<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. 9
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 March 24, 1998 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, 1998 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 485(B)]
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) Not Applicable
(viii) 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
(b) Not Applicable
(c) Performance
(d) Performance; Portfolio Manager Discussions
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) Not Applicable
(d) Investment Management Arrangements and Expenses
(e) Custodian, Transfer Agent and Dividend Disbursing Agent
(f) Investment Management Arrangements and Expenses
(g)(i) Not Applicable
(ii) Not Applicable
ITEM 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
(a) Portfolio Manager's Discussion and Analysis -
Growth Portfolio, Managed Portfolio, Balanced Portfolio
(b) Portfolio Manager's Discussion and Analysis -
Growth Portfolio, Managed Portfolio, Balanced Portfolio
(c) Portfolio Manager's Discussion and Analysis -
Growth Portfolio, Managed Portfolio, Balanced Portfolio
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES
(a) General Information
Voting Rights
(b) Voting Rights
(c) Voting Rights
(d) Not Applicable
(e) Additional Information
(f) Dividends, Distributions and Taxes
(g)(i) Dividends, Distributions and Taxes
(ii) Dividends, Distributions and Taxes
(iii) 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)(i) Not Applicable
(ii) Not Applicable
(iii) 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
Not Applicable
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) Not Applicable
(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;
(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)(i) Not Applicable
(ii) Not Applicable
(iii) Not Applicable
(iv) Investment Advisory and Other Services
ITEM 22. CALCULATIONS OF YIELD QUOTATIONS OF MONEY MARKET FUNDS - Not
Applicable
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>
LOGO
[INVESTRAC GOLD LOGO APPEARS HERE]
PROSPECTUS FOR
AMERICAN NATIONAL
INVESTMENT ACCOUNTS, INC.
APRIL 30, 1998
<PAGE>
PROSPECTUS
DATED: APRIL 30, 1998
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. ("ANIA" or 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, 1998, 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
PERFORMANCE ILLUSTRATIONS.................................................. 6
INVESTMENT OBJECTIVES AND POLICIES......................................... 9
THE FUND AND ITS MANAGEMENT................................................ 11
INVESTMENT MANAGEMENT ARRANGEMENTS AND EXPENSES............................ 12
PURCHASE AND REDEMPTION OF SHARES.......................................... 12
DETERMINATION OF NET ASSET VALUE........................................... 12
DIVIDENDS, DISTRIBUTIONS AND TAXES......................................... 13
GENERAL INFORMATION........................................................ 13
</TABLE>
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained
by the SEC (www.sec.gov).
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 .28% .33% .10% .14%
Service Fee .25% .25% .25% .25%
Other Expenses .34% .35% .55% .48%
---------------------------------------------------
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--1.09%, Managed
Portfolio--1.10%; Balanced Portfolio--1.30%, and Money Market Portfolio--
1.23%. (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 Tait, Weller & Baker, CPA for
December 31, 1997 and for December 31, 1996 and prior, KPMG Peat Marwick, LLP,
independent auditors, whose unqualified report on the Financial Statements
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 included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
March 1, 1991
(date operations
commenced)
through
Year Ended December 31, December 31,
-------------------------------------------------------------------------------------
<CAPTION>
1997 1996 1995 1994 1993 1992 1991
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 1.45 $ 1.27 $ 1.04 $ 1.08 $ 1.07 $ 1.12 $ 1.00
Investment income--Net 0.03 0.02 0.02 0.02 0.02 0.01 0.01
Net realized and
unrealized gain (loss) on
investments during the pe-
riod 0.27 0.21 0.27 0.05 0.06 (0.05) 0.12
-------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 0.30 0.23 0.29 0.07 0.08 (0.04) 0.13
Less distributions
Distributions from invest-
ment income--Net (0.03) (0.02) (0.02) (0.02) (0.02) (0.01) (0.01)
Distributions from capital
gains (0.12) (0.03) (0.04) (0.09) (0.05) -- --
-------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.15) (0.05) (0.06) (0.11) (0.07) (0.01) (0.01)
-------------------------------------------------------------------------------------
Net Asset Value, end of
period $ 1.60 $ 1.45 $ 1.27 $ 1.04 $ 1.08 $ 1.07 $ 1.12
=====================================================================================
TOTAL RETURN-- 20.72% 17.98% 28.50% 6.91% 7.10% (2.82)% 13.74%**
=====================================================================================
RATIOS (in
percentages)/SUPPLEMENTAL
DATA
Net Assets, end of period
(000's omitted) $11,127 $7,278 $4,781 $3,037 $2,748 $2,477 $2,572
Ratio of expenses to aver-
age net assets 0.87(/1/) 0.87 (/1/) 0.87(/1/) 0.90(/1/) 0.91 1.38 1.50*(/1/)
Ratio of net investment
income to average net as-
sets 1.69 1.84 1.99 2.04 1.65 1.35 1.89*
Portfolio turnover rate 45.37 21.24 42.06 46.18 59.55 12.56 25.30
Average commission rate $ .0700 $.0700
</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 1.09%, 1.25%, 1.32% and
1.13%, for the years ended December 31, 1997, 1996, 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 Tait, Weller & Baker, CPA for
December 31, 1997 and for December 31, 1996 and prior, KPMG Peat Marwick LLP,
independent auditors, whose unqualified report on the Financial Statements
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 included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
March 1, 1991
(date operations
commenced)
through
Year Ended December 31, December 31,
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
------------------------------------------------------------------------------------
Net Asset Value, Beginning
of Period $ 1.37 $ 1.21 $ 1.00 $ 1.11 $ 1.05 $ 1.10 $ 1.00
Investment income--Net 0.03 0.03 0.03 0.02 0.02 0.01 0.02
Net realized and
unrealized gain (loss) on
investments during the pe-
riod 0.28 0.19 0.24 -- 0.09 (0.05) 0.11
------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 0.31 0.22 0.27 0.02 0.11 (0.04) 0.13
Less distributions
Distributions from invest-
ment income--Net (0.03) (0.03) (0.03) (0.03) (0.02) (0.01) (0.02)
Distributions from capital
gains (0.09) (0.03) (0.03) (0.10) (0.03) -- (0.01)
------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.12) (0.06) (0.06) (0.13) (0.05) (0.01) (0.03)
------------------------------------------------------------------------------------
Net Asset Value, end of
period $ 1.56 $ 1.37 $ 1.21 $ 1.00 $ 1.11 $ 1.05 $ 1.10
====================================================================================
TOTAL RETURN-- 22.41% 17.69% 27.19% 1.35% 10.97% (3.05)% 12.64%**
====================================================================================
RATIOS (in
percentages)/SUPPLEMENTAL
DATA
Net Assets, end of period
(000's omitted) $9,783 $6,273 $4,028 $2,795 $2,735 $2,406 $2,303
Ratio of expenses to aver-
age net assets 0.93(/1/) 0.93 (/1/) 0.93(/1/) 0.98(/1/) 1.00 1.41 1.50*(/1/)
Ratio of net investment
income to average net as-
sets 1.91 2.29 2.57 2.36 1.87 1.34 2.03*
Portfolio turnover rate 35.08 20.79 30.87 26.26 46.39 6.79 46.53
Average commission rate $.0700 $.0700
</TABLE>
*Ratios annualized
**Returns are not annualized
(/1/) Expensesfor 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 1.10%, 1.14%, 1.26% and
1.23% for the years ended December 31, 1997, 1996, 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 Tait, Weller & Baker, CPA for
December 31, 1997 and for December 31, 1996 and prior, KPMG Peat Marwick, LLP,
independent auditors, whose unqualified report on the Financial Statements
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 included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
March 1, 1991
(date operations
commenced)
through
Year Ended December 31, December 31,
-----------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 1.27 $ 1.18 $ 0.99 $ 1.06 $ 1.07 $ 1.12 $ 1.00
Investment income--Net 0.04 0.04 0.04 0.03 0.03 0.03 0.03
Net realized and
unrealized gain (loss) on
investments during the pe-
riod 0.20 0.10 0.19 (0.03) 0.02 (0.05) 0.12
-----------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 0.24 0.14 0.23 0.00 0.05 (0.02) 0.15
Less distributions
Distributions from invest-
ment income--Net (0.05) (0.04) (0.04) (0.03) (0.03) (0.03) (0.03)
Distributions from capital
gains (0.07) (0.01) -- (0.04) (0.03) -- --
-----------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.12) (0.05) (0.04) (0.07) (0.06) (0.03) (0.03)
-----------------------------------------------------------------------------------
Net Asset Value, end of
period $ 1.39 $ 1.27 $ 1.18 $ 0.99 $ 1.06 $ 1.07 $ 1.12
===================================================================================
TOTAL RETURN-- 18.80% 12.23% 22.80% 0.15% 4.58% (1.77)% 15.13%**
===================================================================================
RATIOS (in
percentages)/SUPPLEMENTAL
DATA
Net Assets, end of period
(000's omitted) $5,595 $4,281 $3,399 $2,660 $2,585 $2,363 $2,313
Ratio of expenses to aver-
age net assets 0.90(/1/) 0.90(/1/) 0.90(/1/) 0.96(/1/) 1.00 1.47 1.50*(/1/)
Ratio of net investment
income to average net as-
sets 3.43 3.25 3.19 3.34 2.65 2.50 3.64*
Portfolio turnover rate 23.02 16.71 15.97 46.14 68.58 11.72 23.48
Average commission rate $.0700 $.0700
</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 1.30%, 1.48%, 1.37% and
1.25% for the years ended December 31, 1997, 1996, 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 Tait, Weller & Baker, CPA for
December 31, 1997 and for December 31, 1996 and prior, KPMG Peat Marwick, LLP,
independent auditors, whose unqualified report on the Financial Statements
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 included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
March 1, 1991
(date operations
commenced)
through
Year Ended December 31, December 31,
--------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Investment income--Net .05 0.08 0.05 0.02 0.02 0.02 0.04
--------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 0.05 0.08 0.05 0.02 0.02 0.02 0.04
Less distributions
Distributions from invest-
ment income--Net (0.05) (0.08) (0.05) (0.02) (0.02) (0.02) (0.04)
--------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.05) (0.08) (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 $ 1.00 $ 1.00
======================================================================================
TOTAL RETURN-- 4.78% 4.61% 5.11% 3.36% 2.13% 2.21% 7.19%**
======================================================================================
RATIOS (in
percentages)/SUPPLEMENTAL
DATA
Net Assets, end of period
(000's omitted) $2,821 $2,532 $2,398 $2,284 $2,194 $2,133 $2,153
Ratio of expenses to aver-
age net assets 0.87(/1/) 0.87 (/1/) 0.87(/1/) 0.91(/1/) 0.98 1.50(/1/) 1.50*(/1/)
Ratio of net investment
income to average net
assets 4.62 4.51 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 1.23%, 1.22%, 1.21%, 1.14%
and 1.72% for the years ended December 31, 1997, 1996, 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, 1997. A copy of the Annual Report is available without
charge upon written request to the Fund at the address indicated on the first
page of this Prospectus.
4
<PAGE>
PERFORMANCE
Performance information for each Portfolio may be compared in adver-tisements,
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.
5
<PAGE>
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION AND ANALYSIS
In 1997, the U.S. economic characteristics reflected steady growth, declining
inflation, a decrease in the budget deficit, large increases in business
profits, employment and real incomes, and a continuation of unprecedented stock
market gains. Further, interest rates declined as the markets realized that
with a backdrop of an appreciating dollar, global deflationary tendencies, and
excess liquidity via declining inflation, the Federal Reserve would have no
compelling reasons to alter monetary policy.
The S&P 500 ended 1997 registering its third consecutive year of +20% gains.
This ended the best calendar-three-year run since Standard and Poor's began
tracking indices in 1923. In addition, this was the first time since 1926 that
the S&P 500 produced better than 20% returns in three consecutive calendar
years. The year 1997 also featured a market of increased volatility. For 1997,
the S&P 500 closed more than 1% higher or lower than the previous day on 34% of
the trading days. In comparison, the average for the period 1990-1996 was less
than half that, at 14.5% of trading days. For the fourth year in a row, large
capitalization stocks were the best performing size category. The S&P 500 broke
43 new record setting high marks during 1997, but not without a few bruises.
The 9.6% decline between February 18 and April 11 stopped just short of the 10%
mark, which is traditionally the benchmark cited to declare a true market
correction. The 10% mark was crested, however, as stocks fell 10.8% between
October 7-27.
The Dow Jones World Index, which excludes the U.S. market, lost 3.0% during the
year, although performance was widely varied. Within the index, Asia/Pacific
declined 29.1% whereas Europe/Africa gained 19.9%. Also during the year, the
Merrill Lynch Domestic Bond Index rose 9.4%. Within this index, performance
varied from convertible bonds returning 16.1% to asset-backed securities
returning 7.2%. Money market returns were widely varied as well. The U.S. money
markets returned 5.1% whereas the foreign money markets fell 5.5%, reflecting
strength in the U.S. dollar.
Looking forward into the remainder of 1998, we believe the U.S. economy will
continue to grow, albeit at a reduced rate of approximately 2.0-3.0%. Inflation
will likely remain historically low (1.5-2.5%) as declining commodities costs
are countered by rising employment and wages. Such an environment will likely
lead to declining interest rates over the short run which in turn could provide
an ideal climate for fixed income securities as well as financial and consumer
dependent securities.
The Growth Portfolio seeks to identify stocks of superior companies utilizing
two valuation disciplines. These disciplines screen potential investments for
both cash flow and earnings with the goal of selecting companies suitable for
long term capital appreciation. The purpose of this approach is to purchase
future company earnings at a discount relative to peer companies, all else
being equal. The disciplines provide what we believe are a conservative and
defensive group of stocks from which to select for inclusion in the Portfolio.
Within the Growth Portfolio, we noted particular strength from our holdings in
the financial, consumer cyclical and technology sectors. For 1997, our
overweighting of technology relative to the market also helped our relative
performance. For investors who owned shares for the whole year 1997, the
Portfolio produced a total return of 20.7% (see graph for complete performance
history). The Portfolio's growth attributes are achieved by investing primarily
in large-capitalization growth companies. The Portfolio makes an effort to
overweight sectors by no more than twice the S&P 500 sector weights and
underweight by no more than half the S&P 500 sector weights.
We continue to seek out undervalued companies undergoing positive changes in
fundamentals and selling those issues that have hit their price targets or
whose fundamentals do not warrant inclusion in our Portfolio.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
ANIA GROWTH PORTFOLIO
AND STANDARD AND POORS 500
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
- --------------------- ---------- ----------
<S> <C> <C>
Measurement Pt-03/01/1991 $10,000.00 $10,000.00
1991 $11,659.00 $13,055.00
1992 $11,310.00 $14,056.00
1993 $12,113.00 $15,461.00
1994 $12,951.00 $15,663.00
1995 $16,642.00 $21,516.00
1996 $19,634.32 $26,422.10
1997 $23,702.55 $35,236.52
Average Annual Return
From Inception 13.07%
5 Year 13.91%
1 Year 20.72%
Past performance does
not guarantee future results.
</TABLE>
The Growth Portfolio's performance fiqures are historical and reflect
reinvestments of all dividends and capital gains distributions and changes
in net asset value. The Portfolio began operations March 1, 1991.
6
<PAGE>
MANAGED PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION AND ANALYSIS
The Managed Portfolio turned in a solid performance in 1997, producing a total
return of 22.4% (see graph for complete performance history). Throughout the
year, the Portfolio continued to seek growth of capital as well as current
income by investing in a diversified portfolio of common stocks and convertible
securities. The Portfolio currently seeks to maintain a dividend yield greater
than that of the Standard & Poor's 500 stock market index. The Portfolio's
year-end dividend yield of 2.3% stands more than 50% greater than the S&P 500's
1.5% yield.
Throughout 1997, the Managed Portfolio benefited from its overweighted
positions in the finance and technology sectors. Within the finance sector, the
Managed Portfolio's holdings include banks like Nationsbank, Fleet Financial,
and Comerica; financial services companies like Beneficial, Morgan Stanley Dean
Witter, and Reliance Group Holdings; and a carefully selected group of real
estate investment trusts (REITs) such as Centerpoint Properties, Crescent,
Health & Retirement Properties. On average, these holdings produced returns of
about 35% for the year. Moreover, the Managed Portfolio was overweighted in
this strong performing sector relative to the broad market benchmarks.
We also noted particular strength in the technology sector, which includes such
industries as computer hardware and software, electronics, and photography or
imaging companies. For the year, the Managed Portfolio's holdings in this
sector produced an average return of 28%, outperforming this strong sector's
performance within the broad market. In addition, the Managed Portfolio
benefited from above-market performance from our transportation selections,
which appreciated 44% on average versus 30% for the sector in the S&P 500.
Weaknesses within the Managed Portfolio's holdings were found in the capital
goods and energy sectors. In the case of capital goods, most of the weakness
came from companies like engineering and construction company Foster Wheeler,
which has above average exposure to emerging markets in Southeast Asia. In the
energy sector, where generous dividend yields are available from many high
quality companies, the falling price of oil hurt earnings, especially in the
fourth quarter. We are still confident in our international integrated
companies like Elf Aquitaine and Texaco as well as our domestic companies like
Kerr-McGee and Murphy Oil.
As mentioned elsewhere in this report, we expect the U.S. economy to continue
its moderate growth in 1998, albeit at a somewhat reduced rate. Inflation will
likely remain historically low (1.5-2.5%) as declining commodities costs are
countered by rising employment and wages. Such an environment will likely lead
to declining interest rates over the short run which, in turn, will provide an
ideal climate for fixed income securities as well as financial and consumer
dependent securities.
Within this slow growth economy, we will endeavor to achieve our style specific
goals by selectively moving between asset classes, while emphasizing equities,
as well as by continuing our quest to identify stocks of superior companies
utilizing our conservative and defensive valuation disciplines. We continually
seek out undervalued companies undergoing positive changes in fundamentals, and
look to sell those issues which have hit their price targets or whose
fundamentals do not warrant inclusion in the Portfolio. This process has served
the Managed Portfolio well over the last several years.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
ANIA MANAGED PORTFOLIO
AND STANDARD AND POORS 500
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
- --------------------- ---------- ---------
<S> <C> <C>
Measurement Pt-03/01/1991 $10,000.00 $10,000.00
1991 $11,526.00 $13,055.00
1992 $11,174.00 $14,056.00
1993 $12,400.00 $15,461.00
1994 $12,568.00 $15,663.00
1995 $15,985.00 $21,516.00
1996 $18,812.58 $26,422.10
1997 $23,028.48 $35,236.52
Average Annual Return
From Inception 11.48%
5 Year 14.49%
1 Year 22.41%
Past performance does
not guarantee future results.
</TABLE>
The Managed Portfolio's performance figures are historical and reflect
reinvestments of all dividends and capital gains distributions and changes in
net asset value. The Portfolio began operations March 1, 1991.
7
<PAGE>
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S DISCUSSION AND ANALYSIS
The Balanced Portfolio (the "Portfolio") is the lowest risk equity-dominated
portfolio in the American National Investment Accounts, Inc. fund. Throughout
1997, the Portfolio's conservative blend of about 50% stocks, 40% bonds and 10%
cash has served investors well. The equity portion of the Portfolio produced a
total return (capital appreciation and dividend income) of about 28%, while the
bond portion returned about 11%. Combined, investors present for the entire
year enjoyed a total return of 18.8% (see graph for complete performance
history).
Within the Portfolio, we took advantage of high real interest rates (after
adjusting for inflation) to extend maturities and add exposure to the fixed
income portion of the Portfolio. We shifted about 6% of the Portfolio's assets
from equities and cash, and moved it into bonds during April, as the yield on
the 30-year Treasury bond pushed above 7%. In retrospect, our timing was quite
fortuitous, as interest rates dropped over one percentage point by year-end,
with the 30-year bond yield closing 1997 at 5.9%.
Within the equity portion of the Portfolio, we utilize the same conservative
and defensive stock selection disciplines used in the ANIA Managed and Growth
Portfolios. The key is to seek out stocks of superior companies and purchase
them at what we consider to be discounted valuations. During 1997, we noted
particular strength from our equity holdings in the healthcare and consumer
staples sectors. In both areas our holdings produced returns in excess of 30%,
outperforming the respective sectors in the S&P 500 for the year.
We weren't so fortunate with our capital goods and energy holdings, however, as
both sectors underperformed both on an absolute basis and relative to their
respective S&P sectors. Within capital goods, we saw weakness in companies like
Fluor and Foster Wheeler, whose businesses are closely tied to large
infrastructure projects in the emerging markets in Southeast Asia. In the
energy sector, falling oil prices caused the shares of most companies to fall
in sympathy. We are examining our holdings in both of these sectors to
determine whether changes should be made going forward.
Overall, our Balanced Portfolio investors were rewarded by their investment in
1997, with a third consecutive year of double-digit returns. Although the
Portfolio has not produced the spectacular returns witnessed by some portfolios
over the last year or two, we have achieved our goal of providing consistently
positive performance in the strong up market, while firmly believing that the
Balanced Portfolio is well positioned should markets turn downward.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
ANIA BALANCED PORTFOLIO,
STANDARD AND POORS 500 AND LEHMAN INTERMEDIATE GOVT/CORP. INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index Lehman
- ---------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Measurement Pt-03/01/1991 $10,000.00 $10,000.00 $10,000.00
1991 $11,829.00 $13,055.00 $11,462.00
1992 $11,620.00 $14,056.00 $12,284.00
1993 $12,152.00 $15,461.00 $13,365.00
1994 $12,171.00 $15,663.00 $13,107.00
1995 $14,945.00 $21,516.00 $15,116.00
1996 $16,773.26 $26,422.10 $15,720.79
1997 $19,926.63 $35,236.52 $16,956.44
Average Annual Return
From Inception 10.17%
5 Year 11.39%
1 Year 18.80%
Past performance does
not guarantee future results.
</TABLE>
The Balanced Portfolio's performance figures are historical and reflect
reinvestments of all dividends and capital gains distributions and changes
in net asset value. The Portfolio began operations March 1, 1991.
8
<PAGE>
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 without the approval of the
shareholders. 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.
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
9
<PAGE>
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
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;
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(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 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 nine 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.
As of April 1, 1998, SM&R and its parent, American National Insurance Company,
owned 5% and 95%, respectively of the outstanding shares of the Growth
Portfolio; 5% and 95%, respectively of the outstanding shares
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of the Managed Portfolio; 8% and 92%, respectively of the outstanding shares
of the Balanced Portfolio; 11% and 89%, respectively of the outstanding shares
of the Money Market Portfolio. American National and SM&R reserve the right to
vote these shares as they deem appropriate.
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 DIRECTOR, SENIOR VICE PRESIDENT, AND 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.
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 since 1987.
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, 1997, the net compensation paid by each
Portfolio to SM&R, expressed as a percentage of average net assets, were as
follows: Growth Portfolio--.28%; Managed Portfolio--.33%; Balanced Portfolio--
.10%; and Money Market Portfolio--.14%.
For information about the expenses of the Fund, see the Statement of
Additional Information.
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 prospectuses. 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.
Shares of the Fund are sold to both variable annuity and variable life
separate accounts. The offering of Fund shares to both types of accounts is
referred to as "mixed funding." It may be disadvantageous for variable annuity
separate accounts and variable life separate accounts to invest in the Fund
simultaneously. Although neither the Fund nor the life insurance company
offering the variable contracts currently foresees any material conflicts
between the variable annuity or variable life contract owners arising out of
the mixed funding, the Board of Directors of the Fund will monitor events in
order to identify any such conflicts and to determine what action, if any,
should be taken in response thereto.
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.
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<PAGE>
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 holidays are Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, the Friday following Thanksgiving Day, two (2)
days at Christmas and News Years Day. If Christmas Day is a weekday other than
Monday, Christmas Day and Christmas Eve Day are business holidays. If
Christmas Day is Monday, Christmas Day and the preceding Friday will be
business holidays. If Christmas Day is a Saturday, the preceding Thursday and
Friday will be business holidays. If Christmas Day is a Sunday, the preceding
Friday and the following Monday will be business holidays. If New Years Day is
a Saturday the preceding Friday will be a business holiday and if New Years
Day is a Sunday, the following Monday will be a business holiday. For calendar
year 1998, Independence Day will be observed on July 3, 1998.
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 Two Billion
(2,000,000,000) shares, par value $.01 per share. The shares of Capital Stock
are divided into four portfolios: Growth Portfolio Capital Stock (115,000,000
shares); Money Market Portfolio Capital Stock (1,050,000,000 shares); Balanced
Portfolio Capital Stock (115,000,000 shares); and Managed Portfolio Capital
Stock (120,000,000 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 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
13
<PAGE>
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.
14
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DIRECTORS
Ernest S. Barratt, Ph.D.
Allan W. Matthews
Lea McLeod Matthews
Michael W. McCroskey
Ann McLeod Moody
Edwin K. Nolan
Robert V. Shattuck, Jr.
Jamie G. Williams
Frank P. Williamson
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
Tait, Weller & Baker, CPA
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103-2108
TRANSFER AGENT, REGISTRAR AND
DIVIDEND PAYING AGENT
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
[UPC Code Appears Here]
Form 9427, Rev. 4/98
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated: April 30, 1998
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, 1998 ("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
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<S> <C>
GENERAL HISTORY OF THE FUND.................................... 37
INVESTMENT OBJECTIVES OF EACH PORTFOLIO........................ 37
INVESTMENT POLICIES OF EACH PORTFOLIO -
TYPES OF SECURITIES AND RATINGS............................... 37
INVESTMENT RESTRICTIONS........................................ 40
MANAGEMENT OF THE FUND......................................... 41
POLICY REGARDING PERSONAL INVESTING............................ 44
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES............ 45
INVESTMENT ADVISORY AND OTHER SERVICES......................... 45
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION................ 47
</TABLE>
36
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<TABLE>
<CAPTION>
<S> <C>
CAPITAL STOCK.................................................. 48
SALE, REDEMPTION AND PRICING OF SHARES......................... 49
TAXES.......................................................... 50
CALCULATION OF YIELD QUOTATIONS OF THE MONEY MARKET PORTFOLIO.. 51
OTHER INFORMATION CONCERNING THE FUND.......................... 52
FINANCIAL STATEMENTS OF THE FUND............................... 53
</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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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
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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, addresses, ages, principal occupations, and other affiliations of the
Fund's directors and executive officers during the last five (5) years are shown
below.
ERNEST S. BARRATT, Ph.D. - DIRECTOR (1) (DEPARTMENT OF PSYCHIATRY AND BEHAVIORAL
SCIENCES, UNIVERSITY OF TEXAS MEDICAL BRANCH, GALVESTON, TEXAS 77550-2777) 73,
Professor and Chief of Psychophysiology Laboratory, Department of
Psychiatry and Behavioral Sciences, University of Texas Medical Branch, a
medical school and hospital system, 1981 to present; Director of the SM&R
Capital Funds Inc., an affiliated investment company, 1997 to present.
MICHAEL W. MCCROSKEY - DIRECTOR AND PRESIDENT* (ONE MOODY PLAZA, GALVESTON,
TEXAS 77550) 54, President, Chief Executive Officer, Director 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. (hereinafter referred to as the "American National Funds Group"), June
1994 to present; President and Director of the SM&R Capital Funds, Inc., June
1994 to present; Executive Vice President, American National, 1971 to present;
Vice President of Standard Life and Accident Insurance Company, 1988 to present;
Assistant Secretary of American National Life Insurance Company of Texas, 1986
to present; Vice President, Investments of American National Property and
Casualty Company, 1994 to present; Vice President, American National General
Insurance Company, 1994 to present; Vice President, Pacific Property and
Casualty, 1996 to present; Vice President, Garden State Life Insurance Company,
1994 to present, life, health and accident insurance companies in the American
National Family of Companies; Director and President, ANREM Corporation, 1977 to
present; President and Director, ANTAC Corporation, 1995 to present; Director,
Comprehensive Management Services, 1998 to present.
ALLAN W. MATTHEWS - DIRECTOR* (1)(7114 YOUPON, GALVESTON, TEXAS 77551) 32,
Program Officer, The Moody Foundation (a charitable foundation), April 1991 to
present; Director of the SM&R Capital Funds, Inc., an affiliated investment
company, November 1991 to present.
LEA MCLEOD MATTHEWS - DIRECTOR* (850 E. ANDERSON LANE, AUSTIN, TEXAS 78752-1602)
35, Publications Editor, National Western Life Insurance Co., 1990 to
present; Associate in Customer Service Designation; Director of the SM&R Capital
Funds, Inc., an affiliated investment company, May 1994 to present; Director of
Garden State Life Insurance Company, 1993 to present; Director of Kids Exchange
of Austin, a non-profit corporation, 1996 to present; Consultant to Austin
Writers League.
ANN MCLEOD MOODY - DIRECTOR* (2) (5 COLONY PARK DRIVE, GALVESTON, TEXAS 77551)
60, Director of Moody Gardens, Inc., 1994 to present; Director of Bank of
Galveston, National Association, 1989 to present; Director of The Westcap
Corporation, 1990 to present; Director of Seal Fleet, Inc., 1972 to 1996;
Director of the SM&R Capital Funds, Inc., an affiliated investment company,
December 1997 to present.
EDWIN K. NOLAN - DIRECTOR (1) (#7 LOOKOUT DRIVE, CANYON LAKE, TEXAS 78133) 54,
Investor and Attorney, Law Offices, EDWIN K. NOLAN, P.C., Canyon Lake,
Texas, 1977 to present; Director, Director/Owner, Canyon Lake Aviation, Inc.
(Aviation Service), Canyon Lake, Texas, 1986 to present; Director/Owner, Canyon
Lake Airport, Inc. (Airport), Canyon Lake, Texas, 1985 to 1995; Director Hancock
Mini Mart, Inc., 1995 to present; Director of the SM&R Capital Funds, Inc., an
affiliated investment company, December 1997 to present.
ROBERT V. SHATTUCK, JR. - DIRECTOR (1013 23RD STREET, GALVESTON, TEXAS 77550)
56, Attorney, Law Offices of Robert V. Shattuck, Jr., Galveston, Texas;
Director of the SM&R Capital Funds, Inc., an affiliated investment company,
December 1997 to present.
JAMIE G. WILLIAMS - DIRECTOR (3328 STANFORD, DALLAS, TEXAS 75225) 51,
Academic Language Therapist and Educational Consultant, 1974 to present;
Director of The Learning Therapist Graduate Certificate Program, 1986 to 1995;
Adult Assessment Clinic and Adolescent Academic Development Programs, Division
of Evening, Summer and Continuing Studies, Southern Methodist University, 1994
to 1995; Adjunct Instructor in Department of Psychology, Dedman College,
Southern Methodist University, 1988 to 1995; Director of the SM&R Capital Funds,
Inc., an affiliated investment company, December 1997 to present.
FRANK P. WILLIAMSON - DIRECTOR (200 UNIVERSITY BOULEVARD, GALVESTON, TEXAS
77550) 65, Owner of Professional Pharmacy, 1964 to present; Director of
the SM&R Capital Funds, Inc., an affiliated investment company, December 1997 to
present.
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<PAGE>
() EMERSON V. UNGER, C.L.U. - VICE PRESIDENT (ONE MOODY PLAZA, GALVESTON, TEXAS
77550) 52, 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) 43, 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; Treasurer, Comprehensive Management Services; Senior
Manager, KPMG Peat Marwick, July 1980 to April 1992.
() TERESA E. AXELSON - VICE PRESIDENT AND SECRETARY (ONE MOODY PLAZA, GALVESTON,
TEXAS 77550) 50, 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;
CO-MANAGER OF MANAGED PORTFOLIO (ONE MOODY PLAZA, GALVESTON, TEXAS 77550) 52,
Director, Senior Vice President, Chief Investment Officer of SM&R and a member
of the Investment & Executive Committees of SM&R; Vice President, Portfolio
Manager of the American National Growth Fund, Inc., Co-Manager of the American
National Income Fund, Inc., mutual funds; President and Director, Comprehensive
Investment Services; Former Director of Equity Strategy Research and Trading for
C&S/Soran Bank (now Nations Bank) Atlanta, Georgia.
() WILLIAM R. BERGER, C.F.A. - VICE PRESIDENT, PORTFOLIO MANAGER OF THE BALANCED
PORTFOLIO; CO-MANAGER OF MANAGED PORTFOLIO (ONE MOODY PLAZA, GALVESTON, TEXAS
77550) 34, Vice President and Portfolio Manager for the Triflex Fund, Inc., Co-
Manager of American National Income Fund, Inc., and a member of the Equities
Investment Committee of SM&R; Assistant Vice President of Investments, American
National; Vice President, Comprehensive Investment Services; 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) 70, 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.
* "Interested persons" as defined by the Investment Company Act of 1940.
(1) Member of the Fund's audit committee.
(2) Mr. Matthews and Ms. Matthews are children of Mrs. Ann Moody.
() 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, 1997 the Fund paid approximately $16,504 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, 1997 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 $5,000 $ 6,000
Robert A. Fruend -- --
Brent E. Masel, M.D. $4,000 $ 8,000
Allan W. Matthews $1,000 $ 6,000
Lea McLeod Matthews $5,000 $10,000
Michael W. McCroskey -- --
Ann McLeod Moody $1,000 $ 2,000
Edwin K. Nolan $1,000 $ 6,000
Louis E. Pauls, Jr. $4,000 $ 8,000
Robert V. Shattuck, Jr. $1,000 $ 2,000
Jamie G. Williams $1,000 $ 2,000
Frank P. Williamson $1,000 $ 2,000
</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, 1998, no officer or director of the Fund owned shares of the
Portfolios.
As of April 1, 1998, American National Insurance Company and SM&R owned 95% and
5% of the outstanding shares of the Growth Portfolio; 95% and 5% of the
outstanding shares of the Managed Portfolio; 92% and 8% of the outstanding
shares of the Balanced Portfolio; and 89% and 11% of the outstanding shares of
the Money Market Portfolio, respectively.
See the "Control and Management of SM&R" section in INVESTMENT ADVISORY AND
OTHER SERVICES, below.
INVESTMENT ADVISORY AND OTHER SERVICES
CONTROL AND MANAGEMENT OF SM&R
SM&R has been the investment adviser, manager and underwriter of the Fund since
the Fund began business in 1990. SM&R acts pursuant to a written agreement
periodically approved by the directors or shareholders of the Fund. SM&R is
also the investment adviser and underwriter of the American National Funds Group
and the SM&R Capital Funds, Inc. SM&R's address is that of the Fund.
SM&R is a wholly-owned subsidiary of American National. The Moody Foundation
(the "Foundation"), a charitable foundation established for charitable and
educational purposes, owns approximately 23.7% of American National's common
stock and the Libbie S. Moody Trust, a private trust, owns approximately 37.6%
of such shares. The trustees of the Moody Foundation are Robert L. Moody
("RLM"), who is Chairman of the Board of Directors of American National, Frances
Moody Newman and Ross R. Moody.
The Moody National Bank of Galveston (the "Bank") is trustee of the Libbie S.
Moody Trust. RLM is Chairman of the Board and President, Chief Executive
Officer of the Bank, President and Director of Moody Bancshares, Inc.
("Bancshares"), the sole shareholder of Moody Bank Holding Company, Inc.
("MBHC"), and President and Director of MBHC, the Bank's controlling
stockholder. The Three R Trusts, trust established by RLM for the benefit of
his children, owns 100% of Bancshares' Class B stock (which elects a majority of
Bancshares' and MBHC's Directors) and 47.5% of its Class A stock. The trustee
of the Three R Trusts is Irwin M. Herz, Jr., who is also a director of American
National and a partner in Greer, Herz & Adams, L.L.P., 18th Floor, One Moody
Plaza, Galveston, Texas, General Counsel to American National, the Bank,
Bancshares, MBHC, the Fund, the other American National Funds, the SM&R Capital
Funds, Inc. and SM&R.
Michael W. McCroskey, President and Director of the Fund, is also President,
Chief Executive Officer, Director and a member of the executive committee of
SM&R, and President and Director of the American National Funds Group and the
SM&R Capital
45
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Funds, Inc.; Gordon D. Dixon, Vice President, Portfolio Manager of the Fund and
the American National Growth Fund, Inc. and Co-Manager of the American National
Income Fund, Inc., is also Director, Senior Vice President, Chief Investment
Officer of SM&R and a member of the investment and executive 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, 1995, 1996, and 1997 SM&R received or accrued
investment advisory fees from each Portfolio as follows: Growth Portfolio
$19,146, $30,323 and $46,499; Managed Portfolio $16,964, $26,036 and $40,851;
Balanced Portfolio $15,022, $19,354 and $24,587 and the Money Market Portfolio
$11,773, $12,287 and $13,299, 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, 1995, 1996, and 1997, SM&R received
or accrued Administrative Service Fees from each Portfolio as follows: Growth
Portfolio $9,573, $15,161 and $23,249, Managed Portfolio
46
<PAGE>
$8,482, $13,018 and $20,425, Balanced Portfolio $7,511, $9,677 and $12,294, and
Money Market Portfolio $5,886, $6,143 and $6,650, 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, 1996 and 1997, expense reimbursements
made to each Portfolio were: Growth Portfolio $16,798, $23,213 and $20,044;
Managed Portfolio $10,885, $10,783 and $13,886, and Balanced Portfolio $14,016,
$22,510 and $19,877, respectively. Expenses reimbursements made to the Money
Market Portfolio were $8,001, $8,646 and $9,686, for the years ended December
31, 1995, 1996 and 1997, 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, 1995, 1996 and 1997 totaled $11,599, $11,495
and $35,534, respectively. No brokerage commissions have been paid during the
Fund's most recent period to any broker which is an affiliated person of the
Fund, which is an affiliated person of a broker which is an affiliated person of
the Fund or an affiliated person of which is an affiliated person of the Fund or
SM&R.
The American National Funds Group and the SM&R Capital Funds, Inc., for which
SM&R is also investment adviser, may own securities of the same companies from
time to time. However, the Fund's portfolio security transactions will be
conducted independently, except when decisions are made to purchase or sell
portfolio securities of the Fund, the American National Funds Group and the SM&R
Capital Funds, Inc., simultaneously. In such event, the transactions will be
averaged as to price and allocated as to amount (according to the proportionate
share of the total combined commitment) in accordance with the daily purchase or
sale orders actually executed.
The Fund's Board of Directors has determined that such ability to effect
simultaneous transactions may be in the best interests of the Fund. It is
recognized that in some cases these practices could have a detrimental effect
upon the price and volume of securities being bought and sold by the Fund, while
in other cases these practices could produce better executions.
CAPITAL STOCK
The Fund's authorized capital stock consists of One Hundred Million
(100,000,000) shares of common stock, par value of $.01 per share issuable in
separate portfolios. Currently, four such portfolios have been established:
Growth Portfolio, Money Market Portfolio, Balanced Portfolio and Managed
Portfolio.
Prior to the Fund's offering of any shares to the Separate Accounts, SM&R
provided the Fund with initial capital by purchasing 100,000 shares of each
Portfolio at a purchase price of $1.00 per share. In addition, American National
purchased 1,750,000 shares of each Portfolio at a price of $1.00 per share. Such
shares were acquired by American National in connection with the formation of
the
48
<PAGE>
Fund, were acquired for investment and can be disposed of only by redemption.
Both SM&R's and American National's shares will be redeemed only when permitted
by the Investment Company Act of 1940 and when the other assets of the Portfolio
are large enough that such redemption will not have a material adverse effect
upon investment performance. SM&R and American National will vote their shares
in the same manner and in the same proportion as the other shares held in the
Separate Accounts are voted. The Fund will offer all other shares only to the
Separate Accounts.
The assets received by the Fund for the issuance or sale of shares of each
Portfolio and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such Portfolio. They
constitute the underlying assets of each Portfolio, are required to be
segregated on the books of account and are to be charged with the expenses of
such Portfolio. Any general expenses not readily identifiable as belonging to a
particular Portfolio shall be allocated among all Portfolios by or under the
direction of the directors in such manner as the directors determine to be fair
and equitable.
All shares are non-assessable, fully transferable, and have one vote and equal
rights to share in dividends and assets. The shares possess no pre-preemptive
or conversion rights. Cumulative voting is not authorized. This means that the
holders of more than 50% of the shares voting for the election of directors can
elect 100% of the directors if they choose to do so, and in such event, the
holders of the remaining shares will be unable to elect any directors.
As used herein, the term "majority" when referring to approval to be obtained
from shareholders means the vote of the lesser of (l) 67% of the Fund's shares
present at a meeting if the owners of more than 50% of the outstanding shares
are present in person or by proxy; or (2) more than 50% of the Fund's
outstanding shares.
SALE, REDEMPTION AND PRICING OF SHARES
SALE AND REDEMPTION
Shares of each Portfolio are sold only to the corresponding subaccount of the
Accounts. Shares are sold and redeemed at their net asset value as next
determined following receipt of a net premium or a surrender request by the
Accounts without the addition of any selling commission or sales load or
redemption charge. The redemption price may be more or less than the
shareholder's cost.
The Fund's shares are also sold and redeemed as a result of transfer requests,
loans, loan repayments and similar Account transactions, in each case without
any sales load or commission and at the net asset value per share computed for
the day as of which such Account's transactions are effected.
PRICING OF SHARES
The net asset value per share of each Portfolio is determined by adding the
value of all Portfolio assets, deducting all Portfolio liabilities and dividing
by the number of outstanding shares of such Portfolio.
MONEY MARKET PORTFOLIO
All Money Market Portfolio securities are valued by the basis of the amortized
cost valuation technique. This involves valuing a security at its cost and,
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
instrument. During periods of declining interest rates, the daily yield on
shares of the Fund may tend to be higher than a like computation made by funds
with identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of amortized cost by the Fund resulted in a lower aggregate
portfolio value on a particular day, a prospective investor in the Fund would be
able to obtain a somewhat higher yield
49
<PAGE>
than would result from investment in a fund with identical investments utilizing
solely market values, and existing investors in a Fund would receive less
investment income. The converse would apply in a period of rising interest
rates.
The valuation of the Money Market Portfolio instruments based upon their
amortized cost is subject to the Portfolio's adherence to certain conditions
with respect to its operation. The Fund must maintain a dollar-weighted average
portfolio maturity for the Money Market Portfolio of 90 days or less, purchase
instruments having remaining maturities of one year or less only, and invest
only in securities determined by the directors to be of high quality with
minimal credit risks.
The Money Market Portfolio follows procedures established by the directors that
are designed to stabilize, to the extent reasonably possible, the Money Market
Portfolio price per share as computed for the purpose of sales and redemptions
at $1.00. There can be no assurance that the Money Market Portfolio will at all
times be able to maintain a continuous $1.00 net asset value per share.
Procedures to be followed will include review of the Money Market Portfolio's
holdings by the directors at such intervals as it may deem appropriate to
determine whether the Money Market Portfolio's net asset value calculated by
using available market quotations deviates from $1.00 per share and, if so,
whether such deviation may result in material dilution or is otherwise unfair to
existing shareholders. In the event the directors determine that such a
deviation exists, it must take such corrective action as it regards as necessary
and appropriate, including the sale of portfolio instruments prior to maturity
to realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends, or establishing a net asset value per share by using
available market quotations.
GROWTH, BALANCED AND MANAGED PORTFOLIO
The value of these Portfolio's securities is determined by one or more of the
following methods:
The securities traded on the New York Stock Exchange ("NYSE") or American Stock
Exchange ("ASE") are valued at the closing sale price on that day, or if there
were no sales during the day, at the last previous sale or bid price reported.
The securities which are not listed on the NYSE or ASE, but are listed on other
national securities exchanges, are valued in a manner similar to that described
in the preceding paragraph, using values reported by the principal exchange on
which the securities are traded, except that the prices are taken at the time
trading closes on the NYSE.
Over-The-Counter securities are valued at the bid prices.
Debt securities having maturities of 60 days or less are valued using the
amortized cost technique. Debt securities with maturities in excess of 60 days
are valued on the basis of prices provided by an independent pricing service or
brokers. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate, maturity and seasoning differential.
Securities in corporate short-term notes are valued at cost plus amortized
discount, which approximates market value. If no quotations are available,
securities and all other assets are valued in good faith at fair value, using
the methods determined by the directors on a consistent basis.
TAXES
SUBCHAPTER M OF THE INTERNAL REVENUE CODE OF 1986
Under the Tax Reform Act of 1986 ("TRA 1986") and the Internal Revenue Code of
1986 ("Code"), each Portfolio of the Fund must elect to be treated and qualify
as a regulated investment company ("RIC") under Subchapter M of the Code in
order to
50
<PAGE>
avoid double taxation of the Portfolio and its shareholders. Among the
requirements for qualification and treatment as a RIC are investment limitations
and diversification requirements that may effect the investments of each
Portfolio, and certain distribution requirements pertaining to net income.
In general, at least 90% of the gross income of each Portfolio for the taxable
year must be derived from dividends, interest and gains from the sale or other
disposition of securities.
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 98% of capital gain net income
for the one-year period ending October 31 of such year, and certain other
amounts. For these purposes, if a RIC pays dividends before the end of January
of any year, they will be treated as paid in the preceding calendar year if the
dividends were declared in the preceding December and were payable to
shareholders of record on a date in December.
SECTION 817(H) OF THE CODE
Each Portfolio intends to comply with Section 817(h) of the Code and the
regulations issued thereunder. Pursuant to that Section, the only shareholders
of the Fund and its Portfolios will be SM&R, American National and the Account.
The prospectus that describes the variable insurance policies issued through the
Account provides additional discussion of the taxation of the Account and of the
owner of the variable insurance policy.
In addition, Section 817(h) of the Code and Treasury Department temporary
regulations thereunder impose certain diversification requirements on the
Account. These requirements, which are in addition to the diversification
requirements applicable to the Fund under Subchapter M and the Investment
Company Act of 1940, may affect the securities in which the Portfolios may
invest. The consequences of failure to meet the requirements of Section 817(h)
could result in taxation of the insurance company offering the variable
insurance policy and immediate taxation of the owner of the policy to the extent
of appreciation on investment under the policy.
The Secretary of the Treasury is expected to issue additional regulations that
will prescribe the circumstances in which a policyowner's control of the
investments of the Account may cause the policyowner, rather than American
National, to be treated as the owner of the assets of the Account.
The Fund may therefore find it necessary to take action to assure that the
variable insurance policies continue to qualify as a variable insurance policy
under federal tax laws. The Fund, for example, may be required to alter the
investment objectives of any Portfolio or substitute the shares of one Portfolio
for those of another. No such change of investment objectives or substitution
of securities will take place without notice to the shareholders of the affected
Portfolio and the approval of a majority of such shareholders and without prior
approval of the Securities and Exchange Commission, to the extent legally
required.
The preceding is a brief summary of some of the relevant tax considerations. It
is not intended as a complete explanation or a substitute for careful tax
planning and consultation with individual tax advisors.
CALCULATION OF YIELD QUOTATIONS OF THE MONEY MARKET PORTFOLIO
51
<PAGE>
The Money Market Portfolio will attempt, consistent with safety of principal, to
achieve the highest possible yield from its investments. The Money Market
Portfolio's yield is its current investment income expressed in annualized
terms. The yield is based on a specified seven-calendar-day-period. It is
computed by (1) determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of the period, (2) dividing the net change in account value by the
value of the account at the beginning of the base period to get the base period
return, then (3) multiplying the base period return by the dividend obtained by
dividing 365 by 7. The resulting yield figure is carried to the nearest
hundredth of one percent.
The Money Market Portfolio effective yield for a specified seven-calendar-day-
period is computed by (1) determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing account having a balance of
one share at the beginning of the period, (2) subtracting a hypothetical charge
reflecting deductions from shareholder accounts, (3) dividing the difference by
the value of the account at the beginning of the base period to get the base
period return, and then compounding the base period return by adding 1, raising
the sum to a power equal to 365 divided by 7 and subtracting 1 from the result
according to the following formula: EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)
365/7] - 1. The resulting yield figure is carried to the nearest hundredth of
one percent.
The calculations include (1) the value of additional shares declared as
dividends on the original share, and dividends declared on both the original
share and any such additional shares, and (2) all fees (other than nonrecurring
fees or sales charges) charged to all shareholder accounts, in proportion to the
length of the base period and the Money Market Portfolio's average account size.
The yield computation may be of limited use for comparative purposes as charges
at the Account level will decrease the yield.
The capital changes excluded from the calculation are realized capital gains and
losses from the sale of securities and unrealized appreciation and depreciation.
Current and compounded yields fluctuate daily and will vary with factors such as
interest rates, the quality and length of maturities, and the type of
investments in the Portfolio. Neither the principal nor the interest is insured.
OTHER INFORMATION CONCERNING THE FUND
CUSTODIAN
The cash and securities of the Fund are held by SM&R pursuant to a Custodian
Agreement dated August 1, 1995. As custodian, SM&R will hold and administer the
Fund's cash and securities and maintain certain financial and accounting books
and records as provided for in such Custodian Agreement. The compensation paid
to the Custodian is paid by the Fund and is based upon and varies with the
number, type and amount of transactions conducted by the Custodian.
SM&R has entered into a sub-custodian agreement with Moody National Bank of
Galveston (the "Bank") effective August 1, 1995. Under the sub-custodian
agreement the cash and securities of the Fund will be held by the Bank which
will be authorized to use the facilities of the Depository Trust Company and the
facilities of the book-entry system of the Federal Reserve Bank with respect to
securities of the Fund held by it on behalf of SM&R for the Fund.
TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
52
<PAGE>
SM&R is the transfer agent and dividend-disbursing agent for the Fund, the
American National Funds Group and the SM&R Capital Funds, Inc. SM&R, as transfer
agent, issues and redeems shares of the Fund and maintains records of ownership
for the shareholders.
COUNSEL AND AUDITORS
The Fund's General Counsel is Greer, Herz & Adams, L.L.P. 18th Floor, One Moody
Plaza, Galveston, Texas 77550. Tait, Weller & Baker, CPA, 8 Penn Center Plaza,
Suite 800, Philadelphia, Pennsylvania 19103-2108, are the Fund's independent
auditors and perform annual audits of the Fund's financial statements.
FINANCIAL STATEMENTS
Audited financial statements dated December 31, 1997 are attached as Exhibit
"1".
53
<PAGE>
EXHIBIT "1"
ANNUAL REPORT
Securities Management & Research, Inc.
One Moody Plaza
Galveston, TX 77550
AMERICAN
NATIONAL
INVESTMENT
ACCOUNTS
INC.
.Growth Portfolio
.Managed Portfolio
.Balanced Portfolio
.Money Market Portfolio
Annual Report
December 31, 1997
FIRST-CLASS MAIL FORM 9429
U.S. POSTAGE
PAID
PERMIT NO. 89
GALVESTON, TEXAS
<PAGE>
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. One Moody Plaza, Galveston,
Texas 77550
- -------------------------------------------------------------------------------
DIRECTORS
Ernest S. Barratt, Ph.D.
Allan W. Matthews
Lea McLeod Matthews
Michael W. McCroskey
Ann McLeod Moody
Edwin K. Nolan
Robert V. Shattuck, Jr.
Jamie G. Williams
Frank P. Williamson
OFFICERS
Michael W. McCroskey, President
Gordon D. Dixon, Vice President and
Portfolio Manager
William R. Berger, Vice President and
Portfolio Manager
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 & Research, Inc.
One Moody Plaza
Galveston, Texas 77550
CUSTODIAN
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550
LEGAL COUNSEL
Greer, Herz & Adams, L.L.P.
One Moody Plaza
Galveston, Texas 77550
UNDERWRITER AND REDEMPTION AGENT
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550
TRANSFER AGENT, REGISTAR AND DIVIDEND PAYING AGENT
Securities Management & Research, Inc.
One Moody Plaza
Galveston, Texas 77550
INDEPENDENT AUDITORS
Tait, Weller & Baker, CPA
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103-2108
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1997
________________________________________________________________________________
GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS December 31, 1997
________________________________________________________________________________
GROWTH PORTFOLIO, CONTINUED
COMMON STOCK SHARES VALUE
APPAREL/TEXTILES-0.52%
Guilford Mills, Incorporated 2,100 $ 57,487
AUTO & TRUCK MANUFACTURERS-1.28%
Chrysler Corporation 600 21,113
Ford Motor Company 1,500 73,031
General Motors Corporation 800 48,500
--------
142,644
AUTO PARTS MANUFACTURERS-1.35%
Modine Manufacturing Company 4,400 150,150
BANKS-5.92%
Banc One Corporation 3,000 162,938
Comerica, Incorporated 900 81,225
First Union Corporation 1,600 82,000
Morgan (J.P.) & Company 500 56,437
NationsBank Corporation 2,000 121,625
Norwest Corporation 4,000 154,500
--------
658,725
BEVERAGES-2.37%
Anheuser-Busch Companies, Incorporated 6,000 264,000
BROADCASTING-0.52%
US West Media Group, Incorporated* 2,000 57,750
BUILDING SUPPLIES-0.62%
Giant Cement Holding, Incorporated* 3,000 69,375
CHEMICALS-5.90%
Cabot Corporation 800 22,100
Dexter Corporation 4,100 177,069
Du Pont (E.I.) de Nemours & Company 1,200 72,075
Hercules, Incorporated 2,600 130,162
Monsanto Company 3,500 147,000
Praxair, Incorporated 2,400 108,000
--------
656,406
COMMUNICATION EQUIPMENT-0.19%
Newbridge Networks Corporation* 600 20,925
COMPUTER RELATED-6.59%
COMPAQ Computer Corporation 1,250 70,547
Hewlett-Packard Company 3,600 225,000
Sequent Computer Systems, Incorporated* 5,500 110,000
Silicon Graphics, Incorporated* 3,000 37,312
Stratus Computer, Incorporated* 6,000 226,875
Sun Microsystems, Incorporated* 1,600 63,800
--------
733,534
COMPUTER SOFTWARE-5.40%
BMC Software, Incorporated* 1,600 $105,000
Cabletron Systems, Incorporated* 2,000 30,000
Electronic Data Systems Corporation 3,200 140,600
First Data Corporation 5,700 166,725
MAPICS, Incorporated* 5,000 54,375
Synopsys, Incorporated* 2,900 103,675
--------
600,375
<PAGE>
CONSTRUCTION-0.27%
Fluor Corporation 800 29,900
COSMETICS/TOILETRIES-0.86%
Procter & Gamble Company 1,200 95,775
DIVERSIFIED-0.70%
Mark IV Industries, Incorporated 3,570 78,094
DRUGS-6.70%
Bristol-Myers Squibb Company 2,000 189,250
Merck & Company, Incorporated 1,000 106,250
Pfizer, Incorporated 3,200 238,600
Schering-Plough Corporation 2,400 149,100
Warner-Lambert Company 500 62,000
---------
745,200
ELECTRICAL EQUIPMENT-2.40%
General Electric Company 2,400 176,100
York International Corporation 2,300 90,994
---------
267,094
ELECTRIC POWER-0.69%
OGE Energy Corporation 1,400 76,563
ELECTRONICS-2.00%
Analog Devices, Incorporated* 2,000 55,375
Avnet, Incorporated 1,200 79,200
Motorola, Incorporated 1,500 85,594
Raytheon Company (Class A) 51 2,465
---------
222,634
ENVIRONMENTAL-0.98%
Waste Management, Incorporated 2,200 60,500
Wheelabrator Technologies, Incorporated 3,000 48,188
---------
108,688
EXPLORATION & DRILLING-1.08%
Global Marine Incorporated* 1,800 44,100
Tidewater, Incorporated 1,000 55,125
Union Pacific Resources Group, Incorporated 846 20,516
---------
119,741
FINANCIAL SERVICES-4.81%
American General Corporation 2,000 $108,125
Beneficial Corporation 2,600 216,125
Morgan Stanley, Dean Witter, Discover and Company 1,600 94,600
Reliance Group Holdings, Incorporated 8,200 115,825
---------
534,675
FOOD PRODUCERS-2.84%
Hudson Foods, Incorporated (Class A) 6,000 123,375
IBP, Incorporated 2,500 52,344
McCormick & Company, Incorporated 2,000 56,000
Universal Foods Corporation 2,000 84,500
---------
316,219
FOOD RETAILERS-0.56%
Albertson's, Incorporated 1,300 61,587
FURNITURE/APPLIANCES-0.49%
Whirlpool Corporation 1,000 55,000
INSURANCE COMPANIES-1.09%
CIGNA Corporation 700 121,144
MACHINERY/EQUIPMENT-2.77%
Flowserve Corporation 2,900 81,019
Foster Wheeler Corporation 1,000 27,062
General Signal Corporation 1,400 59,063
Pall Corporation 6,800 140,675
---------
307,819
MEDICAL PRODUCTS/SUPPLIES-3.66%
Abbott Laboratories 1,000 65,562
Allergan, Incorporated 2,000 67,125
Beckman Instruments, Incorporated 1,100 44,000
Bergen Brunswig Corporation (Class A) 2,500 105,313
Biomet, Incorporated 4,900 125,562
---------
407,562
<PAGE>
MEDICAL SERVICES-3.38%
Aetna Incorporated 1,400 98,787
MedPartners, Incorporated* 4,000 89,500
PacifiCare Health Systems, Incorporated (Class B)* 1,600 83,800
United Healthcare Corporation 2,100 104,344
---------
376,431
METALS & MINING-0.80%
Amax Gold Incorporated* 32,000 74,000
Cyprus Amax Minerals Company 1,000 15,375
---------
89,375
NATURAL GAS-0.97%
Enron Corporation 2,600 108,063
OIL DOMESTIC-4.92%
Amoco Corporation 1,000 $ 85,125
Kerr-McGee Corporation 2,100 132,956
Murphy Oil Corporation 800 43,350
Occidental Petroleum Corporation 4,000 117,250
Union Texas Petroleum Holdings, Incorporated 2,500 52,031
Unocal Corporation 3,000 116,438
---------
547,150
OIL INTERNATIONAL-1.48%
Chevron Corporation 1,000 77,000
Societe Nationale Elf Aquitaine ADR 1,500 87,937
---------
164,937
PAPER/FOREST PRODUCTS-1.06%
Caraustar Industries, Incorporated 2,900 99,325
Louisiana-Pacific Corporation 1,000 19,000
---------
118,325
PHOTOGRAPHY/IMAGING-1.99%
Xerox Corporation 3,000 221,438
PRINTING/PUBLISHING-0.61%
Banta Corporation 2,500 67,500
RECREATION-0.93%
Brunswick Corporation 3,400 103,062
RESTAURANT/LODGING-0.58%
Applebee's International, Incorporated 3,600 65,025
RETAIL-SPECIALTY-0.49%
Tiffany & Company 1,500 54,094
TELEPHONE-2.37%
Alltel Corporation 2,000 82,125
MasTec, Incorporated* 5,000 114,375
US West Communications Group 1,500 67,687
---------
264,187
TRUCKING & SHIPPING-0.96%
USFreightways Corporation 3,300 107,250
---------
TOTAL COMMON STOCK-83.10%
(Cost $7,111,155) 9,245,903
---------
<PAGE>
FACE
AMOUNT VALUE
COMMERCIAL PAPER
AUTO PARTS MANUFACTURERS-3.67%
Echlin Incorporated, 6.150%, 01/14/98 $410,000 $ 409,089
CONTAINERS-1.42%
Crown Cork & Seal Company, Incorporated, 6.020%,
01/27/98 159,000 158,309
FINANCIAL SERVICES-3.96%
Dana Credit Corporation, 7.000%, 01/06/98 141,000 140,863
GATX Capital Corporation, 6.250%, 01/07/98 300,000 299,687
-----------
440,550
FOOD PRODUCERS-3.28%
Conagra, Incorporated, 6.200%, 01/05/98 365,000 364,749
UTILITY - ELECTRIC-4.22%
Orange & Rockland Utilities, Incorporated, 7.700%,
01/08/98 240,000 239,641
Pennsylvania Power & Light Company, 6.550%, 01/09/98 230,000 229,665
-----------
469,306
-----------
TOTAL COMMERCIAL PAPER-16.55% 1,842,003
(Cost $1,842,003) -----------
TOTAL INVESTMENTS-99.65% 11,087,906
(Cost $8,953,158)
CASH AND OTHER ASSETS, LESS LIABILITIES-0.35% 39,010
-----------
NET ASSETS-100.00% $11,126,916
-----------
ABBREVIATIONS
ADR-American Depository Receipt
*-Non-income producing securities
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1997
- --------------------------------------------------------------------------------
MANAGED PORTFOLIO
SCHEDULE OF INVESTMENTS December 31, 1997
- --------------------------------------------------------------------------------
MANAGED PORTFOLIO, CONTINUED
COMMON STOCK SHARES VALUE
APPAREL/TEXTILES-1.26%
Guilford Mills, Incorporated 4,500 $123,188
AUTO & TRUCK MANUFACTURERS-1.40%
Chrysler Corporation 700 24,631
Ford Motor Company 1,318 64,170
General Motors Corporation 800 48,500
--------
137,301
AUTO PARTS MANUFACTURERS-2.13%
Modine Manufacturing Company 6,100 208,163
BANKS-8.25%
Banc One Corporation 2,500 135,781
Comerica, Incorporated 2,000 180,500
Fleet Financial Group, Incorporated 1,784 133,689
First Union Corporation 2,400 123,000
Morgan (J.P.) & Company 1,000 112,875
NationsBank Corporation 2,000 121,625
--------
807,470
BEVERAGES-1.57%
Anheuser-Busch Companies, Incorporated 3,500 154,000
BROADCASTING-0.30%
US West Media Group, Incorporated* 1,000 28,875
CHEMICALS-3.64%
Dexter Corporation 3,400 146,837
Hercules, Incorporated 2,300 115,144
Praxair, Incorporated 2,100 94,500
--------
356,481
COMPUTER RELATED-7.48%
Hewlett-Packard Company 2,600 162,500
Sequent Computer Systems, Incorporated* 5,000 100,000
Silicon Graphics, Incorporated* 1,800 22,387
Stratus Computer, Incorporated* 5,500 207,969
Sun Microsystems, Incorporated* 6,000 239,250
--------
732,106
COMPUTER SOFTWARE-4.22%
Cabletron Systems, Incorporated* 2,000 30,000
Electronic Data Systems Corporation 1,900 83,481
First Data Corporation 5,200 152,100
MAPICS, Incorporated* 5,000 54,375
Synopsys, Incorporated* 2,600 92,950
--------
412,906
CONTAINERS-1.08%
Ball Corporation 3,000 105,938
DIVERSIFIED-1.10%
Mark IV Industries, Incorporated 4,935 107,953
DRUGS-2.54%
Schering-Plough Corporation 4,000 $248,500
ELECTRICAL EQUIPMENT-3.79%
Emerson Electric Company 1,000 56,437
General Electric Company 3,200 234,800
York International Corporation 2,000 79,125
--------
370,362
ELECTRIC POWER-1.31%
Allegheny Power System, Incorporated 800 26,000
DTE Energy Company 2,000 69,375
OGE Energy Corporation 600 32,813
--------
128,188
<PAGE>
ELECTRONICS-3.04%
Analog Devices, Incorporated* 2,000 55,375
Avnet, Incorporated 2,500 165,000
Motorola, Incorporated 1,300 74,181
Raytheon Company (Class A) 51 2,515
--------
297,071
ENVIRONMENTAL-0.56%
Waste Management, Incorporated 2,000 55,000
EXPLORATION & DRILLING-1.12%
Global Marine Incorporated* 1,600 39,200
Tidewater, Incorporated 900 49,612
Union Pacific Resources Group, Incorporated 846 20,516
--------
109,328
FINANCIAL SERVICES-3.70%
Beneficial Corporation 2,300 191,187
Morgan Stanley, Dean Witter, Discover and Company 1,200 70,950
Reliance Group Holdings, Incorporated 7,100 100,287
--------
362,424
FOODS PRODUCERS-1.53%
IBP, Incorporated 4,500 94,219
McCormick & Company, Incorporated 2,000 56,000
--------
150,219
FOODS RETAILERS-0.73%
Albertson's, Incorporated 1,500 71,062
FURNITURE/APPLIANCES-0.56%
Whirlpool Corporation 1,000 $ 55,000
INSURANCE COMPANIES-1.06%
CIGNA Corporation 600 103,838
MACHINERY/EQUIPMENT-3.15%
Flowserve Corporation 2,500 69,844
Foster Wheeler Corporation 2,000 54,125
General Signal Corporation 2,000 84,375
Pall Corporation 4,800 99,300
--------
307,644
MEDICAL PRODUCTS/SUPPLIES-4.94%
Abbott Laboratories 3,000 196,687
Allergan, Incorporated 1,000 33,563
Beckman Instruments, Incorporated 1,000 40,000
Bergen Brunswig Corporation (Class A) 2,500 105,312
Biomet, Incorporated 4,200 107,625
--------
483,187
MEDICAL SERVICES-4.08%
Aetna Incorporated 1,200 84,675
Columbia/HCA HealthCare Corporation 3,000 88,875
MedPartners, Incorporated* 2,800 62,650
PacifiCare Health Systems, Incorporated (Class B)* 1,400 73,325
United Healthcare Corporation 1,800 89,438
--------
398,963
METALS & MINING-0.98%
Amax Gold Incorporated* 28,000 64,750
Cyprus Amax Minerals Company 2,000 30,750
--------
95,500
NATURAL GAS-0.98%
Enron Corporation 2,300 95,594
OIL DOMESTIC-2.49%
Kerr-McGee Corporation 1,800 113,963
Murphy Oil Corporation 600 32,512
Occidental Petroleum Corporation 3,300 96,731
--------
243,206
OIL INTERNATIONAL-1.71%
Societe Nationale Elf Aquitaine ADR 1,000 58,625
Texaco, Incorporated 2,000 108,750
--------
167,375
PAPER/FOREST PRODUCTS-1.26%
Caraustar Industries, Incorporated 2,600 89,050
Weyerhaeuser Company 700 34,344
--------
123,394
<PAGE>
PHOTOGRAPHY/IMAGING-2.26%
Xerox Corporation 3,000 221,437
PRINTING/PUBLISHING-0.61%
Banta Corporation 2,200 59,400
REAL ESTATE/REITS-7.70%
CenterPoint Properties Corporation 1,800 63,225
Crescent Real Estate Equities Company 5,000 196,875
Equity Office Properties Trust 10,000 315,625
Health & Retirement Property Trust 3,000 60,000
National Health Investors, Incorporated 2,800 117,250
--------
752,975
RECREATION-0.93%
Brunswick Corporation 3,000 90,937
RESTAURANT/LODGING-0.57%
Applebee's International, Incorporated 3,100 55,994
RETAIL - DISCOUNT-0.47%
Kmart Corporation* 4,000 46,250
RETAIL - SPECIALTY-0.48%
Tiffany & Company 1,300 46,881
TELEPHONE UTILITY-2.69%
Alltel Corporation 1,800 73,913
GTE Corporation 1,000 52,250
MasTec, Incorporated* 4,000 91,500
US West Communications Group 1,000 45,125
--------
262,788
TOBACCO-0.75%
UST, Incorporated 2,000 73,875
TRUCKING & SHIPPING-1.00%
USFreightways Corporation 3,000 97,500
----------
TOTAL COMMON STOCK-89.42% $8,748,273
(Cost $6,916,671) ----------
PREFERRED STOCK
PREFERRED STOCK SHARES VALUE
INSURANCE COMPANIES-1.59%
Conseco Incorporated (Series D) (Convertible) 1,000 156,000
OIL DOMESTIC-1.16%
Unocal Capital Trust (Convertible) 2,000 113,000
----------
TOTAL PREFERRED STOCK-2.75% 269,000
(Cost $167,289) ----------
See notes
to
financial
statements.
CORPORATE BONDS FACE VALUE
AMOUNT
ENVIRONMENTAL-1.50%
Sanifill Incorporated, 5.00%, 03/01/06 (Convertible) $100,000 $ 146,250
----------
TOTAL CORPORATE BONDS-1.50% 146,250
(Cost $96,500) ----------
COMMERCIAL PAPER
COMMERCIAL PAPER FACE VALUE
AMOUNT
AUTO PARTS MANUFACTURERS-1.89%
Echlin Incorporated, 6.150%, 01/14/98 185,000 184,589
UTILITY - ELECTRIC-4.03%
Kentucky Power Company, 6.600%, 01/06/98 235,000 234,785
Pennsylvania Power & Light Company, 6.600%, 01/09/98 160,000 159,765
----------
394,550
TOTAL COMMERCIAL PAPER-5.92% 579,139
(Cost $579,139) ----------
TOTAL INVESTMENTS-99.59% 9,742,662
(Cost $7,759,599)
CASH AND OTHER ASSETS, LESS LIABILITIES-0.41% 40,324
----------
NET ASSETS-100.00% $9,782,986
----------
ABBREVIATIONS
ADR-American Depository Receipt
REIT-Real Estate Investment Trust
*-Non-income producing security
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1997
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS December 31, 1997
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO, CONTINUED
COMMON STOCK SHARES VALUE
APPAREL/TEXTILES-0.59%
Guilford Mills, Incorporated 1,200 $ 32,850
AUTO & TRUCK MANUFACTURERS-0.89%
Chrysler Corporation 200 7,038
Ford Motor Company 500 24,344
General Motors Corporation 300 18,187
----------
49,569
AUTO PARTS MANUFACTURERS-0.24%
Modine Manufacturing Company 400 13,650
BANKS-4.00%
Banc One Corporation 600 32,588
Comerica, Incorporated 600 54,150
First Union Corporation 400 20,500
Morgan (J.P.) & Company 300 33,862
NationsBank Corporation 600 36,488
Norwest Corporation 1,200 46,350
----------
223,938
BEVERAGES-0.47%
Anheuser-Busch Companies, Incorporated 600 26,400
BROADCASTING-0.31%
US West Media Group, Incorporated* 600 17,325
BUILDING SUPPLIES-0.41%
Giant Cement Holding, Incorporated* 1,000 23,125
CHEMICALS-2.04%
Cabot Corporation 600 16,575
Dexter Corporation 400 17,275
Du Pont (E.I.) de Nemours & Company 400 24,025
Hercules, Incorporated 500 25,031
Praxair, Incorporated 700 31,500
----------
114,406
COMPUTER RELATED-2.25%
Hewlett-Packard Company 800 50,000
Sequent Computer Systems, Incorporated* 900 18,000
Silicon Graphics, Incorporated* 800 9,950
Sun Microsystems, Incorporated* 1,200 47,850
----------
125,800
COMPUTER SOFTWARE-1.93%
Electronic Data Systems Corporation 500 21,969
First Data Corporation 1,100 32,175
Synopsys, Incorporated* 1,500 53,625
----------
107,769
CONSTRUCTION-0.40%
Fluor Corporation 600 22,425
COSMETICS & TOILETRIES-1.71%
Procter & Gamble Company 1,200 95,775
DIVERSIFIED-0.41%
Mark IV Industries, Incorporated 1,050 $ 22,969
<PAGE>
DRUGS-7.13%
Bristol-Myers Squibb Company 800 75,700
Pfizer, Incorporated 1,000 74,562
Schering-Plough Corporation 4,000 248,500
----------
398,762
ELECTRICAL EQUIPMENT-0.78%
York International Corporation 1,100 43,519
ELECTRIC POWER-0.96%
Allegheny Power System, Incorporated 400 13,000
DTE Energy Company 700 24,281
OGE Energy Corporation 300 16,406
----------
53,687
ELECTRONICS-1.50%
Avnet, Incorporated 1,000 66,000
Motorola, Incorporated 300 17,119
Raytheon Company (Class A) 19 937
----------
84,056
ENVIRONMENTAL-1.30%
Waste Management, Incorporated 2,000 55,000
Wheelabrator Technologies, Incorporated 1,100 17,669
----------
72,669
EXPLORATION & DRILLING-1.00%
Global Marine Incorporated* 900 22,050
Tidewater, Incorporated 500 27,562
Union Pacific Resources Group, Incorporated 254 6,160
----------
55,772
FINANCIAL SERVICES-1.72%
American General Corporation 300 16,219
Morgan Stanley, Dean Witter, Discover and Company 400 23,650
Reliance Group Holdings, Incorporated 4,000 56,500
----------
96,369
FOOD PRODUCERS-0.71%
IBP, Incorporated 900 18,844
Universal Foods Corporation 500 21,125
----------
39,969
FOOD RETAILERS-0.51%
Albertson's, Incorporated 600 28,425
INSURANCE COMPANIES-0.62%
CIGNA Corporation 200 34,612
MACHINERY & EQUIPMENT-1.51%
Flowserve Corporation 900 25,144
Foster Wheeler Corporation 500 13,531
General Signal Corporation 600 25,313
Pall Corporation 1,000 20,687
----------
84,675
MEDICAL PRODUCTS/SUPPLIES-4.45%
Abbott Laboratories 1,100 $ 72,119
Allergan, Incorporated 600 20,137
Beckman Instruments, Incorporated 400 16,000
Bergen Brunswig Corporation (Class A) 875 36,859
Biomet, Incorporated 2,500 64,063
Johnson & Johnson 600 39,525
----------
248,703
MEDICAL SERVICES-3.07%
Aetna Incorporated 400 28,225
Columbia/HCA Healthcare Corporation 1,200 35,550
MedPartners, Incorporated* 1,200 26,850
PacifiCare Health Systems, Incorporated (Class B)* 500 26,188
United Healthcare Corporation 1,100 54,656
----------
171,469
METALS & MINING-0.14%
Cyprus Amax Minerals Company 500 7,687
NATURAL GAS-0.97%
Enron Corporation 1,300 54,031
<PAGE>
OIL DOMESTIC-1.40%
Amoco Corporation 200 17,025
Kerr-McGee Corporation 200 12,663
Murphy Oil Corporation 200 10,837
Occidental Petroleum Corporation 1,000 29,313
Union Texas Petroleum Holdings, Incorporated 400 8,325
----------
78,163
OIL INTERNATIONAL-1.56%
Chevron Corporation 600 46,200
Societe Nationale Elf Aquitaine ADR 700 41,037
----------
87,237
PAPER/FOREST PRODUCTS-0.71%
Caraustar Industries, Incorporated 400 13,700
Louisiana-Pacific Corporation 600 11,400
Weyerhaeuser Company 300 14,719
----------
39,819
PRINTING/PUBLISHING-0.43%
Banta Corporation 900 $ 24,300
REAL ESTATE/REITS-0.84%
Health & Retirement Property Trust 1,100 22,000
National Health Investors, Incorporated 600 25,125
----------
47,125
RECREATION-0.92%
Brunswick Corporation 1,700 51,531
RESTAURANT/LODGING-0.16%
Applebee's International, Incorporated 500 9,032
RETAIL - DISCOUNT-0.40%
Toys "R" Us, Incorporated* 700 22,006
RETAIL - SPECIALTY-0.32%
Tiffany & Company 500 18,031
TELEPHONE-1.46%
Alltel Corporation 700 28,744
GTE Corporation 500 26,125
US West Communications Group 600 27,075
----------
81,944
TOBACCO-0.46%
UST, Incorporated 700 25,856
TRUCKING & SHIPPING-0.29%
USFreightways Corporation 500 16,250
----------
TOTAL COMMON STOCK-50.97% 2,851,700
(Cost $1,959,395) ----------
PREFERRED STOCK
OIL DOMESTIC-0.50%
Unocal Capital Trust (Convertible) 500 28,250
----------
TOTAL PREFERRED STOCK-0.50% 28,250
(Cost $26,541) ----------
<PAGE>
BONDS AND NOTES FACE VALUE
AMOUNT
GOVERNMENT AGENCIES-21.58%
Federal Home Loan Mortgage Corporation, 5.74%, 09/17/03 $100,000 $ 97,712
Federal Home Loan Mortgage Corporation, 7.83%, 04/13/05 150,000 155,103
Federal Home Loan Mortgage Corporation, 7.70%, 05/17/06 80,000 81,918
Federal Home Loan Mortgage Corporation, Pool #540341,
9.00%, 09/01/19 5,265 5,597
Federal Home Loan Mortgage Corporation, Pool #360100,
9.00%, 04/01/20 30,737 32,668
Federal National Mortgage Association, 7.55%, 04/22/02 50,000 53,031
Federal National Mortgage Association, 5.78%, 09/17/03 100,000 97,855
Federal National Mortgage Association, 7.55%, 06/10/04 250,000 257,013
Federal National Mortgage Association, 7.70%, 04/10/07 400,000 415,208
Federal National Mortgage Association, 7.95%, 11/25/19 11,068 11,086
----------
1,207,191
U S TREASURY SECURITIES-14.84%
U S Treasury Bonds, 6.00%, 02/15/26 680,000 679,028
U S Treasury Notes, 5.875%, 02/15/04 150,000 151,405
----------
830,433
----------
TOTAL BONDS AND NOTES-36.42% 2,037,624
(Cost $1,903,506) ----------
COMMERCIAL PAPER FACE VALUE
AMOUNT
AUTO PARTS MANUFACTURERS-2.73%
Echlin Incorporated, 6.150%, 01/14/98 $153,000 $ 152,660
UTILITY-ELECTRIC-8.21%
Kentucky Power Company, 6.600%, 01/06/98 220,000 219,798
Pennsylvania Power & Light Company, 6.600%, 01/09/98 240,000 239,648
----------
459,446
----------
TOTAL COMMERCIAL PAPER-10.94% 612,106
(Cost $612,106) ----------
TOTAL INVESTMENTS-98.83% 5,529,680
(Cost $4,501,548)
CASH AND OTHER ASSETS, LESS LIABILITIES-1.17% 65,242
----------
NET ASSETS-100.00% $5,594,922
==========
ABBREVIATIONS
ADR-American Depository Receipt
*-Non-income producing securities
<PAGE>
SCHEDULE OF INVESTMENTS December 31, 1997
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS December 31, 1997
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO, CONTINUED
STATED MATURITY FACE VALUE
RATE(%) DATE AMOUNT
FEDERAL AGENCIES-
Federal Home Loan Mortgage 5.56% 03/06/98 $450,000 $445,552
Corporation
Federal National Mortgage 5.53% 01/05/98 375,000 374,769
Association
Federal National Mortgage 5.49% 01/12/98 425,000 424,287
Association
Federal National Mortgage 5.65% 01/23/98 350,000 348,792
Association
Federal National Mortgage 5.59% 01/26/98 415,000 413,389
Association
Federal National Mortgage 5.65% 02/05/98 300,000 298,352
Association
Federal National Mortgage 5.65% 02/13/98 500,000 496,626
Association ----------
TOTAL FEDERAL AGENCIES-99.33%
(Cost $2,801,767) 2,801,767
CASH AND OTHER ASSETS, LESS LIABILITIES-0.67% 18,902
----------
NET ASSETS-100.00% $2,820,669
==========
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1997
- --------------------------------------------------------------------------------
GROWTH MANAGED BALANCED MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS
Investments in securities, at
value $11,087,906 $9,742,662 $5,529,680 $2,801,767
Cash and cash equivalents 34,310 30,804 30,632 23,236
Receivable for:
Dividends 13,310 16,501 4,374 -
Interest 137 1,860 34,894 106
Expense reimbursement 1,429 1,305 1,163 -
----------- ---------- ---------- ----------
TOTAL ASSETS 11,137,092 9,793,132 5,600,743 2,825,109
LIABILITIES
Accrued:
Investment advisory fee 4,629 4,067 2,334 1,737
Service fee 2,315 2,033 1,167 596
Other liabilities 3,232 4,046 2,320 2,107
----------- ---------- ---------- ----------
TOTAL LIABILITIES 10,176 10,146 5,821 4,440
----------- ---------- ---------- ----------
NET ASSETS $11,126,916 $9,782,986 $5,594,922 $2,820,669
=========== ========== ========== ==========
SHARES OUTSTANDING 6,961,372 6,265,385 4,024,437 2,820,669
=========== ========== ========== ==========
NET ASSET VALUE PER SHARE $1.60 $1.56 $1.39 $1.00
=========== ========== ========== ==========
<PAGE>
STATEMENTS OF OPERATIONS Year Ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH MANAGED BALANCED MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividends (Net of $740, $788 and
$215 of foreign dividend taxes) $129,723 $164,317 $ 52,282 -
Interest 108,232 67,469 160,450 $146,054
---------- ---------- --------- --------
TOTAL INVESTMENT INCOME 237,955 231,786 212,732 146,054
EXPENSES
Investment advisory fees 46,499 40,851 24,587 13,299
Service fees 23,249 20,425 12,294 6,650
Custody and transaction fees 19,715 17,021 15,856 3,765
Directors' fees and expenses 4,126 4,126 4,126 4,126
Professional fees 3,098 3,098 3,098 3,098
Registration fees 512 494 192 41
Insurance expenses 826 826 826 826
Other 2,603 2,567 2,975 919
---------- ---------- --------- --------
TOTAL EXPENSES 100,628 89,408 63,954 32,724
LESS EXPENSES REIMBURSED (20,044) (13,886) (19,877) (9,686)
---------- ---------- --------- --------
NET EXPENSES 80,584 75,522 44,077 23,038
---------- ---------- --------- --------
INVESTMENT INCOME-NET 157,371 156,264 168,655 123,016
---------- ---------- --------- --------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments 875,594 630,123 350,655 -
Change in unrealized appreciation
of investments 641,115 819,659 332,627 -
---------- ---------- --------- --------
NET GAIN ON INVESTMENTS 1,516,709 1,449,782 683,282 -
---------- ---------- --------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,674,080 $1,606,046 $851,937 $123,016
========== ========== ========= ========
</TABLE>
See notes to financial statements.
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
1997 1996
---------- ---------
YEAR ENDED
DECEMBER 31,
----------------------
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income-net $157,371 $111,528
Net realized gain on investments 875,594 128,233
Change in unrealized appreciation 641,115 802,004
----------- ----------
Net increase in net assets resulting 1,674,080 1,041,765
from operations
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income-net (158,902) (108,643)
Capital gains (775,516) (124,776)
----------- ----------
Total distributions to shareholders (934,418) (233,419)
CAPITAL SHARE TRANSACTIONS-Net 3,108,985 1,688,748
----------- ----------
TOTAL INCREASE 3,848,647 2,497,094
NET ASSETS
Beginning of year 7,278,269 4,781,175
----------- ----------
End of year $11,126,916 $7,278,269
----------- ----------
MANAGED PORTFOLIO
1997 1996
--------- ---------
YEAR ENDED
---------------------
DECEMBER 31,
---------------------
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income-net $156,264 $119,184
Net realized gain on investments 630,123 141,375
Change in unrealized appreciation 819,659 591,472
---------- ----------
Net increase in net assets resulting 1,606,046 852,031
from operations
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income-net (158,852) (116,545)
Capital gains (513,633) (120,983)
---------- ----------
Total distributions to shareholders (672,485) (237,528)
CAPITAL SHARE TRANSACTIONS-Net 2,576,293 1,630,186
---------- ----------
TOTAL INCREASE 3,509,854 2,244,689
NET ASSETS
Beginning of year 6,273,132 4,028,443
---------- ----------
End of year $9,782,986 $6,273,132
========== ==========
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
1997 1996
--------- ---------
YEAR ENDED
DECEMBER 31,
--------------------
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income-net $168,655 $125,707
Net realized gain on investments 350,655 64,625
Change in unrealized appreciation 332,627 234,882
---------- ----------
Net increase in net assets resulting 851,937 425,214
from operations
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income-net (168,712) (122,993)
Capital gains (267,353) (52,838)
---------- ----------
Total distributions to shareholders (436,065) (175,831)
CAPITAL SHARE TRANSACTIONS-Net 898,313 632,526
---------- ----------
TOTAL INCREASE 1,314,185 881,909
NET ASSETS
Beginning of year 4,280,737 3,398,828
---------- ----------
End of year $5,594,922 $4,280,737
========== ==========
MONEY MARKET PORTFOLIO
1997 1996
--------- ---------
YEAR ENDED
DECEMBER 31,
---------------------
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income-net $123,016 $110,908
DISTRIBUTIONS TO SHAREHOLDERS FROM
Investment income-net (123,016) (110,908)
CAPITAL SHARE TRANSACTIONS-Net 288,794 133,867
TOTAL INCREASE 288,794 133,867
NET ASSETS
Beginning of year 2,531,875 2,398,008
---------- ----------
End of year $2,820,669 $2,531,875
========== ==========
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the period.
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- --------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 1.45 $ 1.27 $ 1.04 $ 1.08 $ 1.07
Investment
income-net 0.03 0.02 0.02 0.02 0.02
Net realized and
unrealized gain
(loss) on
investments
during the year 0.27 0.21 0.27 0.05 0.06
--------- --------- --------- --------- ---------
Total from
investment
operations 0.30 0.23 0.29 0.07 0.08
Less distributions
from Investment
income-net (0.03) (0.02) (0.02) (0.02) (0.02)
Capital gains (0.12) (0.03) (0.04) (0.09) (0.05)
--------- --------- --------- --------- ---------
Total distributions (0.15) (0.05) (0.06) (0.11) (0.07)
--------- --------- --------- --------- ---------
Net Asset Value,
End of Year $ 1.60 $ 1.45 $ 1.27 $ 1.04 $ 1.08
========= ========= ========= ========= =========
Total return 20.72 % 17.98 % 28.50 % 6.91 % 7.10 %
========= ========= ========= ========= =========
RATIOS (IN
PERCENTAGES)/SUPP
LEMENTAL DATA
Net Assets, end of
year (000's
omitted) $11,127 $ 7,278 $ 4,781 $ 3,037 $ 2,748
Ratio of expenses
to average net
assets 0.87 %(1) 0.87 %(1) 0.87 %(1) 0.90 %(1) 0.91 %
Ratio of net
investment income
to average net
assets 1.69 % 1.84 % 1.99 % 2.04 % 1.65 %
Portfolio turnover
rate 45.37 % 21.24 % 42.06 % 46.18 % 59.55 %
Average commission
rate 7.00 % 7.00 % - - -
</TABLE>
<PAGE>
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- --------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 1.37 $ 1.21 $ 1.00 $ 1.11 $ 1.05
Investment
income-net 0.03 0.03 0.03 0.02 0.02
Net realized and
unrealized gain
(loss) on
investments during
the year 0.28 0.19 0.24 - 0.09
--------- --------- --------- --------- ---------
Total from investment
operations 0.31 0.22 0.27 0.02 0.11
Less distributions
from Investment
income-net (0.03) (0.03) (0.03) (0.03) (0.02)
Capital gains (0.09) (0.03) (0.03) (0.10) (0.03)
--------- --------- --------- --------- ---------
Total distributions (0.12) (0.06) (0.06) (0.13) (0.05)
--------- --------- --------- --------- ---------
Net Asset Value,
End of Year $ 1.56 $ 1.37 $ 1.21 $ 1.00 $ 1.11
========= ========= ========= ========= =========
Total return 22.41 % 17.69 % 27.19 % 1.35 % 10.97 %
========= ========= ========= ========= =========
RATIOS (IN
PERCENTAGES)/SUPPL
EMENTAL DATA
Net Assets, end of
year (000's
omitted) $ 9,783 $ 6,273 $ 4,028 $ 2,795 $ 2,735
Ratio of expenses
to average net
assets 0.93 %(2) 0.93 %(2) 0.93 %(2) 0.98 %(2) 0.00 %
Ratio of net
investment income
to average net
assets 1.91 % 2.29 % 2.57 % 2.36 % 1.87 %
Portfolio turnover
rate 35.08 % 20.79 % 30.87 % 26.26 % 46.39 %
Average commission
rate 7.00 % 7.00 % - - -
</TABLE>
(1) Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of
expenses to average net assets would have been 1.09%, 1.25%, 1.32% and
1.13% for the years ended December 31, 1997, 1996, 1995 and 1994,
respectively.
(2) Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of
expenses to average net assets would have been 1.10%, 1.14%, 1.26% and
1.23% for the years ended December 31, 1997, 1996, 1995 and 1994,
respectively.
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the period.
BALANCED PORTFOLIO
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- --------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 1.27 $ 1.18 $ 0.99 $ 1.06 $ 1.07
Investment
income-net 0.04 0.04 0.04 0.03 0.03
Net realized and
unrealized gain
(loss) on
investments during
the year 0.20 0.10 0.19 (0.03) 0.02
-------- -------- -------- -------- --------
Total from
investment
operations 0.24 0.14 0.23 0.00 0.05
Less distributions
from Investment
income-net (0.05) (0.04) (0.04) (0.03) (0.03)
Capital gains (0.07) (0.01) - (0.04) (0.03)
-------- -------- -------- -------- --------
Total distributions (0.12) (0.05) (0.04) (0.07) (0.06)
-------- -------- -------- -------- --------
Net Asset Value,
End of Year $ 1.39 $ 1.27 $ 1.18 $ 0.99 $ 1.06
======== ======== ======== ======== ========
Total return 18.80 % 12.23 % 22.80 % 0.15 % 4.58 %
======== ======== ======== ======== ========
RATIOS (IN
PERCENTAGES)/SUPPL
EMENTAL DATA
Net Assets, end of
year (000's
omitted) $ 5,595 $ 4,281 $ 3,399 $ 2,660 $ 2,585
Ratio of expenses
to average net
assets 0.90 %(1) 0.90 %(1) 0.90 %(1) 0.96 %(1) 1.00 %
Ratio of net
investment income
to average net
assets 3.43 % 3.25 % 3.19 % 3.34 % 2.65 %
Portfolio turnover
rate 23.02 % 16.71 % 15.97 % 46.14 % 68.58 %
Average commission
rate 7.00 % 7.00 % - - -
</TABLE>
<PAGE>
MONEY MARKET PORTFOLIO
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- -------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
Net Asset Value,
Beginning of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Investment
income-net 0.05 0.08 0.05 0.02 0.02
------ -------- -------- -------- --------
Total from
investment
operations 0.05 0.08 0.05 0.02 0.02
------ -------- -------- -------- --------
Less distributions
from Investment
income-net (0.05) (0.08) (0.05) (0.02) (0.02)
------ -------- -------- -------- --------
Total
distributions (0.05) (0.08) (0.05) (0.02) (0.02)
------ -------- -------- -------- --------
Net Asset Value,
End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ======== ======== ======== ========
Total return 4.78 4.61 % 5.11 % 3.36 % 2.13 %
====== ======== ======== ======== ========
RATIOS (IN
PERCENTAGES)/SUPPL
EMENTAL DATA
Net Assets, end of
year (000's
omitted) $2,821 $2,532 $2,352 $2,284 $2,194
Ratio of expenses
to average net
assets 0.87 %(2) 0.87 %(2) 0.87 %(2) 0.91 %(2) 0.98 %
Ratio of net
investment income
to average net
assets 4.62 % 4.51 % 5.03 % 3.32 % 2.11 %
(1) Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of
expenses to average net assets would have been 1.30%, 1.48%, 1.37% and
1.25% for the ended years December 31, 1997, 1996, 1995 and 1994,
respectively.
(2) Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of
expenses to average net assets would have been 1.23%, 1.22%, 1.21%, 1.14%
and 1.72% for the years ended December 31, 1997, 1996, 1995, 1994 and 1992,
respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS December 31, 1997
- --------------------------------------------------------------------------------
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
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 VALUATIONS:
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. Securities for which market quotations are not readily
available are valued as determined by the Board of Directors. Commercial paper
is stated at amortized cost, which is equivalent to fair 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.
<PAGE>
INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:
Investment transactions are accounted for on the trade date (date order to buy
or sell is executed). Dividend income is recognized on the ex-dividend date, and
interest income is recognized on an accural basis. Realized gains and losses
from security transactions are reported on the basis of identified cost for
financial reporting and federal income tax purposes.
FEDERAL INCOME TAXES:
For federal income tax purposes, each portfolio is treated as a separate entity.
The Fund intends to comply with requirements of the Internal Revenue Code
relating to regulated investment companies and intend to distribute
substantially all of its taxable income to its shareholders. Therefore, no
provision for federal income taxes is recorded in the accompanying financial
statements.
CAPITAL STOCK TRANSACTIONS AND DISTRIBUTIONS TO SHAREHOLDERS:
Fund shares are sold in a continuous public offering at net asset value. 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.
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 subidiary 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
director's 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 0.87%
Managed 0.93%
Balanced 0.90%
Money Market 0.87%
<PAGE>
Prior to May 1, 1994, the reimbursement percentage was 1.50% of each portfolio's
average daily net assets.
As of December 31, 1997, SM&R and American National had the following ownership
in the Portfolios:
<TABLE>
<CAPTION> PERCENT OF PERCENT OF
PERCENT OF SHARES SHARES
SHARES SHARES OUTSTANDING SHARES OUTSTANDING
SHARES OUTSTANDING AMERICAN NATIONAL AMERICAN NATIONAL
SM&R CORPORATE ACCOUNTS SEPARATE ACCOUNTS
------------------------ ---------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth 361,270 5.19% 2,537,473 36.45% 4,062,639 58.36%
Managed 360,662 5.76% 2,529,561 40.37% 3,375,162 53.87%
Balanced 348,801 8.67% 2,444,017 60.73% 1,231,619 30.60%
Money Market 321,945 11.41% 2,254,763 79.94% 243,961 8.65%
</TABLE>
NOTE 3-COST, PURCHASES AND SALES OF INVESTMENTS
Investments have the same cost for tax and financial statement purposes.
Aggreggate purchases and sales of investments, other than commercial paper, were
as follows:
PURCHASES SALES
Growth $5,651,991 $3,352,282
Managed $5,425,753 $2,468,656
Balanced $1,521,692 $1,023,496
Gross unrealized appreciation and depreciation as of December 31, 1997, were as
follows:
APPRECIATION DEPRECIATION
Growth $2,494,866 $360,118
Managed $2,335,176 $352,113
Balanced $1,109,931 $ 81,799
<PAGE>
NOTE 4-CAPITAL STOCK
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
SHARES AMOUNT SHARES AMOUNT
--------- ---------- ---------- ----------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
--------------------- ----------------------
<S> <C> <C> <C> <C>
Sale of capital shares 1,626,208 $2,618,935 1,338,609 $1,817,688
Investment income dividends
reinvested 101,211 158,902 74,927 108,643
Distributions made from net
realized gains reinvested 493,960 775,516 86,052 124,776
--------- ---------- --------- ----------
Subtotals 2,221,379 3,553,353 1,499,588 2,051,107
Redemptions of capital shares (269,044) (444,368) (265,271) (362,359)
--------- ---------- --------- ----------
Net increase in capital shares
outstanding 1,952,335 $3,108,985 1,234,317 $1,688,748
========== ==========
Shares outstanding at beginning
of year 5,009,037 3,774,720
--------- ---------
Shares outstanding at end of year 6,961,372 5,009,037
========= =========
The components of net assets at
December 31, 1997, are as
follows:
Capital Stock-6,961,372 shares of
$.01 par value outstanding
(15,000,000 authorized)(par and
additional paid-in capital) $8,835,248
Accumulated net realized gain on
investments 156,920
Net unrealized appreciation of
investments 2,134,748
-----------
Net assets $11,126,916
===========
</TABLE>
<PAGE>
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
SHARES AMOUNT SHARES AMOUNT
-------- --------- --------- ----------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------- ----------------------
<S> <C> <C> <C> <C>
Sale of capital shares 1,754,279 $2,697,284 1,283,565 $1,643,869
Investment income dividends
reinvested 103,150 158,852 85,070 116,545
Distributions made from net
realized gains reinvested 333,200 513,633 88,309 120,983
--------- ---------- --------- ----------
Subtotals 2,190,629 3,369,769 1,456,944 1,881,397
Redemptions of capital shares (508,525) (793,476) (199,332) (251,211)
--------- ---------- --------- ----------
Net increase in capital shares
outstanding 1,682,104 $2,576,293 1,257,612 $1,630,186
========= ========== ========= ==========
Shares outstanding at beginning
of year 4,583,281 3,25,669
--------- ---------
Shares outstanding at end of year 6,265,385 4,583,281
========= =========
</TABLE>
The components of net assets at December 31, 1997, are as
follows:
Capital Stock-6,265,385 shares of
$.01 par value outstanding
(20,000,000 authorized)(par and
additional paid-in capital) $7,654,367
Accumulated net realized gain on
investments 145,556
Net unrealized appreciation of
investments 1,983,063
----------
Net assets $9,782,986
==========
BALANCED PORTFOLIO
<TABLE>
<CAPTION>
SHARES AMOUNT SHARES AMOUNT
-------- --------- --------- ---------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------- ---------------------
<S> <C> <C> <C> <C>
Sale of capital shares 588,279 $798,835 506,269 $ 627,841
Investment income dividends
reinvested 122,255 168,712 96,844 122,992
Distributions made from net
realized gains reinvested 193,156 267,353 41,605 52,838
--------- ---------- ---------- -----------
Subtotals 903,690 1,234,900 644,718 803,671
Redemptions of capital shares (256,939) (336,587) (136,308) (171,145)
--------- ---------- ---------- -----------
Net increase in capital shares
outstanding 646,751 $898,313 508,410 $ 632,526
========== ===========
Shares outstanding at beginning
of year 3,377,686 2,869,276
--------- ----------
Shares outstanding at end of year 4,024,437 3,377,686
========= ==========
The components of net assets at
December 31, 1997, are as
follows:
Capital Stock-4,024,437 shares of
$.01 par value outstanding
(15,000,000 authorized)(par and
additional paid-in capital) $4,471,287
Accumulated net realized gain on
investments 95,503
Net unrealized appreciation of
investments 1,028,132
----------
Net assets $5,594,922
==========
</TABLE>
<PAGE>
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
SHARES AMOUNT SHARES AMOUNT
-------- --------- --------- ----------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------- ----------------------
<S> <C> <C> <C> <C>
Sales of capital shares 420,449 $420,449 49,329 $ 49,329
Investment income dividends
reinvested 123,016 123,016 110,908 110,908
--------- -------- --------- --------
Subtotals 543,465 543,465 160,237 160,237
Redemptions of capital shares (254,671) (254,671) (26,370) (26,370)
--------- -------- --------- --------
Net increase in capital shares
outstanding 288,794 $288,794 133,867 $133,867
======== ========
Shares outstanding at beginning
of year 2,531,875 2,398,008
--------- ---------
Shares outstanding at end of year 2,820,669 2,531,875
========= =========
The components of net assets at
December 31, 1997, are as
follows:
Capital Stock-2,820,669 shares of
$.01 par value outstanding
(50,000,000 authorized)(par and
additional paid-in capital) $2,820,669
----------
Net assets $2,820,669
==========
</TABLE>
<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, 1997, the related statements of operations, the statements of
changes in net assets and the financial highlights. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statement of changes for the year
ended December 31, 1996 and the financial highlights for each of the four years
in the period ended December 31, 1996 were audited by other auditors whose
report dated February 7, 1997, issued an unqualified opinion.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
American National Investment Accounts, Inc. as of December 31, 1997, the results
of its operations, the changes in its net assets and the financial highlights,
in conformity with generally accepted accounting principles.
Tait, Weller & Baker, CPA
Philadelphia, Pennsylvania
January 30, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
American National Investment Accounts, Inc.
We have audited the accompanying statement of changes in net assets of American
National Investment Accounts, Inc. for the year ended December 31, 1996, and the
financial highlights for each of the years in the four-year period ended
December 31, 1996. The statement of changes in net assets and the financial
highlights are the responsibility of Fund management. Our responsibility is to
express an opinion on the statement of changes in net assets and the 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 the financial
highlights are free of material misstatement. An audit includes examining, on
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statement and the financial highlights referred to
above present fairly, in all material respects, the changes in net assets of
American National Investment Accounts, Inc. for the year ended December 31, 1996
and the financial highlights for the periods stated in the first paragraph
above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1997
<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 Post-Effective Amendment No. 7 to Form
N-1A for a copy of Registrant's Articles of Incorporation.
2. See Exhibit 99.B2 to 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 Post-Effective Amendment No. 7 to Form
N-1A for a specimen of Registrant's stock certificate.
5. See Exhibit 99.B5 to Post-Effective Amendment No. 7 to Form
N-1A for a copy of Registrant's Investment Advisory Agreement.
6. See Exhibit 99.B6a to 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 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. 9 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. 9 to Form
N-1A, for the consent of independent auditors, Tait, Weller &
Baker, CPA, and 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 Post-Effective Amendment No. 9 to Form
N-1A, 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, 1998, 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 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; Vice President and
Director of American National Life Insurance Company of Texas, all
located at One Moody Plaza, Galveston, Texas; Director and Chairman of
the Board of American National Property and Casualty Company; Director
and Chairman of the Board of American National General Insurance
Company; Director of American National Insurance Service Company;
Director of American National Lloyds Insurance Company; Director and
Chairman of the Board, Pacific Property and Casualty Inc., all located
at 1949 East Sunshine, Springfield, Missouri.
R. EUGENE LUCAS
Director and Member of the Executive Committee of SM&R; Director of
American National Insurance Company; Director of ANREM Corporation,
both located at One Moody Plaza, Galveston, Texas; President and
Director of Gal-Tex Hotel Corporation; Gal-Tenn Hotel Corporation,
both located at 504 Moody National Bank Tower, Galveston, Texas.
RONALD J. WELCH
Director of SM&R; Executive Vice President and Chief Actuary of American
National Insurance Company; Senior Vice President of American National
Life Insurance Company of Texas, all located at One Moody Plaza,
Galveston, Texas; Director and Chairman of the Board of Garden State
Life Insurance Company, 2450 South Shore Boulevard, League City,
Texas; Director of Standard Life and Accident Insurance Company, 201
Robert S. Kerr Avenue, Oklahoma City, Oklahoma; Director of American
National Property and Casualty Company; Director of American National
General Insurance Company; Director of American National Insurance
Service Company; Director of Pacific Property and Casualty, Inc., all
located at 1949 East Sunshine Street, Springfield, Missouri.
G. RICHARD FERDINANDSTEN
Director and Member of Executive Committee of SM&R; Director, Senior Vice
President and Chief Operating Officer, American National Insurance
Company; Director, Chairman of the Board, President and Chief
Executive Officer, American National Life Insurance Company of Texas;
Director, Comprehensive Investment Services, all located at One Moody
Plaza, Galveston, Texas; Director and Vice Chairman of the Board,
American National Property and Casualty; Director and Vice Chairman of
the Board, Pacific Property & Casualty, Inc.; Underwriter, American
National Lloyds Insurance Company, all located at 1949 East Sunshine,
Springfield, Missouri; Director and Chairman of the Board, Standard
Life and Accident Insurance Company, 201 Robert S. Kerr Avenue,
Oklahoma City, Oklahoma; Director, Garden State Life Insurance
Company, 2450 South Shore Boulevard, League City, Texas.
MICHAEL W. MCCROSKEY
Director, President, Chief Executive Officer and member of the Executive
Committee of SM&R; President and Director of the Fund; 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");
President and Director of the SM&R Capital Funds, Inc.; Executive Vice
President, American National; Assistant Secretary of American National
Life Insurance Company of Texas; President and Director, ANREM
Corporation; Director and President, ANTAC Corporation; Director,
Comprehensive Investment Services, all located at One Moody Plaza,
Galveston, Texas; Vice President of Standard Life and Accident
Insurance Company, 201 Robert S. Kerr Avenue, Oklahoma City, Oklahoma;
Vice President, Garden State Life Insurance Company, 2450 South Shore
Boulevard, League City, Texas; Vice President, American National
Property and Casualty; Vice President, American National General
Insurance Company; Vice President, Pacific Property and Casualty,
Inc., all located at 1949 East Sunshine, Springfield, Missouri.
GORDON D. DIXON
Director, Senior Vice President, Chief Investment Officer and a member of
the investment and executive committees of SM&R; Vice President,
Portfolio Manager of the American National Investment Accounts -Growth
Portfolio and the American National Growth Fund, Inc., Co-manager of
the American National Investment Accounts, Inc.-Managed Portfolio and
the American National Income Fund, Inc.; Vice President, Stocks of
American National Insurance Company; Director and President,
Comprehensive Investment Services, all located at One Moody Plaza,
Galveston, Texas; Vice President, Investments for Garden State Life
Insurance Company, 2450 South Shore Boulevard, Suite 301, League City,
Texas.
K. DAVID WHEELER
Senior Vice President, Institutional Sales and Private Client Services
of SM&R, One Moody Plaza, Galveston, Texas; Senior Institutional
Consultant, Bank South, Atlanta, Georgia.
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.;
Treasurer, Comprehensive Investment Services, 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. 9 to Registration Statement, pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this POST-EFFECTIVE
AMENDMENT NO. 9 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Galveston and State of
Texas, on the 20th day of April, 1998.
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
By: /s/ MICHAEL W. McCROSKEY
-------------------------------
Michael W. McCroskey, President
Pursuant to the requirements of the Securities Act of 1933, this POST-EFFECTIVE
AMENDMENT NO. 9 to the registration statement has been signed below by the
following persons in the capacities and on the dates indicated:
PRINCIPAL EXECUTIVE AND
FINANCIAL OFFICER: PRINCIPAL ACCOUNTING OFFICER:
/s/ MICHAEL W. McCROSKEY /s/ BRENDA T. KOELEMAY
- ---------------------------------- -----------------------------
Michael W. McCroskey, President Brenda T. Koelemay, Treasurer
Date: April 20, 1998 Date: April 20, 1998
DIRECTORS
/s/ ERNEST S. BARRATT, PH.D. /s/ EDWIN K. NOLAN
- ---------------------------------- -----------------------------
*Ernest S. Barratt, Ph.D. *Edwin K. Nolan
By: Michael W. McCroskey By: Michael W. McCroskey
Date: April 20, 1998 Date: April 20, 1998
/s/ ALLAN W. MATTHEWS /s/ ROBERT B. SHATTUCK, JR.
- ---------------------------------- -----------------------------
*Allan W. Matthews *Robert V. Shattuck, Jr.
By: Michael W. McCroskey By: Michael W. McCroskey
Date: April 20, 1998 Date: April 20, 1998
/s/ LEA MCLEOD MATTHEWS /s/ JAMIE G. WILLIAMS
- ---------------------------------- -----------------------------
*Lea McLeod Matthews *Jamie G. Williams
By: Michael W. McCroskey By: Michael W. McCroskey
Date: April 20, 1998 Date: April 20, 1998
/s/ MICHAEL W. MCCROSKEY /s/ FRANK P. WILLIAMSON
- ---------------------------------- -----------------------------
*Michael W. McCroskey *Frank P. Williamson
By: Michael W. McCroskey By: Michael W. McCroskey
Date: April 20, 1998 Date: April 20, 1998
/s/ ANN MCLEOD MOODY
- ----------------------------------
*Ann McLeod Moody
By: Michael W. McCroskey
Date: April 20, 1998
*Pursuant to a Power of Attorney executed by the Board of Directors dated
December 4, 1997, attached as Exhibit 99.B17 to Post-Effective Amendment No. 9.
58
<PAGE>
EXHIBIT INDEX
TO
POST-EFFECTIVE AMENDMENT NO. 9
UNDER THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 9
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.B10 Consent and Opinion of Registrant's counsel, Greer, Herz & Adams, L.L.P.
Exhibit 99.B11 Consent of Tait, Weller and Baker and KPMG Peat Marwick LLP, independent accountants of
Registrant
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.B10
LEGAL OPINION
April 20, 1998
American National Investment Accounts, Inc.
One Moody Plaza
Galveston, Texas 77550
RE: American National Investment Accounts, Inc. (the "Company") Post-
Effective Amendment No. 9 under the Securities Act of 1933 (the "33
Act") and Post-Effective Amendment No. 9 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, 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 2,000,000,000 shares authorized, nor sell more than the 115,000,000 shares
initially authorized for the Growth Portfolio, the 115,000,000 shares initially
authorized for the Balanced Portfolio, the 120,000,000 shares initially
authorized for the Managed Portfolio, or the 1,050,000,000 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
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our report dated January 30, 1998 on the
financial statements and financial highlights of the Growth Portfolio, the
Managed Portfolio, the Balanced Portfolio, and the Money Market Portfolio, each
a series of shares of American National Investment Accounts, Inc. Such financial
statements and financial highlights appear in the 1997 Annual Report to
Shareholders which is included in the Prospectus and in the Statement of
Additional Information filed in the Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of American National Investment Accounts,
Inc. We also consent to the references to our Firm in the Registration
Statement and Prospectus.
/s/ Tait, Weller & Baker
--------------------------
TAIL, WELLER & BAKER
Philadelphia, Pennsylvania
April 20, 1998
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
American National Investment Accounts, Inc.
We consent to the use of our report dated February 7, 1997 included herein.
KPMG Peat Marwick LLP
Houston, Texas
April 20, 1998
<PAGE>
EXHIBIT 99B.17
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 4th day
of December, 1997.
ATTEST: AMERICAN NATIONAL INVESTMENT
ACCOUNTS, INC.
/s/ Teresa E. Axelson /s/ Michael W. McCroskey
- ------------------------------- ---------------------------------
Teresa E. Axelson, Secretary Michael W. McCroskey, President
SM&R Capital Funds, Inc.
/s/ Michael W. McCroskey /s/ Brenda T. Koelemay
- ------------------------------- ---------------------------------
Michael W. McCroskey, President & Brenda T. Koelemay, Treasurer, Principal
Principal Executive Officer Financial & Accounting Officer
/s/ Ernest S. Barratt, Ph.D. /s/ Edwin K. Nolan
- ------------------------------- ---------------------------------
Ernest S. Barratt, Ph.D., Director Edwin K. Nolan, Director
/s/ Allan W. Matthews /s/ Robert V. Shattuck, Jr.
- ------------------------------- ---------------------------------
Allan W. Matthews, Director Robert V. Shattuck, Jr., Director
/s/ Lea McLeod Matthews /s/ Jamie G. Williams
- ------------------------------- ---------------------------------
Lea McLeod Matthews, Director Jamie G. Williams, Director
/s/ Michael W. McCroskey /s/ Frank P. Williamson
- ------------------------------- ---------------------------------
Michael W. McCroskey, Director Frank P. Williamson, Director
/s/ Ann McLeod Moody
- -------------------------------
Ann McLeod Moody, Director
<PAGE>
Exhibit 99.B19
CONTROL LIST
The Registrant, American National Investment Accounts, Inc., is advised
and managed by Securities Management & Research, Inc. ("SM&R"), a Florida
corporation and registered investment adviser and broker-dealer. SM&R is a
wholly-owned subsidiary of American National Insurance Company, a Texas
insurance company. The Libbie Shearn Moody Trust owns approximately 37.58% of
the outstanding stock of American National Insurance Company. The Moody
Foundation, which has a 75% contingent remainder interest in the Libbie Shearn
Moody Trust, owns approximately 23.7% 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 life income
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 has assigned his interest in the Libbie Shearn Moody
Trust to National Western Life Insurance Company, a Colorado insurance company
of which he is also Chairman of the Board, a Director and controlling
shareholder.
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 Hotel Corporation
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.
<PAGE>
Ownership or Other Basis of Control: American National Insurance Company
owns a 98% 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)
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.
2
<PAGE>
Entity Form: a Maryland corporation - registered investment company
Ownership or Other Basis of Control: Investment Advisory Agreement with
Securities Management and Research, Inc. Also, American National
Insurance Company and Securities Management and Research, Inc.
collectively own less than five 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, American National
Insurance Company and Securities Management and Research, Inc. own less
than five percent of the outstanding stock of the Company.
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 of 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
3
<PAGE>
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.
Entity Form: a Texas corporation
Ownership or Other Basis of 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: Comprehensive Investment Services, Inc.
Entity Form: a Texas corporation
Ownership or Other Basis of Control: Wholly owned subsidiary of American
National Insurance Company.
Entity: Garden State Life Insurance Company
Entity Form: a New Jersey insurance company
4
<PAGE>
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 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: 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
5
<PAGE>
Entity Form: A Texas joint venture
Ownership or Other Basis of Control: American National Insurance Company
owns a 50% interest.
Entity: Rutledge Partners, L.P.
Entity Form: a Texas limited partnership
Ownership or Other Basis of Control: American National Insurance Company
owns a 50% 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 approximately 20.01% of the outstanding stock of the
Government Income Fund Series, and American National Insurance Company
owns approximately 27.44% of the outstanding stock of the Government
Income Fund Series. Securities Management and Research, Inc. owns
approximately 2.23% of the outstanding stock of the Primary Fund Series,
and American National Insurance Company owns approximately 67.40% of the
outstanding stock of the Primary Fund Series. Securities Management and
Research, Inc. owns approximately 11,71% of the outstanding stock of the
Tax Free Fund Series, and American National Insurance Company owns
approximately 58.53% 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: ANTAC, Inc. 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
6
<PAGE>
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.
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 approximately 8.5% of the outstanding stock of the
Company, and American National Insurance Company owns approximately
14.23% of the outstanding stock of the Company.
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000867050
<NAME> AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
<SERIES>
<NUMBER> 1
<NAME> GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 8,953,158
<INVESTMENTS-AT-VALUE> 11,087,906
<RECEIVABLES> 14,876
<ASSETS-OTHER> 34,310
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,137,092
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,176
<TOTAL-LIABILITIES> 10,176
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,873,876
<SHARES-COMMON-STOCK> 6,961,372
<SHARES-COMMON-PRIOR> 5,009,037
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 156,920
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,134,748
<NET-ASSETS> 11,126,916
<DIVIDEND-INCOME> 129,723
<INTEREST-INCOME> 108,232
<OTHER-INCOME> 0
<EXPENSES-NET> 80,584
<NET-INVESTMENT-INCOME> 157,371
<REALIZED-GAINS-CURRENT> 875,594
<APPREC-INCREASE-CURRENT> 641,115
<NET-CHANGE-FROM-OPS> 1,674,080
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 158,902
<DISTRIBUTIONS-OF-GAINS> 775,516
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,626,208
<NUMBER-OF-SHARES-REDEEMED> 269,044
<SHARES-REINVESTED> 595,171
<NET-CHANGE-IN-ASSETS> 3,848,647
<ACCUMULATED-NII-PRIOR> 2,517
<ACCUMULATED-GAINS-PRIOR> 75,624
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 46,499
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 100,628
<AVERAGE-NET-ASSETS> 9,300,718
<PER-SHARE-NAV-BEGIN> 1.45
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.27
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.12
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.60
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.09%.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000867050
<NAME> AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
<SERIES>
<NUMBER> 2
<NAME> MANAGED PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 7,759,599
<INVESTMENTS-AT-VALUE> 9,742,662
<RECEIVABLES> 19,666
<ASSETS-OTHER> 30,804
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,793,132
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,146
<TOTAL-LIABILITIES> 10,146
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,388,982
<SHARES-COMMON-STOCK> 6,265,385
<SHARES-COMMON-PRIOR> 4,583,281
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 145,556
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,983,063
<NET-ASSETS> 9,782,986
<DIVIDEND-INCOME> 164,317
<INTEREST-INCOME> 67,469
<OTHER-INCOME> 0
<EXPENSES-NET> 75,522
<NET-INVESTMENT-INCOME> 156,264
<REALIZED-GAINS-CURRENT> 630,123
<APPREC-INCREASE-CURRENT> 819,659
<NET-CHANGE-FROM-OPS> 1,606,046
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 158,852
<DISTRIBUTIONS-OF-GAINS> 513,633
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,754,279
<NUMBER-OF-SHARES-REDEEMED> 508,525
<SHARES-REINVESTED> 436,350
<NET-CHANGE-IN-ASSETS> 3,509,854
<ACCUMULATED-NII-PRIOR> 2,609
<ACCUMULATED-GAINS-PRIOR> 25,227
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 40,851
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 89,408
<AVERAGE-NET-ASSETS> 8,174,663
<PER-SHARE-NAV-BEGIN> 1.37
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.28
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.09
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.56
<EXPENSE-RATIO> 0.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.10%.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000867050
<NAME> AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
<SERIES>
<NUMBER> 3
<NAME> BALANCED PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 4,501,548
<INVESTMENTS-AT-VALUE> 5,529,680
<RECEIVABLES> 40,431
<ASSETS-OTHER> 30,632
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,600,743
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,821
<TOTAL-LIABILITIES> 5,821
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 446,850
<SHARES-COMMON-STOCK> 4,024,437
<SHARES-COMMON-PRIOR> 3,377,686
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 95,503
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,028,132
<NET-ASSETS> 5,594,922
<DIVIDEND-INCOME> 52,282
<INTEREST-INCOME> 160,450
<OTHER-INCOME> 0
<EXPENSES-NET> 44,077
<NET-INVESTMENT-INCOME> 168,655
<REALIZED-GAINS-CURRENT> 350,655
<APPREC-INCREASE-CURRENT> 332,627
<NET-CHANGE-FROM-OPS> 851,937
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 168,712
<DISTRIBUTIONS-OF-GAINS> 267,353
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 588,279
<NUMBER-OF-SHARES-REDEEMED> 256,939
<SHARES-REINVESTED> 315,411
<NET-CHANGE-IN-ASSETS> 1,314,185
<ACCUMULATED-NII-PRIOR> 2,096
<ACCUMULATED-GAINS-PRIOR> 10,164
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 24,587
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 63,954
<AVERAGE-NET-ASSETS> 4,917,305
<PER-SHARE-NAV-BEGIN> 1.27
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.20
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.07
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.39
<EXPENSE-RATIO> 0.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.30%.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000867050
<NAME> AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
<SERIES>
<NUMBER> 4
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,801,767
<INVESTMENTS-AT-VALUE> 2,801,767
<RECEIVABLES> 106
<ASSETS-OTHER> 23,236
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,825,109
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,440
<TOTAL-LIABILITIES> 4,440
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2,820,669
<SHARES-COMMON-PRIOR> 2,531,875
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,820,669
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 146,054
<OTHER-INCOME> 0
<EXPENSES-NET> 23,038
<NET-INVESTMENT-INCOME> 123,016
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 123,016
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 123,016
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 420,449
<NUMBER-OF-SHARES-REDEEMED> 254,671
<SHARES-REINVESTED> 123,016
<NET-CHANGE-IN-ASSETS> 288,794
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,299
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32,724
<AVERAGE-NET-ASSETS> 2,660,467
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio for expenses
to average net assets would have been 1.23%.
</FN>
</TABLE>
