<PAGE>
Registration No. 33-36423
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 |X|
[Check appropriate box or boxes.]
Post-Effective Amendment No. 7
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
[Exact Name of Registrant as Specified in Charter]
ONE MOODY PLAZA, GALVESTON, TEXAS 77550
[Address of Principal Executive Offices] [Zip Code]
Registrant's Telephone Number, Including Area Code (409) 763-2767
MICHAEL W. MCCROSKEY JERRY L. ADAMS
ONE MOODY PLAZA WITH COPY TO: GREER, HERZ & ADAMS, L.L.P.
GALVESTON, TEXAS 77550 ONE MOODY PLAZA
[Name and Address of Agent for Service] GALVESTON, TEXAS 77550
DECLARATION REQUIRED BY RULE 24F-2(A)(1): An indefinite number of securities of
the Registrant has been registered under the Securities Act of 1933 pursuant to
Rule 24f-2 under the Investment Company Act of 1940. Notice required by Rule
24F-2(b)(1) was filed on February 26, 1996 in the Office of the
Securities and Exchange Commission.
It is proposed that this filing will become effective (check appropriate box):
[ ] 75 days after filing pursuant to paragraph (a) Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 30, 199 6 pursuant to paragraph (b) of Rule 485
If appropriate, check the following box:
[ ] this Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.
1
<PAGE>
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
CROSS-REFERENCE SHEET
---------------------
[PURSUANT TO RULE 495(A)]
SHOWING LOCATION OF INFORMATION
REQUIRED BY FORM N-1A
PART A ITEM AND CAPTION PROSPECTUS CAPTION
- ----------------------- ------------------
ITEM 1. COVER PAGE
(a)(i) Front Cover
(ii) Front Cover
(iii) Front Cover
(iv) Front Cover
(v) Front Cover
(vi) Front Cover
(vii) Front Cover
(b) Front Cover
ITEM 2. SYNOPSIS
(a)(i) Table of Fees and Expenses
(ii) Not applicable
(b) The Fund At A Glance, The Accounts and The Contracts
(c) The Fund At A Glance, The Accounts and The Contracts
ITEM 3. CONDENSED FINANCIAL INFORMATION
(a) Financial Highlights - Growth Portfolio, Managed
Portfolio, Balanced Portfolio, and Money Market
Portfolio
(b) Financial Highlights - Growth Portfolio, Managed
Portfolio, Balanced Portfolio, and Money Market
Portfolio
(c) Performance
(d) Financial Highlights - Growth Portfolio,
Managed Portfolio, Balanced Portfolio, and
Money Market Portfolio
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT
(a)(i) The Fund At A Glance; The Accounts and the
Contracts; The Fund and Its
Management
(ii) Investment Objectives and Policies
(b)(i) Investment Objectives and Policies
(ii) Investment Objectives and Policies
(c) Investment Objectives and Policies
ITEM 5. MANAGEMENT OF THE FUND
(a) The Fund and Its Management
(b)(i) The Fund and Its Management; Investment Management Arrangements
and Expenses
(ii) The Fund and Its Management; Investment Management Arrangements
and Expenses
2
<PAGE>
(iii) The Fund and Its Management;
Investment Management Arrangements and Expenses
(c) The Fund and Its Management
(d) Investment Management Arrangements and Expenses
(e) Custodian, Transfer Agent and Dividend Disbursing Agent
(f) Investment Management Arrangements and Expenses
(g)(i) Portfolio Brokerage and Related Practices
(ii) Portfolio Brokerage and Related Practices
ITEM 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
(a) Contained in Fund's Annual Report
(b) Contained in Fund's Annual Report
(c) Contained in Fund's Annual Report
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES
(a) Purchase and Redemption of Shares;
General Information
Authorized Stock and Voting Rights
(b) Authorized Stock and Voting Rights
(c) Voting Rights
(d) Not Applicable
(e) Additional Information
(f) Dividends, Distributions and Taxes
(g) Dividends, Distributions and Taxes
(h) Not Applicable
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED
(a) Purchase and Redemption of Shares
(b)(i) Determination of Net Asset Value
(ii) Determination of Net Asset Value
(iii) Not Applicable
(iv) Not Applicable
(v) Not Applicable
(c) Not Applicable
(d) Not Applicable
(e) Not Applicable
(f) Not Applicable
(g) Not Applicable
ITEM 8.REDEMPTION OR REPURCHASE
(a) Purchase and Redemption of Shares
(b) Not Applicable
(c) Not Applicable
(d) Not Applicable
ITEM 9. PENDING LEGAL PROCEEDINGS
Not Applicable
PART B ITEM AND CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------------- -------------------------------------------
Item 10. Cover Page
(a)(i) Cover Page
(ii) Cover Page
(iii) Cover Page
(iv) Cover Page
(b) Cover Page
ITEM 11. TABLE OF CONTENTS
Table of Contents
3
<PAGE>
ITEM 12. GENERAL INFORMATION AND HISTORY
General History of the Fund
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES
(a) Investment Policies of each Portfolio;
Investment Objectives of each Portfolio
(b) Investment Policies of each Portfolio;
Investment Restrictions
(c) Investment Restrictions
(d) Investment Objectives of each Portfolio
ITEM 14. MANAGEMENT OF THE FUND
(a) Management of the Fund
(b) Management of the Fund
(c) Remuneration of Directors
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
(a) Control Persons and Principal Holders of Securities
(b) Control Persons and Principal Holders of Securities
(c) Not Applicable
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES
(a)(i) Investment Advisory and Other Services; Control
and Management of SM&R
(ii) Investment Advisory and Other Services; Control
and Management of SM&R
(iii) Investment Advisory Agreement
(b) Investment Advisory Agreement; Administrative Service Agreement
(c) Not Applicable
(d) Administrative Service Agreement
(e) Not Applicable
(f)(i) Not Applicable
(ii) Not Applicable
(iii) Not Applicable
(g) Custodian, Transfer Agent and Dividend Disbursing Agent
(h) Custodian, Transfer Agent and Dividend Disbursing Agent; Experts
(i) Custodian, Transfer Agent and Dividend Disbursing Agent; Investment
Advisory Agreement; Administrative Service Agreement
ITEM 17. BROKERAGE ALLOCATION
(a) Portfolio Transactions and Brokerage Allocation
(b)(i) Portfolio Transactions and Brokerage Allocation
Portfolio Transactions and Brokerage Allocation
(ii) Portfolio Transactions and Brokerage Allocation
(iii) Portfolio Transactions and Brokerage Allocation
(c) Portfolio Transactions and Brokerage Allocation
(d) Portfolio Transactions and Brokerage Allocation
(e) Not Applicable
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES
(a)(i) Capital Stock
(ii) Capital Stock
(b) Not Applicable
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
(a) Sale, Redemption and Pricing of Shares
4
<PAGE>
(b) Sale, Redemption and Pricing of Shares
(c) Not Applicable
ITEM 20. TAX STATUS
Taxes
ITEM 21. UNDERWRITERS
(a)(i) Not Applicable
(ii) Not Applicable
(iii) Not Applicable
(b) Not Applicable
(c) Not Applicable
ITEM 22. CALCULATIONS OF YIELD QUOTATIONS OF MONEY MARKET FUNDS CALCULATIONS
OF YIELD QUOTATIONS OF MONEY MARKET PORTFOLIO
ITEM 23. FINANCIAL STATEMENTS
Exhibit "1" to Statement of Additional Information
PART C OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE>
[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
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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.
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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.
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<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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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
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<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
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<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
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<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
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<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
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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
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<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
<PAGE>
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
The Financial Statements are attached to the Statement of Additional
Information as Exhibit "1".
(b) Exhibits:
1. See Exhibit 99.B1 to this Post-Effective Amendment No. 7 to Form
N-1A for a copy of Registrant's Articles of Incorporation.
2. See Exhibit 99.B2 to this Post-Effective Amendment No. 7 to Form
N-1A for a copy of Registrant's By-Laws.
3. None.
4. See Exhibit 99.B4 to this Post-Effective Amendment No. 7 to Form
N-1A for a specimen of Registrant's stock certificate.
5. See Exhibit 99.B5 to this Post-Effective Amendment No. 7 to Form
N-1A for a copy of Registrant's Investment Advisory Agreement.
6. See Exhibit 99.B6a to this Post-Effective Amendment No. 7 to Form
N-1A for a copy of Registrant's Fund Participation Agreement with
the American National Variable Annuity Separate Account and
Exhibit 99.B6b with the American National Variable Life Separate
Account.
7. None.
8. See Exhibit 99.B8a and Exhibit 99.B8b to this Post-Effective
Amendment No. 7 to Form N-1A for a copy of Registrant's current
Custodian Agreement and Sub-Custodian Agreement.
9. None.
10. See Exhibit 99.B10 to this Post-Effective Amendment No. 7 to Form
N-1A, for the consent and opinion of Registrant's counsel, Greer,
Herz & Adams, L.L.P.
11. See Exhibit 99.B11 to this Post-Effective Amendment No. 7 to Form
N-1A, for the consent of independent auditors, KPMG Peat Marwick
LLP.
12. Not Applicable.
13. See Exhibit 99.B13 to Post-Effective Amendment No. 7 to Form N-1A
for copies of the stock purchase letters.
54
<PAGE>
14. None.
15. None.
16. None.
17. See Exhibit 99.B17 to this Post-Effective Amendment No. 7 to Form
N1A, for a revised Power of Attorney.
18. None
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
All persons under common control with the Registrant are shown on the list
attached hereto as Exhibit 99.B19.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of April 1, 1996, the number of record holders of Registrant's common
stock were as follows:
Title of Class Number of Record Holders
Money Market Portfolio 4
Growth Portfolio 4
Balanced Portfolio 4
Managed Portfolio 4
ITEM 27. INDEMNIFICATION.
The Registrant has agreed to indemnify its directors to the maximum extent
permitted by applicable law against all costs and expenses (including, but not
limited to, counsel fees, amounts of judgments paid, and amounts paid in
settlement) reasonably incurred in connection with the defense of any actual or
threatened claim, action, suit or proceeding, whether civil, criminal,
administrative, or other, in which he or she may be involved by virtue of such
person being or having been such director. Such indemnification is pursuant to
Section 3.15 of the Registrant's By-Laws, a copy of which is attached as Exhibit
99.B2 to this Post-Effective Amendment No. 7 to Form N-1A.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
55
<PAGE>
Securities Management and Research, Inc. ("SM&R") serves as investment adviser
to Registrant, the American National Growth Fund, Inc., the American National
Income Fund, Inc., and the Triflex Fund, Inc., (collectively herein referred to
as the "American National Funds Group") and the SM&R Capital Funds, Inc. See
"Investment Adviser" in Part A and "Investment Advisory and Other Services" in
Part B.
ROBERT A. FRUEND, C.L.U.
Director of SM&R; Executive Vice President and Director of Ordinary
Agencies of American National Insurance Company, One Moody Plaza,
Galveston, Texas; Vice President and Director of American National
Insurance Company of Texas, One Moody Plaza, Galveston, Texas;
Director of American National Property and Casualty Company, 1949 East
Sunshine, Springfield, Missouri; Director of American National
General Insurance Company, 1949 East Sunshine, Springfield, Missouri;
and Director of American National Insurance Service Company, 1722
South Glenstone, Springfield, Missouri.
R. EUGENE LUCAS
Director of SM&R; Director of American National Insurance Company, One
Moody Plaza, Galveston, Texas; President and Director of Gal-Tex
Hotel Corporation, 504 Moody National Bank Tower, Galveston, Texas,
Gal-Tenn Hotel Corporation 504 Moody National Bank Tower, Galveston,
Texas; Director of ANREM Corporation, One Moody Plaza, Galveston,
Texas.
CARL R. ROBERTSON
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
Executive 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 Chairman of the Board
of American Printing Company, 4400 P-1/2, Galveston, Texas; 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.12
MICHAEL W. MCCROSKEY
President, Chief Executive Officer and member of the Executive
Committee of SM&R, June 1994 to present; President and Director of the
Fund, June 1994 to present; President and Director of the American
National Growth Fund, Inc., American National Income Fund, Inc., and
Triflex Fund, Inc.
56
<PAGE>
(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.
GORDON D. DIXON
Senior Vice President, Chief Investment Officer of SM&R; Vice
President, Portfolio Manager of the American National Investment
Accounts -Growth Portfolio and the American National Growth Fund,
Inc., One Moody Plaza, Galveston, Texas; Vice President, Stocks of
American National Insurance Company, One Moody Plaza, Galveston,
Texas; Vice President, Investments for Garden State Life Insurance
Company, 2450 South Shore Boulevard, Suite 301, League City, Texas.
VERA M. YOUNG
Vice President, Portfolio Manager of SM&R; Assistant Vice President,
Securities of American National Insurance Company, One Moody Plaza,
Galveston, Texas. Vice President, Portfolio Manager of the SM&R
Capital Funds, Inc. Primary Series, One Moody Plaza, Galveston, Texas.
EMERSON V. UNGER, C.L.U.
Vice President of SM&R; Vice President of the American National Funds
Group and the SM&R Capital Funds, Inc., One Moody Plaza, Galveston,
Texas.
BRENDA T. KOELEMAY
Vice President and Treasurer of SM&R; Vice President and Treasurer of
the American National Funds Group and the SM&R Capital Funds, Inc.,
One Moody Plaza, Galveston, Texas.
TERESA E. AXELSON
Vice President and Secretary of SM&R, the American National Funds
Group and the SM&R Capital Funds, Inc., One Moody Plaza, Galveston,
Texas.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Not applicable.
(b) Not applicable.
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder
will be maintained at the office of SM&R at One Moody Plaza, Galveston, Texas
77550.
ITEM 31. MANAGEMENT SERVICES.
There are no management-related service contracts to which the Registrant is a
party not discussed under Part A or Part B of this Registration Statement.
ITEM 32. UNDERTAKINGS.
The Fund undertakes to furnish each person to whom a prospectus is delivered a
copy of its latest Annual Report to shareholders, without charge, upon request.
57
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, AMERICAN NATIONAL INVESTMENT ACCOUNTS,
INC., certifies that it meets all of the requirements for effectiveness of this
POST-EFFECTIVE AMENDMENT NO. 7 to Registration Statement, pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this POST-EFFECTIVE
AMENDMENT NO. 7 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Galveston and State of
Texas, on the 25th day of April, 1996.
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
By: MICHAEL W. McCROSKEY
-------------------------------
Michael W. McCroskey, President
Pursuant to the requirements of the Securities Act of 1933, this POST-EFFECTIVE
AMENDMENT NO. 7 to Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<S> <C>
PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER: PRINCIPAL ACCOUNTING OFFICER:
MICHAEL W. McCROSKEY BRENDA T. KOELEMAY
- ---------------------------------- -----------------------------
Michael W. McCroskey, President Brenda T. Koelemay, Treasurer
Date: April 25, 1996 Date: April 25, 1996
DIRECTORS
X ERNEST S. BARRATT ROBERT A. FRUEND
- -------------------------------------- ---------------------------------------
* Ernest S. Barratt, Ph.D. by * Robert A. Fruend by
Michael W. McCroskey, Power of Attorney Michael W. McCroskey, Power of Attorney
Date: April 25, 1996 Date: April 25, 1996
X BRENT E. MASEL X LEA McLEOD MATTHEWS
- -------------------------------------- ---------------------------------------
* Brent E. Masel, M.D. by * Lea McLeod Matthews by
Michael W. McCroskey, Power of Attorney Michael W. McCroskey, Power of Attorney
Date: April 25, 1996 Date: April 25, 1996
X LOUIS E. PAULS X CARL R. ROBERTSON
- -------------------------------------- ---------------------------------------
* Louis E. Pauls by * Carl R. Robertson by
Michael W. McCroskey, Power of Attorney Michael W. McCroskey, Power of Attorney
Date: April 25, 1996 Date: April 25, 1996
X MICHAEL W. McCROSKEY
- --------------------------------------
* Michael W. McCroskey
Date: April 25, 1996
</TABLE>
*Pursuant to a Power of Attorney executed by the Board of Directors dated
December 15, 1994. Attached as Exhibit 99.B17 to this Post-Effective Amendment
No. 7.
58
<PAGE>
EXHIBIT INDEX
TO
POST-EFFECTIVE AMENDMENT NO. 7
UNDER THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 7
UNDER THE INVESTMENT COMPANY ACT OF 1940
FOR
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
("Registrant")
PART C ITEM AND CAPTION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
<TABLE>
<S> <C> <C>
(a) Attached as Exhibit "1" to the
Financial Statements: - Statement of Additional Information.
------------------------ ---------------------------------------
(b) Exhibits Attached This Filing:
Exhibit 99.B1 Registrant's Articles of Incorporation
Exhibit 99.B2 Registrant's By-Laws
Exhibit 99.B4 Registrant's specimen stock certificate
Exhibit 99.B5 Registrant's Investment Advisory Agreement
Exhibit 99.B6a Registrant's Fund Participation Agreement with the American National Variable Annuity
Separate Account
Exhibit 99.B6b Registrant's Fund Participation Agreement with the American National Variable Life
Separate Account
Exhibit 99.B8a Registrant's Custodian Agreement
Exhibit 99.B8b Registrant's Sub-Custodian Agreement
Exhibit 99.B10 Consent and Opinion of Registrant's counsel, Greer, Herz & Adams, L.L.P.
Exhibit 99.B11 Consent of KPMG Peat Marwick LLP, independent accountants of Registrant
Exhibit 99.B13 Stock Purchase Letters
Exhibit 99.B17 Power of Attorney
Exhibit 99.B19 Control List
Exhibit 27.1 Growth Portfolio
Exhibit 27.2 Managed Portfolio
Exhibit 27.3 Balanced Portfolio
Exhibit 27.4 Money Market Portfolio
</TABLE>
<PAGE>
EXHIBIT 99.B1
ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
ARTICLE I
The undersigned, Jerry L. Adams, whose post office address is One Moody
Plaza, 14th Floor, Galveston, Texas 77550 and who is of full legal age, does
hereby declare that he is an incorporator intending to form a corporation under
and by virtue of the Maryland General Corporation Law authorizing the formation
of corporations.
ARTICLE II
The name of the Corporation is AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
ARTICLE III
Purposes and Powers
The purposes for which the Corporation is formed and its objects, rights,
power and privileges are:
(1) To conduct and carry on the business of an investment company of the
open-end management type and to have and exercise any and all rights and powers
necessary and appropriate to the conduct of such business or incidental thereto;
(2) To subscribe for, or otherwise acquire, purchase, pledge, sell,
assign, transfer, exchange, distribute or otherwise dispose of, and generally
deal in and hold all forms of securities and other investments, including but
not limited to, stocks (preferred and common), notes, bonds, debentures, script,
warrants, participation certificates, bankers acceptances, futures, options of
all types on securities and futures, mortgages, commercial paper, choses in
action, evidences of indebtedness and other obligations of every kind and
description, precious metals and contracts and rights to acquire or dispose of
precious metals, and in connection therewith to hold part or all of its assets
in cash or cash equivalents or money market instruments;
(3) To continuously issue and sell shares of its own capital stock in such
amounts and on such terms and conditions, for such purposes and for such amount
or kind of consideration now or hereafter permitted by the Maryland General
Corporation Law and by the Articles of Incorporation of the Corporation, as its
Board of Directors may determine;
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue, retire or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by the laws of Maryland and by the
Articles of Incorporation of the Corporation;
(5) To borrow or raise money for any purpose of the Corporation and from
time to time to draw, make, accept, endorse, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures and other negotiable and
nonnegotiable instruments and evidences of indebtedness, and to pledge,
hypothecate and borrow upon the credit of the assets of the Corporation;
(6) To take all such action as shall be desirable and necessary to cause
its shares to be licensed or registered for sale under the laws of the United
States and in any state, country, city or
<PAGE>
other municipality of the United States, the territories thereof, the District
of Columbia or in any foreign country and in any town, city or subdivision
thereof;
(7) To make contracts and generally to do any and all acts and things
necessary or desirable in furtherance of any of the corporate purposes or
designed to protect, preserve and/or enhance the value of the corporate assets,
all to the extent permitted to business corporations authorized under the laws
of the State of Maryland, as now or may in the future be authorized by said
laws;
(8) To do all and everything necessary, suitable and proper for the
accomplishment of any of the purposes, objects or powers hereinbefore set forth
to the same extent and as fully as a natural person might or could do, in any
part of the world and either alone or in association or partnership with other
corporations, firms or individuals;
(9) To have all the rights, powers and privileges now or hereafter
conferred by the laws of the State of Maryland upon a corporation organized
under the Maryland General Corporation Law or under any act amendatory thereof,
supplemental thereto or in substitution therefor; and
(10) To do any and all such further acts or things and to exercise any and
all such further powers or rights as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of all or any of the foregoing purposes, objects or powers.
The foregoing clauses shall be construed both as objectives and powers, and
it is hereby expressly provided that the enumeration herein of any specific
objective or power, shall not be held to limit or restrict in any way the
general powers of the Corporation, nor shall such objectives and powers, except
when otherwise expressly provided, be in any way limited or restricted by
reference to, or inference from, the terms of any other clause of the Articles
of Incorporation of the Corporation but the objectives and powers specified in
each of the foregoing clauses of this Article shall be regarded as independent
objectives and powers.
ARTICLE IV
Principal Office and Resident Agent
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The resident agent of the Corporation in the State
of Maryland is The Corporation Trust Incorporated, a corporation of the State of
Maryland, whose post office address is 32 South Street, Baltimore, Maryland
21202.
ARTICLE V
Capital Stock
(1) The total number of shares of stock which the Corporation initially
shall have authority to issue is One Hundred Million (100,000,000) shares of
common stock of the par value of one cent ($0.01) each, such shares to be
classified as "Common Shares", and to be of the aggregate par value of One
Million Dollars (1,000,000.00). Unless otherwise prohibited by law, so long as
the Corporation is registered as an open-end investment company under the
Investment Company Act of 1940, as amended, the total number of shares which the
Corporation is authorized to issue may be increased or decreased by the Board of
Directors in accordance with the applicable provisions of the Maryland General
Corporation Law.
(2) The Corporation is authorized to issue its Common Shares in two or
more series or two or more classes, and, subject to the requirements of the
Investment Company Act of 1940, as amended,
2
<PAGE>
particularly section 18(f) thereof and Rule 18f-2 thereunder, the different
series or classes of Common Shares shall be established and designated, and the
variations in the relative preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption as between the different series or classes of Common
Shares shall be fixed and determined by the Board of Directors; provided that
the Board of Directors shall not classify or reclassify any of such Common
Shares into any class or series of stock which is prior to any other class or
series of Common Shares then outstanding with respect to rights upon the
liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the general assets, of the Corporation, except that there may be
variations so fixed and determined between series or classes of Common Shares as
to investment objective, purchase price, right of redemption, special rights as
to dividends and on liquidation with respect to assets belonging to a particular
series or class of Common Shares, voting powers and conversion rights. All
references to Common Shares in these Articles shall be deemed to be to shares of
any or all series and classes as the context may require.
The following is a description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the series designed as the "Growth
Portfolio" (of which there are initially 15,000,000 authorized shares), the
"Money Market Portfolio" (of which there are initially 50,000,000 authorized
shares) the "Balanced Portfolio" (of which there are initially authorized
15,000,000 shares), the "Managed Portfolio" (of which there are initially
authorized 20,000,000 shares) and any additional class or series of Common
Shares of the Corporation (unless provided otherwise by the Board of Directors
with respect to any such additional class or series at the time of establishing
and designating such additional class or series).
(a) The number of authorized Common Shares and the number of Common Shares
of each series or of each class that may be issued shall be in such number
as may be determined by the Board of Directors. The Directors may classify
or reclassify any unissued Common Shares or any Common Shares previously
issued and reacquired of any series or class into one or more series or
into one or more classes that may be established and designated from time
to time. The Directors may hold as treasury shares (of the same or some
other series or class) reissue for such consideration and on such terms as
they may determine, or cancel any Common Shares of any series or any class
reacquired by the Corporation at their discretion from time to time.
(b) All consideration received by the Corporation for the issue or sale of
Common Shares of a particular series or class, together with all assets in
which such consideration is invested or reinvested, all income, earnings,
profits and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably belong to that series or class for all purposes, subject
only to the rights of creditors of that series or class, and shall be so
recorded upon the books of account of the Corporation. Such consideration,
assets, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, any asset
derived from any reinvestment of such proceeds in whatever form the same
may be shall be referred to in these Articles of Incorporation as "assets
belonging to" or "belonging to" such series or class. In the event that
there are any assets, income, earnings, profits and proceeds thereof, funds
or payments which are not readily identifiable as belonging to any
particular series or class, the Directors shall allocate them among, and
they shall then belong to, any one or more of the series or classes
established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable. Each
such allocation by the Corporation shall be conclusive and binding upon the
stockholders of all series or classes for
3
<PAGE>
all purposes. The Directors shall have full discretion, to the extent not
inconsistent with the Investment Company Act of 1940, as amended, and the
Maryland General Corporation Law to determine which items shall be treated
as income and which items shall be treated as capital; and each such
determination and allocation shall be conclusive and binding upon the
stockholders.
(c) The assets belonging to each particular series or class shall be
charged with the liabilities of the Corporation in respect of that series
or class and all expenses, costs, charges and reserves attributable to that
series or class. Any general liabilities, expenses, costs, charges or
reserves of the Corporation which are not readily identifiable as belonging
to any particular series or class shall be allocated and charged by the
Directors to and among any one or more of the series or classes established
and designated from time to time in such manner and on such basis as the
Directors in their sole discretion deem fair and equitable. Each
allocation of liabilities, expenses, costs, charges and reserves by the
Directors shall be conclusive and binding upon the stockholders of all
series or classes for all purposes.
(d) Dividends and distributions on Common Shares of a particular series or
class may be paid with such frequency as the Directors may determine which
may be daily or otherwise, pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Board of Directors may
determine, to the holders of Common Shares of that series or class, from
such of the income and capital gains, accrued or realized, from the assets
belonging to that series or class, as the Directors may determine, after
providing for actual and accrued liabilities belonging to that series or
class. All dividends and distributions on Common Shares of a particular
series or class shall be distributed pro-rata to the holders of that series
or class in proportion to the number of Common Shares of that series or
class held by such holders at the date and time of record established for
the payment of such dividends or distributions except that in connection
with any dividend or distribution program or procedure, the Board of
Directors may determine that no dividend or distribution shall be payable
on shares as to which the stockholder's purchase order and/or payment has
not been received by the time or times established by the Board of
Directors under such program or procedure.
The Corporation intends to have each separate series or class qualify
as a "regulated investment company" under the Internal Revenue Code of
1986, or any successor comparable statute thereto, and regulations
promulgated thereunder. Inasmuch as the computation of net income and
gains for Federal income tax purposes may vary from the computation thereof
on the books of the Corporation, the Board of Directors shall have the
power, in its sole discretion, to distribute in any fiscal year as
dividends, including dividends designated in whole or in part as capital
gains distributions, amounts sufficient, in the opinion of the Board of
Directors, to enable the respective series or classes to qualify as
regulated investment companies and to avoid liability of such series or
class for Federal income tax in respect of that year. However, nothing in
the foregoing shall limit the authority of the Board of Directors to make
distributions greater than or less than the amount necessary to qualify the
series or classes as regulated investment companies and to avoid liability
of such series for such tax.
Dividends and distributions may be made in cash, property or
additional shares of the same or another class or series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program
that the Board of Directors may have in effect at the time for the election
by each stockholder of the mode of the making of such dividend or
distribution to that stockholder. Any such dividend or distribution paid
in shares will be paid at the net asset value thereof as defined in section
(3) below.
4
<PAGE>
(e) Each holder of any series or class of stock of the Corporation who
surrenders his certificate in good delivery form to the Corporation, or, if
the shares in question are not represented by certificates, who delivers to
the Corporation a written request in good order signed by the shareholder,
shall be entitled to convert the shares in question on the basis
hereinafter set forth into shares of stock of any other series or class of
the Corporation. The Corporation shall determine the net asset value, as
defined in the By-Laws, of the shares to be converted, shall deduct any
conversion cost as specified by the Board of Directors, within five (5)
business days after each surrender and payment, and shall issue to the
shareholder such number of shares of stock of the series or class desired
as, taken at the net asset value thereof determined in the same manner and
at the same time as that of the shares surrendered, less the conversion
cost as aforesaid. Any amount representing a fraction of a share may be
paid in cash at the option of the Corporation. Upon any conversion taking
place proper transfer shall be made between the assets belonging to the
various series or classes of stock involved. The Board of Directors may
limit this privilege to shares which have been held for such reasonable
period as the directors may determine.
(f) In the event of the liquidation or dissolution of the Corporation or
of a particular class or series, the stockholders of each class or series
that has been established and designated and is being liquidated shall be
entitled to receive, as a class or series, when and as declared by the
Board of Directors, the excess of the assets belonging to that class or
series over the liabilities belonging to that class or series. The holders
of shares of any particular class or series shall not be entitled thereby
to any distribution upon liquidation of any other class or series. The
assets so distributable to the stockholders of any particular class or
series shall be distributed among such stockholders in proportion to the
number of shares of that class or series held by them and recorded on the
books of the Corporation. The liquidation of any particular class or
series in which there are shares then outstanding may be authorized by vote
of a majority of the Board of Directors then in office, subject to the
approval of a majority of the outstanding securities of that class or
series, as defined in the Investment Company Act of 1940, as amended, and
without the vote of the holders of any other class or series. The
liquidation or dissolution of a particular class or series may be
accomplished, in whole or in part, by the transfer of assets of such class
or series to another class or series or by the exchange of shares of such
class or series for the shares of another class or series.
(g) On each matter submitted to a vote of the stockholders, each holder of
a share shall be entitled to one vote for each share standing in his name
on the books of the Corporation irrespective of the class or series
thereof, and all shares of all classes or series shall vote as a single
class or series ("Single Class Voting"); provided, however, that (i) as to
any matter with respect to which a separate vote of any class or series is
required by the Investment Company Act of 1940, as amended, or by the
Maryland General Corporation Law, such requirement as to a separate vote by
that class or series shall apply in lieu of Single Class Voting as
described above; (ii) in the event that the separate vote requirements
referred to in (i) above apply with respect to one or more classes or
series, then, subject to (iii) below, the shares of all other classes or
series shall vote as a single class or series; and (iii) as to any matter
which does not affect the interest of particular class or series, only the
holders of shares of the one or more affected classes or series shall be
entitled to vote.
(h) The establishment and designation of any series or class of common
Shares shall be effective upon the adoption by a majority of the then
Directors of a resolution setting forth such establishment and designation
and the relative rights and preferences of such series or class, or as
otherwise provided in such instrument and the filing with the proper
authority of the State of Maryland of Articles Supplementary setting forth
such establishment and
5
<PAGE>
designation and relative rights and preferences.
(3) The Corporation shall, upon due presentation of a share or shares of
stock for redemption, redeem such share or shares of stock at a redemption price
prescribed by the Board of Directors in accordance with applicable laws and
regulations; provided that in no event shall such price be less than the
applicable net asset value per share of such class or series as determined in
accordance with the provisions of this section (3), less such redemption charge
as is determined by the Board of Directors, which redemption charge shall not
exceed eight percent (8%) of such net asset value per share. The Corporation
may redeem, at the current net asset value, shares of any series not offered for
redemption held by any shareholder whose shares have a value of less than
$1,000, or such lesser amount as may be fixed by the Board of Directors (the
"Minimum Required Investment"); PROVIDED that before the Corporation redeems
such shares it must notify the shareholder that the value of his shares is less
than the Minimum Required Investment and allow him 60 days to make an additional
investment in an amount which will increase the value of his account to the
Minimum Required Investment or more. The Corporation shall pay redemption
prices in cash, except that the Corporation may pay redemption price in kind in
such manner as is consistent with and not in contravention of Section 18(f) of
the Investment Company Act of 1940, as amended, and any Rules and Regulations
thereunder. Redemption prices shall be paid exclusively out of the assets of
the series whose shares are being redeemed.
Notwithstanding the foregoing, the Corporation may postpone payment of the
redemption price and may suspend the right of the holders of shares of any class
or series to require the Corporation to redeem shares of that class or series
during any period or at any time when and to the extent permissible under the
Investment Company Act of 1940, as amended, or any rule or order thereunder.
The Net Asset Value of a share of any class or series of Common Stock of
the Corporation shall be determined in accordance with applicable laws and
regulations and under the supervision of such persons and at such time or times
as shall from time to time be prescribed by the Board of Directors.
(4) The Corporation may issue, sell, redeem, repurchase and otherwise deal
in and with shares of its stock in fractional denominations and such fractional
denominations shall, for all purposes, be shares of common stock having
proportionately to the respective fractions represented thereby all the rights
of whole shares, including without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Corporation; provided that the issue of shares in fractional
denominations shall be limited to such transactions and be made upon such terms
as may be fixed by or under authority of the By-Laws.
(5) The Corporation shall not be obligated to issue certificates
representing shares of any class or series unless it shall receive a written
request therefor from the record holder thereof in accordance with procedures
established in the By-Laws or by the Board of Directors.
ARTICLES VI
Preemptive Rights
No stockholder of the Corporation of any class or series, whether now or
hereafter authorized, shall have any preemptive or preferential or other right
of purchase of or subscription to any shares of any class or series of stock, or
securities convertible into, exchangeable for or evidencing the right to
purchase stock of any class or series whatever, whether or not the stock in
question be of the same class or series as may be held by such stockholders, and
whether now or hereafter authorized and whether issued for cash, property,
services or otherwise, other than such, if any, as the Board of Directors in its
discretion may from time to time fix.
6
<PAGE>
ARTICLES VII
Number and Powers of Directors
(1) The number of directors of the Corporation shall be three (3) or such
other number not less than five (5) as may from time to time be specified in or
fixed in the manner prescribed by the By-Laws of the Corporation. The By-Laws
of the Corporation shall also specify the number of directors which shall be
necessary to and shall constitute a quorum; provided, however that in no case
shall a quorum be less than one-third (1/3) of the total number of directors or
less than (2) directors. Unless otherwise provided by the By-Laws of the
Corporation, directors need not be stockholders thereof.
(2) The names of the directors who shall act until the first annual
meeting or until their successors are duly chosen and qualify are:
Steven H. Stubbs
Don B. Reynolds
Milton L. Brock
(3) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable, subject to such limitations as may be set forth in the Charter
or the By-Laws of the Corporation or in the Maryland General Corporation Law.
(4) Each Director and each officer of the Corporation shall be indemnified
by the Corporation to the full extent permitted by the Maryland General
Corporation Law and the By-Laws of the Corporation, as such Law and By-Laws may
now or in the future may be in effect, subject only to such limitations as may
be required by the Investment Company Act of 1940, as amended.
(5) The Board of Directors of the Corporation may make, alter or repeal
from time to time any of the By-Laws of the Corporation except any particular
By-Law which is specified as not subject to alteration or repeal by the Board of
Directors.
(6) The Corporation may employ such custodian or custodians for the
safekeeping of the property of the Corporation and of its shares, such dividend
disbursing agent or agents, and such transfer agents or agents and registrar or
registrars for its shares, and may make and perform such contracts for the
aforesaid purposes as in the opinion of the Board of Directors of this
Corporation may be reasonable, necessary or proper for the conduct of the
affairs of the Corporation, and may pay the fees and disbursements of such
custodians, dividend disbursing agents, transfer agents, and registrars out of
the income and/or any other property of the Corporation. Notwithstanding any
other provisions of these Articles of Incorporation or the By-Laws of the
Corporation, the Board of Directors may cause any or all of the property of the
Corporation to be transferred or to be acquired and held in the name of a
custodian so appointed or in the name of any nominee or nominees of this
Corporation or nominee or nominees of such custodian satisfactory to the said
Board of Directors.
(7) The Corporation may enter into a written contract or contracts with any
person, including any firm, corporation, trust or association in which any
officer, other employee, director or stockholder of this Corporation may be
interested, providing for a delegation of the management of all or part of this
Corporation's securities portfolio and also for the delegation of the
performance of administrative corporate functions, subject always to the
direction of the Board of Directors. The compensation payable by this
Corporation under such contracts shall be such as is deemed fair and equitable
to both parties by the said Board of Directors.
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Any such contracts shall in all respects be consistent with and
subject to the requirements of the Investment Company Act of 1940 as then in
effect and regulations of the Securities and Exchange Commission (or any
succeeding governmental authority) promulgated thereunder.
ARTICLE VIII
Stockholder Vote
Notwithstanding any provisions of Maryland law requiring a greater
proportion than a majority of the votes of all classes or of any class of stock
entitled to be cast, to take or authorize any action, the Corporation if
permitted by the Investment Company Act of 1940, may take or authorize any such
action upon the concurrence of a majority of the aggregate number of the votes
entitled to be cast thereon.
ARTICLE IX
Perpetual Existence
The duration of the Corporation shall be perpetual.
ARTICLE X
Amendment
The Corporation reserves the right from time to time to make any amendment
of its Article of Incorporation now or hereafter authorized by law, including
any amendment which alters the contract rights, as expressly set forth in its
Articles of Incorporation, of any outstanding Common Shares by classification,
reclassification or otherwise, but no such amendment which changes such terms or
contract rights of any of its outstanding stock shall be valid unless such
amendment shall have been authorized by not less than a majority of the
aggregate number of the votes entitled to be cast thereon, by a vote at a
meeting or in writing with or without a meeting.
8
<PAGE>
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledge same to be my act on this 8th day of March, 1988.
JERRY L. ADAMS
Jerry L. Adams, Incorporator
WITNESS:
SANDRA ANDERSON
STATE OF TEXAS
COUNTY OF GALVESTON
This instrument was acknowledged before me on the 8th day of
March, 1988, by JERRY L. ADAMS.
JOYCE E. RUTAN
Notary Public in and for
The State of Texas
JOYCE E. RUTAN
Printed or Typed Name of Notary
My Commission Expires:
6-29-89
9
<PAGE>
EXHIBIT 99.B2
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
BY-LAWS
Table of Contents
<TABLE>
<CAPTION>
Pages
<S> <C>
Article I - Officers................................................................. 1
1.1 Principal Office........................................................... 1
1.2 Other Offices.............................................................. 1
Article II - Stockholders' Meetings.................................................. 1-3
2.1 Place of Meetings.......................................................... 1
2.2 Annual Meetings............................................................ 1
2.3 Special Meetings........................................................... 1
2.4 Notice of Meetings......................................................... 1
2.5 Quorum & Adjournment of Meetings........................................... 2
2.6 Voting Rights, Proxies..................................................... 2
2.7 Vote Required.............................................................. 2
2.8 Inspectors of Election..................................................... 2
2.9 Action by Stockholders Without Meeting..................................... 3
Article III - Directors.............................................................. 3-5
3.1 Number and Term............................................................ 3
3.2 Powers..................................................................... 3
3.3 Organizational Meetings.................................................... 3
3.4 Regular Meetings........................................................... 3
3.5 Special Meetings........................................................... 3
3.6 Notice of Special Meetings................................................. 3
3.7 Telephone Meetings......................................................... 3
3.8 Quorum, Voting and Adjournments of Meetings................................ 4
3.9 Removal.................................................................... 4
3.10 Vacancies 4
3.11 Action by Directors Without Meeting........................................ 4
3.12 Expenses and Fees.......................................................... 4
3.13 Execution of Instruments and Documents and Signing of Checks and
Other Obligations and Transfers............................................ 4
3.14 Contracts.................................................................. 4
3.15 Indemnification of Directors, Officers, Employees and Agents............... 5
Article IV - Committees.............................................................. 7-8
4.1 Executive and Other Committees............................................. 7
4.2 Advisory Committee......................................................... 8
4.3 Committee Action Without Meeting........................................... 8
Article V - Officers................................................................. 8-10
5.1 Executive Officers......................................................... 8
5.2 Other Officers and Agents.................................................. 8
5.3 Term, Removal and Vacancies................................................ 8
5.4 Compensation of Officers................................................... 8
5.5 Power and Duties........................................................... 9
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.6 The Chairman and Vice Chairman............................................. 9
5.7 The President.............................................................. 9
5.8 The Vice Presidents........................................................ 9
5.9 The Assistant Vice Presidents.............................................. 9
5.10 The Secretary.............................................................. 9
5.11 The Assistant Secretaries.................................................. 9
5.12 The Treasurer.............................................................. 10
5.13 The Assistant Treasurer.................................................... 10
5.14 Delegation of Duties....................................................... 10
Articles VI - Capital Stock.......................................................... 10-11
6.1 Issuance of Stock.......................................................... 10
6.2 Certificates of Stock...................................................... 10
6.3 Transfer of Stock.......................................................... 11
6.4 Record Date................................................................ 11
6.5 Lost, Stolen, Destroyed and Mutilated Certificates......................... 11
6.6 Registered Owners of Stock................................................. 11
6.7 Fractional Denominations................................................... 11
Articles VII - Sale of Stock......................................................... 12
Articles VII - Determination of Net Asset Value: Valuation of Portfolio Securities
and Other Assets........................................................... 12
8.1 Net Asset Value............................................................ 12
8.2 Valuation of Portfolio Securities and Other Assets......................... 12
Articles IX - Dividends and Distributions............................................ 12
Article X - Custodian................................................................ 12-13
10.1 Appointment and Duties.................................................... 12
10.2 Central Certificate System................................................ 13
Article XI - Books and Records....................................................... 13-14
11.1 Location.................................................................. 13
11.2 Stock Ledgers............................................................. 13
11.3 Annual Statement.......................................................... 14
Articles XII - Waiver of Notice...................................................... 14
Article XIII - Miscellaneous......................................................... 14
13.1 Seal...................................................................... 14
13.2 Fiscal Year............................................................... 14
13.3 Orders for Payment of Money............................................... 14
Article XIV - Compliance with Federal Regulations.................................... 14
Article XV - Amendments.............................................................. 15
</TABLE>
<PAGE>
BY-LAWS
OF
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
ARTICLE I
OFFICES
SECTION 1.1 Principal Office. The principal office of the Corporation in
the State of Maryland shall be in the City of Baltimore.
SECTION 1.2 Other Offices. In addition to its principal office in the
State of Maryland, the Corporation may have an office or offices in the City of
Galveston, State of Texas, and at such other places as the Board of Directors
may from time to time designate or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 2.1 Place of Meetings. Meetings of stockholders shall be held at
such place, within or without the State of Maryland, as may be designated from
time to time by the Board of Directors.
SECTION 2.2 Annual Meetings. Annual or other meetings of the
stockholders, unless required by the Investment Company Act of 1940, as amended,
or the Maryland General Corporation Law shall not be required to be held but
may, in the discretion of the Directors, be held notwithstanding the absence of
a requirement under the Investment Company Act of 1940, as amended, or the
Maryland General Corporation Law to hold such meeting.
SECTION 2.3 Special Meetings. Special meetings of stockholders of the
Corporation shall be held whenever called by the Board of Directors or the
President of the Corporation. Special meetings of stockholders shall also be
called by the Secretary upon the written request of the holders of shares
entitled to vote not less than twenty-five percent (25%) of all the votes
entitled to be cast at such meeting. In addition, special meetings of
stockholders shall be called upon the written request of record holders of not
less than ten percent (10%) of the outstanding shares if such request is to
consider the removal of any director. Such request shall state the purpose or
purposes of such meeting and the matters proposed to be acted on thereat. The
Secretary shall inform such stockholders of the reasonable estimated cost of
preparing and mailing such notice of the meeting, and upon payment to the
Corporation of such costs, the Secretary shall give notice stating the purpose
or purposes of the meeting to all entitled to a vote at such meeting. Unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted upon at any special
meeting of stockholders held during the preceding twelve months.
SECTION 2.4 Notice of Meetings. Written or printed notice of every
stockholders' meeting stating the place, date and time, and in the case of a
special meeting the purpose or purposes thereof, shall be given by the Secretary
not less than ten (10) nor more than ninety (90) days before such meeting to
each stockholder entitled to vote at such meeting, either by mail or by
presenting it to him personally, or by leaving it at his residence or usual
place of business. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
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SECTION 2.5 Quorum and Adjournment of Meetings. Except as otherwise
provided by law, by the Charter of the Corporation, or by these By-Laws, at all
meetings of stockholders the holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum for the transaction of
business. In the absence of a quorum, the stockholders present or represented
by proxy and entitled to vote thereat shall have power to adjourn the meeting
from time to time (but in no event to a date more than 120 days after the
original record date) without notice other than announcement at the meeting,
until a quorum shall be present. At any adjourned meeting at which a quorum
shall be present, any business may be transacted if the meeting had been held as
originally called.
SECTION 2.6 Voting Rights, Proxies. At each matter submitted to a vote of
the stockholders, each holder of a share shall be entitled to one vote for each
share standing in his name on the books of the Corporation, irrespective of the
class or series thereof, and all shares of all classes or series shall vote as a
single class or series ("Single Class Voting"); provided, however, that (i) as
to any matter with respect to which a separate vote of any class or series is
required by the Investment Company Act of 1940, as amended, or by the Maryland
General Corporation Law, such requirement as to a separate vote by that class or
series shall apply in lieu of Single Class Voting as describe above; (ii) in
the event that the separate vote requirements referred to in (i) above apply
with respect to one or more classes or series, then, subject to (iii) below, the
shares of all other classes or series shall vote as a single class or series;
and (iii) as to any matter which does not affect the interest of a particular
class or series, only the holders of shares of the one or more affected classes
or series shall be entitled to vote. In all elections of directors, each share
of stock so registered in a stockholder's name on the books of the corporation
on the date fixed as the record date, may be voted for as many individuals as
there are directors to be elected and for whose election such share is entitled
to be voted. No proxy shall be valid after eleven months from its date, unless
otherwise provided in the proxy. At all meetings of stockholders, unless the
voting is conducted by inspectors, all questions relating to the qualification
of voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting.
SECTION 2.7 Vote Required. Except as otherwise provided by law, by the
Charter of the Corporation, or by these By-Laws, at each meeting of stockholders
at which a quorum is present, all matters shall be decided by a majority of the
votes cast by the shareholders present in person or represented by proxy and
entitled to vote with respect to any such matter.
SECTION 2.8 Inspectors of Election. In advance of any meeting of
stockholders, the Directors may appoint Inspectors of Election to act at the
meeting or an adjournment thereof. If Inspectors of election are not so
appointed, the chairman of any meeting of stockholders may, and on the request
of any stockholder of his proxy shall, appoint Inspectors of Election of the
meeting. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Directors
in advance of the convening of the meeting or at the meeting by the person
acting as chairman. The Inspectors of election shall determine the number of
shares of stock outstanding, the shares of stock represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies, shall
receive votes, ballots or consents, shall hear and determine all challenges and
questions in any way arising in connection with the right to vote, shall count
and tabulate all votes or consents, determine the results, and do such other
acts as may be proper to conduct the election or vote with fairness to all
stockholders. On request of the chairman of the meeting or of any stockholder
or his proxy, the Inspectors of Election shall make a report in writing of any
challenge or question or matter determined by them and shall execute a
certificate of any facts found by them.
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SECTION 2.9 Action by Stockholders Without Meeting. Except as otherwise
provided by law, the provisions of these By-Laws relating to notices and
meetings to the contrary notwithstanding, any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting if a consent
in writing setting forth the action shall be signed by all the stockholders
entitled to vote upon the action and such consent shall be filed with the
records of the Corporation.
ARTICLE III
DIRECTORS
SECTION 3.1 Number and Term. The Board of Directors shall consist of not
less than three (3) nor more than fifteen (15) directors, the number of
directors to be fixed from time to time within the above-specified limits by the
affirmative vote of a majority of the whole Board of Directors. At the first
meeting of stockholders, and at each meeting thereafter called for the purpose
of electing directors, the stockholders shall elect directors to hold office
until their successors are elected and qualify. Directors need not be
stockholders of the Corporation.
SECTION 3.2 Powers. The business of the Corporation shall be managed by
the Board of Directors which may exercise all powers of the Corporation and do
all lawful acts and things which are not by law or by the Charter of the
Corporation, or by these By-Laws, directed or required to be exercised or done
exclusively by the stockholders.
SECTION 3.3 Organizational Meetings. The first meeting of each newly
elected Board of Directors for the purposes of organization and the election of
officers and otherwise shall be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
directors.
SECTION 3.4 Regular Meetings. Regular meetings of the Board of Directors
may be held at such time and place as shall be determined from time to time by
the Board of Directors without further notice.
SECTION 3.5 Special Meetings. Special meetings of the Board of Directors
may be called at any time by the President an shall be called by such President
or the Secretary upon the written request of any two (2) directors.
SECTION 3.6 Notice of Special Meetings. Written notice of special
meetings of the Board of Directors, stating the place, date and time thereof
shall be given not less than two (2) days before such meeting to each director,
personally, by telegram, by mail or by leaving such notice at his place of
residence or usual place of business. If mailed, such notice shall be deemed to
be given when deposited in the United States mail, postage prepaid, directed to
the director at his address as it appears on the records of the Corporation.
SECTION 3.7 Telephone Meetings. Any member or members of the Board of
Directors or of any committee designated by the Board, may participate in a
meeting of the Board, or any such committee, as the case may be, by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
Participation in a meeting by these means constitutes presence in person at the
meeting. This Section 3.7 shall not be applicable to meetings held for the
purpose of voting in respect of approval of contracts or agreements whereby a
person undertakes to serve or act as investment adviser of, or principal
underwriter for, the Corporation.
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SECTION 3.8 Quorum, Voting and Adjournments of Meetings. At all meetings
of the Board of Directors, a majority of the whole Board shall be requisite to
and shall constitute a quorum for the transaction of business. If a quorum is
present, the affirmative vote of a majority of the directors present shall be
the act of the Board of Directors, unless the concurrence of a greater
proportion is expressly required for such action by law, the Charter of the
Corporation or these By-Laws. If at any meeting of the Board there be less than
a quorum present, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting until a
quorum shall have been obtained.
SECTION 3.9 Removal. Any one or more of the directors may be removed,
either with or without cause, by the affirmative vote of the stockholders
holding a majority of the outstanding shares entitled to vote for the election
of directors. The successor or successors of any director or directors so
removed may be elected by the stockholders entitled to vote thereon at the same
meeting to fill any resulting vacancies for the unexpired term of removed
directors. Except as provided by law, the successor or successors of any
director of directors so removed may be chosen by the Board of Directors.
SECTION 3.10 Vacancies. Except as otherwise provided by law, any vacancy
occurring in the Board of Directors and newly created directorships resulting
from an increase in the authorized number of directors may be filled by the vote
of a majority of the directors then in office or, if only one director shall
then be in office, by such director. A director elected by the Board of
Directors to fill a vacancy shall be elected to hold office until the next
annual meeting of stockholders or until his successor is elected and qualifies.
SECTION 3.11 Action by Directors Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting if a consent in
writing setting forth the action shall be signed by all of the directors
entitled to vote upon the action and such written consent is filed with the
minutes of proceedings of the Board of Directors.
SECTION 3.12 Expenses and Fees. Each director may be allowed expenses, if
any, for attendance at each regular or special meeting of the Board of Directors
and shall receive for services rendered as a director of the Corporation such
compensation as may be fixed by the Board of Directors. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 3.13 Execution of Instruments and Documents and Signing of Checks
and Other Obligations and Transfers. All instruments, documents and other paper
shall be executed in the name and on behalf of the Corporation and all checks,
notes, drafts and other obligations for the payment of money by the Corporation
shall be signed, and all transfer of securities standing in the name of the
Corporation shall be executed, by the President, any Vice President or the
Treasurer or by any one or more officers or agents of the Corporation as shall
be designated for that purpose by vote of the Board of Directors.
SECTION 3.14 Contracts. Except as otherwise provided by law or by the
Articles of Incorporation of the Corporation, no contract or transaction between
the Corporation and any partnership or corporation, and no act of the
Corporation, shall in any way be affected or invalidated by the fact that any
officer or director of the Corporation, is pecuniarily or otherwise interested
therein or is a member, officer or director of such interest shall be known to
the Board of Directors of the Corporation. Specifically, but without limitation
of the foregoing, the Corporation may enter into one
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or more contracts appointing Securities Management and Research, Inc.,
investment manager of the Corporation, and may otherwise do business with
Securities Management and Research, Inc., notwithstanding the fact that one or
more of the directors of the Corporation and some or all of its officers are,
have been or may become directors, officers, members, employees, or stockholders
of Securities Management and Research, Inc.; and in the absence of fraud, the
Corporation and Securities Management and Research, Inc. may deal freely with
each other, and neither such contract appointing Securities Management and
Research, Inc. shall be invalidated or in any way affected thereby, nor shall
any director or officer of the Corporation by reason thereof be liable to the
Corporation or to any stockholder or creditor of the Corporation or to any other
person for any loss incurred under or by reason of any such contract or
transaction. For purposes of this paragraph, any reference to "Securities
Management and Research, Inc." shall be deemed to include said company and any
parent, subsidiary or affiliate of said company and any successor (by merger,
consolidation or otherwise) to said company or any such parent, subsidiary or
affiliate.
SECTION 3.15 Indemnification of Directors, Officers, Employees and Agents.
(a) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
suit, or proceeding, whether civil, criminal administrative, or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation. The indemnification shall be against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him in connection with the action, suit, or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not of itself, create a presumption that the person did not in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interest of the Corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or on behalf of the Corporation to obtain a judgment or
decree in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the Corporation. The indemnification shall
be against expenses, including attorneys' fees actually and reasonably
incurred by him in connection with the defense or settlement of the action
or suit if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporations; except that
no indemnification shall be made in respect of any claim, issue, or matter
as to which the person has been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation, except to the
extent that the court in which the action or suit was brought, or a court
of equity in the county in which the Corporation has its principal office,
determines upon application that, despite the adjudication of liability but
in view of all circumstance of the case, the person is fairly and
reasonably entitled to indemnity for those expenses which the court shall
deem proper, provided such director or officer is not adjudged to be liable
by means of his willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
(c) To the extent that a director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsection (a) or (b) or in
defense of any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorney's fees, actually and reasonable
incurred by him in connection therewith.
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(d) (1) Unless a court orders otherwise, any indemnification under subsections
(a) or (b) of this section may be made by the Corporation only as
authorized in the specific case after a determination that
indemnification of the director, officer, employee, or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth subsections (a) or (b).
(2) The determination shall be made:
(i) By the Board of Directors, by a majority vote of a quorum which
consists of directors who were not parties to the action, suit or
proceeding; or
(ii) If the required quorum is not obtainable, or if a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion; or
(iii) By the stockholders.
(3) Notwithstanding the provisions of paragraphs (1) and (2) of this
subsection (d), no person shall be entitled to indemnification for any
liability, whether or not there is an adjudication of liability,
arising by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duties as subscribed in section 17(h) and (i)
of the Investment Company Act of 1940, as amended ("disabling
conduct"). A person shall be deemed not liable by reason of disabling
conduct if, either.
(i) a final decision on the merits is made by a court or other body
before whom the preceding was brought that the person to be
indemnified ("indemnitee") was not liable by reason of disabling
conduct; or
(ii) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnitee was not
liable by reason of disabling conduct, is made by either --
(A) a majority of a quorum of directors who are neither
"interested persons" of the Corporation, as defined in
section 2(a)(19) of the Investment Company Act of 1940, as
amended, nor parties to the action, suit or proceeding, or
(B) an independent legal counsel in a written opinion.
(e) Expenses, including attorney's fees, incurred by a director, officer,
employee or agent of the Corporation in defending a civil or criminal
action suit or proceeding may be paid by the Corporation in advance of the
final disposition thereof if:
(1) authorized in the specific case by the Board of Directors; and
(2) the Corporation receives an undertaking by or on behalf of the
director, officer, employee or agent of the Corporation to repay the
advance if it is not ultimately determined that such person is
entitled to be indemnified by the Corporation; and
(3) either
(i) such person provides a security for his undertaking, or
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(ii) the Corporation is insured against losses by reason of any lawful
advances, or
(iii) a determination, based on a review of readily available facts,
that there is reason to believe that such persons ultimately will
be found entitled to indemnification, is made by either--
(A) a majority of a quorum which consists of directors who are
neither "interested persons" of the Corporation, as defined
in Section 2 (a)(19) of the Investment Company Act of 1940,
as amended, nor parties to the action, suit or proceeding,
or
(B) an independent legal counsel in a written opinion.
(f) The indemnification provided by this Section shall not be deemed exclusive
of any other rights to which a person may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another
capacity while holding the office, and shall continue as to a person who
has ceased to be a director, officer, employee, or agent and inure to the
benefit of the heirs, executors and administrators of such person.
(g) The Corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of the Corporation,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such. However, in no event will
the Corporation purchase insurance to indemnify any officer or director
against liability for any act for which the Corporation itself is not
permitted to indemnify him.
(h) Nothing contained in this Section shall be construed to protect any
director or officer of the Corporation against any liability to the
Corporation or to its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE IV
COMMITTEES
SECTION 4.1 Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the whole Board, may designate an Executive
Committee and/or other committees, each committee to consist of two (2) or more
of the Directors of the Corporation and may delegate to such committees, in the
intervals between meetings of the Board of Directors, any or all of the powers
of the Board of Directors in the management of the business and affairs of the
Corporation, except the power to: declare dividends or distributions of stock;
issue stock; recommend to stockholders any action requiring stockholder
approval; amend the By-Laws of the Corporation; or approve any merger or share
exchange which does not require shareholder approval. In the absence of any
member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of the Board of
Directors to act in place of such absent member. Each such committee shall keep
a record of its proceedings.
The Executive Committee and any other committee shall fix its own rules or
procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting be necessary to take action.
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All actions of the Executive Committees shall be reported to the Board of
Directors at the meeting thereof next succeeding to the taking of such action.
SECTION 4.2 Advisory Committee. The Board of Directors may appoint an
advisory committee which shall be composed of persons who do not serve the
Corporation in any other capacity and which shall have advisory functions with
respect to the investments of the Corporation but which shall have no power to
determine that any security or other investment shall be purchased, sold or
otherwise disposed of by the Corporation. The number of persons constituting
any such advisory committee shall be determined from time to time by the Board
of Directors. The members of any such advisory committee may receive
compensation for their services and may be allowed such fees and expenses for
the attendance at meetings as the Board of Directors may from time to time
determine to be appropriate.
SECTION 4.3 Committee Action Without Meeting. The provisions of these By-
Laws covering notices and meetings to the contrary notwithstanding, and except
as required by law, any action required or permitted to be taken at any meeting
of any committee of the Board appointed pursuant to Section 4.2 of these By-Laws
may be taken without a meeting if the consent in writing setting forth the
action shall be signed by all members of the Committee entitled to vote upon the
action and such written consent is filed with the records of the proceedings of
the Committee.
ARTICLE V
OFFICERS
SECTION 5.1 Executive Officers. The executive officers of the Corporation
shall be a President, one or more Vice Presidents, a Secretary and a Treasurer.
The Board of Directors may also elect a Chairman. The President shall be
selected from among the directors but none of the other executive officers need
be a member of the Board of Directors. Two or more offices, except those of
President and any Vice President, may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one capacity.
The executive officers of the Corporation shall be elected annually by the Board
of Directors and each executive officer so elected shall hold office until his
successor is elected and has qualified.
SECTION 5.2 Other Officers and Agents. The Board of Directors may also
elect one or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers and may elect, or may delegate to the President the power to appoint
and fix the compensation of such officers, and such other officers and agents as
the Board of Directors shall at any time or from time to time deem advisable.
SECTION 5.3 Term, Removal and Vacancies. Each officer of the Corporation
shall hold office until his successor is elected and has qualified. Any officer
or agent of the Corporation may be removed by the Board of Directors whenever,
in its judgement, the best interests of the Corporation will be served thereby,
but such removal shall be without prejudice to the contractual rights, if any,
of the person so removed.
SECTION 5.4 Compensation of Officers. The compensation of officers and
agents of the Corporation shall be fixed by the Board of Directors, or by the
President to the extent provided by the Board of Directors with respect to
officers appointed by the President.
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SECTION 5.5 Powers and Duties. All officers and agents of the
Corporation, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may be
provided in or pursuant to these By-Laws, or, to the extent not so provided, as
may be prescribed by the Board of Directors; PROVIDED, that no rights of any
third party shall be affected or impaired by any such By-Law or resolution of
the Board unless he has knowledge thereof.
SECTION 5.6 The Chairman. The Chairman, if any, or in his absence the
President shall preside at all meetings of the stockholders and of the Board of
Directors; and he shall perform such other duties as the Board of Directors may
from time to time prescribe.
SECTION 5.7 The President. The President shall be the chief executive
officer of the Corporation; he shall have general and active management of the
business of the Corporation, shall see that all orders and resolutions of the
Board of Directors are carried into effect, and, in connection therewith, shall
be authorized to delegate to one or more Vice Presidents such of his powers and
duties at such times and in such manner as he may deem advisable. Subject to
the control of the Board of Directors and to the control of any Committees of
the Board of Directors, within their respective spheres, as provided by the
Board of Directors, he shall at all times exercise a general supervision and
direction over the affairs of the Corporation. He shall have the power to
employ attorneys and counsel for the Corporation and to employ such subordinate
officers, agents, clerks and employees as he may find necessary to transact the
business of the Corporation. He shall also have the power to grant, issue,
execute or sign such powers of attorney, proxies or other documents as may be
deemed advisable or necessary in furtherance of the interests of the
Corporation. The President shall have such other powers and duties, as from
time to time may be conferred upon or assigned to him by the Board of Directors.
SECTION 5.8 The Vice Presidents. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by the
Board of Directors. The Vice President or, if there be more than one, the Vice
Presidents in the order of their seniority as may be determined from time to
time by the Board of Directors or the Executive Vice President shall, in the
absence or disability of the President, and the Executive Vice President,
exercise the powers and perform the duties of those officers; and he or they
shall perform such other duties as the Board of Directors or the Executive Vice
President may from time to time prescribe.
SECTION 5.9 The Assistant Vice Presidents. The Assistant Vice President
or, if there be more than one, the Assistant Vice Presidents, shall perform such
duties and have such powers as may be assigned them from time to time by the
Board of Directors or the Executive Vice President.
SECTION 5.10 The Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the stockholders and of the Board of Directors in
a book to be kept for that purpose, and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties and have such powers as the Board
of Directors or the Executive Vice President may, from time to time, prescribe.
He shall keep in safe custody the seal of the Corporation and affix or cause the
same to be affixed to any instrument requiring it, and, when so affixed, it
shall be attested by his signature or by the signature of an Assistant
Secretary.
SECTION 5.11 The Assistant Secretaries. The Assistant Secretary or, if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors or the Executive Vice President shall, in the absence or
disability of the Secretary, perform the duties and exercise the
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powers of the Secretary and shall perform such other duties and have such other
powers as the Board of Directors or the Executive Vice President may from time
to time prescribe.
SECTION 5.12 The Treasurer. The Treasurer shall be the chief financial
officer of the Corporation. He shall keep or cause to be kept full and accurate
accounts or receipts and disbursements in books belonging to the Corporation,
and he shall render the Board of Directors and the Executive Vice President,
whenever any of them require it, an account of his transactions as Treasurer and
of the financial condition of the Corporation; and he shall perform such other
duties as the Board of Directors or the Executive Vice President may from time
to time prescribe.
SECTION 5.13 The Assistant Treasurer. The Assistant Treasurer or, if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board of Directors or the
Executive Vice President may from time to time prescribe.
SECTION 5.14 Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the Board of Directors may deem is
desirable, the Board may delegate the powers and duties of an officer to any
other officer or officers or to any Director or Directors.
ARTICLES VI
Capital Stock
SECTION 6.1. Issuance of Stock. The Corporation shall not issue its
shares of capital stock except as approved by the Board of Directors.
SECTION 6.2. Certificates of Stock. Certificates for shares of each class
of the capital stock of the Corporation shall be in such form and of such design
as the Board of Directors shall approve, subject to the right of the Board of
Directors to change such form and design at any time or from time to time, and
shall be entered in the books of the Corporation as they are issued. Each such
certificate shall bear a distinguishing number; shall exhibit the holder's name
and certify the number of full shares owned by such holder; shall be signed by
or in the name of the Corporation by the President or a Vice President, and
countersigned by the Secretary or an Assistant Secretary or the Treasurer and an
Assistant Treasurer of the Corporation; shall be sealed with the corporate seal;
and shall contain such recitals as may be required by law. Where any stock
certificate is signed by a Transfer Agent or by a Registrar, the signature of
such corporate officers and the corporate seal may be facsimile, printed or
engraved. The Corporation may, at its option, defer the issuance of a
certificate or certificates to evidence shares of capital stock owned of record
by any stockholder until such time as written demand therefor shall be made upon
the Corporation or its Transfer Agent, but upon the making of such demand each
stockholder shall be entitled to such certificate or certificates.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall appear on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or certificates
shall have been delivered by the Corporation, such certificate or certificates
shall, nevertheless, be adopted by the Corporation and be issued and delivered
as though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures shall appear therein had not ceased to
be such officer or officers of the Corporation.
No certificate shall be issued for any share of stock until such share is
fully paid.
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SECTION 6.3. Transfer of Stock. Transfers of shares of the capital stock
of the Corporation shall be made only on the books of the Corporation by the
holder thereof, or by his attorney thereunto duly authorized by a power of
attorney duly executed and filed with the Corporation or a Transfer Agent of the
Corporation, if any, upon written request in proper form if no share certificate
has been issued, or in the event such certificate has been issued, upon
presentation and surrender in proper form of said certificate.
SECTION 6.4. Record Date. The Board of Directors may fix in advance a
date as the record date for the purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any rights, or in order
to make a determination of stockholders for any other proper purpose. Such
date, in any case, shall be not more than ninety (90) days, and in case of a
meeting of stockholders not less than (10) days prior to the date on which
particular action requiring such determination of stockholders is to be taken.
In lieu of fixing a record date the Board of Directors may provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case, twenty (20) days. If the stock transfer books are closed for the
purpose of determining stockholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting.
SECTION 6.5. Lost, Stolen, Destroyed and Mutilated Certificates. The
Board of Directors may direct a new certificate of certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon satisfactory proof of such
loss, theft, or destruction; and the Board of Directors may, in its discretion,
require the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give to the Corporation and to such Registrar, Transfer
Agent, and/or Transfer Clerk as may be authorized or required to countersign
such new certificate or certificates, a bond in such sum and of such type as
they may direct, and with such surety and sureties, as they may direct, as
indemnity against any claim that may be against them or any of them on account
of or in connection with the alleged loss, theft or destruction of any such
certificate.
SECTION 6.6. Registered Owners of Stock. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares of stock to receive dividends, and to vote as such owner,
and to hold liable for calls and assessments a person registered on its books as
the owner of shares of stock, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
SECTION 6.7. Fractional Denominations. Subject to any applicable
provisions of law and the Charter of the Corporation, the Corporation may issue
shares of is capital stock in fractional denominations, provided that the
transactions in which and the terms and conditions upon which shares in
fractional denominations may be issued may from time to time be limited or
determined by or under the authority of the Board of Directors.
ARTICLES VII
Sale of Stock
Upon the sale of each share of its Common Stock, except as otherwise
permitted by applicable laws and regulations, the Corporation shall receive in
cash or in securities valued as provided in Article VIII of these By-Laws, not
less than the current net asset value thereof, exclusive of any distributing
commission or discount, and in no event less than the par value thereof.
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<PAGE>
ARTICLES VIII
Determination of Net Asset Value:
Valuation Of Portfolio Securities and Other Assets
SECTION 8.1. Net Asset Value. The net asset value of a share of
Common Stock of the Corporation shall be determined in accordance with
applicable laws and regulations under the supervision of such persons and at
such time or times as shall from time to time be prescribed by the Board of
Directors. Each such determination shall be made by subtracting from the value
of the assets of the Corporation (as determined pursuant to Section 8.2 of these
By-Laws) the amount of its liabilities, dividing the remainder by the number of
shares of Common Stock issued and outstanding.
SECTION 8.2. Valuation of Portfolio Securities and Other Assets.
Except as otherwise required by any applicable law or regulation of any
regulatory agency having jurisdiction over the activities of the Corporation and
the use of the amortized cost valuation technique for Money Market Portfolio
securities and for other Portfolios which have maturities of sixty (60) days or
less, the Corporation shall determine the value of its other portfolio
securities and other assets as follows:
(a) securities for which market quotations are readily available shall be
valued at current market value determined in such manner as the Board
of Directors may from time to time prescribe;
(b) all other securities and assets shall be valued at amounts deemed best
to reflect their fair value as determined in good faith by or under
the supervision of such persons and at such time or times as shall
from time to time be prescribed by the Board of Directors.
All quotations, sale prices, bid and asked prices and other information
shall be obtained from such sources as the persons making such determination
believe to be reliable and any determination of net asset value based thereon
shall be conclusive.
ARTICLE IX
Dividends and Distributions
Subject to any applicable provisions of law and the Charter of the
Corporation, dividends and distributions upon the Common Stock of the
Corporation may be declared at such intervals as the Board of Directors may
determine, in cash, in securities or other property, or in shares of stock of
the Corporation, from any sources permitted by law, all as the Board of
Directors shall from time to time determine.
Inasmuch as the computation of net income and net profits from the sale of
securities or other properties for federal income tax purposes may vary from the
computation thereof on the books of the Corporation, the Board of Directors
shall have power, in its discretion, to distribute as income dividends and as
capital gains distributions, respectively, amounts sufficient to enable to the
Corporation to avoid or reduce liability for federal income taxes.
ARTICLE X
Custodian
SECTION 10.1. Appointment and Duties. The Corporation may at any time
employ a bank or trust company having the qualifications specified by the
Investment Company Act of 1940, as amended, as custodian with authority as its
agent, but subject to such restrictions, limitations and
12
<PAGE>
other requirements, if any, as may be contained in these By-Laws and the
Investment Company Act of 1940, as amended:
(1) to receive and hold the securities owned by the Corporation and
deliver the same upon written order;
(2) to receive and receipt for any monies due to the Corporation and
deposit the same in its own banking department or elsewhere as the Trustees
may direct;
(3) to disburse such funds upon orders or vouchers;
(4) to keep the books and accounts of the Corporation and furnish clerical
and accounting services;
(5) to compute the net income of the Corporation and the net asset value
of the Corporation and its shares;
all upon such basis of compensation as may be agreed upon between the Board of
Directors and the custodian. If so directed by a vote of a majority of the
shares of stock outstanding, the custodian shall deliver and pay over all
property of the Corporation held by it as specified in such vote.
The Board of Directors may also authorize the custodian to employ one or
more sub-custodians from time to time to perform such of the acts and services
of the custodian and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Board of
Directors.
SECTION 10.2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Directors may direct the
custodian to deposit all or any part of the securities owned by the Corporation
in a system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the
Investment Company Act of 1940, as amended, pursuant to which system all
securities of any particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of such securities, provided that all such
deposits shall be subject to withdrawal only upon the order of the Corporation.
ARTICLE XI
Books and Records
SECTION 11.1. Location. The books and records of the Corporation may be
kept outside the State of Maryland at such place or places as the Board of
Directors may from time to time determine, except as otherwise required by law.
SECTION 11.2. Stock Ledgers. The Corporation shall maintain at the office
of its transfer agent an original stock ledger containing the names and
addresses of all stockholders and the number of shares held by each stockholder.
Such stock ledger may be in written form or any other form capable of being
converted into written form within a reasonable time for visual inspection.
13
<PAGE>
SECTION 11.3. Annual Statement. The President or a Vice President or the
Treasurer shall prepare or cause to be prepared annually a full and correct
statement of the affairs of the Corporation, including a statement of assets and
liabilities and a statement of operations for the preceding fiscal year, which
shall be submitted to the stockholders and filed with the principal office of
the Corporation at the times required by the Investment Company Act of 1940, as
amended, and to the extent not conflicting with such statute, at times required
by the Maryland General Corporation Law.
ARTICLE XII
Waiver of Notice
Whenever any notice of the time, place or purpose of any meeting or
stockholders, directors, or of any committee is required to be given under the
provisions of the Maryland statute, the Investment Company Act of 1940, as
amended, or under the provisions of the Charter of the Corporation of these
ByLaws, a waiver thereof in writing, signed by the person or persons entitled to
such notice and filed with the records of the meeting, whether before or after
the holding thereof, or actual attendance at the meeting of Directors or
committee in person, shall be deemed equivalent to the giving of such notice to
such person.
ARTICLE XIII
Miscellaneous
SECTION 13.1. Seal. The Board of Directors shall adopt a corporate seal,
which shall be in the form of a circle, and shall have inscribed thereon the
name of the Corporation, the year of its incorporation, and the words "Corporate
Seal - Maryland". Said seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
SECTION 13.2. Fiscal Year. The fiscal year of the Corporation shall end
such date as the Board of Directors may by resolution specify, and the Board of
Directors may by resolution change such date for future fiscal years at any time
and from time to time.
SECTION 13.3. Orders for Payment of Money. All orders or instructions for
the payment of money of the Corporation, and all notes or other evidences of
indebtedness issued in the name of the Corporation, shall be signed by such
officer or officers or such other person or persons as the Board of Directors
may from time to time designate, or as may be specified in or pursuant to the
agreement between the Corporation and the bank or trust company appointed as
Custodian of the securities and funds of the Corporation.
ARTICLES XIV
Compliance with Federal Regulations
The Board of Directors and officers of the Corporation are hereby empowered
to take such action as they may deem to be necessary, desirable or appropriate
so that the Corporation is or shall be in compliance with any federal or state
statute, rule or regulation with which compliance by the Corporation is
required.
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ARTICLES XV
Amendments
These By-Laws may be amended, altered, or repealed at any annual or special
meeting of the stockholders by the affirmative vote of the holders of a majority
of the shares of capital stock of the Corporation issued and outstanding and
entitled to vote, provided notice of the general purpose of the proposed
amendment, alteration or repeal is given in the notice of said meeting; or, at
any meeting of the Board of Directors, by a vote of a majority of the whole
Board of Directors, provided, however, that any By-Law or amendment or
alteration of the By-Laws adopted by the Board of Directors may be amended,
altered or repealed and any By-Law repealed by the Board of Directors may be
reinstated, by vote of the stockholders of the Corporation.
15
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EXHIBIT 99.B4
REGISTRANTS STOCK CERTIFICATE
Incorporated Under the Laws of the State of Maryland
American National Investment Accounts, Inc.
Galveston, Texas
Common Stock Number Common Stock Shares
See Reverse for
Certain Definitions
This Certifies That is the owner of
fully paid and non-assessable shares of Common Stock of American National
Investment Accounts, Inc. of the par value of $.01 per share, transferable on
the books of the Company in person or by duly authorized attorney upon surrender
of this Certificate properly endorsed. NOTE: this Certificate has restrictions
on transferability, whether by sale, pledge or otherwise. No pledge of this
certificate shall be valid unless prior written notice is given to the Company.
The Company will furnish all restriction information to the stockholder on
request and without charge. Additionally, this Certificate is issued by the
Company and accepted by the holder subject to all the terms and conditions
pertaining to the Common Stock of the Company contained in the Certificate of
Incorporation, and all amendments thereto and in the By Laws of the Company, and
all amendments thereto, copies of which are on file in the office of the
Company, and to which reference is hereby made.
This Certificate is not valid unless countersigned by the Transfer
Agency-Registrar.
Witness the facsimile seal of the Company and facsimile signatures of its duly
authorized and designated officers.
Dated: Countersigned and Registered by:
Securities Management & Research, Inc.
Transfer Agent and Registrar
Authorized Signature
American National Investment Accounts, Inc.
Incorporated
SEAL
Maryland 1988
Teresa Axelson Steven H. Stubbs
Secretary President
<PAGE>
(back of certificate)
NO HOLDER OF ANY OF THE COMMON SHARES OF THE CORPORATION OR OTHER SECURITIES (IF
ANY) OF THE CORPORATION SHALL BE ENTITLED AS A MATTER OF RIGHT TO PURCHASE ANY
UNISSUED COMMON SHARES OR OTHER SECURITIES OF THE CORPORATION AT ANY TIME
AUTHORIZED; BUT ANY UNISSUED COMMON SHARES OR OTHER SECURITIES OF THE
CORPORATION MAY BE ISSUED AND DISPOSED OF BY THE BOARD OF DIRECTORS TO SUCH
PERSONS AS THE BOARD OF DIRECTORS MAY IN ITS SOLE DISCRETION DETERMINE WITHOUT
OFFERING ANY THEREOF TO HOLDERS OF COMMON SHARES OR OTHER SECURITIES OF THE
CORPORATION.
The following abbreviations when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____________ custodian ______________ under
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with rights of Uniform Gifts to Minors Act_________________
and not as tenants in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ______________ hereby sells, assign and transfer unto
Please insert social security or other identifying number of assignee
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code, of assignee)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- ----------------------------------------------------------------------- shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ----------------------------------------------------------------------- Attorney
to transfer the said stock on the books of the within named Company with full
power of substitution in the premises.
Dated
------------------------------
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the certificate in every particular, without
alteration or enlargement or any change whatever.
- -------------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE>
EXHIBIT 99.B5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS AGREEMENT is made and entered into this 8th day of February, 1991, by and
between AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC., a Maryland corporation
(hereinafter referred to as the "Fund"), and SECURITIES MANAGEMENT AND RESEARCH,
INC., a Florida corporation (hereinafter referred to as the "Adviser").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
FIRST: Adviser shall act as investment adviser for the Fund and shall, in
such capacity, supervise the investment and reinvestment of the cash, securities
and other properties comprising the assets of the Fund, subject at all times to
the policies and approval of the Board of Directors of the Fund. Adviser shall
give the Fund the benefit of its best judgment and efforts in rendering its
services as investment adviser.
SECOND: In carrying out its obligations under paragraph FIRST hereof,
Adviser shall:
(1) Obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
portfolios of the Fund, and whether concerning the individual
companies whose securities are included in the Fund's portfolios, or
the industries in which they engage, or with respect to securities
which the Adviser considers desirable for inclusion in the Fund's
portfolios.
(2) Determine what industries and companies shall be represented in the
Fund's portfolios and regularly report them to the Board of Directors
of the Fund.
(3) Formulate and implement programs for the purchases and sales of the
securities of such companies and regularly report thereon to the Board
of Directors of the Fund.
(4) Take, on behalf of the Fund, all actions which appear to the Adviser
necessary to carry into effect such purchase and sale programs, and
supervisory functions including the placing of orders for the purchase
and sale of the portfolios' securities.
THIRD: As its sole compensation for the services supplied to the Fund
hereunder, the fund shall pay to the Adviser an investment advisory fee of .50
of one percent per annum of the average daily net asset value of the Fund
computed on a monthly basis by taking 1/12th of the annual rate specified above.
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The "average daily net asset value" of the Fund for a particular period shall be
determined by adding net asset values as regularly computed by the Fund each day
during such period and dividing the resulting total by the number of days during
such period.
The investment advisory fee for each month shall each be payable as soon as
practical after the last business day of such month.
FOURTH: Any investment program undertaken by the Adviser pursuant to this
Agreement, as well as any other activities undertaken by the Adviser on behalf
of the Fund pursuant thereto, shall at all times be subject to any directives of
the Board of Directors of the Fund, the Executive Committee of said Board, any
other Committee or Committees of the Fund acting pursuant to authority of the
Board, or any officer of the Fund acting pursuant to authority of the board, or
any officers of the Fund acting pursuant to like authority.
FIFTH: In carrying out its obligations under this Agreement, Adviser shall at
all times conform to:
(1) All applicable provisions of the Investment Company Act of 1940, as
amended, and any rules and regulations adopted thereunder;
(2) The provisions of the Articles of Incorporation of the Fund as amended
from time to time;
(3) The provisions of the By-Laws of the Fund as amended from time to
time;
(4) The provisions of the registration statements of the Fund under the
Securities Act of 1933 and the Investment Company Act of 1940, as
amended from time to time;
(5) Any other applicable provisions of state or federal law.
In connection with purchases or sales of the portfolios' securities for the
account of the Fund neither the Adviser nor any officer or director of the
Adviser shall act as a principal or receive any commission other than its
compensation provided for in paragraph Third hereof.
SIXTH: The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Adviser in the performance of its
duties or from reckless disregard by the Adviser of its obligations and duties
under this Agreement.
SEVENTH: This Agreement shall become effective on the date set forth above and
shall continue in effect until February 8, 1993. Thereafter, this Agreement
will continue in effect for additional one year periods only so long as such
continuance is specifically approved at least annually by the Board of Directors
or by vote of a majority of the outstanding voting securities of the Fund, and
in either case by the specific approval of a majority of the directors who are
not parties to such contract or agreement, or "interested" persons of any such
parties, cast in person at a meeting called for the purpose of voting on such
approval, the term "interested" persons for this purpose having the meaning
defined in Section 2(a)(19) of the Investment Company Act OF 1940, as amended.
2
<PAGE>
EIGHTH: This Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Board of Directors of the Fund or by vote of the
holders of a majority of the outstanding voting securities of the Fund, or by
the Adviser, on sixty days' written notice to the other party.
NINTH: This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940.
3
<PAGE>
TENTH: Any notice under this Agreement shall be in writing addressed and
delivered or mailed postage paid to the other party, at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Fund and that of the
Adviser for this purpose shall be Two Moody Plaza, Galveston, Texas 77550.
ELEVENTH: No amendment to this Agreement shall be effective until approved by
vote of the holders of a majority of the outstanding shares of the Fund as
defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate on the day and year first above written.
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
By: STEVEN H. STUBBS
Steven H. Stubbs, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: DON B. REYNOLDS
Don B. Reynolds, Chairman of the Board
4
<PAGE>
EXHIBIT 99.B6A
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, entered into on this 1ST DAY OF AUGUST, 1994, among AMERICAN
NATIONAL INSURANCE COMPANY ("Company"), a life insurance company organized under
the laws of the State of Texas, on behalf of itself and American National
Variable Annuity Separate Account ("Separate Account"), a separate account
established by the Company in accordance with the laws of the State of Texas,
American National Investment Accounts, Inc. ("Fund"), an open-end management
investment company orgainized under the laws of the State of Maryland, and
Securities Management and Research, Inc. ("Distributor"), a Florida Corporation.
W I T N E S S E T H:
WHEREAS, the Separate Account has been established by the Company pursuant to
the Texas Insurance Code in connection with certain variable contracts
("Contracts") issued to the public by the Company; and
WHEREAS, the Separate Account is registered as a unit investment trust under the
Investment Company Act of 1940;
WHEREAS, the income, gains and losses, whether or not realized, from assets
allocated to the Separate Account are, in accordance with the applicable
Contracts, to be credited to or charged against such Separate Account without
regard to other income, gains or losses of the Company; and
WHEREAS, the Separate Account is subdivided into various Subaccounts under which
income, gains and losses, whether or not realized, form assets allocated to each
such Subaccount are, in accordance with the applicable Contracts, to be credited
to or charged against such Subaccounts without regard to other income, gains or
losses of other Subaccounts or of the Company; and
WHEREAS, the Fund is registered as an open-end diversified management investment
company under the Investment Company Act of 1940; and
WHEREAS, the Fund is divided into various series ("Portfolios"), each Portfolio
having a different investment objective and being subject to separate investment
policies and restrictions which may not be changed without the majority vote of
shareowners of such Portfolio; and
WHEREAS, the Fund agrees to make its shares available to serve as underlying
investment media for the Separate Account, with shares of each Portfolio of the
Fund to serve as the underlying investment medium for each of the various
Subaccounts in the Separate Account; and
WHEREAS, Distributor, the principal underwriter for the Contracts to be funded
in the Separate Account, is a broker-dealer registered as such under the
Securities Exchange Act of 1934;
1
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and conditions set forth herein and for other good and valuable consideration,
the Company, the Separate Account, the Fund and the Distributor hereby agree as
follows:
1. The Contracts funded through the Separate Account will provide for the
allocation of net amounts among the various Subaccounts of the
Separate Account for investment in the shares of the Portfolios of the
Fund underlying each Subaccount. The selection of the particular
Subaccount is to be made by the Contract Owner and such selection may
be changed in accordance with the termS of the Contracts.
2. No representation is made as to the number or amount of such Contracts
to be sold. The Company and the Distributor will make reasonable
efforts to market such Contracts and will comply with all applicable
federal or state laws in connection therewith.
3. Fund shares to be made available to each Subaccount of the Separate
Account shall be sold by each of the respective Portfolio of the Fund
and purchased by the Company for the corresponding Subaccount at the
net asset value (without the imposition of a sales load) next computed
after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Fund. Shares of a
particular Portfolio shall be ordered in such quantities and at such
times as determined by the Company to be necessary to meet the
requirements of those Contracts issued by the Company in that
Subaccount of the Separate Account for which the Portfolio shares
serve as the underlying investment medium. Orders or payments for
shares purchases will be sent promptly to the Fund and will be made
payable in the manner established from time to time by the Fund for
the receipt of such payments. The Fund reserves the right to delay
transfer of its shares until the payment check has cleared. The Fund
has the obligation to insure that its shares are registered at all
times.
4. Transfer of the Fund's shares will be by book entry only. No stock
certificate will be issued to the Separate Account. Shares ordered
from a particular Portfolio of the Fund will be recorded in an
appropriate title for the corresponding Subaccount of the Separate
Account by the Company.
5. The Fund shall furnish notice promptly to the Company of any dividend
or distribution payable on its shares. All such dividends and
distributions as are payable on each Portfolio's shares in the title
for the corresponding Subaccount of the Separate Account shall be
automatically reinvested in additional shares of that Portfolio. The
Fund shall notify the Company of the number of shares so issued.
6. All expenses incident to the performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall ensure that all
its shares are registered and authorized for issue in accordance with
applicable federal and state laws prior to their purchase for the
Separate Account. The Company shall bear none of the expenses for the
cost of registration of the Fund's shares, preparation of the Fund's
prospectuses, proxy materials and reports, the preparation of all
statements and notices required by any federal or state law, or taxes
on the issue or transfer of the Fund's shares subject to this
Agreement.
2
<PAGE>
7. The Company and the Distributor shall make no representations
concerning the Fund's shares except those contained in the then
current prospectus of the Fund and in printed information subsequently
issued on behalf of the Fund as supplemental to such prospectus.
8. This Agreement shall terminate:
(a) at the option of the Company or of the Fund upon sixty (60) days'
advance written notice to all other parties to this Agreement;
(b) at the option of the Company if any of the Fund's shares are not
reasonably available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of election to
terminate shall be furnished by the Company;
(c) at the option of the Company upon institution of formal
proceedings against the Fund by the Securities and Exchange
Commission;
(d) upon requisite vote of the Contract Owners having an interest in
a particular Subaccount of the Separate Account to substitute the
shares of another investment company for the corresponding Fund
shares in accordance with the terms of the Contracts for which
those Fund shares had been selected to serve as the underlying
investment medium. The Company will give thirty (30) days' prior
written notice to the Fund of the date of any proposed vote to
replace the Fund shares;
(e) in the event the Fund's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying investment
medium of the Contracts issued or to be issued by the Company.
Prompt notice shall be given by any party to all other parties in
the event that the conditions stated in this subsection (e) or in
any subsection of this Section 8. should occur.
9. Each notice required by this agreement may be given by wire or
facsimile transmission and confirmed in writing to:
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Investment Accounts, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
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<PAGE>
American National Variable Annuity Separate Account
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550
ATTN: President
10. This agreement shall be construed in accordance with the laws of the
State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested on the date first stated above.
AMERICAN NATIONAL INSURANCE COMPANY
/s/ CARL R. ROBERTSON
By: ______________________________________________________________
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL VARIABLE ANNUITY
SEPARATE ACCOUNT
/s/ CARL R. ROBERTSON
By: _____________________________________________________________
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
/s/ MICHAEL W. MCCROSKEY
By: ____________________________________________________________
Michael W. McCroskey, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
/s/ MICHAEL W. MCCROSKEY
By: ____________________________________________________________
Michael W. McCroskey, President
4
<PAGE>
EXHIBIT 99.B6B
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, entered into on this 1ST DAY OF AUGUST, 1994, among American
National Insurance Company ("Company"), a Life Insurance Company organized under
the laws of the State of Texas, on behalf of itself and American National
Variable Life Separate Account ("Separate Account"), a Separate Account
established by the Company in accordance with the laws of the State of Texas,
American National Investment Accounts, Inc. ("fund"), an open-end management
investment company orgainized under the laws of the State of Maryland, and
Securities Management and Research, Inc. ("Distributor"), a Florida Corporation.
W I T N E S S E T H:
WHEREAS, the Separate Account has been established by the Company pursuant to
the Texas Insurance Code in connection with certain variable contracts
("Contracts") issued to the public by the Company; and
WHEREAS, the Separate Account is registered as a unit investment trust under the
Investment Company Act of 1940;
WHEREAS, the income, gains and losses, whether or not realized, from assets
allocated to the Separate Account are, in accordance with the applicable
Contracts, to be credited to or charged against such Separate Account without
regard to other income, gains or losses of the Company; and
WHEREAS, the Separate Account is subdivided into various Subaccounts under which
income, gains and losses, whether or not realized, form assets allocated to each
such Subaccount are, in accordance with the applicable Contracts, to be credited
to or charged against such Subaccounts without regard to other income, gains or
losses of other Subaccounts or of the Company; and
WHEREAS, the Fund is registered as an open-end diversified management investment
company under the Investment Company Act of 1940; and
WHEREAS, the Fund is divided into various series ("Portfolios"), each Portfolio
having a different investment objective and being subject to separate investment
policies and restrictions which may not be changed without the majority vote of
shareowners of such Portfolio; and
WHEREAS, the Fund agrees to make its shares available to serve as underlying
investment media for the Separate Account, with shares of each Portfolio of the
Fund to serve as the underlying investment medium for each of the various
Subaccounts in the Separate Account; and
WHEREAS, Distributor, the principal underwriter for the Contracts to be funded
in the Separate Account, is a broker-dealer registered as such under the
Securities Exchange Act of 1934;
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NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and conditions set forth herein and for other good and valuable consideration,
the Company, the Separate Account, the Fund and the Distributor hereby agree as
follows:
1. The Contracts funded through the Separate Account will provide for the
allocation of net amounts among the various Subaccounts of the
Separate Account for investment in the shares of the Portfolios of the
Fund underlying each Subaccount. The selection of the particular
Subaccount is to be made by the Contract Owner and such selection may
be changed in accordance with the terms of the Contracts.
2. No representation is made as to the number or amount of such Contracts
to be sold. The Company and the Distributor will make reasonable
efforts to market such Contracts and will comply with all applicable
federal or state laws in connection therewith.
3. Fund shares to be made available to each Subaccount of the Separate
Account shall be sold by each of the respective Portfolio of the Fund
and purchased by the Company for the corresponding Subaccount at the
net asset value (without the imposition of a sales load) next computed
after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Fund. Shares of a
particular Portfolio shall be ordered in such quantities and at such
times as determined by the Company to be necessary to meet the
requirements of those Contracts issued by the Company in that
Subaccount of the Separate Account for which the Portfolio shares
serve as the underlying investment medium. Orders or payments for
shares purchases will be sent promptly to the Fund and will be made
payable in the manner established from time to time by the Fund for
the receipt of such payments. The Fund reserves the right to delay
transfer of its shares until the payment check has cleared. The Fund
has the obligation to insure that its shares are registered at all
times.
4. Transfer of the Fund's shares will be by book entry only. No stock
certificate will be issued to the Separate Account. Shares ordered
from a particular Portfolio of the Fund will be recorded in an
appropriate title for the corresponding Subaccount of the Separate
Account by the Company.
5. The Fund shall furnish notice promptly to the Company of any dividend
or distribution payable on its shares. All such dividends and
distributions as are payable on each Portfolio's shares in the title
for the corresponding Subaccount of the Separate Account shall be
automatically reinvested in additional shares of that Portfolio. The
Fund shall notify the Company of the number of shares so issued.
6. All expenses incident to the performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall ensure that all
its shares are registered and authorized for issue in accordance with
applicable federal and state laws prior to their purchase for the
Separate Account. The Company shall bear none of the expenses for the
cost of registration of the Fund's shares, preparation of the Fund's
prospectuses, proxy materials and reports, the preparation of all
statements and notices required by any federal or state law, or taxes
on the issue or transfer of the Fund's shares subject to this
Agreement.
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7. The Company and the Distributor shall make no representations
concerning the Fund's shares except those contained in the then
current prospectus of the Fund and in printed information subsequently
issued on behalf of the Fund as supplemental to such prospectus.
8. This Agreement shall terminate:
(a) at the option of the Company or of the Fund upon sixty (60) days'
advance written notice to all other parties to this Agreement;
(b) at the option of the Company if any of the Fund's shares are not
reasonably available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of election to
terminate shall be furnished by the Company;
(c) at the option of the Company upon institution of formal
proceedings against the Fund by the Securities and Exchange
Commission;
(d) upon requisite vote of the Contract Owners having an interest in
a particular Subaccount of the Separate Account to substitute the
shares of another investment company for the corresponding Fund
shares in accordance with the terms of the Contracts for which
those Fund shares had been selected to serve as the underlying
investment medium. The Company will give thirty (30) days' prior
written notice to the Fund of the date of any proposed vote to
replace the Fund shares;
(e) in the event the Fund's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying investment
medium of the Contracts issued or to be issued by the Company.
Prompt notice shall be given by any party to all other parties in
the event that the conditions stated in this subsection (e) or in
any subsection of this Section 8. should occur.
9. Each notice required by this agreement may be given by wire or
facsimile transmission and confirmed in writing to:
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Investment Accounts, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
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American National Variable Life Separate Account
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550
ATTN: President
10. This agreement shall be construed in accordance with the laws of the
State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested on the date first stated above.
AMERICAN NATIONAL INSURANCE COMPANY
/s/ CARL R. ROBERTSON
By: ______________________________________________________________
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT
/s/ CARL R. ROBERTSON
By: _____________________________________________________________
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
/s/ MICHAEL W. MCCROSKEY
By: ____________________________________________________________
Michael W. McCroskey, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
/s/ MICHAEL W. MCCROSKEY
By: ____________________________________________________________
Michael W. McCroskey, President
4
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EXHIBIT 99.B8A
CUSTODIAN AGREEMENT
BETWEEN
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
THIS AGREEMENT between AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC., a
corporation organized and existing under the laws of Maryland, having its
principal place of business at One Moody Plaza, Galveston, Texas 77550,
hereinafter called the "Fund", and SECURITIES MANAGEMENT AND RESEARCH, INC., a
Florida corporation having its principal place of business at One Moody Plaza,
Galveston, Texas 77550, hereinafter called the "Custodian",
W I T N E S E T H:
That in consideration of the mutual covenants and agreements hereinafter
contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It.
The Fund hereby employs the Custodian as the custodian of its assets pursuant to
the provisions of the Articles of Incorporation. The Fund agrees to deliver to
the Custodian all securities and cash owned by it, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Fund from time to time, and the cash consideration
received by it for such new or treasury shares of capital stock, $1.00 par value
("Shares") of the Fund as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the Fund held or received
by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section 2.17), the
Custodian shall from time to time employ one or more sub-custodians, but only in
accordance with an applicable vote by the Board of Directors of the Fund, and
provided that the Custodian, while responsible for the actions for any
subcustodian shall have no more or less responsibility or liability to the Fund
on account of the use of the subcustodian. It is contemplated by the Fund and
the Custodian that the Custodian shall enter into a sub-custodian agreement with
the Moody National Bank of Galveston, a national bank, having it principal place
of business at 2302 Postoffice Street, Galveston, Texas 77550.
The Custodian shall indemnify and shall hold the Fund harmless for all acts or
omissions of any subcustodian and shall be responsible to the Fund for all such
acts or omissions of a subcustodian had been committed directly by the
Custodian.
2. Duties of the Custodian With Respect To Property of the Fund Held By the
Custodian.
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, including all securities
owned by the Fund, other than securities which are maintained pursuant to
Section 2.12 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System".
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions,which may be continuing instructions when deemed appropriate
by the parties, and only in the following cases:
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(1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund;
(5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided, that in any
such case, the cash or other consideration is to be delivered to the
Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Section 2.11 or into the name or Nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided, that in any such
case, the new securities are to be delivered to the Custodian;
(7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided, that in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
(9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided, that in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
(10) For delivery in connection with any loans of securities made by the
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by the Fund prior to the receipt of
such collateral;
(11) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
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<PAGE>
(12) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
(13) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Fund;
(14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of Shares in connection with distributions in kind, as may be
described from time to time in the Fund's currently effective
prospectus and statement of additional information ("prospectus"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
(15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purposes to be proper corporate purposes, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.11 or in the name or nominee name of any sub-
custodian appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Fund under the terms of this Contract shall be
in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or order
by the Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
be qualified to act as a custodian under the Investment Company Act of 1940
and that each such bank or trust company and the funds to be deposited with
each such bank or trust company shall be approved by vote of a majority of
the Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor for
the Fund's Shares or from the Transfer Agent of the Fund and deposit into
the Fund's account such payments as are received for Shares of the Fund
issued or sold from time to time by the Fund. The Custodian will provide
timely notification to the Fund and the Transfer Agent of any receipt by it
of payments for Shares of the Fund.
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2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the receipt
of Proper Instructions,
(1) invest in such instruments as may be set forth in such instructions on
the same day as received all federal funds received after a time
agreed upon between the Custodian and the Fund; and
(2) make federal funds available to the Fund as of specified times agreed
upon from time to time by the Fund and the Custodian in the amount of
checks received in payment for Shares of the Fund which are deposited
into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the date
of payment by the issuer, such securities are held by the Custodian or
agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due the Fund on
securities loaned pursuant to the provisions of Section 2.2(10) shall be
the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to which
the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
(1) Upon the purchase of securities, futures contracts or options on
futures contracts for the account of the Fund but only (a) against the
delivery of such securities, or evidence of title to futures contracts
or options on futures contracts, to the Custodian (or any bank,
banking firm or trust company doing business in the United States or
abroad which is qualified under the Investment Company Act of 1940, as
amended, to act as a custodian and has been designated by the
Custodian as its agent for this purpose) registered in the name of
the Fund or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in the case of
a purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof; or (c) in the case
of repurchase agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund;
(2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares issued by the Fund as set
forth in Section 2.10 hereof;
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<PAGE>
(4) For the payment of any expense or liability incurred by the Fund,
including, but not limited to, the following payments for the account
of the Fund: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as
deferred expenses;
(5) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons to whom such
payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of securities for the account of the Fund
is made by the Custodian in advance of receipt of the securities purchased
in the absence of specific written instructions from the Fund to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by the
Custodian, except that in the case of repurchase agreements entered into by
the Fund with a bank which is a member of the Federal Reserve System, the
Custodian may transfer funds to the account of such bank prior to the
receipt of written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated non-
proprietary account of the Custodian maintained with the Federal Reserve
Bank or of the safe-keeping receipt, provided, that such securities have in
fact been so transferred by book- entry.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations of
the Articles of Incorporation and any applicable votes of the Board of
Directors of the Fund pursuant thereto, the Custodian shall, upon receipt
of instructions from the Transfer Agent, make funds available for payment
to holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian is authorized
upon receipt of instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming shareholders. In
connection with the redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Fund to the holder of Shares, when
presented to the Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the Fund and the
Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
provided, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
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2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
(1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by book-
entry those securities belonging to the Fund;
(3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon (i) receipt
of advice from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment
for the account of the Fund. Copies of all advises from the
Securities System of transfers of securities for the account of the
Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund in the form of a written advice or
notice and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System for
the account of the Fund.
(4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
(5) The Custodian shall have received the initial or annual certificate,
as the case may be, required by Article 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such loss
or damage if and to the extent that the Fund has not been made whole
for any such loss or damage.
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2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in an
account by the Custodian pursuant to Section 2.12 hereof, (i) in accordance
with the provisions of any agreement among the Fund, the Custodian and a
broker dealer registered under the Exchange Act and a member of the NASD
(or any futures commission merchant registered under The Commodity Exchange
Act), relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for purposes
of segregating cash or government securities in connection with options
purchased, sold or written by the Fund or commodity futures contracts or
options thereon purchased or sold by the Fund, (iii) for the purposes of
compliance by the Fund with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other
proper corporate purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Directors or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.16 Communications Relating to Fund Portfolio Securities. The Custodian shall
transmit promptly to the Fund all written information (including, without
limitation, pendency of calls and maturities of securities and expirations
of rights in connection therewith and notices of exercise of call and put
options written by the Fund and the maturity of futures contracts purchased
or sold by the Fund) received by the Custodian from issuers of the
securities being held for the Fund. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Fund desires to take action with respect
to any tender offer, exchange offer or any other similar transaction, the
Fund shall notify the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
2.17 Proper Instructions. Proper Instructions as used throughout this Article
2 means a writing signed or initialled by one or more person or persons as
the Board of Directors shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given
by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of
the Fund accompanied by a detailed description of procedures approved by
the Board of Directors, Proper Instructions may include communications
effected directly between electro-mechanical or electronic devices provided
that the Board of Directors and the Custodian are satisfied that such
procedures afford adequate safeguards for the Fund's assets. For purposes
of this Section, Proper Instructions shall include instructions received by
the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.13.
7
<PAGE>
2.18 Actions Permitted Without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided, that all such payments shall be accounted for to
the Fund;
(2) surrender securities in temporary form for securities in definitive
form;
(3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
(4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Directors of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other instrument
or paper believed by it to be genuine and to have been properly executed by
or on behalf of the Fund. The Custodian may receive and accept a certified
copy of a vote of the Board of Directors of the Fund as conclusive evidence
(a) of the authority of any person to act in accordance with such vote, or
(b) of any determination or of any action by the Board of Directors
pursuant to the Articles of Incorporation as described in such vote, and
such vote may be considered as in full force and effect until receipt by
the Custodian of written notice to the contrary.
3. Duties of Custodian With Respect to the Books of Account and Calculation of
Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. . The calculations of the net asset value per share and
the daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its activities
and obligations under this Contract in such manner as will meet the obligations
of the Fund under the Investment Company Act of 1940, with particular attention
to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable federal
and state tax laws and any other law or administrative rules or procedures which
may be applicable to the Fund. All such records shall be the property of the
Fund and shall at all times during the regular business hours of the Custodian
be open for inspection by duly authorized officers, employees or agents of the
Fund and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian and shall, when requested
to do so by the Fund and for such compensation as shall be agreed upon between
the Fund and the Custodian, include certificate numbers in such tabulations.
8
<PAGE>
5. Opinion of Fund's Independent Accountant.
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-1A, Form N-SAR or other
annual reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants.
The Custodian shall provide the Fund, at such times as the Fund may reasonably
require, with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities System, relating to the services
provided by the Custodian under this Contract; such reports, which shall be of
sufficient scope and in sufficient detail, as may reasonably be required by the
Fund, to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, shall so
state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its services and
expenses as Custodian, as agreed upon from time to time between the Fund and the
Custodian.
8. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable care, the
Custodian shall not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered by it pursuant
to this Contract and shall be held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably believed by it to be genuine
and to be signed by the proper party or parties, including any futures
commission merchant acting pursuant to the terms of a three-party futures or
options agreement. The Custodian shall be held to the exercise of reasonable
care in carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence. It shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate agreement entered into between the
Custodian and the Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any purpose
or in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of the Fund assets to the extent necessary
to obtain reimbursement.
9
<PAGE>
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue in full
force and effect until terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage prepaid to the
other party, such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided, however, that the
Custodian shall not act under Section 2.12 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors of the Fund have approved the initial use of a particular
Securities System and the receipt of an annual certificate of the Secretary or
an Assistant Secretary that the Board of Directors have reviewed the use by the
Fund of such Securities System, to the extent required in each case by Rule 17f-
4 under the Investment Company Act of 1940, as amended; provided further,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation, and further provided, that the Fund may at any
time by action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of Directors of the
Fund, the Custodian shall, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an account of the
successor custodian all of the Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in like
manner, upon receipt of a certified copy of a vote of the Board of Directors of
the Fund, deliver at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940, of
its own selection, having an aggregate capital, surplus and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian and all instruments
held by the Custodian relative thereto and all other property held by it under
this Contract and to transfer to an account of such successor custodian all of
the Fund's securities held in any Securities System. Thereafter, such bank or
trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of vote referred to or of the
Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
10
<PAGE>
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition to
the provisions of this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or additional
provisions shall be in writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
Articles of Incorporation of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
12. Texas Law to Apply.
This Contract shall be construed and the provisions thereof interpreted under
and in accordance with laws of The State of Texas.
13. Additional Requirements.
Notwithstanding anything to the contrary contained above, the Custodian agrees
that, until such time as it receives an opinion of counsel satisfying to the
Fund, that it is not an affiliate (as defined in the Investment Company Act of
1940 and rules and regulations issued thereunder) of the Fund, the Custodian and
any sub-custodian employed by the Custodian agrees to comply with Rule 17f-2
under the Investment Company Act of 1940, as such rule may be amended and/or
superseded.
IN WITNESS WHEREOF, EACH OF THE PARTIES HAS CAUSED THIS INSTRUMENT TO BE
EXECUTED IN ITS NAME AND BEHALF BY ITS DULY AUTHORIZED REPRESENTATIVE ON AUGUST
1, 1995.
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
By: MICHAEL W. MCCROSKEY
-------------------------
Michael W. McCroskey, President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: BRENDA T. KOELEMAY
---------------------------
Brenda T. Koelemay, Vice President
11
<PAGE>
EXHIBIT 99.B8B
SUB-CUSTODIAN AGREEMENT BETWEEN
THE MOODY NATIONAL BANK OF GALVESTON, TEXAS
AND
SECURITIES MANAGEMENT AND RESEARCH, INC.
Securities Management and Research, Inc. (the "Custodian") requests that The
Moody National Bank of Galveston (the "Sub-Custodian") open a Custody Account
(the "Account") for and in the name of the Custodian on behalf of the American
National Investment Accounts, Inc., and all such portfolios, as may be
organized, under the (the "Fund") and requests that the Sub-Custodian hold all
securities and other property now or hereafter deposited in or held by the Sub-
Custodian for each such portfolio of the Account (the "Property"). The Sub-
Custodian agrees to open such Account and to provide safekeeping and accounting
services, but no investment services for each such portfolio of the Account.
TERM OF THE AGREEMENT
The terms and conditions under which this Account shall be administered are as
follows:
HOLDING THE PROPERTY The Sub-Custodian holds the Property deposited into the
Account subject to future instructions by the Custodian. The Custodian may
deposit additional Property to the Account, subject to the Sub-Custodian's
acceptance thereof, and the Custodian may direct the Sub-Custodian to
immediately settle trades, sales or exchanges for the Account. The Sub-
Custodian shall not be liable for any losses or unfavorable result arising from
its prompt compliance with Custodian's directions.
The Custodian may withdraw all or any part of the Property from time to time
upon giving written notice and by giving the Sub-Custodian a receipt for such
withdrawn Property.
PROCEEDS FROM SALE Proceeds from the sale, redemption or exchange of securities
or other Properties held in the Account, including all receipts of principal,
shall be subject to the written instructions of the Custodian on behalf of the
Funds Group or as otherwise provided in this Agreement.
INCOME AND CASH BALANCES The Sub-Custodian shall use reasonable efforts to
collect principal and income on the Property, but in the absence of bad faith or
gross negligence, shall have no liability for sums not collected.
The income received by the Sub-Custodian from Property held in the Account shall
be held subject to further instructions of the Custodian.
UNINVESTED BALANCES The Custodian authorizes the Sub-Custodian to sweep
uninvested cash balances into an overnight interest bearing account of the Sub-
Custodian. Balances swept each night will be in whole dollars unless other
instructions are received from the Custodian. The Sub-Custodian shall be
responsible for any loss incurred by the Fund resulting from the investment of
the Fund's uninvested cash into an overnight interest bearing account held in
the name of the Sub-Custodian.
OWNER; REGISTRATION; PROXIES The Property held in the Account shall be owned by
the Funds Group but, as a matter of convenience, any of the Property may be
registered or retained in the name of the Sub-Custodian's nominee. Proxies
received by the Sub-Custodian with respect to securities shall be promptly
forwarded to the Custodian.
1
<PAGE>
INFORMATION FURNISHED TO ISSUERS The Custodian has no objection to the Sub-
Custodian furnishing to the companies which issued securities held in this
Account the Customer's name, address and share position, all in accordance with
applicable SEC rules. (The purpose of the rule is to facilitate communications
between issuers of securities and shareholders.)
CUSTOMER'S INSTRUCTIONS All written directions in regard to this Account must
be personally signed by an authorized representative of the Custodian. Written
direction includes those directions received by facsimile transmission.
However, the Sub-Custodian, in its sole discretion, may act in accordance with
directions from the Custodian whether given orally, by telephone, telegraph,
cable radio or otherwise, if it believes such directions to be genuine; but if
such directions are not in writing then the Sub-Custodian shall not be liable
for executing, failure to execute, or for any mistake in the execution thereof,
except in the case of willful misconduct or gross negligence. Custodian agrees
to confirm all oral instructions in writing within a reasonable period of time.
STATEMENTS After the end of each month, the Sub-Custodian shall send to the
Custodian a statement listing all income and principal transactions of the
Account and a statement listing the Property owned by the Funds Group. Each
statement shall be conclusive as to its contents unless the Custodian shall
deliver written objections to the Sub-Custodian within sixty (60) days after
receipt of the statement.
NO TAX LIABILITY The Sub-Custodian shall not be responsible or liable for
determination or payment of any taxes assessed with respect to the Property or
the income thereof nor shall it be responsible for the preparation of filing of
any tax returns, other than withholding required by law.
FEES AND EXPENSES A schedule used in computing the Sub-Custodian's fee is
attached. Such schedule may be amended at any time upon mutual agreement of
both parties.
TERMINATION; INDEMNIFICATION; ETC. Custodian and the Sub-Custodian, upon
execution of this Agreement, agree to be bound by all of its terms and
provisions and further agree that the Agreement shall remain in full force and
effect until expressly revoked or amended in writing. Either the Custodian or
the Sub-Custodian may terminate or revoke this Agreement upon written notice
delivered to the other, and the Agreement may be amended upon the mutual
agreement of both, in writing.
ACCEPTED BY SUB-CUSTODIAN: ACCEPTED BY CUSTODIAN:
THE MOODY NATIONAL BANK OF SECURITIES MANAGEMENT AND
GALVESTON RESEARCH, INC.
2302 Postoffice One Moody Plaza
Galveston, Texas 77550 Galveston, Texas 77550
BY CARROLL SUNSERI BY: MICHAEL W. MCCROSKEY
---------------------- -------------------------------
Carroll Sunseri Michael W. McCroskey
TITLE: Exec.Vice Pres. & TITLE: President
Senior Trust Officer -------------------
------------------------- Tax I.D.#59-1145041
-------------------------
2
<PAGE>
REVISED FEE SCHEDULE (JULY, 1995)
AMENDMENT NO. 2
FEES AND EXPENSES
- -----------------
The following schedule shall be used in computing the Sub-Custodian's fee:
TRADES 25.00
HOLDING FEES 4.00
ASSET FEES .00030 (Includes all out of pocket expenses)
Any terminal or access ot system changes shall be billed to Custodian.
3
<PAGE>
EXHIBIT 99.B10
LEGAL OPINION
April 25, 1996
American National Investment Accounts, Inc.
One Moody Plaza
Galveston, Texas 77550
RE: American National Investment Accounts, Inc. (the "Company") Post-
Effective Amendment No. 7 under the Securities Act of 1933 (the "33
Act") and Post-Effective Amendment No. 7 to the Investment Company
Act of 1940 (the "40 Act")
Gentlemen:
We have assisted you in preparing the above referenced post-effective
amendments to your '33 Act and '40 Act Registration Statements referenced above.
In connection therewith, and in connection with our opinion furnished in
connection with your Rule 24f-2 Notice for your immediately preceding fiscal
year, we have examined the Company's Articles of Incorporation and such other
corporate records, prospectuses and other material we deemed appropriate. On the
basis of such examination, we are of the opinion that the Company's shares, when
sold, will be legally issued, fully paid and non-assessable. We, of course,
assume that the Company will not sell more than the 100,000,000 shares
authorized, nor sell more than the 15,000,000 shares initially authorized for
the Growth Portfolio, the 15,000,000 shares initially authorized for the
Balanced Portfolio, the 20,000,000 shares initially authorized for the Managed
Portfolio, or the 50,000,000 shares initially authorized for the Money Market
Portfolio, by its Articles of Incorporation, and that all sales will be for full
value received at the time of sale.
We consent to the attachment of this opinion to and its use in connection
with the above referenced post-effective amendments.
Yours very truly,
/s/ JERRY L. ADAMS
------------------------------
Jerry L. Adams
<PAGE>
EXHIBIT 99.B11
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
American National Investment Accounts, Inc.
We consent to the use of our report on the American National Investment
Accounts, Inc. dated February 16, 1996 included herein and to the references to
our firm under the headings "Financial Highlights" in the Prospectus and
"Counsel and Auditors" in the Statement of Additional Information.
KPMG Peat Marwick LLP
Houston, Texas
April 25, 1996
<PAGE>
EXHIBIT 99.B13
STOCK PURCHASE LETTERS
February 15, 1991
American National Investment Accounts, Inc.
Two Moody Plaza
Galveston, Texas 77550
Gentlemen:
Securities Management and Research, Inc. ("SM&R") has purchased 250,000
shares of each of Class A (Money Market Portfolio), Class B (Growth Portfolio),
Class C (Balanced Portfolio) and Class D (Managed Portfolio) of the American
National Investment Accounts, Inc. (the "Fund"), $0.01 par value per share (the
"Shares"). Such Shares were purchased at a price of $1.00 per share, for a
total consideration of $1,000,000.00.
In connection with such purchase, SM&R acknowledges that such shares were
acquired in connection with the Fund's formation, were acquired for investment
and can be disposed of only by redemption. SM&R further agrees that it will
redeem such Shares only when the other assets of the each of the four portfolios
are large enough that such redemption will not have a material adverse effect
upon investment performance. In addition, SM&R will vote its Shares of each
such portfolio in the same manner and in the same proportion as the other Shares
held in the Separate Account are voted.
Yours very truly,
SECURITIES MANAGEMENT AND RESEARCH, INC.
By: STEVEN H. STUBBS
----------------------------------------
Steven H. Stubbs, President and
Chief Executive Officer
<PAGE>
February 15, 1991
SM&R Capital Funds, Inc.
Two Moody Plaza
Galveston, Texas 77550
Gentlemen:
American National Insurance Company (the "Company") has purchased 1,750,000
shares of each of Class A (Money Market Portfolio), Class B (Growth Portfolio),
Class C (Balanced Portfolio) and Class D (Managed Portfolio) of the American
National Investment Accounts, Inc. (the "Fund"), $0.01 par value per share (the
"Shares"). Such Shares were purchased at a price of $1.00 per share, for a
total consideration of $7,000,000.00.
In connection with such purchase, SM&R acknowledges that such shares were
acquired in connection with the Fund's formation, were acquired for investment
and can be disposed of only by redemption. SM&R further agrees that it will
redeem such Shares only when the other assets of the each of the four portfolios
are large enough that such redemption will not have a material adverse effect
upon investment performance. In addition, SM&R will vote its Shares of each
such portfolio in the same manner and in the same proportion as the other Shares
held in the Separate Account are voted.
Yours very truly,
AMERICAN NATIONAL INSURANCE COMPANY
By: CARL R. ROBERTSON
--------------------------------------
Carl R. Robertson, Senior
Executive Vice President
<PAGE>
EXHIBIT 99.B17
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT AMERICAN NATIONAL INVESTMENT ACCOUNTS,
INC., a Maryland corporation, and its undersigned officers and Directors each
hereby nominate, constitute and appoint MICHAEL W. MCCROSKEY its/his/her true
and lawful attorney-in-fact and agent, for it/him/her and on its/his/her name,
place and stead in any and all capacities, to make, execute and sign all
amendments to the Fund's Registration on Form N-1A under the Securities Act of
1933 and the Investment Company Act of 1940, and to file with the Securities and
Exchange Commission and any other regulatory authority having jurisdiction over
the offer and sale of shares of the Funds, such amendments, and any and all
amendments and supplements thereto, and any and all exhibits and other documents
requisite in connection therewith granting unto said attorney, full power and
authority to do and perform each and every act necessary and/or appropriate as
fully to all intents and purposes as the Fund and the undersigned Officers and
Directors themselves might or could do.
IN WITNESS WHEREOF, the Fund has caused this power of attorney to be executed in
its name by its President and attested by its Secretary, and the undersigned
Officers and Directors have hereunto set their hands this 15th day of December,
1994.
ATTEST: AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
TERESA E. AXELSON MICHAEL W. MCCROSKEY
- --------------------------- ---------------------------------------------
Teresa E. Axelson, Michael W. McCroskey, President
Secretary
SM&R Capital Funds, Inc.
MICHAEL W. MCCROSKEY BRENDA T. KOELEMAY
- --------------------------- ---------------------------------------------
Michael W. McCroskey, Brenda T. Koelemay, Treasurer, Principal Financial
President & & Accounting Officer
Principal Executive Officer
ERNEST S. BARRATT ROBERT A. FRUEND
- --------------------------- ---------------------------------------------
Ernest S. Barratt, PhD., Robert A. Fruend, M.D., Director
Director
BRENT E. MASEL LEA M. MATTHEWS
- --------------------------- ---------------------------------------------
Brent E. Masel, M.D., Lea M. Matthews, Director
Director
LOUIS E. PAULS CARL R. ROBERTSON
- --------------------------- ---------------------------------------------
Louis E. Pauls, Director Carl R. Robertson, Director
MICHAEL W. MCCROSKEY
- ---------------------------
Michael W. McCroskey,
Director
<PAGE>
Exhibit 99.B19
CONTROL LIST
American National Investment Accounts, Inc. is a registered investment
company organized under the laws of the State of Maryland. American National
Investment Accounts, Inc. is advised and managed by Securities Management and
Research, Inc., a Florida corporation and a registered broker-dealer and
investment adviser. Securities Management and Research, Inc. is a wholly owned
subsidiary of American National Insurance Company, a Texas insurance company.
Securities Management and Research, Inc. owns 10.2 percent of the outstanding
stock of the Company, and American National Insurance Company owns 89.8 percent
of the outstanding stock of American National Investment Accounts, Inc.
The Moody Foundation owns approximately 23.7% and the Libbie Shearn Moody
Trust owns approximately 37.58% of the outstanding stock of American National
Insurance Company. The Trustees of The Moody Foundation are Mrs. Frances Moody
Newman, Robert L. Moody and Ross Rankin Moody. Robert L. Moody is a beneficiary
of the Libbie Shearn Moody Trust and Chairman of the Board, Director, President
and Chief Executive Officer of American National Insurance Company. Robert L.
Moody is also Chairman of the Board, a Director and controlling shareholder of
National Western Life Insurance Company, a Colorado insurance company. National
Western Life Insurance Company directly or indirectly owns the following
entities: The Westcap Corporation, Westcap Securities Management, Inc., Westcap
Securities Investment, Inc. and Westcap Securities, L.P.
The Moody National Bank of Galveston is the trustee of the Libbie Shearn
Moody Trust and various other trusts which, in the aggregate, own approximately
46.87% of the outstanding stock of American National Insurance Company. Moody
Bank Holding Company, Inc. owns approximately 97% of the outstanding shares of
The Moody National Bank of Galveston. Moody Bank Holding Company, Inc. is a
wholly owned subsidiary of Moody Bancshares, Inc. The Three R Trusts, trusts
created by Robert L. Moody for the benefit of his children, are controlling
stockholders of Moody Bancshares, Inc.
The Moody Foundation owns 33.0% and the Libbie Shearn Moody Trust owns
51.0% of the outstanding stock of Gal-Tex Hotel Corporation, a Texas
corporation. Gal-Tex Hotel Corporation has the following wholly-owned
subsidiaries, listed in alphabetical order:
Gal-Tenn Corporation
1
<PAGE>
Gal-Tex Management Company
Gal-Tex Woodstock, Inc.
GTG Corporation
New Paxton Hotel Corporation
American National owns a direct or indirect interest in the following
entities, listed in alphabetical order:
Entity: American Hampden Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
98% interest.
Entity: American National - Clear Lake 2 Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
88% interest.
Entity: American National of Delaware Corporation
Entity Form: a Delaware corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
Entity: American National Financial Corporation
Entity Form: a Texas corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: American National Financial Corporation (Delaware)
2
<PAGE>
Entity Form: a Delaware corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: American National Financial Corporation (Nevada)
Entity Form: a Nevada corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: American National General Insurance Company
Entity Form: a Missouri insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
Entity: American National Growth Fund, Inc.
Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns .88 percent of the outstanding stock of the Company.
American National Insurance Company owns 3.13 percent of the outstanding stock
of the Company.
Entity: American National Income Fund, Inc.
Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns .21 percent of the outstanding stock of the Company.
3
<PAGE>
Entity: American National Insurance Service Company
Entity Form: a Missouri corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
Entity: American National Life Insurance Company of Texas
Entity Form: a Texas insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
Entity: American National Lloyds Insurance Company
Entity Form: a Texas corporation
Ownership or Other Basis for Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: American National Property and Casualty Company
Entity Form: a Missouri insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: ANPAC General Agency of Texas
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company.
Entity: ANPAC Lloyds Insurance Management, Inc.
4
<PAGE>
Entity Form: a Texas corporation
Ownership or Other Basis for Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: ANREM Corporation
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of Securities
Management and Research, Inc.
Entity: ANTAC, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Base Securities Systems, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of ANREM Corp.
Entity: Garden State Life Insurance Company
Entity Form: a New Jersey insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Gateway Park Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: South Shore Harbour
5
<PAGE>
Development, Ltd. has a 50% interest.
Entity: Harbour Title Company
Entity Form: a Texas corporation
Ownership or Other Basis of Control: South Shore Harbour Development, Ltd. owns
50% of the outstanding stock.
Entity: Kearns Building Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National owns a 85% interest.
Entity: Lighthouse Refreshment Company, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of ANREM
Corporation
Entity: Maya Energy Limited Partnership
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: National Institute of Family Economics, Inc.
Entity Form: a Texas corporation (inactive)
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company
6
<PAGE>
Entity: Pacific Property and Casualty Company
Entity Form: a California corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Property and Casualty Company
Entity: Panther Creek Limited Partnership
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest
Entity: Ridgedale Festival Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
50% interest.
Entity: Rodeo Square
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
95% interest. ANREM Corp. owns a 5% interest.
Entity: SM&R Capital Funds, Inc.
Entity Form: a Maryland corporation - a registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Company consists of three (3)
different series: Government Income Fund Series, Primary Fund Series, and Tax
Free Fund Series. Securities Management and Research, Inc. owns 10.03 percent
of the outstanding stock of the Government Income Fund Series, and American
National
7
<PAGE>
Insurance Company owns 27.65 percent of the outstanding stock of the Government
Income Fund Series. Securities Management and Research, Inc. owns 13.71 percent
of the outstanding stock of the Primary Fund Series, and American National
Insurance Company owns 17.22 percent of the outstanding stock of the Primary
Fund Series. Securities Management and Research, Inc. owns 12.06 percent of the
outstanding stock of the Tax Free Fund Series, and American National Insurance
Company owns 59.78 percent of the outstanding stock of the Tax Free Fund Series.
Entity: South Shore Harbour Development, Ltd.
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
95% limited partnership interest. ANREM Corp. owns a 5% general partnership
interest.
Entity: Standard Life and Accident Insurance Company
Entity Form: an Oklahoma insurance company
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Terra Venture Bridgeton Project Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: Wholly owned by American National
Insurance Company.
Entity: Third and Catalina, Ltd.
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company owns a
49% limited partnership interest.
8
<PAGE>
Entity: Timbermill, Ltd.
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: Town and Country Joint Venture
Entity Form: a Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company owns a
99% limited partnership interest.
Entity: Triflex Fund, Inc.
Entity Form: a Maryland corporation - a registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, Securities Management and
Research, Inc. owns 7.68 percent of the outstanding stock of the Company, and
American National Insurance Company owns 12.86 percent of the outstanding stock
of the Company.
9
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<PAGE>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4,049,962
<INVESTMENTS-AT-VALUE> 4,741,591
<RECEIVABLES> 6,164
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,287
<TOTAL-LIABILITIES> 5,287
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<PAID-IN-CAPITAL-COMMON> 3,980,000
<SHARES-COMMON-STOCK> 37,747
<SHARES-COMMON-PRIOR> 29,064
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<OVERDISTRIBUTION-NII> 368
<ACCUMULATED-NET-GAINS> 72,167
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 691,629
<NET-ASSETS> 4,781,175
<DIVIDEND-INCOME> 77,465
<INTEREST-INCOME> 32,665
<OTHER-INCOME> 0
<EXPENSES-NET> 33,693
<NET-INVESTMENT-INCOME> 76,437
<REALIZED-GAINS-CURRENT> 189,881
<APPREC-INCREASE-CURRENT> 652,742
<NET-CHANGE-FROM-OPS> 919,060
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 79,425
<DISTRIBUTIONS-OF-GAINS> 154,556
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 731,489
<NUMBER-OF-SHARES-REDEEMED> 50,347
<SHARES-REINVESTED> 187,184
<NET-CHANGE-IN-ASSETS> 1,744,097
<ACCUMULATED-NII-PRIOR> 2,618
<ACCUMULATED-GAINS-PRIOR> 36,842
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50,491
<AVERAGE-NET-ASSETS> 3,832,894
<PER-SHARE-NAV-BEGIN> 1.04
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> .27
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> .04
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<NAME> AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
<SERIES>
<NUMBER> 2
<NAME> MANAGED PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 3,350,843
<INVESTMENTS-AT-VALUE> 3,922,775
<RECEIVABLES> 9,133
<ASSETS-OTHER> 2,664
<OTHER-ITEMS-ASSETS> 100,549
<TOTAL-ASSETS> 4,035,121
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,678
<TOTAL-LIABILITIES> 6,678
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,418,449
<SHARES-COMMON-STOCK> 33,257
<SHARES-COMMON-PRIOR> 28,077
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 30
<ACCUMULATED-NET-GAINS> 4,835
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 571,932
<NET-ASSETS> 4,028,443
<DIVIDEND-INCOME> 83,620
<INTEREST-INCOME> 35,442
<OTHER-INCOME> 0
<EXPENSES-NET> 31,749
<NET-INVESTMENT-INCOME> 87,313
<REALIZED-GAINS-CURRENT> 128,339
<APPREC-INCREASE-CURRENT> 596,564
<NET-CHANGE-FROM-OPS> 812,216
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 88,756
<DISTRIBUTIONS-OF-GAINS> 101,791
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 414,372
<NUMBER-OF-SHARES-REDEEMED> 55,212
<SHARES-REINVESTED> 158,789
<NET-CHANGE-IN-ASSETS> 1,233,483
<ACCUMULATED-NII-PRIOR> 1,414
<ACCUMULATED-GAINS-PRIOR> (21,714)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16,964
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42,634
<AVERAGE-NET-ASSETS> 3,395,799
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> .24
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> .03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.21
<EXPENSE-RATIO> .93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<CIK> 0000867050
<NAME> AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
<SERIES>
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<NAME> BALANCED PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 2,899,195
<INVESTMENTS-AT-VALUE> 3,359,817
<RECEIVABLES> 18,563
<ASSETS-OTHER> 9,322
<OTHER-ITEMS-ASSETS> 15,556
<TOTAL-ASSETS> 3,403,258
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,430
<TOTAL-LIABILITIES> 4,430
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,911,753
<SHARES-COMMON-STOCK> 28,693
<SHARES-COMMON-PRIOR> 26,771
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 618
<ACCUMULATED-NET-GAINS> (1,623)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 460,623
<NET-ASSETS> 3,398,828
<DIVIDEND-INCOME> 44,438
<INTEREST-INCOME> 78,699
<OTHER-INCOME> 0
<EXPENSES-NET> 27,176
<NET-INVESTMENT-INCOME> 95,961
<REALIZED-GAINS-CURRENT> 21,195
<APPREC-INCREASE-CURRENT> 494,465
<NET-CHANGE-FROM-OPS> 611,621
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 98,462
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 142,989
<NUMBER-OF-SHARES-REDEEMED> 34,940
<SHARES-REINVESTED> 84,157
<NET-CHANGE-IN-ASSETS> 739,203
<ACCUMULATED-NII-PRIOR> 1,883
<ACCUMULATED-GAINS-PRIOR> (22,817)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15,022
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 41,192
<AVERAGE-NET-ASSETS> 3,006,158
<PER-SHARE-NAV-BEGIN> .99
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> .19
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.18
<EXPENSE-RATIO> .90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<S> <C>
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<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 2,379,198
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