1.35 1.89*
Portfolio turnover rate 42.06 46.18 59.55 12.56 25.30
</TABLE>
*Ratios annualized
**Returns not annualized
(/1/)Expenses for the calculation are net of a reimbursement from Securities
Management and Research, Inc. Without this reimbursement the ratio of
expenses to average net assets would have been 1.32% and 1.13%, for the
years ended December 31, 1995 and 1994, respectively, and 1.73%
(annualized) for the period ended December 31, 1991.
MANAGED PORTFOLIO
The table that follows has been audited by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report thereon appears in the Statement of
Additional Information, which is available upon request. This information
should be read in conjunction with the related financial statements and notes
thereto included in the Statement of Additional Information.
<TABLE>
<CAPTION>
March 1, 1991
(date operations
commenced) thru
Year Ended December 31, December 31,
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------------
Net Asset Value, Beginning
of Period $ 1.00 $ 1.11 $ 1.05 $ 1.10 $ 1.00
Net investment income 0.03 0.02 0.02 0.01 0.02
Net realized and unrealized
gain (loss) on investments
during the period 0.24 -- 0.09 (0.05) 0.11
---------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 0.27 0.02 0.11 (0.04) 0.13
Less distributions
Distributions from net in-
vestment income (0.03) (0.03) (0.02) (0.01) (0.02)
Distributions from capital
gains (0.03) (0.10) (0.03) -- (0.01)
---------------------------------------------------------
TOTAL DISTRIBUTIONS (0.06) (0.13) (0.05) (0.01) (0.03)
Net Asset Value, end of pe-
riod $ 1.21 $ 1.00 $ 1.11 $ 1.05 $ 1.10
=========================================================
TOTAL RETURN--Variable
Universal Life 27.33% 0.67% 10.00% (3.90)% 11.20%**
=========================================================
--Variable Annuity 26.45%
======
RATIOS (in
percentages)/SUPPLEMENTAL
DATA
Net Assets, end of period
(000's omitted) $4,028 $2,795 $2,735 $2,406 $2,303
Ratio of expenses to aver-
age net assets 0.93(/1/) 0.98(/1/) 1.00 1.41 1.50*(/1/)
Ratio of net investment in-
come to average net assets 2.57 2.36 1.87 1.34 2.03*
Portfolio turnover rate 30.87 26.26 46.39 6.79 46.53
</TABLE>
*Ratios annualized
**Returns not annualized
(/1/)Expenses for the calculation are net of a reimbursement from Securities
Management and Research, Inc. Without this reimbursement the ratio of
expenses to average net assets would have been 1.26% and 1.23% for the
years ended December 31, 1995 and 1994, respectively, and 1.69%
(annualized) for the period ended December 31, 1991.
3
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.)
BALANCED PORTFOLIO
The table that follows has been audited by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report thereon appears in the Statement of
Additional Information, which is available upon request. This information
should be read in conjunction with the related financial statements and notes
thereto included in the Statement of Additional Information.
<TABLE>
<CAPTION>
March 1, 1991
(date operations
commenced) thru
Year Ended December 31, December 31,
-----------------------------------------------
1995 1994 1993 1992 1991
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 0.99 $ 1.06 $ 1.07 $ 1.12 $ 1.00
Net investment income 0.04 0.03 0.03 0.03 0.03
Net realized and unrealized
gain (loss) on investments
during the period 0.19 (0.03) 0.02 (0.05) 0.12
-----------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 0.23 0.00 0.05 (0.02) 0.15
Less distributions
Distributions from net in-
vestment income (0.04) (0.03) (0.03) (0.03) (0.03)
Distributions from capital
gains -- (0.04) (0.03) -- --
-----------------------------------------------
TOTAL DISTRIBUTIONS (0.04) (0.07) (0.06) (0.03) (0.03)
Net Asset Value, end of pe-
riod $ 1.18 $ 0.99 $ 1.06 $ 1.07 $ 1.12
===============================================
TOTAL RETURN--Variable
Universal Life 20.47% 0.26% 3.70% (2.70)% 16.40%**
===============================================
--Variable Annuity N/A
======
RATIOS (in percentages)
/SUPPLEMENTAL DATA
Net Assets, end of period
(000's omitted) $3,399 $2,660 $2,585 $2,363 $2,313
Ratio of expenses to aver-
age net assets 0.90(/1/) 0.96(/1/) 1.00 1.47 1.50*(/1/)
Ratio of net investment in-
come to average net assets 3.19 3.34 2.65 2.50 3.64*
Portfolio turnover rate 15.97 46.14 68.58 11.72 23.48
</TABLE>
*Ratios annualized
**Returns are not annualized
(/1/)Expenses for the calculation are net of a reimbursement from Securities
Management and Research, Inc. Without this reimbursement the ratio of
expenses to average net assets would have been 1.37% and 1.25% for the
years ended December 31, 1995 and 1994, respectively, and 1.80%
(annualized) for the period ended December 31, 1991.
MONEY MARKET PORTFOLIO
The table that follows has been audited by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report thereon appears in the Statement of
Additional Information, which is available upon request. This information
should be read in conjunction with the related financial statements and notes
thereto included in the Statement of Additional Information.
<TABLE>
<CAPTION>
March 1, 1991
(date operations
commenced) thru
Year Ended December 31, December 31,
--------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Net Asset Value, Beginning
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.05 0.02 0.02 0.02 0.04
--------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 0.05 0.02 0.02 0.02 0.04
Less distributions
Distributions from net in-
vestment income (0.05) (0.02) (0.02) (0.02) (0.04)
--------------------------------------------------
TOTAL DISTRIBUTIONS (0.05) (0.02) (0.02) (0.02) (0.04)
Net Asset Value, end of pe-
riod $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================================================
TOTAL RETURN--Variable
Universal Life 4.18% 3.31% 2.12% 2.17% 3.62%**
==================================================
--Variable Annuity 3.43%
======
RATIOS (in percentages)
/SUPPLEMENTAL DATA
Net Assets, end of period
(000's omitted) $2,352 $2,284 $2,194 $2,133 $2,153
Ratio of expenses to aver-
age net assets 0.87(/1/) 0.91(/1/) 0.98 1.50(/1/) 1.50*(/1/)
Ratio of net investment
income to average net
assets 5.03 3.32 2.11 2.20 4.29*
</TABLE>
*Ratios annualized
**Returns are not annualized
(/1/)Expenses for the calculation are net of a reimbursement from Securities
Management and Research, Inc. Without this reimbursement the ratio of
expenses to average net assets would have been 1.21%, 1.14% and 1.72% for
the years ended December 31, 1995, 1994 and 1992, respectively, and 1.81%
(annualized) for the period ended December 31, 1991.
Information relative to the performance of each Portfolio is included in the
American National Investment Accounts, Inc. Annual Report to shareholders
dated December 31, 1995. A copy of the Annual Report is available without
charge upon written request to the Fund at the address indicated on the first
page of this Prospectus.
4
<PAGE>
PERFORMANCE
Performance information for each Portfolio may be compared in advertisements,
sales literature, shareholder reports or other communications to the Standard
& Poor's 500 Composite Stock Price Index ("S&P 500") and to other investment
products tracked by Lipper Analytical Services, Lehman Brothers or
Morningstar. Performance is based on historical results and is not intended to
indicate future performance.
Total returns, yields and other performance information may be quoted
numerically or in a table, graph or similar illustration for each of the
Portfolios.
Total return is the change in value of an investment in a portfolio over a
given period, assuming reinvestment of any dividends and capital gains. A
cumulative total return reflects actual performance over a stated period of
time. An average annual total return is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period. Average annual total
returns smooth out variations in performance. They are not the same as actual
year by year results. Average annual total returns covering periods of less
than one year assume that performance will remain constant for the rest of the
year.
Yield refers to the income generated by an investment in a portfolio over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income is reinvested, it is called an effective yield. Seven-day
yield illustrates the income earned by an investment in a money market
portfolio over a recent seven-day period. Since money market funds maintain a
stable $1.00 share price, current seven-day yields are the most common
illustration of money market fund performance.
Total returns and yields quoted for the Portfolios include each Portfolio's
expenses and charges and expenses attributable to the American National
Variable Universal Life and Variable Annuity Separate Accounts. Inclusion of
the variable universal life and variable annuity separate account charges have
the effect of reducing each Portfolio's performance quoted for the product.
When reviewing performance, you should keep in mind the effect the inclusion
or exclusion of the variable products charges have on performance quoted when
comparing the performance of the Portfolios with other portfolios or funds.
Additional information regarding the calculation of performance can be found
in the Fund's Statement of Additional Information.
INVESTMENT OBJECTIVES AND POLICIES
Each Portfolio of the Fund has a different fundamental investment objective
which it pursues through the separate investment policies and techniques
described below. These policies and techniques are not fundamental and may be
changed by the Board of Directors of the Fund with the approval of the
shareholders. In addition, the Fund has adopted certain investment
restrictions as fundamental policies for each Portfolio of the Fund, which may
not be changed without shareholder approval. See the Fund's Statement of
Additional Information for a description of the investment restrictions
adopted as fundamental policies and shareholder voting requirements. Since
each Portfolio has a different investment objective, each can be expected to
have different investment results and incur different market and financial
risks. The Fund may in the future establish other portfolios with different
investment objectives.
The investments of the various Portfolios are indirectly subject to certain
additional restrictions under the laws of the State of Maryland. In the event
of future amendments to the applicable Maryland statutes, each Portfolio will
comply, without the approval of the shareholders, with the statutory
requirements as so modified.
Investment limitations may also arise under the insurance laws and regulations
of Texas, which is American National's domicile, and other states. Although
compliance with the requirements of Texas law will ordinarily result in
compliance with any applicable laws of other states, under some circumstances,
the laws of other states could impose additional restrictions on the
Portfolios.
Because of the market risks inherent in any investment, attainment of each
Portfolio's investment objective cannot be assured. In addition, effective
management of each Portfolio is subject to general economic conditions and to
the ability and investment techniques of management. The net asset value of
each Portfolio's shares will vary and the redemption value of shares owned may
be either higher or lower than the shareholders' cost.
The following paragraphs describe the investment objectives and policies and
techniques of each Portfolio.
GROWTH PORTFOLIO
Investment Objectives. The Growth Portfolio's primary investment objective is
to achieve capital appreciation, normally through the purchase of common
stocks (although the Growth Portfolio's investments are not restricted to any
one type of security). Capital appreciation may also be sought in other types
of securities, including bonds and preferred stocks.
Investor Suitability Profile. This portfolio is designed for investors who
want to build capital over the long term. It is particularly suited to
investors of modest means who need to be able to invest small amounts of money
over a period of time in order to achieve their financial goals.
Investment Policies and Techniques. The Growth Portfolio will normally invest
in common stocks, securities convertible into common stocks, or securities
with warrants attached. The Growth Portfolio may also invest in debt
securities, preferred stock, or money market securities, if, in the investment
adviser's judgment, market or economic conditions justify such action.
Generally, the Growth Portfolio's equity investments will be in established
companies, thereby reducing the financial risks. However, since the securities
of all companies fluctuate, the Growth Portfolio will experience more short-
term market risks than the other Portfolios. The net asset value of the Growth
Portfolio may experience greater short-term variations than the other
Portfolios.
The Growth Portfolio may invest in the securities of foreign corporations
listed on a U.S. securities exchange. The Growth Portfolio will not invest
more than 5% of its total assets in securities of foreign corporations. Such
securities may present greater risks than those of domestic securities,
including the risks of limited information, expropriation of assets and
foreign withholding taxes. See the Statement of Additional Information for
further discussion about foreign securities.
The Growth Portfolio normally will not seek to realize profits by anticipating
short-term market movements but intends to purchase securities for long-term
capital appreciation.
MANAGED PORTFOLIO
Investment Objective. The investment objective of the Managed Portfolio is to
achieve growth of capital and/or current income by investing in a diversified
portfolio consisting of, at the Fund's investment adviser's discretion, money
market instruments, debt securities, common stock or a combination thereof. It
is anticipated that over longer periods, a larger portion of the Managed
Portfolio's portfolio will consist of equity securities.
Investor Suitability Profile. This portfolio is designed for investors
primarily interested in participating in the potential opportunities of a
rising equity market, but whose risk comfort level is moderate to aggressive.
This portfolio is suited for investors with long-term investment goals who
wish to pursue those goals through lump-sum investments.
5
<PAGE>
Investment Policies and Techniques. SM&R, as investment adviser and manager,
has the flexibility to select among different types of investments for capital
growth and income and alter the composition of the Managed Portfolio as
economic and market trends change.
SM&R considers both the opportunity for gain and the risk of loss in making
investments. While SM&R anticipates that over the long-term, the Managed
Portfolio will consist primarily of equity investments, in the form of common
and preferred stocks, the Managed Portfolio may also invest in long-term bonds
and other debt securities such as convertible securities and short-term
investments, including short-term U.S. Government securities, bank or savings
and loan association interest-bearing accounts, certificates of deposit,
commercial paper, bankers' acceptances, repurchase agreements (subject to
certain limitations) and other money market instruments. The Managed Portfolio
may also occasionally acquire warrants or rights to purchase stocks that are
attached to equity or debt securities in which it invests. Such warrants or
rights would not typically have voting rights or entitle the Managed Portfolio
to receive income.
Flexibility to choose among these various kinds of investments is a principal
feature of SM&R's managed investment approach used in connection with the
Managed Portfolio. SM&R shifts its emphasis among different types of
investments, as well as among various industry sections, as financial trends
and economic conditions change. For example, one strategy will be to increase
investments in equity securities when SM&R anticipates a generally rising
stock market. A corresponding strategy will be to reduce investments in equity
securities when SM&R foresees a declining stock market or when it believes
that the total return from debt or convertible securities and short-term
investments can be expected to exceed returns from equity investments.
In selecting equity investments, SM&R will invest in the equity securities of
corporations having a market capitalization of at least $100 million, an
operating history of at least three (3) years and a listing on the New York
Stock Exchange, American Stock Exchange or Over-The-Counter markets. When
purchasing debt securities, SM&R will seek debt securities with longer
maturities during periods of anticipated lower interest rates and shorter-term
debt securities when interest rates are expected to rise. SM&R selects long-
term debt securities from high quality bonds (rated A or higher, as rated by
Standard & Poor's Corporation or Moody's Investors Service, Inc.) to achieve
income and capital gains with limited risk. SM&R may also invest the Managed
Portfolio's assets in high quality, short-term debt securities (such as
commercial paper rated in the top two rankings of nationally recognized
statistical rating organizations ("NRSROs"). However, the Managed Portfolio
may invest up to 10% of the value of its total assets (measured at the time of
investment) in lower-rated or unrated debt securities. Such lower-rated or
unrated debt securities may provide greater potential for capital appreciation
and/or income, but are also generally more speculative and have substantially
higher investment risks. Because at least 90% of the Managed Portfolio's
investments must be in higher quality securities as discussed above, the
Managed Portfolio's opportunities for income and gain may be more limited, as
will the investment risk. See the Statement of Additional Information for a
discussion of the ratings used in this paragraph.
In selecting among various short-term investments, the Managed Portfolio will
also follow certain general guidelines. For example, the Managed Portfolio
will generally open interest-bearing accounts only with or purchase
certificates of deposit or bankers' acceptances only from, banks or savings
and loan associations whose deposits are Federally insured and whose capital
is at least $50 million. The Managed Portfolio will generally purchase
commercial paper only of companies of medium to large capitalizations (that
is, $200 million or more) and will enter into repurchase agreements only with
well-established registered broker-dealers or with domestic banks or other
financial institutions insured by the FDIC and having total assets in excess
of $10 billion and only on a fully collateralized basis.
BALANCED PORTFOLIO
Investment Objectives. The Balanced Portfolio's investment objectives are to
provide conservation of principal, reasonable current income and long-term
capital appreciation by investing in a balanced portfolio of fixed-income
securities such as bonds, preferred stock and short-term obligations combined
with common stocks and securities convertible into common stocks. Although the
Balanced Portfolio seeks to reduce both the financial and market risks
associated with any one investment medium, performance will depend upon the
additional factors of timing and mix and the ability to judge and respond to
changing market conditions.
Investor Suitability Profile. This portfolio is designed for risk-conscious
investors where conservation of principal is an important consideration, but
participation in the potential opportunities of equity investments is desired.
This portfolio is for investors with a conservative to moderate risk comfort
level, yet with an intermediate to long-range investment time horizon.
Investment Policies and Techniques. The Balanced Portfolio may invest in the
following market sectors:
(1) Money market instruments and other debt obligations that are
permissible investments for the Money Market Portfolio. (See Money Market
Portfolio-Investment Policies and Techniques below.) Investments in
commercial paper are limited to issues rated in the top two rankings of the
recognized NRSROs. (Also, see the Statement of Additional Information for a
discussion of commercial paper ratings and a discussion of U.S. Government
obligations).
(2) Corporate Bonds and notes that are of the same quality as permitted
investments for the Money Market Portfolio. (See the Statement of
Additional Information for a discussion of corporate bond ratings.)
(3) Common stock and other equity-type securities that are permissible
investments for the Growth Portfolio.
The Balanced Portfolio will adjust the mix of investments among the three
market sectors to take advantage of perceived variations in return potential
produced by changing economic and financial market conditions. The adjustments
will normally be made in a gradual manner over a period of time. As a balanced
portfolio, the Balanced Portfolio has adopted an investment policy that it
will not purchase a security if as a result of such purchase less than 25% of
its total assets would be in fixed income senior securities (including short
and long-term debt securities, preferred stocks and convertible debt
securities). SM&R expects that the Balanced Portfolio will have some exposure
to all market sectors at most times.
MONEY MARKET PORTFOLIO
Investment Objectives. The Money Market Portfolio's investment objective is
the highest current income consistent with the preservation of capital and
maintenance of liquidity. Investments in Money Market instruments are subject
to the ability of the issuer to make payment at maturity. In addition, the
Money Market Portfolio's performance will vary depending on changes in short-
term interest rates. However, both the financial and market risks of
investment in the Money Market Portfolio may be expected to be less than for
any other Portfolio.
To ensure compliance with Rule 2a-7 under the Investment Company Act of 1940
(the "1940 Act"), the Money Market Portfolio will limit its investments to
those securities which the Board determines present minimal credit risk and
which are of "high quality" as determined by nationally recognized rating
agencies, or if unrated, of comparable quality, as determined by the Board of
Directors upon the recommendations of the Portfolio's investment adviser.
Investor Suitability Profile. This portfolio is designed for investors who are
extremely risk-averse. First-time investors looking to move cautiously into
the investment arena will find this a "comfortable" solution. This portfolio
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is appropriate when the need is safety or when liquidity is a consideration.
It can also be used for temporarily "parking" funds during periods when there
is a desire to not be invested in the equity market.
Investment Policies and Techniques. The Money Market Portfolio may invest in
the following types of high quality debt obligations:
(1) U.S. Government Obligations. U.S. Government Obligations consist of
marketable securities issued or guaranteed as to both principal and
interest by the United States Government or by its agencies. Federal agency
securities are debt obligations issued by agencies or authorities
controlled or supervised by and acting as instrumentalities of the U.S.
Government established under authority granted by Congress. Such
obligations include, but are not limited to, Government National Mortgage
Association, The Tennessee Valley Authority, The Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Home Loan Banks, Federal Land
Banks and The Federal National Mortgage Association. Some obligations of
U.S. Government agencies, authorities, and other instrumentalities are
supported by the full faith and credit of the U.S. Treasury; others by the
right of the issuer to borrow from the Treasury; and, others only by the
credit of the issuer. Obligations of the Government National Mortgage
Association are supported by the full faith and credit of the U.S.
Treasury; obligations of the other agencies, authorities, and
instrumentalities shown above are supported only by the credit of the
issuer;
(2) Certificates of Deposit. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank for a
definite period of time and earning a specified return. The Money Market
Portfolio will invest only in certificates of deposit of U.S. banks,
provided that each bank has total assets in excess of $1 billion at the
time of investment;
(3) Banker's Acceptances. Banker's acceptances are short-term instruments
issued by banks, generally for the purpose of financing imports or exports.
An acceptance is a time draft drawn on a bank by the importer or exporter
to obtain a stated amount of funds to pay for specific merchandise. The
draft is then "accepted" and is an irrevocable obligation of the issuing
bank;
(4) Commercial paper which at the date of the investment is considered a
First Tier Security (a security rated by at least two "NRSROs" in the
highest rating category) or no more than 5% of fund assets in Second Tier
Securities (securities that have received a rating in one of the two
highest categories by any two NRSROs) or, if unrated, the security is of
comparable quality to securities deemed Eligible Securities pursuant to
Rule 2a-7 under the 1940 Act. (See "Investment Policies of Each Portfolio--
Types of Securities and Ratings" in the Statement of Additional Information
for a more detailed explanation of the investment categories.)
(5) Bonds and Notes. The Money Market Portfolio may invest in corporate
bonds or notes with a remaining maturity of one year or less. These bonds
or notes must be rated within the two highest grades as determined by
Moody's Investor Service, Inc. (Aaa, Aa) or Standard & Poor's Corporation
(AAA, AA). See the Statement of Additional Information for a discussion of
these ratings.
The Fund's directors have agreed to maintain a dollar-weighted average
portfolio maturity of 90 days or less.
ADDITIONAL INVESTMENT POLICIES AND TECHNIQUES.
Unless otherwise specified, each Portfolio is permitted to make use of the
following investment policies and techniques:
Loans of Securities. All of the Portfolios, except the Money Market Portfolio,
may from time to time lend the securities they hold to broker-dealers,
provided that such loans are made pursuant to written agreements and are
continuously secured by collateral in the form of cash, U.S. Government
securities, or irrevocable standby letters of credit in an amount equal to at
least the market value at all times of the loaned securities plus the accrued
interest and dividends. During the time securities are on loan, the Portfolio
will continue to receive the interest and dividends, or amounts equivalent
thereto, on the loaned securities while receiving a fee from the borrower or
earning interest on the investment of the cash collateral. The right to
terminate the loan will be given to either party subject to appropriate
notice. Upon termination of the loan, the borrower will return to the lender
securities identical to the loaned securities. The Portfolio will not have the
right to vote securities on loan, but would terminate the loan and retain the
right to vote if that were considered important with respect to the
investment.
The primary risk in lending securities is that the borrower may become
insolvent on a day on which the loaned security is rapidly advancing in price.
In such event, if the borrower fails to return the loaned securities, the
existing collateral might be insufficient to purchase back the full amount of
the security loaned, and the borrower would be unable to furnish additional
collateral. The borrower would be liable for any shortage; but the Portfolio
would be an unsecured creditor with respect to such shortage and might not be
able to recover all or any of it. However, this risk may be minimized by a
careful selection of borrowers and securities to be lent and by monitoring
collateral.
No Portfolio will lend securities to broker-dealers affiliated with SM&R. This
will not affect a Portfolio's ability to maximize its securities lending
opportunities. For a more complete discussion of the Fund's investment
policies applicable to each Portfolio, see INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS in the Statement of Additional Information.
Repurchase Agreements. Each Portfolio may occasionally enter into repurchase
agreements. Under a repurchase agreement, a series will acquire and hold an
obligation (government security, certificate of deposit, or banker's
acceptance) for not more than seven days, subject to the agreement by the
seller (a Federal Reserve System member bank or a registered securities
dealer) to repurchase the obligation at an agreed upon repurchase price and
date, thereby determining the yield during the Series' holding period. During
the holding period, the seller must provide additional collateral if the
market value of the obligation falls below the repurchase price. Refer to the
Statement of Additional Information for a further explanation.
Covered Call Options. All of the Portfolios, except the Money Market
Portfolio, may write and sell covered call options which are traded on a
national securities exchange. A call option provides the right to buy shares
of an underlying security at a stated exercise price upon notice prior to the
stated option expiration date. A call option is covered when the option issuer
owns the underlying securities at the time the option is written and until the
option expiration date. A Portfolio may also purchase equivalent options on an
exchange (closing purchase transaction) in order to terminate its obligations
under the call option. Writing only call options that are traded on an
exchange increases the likelihood that a Portfolio will be able to make
closing purchase transactions at any particular time at an acceptable price.
The writer of a call option receives a premium for its obligation to sell the
underlying security at a stated price, but forgoes the opportunity to profit
from increases in the market price of the underlying security. A Portfolio
will write or purchase call options when it believes that it can realize a
greater current return than would be realized on the securities alone or to
provide greater flexibility in disposing of such securities.
PORTFOLIO TURNOVER
It is anticipated that the annual turnover rates for all of the Portfolios,
except the Money Market Portfolio, will vary, but they are not expected to
exceed 80%. Since securities with maturities of less than one year are
excluded
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from required portfolio turnover rate calculations, the portfolio turnover
rate for Money Market Portfolio reporting purposes will be zero. Each
Portfolio's historical portfolio turnover rates are included in the Financial
Highlights tables herein. A higher rate of portfolio turnover may result in
higher costs including brokerage commissions. Additionally, a higher Portfolio
turnover may, in some cases, have adverse tax effects on the Fund or its
shareholders.
THE FUND AND ITS MANAGEMENT
A Board of seven directors has overall responsibility for overseeing the
affairs of the Fund in a manner reasonably believed to be in the best interest
of the Fund. The Board has delegated to SM&R, the adviser, the management of
the Fund's business and affairs. In addition, SM&R invests the Fund's assets,
provides administrative services and serves as transfer agent, dividend paying
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 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 four other registered investment companies, the
American National Growth Fund, Inc., American National Income Fund, Inc., and
the Triflex Fund, Inc. (collectively, the "American National Funds Group") and
the SM&R Capital Funds, Inc. SM&R also serves as investment adviser to the
American National Investment Accounts, Inc., an investment company used to
fund benefits under contracts issued by American National 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 employee
benefit plans, other investment companies, banks, foundations and endowment
funds.
The following persons are officers of both SM&R and the Fund: Michael W.
McCroskey, Gordon D. Dixon, Vera M. Young, Emerson V. Unger, Teresa E. Axelson
and Brenda T. Koelemay.
PORTFOLIO MANAGEMENT
SM&R uses a disciplined, team approach in providing investment advisory
services to the Fund. While the following individuals are primarily
responsible for the day-to-day portfolio management of their respective
Portfolio, 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 IS SENIOR VICE PRESIDENT, CHIEF INVESTMENT OFFICER OF
SECURITIES MANAGEMENT AND RESEARCH, INC., AND VICE PRESIDENT, PORTFOLIO
MANAGER OF THE FUND. Mr. Dixon joined SM&R 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 IS VICE PRESIDENT AND A PORTFOLIO MANAGER OF THE FUND. Mr.
Zimansky joined SM&R 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. IS VICE PRESIDENT AND A PORTFOLIO MANAGER OF THE
FUND. Mr. Berger joined SM&R 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.
VERA M. YOUNG IS VICE PRESIDENT AND A PORTFOLIO MANAGER OF THE FUND. Ms. Young
earned her Business degree from Galveston College. She has been in the
securities industry since 1964 managing fixed income investments for the
American National Insurance Company. She has been a portfolio manager with
SM&R for eleven years.
INVESTMENT MANAGEMENT ARRANGEMENTS AND EXPENSES
ADVISORY AGREEMENT. SM&R receives an investment advisory fee at an annual rate
of one-half of one percent of the average daily net asset value of the Fund
(i.e., the aggregate of the average daily net assets of all of the Portfolios)
computed each month.
ADMINISTRATIVE SERVICE AGREEMENT. SM&R receives a management and
administrative service fee at an annual rate of one-quarter of one percent of
the average daily asset value of the Fund computed each month. 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 management fee, in excess of 1.50% per year of the
Fund's average daily net assets.
FEE WAIVERS. In order to improve the yield and total return of a Portfolio of
the Fund, SM&R may, from time-to-time, voluntarily waive or reduce all or any
portion of its advisory fee and/or assume certain or all expenses of such
Portfolio. SM&R has agreed to continue its undertaking to reimburse the Growth
Portfolio and the Money Market Portfolio for expenses in excess of 0.87%; the
Balanced Portfolio for expenses in excess of 0.90% and the Managed Portfolio
for expenses in excess of 0.93%, of each Portfolio's average daily net assets.
Fee waivers and/or reductions, other than those stated in the Administrative
Service Agreement, may be rescinded by SM&R at any time without notice to
investors. Such reimbursement obligation is more restrictive than required by
California, the only State having an expense reimbursement provision
applicable to the Fund. Such reimbursements, when required, will be made
monthly.
For the year ended December 31, 1995, the net compensation paid by each
Portfolio to SM&R, expressed as a percentage of average net assets, were as
follows: Growth Portfolio--31%; Managed Portfolio--43%; Balanced Portfolio--
28%; and Money Market Portfolio--41%.
For information about the expenses of the Fund, see the Statement of
Additional Information.
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PURCHASE AND REDEMPTION OF SHARES
Shares in the Fund are currently offered continuously, without sales charge,
at prices equal to the respective net asset values of the Portfolio, only to
the Accounts to fund benefits payable under the Contracts described in the
attached prospectus. The Fund may at some later date also offer its shares to
other separate accounts of American National, American National's subsidiaries
or similar institutions. Although the Fund does not levy a sales charge upon
the purchase of the Fund's shares, a sales or redemption charge may be levied
by the Separate Accounts to which the Fund offers its shares.
The Fund is required to redeem all full and fractional shares of the Fund for
cash within seven days of receipt of proper notice of redemption. The
redemption price is the net asset value per share next determined after the
initial receipt of proper notice of redemption.
The right to redeem shares or to receive payment with respect to any
redemption may be suspended only for any period during which trading on the
New York Stock Exchange (the "Exchange") is restricted as determined by the
Commission or when the Exchange is closed (other than customary weekend and
holiday closings), for any period during which an emergency exists as defined
by the Commission as a result of which disposal of a Portfolio's securities or
determination of the net asset value of each Portfolio is not reasonably
practicable, and for such other periods as the Commission may by order permit
for the protection of shareholders of each Portfolio.
DETERMINATION OF NET ASSET VALUE
The offering price for shares of each Portfolio is determined once each day
that such Portfolio's net asset value is determined. Net asset value per share
is determined by dividing the market value of the securities owned by the
Portfolio, plus any cash or other assets (including dividends accrued but not
collected, less all liabilities and surplus), by the number of shares of the
Portfolio 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 such Portfolio investment securities that
the current net asset value of such Portfolio's shares might be materially
effected by changes in the value of its portfolio of investment securities.
Each Portfolio of the Fund reserves the right, without notice, to compute such
Portfolio's net asset value at a different time, to compute such value more
often than once daily, or to make the offering price effective at a different
time.
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 Year's Day is a Saturday, the preceding Friday
will be a business holiday. If New Year's Day is a Sunday, the following
Monday will be a business holiday.
The Money Market Portfolio values all of its securities using the amortized
cost method, which does not take into account unrealized capital gains or
losses. This involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. (For a further discussion of the amortized cost method, see
the Statement of Additional Information.) The other Portfolios use the
amortized cost method only for valuing debt securities having maturities of 60
days or less. Debt securities with maturities in excess of 60 days are valued
on the basis of prices provided by a pricing service or brokers.
Securities listed on a stock exchange are valued at the closing sale price or,
if there were no sales during the day, at the last previous sale or bid price
reported. Securities traded only in the over-the-counter market are valued at
the closing bid price. Securities for which there are no readily available
market quotations and all other assets are valued in such manner as the Board
of Directors in good faith determines is appropriate to reflect their fair
value.
Further description of asset valuation methods is included in the Statement of
Additional Information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 ("Code"). To avoid adverse
tax consequences each Portfolio intends to distribute all of its net
investment income and any net realized capital gains to its shareholders in a
timely manner. Thus, it is not expected that the Fund will be required to pay
federal income tax.
Income dividends will be distributed annually in the case of the Growth,
Balanced and Managed Portfolios and on the last business day of each month in
the case of the Money Market Portfolio. Any net capital gains of each
Portfolio realized during the fiscal year will be declared and distributed
periodically, no less frequently than annually.
All income dividends and capital gains distributions shall be reinvested
automatically in additional Portfolio shares at the net asset value on the
distribution date. Shareholders may be proportionately liable for taxes on
income and gains of the Fund however, shareholders not subject to tax on their
income will not be required to pay tax on amounts distributed to them.
Further, the Fund, to the extent required by Federal law, will inform
shareholders of the amount and nature of such income or gains.
Among the conditions for qualification and avoidance of taxation of the Fund,
Subchapter M imposes investment limitations, distribution requirements and
requirements relating to the diversification of investments. The Subchapter M
diversification requirements are in addition to diversification requirements
under Section 817(h) of the Code and the 1940 Act.
GENERAL INFORMATION
AUTHORIZED STOCK
The authorized Capital Stock of the Fund consists of One Hundred Million
(100,000,000) shares, par value $.01 per share. The shares of Capital Stock
are divided into four portfolios: Growth Portfolio Capital Stock (15,000,000
shares); Money Market Portfolio Capital Stock (50,000,000 shares); Balanced
Portfolio Capital Stock (15,000,000 shares); and Managed Portfolio Capital
Stock (20,000,000 shares). The shares of each Portfolio, when issued, will be
fully paid and non-assessable, will have no conversion, exchange or similar
rights, and will be freely transferable.
Each share of stock will have a pro-rata interest in the assets of the
Portfolio to which the stock of that class relates and will have no interest
in the assets of any other Portfolio. Holders of shares of any Portfolio are
entitled to redeem their shares as set forth under PURCHASE AND REDEMPTION OF
SHARES herein.
VOTING RIGHTS
The voting rights of Contract owners, and limitations on those rights, are
explained in the accompanying prospectuses for the Contracts. American
National, as the owner of the assets in the Separate Accounts, is entitled to
vote all of the shares of the Fund, but it will generally do so in accordance
with the instructions of Contract owners. American National has agreed to vote
shares of the Fund held in the Separate Accounts for which no timely
9
<PAGE>
voting instructions from Contract owners are received, as well as shares it
owns, in the same proportion as those shares for which voting instructions are
received. A meeting may be called by the Board of Directors in their
discretion or by Contract owners holding at least ten (10%) percent of the
outstanding shares of any Portfolio. Contract owners will receive assistance
in communicating with other Contract owners in connection with the election or
removal of directors similar to the provisions contained in Section 16(c) of
the 1940 Act. Under certain circumstances, however, American National may
disregard voting instructions received from Contract owners. For additional
information describing how American National will vote the shares of the Fund,
see VOTING RIGHTS in the accompanying prospectuses for the Contracts.
PERIODIC REPORTS
American National, on behalf of the Fund, will send each Contract owner, at
least annually, reports showing as of a specified date the number of shares in
each Portfolio credited to the Contract owner. The Fund will also send
Contract owners semi-annual reports showing the financial conditions of the
Portfolios and the investments held in each.
PORTFOLIO BROKERAGE AND RELATED PRACTICES
SM&R is responsible for decisions to buy and sell securities for the
Portfolios, the selection of brokers and dealers to effect the transactions
and the negotiation of brokerage commissions, if any. Transactions on a stock
exchange in equity securities will be executed primarily through brokers that
will receive a commission paid by the Portfolio. The Money Market Portfolio,
on the other hand, will not normally incur any brokerage commissions. Fixed
income securities, as well as equity securities traded in the Over-The-Counter
market, are generally traded on a "net" basis with dealers acting as
principals for their own accounts without a stated commission, although the
price of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price that includes an amount
of compensation to the underwriter, generally referred to as the underwriter's
concession or discount. Certain of these securities may also be purchased
directly from an issuer, in which case neither commissions nor discounts are
paid.
The Fund may not engage in any transactions in which SM&R or its affiliates
acts as principal, including over-the-counter purchases and negotiated trades
in which such a party acts as a principal.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
SM&R is the custodian of the cash and securities of the Fund pursuant to a
Custodian Agreement dated August 1, 1995. The Custodian holds and administers
the Fund's cash and securities 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 is the transfer agent and dividend-disbursing agent for the
Fund. SM&R's principal business address is One Moody Plaza, Galveston, Texas
77550.
ADDITIONAL INFORMATION
This Prospectus and the Statement of Additional Information referred to on the
cover page do not contain all the information set forth in the registration
statement, certain portions of which have been omitted pursuant to the rules
and regulations of the Securities and Exchange Commission. The omitted
information may be obtained from the Commission's principal office in
Washington, D.C., upon payment of the fees prescribed by the Commission.
For further information, shareholders may also contact the Fund's office, the
address and phone number of which are set forth on the cover of this
Prospectus.
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DIRECTORS
Ernest S. Barratt, Ph.D.
Robert A. Fruend
Michael W. McCroskey
Brent E. Masel, M.D.
Lea McLeod Matthews
Louis E. Pauls, Jr.
Carl R. Robertson
INVESTMENT ADVISOR AND MANAGER
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
UNDERWRITER AND REDEMPTION AGENT
Securities Management and Research, Inc.
One Moody Plaza
Galveston, TX 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
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
700 Louisiana
Houston, Texas 77002
TRANSFER AGENT, REGISTRAR AND
DIVIDEND PAYING AGENT
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
Form 9427, Rev. 5/96
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated: April 30, 1996 5
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
One Moody Plaza
Galveston, Texas 77550
1-409-763-2767
Toll Free 1-800-526-8346
This Statement of Additional Information is NOT a prospectus and should be read
in conjunction with the Fund's Prospectus dated April 30, 1995 ("Prospectus"),
which is available without charge upon written request to American National
Investment Accounts, Inc., One Moody Plaza, Galveston, Texas 77550, or by
phoning 409-763-2767 or (Toll Free) 800-526-8346.
American National Investment Accounts, Inc. (the "Fund") is a diversified, open-
end, series, management investment company (commonly known as a "mutual
fund") that is intended to provide a range of investment alternatives through
its four separate portfolios, each of which is, for investment purposes, in
effect a separate fund. A separate class of capital stock is issued for each
portfolio.
Shares of the Fund are currently sold only to separate accounts (the "Separate
Accounts") of American National Insurance Company ("American National") to fund
benefits under variable universal life insurance policies and variable annuity
contracts (all of such insurance policies and variable annuity contracts are
referred to as the "Contract" or "Contracts") issued by American National. The
Separate Accounts invest in shares of the Fund through subaccounts that
correspond to the portfolios. The Separate Accounts will redeem shares of the
Fund to the extent necessary to provide benefits under the Contracts or for such
other purposes as may be consistent with the Contracts.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----------
<S> <C>
GENERAL HISTORY OF THE FUND.................................... 3
INVESTMENT OBJECTIVES OF EACH PORTFOLIO........................ 3
INVESTMENT POLICIES OF EACH PORTFOLIO -
TYPES OF SECURITIES AND RATINGS............................... 3
INVESTMENT RESTRICTIONS........................................ 6
MANAGEMENT OF THE FUND......................................... 8
POLICY REGARDING PERSONAL INVESTING............................ 11
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES............ 11
INVESTMENT ADVISORY AND OTHER SERVICES......................... 11
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION................ 14
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CAPITAL STOCK.................................................. 15
SALE, REDEMPTION AND PRICING OF SHARES......................... 15
TAXES.......................................................... 17
CALCULATION OF YIELD QUOTATIONS OF THE MONEY MARKET PORTFOLIO.. 18
OTHER INFORMATION CONCERNING THE FUND.......................... 18
FINANCIAL STATEMENTS OF THE FUND............................... 19
</TABLE>
GENERAL HISTORY OF THE FUND
The Fund was incorporated under the laws of the State of Maryland on March 14,
1988 as the American National Investment Accounts, Inc. The Fund had no
business history prior to such incorporation.
INVESTMENT OBJECTIVES OF EACH PORTFOLIO
The investment objective of each of the Fund's four Portfolios can be found in
the INVESTMENT OBJECTIVES AND POLICIES SECTION IN THE PROSPECTUS.
From time to time, the assets of the Portfolios, except the Money Market
Portfolio, may be invested in debt securities that are offered together with
warrants for the purchase of common stock of the issuer. Warrants are options to
buy a fixed number of shares of stock at a predetermined price during a
specified period. These may be purchased for a Portfolio, but only when the
debt security meets the Fund's investment criteria, and the value of the
warrants is relatively very small. If the warrant becomes valuable, it will
ordinarily be sold rather than exercised. The risk associated with the purchase
of a warrant is that the purchase price will be lost because the market price of
the stock does not reach a level that justifies the exercise or sale of the
warrant before it expires.
INVESTMENT POLICIES OF EACH PORTFOLIO - TYPES OF SECURITIES AND RATINGS
U.S. GOVERNMENT OBLIGATIONS
U.S. Government Agency Securities. Federal agency securities are debt
obligations issued by agencies or authorities controlled or supervised by and
acting as instrumentalities of the U.S. Government established under authority
granted by Congress. Such obligations include, but are not limited to,
Government National
37
<PAGE>
Mortgage Association, The Tennessee Valley Authority, The Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Home Loan Banks, Federal Land Banks
and The Federal National Mortgage Association. Some obligations of U.S.
Government agencies, authorities and other instrumentalities are supported by
the full faith and credit of the U.S. Treasury; others by the rights of the
issuer to borrow from the Treasury; and, others only by the credit of the
issuer. Obligations of the Government National Mortgage Association are
supported by the full faith and credit of the U.S. Treasury; obligations of the
other agencies, authorities and other instrumentalities shown above are
supported only by the credit of the issuers.
U.S. Treasury Bills. U.S. Treasury bills are issued with maturities of any
period up to one year. Three month bills are currently auctioned each week by
the Treasury. Bills are issued in bearer form only and are sold only on a
discount basis. The difference between the purchase price and the maturity
value (or the resale price if they are sold before maturity) constitutes the
interest income for the investor.
FOREIGN SECURITIES
The Growth Portfolio may choose to invest in foreign securities for
diversification and for the potential to benefit during periods of currency
fluctuation during which foreign currencies are strengthening against the U.S.
dollar. The ability to benefit from currency fluctuations will depend on the
ability of the Growth Portfolio to predict the relationship between currencies.
The Growth Portfolio will consider certain special factors in connection with
investments in foreign securities, particularly those of non-governmental
issuers. The Growth Portfolio will not invest in foreign securities that entail
risks or considerations that are inconsistent with the Growth Portfolio's
practice of assuming only moderate investment risk. Foreign securities may be
subject to: currency exchange control regulations, currency fluctuations,
foreign withholding taxes, the economic effects of political instability, and
possible expropriation. Information regarding the issuer of foreign securities
may also be less available than financial information concerning domestic
issuers. In addition, there may be difficulties in interpreting financial
information prepared under foreign accounting standards. Economic trends in
foreign countries may be more difficult to assess. Legal processes abroad might
not be as easy to invoke as would be the case in the United States should such
processes be necessary.
BANKER'S ACCEPTANCES
The bank issuing an acceptance is protected by the pledge of documents giving it
title to the goods in transit should the bank's customer fail to provide proper
funds upon delivery of the goods and maturity of the acceptance. Courts have
held that the bank holds the credit agreement backing the acceptance not for its
own benefit or the benefit of its general creditors, but in trust for the holder
of the acceptance.
COMMERCIAL PAPER RATINGS
Description of Standard & Poor's Corporation's three highest commercial paper
ratings:
Commercial paper rated "A" by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are adequate to meet cash requirements. Long-
term senior debt is generally rated "A" or better. The issuer has access to at
least two additional channels of borrowing. Basic earnings and cash flow have
an upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is rated A-1, A-2 or A-3. A-1 is the
highest commercial paper rating assigned by Standard & Poor's Corporation. A-2
is the second highest of such ratings.
38
<PAGE>
Description of Moody's Investor's Services, Inc.'s three highest commercial
paper ratings:
Among the factors considered by Moody's Investor's Service, Inc. in assigning
commercial paper ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or industries and
an appraisal of the risks which may be inherent in certain areas; (3) evaluation
of the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition of the management
of obligations which may be present or may arise as a result of public interest
questions and proportions to meet such obligations which may be present or may
arise as a result of public interest questions and proportions to meet such
obligations. Relative differences in strength and weakness in respect to these
criteria would establish a rating in one of three classifications; P-1, P-2 or
P-3. P-1 is the highest commercial paper rating assigned by Moody's Investor's
Service, Inc. P-2 is the second highest of such ratings.
Description of Fitch Investors Service, Inc. two highest commercial ratings:
Fitch's commercial paper ratings place emphasis on the existence of liquidity
necessary to meet the issuer's obligations in a timely manner. Relative
differences in strength and weakness in respect to an issuer is rated by Fitch's
as F-1 or F-2; F-1 is the highest commercial paper rating assigned by Fitch's
and F-2 is the second highest.
Description of Duff & Phelp's two highest commercial ratings:
Duff and Phelp's commercial paper ratings place emphasis on liquidity,
considering not only cash from operations, but access to alternative sources of
funds, including trade credit, bank lines and capital markets. Relative
differences in strength and weakness is rated by Duff & Phelp's as Duff-1 or
Duff-2; Duff-1 being the highest commercial paper rating and Duff-2 being the
second highest rating.
Description of Thompson Bankwatch, Inc.'s two highest ratings:
Thompson Bankwatch, Inc's ratings of United States commercial banks, thrifts,
and non-bank banks, non-United States banks, and broker-dealers are based upon
among other things, five years' financial information and the issuer's most
recent regulatory filings. Relative differences in strength and weakness are
rated by Thompson Bankwatch, Inc. as TBW-1 or TBW-2; TBW-1 being the highest
commercial paper rating and TBW-2 being the second highest rating.
PREFERRED STOCK RATINGS
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 Investor's Services, 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.
CORPORATE BOND RATINGS
39
<PAGE>
Moody's Investor Service, Inc. Aaa bonds 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 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 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 because margins of protection may not be as
large as Aaa securities, or fluctuation of protective element may be of greater
amplitude, or there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A bonds possess many favorable investment attributes and 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 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 outstanding investment characteristics and, in fact, have speculative
characteristics as well.
Standard and Poor's Corporation. AAA is the highest rating assigned to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
principal.
AA bonds also qualify as high-quality debt obligations. The capacity to pay
interest and repay principal is very strong.
A bonds 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 are higher rated bonds.
BBB bonds 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 circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for bonds in this
category than for higher rated bonds.
INVESTMENT RESTRICTIONS
In addition to the restrictions described in the Prospectus, the Fund has
adopted the following restrictions relating to the investment of each
Portfolio's assets. These restrictions are fundamental policies and may not be
changed for any Portfolio without the approval of a majority of the outstanding
voting shares of each affected Portfolio. (As used in the Prospectus and this
Statement of Additional Information, the term "majority of the outstanding
voting shares" means the lesser of (1) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented, or (2)
more than 50% of the outstanding shares.) A change in policy affecting only one
Portfolio may be effective without the approval of a majority of the outstanding
voting shares of any other Portfolio or of the entire Fund.
A Portfolio:
(1) Will not issue senior securities, except as permitted by sections 18(f) and
(g) and the rules thereunder of the Investment Company Act of 1940.
(2) Will not make short sales of securities.
(3) Will not engage in margin transactions or arbitrage.
40
<PAGE>
(4) Will not buy or sell real estate although a Portfolio may invest in the
securities of real estate investment trusts.
(5) Will not purchase or sell commodities or commodity contracts.
(6) Will not invest in companies for the purpose of exercising management or
control.
(7) Will not invest in oil, gas or other mineral leases, rights on royalty
contracts or in real estate or real estate limited partnerships.
(8) Will not underwrite securities of other issuers, except where the Fund may
be deemed to be a statutory underwriter for purposes of certain federal
securities laws in connection with the disposition of portfolio securities,
restricted securities or not readily marketable securities.
(9) Will not borrow money.
(10) Will not lend money, and the Money Market Portfolio will not lend
securities except that the Portfolio may purchase obligations subject to
repurchase agreements. The purchase of publicly held debt securities is not
considered lending money for the purpose of this restriction.
(11) Will not purchase securities (including commercial paper) of any issuer if
such purchase would at that time (i) cause more than 5% of the value of the
individual Portfolio's total assets to be invested in securities of any one
issuer other than the U.S. Government or its corporate instrumentalities or
(ii) cause the Portfolio to own more than 10% of the outstanding voting
securities of any issuer.
(12) Will not concentrate its investments in any one industry by investment of
more than 25% of the value of its total assets in such industry.
(13) Will not invest more than 5% of the value of its total assets in securities
of companies having a record of less than three years continuous
operations.
(14) Will not invest more than 5% of the value of its total assets in any
closed-end investment company and will not hold more than 3% of the
outstanding voting stock of any closed-end investment company.
(15) Will not purchase or retain securities of any issuer if any officer or
director of the Fund or of its investment manager own individually more
than one-half of one percent (1/2 of 1%) of the securities of that issuer,
and collectively the officers and directors of the Fund and investment
manager together own more than 5% of the securities of that issuer.
(16) Will not acquire securities of other open-end investment companies, except
in connection with a merger, consolidation, or acquisition of assets
approved by the shareholders.
(17) Will not purchase from or sell to any officer or director of the Fund or
its investment manager any securities other than shares of the capital
stock of the Portfolio.
(18) Will not invest more than 5% of the value of its total assets in securities
which are not readily marketable including restricted securities.
Current federal income tax laws require that the assets of each Portfolio be
adequately diversified so that, American National, and not the Contract owners,
are considered the owners of assets held in the Accounts for federal income tax
purposes. See DIVIDENDS, DISTRIBUTIONS AND TAXES in the Prospectus. American
National intends to maintain the assets of each Portfolio pursuant to those
diversification requirements.
Portfolio turnover (as referred to in the "Portfolio Turnover" section of the
Prospectus) is calculated by dividing the lesser of annual purchases or sales of
portfolio securities by the monthly average of the value of each Portfolio's
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 Portfolio's securities were replaced within one year.
MANAGEMENT OF THE FUND
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The names of all directors and officers of the Fund and the principal occupation
of each during the last five (5) years are shown below.
(2)ERNEST S. BARRATT, Ph.D. - DIRECTOR (DEPARTMENT OF PSYCHIATRY AND
BEHAVIORAL SCIENCES, UNIVERSITY OF TEXAS MEDICAL BRANCH, GALVESTON, TEXAS 77550-
2777) Professor and Chief, Psychophysiology Laboratory, Department of Psychiatry
and Behavioral Sciences, University of Texas Medical Branch, a medical school
and hospital system, 1962 to present; Chief, Psychology Section and
Psychodiagnostic Service, Department of Psychiatry and Behavioral Sciences,
University of Texas Medical Branch, 1962 to present.
(1)ROBERT A. FRUEND, C.L.U. - DIRECTOR (ONE MOODY PLAZA, GALVESTON, TEXAS
77550) Executive Vice President, Director of Ordinary Agencies of American
National, April, 1989 to present; Senior Vice President, November, 1988 to
April, 1989 and Regional Director, January, 1975 to October, 1988 of American
National; Director and Vice President, April 1989 to present, American National
Insurance Company of Texas; Director, November, 1979 to present, American
National Property and Casualty Insurance Company; Director, November, 1981 to
present, American National General Insurance Company; Director, Securities
Management and Research, Inc., November 1988 to present.
(2)BRENT E. MASEL, M.D. - DIRECTOR (1528 POSTOFFICE, GALVESTON, TEXAS 77550)
Doctor of Neurology; Clinical Assistant Professor in Neurology, University of
Texas Medical Branch, 1978 to present; Staff Physician, St. Mary's Hospital,
Galveston, Texas, 1979 to present; Staff Physician, Mainland Center Hospital,
1978 to present; Clinical Assistant Professor in Family Medicine, University of
Texas Medical Branch, Galveston, Texas, 1979 to present; Director SM&R Capital
Funds, Inc., 1992 to present; President and Executive Administrator
Transitional Learning Community, Galveston, Texas, July 1992 to present.
(1)LEA MCLEOD MATTHEWS - DIRECTOR (850 E. ANDERSON LANE, AUSTIN, TEXAS 78752-
1602) Publications Editor, National Western Life Insurance Co., 1990 to present;
Director of American National Investment Accounts, Inc., (an affiliated mutual
fund) 1994 to present; Public Relations, Moody Gardens, Galveston, Texas, 1988
to 1990; Director of Garden State Life Insurance Company, 1993 to present.
( 2)LOUIS E. PAULS, JR. - DIRECTOR (1413 TREMONT, SUITE 200, GALVESTON,
TEXAS 77550) Owner of Louis Pauls & Co., a sole proprietorship, 1959 to
present; Director, National Western Life Insurance Co., Austin, Texas, 1971 to
present; Director Seal Fleet, Galveston, Texas, 1970 to present; Director
American National Investment Accounts, Inc. (an affiliated mutual fund), 1994 to
present.
(1)CARL R. ROBERTSON - DIRECTOR (ONE MOODY PLAZA, GALVESTON, TEXAS 77550)
Director of SM&R; 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.
() (1) MICHAEL W. MCCROSKEY - Director and President (One Moody Plaza,
Galveston, Texas 77550) 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
Growth Fund, Inc.,
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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; 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.
() EMERSON V. UNGER, C.L.U. - VICE PRESIDENT (ONE MOODY PLAZA, GALVESTON,
TEXAS 77550) Vice President of SM&R; Vice President of the American National
Funds Group and the SM&R Capital Funds, Inc., Mutual Funds.
() BRENDA T. KOELEMAY - VICE PRESIDENT AND TREASURER (ONE MOODY PLAZA,
GALVESTON, TEXAS 77550) Vice President and Treasurer of SM&R; Vice President and
Treasurer of the American National Funds Group and the SM&R Capital Funds, Inc.,
Mutual Funds; Senior Manager, KPMG Peat Marwick, July 1980 to April 1992.
() TERESA E. AXELSON - VICE PRESIDENT AND SECRETARY (ONE MOODY PLAZA,
GALVESTON, TEXAS 77550) Vice President and Secretary of SM&R; Vice President and
Secretary of the American National Funds Group and the SM&R Capital Funds, Inc.
() GORDON D. DIXON - VICE PRESIDENT AND PORTFOLIO MANAGER OF GROWTH PORTFOLIO
(ONE MOODY PLAZA, GALVESTON, TEXAS 77550) Senior Vice President, Chief
Investment Officer of SM&R and a member of the Investment Committee of SM&R;
Vice President, Portfolio Manager of the American National Growth Fund, Inc., a
mutual fund; Former Director of Equity Strategy Research and Trading for
C&S/Soran Bank (now Nations Bank) Atlanta, Georgia.
() DAVID ZIMANSKY - VICE PRESIDENT, PORTFOLIO MANAGER OF MANAGED PORTFOLIO (ONE
MOODY PLAZA, GALVESTON, TEXAS 77550) Vice President and Portfolio Manager of
the American National Income Fund, Inc. and a member of the Equities Investment
Committee of SM&R; Former Vice President, Convertible Arbitrage, Shearson Lehman
Hutton, New York, N.Y.
() WILLIAM R. BERGER, C.F.A. - VICE PRESIDENT, PORTFOLIO MANAGER OF THE
BALANCED PORTFOLIO (ONE MOODY PLAZA, GALVESTON, TEXAS 77550) Vice President and
Portfolio Manager for the Triflex Fund, Inc. and a member of the Equities
Investment Committee of SM&R; Former Portfolio Manager for Trinity Investment
Management, Bellefonte, Pennsylvania, Investment Adviser; Former Auditor for
Coopers & Lybrand, Dallas, Texas.
() VERA M. YOUNG - VICE PRESIDENT, PORTFOLIO MANAGER OF MONEY MARKET PORTFOLIO
(ONE MOODY PLAZA, GALVESTON, TEXAS 77550) Vice President, Portfolio Manager and
member of the Fixed Income Investment Committee of SM&R; Vice President,
Portfolio Manager of the American National Primary Fund Series of the SM&R
Capital Funds, Inc.; Assistant Vice President, Securities, American National.
(1) Directors who are "Interested persons" of the Fund as defined by the 1940
Act, as amended.
(2) Members of the Fund's Nominating and Audit Committees
() The American National Funds Group and the SM&R Capital Funds, Inc. are
mutual funds which have investment advisory and underwriting agreements with
SM&R, which is a wholly-owned subsidiary of American National. See INVESTMENT
ADVISORY AND OTHER SERVICES, BELOW.
By resolution of the Board of Directors, the Fund pays the fees and expenses of
only those directors who are not affiliated with SM&R. During the period ended
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December 31, 1995 the Fund paid approximately $14,368 to such directors for fees
and expenses in attending meetings of the Board of Directors.
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
DIRECTOR FROM FUND ALL AMERICAN NATIONAL
FUNDS
- --------------------------------------------------------------------------------
<S> <C> <C>
Ernest S. Barratt $3,500 $3,500
Robert A. Fruend -- --
Brent E. Masel, M.D. $3,500 $7,000
Lea McLeod Matthews $3,661 $7,321
Michael W. McCroskey -- --
Louis E. Pauls, Jr. $3,500 7,000
Carl R. Robertson -- --
</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.
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<PAGE>
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
As of April 1, 1995, no officer or director of the Fund owned shares of the
Portfolios.
As of April 1, 1996, American National and SM&R owned 92% and 8% of the
outstanding shares of the Growth Portfolio, 91% and 9% of the outstanding shares
of the Managed Portfolio, 90% and 10% of the outstanding shares of the Balanced
Portfolio, and 88% and 12% of the outstanding shares of the Money Market
Portfolio, respectively.
See the "Control and Management of SM&R" section in INVESTMENT ADVISORY AND
OTHER SERVICES, below.
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 1990. 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 and underwriter of the American National Funds Group
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. 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"), who is 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, trust 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 SM&R Capital
Funds, Inc. and SM&R.
Michael W. McCroskey, President and Director 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 American National Funds Group and the
SM&R Capital
45
<PAGE>
Funds, Inc.; Gordon D. Dixon, Vice President, Portfolio Manager of the Fund and
the Triflex Fund, Inc. is also Senior Vice President, Chief Investment Officer
of SM&R and a member of the investment committees of SM&R; Vera M. Young, Vice
President, Portfolio Manager of the Fund and the SM&R Capital Funds' Primary
Series, Vice President of SM&R and a member of the fixed income investment
committee of SM&R; Emerson V. Unger, Vice President of the Fund, is also Vice
President of SM&R, the American National Funds Group and the SM&R Capital Funds,
Inc.; Teresa E. Axelson, Vice President and Secretary of the Fund, is also Vice
President and Secretary of SM&R, the American National Funds Group and the SM&R
Capital Funds; and Brenda T. Koelemay, Vice President and Treasurer of the Fund,
is also Vice President and Treasurer of SM&R, the American National Funds Group
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 February 8, 1991, SM&R acts as investment adviser for and
provides certain administrative services to the Fund.
As investment manager, 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.
Under the Advisory Agreement, SM&R is paid a monthly fee by the Fund of 1/24th
of 1% per month (1/2 of 1% per annum) of the Fund's average daily net assets.
Such monthly fee is allocated among the Portfolios based on the percentage of
each Portfolios' respective net assets to the total net assets of the Fund.
For the periods ended December 31, 1993, 1994 and 1995, SM&R received or accrued
investment advisory fees from each Portfolio as follows: Growth Portfolio
$12,761, $14,338 and $19,146, Managed Portfolio $12,701, $13,741 and $16,964,
Balanced Portfolio $12,326, $13,050 and $15,022, and the Money Market
Portfolio $10,857, $11,217 and $11,773, respectively.
ADMINISTRATIVE SERVICE AGREEMENT
Under an Administrative Service Agreement between the Fund and SM&R dated
February 8, 1991, SM&R provides certain management, operational and executive
services to the Fund. SM&R pays the salaries of all officers and accounting
employees administering the Fund's affairs and provides accounting, data
processing, bookkeeping, 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
transactions, Securities & Exchange Commission fees, fees of the Custodian (see,
"the Custodian" herein), auditing and legal expenses and 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 for printing and mailing prospectuses and shareholder reports
to existing shareholders and expenses of shareholders' meetings.
Under the Administrative Service Agreement, SM&R is paid a monthly service fee
of 1/48th of 1% per month (1/4 of 1% per annum) of the Fund's average daily net
assets. Such monthly fee is allocated among the Portfolios based on the
percentage of each Portfolios' respective net assets to the total net assets of
the Fund. For the periods ended December 31, 1993, 1994 and 1995, SM&R received
or accrued Administrative Service Fees from each Portfolio as follows: Growth
Portfolio $6,380, $7,169 and $9,573, Managed Portfolio $6,350, $6,870
46
<PAGE>
and $8,482, Balanced Portfolio $6,163, $6,525 and $7,511, and Money Market
Portfolio $5,428, $5,608 and $5,886, respectively.
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 management fee, in excess of 1.50% per
year of the Fund's average daily net assets. SM&R has agreed to continue its
undertaking to reimburse the Growth Portfolio and the Money Market Portfolio for
expenses in excess of 0.87%; the Balanced Portfolio for expenses in excess of
0.90% and the Managed Portfolio for expenses in excess of 0.93%, of each of such
Portfolio's average daily net assets. Fee waivers and/or reductions, other than
those stated in the Administrative Service Agreement, may be rescinded by SM&R
at any time without notice to investors. Such reimbursement obligation is
more restrictive than required by California, the only State having an expense
reimbursement provision applicable to the Fund. Such reimbursements, when
required, will be made monthly.
For the years ended December 31, 1995 and 1994, expense reimbursements made to
each Portfolio were: Growth Portfolio $16,798 and $6,585; Managed Portfolio
$10,885 and $7,007; and Balanced Portfolio $14,016 and $7,635, respectively.
Expenses reimbursements made to the Money Market Portfolio were $8,001, $5,286
and $4,367 for the years ended December 31, 1995, 1994 and 1992, respectively.
Each daily charge for the fees is divided among each of the Portfolio in
proportion to their net assets on that day.
The Advisory Agreement is effective on and after September 1 in each year but it
continues 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 each of the Fund's
Portfolios, and, in either case, by the specific approval of a majority of
directors who are not parties to the Advisory Agreement or "interested persons"
(as defined in the 1940 Act, as amended) of any such parties, cast in person at
a meeting called for the purpose of voting on such approval. The Advisory
Agreement was approved by the shareholders of each Portfolio in accordance with
such procedures on April 1, 1992. 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 each of the Fund's Portfolios,
or by SM&R, upon sixty (60) days' written notice and will automatically
terminate if assigned (as provided in the 1940 Act, as amended).
SM&R has entered into a Service Agreement with American National pursuant to
which American National will furnish certain services and facilities required by
SM&R from time to time for the conduct of its business. Such services will not
include investment advice or personnel. SM&R will reimburse American National
for the costs of such services.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
Purchases and sales of portfolio securities usually will be secondary
transactions. Portfolio securities normally will be purchased from an
underwriter or market maker for the securities. Purchases from underwriters of
portfolio securities will include a commission or concession paid by the issuer
to the
47
<PAGE>
underwriter, and purchases from dealers serving as market makers will include
the spread between the bid and asked price. While SM&R generally seeks
competitive spreads or commissions, the Fund will not necessarily be paying the
lowest spread or commission available on each transaction.
Allocation of transactions, including their frequency, to various dealers is
determined by SM&R in its best judgment and in a manner deemed fair to the
Fund's shareholders. The primary consideration is prompt execution of orders in
an effective manner at the most favorable price. Subject to this consideration,
dealers who provide supplemental statistical and research services to SM&R may
receive orders for transactions by the Fund. Such supplemental services include
advice as to the advisability of investing in, purchasing or selling securities,
as well as analyses and reports concerning securities, economic factors and
trends. Information so received will supplement but will not replace that to be
provided by SM&R, and SM&R's fees are not reduced as a consequence of the
receipt of such supplemental information. Such information may be useful to
SM&R in serving both the Fund, the American National Funds Group and the SM&R
Capital Funds, Inc. and conversely, supplement all information obtained by the
placement of business of the American National Funds Group and the SM&R Capital
Funds, Inc. may be useful to SM&R in carrying out its obligations to the Fund.
The Fund will make no commitment to allocate portfolio transactions upon any
prescribed basis. While SM&R is primarily responsible for the allocation of the
Fund's brokerage business, the policies and practices in this regard must be
consistent with the foregoing and will at all times be subject to review by the
Fund's Board of Directors.
Brokerage fees paid by the Fund on the purchase and sale of portfolio securities
for the periods ended December 31, 1993, 1994 and 1995 totaled $11,132, $8,555
and $11,599, respectively. No brokerage commissions have been paid during the
Fund's most recent period 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 American National Funds Group 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 American National Funds Group 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 One Hundred Million
(100,000,000) shares of common stock, par value of $.01 per share issuable in
separate portfolios. Currently, four such portfolios have been established:
Growth Portfolio, Money Market Portfolio, Balanced Portfolio and Managed
Portfolio.
Prior to the Fund's offering of any shares to the Separate Accounts, SM&R
provided the Fund with initial capital by purchasing 100,000 shares of each
Portfolio at a purchase price of $1.00 per share. In addition, American National
purchased 1,750,000 shares of each Portfolio at a price of $1.00 per share. Such
shares were acquired by American National in connection with the formation of
the
48
<PAGE>
Fund, were acquired for investment and can be disposed of only by redemption.
Both SM&R's and American National's shares will be redeemed only when permitted
by the Investment Company Act of 1940 and when the other assets of the Portfolio
are large enough that such redemption will not have a material adverse effect
upon investment performance. SM&R and American National will vote their shares
in the same manner and in the same proportion as the other shares held in the
Separate Accounts are voted. The Fund will offer all other shares only to the
Separate Accounts.
The assets received by the Fund for the issuance or sale of shares of each
Portfolio and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such Portfolio. They
constitute the underlying assets of each Portfolio, are required to be
segregated on the books of account and are to be charged with the expenses of
such Portfolio. Any general expenses not readily identifiable as belonging to a
particular Portfolio shall be allocated among all Portfolios by or under the
direction of the directors in such manner as the directors determine to be fair
and equitable.
All shares are non-assessable, fully transferable, and have one vote and equal
rights to share in dividends and assets. The shares possess no pre-preemptive
or conversion rights. Cumulative voting is not authorized. 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 choose to do so, and in such event, the
holders of the remaining shares will be unable to elect any directors.
As used herein, the term "majority" when referring to approval to be obtained
from shareholders means the vote of the lesser of (l) 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.
SALE, REDEMPTION AND PRICING OF SHARES
SALE AND REDEMPTION
Shares of each Portfolio are sold only to the corresponding subaccount of the
Accounts. Shares are sold and redeemed at their net asset value as next
determined following receipt of a net premium or a surrender request by the
Accounts without the addition of any selling commission or sales load or
redemption charge. The redemption price may be more or less than the
shareholder's cost.
The Fund's shares are also sold and redeemed as a result of transfer requests,
loans, loan repayments and similar Account transactions, in each case without
any sales load or commission and at the net asset value per share computed for
the day as of which such Account's transactions are effected.
PRICING OF SHARES
The net asset value per share of each Portfolio is determined by adding the
value of all Portfolio assets, deducting all Portfolio liabilities and dividing
by the number of outstanding shares of such Portfolio.
MONEY MARKET PORTFOLIO
All Money Market Portfolio securities are valued by the basis of the amortized
cost valuation technique. This involves valuing a security at its cost and,
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
instrument. During periods of declining interest rates, the daily yield on
shares of the Fund may tend to be higher than a like computation made by funds
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of amortized cost by the Fund resulted in a lower aggregate
portfolio value on a particular day, a prospective investor in the Fund would be
able to obtain a somewhat higher yield
49
<PAGE>
than would result from investment in a fund with identical investments utilizing
solely market values, and existing investors in a Fund would receive less
investment income. The converse would apply in a period of rising interest
rates.
The valuation of the Money Market Portfolio instruments based upon their
amortized cost is subject to the Portfolio's adherence to certain conditions
with respect to its operation. The Fund must maintain a dollar-weighted average
portfolio maturity for the Money Market Portfolio of 90 days or less, purchase
instruments having remaining maturities of one year or less only, and invest
only in securities determined by the directors to be of high quality with
minimal credit risks.
The Money Market Portfolio follows procedures established by the directors that
are designed to stabilize, to the extent reasonably possible, the Money Market
Portfolio price per share as computed for the purpose of sales and redemptions
at $1.00. There can be no assurance that the Money Market Portfolio will at all
times be able to maintain a continuous $1.00 net asset value per share.
Procedures to be followed will include review of the Money Market Portfolio's
holdings by the directors at such intervals as it may deem appropriate to
determine whether the Money Market Portfolio's net asset value calculated by
using available market quotations deviates from $1.00 per share and, if so,
whether such deviation may result in material dilution or is otherwise unfair to
existing shareholders. In the event the directors determine that such a
deviation exists, it must take such corrective action as it regards as necessary
and appropriate, including the sale of portfolio instruments prior to maturity
to realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends, or establishing a net asset value per share by using
available market quotations.
GROWTH, BALANCED AND MANAGED PORTFOLIO
The value of these Portfolio's securities is determined by one or more of the
following methods:
The securities traded on the New York Stock Exchange ("NYSE") or American Stock
Exchange ("ASE") are valued at the closing sale price on that day, or if there
were no sales during the day, at the last previous sale or bid price reported.
The securities which are not listed on the NYSE or ASE, but are listed on other
national securities exchanges, are valued in a manner similar to that described
in the preceding paragraph, using values reported by the principal exchange on
which the securities are traded, except that the prices are taken at the time
trading closes on the NYSE.
Over-The-Counter securities are valued at the bid prices.
Debt securities having maturities of 60 days or less are valued using the
amortized cost technique. Debt securities with maturities in excess of 60 days
are valued on the basis of prices provided by an independent pricing service or
brokers. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate, maturity and seasoning differential.
Securities in corporate short-term notes are valued at cost plus amortized
discount, which approximates market value. If no quotations are available,
securities and all other assets are valued in good faith at fair value, using
the methods determined by the directors on a consistent basis.
TAXES
SUBCHAPTER M OF THE INTERNAL REVENUE CODE OF 1986
Under the Tax Reform Act of 1986 ("TRA 1986") and the Internal Revenue Code of
1986 ("Code"), each Portfolio of the Fund must elect to be treated and qualify
as a regulated investment company ("RIC") under Subchapter M of the Code in
order to
50
<PAGE>
avoid double taxation of the Portfolio and its shareholders. Among the
requirements for qualification and treatment as a RIC are investment limitations
and diversification requirements that may effect the investments of each
Portfolio, and certain distribution requirements pertaining to net income.
In general, at least 90% of the gross income of each Portfolio for the taxable
year must be derived from dividends, interest and gains from the sale or other
disposition of securities, and less than 30% of its gross income for the taxable
year can be attributable to gains (without deductions for losses) from the sale
or other disposition of securities held for less than three months. TRA 1986
expanded the qualified sources of income for a RIC to include gains from
options, futures and forward contracts under certain circumstances, and special
tax issues arising in connection with the use of hedging instruments.
A RIC must distribute 90% of its ordinary income and net short-term capital
gains. Moreover, undistributed net income may be subject to tax at the RIC
level. TRA 1986 also subjects each Portfolio to a nondeductible 4% excise tax
to the extent it fails to distribute by the end of each calendar year at least
98% of ordinary income for the calendar year and 90% of capital gain net income
for the one-year period ending October 31 of such year, and certain other
amounts. For these purposes, if a RIC pays dividends before the end of January
of any year, they will be treated as paid in the preceding calendar year if the
dividends were declared in the preceding December and were payable to
shareholders of record on a date in December.
SECTION 817(H) OF THE CODE
Each Portfolio intends to comply with Section 817(h) of the Code and the
regulations issued thereunder. Pursuant to that Section, the only shareholders
of the Fund and its Portfolios will be SM&R, American National and the Account.
The prospectus that describes the variable insurance policies issued through the
Account provides additional discussion of the taxation of the Account and of the
owner of the variable insurance policy.
In addition, Section 817(h) of the Code and Treasury Department temporary
regulations thereunder impose certain diversification requirements on the
Account. These requirements, which are in addition to the diversification
requirements applicable to the Fund under Subchapter M and the Investment
Company Act of 1940, may affect the securities in which the Portfolios may
invest. The consequences of failure to meet the requirements of Section 817(h)
could result in taxation of the insurance company offering the variable
insurance policy and immediate taxation of the owner of the policy to the extent
of appreciation on investment under the policy.
The Secretary of the Treasury is expected to issue additional regulations that
will prescribe the circumstances in which a policyowner's control of the
investments of the Account may cause the policyowner, rather than American
National, to be treated as the owner of the assets of the Account.
The Fund may therefore find it necessary to take action to assure that the
variable insurance policies continue to qualify as a variable insurance policy
under federal tax laws. The Fund, for example, may be required to alter the
investment objectives of any Portfolio or substitute the shares of one Portfolio
for those of another. No such change of investment objectives or substitution
of securities will take place without notice to the shareholders of the affected
Portfolio and the approval of a majority of such shareholders and without prior
approval of the Securities and Exchange Commission, to the extent legally
required.
The preceding is a brief summary of some of the relevant tax considerations. It
is not intended as a complete explanation or a substitute for careful tax
planning and consultation with individual tax advisors.
CALCULATION OF YIELD QUOTATIONS OF THE MONEY MARKET PORTFOLIO
51
<PAGE>
The Money Market Portfolio will attempt, consistent with safety of principal, to
achieve the highest possible yield from its investments. The Money Market
Portfolio's yield is its current investment income expressed in annualized
terms. The yield is based on a specified seven-calendar-day-period. It is
computed by (1) determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of the period, (2) dividing the net change in account value by the
value of the account at the beginning of the base period to get the base period
return, then (3) multiplying the base period return by the dividend obtained by
dividing 365 by 7. The resulting yield figure is carried to the nearest
hundredth of one percent.
The Money Market Portfolio effective yield for a specified seven-calendar-day-
period is computed by (1) determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing account having a balance of
one share at the beginning of the period, (2) subtracting a hypothetical charge
reflecting deductions from shareholder accounts, (3) dividing the difference by
the value of the account at the beginning of the base period to get the base
period return, and then compounding the base period return by adding 1, raising
the sum to a power equal to 365 divided by 7 and subtracting 1 from the result
according to the following formula: EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)
365/7] - 1. The resulting yield figure is carried to the nearest hundredth of
one percent.
The calculations include (1) the value of additional shares declared as
dividends on the original share, and dividends declared on both the original
share and any such additional shares, and (2) all fees (other than nonrecurring
fees or sales charges) charged to all shareholder accounts, in proportion to the
length of the base period and the Money Market Portfolio's average account size.
The yield computation may be of limited use for comparative purposes as charges
at the Account level will decrease the yield.
The capital changes excluded from the calculation are realized capital gains and
losses from the sale of securities and unrealized appreciation and depreciation.
Current and compounded yields fluctuate daily and will vary with factors such as
interest rates, the quality and length of maturities, and the type of
investments in the Portfolio. Neither the principal nor the interest is insured.
OTHER INFORMATION CONCERNING THE FUND
CUSTODIAN
The cash and securities of the Fund are held by SM&R pursuant to a Custodian
Agreement dated August 1, 1995. 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-custodian agreement with Moody National Bank of
Galveston (the "Bank") effective August 1, 1995. 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.
TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
52
<PAGE>
SM&R is the transfer agent and dividend-disbursing agent for the Fund, the
American National Funds Group and the SM&R Capital Funds, Inc. SM&R, as transfer
agent, issues and redeems shares of the Fund and maintains records of ownership
for the shareholders.
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 77210, are the Fund's independent auditors and perform annual audits of
the Fund's financial statements.
FINANCIAL STATEMENTS
Audited financial statements dated December 31, 1995 are attached as Exhibit
"1".
53
<PAGE>
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
One Moody Plaza, Galveston, Texas 77550
- --------------------------------------------------------------------------------
DIRECTORS
Ernest S. Barratt, Ph.D.
Robert A. Fruend
Brent E. Masel, M.D.
Lea McLeod Matthews
Michael W. McCroskey
Louis E. Pauls, Jr.
Carl R. Robertson
OFFICERS
Michael W. McCroskey, President
Gordon D. Dixon, Vice President and
Portfolio Manager, Growth Portfolio
David Zimansky, Vice President and
Portfolio Manager, Managed Portfolio
William R. Berger, Vice President and
Portfolio Manager, Balanced Portfolio
Vera M. Young, Vice President and
Portfolio Manager, Money Market Portfolio
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
Moody National Bank
2302 Postoffice
Galveston, Texas 77550
LEGAL COUNSEL
Greer, Herz & Adams
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
700 Louisiana
Houston, Texas 77002
This Annual Report must be preceded or accompanied by a Prospectus of the
American National Investment Accounts, Inc.
<PAGE>
GROWTH PORTFOLIO
AMERICAN NATIONAL INVESTMENT ACCOUNTS, 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 on 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.
The Growth Portfolio 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
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN GROWTH PORTFOLIO AND S&P 500
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Growth Portfolio S&P 500
<S> <C> <C>
3/1/91 10,000 10,000
1991 11,659 13,055
1992 11,310 14,056
1993 12,113 15,461
1994 12,951 15,663
1995 16,494 21,516
AVERAGE ANNUAL RETURN
FROM INCEPTION 10.57%
1 YEAR 27.35%
</TABLE>
Past performance is not predictive of future performance.
Growth Portfolio's performance figures are historical and reflect
reinvestment of all dividends and capital gains distribution and changes in
net asset value. All performance figures are as of December 31 for the
applicable year. The Portfolio began operations March 1, 1991.
<PAGE>
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 GROWTH PORTFOLIO AND LIPPER ANALYTICAL
AVERAGE GROWTH FUND (LAST NINE QUARTERS)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lipper Analytical
Growth Portfolio Avg. Growth Fund
<S> <C> <C>
9/30/93 10,000 10,000
12/31/93 10,710 10,226
3/31/94 10,512 9,875
6/30/94 10,611 9,617
9/30/94 11,404 10,136
12/31/94 11,450 10,001
3/31/95 12,303 10,739
6/30/95 13,042 11,741
9/30/95 13,888 12,748
12/31/95 14,582 13,049
</TABLE>
Past performance is not predictive of future performance.
<PAGE>
MANAGED PORTFOLIO
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
The year ended December, 1995 was an exceptional year for equity investors. The
major stock market indexes earned solid positive gains in each of the year's
four quarters, and our fund was no exception. The Standard & Poor's Index and
the Dow Jones Industrial Average Index each produced returns of more than 30%,
or three times the long-term average return of 10% for common stocks as reported
by Ibbotson Associates.
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.
Within the Managed Portfolio, our best performing sectors were technology (our
holdings up an average of 67%), healthcare (our holdings were up an average of
63%) and finance (holdings up 58%). Conversely, our consumer cyclicals, consumer
staples, and energy holdings produced the lowest returns. The Portfolio's three
best stocks were Sun Microsystems (up 157%), Gardner Denver (up 90%) and United
Healthcare (up 68%).
The returns of the Managed Portfolio are notable in that we believe that many of
our shareholders wish to view the Portfolio as less risky than other types of
stock fund portfolios. The Managed Portfolio is invested in a portfolio of
stocks and convertible securities with a higher current dividend yield than the
stock market as a whole, so that a greater portion of the securities' total
return will be more assured in the form of income with capital appreciation
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN MANAGED PORTFOLIO AND S&P 500
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Managed Portfolio S&P 500
<S> <C> <C>
3/1/91 10,000 10,000
1991 11,526 13,055
1992 11,174 14,056
1993 12,400 15,461
1994 12,566 15,663
1995 16,002 21,516
AVERAGE ANNUAL RETURN
FROM INCEPTION 9.66%
1 YEAR 27.32%
</TABLE>
Past performance is not predictive of future performance.
Managed Portfolio's performance figures are historical and reflect reinvestment
of all dividends and capital gains distribution and changes in net asset value.
All performance figures are as of December 31 for the applicable year. The
Portfolio began operations March 1, 1991.
<PAGE>
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 Portfolio should avoid excessively speculative or overheated
issues in a volatile environment such as we experienced 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.
Our outlook for 1996 is for more moderate returns than experienced in 1995. The
United States economy appears sluggish, as are the economies of our major
trading partners in North America, Europe and Japan. Interest rates have been
falling around 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 Managed Portfolio remains well diversified among sectors. We are maintaining
our systematic and disciplined search for undervalued equities.
QUARTERLY COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN MANAGED PORTFOLIO AND LIPPER ANALYTICAL
AVERAGE EQUITY INCOME FUND (LAST NINE QUARTERS)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lipper Analytical
Managed Portfolio Equity Income Fund
<S> <C> <C>
9/30/93 10,000 10,000
12/31/93 10,404 10,126
3/31/94 10,216 9,752
6/30/94 10,029 9,764
9/30/94 10,591 10,145
12/31/94 10,544 9,885
3/31/95 11,476 10,615
6/30/95 12,298 11,317
9/30/95 13,012 12,136
12/31/95 13,425 12,827
</TABLE>
Past performance is not predictive of future performance
<PAGE>
BALANCED PORTFOLIO
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
1995 was a remarkable year for both the stock and bond markets and the Balanced
Portfolio participated in the good fortune. For the year the Portfolio produced
a total rate of return of 23.2% scoring positive returns in all four quarters of
1995. After outperforming the Lipper Balanced Fund Index in 1994's weak markets,
the Balanced Portfolio lagged the Lipper Benchmark by 1.4 percentage points in
1995's strong market environment. Total return is the change in value of an
investment in the Portfolio over a given period, assuming reinvestment of any
dividends and capital gains.
Within the financial markets, stocks produced returns of more than 30% in 1995
(37.4% for the Standard & 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 CHANGE IN VALUE OF $10,000
INVESTMENT IN BALANCED PORTFOLIO, S&P 500 AND
LEHMAN INTERMEDIATE GOVT/CORP. INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Intermediate
Balanced Portfolio S&P 500 Govt/Corp. Index
<S> <C> <C> <C>
3/1/91 10,000 10,000 10,000
1991 11,829 13,055 11,462
1992 11,620 14,056 12,284
1993 12,152 15,461 13,365
1994 12,171 15,663 13,107
1995 14,662 21,516 15,116
AVERAGE ANNUAL RETURN
FROM INCEPTION 8.05%
1 YEAR 20.45%
</TABLE>
Past performance is not predictive of future performance.
Balanced Portfolio's performance figures are historical and reflect reinvestment
of all dividends and capital gains distribution and changes in net asset value.
All performance figures are as of December 31 for the applicable year. The
Portfolio began operations March 1, 1991.
<PAGE>
Within the Balanced Portfolio, our best performing sectors were healthcare (with
our holdings up an average of 55% for the year), finance (up 51%) and
technology, (up 43%). On the flip side, our consumer cyclicals, transportation,
and energy holdings produced the lowest returns. Our overweighted position in
healthcare benefited the Portfolio while our underweightings in the strong
performing finance and utilities sectors proved costly. The Portfolio'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. treasury and agency issues. The 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 Balanced Portfolio remains well diversified, with about 57% in equities, 30%
in bonds and 13% in cash. We are maintaining our systematic and disciplined
search for undervalued equities and a focus on high quality, intermediate term
bonds.
We appreciate the confidence you have placed in us with your investment in the
Balanced Portfolio.
QUARTERLY COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN BALANCED PORTFOLIO AND LIPPER ANALYTICAL
AVERAGE BALANCED FUND (LAST NINE QUARTERS)
<TABLE>
<CAPTION>
Lipper Analytical Avg.
Balanced Portfolio Balanced Fund
<S> <C> <C>
9/30/93 10,000 10,000
12/31/93 10,266 10,119
3/31/94 9,879 9,791
6/30/94 9,975 9,679
9/30/94 10,363 9,972
12/31/94 10,282 9,862
3/31/95 10,772 10,463
6/30/95 11,464 11,206
9/30/95 11,948 11,826
12/31/95 12,386 12,326
</TABLE>
Past performance is not predictive of future performance.
7
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
GROWTH PORTFOLIO
COMMON STOCK
SHARES VALUE
APPAREL, TEXTILE--1.01%
Guilford Mills, Incorporated 1,400 $ 28,525
Phillips-Van Heusen Corporation 2,000 19,750
----------
48,275
AUTO TRUCK & PARTS MANUFACTURER--3.03%
Arvin Industries, Incorporated 1,500 24,750
Chrysler Corporation 400 22,150
Eaton Corporation 800 42,900
Ford Motor Company 800 23,200
General Motors Corporation 600 31,725
----------
144,725
BANKS--2.47%
Comerica, Incorporated 900 36,113
Morgan (J.P.) & Company 500 40,125
NationsBank Corporation 600 41,775
----------
118,013
BEVERAGES--2.80%
Anheuser-Busch Companies, Incorporated 1,000 66,875
Cott Corporation 2,000 11,000
PepsiCo, Incorporated 1,000 55,875
----------
133,750
BUILDING CONSTRUCTION & SUPPLIES--2.59%
Fluor Corporation 800 52,800
Foster Wheeler Corporation 1,000 42,500
Giant Cement Holding, Incorporated* 2,500 28,750
----------
124,050
CHEMICALS--4.85%
Cabot Corporation 400 21,550
Du Pont (E.I.) de Nemours & Company 600 41,925
Ethyl Corporation 2,000 25,000
The Geon Company 1,200 29,250
Lyondell Petrochemical Company 400 9,150
Monsanto Company 700 85,750
Occidental Petroleum Corporation 900 19,237
----------
231,862
COAL, GAS, PIPE--1.84%
Sonat, Incorporated 1,500 53,438
Tenneco, Incorporated 700 34,737
----------
88,175
COMPUTER SOFTWARE & SERVICES--4.52%
Bay Networks, Incorporated* 750 30,844
BMC Software, Incorporated* 800 34,200
General Motors Corporation (Class E) 1,000 52,000
Microtest, Incorporated* 1,300 13,000
Newbridge Networks Corporation* 300 12,413
Sequent Computer Systems, Incorporated* 2,000 29,000
Western Digital Corporation* 2,500 44,688
----------
216,145
DRUGS--8.95%
Abbott Laboratories 1,000 $ 41,750
Bristol-Myers Squibb Company 1,000 85,875
Merck & Company, Incorporated 1,000 65,750
Pfizer, Incorporated 1,600 100,800
Schering Plough Corporation 1,200 65,700
Warner Lambert Company 700 67,987
----------
427,862
ELECTRONICS--4.30%
General Electric Company 1,200 86,400
General Signal Corporation 1,400 45,325
Motorola, Incorporated 1,300 74,100
----------
205,825
ENVIRONMENTAL--2.43%
Wheelabrator Technologies, Incorporated 3,000 50,250
WMX Technologies, Incorporated 2,200 65,725
----------
115,975
EXPLORATION & DRILLING--1.11%
Noble Affiliates, Incorporated 1,000 29,875
Union Texas Petroleum Holdings,
Incorporated 1,200 23,250
----------
53,125
FOOD PRODUCERS & RETAILERS--4.31%
Albertson's, Incorporated 1,300 42,738
Hudson Foods, Incorporated (Class A) 3,000 51,750
McCormick & Company, Incorporated 1,300 31,362
Universal Foods Corporation 2,000 80,250
----------
206,100
HOSPITAL SUPPLIES & SERVICES--5.67%
Ornda Healthcorp* 2,000 46,500
Pacificare Health Systems, Incorporated* 500 43,500
Tenet Healthcare Corporation 4,000 83,000
United Healthcare Corporation 1,500 98,250
----------
271,250
HOUSEHOLD FURNITURE/APPLIANCES--2.50%
Masco Corporation 1,000 31,375
The Singer Company N.V. 2,200 61,325
Whirlpool Corporation 500 26,625
----------
119,325
INSURANCE--1.81%
American Re Corporation 1,100 44,963
The Paul Revere Corporation 2,000 41,500
----------
86,463
MEDICAL SUPPLIES & SERVICES--1.12%
Johnson & Johnson 200 17,125
Mallinckrodt Group, Incorporated 1,000 36,375
----------
53,500
See notes to financial statements.
8
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
GROWTH PORTFOLIO, continued
COMMON STOCK
SHARES VALUE
METALS & MINING--1.93%
Cyprus Amax Minerals Company 1,000 $ 26,125
Huntco, Incorporated (Class A) 1,200 18,450
J&L Specialty Steel, Incorporated 800 15,000
Quanex Corporation 800 15,500
Reynolds Metals Company 300 16,987
----------
92,062
MISCELLANEOUS--3.99%
Commercial Metals Company 600 14,850
Dean Witter Discover and Company 400 18,800
Disney (Walt) Company 500 29,500
Gannett Company, Incorporated 300 18,413
Procter & Gamble Company 600 49,800
Sturm, Ruger & Company, Incorporated 700 19,162
UST, Incorporated 1,200 40,050
----------
190,575
OFFICE EQUIPMENT/SERVICES--3.65%
COMPAQ Computer Corporation* 500 24,000
Hewlett-Packard Company 600 50,250
Sun Microsystems, Incorporated* 800 36,500
Tandem Computers, Incorporated* 6,000 63,750
----------
174,500
OIL DOMESTIC & INTERNATIONAL--6.45%
Amoco Corporation 1,000 71,875
Ashland Oil, Incorporated 1,400 49,175
Chevron Corporation 1,000 52,500
Societe Nationale Elf Aquitaine 1,300 47,775
Unocal Corporation 3,000 87,375
----------
308,700
PAPER/FOREST PRODUCTS--1.81%
Louisiana-Pacific Corporation 1,000 24,250
Mead Corporation 700 36,575
Potlatch Corporation 200 8,000
Temple-Inland, Incorporated 400 17,650
----------
86,475
RAILROADS--2.03%
Burlington Northern, Incorporated 400 31,200
Union Pacific Corporation 1,000 66,000
----------
97,200
RETAIL DISCOUNT/SPECIALTY--1.07%
Price/Costco, Incorporated* 2,500 38,125
Toys "R" Us, Incorporated* 600 13,050
----------
51,175
SEMICONDUCTORS--1.57%
Advanced Micro Devices, Incorporated 1,300 $ 21,450
Avnet, Incorporated 1,200 53,700
----------
75,150
TELECOMMUNICATIONS--2.19%
AT&T Company 1,300 84,175
VTEL Corporation* 1,100 20,350
----------
104,525
TRANSPORT, TRUCKING & SHIPPING--0.98%
Arnold Industries, Incorporation 600 10,425
Covenant Transport, Incorporation
(Class A)* 700 8,400
Greenbrier Companies, Incorporated 1,500 18,187
TNT Freightways Corporation 500 10,063
----------
47,075
UTILITY--ELECTRIC/TELEPHONE--1.48%
Telefonos de Mexico (Class L) ADR 500 15,937
US West, Incorporated 1,000 35,750
US West Media Group, Incorporated* 1,000 19,000
----------
70,687
----------
TOTAL COMMON STOCK--82.46%
(Cost $3,250,915) 3,942,544
----------
FACE
AMOUNT
COMMERCIAL PAPER
ELECTRIC UTILITIES--16.71%
Boston Gas Company, 6.00%, 01/19/96 $100,000 99,700
Commonwealth Edison Company, 5.95%,
1/10/96 200,000 199,702
Detroit Edison Company, 6.20%, 01/02/96 135,000 134,977
Pacific Gas and Electric Company,
6.00%, 01//08/96 180,000 179,790
Pennsylvania Power and Light Company,
5.95%, 01/05/96 185,000 184,878
----------
TOTAL COMMERCIAL PAPER--16.71%
(Cost $799,047) 799,047
----------
TOTAL INVESTMENTS--99.17%
(Cost $4,049,962) 4,741,591
CASH AND OTHER ASSETS, LESS LIABILITIES--0.83% 39,584
----------
NET ASSETS--100% $4,781,175
==========
ABBREVIATIONS
ADR--American Depository Receipt
*--Non-income producing securities
See notes to financial statements.
9
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
MANAGED PORTFOLIO
COMMON STOCK
SHARES VALUE
AUTO TRUCK & PARTS MANUFACTURER--1.66%
Arvin Industries, Incorporated 800 $ 13,200
Eaton Corporation 1,000 53,625
----------
66,825
BANKS--8.51%
Comerica, Incorporated 2,000 80,250
Fleet Financial Group, Incorporated 1,784 72,698
Morgan (J.P.) & Company 1,500 120,375
NationsBank Corporation 1,000 69,625
----------
342,948
CHEMICALS--3.87%
Ethyl Corporation 3,000 37,500
The Geon Company 2,000 48,750
Mississippi Chemical Corporation 3,000 69,750
----------
156,000
COAL, GAS, PIPE--2.56%
Sonat, Incorporated 1,500 53,438
Tenneco, Incorporated 1,000 49,625
----------
103,063
DRUGS--5.83%
Abbott Laboratories 3,000 125,250
Schering-Plough Corporation 2,000 109,500
----------
234,750
ELECTRONICS--10.34%
Emerson Electric Company 500 40,875
General Electric Company 1,600 115,200
General Signal Corporation 2,000 64,750
Honeywell, Incorporated 2,500 121,562
Motorola, Incorporated 1,300 74,100
----------
416,487
FOODS PRODUCERS & RETAILERS--2.42%
Albertson's, Incorporated 1,500 49,313
McCormick & Company, Incorporated 2,000 48,250
----------
97,563
HOSPITAL SUPPLIES & SERVICES--5.77%
Columbia/HCA Healthcare Corporation 2,000 101,500
United Healthcare Corporation 2,000 131,000
----------
232,500
HOUSEHOLD FURNITURE/APPLIANCES--2.24%
La-Z Boy Chair Company 1,200 37,050
Whirlpool Corporation 1,000 53,250
----------
90,300
MISCELLANEOUS--12.56%
Ball Corporation 3,000 $ 82,500
Cooper Industries, Incorporated 1,000 36,750
Cyprus Amax Minerals Company 2,000 52,250
Dean Witter Discover and Company 200 9,400
Foster Wheeler Corporation 2,000 85,000
Guilford Mills, Incorporated 1,000 20,375
Sturm, Ruger & Company, Incorporated 1,000 27,375
Union Pacific Corporation 1,000 66,000
UST, Incorporated 2,000 66,750
WMX Technologies, Incorporated 2,000 59,750
----------
506,150
OFFICE EQUIPMENT/SERVICES--4.29%
Sun Microsystems, Incorporated* 3,000 136,875
Tandem Computers, Incorporated* 3,400 36,125
----------
173,000
OIL DOMESTIC & INTERNATIONAL--4.31%
Societe Nationale Elf Aquitaine 1,000 36,750
Texaco, Incorporated 1,000 78,500
Unocal Corporation 2,000 58,250
----------
173,500
PAPER/FOREST PRODUCTS--2.05%
Mead Corporation 1,000 52,250
Weyerhaeuser Company 700 30,275
----------
82,525
REAL ESTATE/REITS--1.38%
CenterPoint Properties Corporation 1,800 41,625
Highwood Properties, Incorporated 500 14,125
----------
55,750
RETAIL DISCOUNT/SPECIALTY--1.86%
Kmart, Corporation 4,000 29,000
Price/Costco, Incorporated* 3,000 45,750
----------
74,750
SEMICONDUCTORS--3.19%
Advanced Micro Devices, Incorporated 1,000 16,500
Avnet, Incorporated 2,500 111,875
----------
128,375
TRUCKING & SHIPPING--0.93%
Arnold Industries, Incorporated 1,000 17,375
TNT Freightways Corporation 1,000 20,125
----------
37,500
See notes to financial statements.
10
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
MANAGED PORTFOLIO, continued
COMMON STOCK
SHARES VALUE
UTILITY ELECTRIC/GAS/TELEPHONE--4.17%
The Detroit Edison Company 2,000 $ 69,000
GTE Corporation 1,000 44,000
US West, Incorporated 1,000 35,750
US West Media Group, Incorporated* 1,000 19,000
----------
167,750
----------
TOTAL COMMON STOCK--77.94%
(Cost $2,587,967) 3,139,736
----------
PREFERRED STOCK
AUTO & TRUCK MANUFACTURER--2.82%
Ford Motor Company (Convertible) 1,200 113,700
OIL--1.17%
Ashland Oil, Incorporated (Convertible) 800 47,100
----------
TOTAL PREFERRED STOCK--3.99%
(Cost $140,637) 160,800
----------
FACE
AMOUNT VALUE
COMMERCIAL PAPER
ELECTRIC UTILITIES--10.72%
Detroit Edison Company, 6.20%, 01/02/96 $137,000 $ 136,976
Kentucky Power Company, 5.90%, 01/04/96 101,000 100,950
Pennsylvania Power and Light Company,
5.95%, 01/05/96 194,000 193,872
----------
431,798
FOODS--4.73%
Conagra, Incorporated, 6.20%, 01/18/96 191,000 190,441
----------
TOTAL COMMERCIAL PAPER--15.45%
(Cost $622,239) 622,239
----------
TOTAL INVESTMENTS--97.38%
(Cost $3,350,843) 3,922,775
CASH AND OTHER ASSETS, LESS LIABILITIES--2.62% 105,668
----------
NET ASSETS--100.00% $4,028,443
==========
ABBREVIATIONS
ADR--American Depository Receipt
*--Non-income producing security
See notes to financial statements.
11
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
BALANCED PORTFOLIO
COMMON STOCK
SHARES VALUE
AUTO TRUCK & PARTS MANUFACTURER--2.20%
Arvin Industries, Incorporated 900 $ 14,850
Chrysler Corporation 200 11,075
Eaton Corporation 300 16,088
Ford Motor Company 400 11,600
General Motors Corporation 400 21,150
----------
74,763
BANKS--3.09%
Comerica, Incorporated 600 24,075
Morgan (J.P.) & Company 500 40,125
NationsBank Corporation 300 20,888
Norwest Corporation 600 19,800
----------
104,888
BEVERAGES--1.61%
Cott Corporation 800 4,400
PepsiCo, Incorporated 900 50,287
----------
54,687
BUILDING CONSTRUCTION & SUPPLIES--3.17%
Fluor Corporation 800 52,800
Foster Wheeler Corporation 500 21,250
Giant Cement Holding, Incorporated* 1,000 11,500
Granite Construction, Incorporated 700 22,050
----------
107,600
CHEMICALS--3.12%
Cabot Corporation 300 16,162
Du Pont (E.I.) de Nemours & Company 500 34,938
Ethyl Corporation 1,000 12,500
The Geon Company 300 7,312
Mississippi Chemical Corporation 600 13,950
Occidental Petroleum Corporation 1,000 21,375
----------
106,237
COAL, GAS, PIPE--1.11%
Sonat, Incorporated 500 17,813
Tenneco, Incorporated 400 19,850
----------
37,663
COMPUTER SOFTWARE & SERVICES--2.28%
Bay Networks, Incorporated* 420 17,273
BMC Software, Incorporated* 200 8,550
General Motors Corporation (Class E) 500 26,000
Sequent Computer Systems, Incorporated* 900 13,050
Western Digital Corporation* 700 12,512
----------
77,385
DRUGS--8.13%
Abbott Laboratories 1,100 45,925
Amgen, Incorporated* 400 23,750
Bristol-Myers Squibb Company 400 34,350
Pfizer, Incorporated 1,000 63,000
Schering Plough Corporation 2,000 109,500
----------
276,525
ELECTRONICS--1.07%
General Signal Corporation 600 19,425
Motorola, Incorporated 300 17,100
----------
36,525
ENVIRONMENTAL--2.48%
Wheelabrator Technologies, Incorporated 1,100 $ 18,425
WMX Technologies, Incorporated 2,200 65,725
----------
84,150
EXPLORATION & DRILLING--0.49%
Noble Affiliates, Incorporated 300 8,963
Union Texas Petroleum Holdings,
Incorporated 400 7,750
----------
16,713
FOOD PRODUCERS & RETAILERS--2.21%
Albertson's, Incorporated 600 19,725
Hudson Foods, Incorporated (Class A) 600 10,350
Ralston Purina Company 400 24,950
Universal Foods Corporation 500 20,062
----------
75,087
HOSPITAL SUPPLIES & SERVICES--1.89%
Columbia/HCA Healthcare Corporation 200 10,150
Ornda Healthcorp* 500 11,625
Pacificare Health Systems, Incorporated* 100 8,700
Tenet Healthcare Corporation 1,000 20,750
United Healthcare Corporaton 200 13,100
----------
64,325
HOUSEHOLD FURNITURE/APPLIANCES--1.41%
Armstrong World Industries, Incorporated 200 12,400
La-Z Boy Chair Company 300 9,263
Masco Corporation 300 9,412
The Singer Company N.V. 600 16,725
----------
47,800
MEDIA--1.00%
Disney (Walt) Company 500 29,500
Grupo Televisa S.A 200 4,500
----------
34,000
MISCELLANEOUS--8.21%
AT&T Company 600 38,850
Cooper Industries, Incorporated 600 22,050
Cypress Amax Minerals Company 500 13,062
Dean Witter Discover and Company 200 9,400
The Dun & Bradstreet Corporation 500 32,375
Eastman Kodak Company 300 20,100
Guilford Mills, Incorporated 800 16,300
Johnson & Johnson 300 25,688
Procter & Gamble Company 600 49,800
Sturm, Ruger & Company, Incorporated 300 8,212
Union Pacific Corporation 300 19,800
UST, Incorporated 700 23,363
----------
279,000
OFFICE EQUIPMENT/SERVICES--2.23%
Hewlett-Packard Company 400 33,500
Sun Microsystems, Incorporated* 600 27,375
Tandem Computers, Incorporated* 1,400 14,875
----------
75,750
See notes to financial statements.
12
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
BALANCED PORTFOLIO, continued
COMMON STOCK
SHARES VALUE
OIL DOMESTIC & INTERNATIONAL--3.22%
Amoco Corporation 200 $ 14,375
Ashland Oil, Incorporated 500 17,563
Chevron Corporation 600 31,500
Societe Nationale Elf Aquitaine 700 25,725
Unocal Corporation 700 20,387
----------
109,550
PAPER/FOREST PRODUCTS--1.27%
Louisiana-Pacific Corporation 600 14,550
Mead Corporation 300 15,675
Weyerhaeuser Company 300 12,975
----------
43,200
REAL ESTATE/REITS--0.94%
Health & Rehabilitation Properties Trust 1,100 17,875
Highwood Properties, Incorporated 500 14,125
----------
32,000
RETAIL DISCOUNT/GENERAL/SPECIALTY--1.89%
The Gap, Incorporated 800 33,600
Price/Costco, Incorporated* 1,000 15,250
Toys "R" Us, Incorporated* 700 15,225
----------
64,075
SEMICONDUCTORS--1.51%
Advanced Micro Devices, Incorporated 400 6,600
Avnet, Incorporated 1,000 44,750
----------
51,350
TRANSPORT, TRUCKING & SHIPPING--1.03%
Arnold Industries, Incorporated 300 5,213
Covenant Transport, Incorporated
(Class A)* 800 9,600
Greenbrier Companies, Incorporated 700 8,487
TNT Freightways, Corporation 300 6,038
Transportacion Maritima Mexicana S.A de
C.V.* 700 5,862
----------
35,200
UTILITY ELECTRIC/GAS/TELEPHONE--3.00%
GTE Corporation 500 22,000
PacifiCorp 400 8,500
Public Service Enterprise Group,
Incorporated 300 9,187
Telefonos de Mexico (Class L) ADR 300 9,562
United Illuminating Company 300 11,213
US West, Incorporated 600 21,450
US West Media Group, Incorporated* 600 11,400
Washington Water Power Company 500 8,750
----------
102,062
----------
TOTAL COMMON STOCK--58.56%
(Cost $1,575,785) 1,990,535
----------
PREFERRED STOCK
COAL, GAS, PIPE--0.41%
Western Gas Resources, Incorporated
(Convertible) 400 $ 14,000
----------
TOTAL PREFERRED STOCK --41%
(Cost $19,754) 14,000
----------
BONDS AND NOTES FACE AMOUNT
FEDERAL AGENCIES--25.46%
Federal Home Loan Mortgage Corporation,
5.74%, 09/17/03 $100,000 97,382
Federal Home Loan Mortgage Corporation,
7.83%, 04/13/05 150,000 160,382
Federal Home Loan Mortgage Corporation,
Pool #540341, 9.00%, 09/01/19 8,513 8,921
Federal Home Loan Mortgage Corporation,
Pool #360100, 9.00%, 04/01/20 51,821 54,299
Federal National Mortgage Association,
7.55%, 04/22/02 50,000 54,698
Federal National Mortgage Association,
5.78%, 09/17/03 100,000 97,625
Federal National Mortgage Association,
7.65%, 04/29/04 80,000 81,790
Federal National Mortgage Association,
7.55%, 06/10/04 250,000 261,470
Federal National Mortgage Association,
7.95%, 11/25/19 47,989 48,758
----------
865,325
U.S. TREASURY SECURITIES--4.51%
U S Treasury Note, 5.875%, 02/15/04 150,000 153,237
----------
TOTAL BONDS AND NOTES--29.97%
(Cost $966,936) 1,018,562
----------
COMMERCIAL PAPER
ELECTRIC UTILITIES--9.91%
Commonwealth Edison Company, 5.95%,
01/10/96 $169,000 168,749
Detroit Edison Company, 6.20%, 01/02/96 168,000 167,971
----------
TOTAL COMMERCIAL PAPER - 9.91% (Cost $336,720) 336,720
----------
TOTAL INVESTMENTS--98.85%
(Cost $2,899,195) 3,359,817
CASH AND OTHER ASSETS, LESS LIABILITIES--1.15% 39,011
----------
NET ASSETS--100.00% $3,398,828
==========
ABBREVIATIONS
ADR--American Depository Receipt
*--Non-income producing securities
See notes to financial statements.
13
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1995
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
STATED RATE(%) MATURITY DATE FACE AMOUNT VALUE
<S> <C> <C> <C> <C>
FEDERAL AGENCIES--
Federal Home Loan Banks 5.64% 01/03/96 $500,000 $ 499,843
Federal National Mortgage Association 5.64% 01/08/96 435,000 434,523
Federal Farm Credit Banks 5.45% 01/11/96 100,000 99,849
Federal National Mortgage Association 5.47% 01/17/96 400,000 399,027
Federal National Mortgage Association 5.46% 01/26/96 450,000 448,294
Federal Farm Credit Banks 5.43% 02/01/96 500,000 497,662
---------
TOTAL FEDERAL AGENCIES--99.22%
(COST $2,379,198) 2,379,198
CASH AND OTHER ASSETS, LESS LIABILITIES--0.78% 18,810
----------
NET ASSETS--100.00% $2,398,008
==========
See notes to financial statements.
</TABLE>
14
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1995
<TABLE>
<CAPTION>
GROWTH MANAGED BALANCED MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
ASSETS
Investments, at value $4,741,591 $3,922,775 $3,359,817 $2,379,198
Cash and cash equivalents 30,751 100,549 15,556 21,050
Receivable for:
Dividends 6,057 8,898 3,902 --
Interest 107 235 14,661 274
Other assets 7,956 2,664 9,322 1,280
---------- ---------- ---------- ----------
TOTAL ASSETS 4,786,462 4,035,121 3,403,258 2,401,802
LIABILITIES
Payable for:
Investment advisory fee 1,995 1,668 1,431 1,013
Service fee 997 834 716 506
Other liabilities 2,295 4,176 2,283 2,275
---------- ---------- ---------- -----------
TOTAL LIABILITIES 5,287 6,678 4,430 3,794
---------- ---------- ---------- -----------
Net assets at value $4,781,175 $4,028,443 $3,398,828 $2,398,008
========== ========== ========== ==========
Shares outstanding 3,774,720 3,325,669 2,869,276 2,398,008
========== ========== ========== ==========
Net asset value per share $1.27 $1.21 $1.18 $1.00
========== ========== ========== ==========
</TABLE>
STATEMENTS OF OPERATIONS Year Ended December 31, 1995
<TABLE>
<CAPTION>
GROWTH MANAGED BALANCED MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 77,465 $ 83,620 $ 44,438 $ --
Interest 32,665 35,442 78,699 138,778
-------- -------- -------- --------
TOTAL INVESTMENT INCOME 110,130 119,062 123,137 138,778
EXPENSES
Investment advisory fee 19,146 16,964 15,022 11,773
Service fee 9,573 8,482 7,511 5,886
Directors' fees and expenses 3,592 3,592 3,592 3,592
Custodian fees 15,052 10,508 11,829 3,767
Audit fees 2,875 2,875 2,875 2,875
Other 253 213 363 679
-------- -------- -------- --------
TOTAL EXPENSES 50,491 42,634 41,192 28,572
LESS EXPENSES REIMBURSED 16,798 10,885 14,016 8,001
-------- -------- -------- --------
NET EXPENSES 33,693 31,749 27,176 20,571
-------- -------- -------- --------
NET INVESTMENT INCOME 76,437 87,313 95,961 118,207
-------- -------- -------- --------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments 189,881 128,339 21,195 --
Net unrealized appreciation of
investments during the year 652,742 596,564 494,465 --
-------- -------- --------- --------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 842,623 724,903 515,660 --
-------- -------- -------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $919,060 $812,216 $611,621 $118,207
======== ======== ======== ========
</TABLE>
See notes to financial statements.
15
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
GROWTH PORTFOLIO
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
---------- ---------
OPERATIONS
Net investment income $ 76,437 $ 58,409
Net realized gain on investments 189,881 290,171
Net unrealized appreciation
(depreciation) of investments during
the year 652,742 (151,989)
---------- ----------
Net increase in net assets resulting
from operations 919,060 196,591
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (79,425) (55,370)
Capital gains distributions (154,556) (247,827)
---------- ----------
Total distributions to shareholders (233,981) (303,197)
CAPITAL SHARE TRANSACTIONS
Increase in net assets from capital
share transactions 1,059,018 396,121
---------- -----------
NET INCREASE IN NET ASSETS 1,744,097 289,515
TOTAL NET ASSETS
Beginning of year 3,037,078 2,747,563
---------- ----------
End of year $4,781,175 $3,037,078
========== ==========
MANAGED PORTFOLIO
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994
--------- ---------
OPERATIONS
Net investment income $ 87,313 $ 64,930
Net realized gain on investments 128,339 217,579
Net unrealized appreciation
(depreciation) of investments during
the year 596,564 (252,051)
---------- ----------
Net increase in net assets resulting
from operations 812,216 30,458
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (88,756) (63,164)
Capital gains distributions (101,791) (245,179)
---------- ----------
Total distributions to shareholders (190,547) (308,343)
CAPITAL SHARE TRANSACTIONS
Increase in net assets from capital
share transactions 611,814 337,986
---------- ----------
NET INCREASE IN NET ASSETS 1,233,483 60,101
TOTAL NET ASSETS
Beginning of year 2,794,960 2,734,859
---------- ----------
End of year $4,028,443 $2,794,960
========== ==========
See notes to financial statements.
16
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
BALANCED PORTFOLIO
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994
---------- --------
OPERATIONS
Net investment income $ 95,961 $ 87,240
Net realized gain on investments 21,195 62,628
Net unrealized appreciation
(depreciation) of investments during
the year 494,465 (138,996)
---------- ----------
Net increase in net assets resulting 611,621 10,872
from operations
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (98,462) (85,363)
Capital gains distributions -- (95,195)
---------- ----------
Total distributions to shareholders (98,462) (180,558)
CAPITAL SHARE TRANSACTIONS
Increase in net assets from capital
share transactions 226,044 244,573
---------- ----------
NET INCREASE IN NET ASSETS 739,203 74,887
TOTAL NET ASSETS
Beginning of year 2,659,625 2,584,738
---------- ----------
End of year $3,398,828 $2,659,625
========== ==========
MONEY MARKET PORTFOLIO
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994
--------- ---------
OPERATIONS
Net investment income $ 118,207 $ 74,577
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (118,207) (74,577)
CAPITAL SHARE TRANSACTIONS
Increase in net assets from capital
share transactions 114,303 89,891
---------- ----------
NET INCREASE IN NET ASSETS 114,303 89,891
TOTAL NET ASSETS
Beginning of year 2,283,705 2,193,814
---------- ----------
End of year $2,398,008 $2,283,705
========== ==========
See notes to financial statements.
17
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for each share of capital stock outstanding throughout the period
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------- PERIOD ENDED
1995 1994 1993 1992 DECEMBER 31, 1991
---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.04 $ 1.08 $ 1.07 $ 1.12 $ 1.00
Net investment income 0.02 0.02 0.02 0.01 0.01
Net realized and unrealized gain (loss)
on investments during the period 0.27 0.05 0.06 (0.05) 0.12
-------- ------- ------- ------- ---------
Total from investment operations 0.29 0.07 0.08 (0.04) 0.13
Less distributions
Distributions from net investment
income (0.02) (0.02) (0.02) (0.01) (0.01)
Distributions from capital gains (0.04) (0.09) (0.05) -- --
-------- ------- ------- ------- ----------
Total distributions (0.06) (0.11) (0.07) (0.01) (0.01)
-------- ------- ------- ------- ----------
Net Asset Value, End of Period $ 1.27 $ 1.04 $ 1.08 $ 1.07 $ 1.12
======== ======= ======= ======= ==========
Total return--Variable Universal Life 27.34 % 7.10 % 6.20 % (3.90)% 13.50 %**
--Variable Annuity 26.52 %
======= ======= ======= ======= ==========
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's
omitted) $ 4,781 $ 3,037 $ 2,748 $ 2,477 $ 2,572
Ratio of expenses to average net assets 0.87 (1) .90 (1) 0.91 1.38 1.50 *(1)
Ratio of net investment income to
average net assets 1.99 2.04 1.65 1.35 1.89 *
Portfolio turnover rate 42.06 46.18 59.55 12.56 25.30
</TABLE>
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------- PERIOD ENDED
1995 1994 1993 1992 DECEMBER 31, 1991
-------- ------- ------- ------ ----------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.11 $ 1.05 $ 1.10 $ 1.00
Net investment income 0.03 0.02 0.02 0.01 0.02
Net realized and unrealized gain (loss)
on investments during the period 0.24 -- 0.09 (0.05) 0.11
-------- ------- ------- ------- ----------
Total from investment operations 0.27 0.02 0.11 (0.04) .13
Less distributions
Distributions from net investment
income (0.03) (0.03) (0.02) (0.01) (0.02)
Distributions from capital gains (0.03) (0.10) (0.03) -- (0.01)
-------- ------- ------- ------- ----------
Total distributions (0.06) (0.13) (0.05) (0.01) (0.03)
-------- ------- ------- ------- ----------
Net Asset Value End of Period $ 1.21 $ 1.00 $ 1.11 $ 1.05 $ 1.10
======== ======= ======= ======= ==========
Total return--Variable Universal Life 27.33 % 0.67 % 10.00 % (3.90)% 11.20 %**
--Variable Annuity 26.45 %
========= ======= ======= ======= ==========
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's
omitted) $ 4,028 $ 2,795 $ 2,735 $ 2,406 $ 2,303
Ratio of expenses to average net assets 0.93(2) .98(2) 1.00 1.41 1.50 *(2)
Ratio of net investment income to average net assets 2.57 2.36 1.87 1.34 2.03 *
Portfolio turnover rate 30.87 26.26 46.39 6.79 46.53
</TABLE>
(1) Expenses for the calculation are net of a reimbursement from Securities
Management and Research, Inc. Without this reimbursement, the ratio of
expenses to average net assets would have been 1.32% and 1.13% for the
years ended December 31, 1995 and 1994, and 1.73% (annualized) for the
period ended December 31, 1991.
(2) Expenses for the calculation are net of a reimbursement from Securities
Management and Research, Inc. Without this reimbursement, the ratio of
expenses to average net assets would have been 1.26% and 1.23% for the
years ended December 31, 1995 and 1994, and 1.69% (annualized) for the
period ended December 31, 1991.
* Ratios annualized
** Returns are not annualized
See notes to financial statements.
18
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for each share of capital stock outstanding throughout the period
BALANCED PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------- PERIOD ENDED
1995 1994 1993 1992 DECEMBER 31, 1991
---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 0.99 $ 1.06 $ 1.07 $ 1.12 $ 1.00
Net investment income 0.04 0.03 0.03 0.03 0.03
Net realized and unrealized gain (loss)
on investments during the period 0.19 (0.03) 0.02 (0.05) 0.12
-------- -------- ------ -------- ----------
Total from investment operations 0.23 0.00 0.05 (0.02) 0.15
Less distributions
Distributions from investment income (0.04) (0.03) (0.03) (0.03) (0.03)
Distributions from capital gains -- (0.04) (0.03) -- --
--------- -------- ------ -------- ----------
Total distributions (0.04) (0.07) (0.06) (0.03) (0.03)
---------- -------- ------ -------- ----------
Net Asset Value End of Period 1.18 $ 0.99 $ 1.06 $ 1.07 $ 1.12
========== ======== ====== ======== ==========
Total return--Variable Universal Life 20.47 % 0.26 % 3.70 % (2.70)% 16.40 %**
--Variable Annuity N/A
========= ======== ====== ======== ==========
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's omitted) $ 3,399 $ 2,660 $2,585 $ 2,363 $ 2,313
Ratio of expenses to average net assets 0.90(1) 0.96(1) 1.00 1.47 1.50 *(1)
Ratio of net investment income to average net assets 3.19 3.34 2.65 2.50 3.64 *
Portfolio turnover rate 15.97 46.14 68.58 11.72 23.48
</TABLE>
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------- PERIOD ENDED
1995 1994 1993 1992 DECEMBER 31, 1991
---- ----- ----- ----- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.05 0.02 0.02 0.02 0.04
-------- -------- ------ -------- ----------
Total from investment operations 0.05 0.02 0.02 0.02 0.04
Less distributions
Distributions from investment income (0.05) (0.02) (0.02) (0.02) (0.04)
-------- -------- ------ -------- ----------
Total distributions (0.05) (0.02) (0.02) (0.02) (0.04)
-------- -------- ------ -------- ----------
Net Asset Value End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ====== ======== ==========
Total return--Variable Universal Life 4.18 % 3.31 % 2.12 % 2.17 % 3.62 %**
--Variable Annuity 3.43 %
======== ======== ====== ======== ==========
RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA
Net Assets, end of period (000's omitted) $ 2,352 $ 2,284 $2,194 $ 2,133 $ 2,153
Ratio of expenses to average net assets 0.87(2) 0.91(2) 0.98 1.50(2) 1.50 *(2)
Ratio of net investment income to average net assets 5.03 3.32 2.11 2.20 4.29 *
</TABLE>
___________
(1) Expenses for the calculation are net of a reimbursement from Securities
Management and Research, Inc. Without this reimbursement, the ratio of
expenses to average net assets would have been 1.37% and 1.25% for the
years ended December 31, 1995 and 1994, and 1.80% (annualized) for the
period ended December 31, 1991.
(2) Expenses for the calculation are net of a reimbursement from Securities
Management and Research, Inc. Without this reimbursement, the ratio of
expenses to average net assets would have been 1.21%, 1.14% and 1.72% for
the years ended December 31, 1995, 1994 and 1992, and 1.81% (annualized)
for the period ended December 31, 1991.
* Ratios annualized
** Returns are not annualized
See notes to financial statements.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS December 31, 1995
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
The American National Investment Accounts, Inc. (the "Fund") is a diversified
open-end management investment company registered as a series fund under the
Investment Company Act of 1940, as amended. The Fund is comprised of the Growth,
Managed, Balanced and Money Market Portfolios. Operations commenced March 1,
1991.
Shares of the Fund, other than the initial capitalization, will be sold only to
separate accounts of American National Insurance Company ("American National").
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its 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:
GROWTH, MANAGED AND BALANCED PORTFOLIOS
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.
MONEY MARKET PORTFOLIO
Investments are valued at amortized cost (premiums and discounts are amortized
on a straight-line basis), which has been determined by the Fund's Board of
Directors to closely approximate the fair value of such securities. The Fund
intends to maintain a continuous net asset value per share of $1.00, rounded to
the nearest cent.
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.
Interest income is recorded on the accrual basis. Realized gains and losses from
security transactions are reported on the basis of specific identification for
financial reporting and federal income tax purposes.
FEDERAL INCOME TAXES:
For federal income tax purposes, each portfolio is treated as a separate entity.
The Fund intends to fulfill the applicable requirements of the Internal Revenue
Code relating to regulated investment companies and intends 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. The
Fund repurchases its shares at net asset value. Dividends and other
distributions are recorded by the Fund on the ex-dividend date and may be
reinvested at net asset value. For the Money Market Portfolio, distributions are
computed daily and distributed monthly.
EXPENSES:
Operating expenses directly attributable to a portfolio are charged to that
portfolio's operations. Expenses of the Fund which are not directly attributable
to the operations of any portfolio are prorated among all portfolios of the Fund
based on the relative net assets of each portfolio.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
NOTE 2--INVESTMENT ADVISORY AND SERVICE FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
The Fund has entered into an investment advisory agreement and an administrative
service agreement with Securities Management and Research, Inc. ("SM&R"). SM&R
is a wholly-owned subsidiary of American National.
The investment advisory agreement provides SM&R with a monthly advisory fee
based on an annualized rate of 1/2 of 1% of the Fund's average daily net assets.
For its fee, SM&R will provide investment advice and, in general, will conduct
the management and investments of the Fund.
The administrative service agreement provides SM&R with a monthly service fee
based on an annualized rate of 1/4 of 1% of the Fund's average daily net assets.
For its fee, SM&R will provide certain administrative services for the Fund.
In addition to the investment advisory fee and the administrative fee, the Fund
is responsible for paying most other operating expenses including outside
directors' fees and expenses, safekeeping fees, legal fees, auditing services,
insurance, interest and miscellaneous expenses.
All offering and organization costs were paid by American National. Effective
May 1, 1994, SM&R has agreed to reimburse the Fund for expenses of any kind
(exclusive of interest, commissions and other expenses incidental to portfolio
transactions which exceed the following percentages of each portfolio's average
daily net assets:
Growth .87%
Managed .93%
Balanced .90%
Money Market .87%
Prior to May 1, 1994, the reimbursement percentage was 1.50% of each portfolio's
average daily net assets.
As of December 31, 1995, SM&R and American National had the following ownership
in the Portfolios:
SM&R American National
---------------------- -------------------------
Percent of Percent of
Shares Shares
Shares Outstanding Shares Outstanding
Growth 319,570 8.47% 3,455,150 91.53%
Managed 322,779 9.71% 3,002,890 90.29%
Balanced 308,156 10.74% 2,561,120 89.26%
Money Market 296,219 12.35% 2,101,789 87.65%
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, other than short-term notes were
as follows:
Purchases Sales
Growth $1,871,750 $1,369,293
Managed 1,239,962 857,396
Balanced 581,584 429,919
Gross unrealized appreciation and depreciation as of December 31, 1995, were as
follows:
Appreciation Depreciation
Growth $ 864,776 $ 173,147
Managed 722,140 150,208
Balanced 566,101 105,478
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
NOTE 4--CAPITAL STOCK
GROWTH PORTFOLIO
<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 731,489 $ 885,922 156,175 $ 174,294
Investment income dividends reinvested 63,539 79,425 52,733 55,370
Distributions made from net realized
gains reinvested 123,645 154,556 236,026 247,827
--------- ----------- --------- ----------
Subtotals 918,673 1,119,903 444,934 477,491
Redemptions of capital shares (50,347) (60,885) (73,142) (81,370)
--------- ----------- --------- ----------
Net increase in capital shares
outstanding 868,326 $ 1,059,018 371,792 $ 396,121
=========== ==========
Shares outstanding at beginning of period 2,906,394 2,534,602
--------- ---------
Shares outstanding at end of period 3,774,720 2,906,394
========= =========
The components of net assets at December 31,
1995, are as follows:
Capital Stock--3,774,720 shares of $.01 par value
outstanding (15,000,000 authorized) (par and
additional paid-in capital) $4,017,747
Undistributed net investment income (368)
Accumulated net realized gain on investments 72,167
Net unrealized appreciation of investments 691,629
----------
Net assets $4,781,175
==========
</TABLE>
MANAGED PORTFOLIO
<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 414,372 $ 481,788 97,966 $ 108,964
Investment income dividends reinvested 73,964 88,757 63,802 63,164
Distributions made from net realized
gains reinvested 84,825 101,791 247,656 245,179
---------- ----------- ---------- ----------
Subtotals 573,161 672,336 409,424 417,307
Redemptions of capital shares (55,212) (60,522) (70,597) (79,321)
---------- ----------- ---------- ----------
Net increase in capital shares
outstanding 517,949 $ 611,814 338,827 $ 337,986
=========== ==========
Shares outstanding at beginning of period 2,807,720 2,468,893
---------- ---------
Shares outstanding at end of period 3,325,669 2,807,720
========== =========
The components of net assets at December 31,
1995, are as follows:
Capital Stock--3,325,669 shares of $.01 par value
outstanding (20,000,000 authorized) (par and
additional paid-in capital) $3,451,706
Undistributed net investment income (30)
Accumulated net realized gain on investments 4,835
Net unrealized appreciation of investments 571,932
----------
Net assets $4,028,443
==========
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
BALANCED PORTFOLIO
<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 142,989 $ 164,888 113,111 $ 119,964
Investment income dividends reinvested 84,157 98,463 85,363 85,364
Distributions made from net realized
gains reinvested -- -- 95,195 95,195
---------- ----------- --------- ----------
Subtotals 227,146 263,351 293,669 300,523
Redemptions of capital shares (34,940) (37,307) (53,094) (55,950)
---------- ----------- --------- ----------
Net increase in capital shares
outstanding 192,206 $ 226,044 240,575 $ 244,573
=========== ==========
Shares outstanding at beginning of period 2,677,070 2,436,495
----------- ----------
Shares outstanding at end of period 2,869,276 2,677,070
============ ==========
The components of net assets at December
31, 1995, are as follows:
Capital Stock--2,869,276 shares of $.01 par value
outstanding (50,000,000 authorized) (par and
additional paid-in capital) $2,940,446
Undistributed net investment income (618)
Accumulated net realized gain (loss) on investments (1,623)
Net unrealized appreciation of investments 460,623
----------
Net assets $3,398,828
==========
</TABLE>
MONEY MARKET PORTFOLIO
<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 1,004,957 $ 1,004,957 676,573 $ 676,573
Investment income dividends reinvested 118,207 118,207 74,577 74,577
---------- ----------- --------- ----------
Subtotals 1,123,164 1,123,164 751,150 751,150
Redemptions of capital shares (1,008,861) (1,008,861) (661,259) (661,259)
---------- ----------- --------- ----------
Net increase in capital shares
outstanding 114,303 $ 114,303 89,891 $ 89,891
=========== ==========
Shares outstanding at beginning of period 2,283,705 2,193,814
---------- ----------
Shares outstanding at end of period 2,398,008 2,283,705
========== ==========
The components of net assets at
December 31, 1995, are as follows:
Capital Stock--2,398,008 shares of $.01
par value outstanding (50,000,000 authorized)
(par and additional paid-in capital) $ 36,798
Additional paid-in capital 2,361,210
-----------
Net assets $ 2,398,008
===========
</TABLE>
23
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
American National Investment Accounts, Inc.
We have audited the accompanying statements of assets and liabilities of
American National Investment Accounts, Inc. (comprised of Growth, Managed,
Balanced and Money Market portfolios), 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 four-year period then ended, and the period March 1, 1991 (date operations
commended) through December 31, 1991. 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 include 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 provides 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 Investment Accounts, Inc. 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 four-year period then ended, and the period March
1, 1991 (date operations commended) through December 31, 1991, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 16, 1996
24
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<PAGE>
A N N U A L R E P O R T
American
National
Investment
Accounts
Inc.
. Growth Portfolio
. Managed Portfolio
. Balanced Portfolio
. Money Market Portfolio
Annual Report
December 31, 1995
Form 9429
Rev. 12/95
Securities Management & Research, Inc. BULK RATE
One Moody Plaza U.S. POSTAGE
Galveston, TX 77550 PAID
PERMIT NO. 14
GALVESTON, TEXAS
