<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[] Preliminary Proxy Statement
[] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[] Definitive Additional Materials
[] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
[Name of Registrant as Specified In Its Charter]
- --------------------------------------------------------------------------------
Teresa E. Axelson Jerry L. Adams
2450 South Shore Boulevard With Copy To: Greer, Herz & Adams, L.L.P.
League City, Texas 77573 One Moody Plaza
Galveston, Texas 77550
[Name of Person(s) Filing Proxy Statement]
Payment of Filing Fee (Check the appropriate box):
[] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a6(i)(1), or
14a-6(j)(2).
[] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies: --
2) Aggregate number of securities to which transaction applies: --
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: --
4) Proposed maximum aggregate value of transaction: --
5) Total fee paid
[] Fee paid previously with preliminary materials.
[] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid
2) Form, Schedule or Registration Statement No:
3) Filing Party:
4) Date Filed:
1
<PAGE>
MARCH 15, 2000
IMPORTANT
REQUEST TO AMERICAN NATIONAL INSURANCE COMPANY
VARIABLE ANNUITY AND VARIABLE LIFE
CONTRACT OWNERS FOR VOTING INSTRUCTIONS
Dear Contract Owner:
A Special Meeting of American National Investment Accounts, Inc. (the
"Fund"), which serves as the funding media for your American National Insurance
Company ("American National") variable annuity or variable life insurance
policy, will be held at the principal executive offices of the Fund, 2450 South
Shore Boulevard, Suite 400, League City, Texas 77573, on April 13, 2000, at
8:30 a.m., Central Time. The purpose of the Special Meeting is to consider the
three (3) proposals described in the enclosed Notice of Special Meeting of
Shareholders and Proxy Statement.
Shareholders of the Fund are being asked to consider a number of proposals
at the Special Meeting. First, under PROPOSAL NO. 1, shareholders of the Fund
are being asked to ratify or reject the appointment of Tait, Weller & Baker as
independent auditors of the fund for its fiscal year ending December 31, 2000.
Next, under PROPOSAL NO. 2, shareholders of the Fund are being asked to approve
or reject certain amendments to the Fund's Articles of Incorporation described
in the accompanying Proxy Statement. Finally, under PROPOSAL NO. 3, shareholders
are being asked to approve or disapprove amending, restating or eliminating the
Fund's fundamental investment restrictions, also described in the accompanying
Proxy Statement.
THE BOARD OF DIRECTORS OF THE FUND HAS UNANIMOUSLY VOTED IN FAVOR OF THE
PROPOSALS AND RECOMMENDS THAT YOU VOTE FOR EACH PROPOSAL.
Although you are not technically a shareholder of the Fund, at least a
portion of your contract value under your variable annuity or variable life
policy is invested in shares of one or more of the series or "portfolios" of the
Fund through separate accounts established by American National for such
purpose. Since the value of your contract invested in the Fund depends on the
investment performance of the Fund, you have the right to instruct American
National, which is the legal owner of such shares, as to the manner in which the
shares of the Fund attributable to your contract value are to be voted. The
number of votes for which you may give American National instructions as to each
series or "portfolio" of the Fund is equal to the proportional value of the
amount you have allocated to each such series or "portfolio" of the Fund.
Fractional votes are counted. Fund shares for which no instructions are
received, including shares owned by American National, will be voted in the
<PAGE>
same proportion as those for which instructions are received. Securities
Management and Research, Inc. ("SM&R"), the Fund's investment advisor,
underwriter and administrator, has advised the Fund that it intends to vote the
shares owned by SM&R "FOR" the three proposals.
Enclosed you will find a Notice of Special Meeting of Shareholders, a Proxy
Statement for the Fund and a Proxy Card for each series or "portfolio" of the
Fund in which your contract values were invested on February 4, 2000, the record
date for the Special Meeting of the Fund. The Proxy Statement provides
background information and explains the matters to be voted on at the Special
Meeting. WE URGE YOU TO READ THE PROXY STATEMENT AND THEN COMPLETE AND RETURN TO
US THE PROXY CARD ON OR BEFORE April 12, 2000. YOUR VOTE IS EXTREMELY IMPORTANT
AND YOUR PROMPT RESPONSE WILL HELP SAVE THE EXPENSE OF ADDITIONAL SOLICITATION
MAILINGS.
If you have any questions, please call Teresa E. Axelson, Secretary of the
Fund, at (800) 526-8346, ext. 229.
<TABLE>
<S> <C> <C>
Sincerely yours,
AMERICAN NATIONAL INSURANCE
COMPANY
By:
[SIGNATURE]
------------------------
V. E. Soler, Jr.
VICE PRESIDENT,
SECRETARY & TREASURER
</TABLE>
<PAGE>
AMERICAN NATIONAL INVESTMENT
ACCOUNTS, INC.
2450 SOUTH SHORE BOULEVARD, SUITE 400
LEAGUE CITY, TEXAS 77573
(281) 334-2469
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 13, 2000
------------------------
To the Shareholders of
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.:
A Special Meeting (the "Special Meeting") of the Shareholders of American
National Investment Accounts, Inc. (the "Fund") will be held at the principal
executive offices of the Fund and of Securities Management and Research, Inc.,
2450 South Shore Boulevard, Suite 400, League City, Texas 77573. The meeting
will be held on April 13, 2000, at 8:30 a.m. Central Time, for the following
purposes:
(1) To ratify or reject the appointment of Tait, Weller & Baker as
independent auditors of the Fund for its fiscal year ending
December 31, 2000.
(2) To approve or reject certain amendments to the Fund's Articles of
Incorporation.
(3) To approve or disapprove amending, restating or eliminating the Fund's
fundamental investment restrictions.
(4) To act on such other matters as may properly come before the meeting or
any adjournment or adjournments thereof.
Only the shareholders of record at the close of business on February 4,
2000, are entitled to notice of, and to vote at, the Special Meeting. After the
Special Meeting, the Fund does not presently anticipate holding regular annual
meetings of shareholders except to the extent required by law. A list of
<PAGE>
the Fund's shareholders is held in the office of the Fund, 2450 South Shore
Boulevard, Suite 400, League City, Texas 77573.
By Order of the Board of Directors
[SIGNATURE]
Teresa E. Axelson
SECRETARY
March 15, 2000
-------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING YOU CAN CAST YOUR VOTE BY
COMPLETING THE ENCLOSED PROXY CARD. JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT
APPEAR ON YOUR ENCLOSED PROXY CARD.
PLEASE HELP YOUR FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY.
A MAJORITY OF THE OUTSTANDING SHARES OF THE FUND MUST BE PRESENT IN PERSON OR BY
PROXY AT THE SPECIAL MEETING. ADDITIONALLY, A MAJORITY OF THE OUTSTANDING SHARES
OF EACH SERIES MUST BE PRESENT IN PERSON OR BY PROXY AT THE SPECIAL MEETING FOR
APPROVAL OF THE PROPOSED CHANGE TO THE INVESTMENT RESTRICTIONS OF THE FUND FOR
EACH SERIES.
-------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
FOR AMERICAN NATIONAL INVESTMENT
ACCOUNTS, INC.
---------------------
2450 SOUTH SHORE BOULEVARD, SUITE 400
LEAGUE CITY, TEXAS 77573
(281) 334-2469
------------------------
GENERAL INFORMATION
The accompanying proxy is being solicited on behalf of the Board of
Directors of American National Investment Accounts, Inc. (the "Fund") for the
Special Meeting of Shareholders (the "Special Meeting") to be held at 2450 South
Shore Boulevard, Suite 400, League City, Texas 77573, the principal offices of
the Fund, on April 13, 2000, and any adjournment of such meeting.
This Proxy Statement is being furnished to owners of variable annuity
contracts and variable life insurance policies ("Contract Owners") issued by
American National Insurance Company ("American National") who have allocated
value under their variable annuity contract and variable life insurance policy
("Variable Contracts") to separate accounts (the "Separate Accounts") sponsored
by American National which are registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Separate Accounts invest Contract Owners'
assets in the Fund in accordance with instructions received from Contract
Owners. The Fund is sponsored by American National for use only in conjunction
with Variable Contracts and, therefore, shares of the Fund are not sold directly
to the public. BECAUSE CONTRACT OWNERS ARE INDIRECTLY INVESTED IN THE FUND
THROUGH THEIR INVESTMENT IN THE SEPARATE ACCOUNTS AND HAVE THE RIGHT TO INSTRUCT
AMERICAN NATIONAL HOW TO VOTE SHARES OF THE FUND ON ALL MATTERS REQUIRING A
SHAREHOLDER VOTE, CONTRACT OWNERS SHOULD CONSIDER THEMSELVES SHAREHOLDERS OF THE
FUND FOR PURPOSES OF THIS PROXY STATEMENT. The number of shares for which a
Contract Owner can give voting instructions is determined as explained in the
Variable Contracts, and is the number of units shown on the enclosed Proxy Card.
A proxy may be revoked at any time prior to the voting thereof by written
notice to the Secretary of the Fund at the address shown above, by personal
attendance at the Special Meeting, or by submitting a proxy bearing a later
date. All costs of this solicitation will be paid by Securities Management and
Research, Inc. ("SM&R"), the Fund's underwriter, investment advisor and
1
<PAGE>
administrator, and American National. Neither SM&R nor American National will
seek any reimbursement from the Fund for such costs.
The Fund is a Maryland corporation consisting of four separate Series: the
American National Growth Portfolio (the "Growth Portfolio"), the American
National Managed Portfolio (the "Managed Portfolio"), the American National
Balanced Portfolio (the "Balanced Portfolio"), and the American National Money
Market Portfolio (the "Money Market Portfolio").
February 4, 2000 (the "Record Date") has been fixed as the record date for
the determination of shareholders entitled to notice of and to vote at the
Special Meeting. The Fund had 34,447,911.144 shares of common stock (the "Common
Stock") outstanding on the record date, consisting of 9,907,279.781 shares of
the Growth Portfolio, 10,901,305.904 shares of the Managed Portfolio,
6,348,914.249 shares of the Balanced Portfolio and 7,290,411.210 shares of the
Money Market Portfolio. Each share of Common Stock outstanding is entitled to
one vote, but votes may not be cumulated.
This Proxy Statement and accompanying instruction letter were mailed on or
about March 15, 2000 to each Contract Owner who had assets allocated to the Fund
on the Record Date. Each such Contract Owner is invited to attend the Special
Meeting in person and give instructions instead of giving a proxy.
Generally, one-half ( 1/2) of the outstanding common shares of the Fund must
be present in person or by proxy to constitute a quorum for the approval of any
matter which properly comes before the Special Meeting. However, because of
Maryland General Corporation Law and the 1940 Act requirements, approval of
Proposals 2 and 3 will require the approval of more than one-half ( 1/2) of the
Fund's outstanding common shares. (See "Required Vote" in the discussion of each
proposal below for a more detailed explanation of the number of votes necessary
to approve each such proposal.) Abstentions and proxies signed and returned by
brokers without voting on a proposal ("Broker Non-Votes") will not be counted
for or against the proposal, but will be counted as votes present for purposes
of determining whether a quorum is present.
American National will vote the shares of the fund held by the Separate
Accounts in accordance with instructions received from Contract Owners. Shares
for which no instructions have been given and shares directly owned by American
National ("seed money" shares) will be voted in the same proportion as shares
for which American National has received instructions from Contract Owners. SM&R
has advised the Fund that it intends to vote the shares owned directly by it
(all "seed money" shares) "FOR" the three Proposals described below.
2
<PAGE>
If, as the time of the Special Meeting nears, the required number of
Contract Owners have not given American National instructions to vote for the
Proposals, the officers of the Fund may make phone calls to certain of the
Contract Owners in order to gather enough favorable instructions for approval of
such Proposals.
American National and SM&R have contributed seed money to the Fund. As of
the Record Date, American National's and SM&R's direct ownership in the Fund was
as follows:
<TABLE>
<CAPTION>
NUMBER OF PERCENT
TITLE OF CLASS (SERIES) NAME AND ADDRESS OF OWNER SHARES OF CLASS
- ----------------------- ------------------------- --------- --------
<S> <C> <C> <C>
Growth Portfolio....... American National 2,688,267 27.1%
Insurance Company
One Moody Plaza
Galveston, Texas 77550
Securities Management and 382,739 3.9%
Research, Inc.
2450 South Shore
Boulevard, Suite 400
League City, Texas 77573
Balanced Portfolio..... American National 2,813,851 44.3%
Insurance Company
One Moody Plaza
Galveston, Texas 77550
Securities Management and 401,583 6.3%
Research, Inc.
2450 South Shore
Boulevard, Suite 400
League City, Texas 77573
Managed Portfolio...... American National 2,909,220 26.7%
Insurance Company
One Moody Plaza
Galveston, Texas 77550
Securities Management and 414,793 3.8%
Research, Inc.
2450 South Shore
Boulevard, Suite 400
League City, Texas 77573
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENT
TITLE OF CLASS (SERIES) NAME AND ADDRESS OF OWNER SHARES OF CLASS
- ----------------------- ------------------------- --------- --------
<S> <C> <C> <C>
Money Market
Portfolio............ American National 2,468,780 33.9%
Insurance Company
One Moody Plaza
Galveston, Texas 77550
Securities Management and 352,503 4.8%
Research, Inc.
2450 South Shore
Boulevard, Suite 400
League City, Texas 77573
</TABLE>
SM&R, the investment adviser, manager and underwriter of the Fund, 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 Foundation are Robert L. Moody ("RLM"),
Chairman of the Board, President and Chief Executive Officer of American
National, Frances Moody Newman, RLM's mother, and Ross R. Moody, RLM's son.
The Moody National Bank of Galveston ("the Bank") is the trustee of the
Libbie S. Moody Trust. RLM is Chairman of the Board, President and Chief
Executive Officer of the Bank and President and Director of Moody
Bancshares, Inc. ("Bancshares"), the sole shareholder of Moody Bank Holding
Company, Inc. ("MBHC"), and President and Director of MBHC, the Bank's
controlling stockholder. The Three R Trusts, trusts established by RLM for the
benefit of his children, own 100% of Bancshares Class B Common Stock (which
elects a majority of Bancshares' directors) and 47.5% of its Class A Common
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,
SM&R, the Bank, Bancshares, MBHC, and the Fund.
Other than the shares directly owned by American National and SM&R, as shown
above, all shares of the Fund are held by the Separate Accounts.
Except as shown in the chart above, to the knowledge of the Fund, no
shareholder owned of record or beneficially more than 5% of the outstanding
shares of the Fund on the Record Date.
4
<PAGE>
SUMMARY OF SERIES VOTING ON PROPOSALS
The following table indicates which Series of the Fund is entitled to vote
on each proposal:
<TABLE>
<CAPTION>
PROPOSAL SERIES VOTING
- -------- ----------------------------------
<S> <C> <C>
1. To ratify or reject the All of the Series voting together
appointment of Tait, Weller & as one group.
Baker as independent auditors of
the Fund for its fiscal year
ending December 31, 2000.
2. To approve or reject certain All of the Series voting together
amendments to the Fund's Articles as one group.
of Incorporation.
3(a) The approval or disapproval of the Each Series voting separately.
amendment of the Series'
investment restriction on issuer
diversification.
3(b) The approval or disapproval of the Each Series voting separately.
restatement of the Series'
investment restriction on industry
concentration.
3(c) The approval or disapproval of the Each Series voting separately.
amendment or elimination of the
Series' investment restrictions on
borrowing and engaging in margin
transactions or arbitrage.
3(d) The approval or disapproval of the Each Series voting separately.
restatement of the Series'
investment restriction on lending
money and securities.
3(e) The approval or disapproval of the Each Series voting separately.
restatement of the Series'
investment restriction on
underwriting.
3(f) The approval or disapproval of the Each Series voting separately.
restatement of the Series'
investment restriction on
investment in real estate.
3(g) The approval or disapproval of the Each Series voting separately.
elimination of the Series'
investment restriction on
investments in oil and gas
interests.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PROPOSAL SERIES VOTING
- -------- ----------------------------------
<S> <C> <C>
3(h) The approval or disapproval of the Each Series voting separately.
amendment of the Series'
investment restriction on
commodities.
3(i) The approval or disapproval of the Each Series voting separately.
amendment of the Series'
investment restriction on senior
securities.
3(j) The approval or disapproval of the Each Series voting separately.
elimination of the Series'
investment restriction on short
sales of securities.
3(k) The approval or disapproval of the Each Series voting separately.
elimination of the Series'
investment restriction on
investments to exercise management
or control.
3(l) The approval or disapproval of the Each Series voting separately.
elimination of the Series'
investment restriction on
investing in other investment
companies.
3(m) The approval or disapproval of the Each Series voting separately.
elimination of the Series'
investment restriction on
investment in restricted
securities.
3(n) The approval or disapproval of the Each Series voting separately.
elimination of the Series'
investment restriction on
investments in securities of
companies with less than three
years' continuous operations.
3(o) The approval or disapproval of the Each Series voting separately.
elimination of the Series'
investment restriction on
investments in an issuer of which
Fund officers and directors or
portfolio managers own more than a
certain percentage.
3(p) The approval or disapproval of the Each Series voting separately.
elimination of the Series'
investment restriction on certain
purchases or sales from or to any
officer or director of the
Series or their investment
manager.
</TABLE>
6
<PAGE>
PROPOSAL 1. AUDITORS
(Item 1 on Proxy Card)
The Audit Committee and Board of Directors of the Fund appointed Tait,
Weller & Baker ("TWB") as the Fund's independent auditors for the fiscal year
ended December 31, 2000. Such firm served as the Fund's independent auditors for
its fiscal year ending December 31, 1999.
The Fund does not expect representatives of TWB to attend this Special
Meeting.
REQUIRED VOTE
Ratification of the selection of TWB as independent auditors requires, as to
the entire Fund, the affirmative vote of a majority of the shares present (in
person or by proxy) at the Special Meeting, provided that at least a majority
( 1/2) of the outstanding shares entitled to be cast are present at the Special
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF TWB AS THE
FUND'S INDEPENDENT AUDITORS.
PROPOSAL 2. PROPOSED AMENDMENT AND RESTATEMENT OF ARTICLES OF INCORPORATION
(Item 2 on Proxy Card)
The Board approved certain "clean-up" and technical amendments to the Fund's
Articles of Incorporation. Most of these "clean-up" amendments are intended to
(i) conform, to the extent appropriate, the Fund's Articles of Incorporation
with those of other funds advised by SM&R (the "SM&R complex of funds") and
(ii) restate in one document changes contained in Articles Supplementary filed
in 1998 which increased the Fund's authorized shares. Conforming the Fund's
Articles of Incorporation to the Articles of Incorporation of the other Fund's
in the SM&R complex of funds would provide a uniform set of articles and avoid
possible administrative difficulties. The "clean-up" changes result in a clearer
and simpler statement of the matters covered by the amended articles.
The reduction of shareholder quorum requirements from one-half ( 1/2) to
one-third ( 1/3) in Article V, as expressly permitted by Maryland law, will
conform the Fund's articles to the quorum requirements of the other funds in the
SM&R complex of funds. Such reduction will also make it easier for the Fund to
obtain a quorum for routine matters requiring shareholder approval. The Fund, as
is the case with most mutual funds today, frequently has great difficulty in
obtaining a quorum. This difficulty results in additional expense to the Fund
and results in unnecessary administrative burdens. The Board believes this
reduction to be in the Fund's and its shareholders' best interest. The quorum
reduction will not affect state law and 1940 Act requirements
7
<PAGE>
requiring a higher percentage of shareholders to vote on non-routine matters
such as amendment of the Fund's Articles of Incorporation, approval of an
investment advisory agreement, or the change of a fundamental investment
restriction.
The Board also believes that the limitation of director and officer
liability provision added in Article IX is beneficial to the Fund and its
shareholders. Such provision is expressly permitted by Maryland law and is
common among mutual funds and other companies. In today's litigious society,
many persons who are qualified to be a director or officer of the Fund would be
reluctant to do so without the limited protection provided by the proposed
limitation of liability provision. As indicated in Article IX, the proposed
limitation of liability provision does not relieve directors or officers from
liability to the extent (i) they actually received an improper benefit or profit
or (ii) a judgment or other final adjudication is entered finding that a
director's or officer's action, or failure to act, was the result of active and
deliberate dishonesty material to the cause of action adjudicated in the
proceeding.
The Amended and Restated Articles of Incorporation of the Fund,
incorporating the changes proposed in Proposal 2, would read as shown in
Appendix A. To assist you in your consideration of Proposal 2, Appendix A has
been marked to show changes from the Fund's current Articles of Incorporation.
The amendments can be summarized as follows:
<TABLE>
<S> <C>
Article I: ............................. Article I contains the name of the Fund's initial incorporator. The proposed
changes to such Article are non-substantive in nature and are simply to give
the current address of the incorporator and to conform the wording of the
article to the wording of the articles of incorporation of the other funds in
the SM&R complex of funds.
Article III, Section (1): .............. Article III, Section (1) contains a description of the Fund's business purpose.
The proposed changes to such section are non-substantive in nature and are
simply to conform the wording of the section to the wording of the articles of
incorporation of the other funds in the SM&R complex of funds.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Article III, Section (3): .............. Article III, Section (3) provides that the Fund shall continuously issue and
sell shares of its capital stock. The proposed changes to this section are
non-substantive in nature and are simply to conform the wording of the section
to the wording of the articles of incorporation of the other funds in the SM&R
complex of funds.
Article III, Section (4): .............. Article III, Section (4) provides that the Fund shall redeem, purchase or
otherwise acquire its shares of capital stock. The proposed changes to such
section are non-substantive in nature and are simply to conform the wording of
the section to the wording of the articles of incorporation of the other funds
in the SM&R complex of funds.
Article III, Section (9): .............. Article III, Section (9) provides that the Fund shall have the rights, powers
and privileges conferred by the State of Maryland. The proposed changes to
such section are non-substantive in nature and are simply to conform the
wording of the section to the wording of the articles of incorporation of the
other funds in the SM&R complex of funds.
Article III--ending paragraph: ......... The ending paragraph of Article III provides that the preceding clauses are not
intended to be restrictive and are regarded as independent sections. The
proposed changes to such paragraph are non-substantive in nature and are
simply to conform the wording of the paragraph to the wording of the articles
of incorporation of the other funds in the SM&R complex of funds.
Article IV: ............................ Article IV contains the address of the Fund's principal office and resident
agent. The proposed changes to such Article are non-substantive in nature and
are simply to (i) give the current address of the principal office of the
corporation and of the corporation's resident agent; and (ii) to conform the
wording of the article to the wording of the articles of incorporation of the
other funds in the SM&R complex of funds.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Article V: ............................. Article V describes the Fund's authorized shares of capital stock; the four (4)
series into which such shares are divided, and the number of authorized shares
in each such series; the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms
and conditions of redemption of each of such series. Such Article also
provides for the determination of net asset value, declaration and payment of
dividends and distributions, issuance of share certificates, and other general
terms and provisions affecting the Fund's shares and Fund shareholders.
Most of the proposed changes to this Article are nonsubstantive in nature and
are intended to conform the wording of the Article to the wording of the
articles of incorporation of the other funds in the SM&R complex of funds (the
"conforming changes"). One of these conforming changes, however, could be
considered to be a substantive change. Proposed new Article V(7) reduces the
number of shareholders necessary to constitute a quorum at a shareholders'
meeting from one-half ( 1/2) to one-third ( 1/3). However, because the shares
of the Fund are sold only to Separate Accounts sponsored by American National
for use in connection with Variable Contracts, and not directly to the public,
quorum requirements are not a practical consideration for the Fund.
In addition to the proposed "conforming changes", there is one other change to
Article V. This change simply reflects an increase in the number of the Fund's
authorized shares made in Articles Supplementary filed by the Fund in 1998.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Article VI: ............................ Article VI provides that the Fund's shareholders do not have preemptive or other
preferential rights to purchase shares of the Fund. The proposed changes to
Article VI are non-substantive in nature and are simply to conform the wording
of the article to the wording of the articles of incorporation of the other
funds in the SM&R complex of funds.
Article VII: ........................... Article VII provides for the number of and other requirements concerning the
Fund's directors and for indemnification by the Fund of its directors. Such
Article also provides that the Board of Directors may make, alter or repeal
the Fund's bylaws and that the Fund may employ a custodian for the safekeeping
of its assets and a dividend disbursing agent and transfer agent or registrar
for its shares. Article VII further provides that the Fund may enter into
contracts providing for a delegation of the management of all or part of the
Fund's securities portfolio and of administrative corporate functions, subject
to the direction of the Board of Directors.
The proposed changes to this Article are non-substantive in nature and are
simply to reflect the current number of directors, the names of the current
directors and to conform the wording of such section to the wording of the
articles of incorporation of the other funds in the SM&R complex of funds.
Article VIII: .......................... Article VIII provides that, notwithstanding any provision of Maryland law
requiring greater than a majority vote to take or authorize any action, the
Fund, if permitted by the Investment Company Act of 1940, may take or
authorize any such action upon the approval of a majority of the shareholders
entitled to vote on such matter.
The proposed changes to such Article are non-substantive in nature and are
simply to conform the wording of such section to the wording of the articles
of incorporation of the other funds in the SM&R complex of funds.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Article IX: ............................ Article IX provides that the duration of the Fund shall be perpetual. The
proposed change to such Article is to renumber the Article as Article X and to
replace such Article IX with the Limitation of Directors and Officers
Liability section contained in the articles of incorporation of the other
funds in the SM&R complex of funds. The proposed Article IX provides that the
personal liability of the Fund's directors and officers to the Fund or to its
shareholders shall be limited to the fullest extent permitted by the Maryland
General Corporation Law. However, such proposed Article IX does not release an
officer or director from such liability to the extent (1) it is proved that
such director or officer actually received an improper benefit or (2) a
judgment or other final adjudication adverse to a director or officer is
entered based on a finding that such director's or officer's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. This is a
substantive change.
Article X: ............................. Article X provided that the Fund reserved the right to amend its Articles of
Incorporation. The proposed change to such Article is to eliminate the
existing Article X which is unnecessary.
</TABLE>
REQUIRED VOTE
The amendment of the Articles of Incorporation requires, as to the entire
Fund, the affirmative vote of a majority of the outstanding shares entitled to
be cast at the Special Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF EACH SERIES VOTE
"FOR" THE APPROVAL OF THE PROPOSED AMENDMENT AND RESTATEMENT OF THE FUND'S
ARTICLES OF INCORPORATION.
12
<PAGE>
PROPOSAL 3. THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
(Item 3 on Proxy Ballot)
For each proposed change or element of Proposal 3 the relevant current
restriction is described below. The effect of a "FOR" vote on each of Proposals
3(a) through 3(p) is detailed, i.e., whether the current restriction will be:
(i) amended; (ii) restated; or (iii) eliminated entirely. If a proposed
restriction will amend or restate the current restriction, then such proposed
amendment or restatement is also described in detail.
The Board of Directors recommends to shareholders of each Series that they
approve proposals to amend, restate or eliminate the Series' current investment
restrictions. These investment restrictions are fundamental policies that may be
changed by a Series only with the approval of a majority of the outstanding
shares of that Series, as determined by the provisions of the 1940 Act. As
explained below in "Voting Procedures", you have the right to vote on the
proposed changes either as a group or individually. The entire slate of proposed
fundamental restrictions, as well as the current fundamental restrictions, are
provided in Exhibit B for your reference. You should consult such Exhibit B when
deciding whether to vote on the proposed changes as a group or individually.
Each proposed fundamental restriction is also specifically discussed below where
appropriate. Each Series may adopt additional or supplemental fundamental
investment restrictions if required by federal regulators or if determined by
the Board of Directors to be necessary or desirable. The proposed restrictions
meet all of the requirements of the 1940 Act, and no other fundamental
investment restrictions beside those stated in Exhibit B are presently required
by the 1940 Act.
One reason for amending, restating or eliminating the Series' investment
restrictions is to adopt, insofar as possible, a uniform statement of investment
restrictions for all of the mutual funds advised by SM&R, as well as for funds
that may be created in the future. Such uniformity would facilitate the
comparison of the investment restrictions of different funds in the SM&R complex
of funds, as well as the administration of the investment restrictions by the
portfolio managers. The proposals would also result in a clearer and simpler
statement of these investment restrictions.
Another reason for amending, restating or eliminating the Series' investment
restrictions is to modernize the investment restrictions. Certain of the
fundamental investment restrictions reflect regulatory, business or industry
conditions, practices or requirements which at one time led the Board of
Directors to impose them on the management of the Series' investments. The
Directors believe that the passage of time, changes in regulatory standards, and
the development of new practices have rendered certain of the Series'
fundamental investment restrictions unnecessary or unwarranted. In certain
13
<PAGE>
cases, investment restrictions were adopted in response to state securities laws
and regulations restricting certain types of investment company practices and
investments. Because the states no longer have the power to enforce these
investment restrictions in light of the National Securities Markets Improvement
Act of 1996 ("NSMIA"), the elimination of these restrictions may expand the
range of investment opportunities and techniques available in connection with
the management of the Series' portfolios. In other cases, fundamental
restrictions reflect federal, regulatory requirements that remain in effect, but
are not required to be fundamental restrictions.
The Directors propose to amend or eliminate investment restrictions that are
redundant or inconsistent with current regulatory standards or industry
practice. In particular, the Directors propose to eliminate certain fundamental
investment restrictions that are no longer legally required, and to amend
certain fundamental investment restrictions that are more restrictive than
currently required by law. The Directors believe that eliminating or amending
such restrictions would afford the Series greater flexibility in responding to
investment opportunities that may arise from time to time.
The Directors also propose to eliminate other fundamental investment
restrictions that are not required to be fundamental.
If the shareholders of the Series approve all or part of Proposal 3, the
Board of Directors plans to adopt such operating policies or non-fundamental
investment restrictions for the Series as the Board of Directors determines is
appropriate for the management of the Series' portfolios. Non-fundamental
investment restrictions may be adopted or changed by the Board of Directors,
without seeking approval from shareholders. The Directors believe that reducing
the number of restrictions that can be changed only by shareholder vote will
result in an enhanced ability to modify investment policies, as appropriate, to
respond to changing markets and new investment opportunities, and will minimize
costs and delay associated with soliciting shareholders when new opportunities
or market changes arise.
Finally, the Directors propose to restate certain of the Series' investment
restrictions, as described below, in order to render clearer and simpler
statements of the Series' fundamental policies.
The Directors do not anticipate that the proposed amendment, restatement, or
elimination of the Series' investment restrictions will result in any material
change in the level of risk associated with an investment in any Series. If, in
the future, the Board of Directors should approve any change in any of the
Series' principal investment strategies, or the principal risks of investing in
the Series should materially change, such changes would be described in the
Series' prospectus and statement of additional information, as required by the
1940 Act.
14
<PAGE>
If the proposed changes are approved by shareholders of a Series at the
Meeting, the Fund's registration statement, including its prospectus and
statement of additional information, would be revised, as appropriate, to
reflect such changes and, as necessary, to reflect modified investment policies.
Any amendment, restatement or elimination of an investment restriction would be
effective upon the effective date of the revised registration statement. In the
event that an amendment, restatement, or elimination of a restriction or
restrictions is not approved by a Series' shareholders, that Series will retain
the current fundamental restriction or restrictions, as applicable.
VOTING PROCEDURES
Each element of Proposal 3 discussed below and presented on the proxy voting
ballot may be voted on EITHER (i) as a group or (ii) by each element, BUT NOT
BOTH. If the entire slate of Proposal 3 is approved, each Series will have no
fundamental investment policies or investment restrictions except those set
forth in Appendix B.
If shareholders of a Series approve some, but not all, of the proposed
modifications, a Series will have a combination of certain current restrictions
and certain proposed restrictions. In that event, each Series would have as its
only fundamental restrictions the combination of (i) approved proposed
restrictions, and (ii) current restrictions which were retained by shareholder
vote.
A vote on the entire group of proposed modifications will be counted as if
it were a vote on each separate proposed modification. For example, a vote "FOR"
the entire group of proposed modifications on the proxy voting ballot will be
counted as a vote "FOR" each proposed modification. In the event that a proxy
voting ballot is returned with a vote on the entire slate and a vote on a
specific element of Proposal 3, the vote on the entire slate of proposed
modifications will be considered determinative of, and counted as, the
shareholder's intended vote. The vote on a specific element will not be counted
and will be treated as though it had not been made. If any part of Proposal 3 is
adopted, then the Fund's Prospectus and Statement of Additional Information will
be revised to reflect the changes in the Fund's fundamental investment policies
and restrictions when such changes become effective.
The Board of Directors believes that submitting each element of Proposal 3
to each Series' shareholders at this time is in the shareholders' and each
Series' best interest because it takes advantage of the same shareholders'
meeting needed to consider Proposal 2 above. Not having to call another
shareholders' meeting to consider Proposal 3 will spare each Series the extra
costs and time delay of having a subsequent shareholders meeting to consider
changes to each Series' current restrictions.
15
<PAGE>
PROPOSAL 3(A): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF THE SERIES'
INVESTMENT RESTRICTION ON ISSUER DIVERSIFICATION.
Each Series' current investment restrictions prohibit it: (i) from investing
more than 5% of the value of the total assets of the Series, at the time of
purchase, in the securities (including commercial paper) of any one issuer
(other than securities issued or guaranteed by the U.S. government or its
instrumentalities), or (ii) from purchasing any security if, as a result, the
Series would own more than 10% of the outstanding voting securities of any
issuer.
To be diversified under the 1940 Act, a Series must not, with respect to 75%
of its total assets, invest more than 5% of its total assets in the securities
of any one issuer or acquire more than 10% of the outstanding voting securities
of any one issuer. These restrictions apply only at the time of investment. A
Series may invest up to 25% of its total assets without regard to these
restrictions. In addition, these restrictions do not apply to holdings of or
investments in cash, cash items, U.S. Government securities, or securities of
other investment companies. (See discussion in other investment companies in
Proposal 3(l) below).
The Board of Directors proposes amending the investment restrictions of each
Series to require diversification only to the extent required under the 1940
Act. Additional diversification requirements are required for the Series to be
treated as regulated investment companies for federal income tax purposes. These
tax-based requirements are not required to be reflected in the proposed
investment restrictions and will not be affected by the proposal.
The Board of Directors proposes that each Series adopt the following
investment restriction in lieu of its current fundamental policy on issuer
diversification:
THE SERIES, WITH RESPECT TO 75% OF THE SERIES' TOTAL ASSETS, MAY NOT PURCHASE
SECURITIES OF AN ISSUER (OTHER THAN CASH OR CASH ITEMS, OR SECURITIES OF THE
U.S. GOVERNMENT, ITS AGENCIES, OR INSTRUMENTALITIES OR OF OTHER INVESTMENT
COMPANIES), IF (I) SUCH PURCHASE WOULD CAUSE MORE THAN 5% OF THE SERIES' TOTAL
ASSETS TAKEN AT MARKET VALUE TO BE INVESTED IN THE SECURITIES OF SUCH ISSUER, OR
(II) SUCH PURCHASE WOULD AT THE TIME RESULT IN MORE THAN 10% OF THE OUTSTANDING
VOTING SECURITIES OF SUCH ISSUER BEING HELD BY THE SERIES.
PROPOSAL 3(B): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF THE SERIES'
INVESTMENT RESTRICTION ON INDUSTRY CONCENTRATION.
The 1940 Act requires that an open-end investment company adopt a policy,
which cannot be changed without shareholder approval, stating whether 25% or
more of the fund's assets can be invested or "concentrated" in the securities of
issuers in any one industry. The limitation does not apply to
16
<PAGE>
investments in U.S. Government securities. Each Series has adopted an investment
restriction on industry concentration prohibiting it from investing more than
25% of the value of its total assets in any one industry.
While not representing a change in investment policy, the Board of Directors
has determined that it is in the best interest of the Fund and its shareholders
to restate the Fund's investment restriction on industry concentration to bring
such investment restriction in line with the other funds in the SM&R complex of
funds. The Board of Directors may determine to define or redefined industries as
appropriate on the basis of evolutionary change in businesses. Restating the
restriction as proposed would clarify that the Board of Directors may from time
to time define and redefine industries in response to a changing business
environment. The directors also wish to restate this restriction to clarify that
the Fund's investments in obligations issued by or guaranteed by the U.S.
Government, its agencies or instrumentalities are not considered investments in
the same industry.
The Board of Directors also believes that the proposed investment
restriction on industry concentration follows more precisely the parameters set
forth under the 1940 Act for mutual funds that do not intend to concentrate.
Under the 1940 Act, a mutual fund that does not intend to concentrate must make
no further investment in any industry if, upon making the proposed investment,
25% or more of the value of the Fund's total assets would be invested in such
industry. Under the current restriction, the fund may invest UP TO 25% of the
value of its total assets in securities of issuers in any one industry. The
current restriction is slightly less restrictive than the proposed restriction,
which limits investment of 25% OR MORE of the Fund's assets in securities of
issuers in any one industry.
The Board of Directors proposes that each Series adopt the following
investment restriction in lieu of its current fundamental policy on industry
concentration:
THE SERIES MAY NOT INVEST 25% OR MORE OF ITS TOTAL ASSETS IN THE SECURITIES OF
ONE OR MORE ISSUERS CONDUCTING THEIR PRINCIPAL BUSINESS ACTIVITIES IN THE SAME
INDUSTRY (EXCLUDING THE U.S. GOVERNMENT OR ANY OF ITS AGENCIES OR
INSTRUMENTALITIES).
PROPOSAL 3(C): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OR ELIMINATION OF
THE SERIES' INVESTMENT RESTRICTION ON BORROWING AND ENGAGING IN MARGIN
TRANSACTIONS OR ARBITRAGE.
The 1940 Act requires that a mutual fund adopt a policy, which cannot be
changed without shareholder approval, on borrowing. Pursuant to the 1940 Act, a
mutual fund is prohibited from issuing any senior security (including debt),
except that such fund may borrow from banks in an amount not exceeding 33-1/3%
of its total assets. A senior security includes any form of
17
<PAGE>
indebtedness that would have priority over the Fund's common stock as to the
distribution of assets or payment of dividends.
The Series currently have a fundamental investment restriction prohibiting
borrowing. The Board of Directors is recommending that the Series adopt a
fundamental investment restriction (i) permitting borrowing up to the maximum
allowed by the 1940 Act, and (ii) permitting the Series to enter into mortgage
dollar rolls accounted for as a financing. The proposed restriction would also
clarify that the Fund may obtain short-term credits to effect transaction
clearances. For purposes of the Series' policy on borrowing, the Series do not
consider certain investments and practices to be borrowings, including currency
transactions, mortgage dollar rolls which are not accounted for as financings,
forward contracts, swaps, interest rate caps, floors and collars, options,
futures contracts, options on futures contracts, and forward commitment
transactions. Such investment restriction on borrowing is the same policy
adopted by the other funds in the SM&R complex of funds.
The Series expect to utilize their borrowing authority for temporary or
emergency purposes only and not for the purpose of investment leverage. Leverage
is a speculative technique that allows one to acquire additional assets to an
extent greater than would be the case without borrowing. Borrowing for leverage
would exaggerate any increase or decrease in the market value of Series assets.
Furthermore, borrowed funds are subject to interest costs.
To the extent a Series invests in financial futures and options, the Series
will be subject to the risks of such investments. These risks include possible
default by the other party to the transaction, illiquidity, and to the extent
the Series' view as to certain market movements is incorrect, the risk that the
use of such transactions could result in losses greater than if they had not
been used. The use of options may result in losses to a Series, force the sale
or purchase of securities at inopportune times or for prices other than current
market values, limit the amount of appreciation a Series can realize on its
investments or cause a Series to hold a security it might otherwise sell. The
use of currency transactions can result in a Series incurring losses as a result
of a number of factors including the imposition of exchange controls, suspension
of settlements, or the inability to deliver or receive a specified currency. The
risks of investing in derivative instruments such as forward contracts, swaps,
interest rate caps, floors and collars, options, futures contracts, options on
futures contracts, and forward commitment transactions are the same as those
discussed in Proposal 3(h) below in connection with the currency and financial
instruments discussed there.
The Series also have a fundamental investment restriction that provides that
the Series will not purchase securities on margin or engage in arbitrage. Margin
purchases involve the purchase of securities with money borrowed from a broker.
"Margin" is the cash or eligible securities that the borrower places with its
broker as collateral for this loan. Under the 1940 Act, purchases
18
<PAGE>
on margin are permitted to obtain short-term credit for the clearance of
transactions and for initial and variation margin payments made in connection
with the purchase and sale of futures contracts or related options. The
Directors believe that the Series should have the flexibility to engage in such
margin transactions, and propose that the Series amend their fundamental
investment restriction on margin purchases to permit the purchase of securities
on margin to the extent permitted by applicable law. The Directors also propose
that the restriction on margin purchases be combined with the Series' investment
restriction on borrowing. The Directors believe that the proposed amendment on
margin purchases would permit the Series maximum flexibility to respond to a
changing regulatory environment. However, the Directors do not presently
anticipate any of the Series engaging in any significant amount of margin
purchases.
"Arbitrage" involves attempts to profit from differences in price when the
same security, currency or commodity is traded on two or more markets. The
Directors recommend deleting the Series' fundamental investment restriction
prohibiting engaging in arbitrage. While such deletion would permit the
Series to engage in arbitrage to the extent permitted by applicable law, if such
investment restriction is deleted, the Directors anticipate adopting, as a non-
fundamental operating policy, a policy prohibiting arbitrage.
"Mortgage dollar rolls" are two simultaneous transactions with different
settlement dates, with one transaction being a sale and the other transaction
being a purchase of mortgage backed securities. Mortgage dollars rolls involve
the risk that the market value of the securities the Series is obligated to
repurchase under the agreement may decline below the repurchase price. In the
event the buyer of securities under a mortgage dollar roll files for bankruptcy
or becomes insolvent, the Series' use of proceeds of the dollar roll may be
restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Series' obligations to repurchase the
securities.
The Directors believe that the proposed amendment on margin purchases and
deletion of the prohibition against arbitrage would permit the Series maximum
flexibility to respond to a changing regulatory environment.
The Board of Directors proposes that each Series adopt the following
investment restriction in lieu of its current fundamental policies on borrowing,
margin purchases, and arbitrage:
THE SERIES MAY NOT BORROW MONEY, EXCEPT (A) THE SERIES MAY BORROW FROM BANKS (AS
DEFINED IN THE INVESTMENT COMPANY ACT OF 1940) OR THROUGH REVERSE REPURCHASE
AGREEMENTS IN AMOUNTS UP TO 33- 1/3% OF ITS TOTAL ASSETS (INCLUDING THE AMOUNT
BORROWED), (B) THE SERIES MAY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROW
UP TO AN ADDITIONAL 5% OF ITS TOTAL ASSETS FOR TEMPORARY PURPOSES, (C) THE
SERIES MAY OBTAIN SUCH SHORT-TERM CREDITS AS MAY BE NECESSARY FOR THE CLEARANCE
OF
19
<PAGE>
PURCHASES AND SALES OF PORTFOLIO SECURITIES, (D) THE SERIES MAY PURCHASE
SECURITIES ON MARGIN TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND (E) THE
SERIES MAY ENGAGE IN TRANSACTIONS IN MORTGAGE DOLLAR ROLLS WHICH ARE ACCOUNTED
FOR AS FINANCINGS.
PROPOSAL 3(D): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF THE SERIES'
INVESTMENT RESTRICTION ON LENDING MONEY AND SECURITIES.
The 1940 Act requires that a mutual fund adopt a policy, which cannot be
changed without shareholder approval, on lending. The current fundamental
investment restriction on lending prohibits all of the Series from lending money
and also prohibits the Money Market Portfolio from lending securities, but
excepts purchasing obligations subject to repurchase agreements. Such
restriction further provides that the purchase of publicly held debt securities
is not considered lending money for purposes of the restriction.
The Directors propose to conform the Series' investment restriction on
lending to the restriction of the other funds in the SM&R complex of funds. Such
proposed investment restriction would permit the Series, including the Money
Market Portfolio, to engage in securities lending to the extent permitted by
applicable law and to enter into repurchase agreements with banks,
brokers-dealers and other financial institutions. The proposed amendment of the
Series' fundamental investment restriction on lending also would permit the
Series to make loans through the purchase of debt obligations. Such provision
would incorporate the Series' current policy that permits purchasing obligations
subject to repurchase agreements and loans through the purchase of publicly held
debt securities, but restates such policy more succinctly. The Directors do not
anticipate that approval of the proposed restriction would significantly change
the current operation of the Money Market Portfolio, as money market funds
typically do not make loans or lend securities.
The principal risk of lending, whether money or securities, is the potential
insolvency of the borrower. In this event, the Series could experience delays in
recovering its securities and possible capital losses.
In a repurchase agreement, a Series will acquire and hold securities subject
to the seller's agreement to repurchase the securities at a predetermined price
within a specified time (normally one day to one week), thereby determining the
yield during the Series' holding period. If the other party to the agreement
defaults on its obligations to repurchase the underlying security at a time when
the value of the security has declined, a Series may incur a loss upon
disposition of the security.
The Board of Directors proposes that the Series adopt the following
investment restriction in lieu of its current fundamental policy on lending:
THE SERIES MAY NOT MAKE LOANS, EXCEPT THROUGH (A) THE PURCHASE OF DEBT
OBLIGATIONS IN ACCORDANCE WITH THE SERIES' INVESTMENT OBJECTIVE AND POLICIES,
20
<PAGE>
(B) REPURCHASE AGREEMENTS WITH BANKS, BROKERS, DEALERS, AND OTHER FINANCIAL
INSTITUTIONS, AND (C) LOANS OF SECURITIES AS PERMITTED BY APPLICABLE LAW.
PROPOSAL 3(E): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF THE SERIES'
INVESTMENT RESTRICTION ON UNDERWRITING.
The 1940 Act requires that a mutual fund adopt a policy, which cannot be
changed without shareholder approval, prohibiting underwriting securities issued
by other issuers. The Series' current restriction on underwriting prohibits a
Series from underwriting 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 Series securities,
restricted securities or not readily marketable securities. The Board of
Directors proposes to restate the Series' current restriction on underwriting to
make it more succinct and to conform it to the standard restriction applicable
to other funds in the SM&R complex of funds. The proposed restatement of the
Series' policy, which does not represent a material change in investment policy,
would prohibit the Series from underwriting the securities of other issuers
(which is not a part of the normal activities of a mutual fund). The proposed
restriction also would clarify that such restriction would not apply to sales of
portfolio securities by the Series that may be deemed to be an underwriting.
The Board of Directors proposes that the Series adopt the following
investment restriction in lieu of its current fundamental policy on
underwriting:
THE SERIES MAY NOT UNDERWRITE SECURITIES ISSUED BY OTHERS, EXCEPT TO THE EXTENT
THAT THE SALE OF PORTFOLIO SECURITIES BY THE SERIES MAY BE DEEMED TO BE AN
UNDERWRITING.
PROPOSAL 3(F): THE APPROVAL OR DISAPPROVAL OF THE RESTATEMENT OF THE SERIES'
INVESTMENT RESTRICTION ON INVESTMENT IN REAL ESTATE.
The 1940 Act requires that a mutual fund adopt a policy, which cannot be
changed without shareholder approval, on acquiring interests in real estate. The
current investment restriction prohibits a Series from buying or selling real
estate, but permits the Series to invest in the securities of real estate
investment trusts. A separate restriction discussed in 3(g) below provides that
the Series will not invest in oil, gas or other mineral leases, rights on
royalty contracts or in real estate or real estate limited partnerships.
The Board of Directors proposes that the Series' fundamental investment
restrictions on investment in real estate be amended and restated to provide the
Series maximum flexibility under the 1940 Act to invest in interests secured by
real estate and to reflect the standard restriction applicable to other funds in
the SM&R complex of funds. The proposed fundamental investment restriction would
permit the Series to invest in securities secured by real estate or interests
therein, securities of real estate investment trusts and in mortgage-
21
<PAGE>
related securities. Such restriction also would provide that the Series may hold
and sell real estate acquired by the Series as a result of the ownership of
securities, affording the Series additional flexibility to own real estate
directly as a result of the exercise of their rights in connection with debt
obligations secured by real estate, which may serve to protect the Series in the
event an issuer of debt securities is unable to meet its obligations. Any
investments in securities secured by an interest in real estate would be, of
course, subject to the Series' investment objective and policies and to other
limitations regarding diversification and concentration.
The Board of Directors proposes that the Series adopt the following
investment restriction in lieu of their current fundamental policy on investment
in real estate:
THE SERIES MAY NOT PURCHASE, HOLD OR DEAL IN REAL ESTATE, ALTHOUGH THE SERIES
MAY PURCHASE AND SELL SECURITIES THAT ARE SECURED BY REAL ESTATE OR INTERESTS
THEREIN, SECURITIES OF REAL ESTATE INVESTMENT TRUSTS, AND MORTGAGE-RELATED
SECURITIES AND MAY HOLD AND SELL REAL ESTATE ACQUIRED BY THE SERIES AS A RESULT
OF THE OWNERSHIP OF SECURITIES.
PROPOSAL 3(G): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE SERIES'
INVESTMENT RESTRICTION ON INVESTMENTS IN OIL AND GAS INTERESTS.
The Series current investment restrictions prohibit the Series from
investing in oil, gas or other mineral leases, rights on royalty contracts, or
in real estate or real estate limited partnerships. This restriction was imposed
by certain state securities laws and regulations. The 1940 Act currently does
not contain any equivalent restrictions. As a result of the recent enactment of
NSMIA, state law restrictions on permissible investments no longer apply to the
Series. The Board of Directors recommends that the provision restricting
investment in oil, gas or other mineral leases or rights on royalty contracts be
eliminated. If shareholders approve the elimination of this investment
restriction, the Board of Directors plans to adopt a non-fundamental investment
policy prohibiting the Series from engaging in participations or other direct
interests in, or from entering into leases with respect to oil, gas, or other
mineral exploration or development programs.
The Board of Directors further proposes that the Series adopt the following
non-fundamental investment restriction in lieu of its current fundamental policy
on purchase of oil and gas interest:
THE SERIES MAY NOT PURCHASE PARTICIPATIONS OR OTHER DIRECT INTERESTS IN, OR
ENTER INTO LEASES WITH RESPECT TO OIL, GAS, OR OTHER MINERAL EXPLORATION OR
DEVELOPMENT PROGRAMS.
22
<PAGE>
PROPOSAL 3(H): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF THE SERIES'
INVESTMENT RESTRICTION ON COMMODITIES.
The 1940 Act requires that a mutual fund have a fundamental investment
policy regarding investments in commodities. The Series' current investment
restriction on commodities provides that the Series will not purchase or sell
commodities or commodity contracts.
While the Series do not invest in physical commodities or commodities
contracts, the Series may, in certain circumstances, appropriately enter into
financial futures contracts, options on futures, and, in certain cases, currency
contracts. Any financial futures contact or related option is considered to be a
commodity contract. Other types of financial instruments, such as forward
commitments and swaps, might also be deemed to be commodity contracts. The
amendment is being proposed to enable the Series to enter into financial futures
contracts and related options for hedging and other permissible purposes and to
clarify that certain practices in which a Series engages (such as forward
foreign currency contracts) or might in the future engage (such as swaps) are
not subject to this restriction.
The Series may invest in these currency and financial instruments that might
otherwise be considered commodities in order to earn income, facilitate
portfolio management, and mitigate risks. Such strategies are generally accepted
under modern portfolio management and are regularly used by many mutual funds
and other institutional investors. To the extent the Series invest in these
derivative instruments, the Series will be subject to certain risks. These risks
include possible default by the other party to the transaction, illiquidity, and
to the extent the Fund's view as to certain market movements is incorrect, the
risk that the use of such transactions could result in losses greater than if
they had not been used. The use of options may results in losses to a Series,
force the sale or purchase of securities at inopportune times or for prices
other than current market values, limit the amount of appreciation a portfolio
can realize on its investments or cause a portfolio to hold a security it might
otherwise sell. The use of currency transactions can result in a Series'
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements, or the inability to deliver or
receive a specified currency.
The Board of Directors proposes that the fundamental restriction on
purchasing or selling commodities or commodities contracts be liberalized to
permit investments in financial futures and options thereon to the fullest
extent permitted under applicable law. Amending the restriction in this manner
is consistent with mutual fund industry practice and will provide the Series
flexibility to invest in such instruments in the future if the Board of
Directors determines that investment in such instruments would be advantageous
to the Series. The proposed restriction would clarify that certain practices in
which
23
<PAGE>
the Series may engage (such as forward currency contracts or swaps) are not
subject to the restriction on commodities.
The Board of Directors proposes that the Series adopt the following
investment restriction in lieu of its current fundamental policy with respect to
commodities:
THE SERIES MAY NOT INVEST IN COMMODITIES OR COMMODITY CONTRACTS, EXCEPT THAT THE
SERIES MAY INVEST IN CURRENCY AND FINANCIAL INSTRUMENTS AND CONTRACTS THAT ARE
COMMODITIES OR COMMODITY CONTRACTS.
PROPOSAL 3(I): THE APPROVAL OR DISAPPROVAL OF THE AMENDMENT OF THE SERIES'
INVESTMENT RESTRICTION ON SENIOR SECURITIES.
The 1940 Act restricts the ability of a mutual fund to issue "senior
securities," as defined in the 1940 Act, and requires that a mutual fund adopt a
fundamental policy with respect to the issuance of such securities. Senior
securities include any form of indebtedness that has priority over the Series'
common stock as to the distribution of assets or payment of dividends. As
discussed in connection with Proposal 3(c) above, under the 1940 Act a mutual
fund is not permitted to issue senior securities except for borrowings from
banks. The Series expect to utilize their authority to issue senior securities
only for temporary or emergency purposes and not for the purpose of investment
leverage.
The Series' current investment restriction on senior securities prohibits
the issuance of senior securities except as permitted by the 1940 Act in
connection with borrowing from a bank. The proposed amendment of the Series'
restriction on senior securities would permit the Series to issue senior
securities to the extent permitted by applicable law. In addition to permitting
the borrowing contemplated above under Proposal 3(c), the amendment clarifies
that the Series does not consider certain investment practices, such as forward
purchases of securities and currencies, options and futures transactions, which
may have a leverage effect on the Series to be senior securities if such
practices are conducted in a manner consistent with current law and the
interpretive positions of the SEC. The proposed amendment permits the
Series maximum flexibility to respond to a changing regulatory environment.
The Board of Directors proposes that the Series adopt the following
investment restriction in lieu of its current fundamental policy on senior
securities:
THE SERIES MAY NOT ISSUE SENIOR SECURITIES TO THE EXTENT SUCH ISSUANCE WOULD
VIOLATE APPLICABLE LAW.
24
<PAGE>
PROPOSAL 3(J): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE SERIES'
INVESTMENT RESTRICTION ON SHORT SALES OF SECURITIES.
The Series have a fundamental investment policy prohibiting short sales of
securities. In a short sale, an investor sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. The
Board of Directors recommends that shareholders vote to eliminate this
fundamental investment restriction. If shareholders approve the elimination of
this investment restriction, the Board of Directors plans to adopt a non-
fundamental investment policy prohibiting the Series from engaging in the
strategy of short sales of securities. Under this investment policy, which could
be changed by the Board without shareholder approval, entering into short sales
"against the box" would not be deemed to be engaging in the strategy of short
sales of securities. In a short sale "against the box," a Series could engage in
short sale if it owned, or, by virtue of its ownership of other securities, had
the right to obtain, securities equivalent in kind and amount to the securities
sold short.
The principal risk of engaging in short sale transactions is that the market
value of the borrowed security may increase before the investor returns the
identical security to the lender. In that case, the short sale will cause the
investor greater losses that if the short sale was not used.
The Board of Directors proposes that each Series adopt the following
non-fundamental investment restriction in lieu of its current fundamental policy
on short sales of securities:
THE SERIES MAY NOT ENGAGE IN THE STRATEGY OF SHORT SALES OF SECURITIES.
PROPOSAL 3(K): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE SERIES'
INVESTMENT RESTRICTION ON INVESTMENTS TO EXERCISE MANAGEMENT OR CONTROL.
The Series currently have a fundamental investment restriction that
prohibits them from investing in a company for the purpose of exercising
management or control. This restriction was mandated by certain state securities
laws. The 1940 Act currently does not contain any equivalent restrictions. As a
result of the recent enactment of NSMIA, state law restrictions on investment to
exercise management or control no longer apply to the Series. The Board of
Directors therefore has concluded that it is in the best interests of each
Series and its shareholders to eliminate such restriction.
PROPOSAL 3(L): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE SERIES'
INVESTMENT RESTRICTIONS ON INVESTING IN OTHER INVESTMENT COMPANIES.
The Series currently have two fundamental investment restrictions
prohibiting investments in other investment companies. One of such fundamental
investment restrictions provides that no Series may invest more than 5% of the
value of its total assets or hold more than 3% of the outstanding
25
<PAGE>
voting stock of any closed-end investment company. The other fundamental
restriction provides that no Series may acquire securities of other open-end
investment companies, except in connection with a merger, consolidation, or
acquisition of assets approved by the shareholders. The 1940 Act limits the
extent to which mutual funds may invest in other investment companies. The 1940
Act does not, however, require investment companies to adopt a fundamental
restriction with respect to investment in other investment companies. The
Series' current fundamental investment restrictions are redundant in that they
merely recite prohibitions contained in the 1940 Act. The Board of Directors
believes that such fundamental investment restrictions are unnecessary, and
should be eliminated. Moreover, the Board believes that the 1940 Act provisions
regarding investment in other investment companies may change from time to time,
and therefore the fundamental restrictions on such investment should be
eliminated in order to permit a Series maximum flexibility in responding to a
changing regulatory environment. The Directors believe it is in the best
interests of each Series and its shareholders to eliminate the two current
restrictions on investment in other investment companies.
PROPOSAL 3(M): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE SERIES'
RESTRICTION ON INVESTMENT IN RESTRICTED SECURITIES.
The Series currently have a fundamental investment restriction that provides
that no Series may invest more than 5% of the value of its total assets in
securities that are not readily marketable ("illiquid" securities), including
restricted securities. Restricted securities are securities that are subject to
legal or contractual delays on resale. Illiquid securities are securities which
may not be sold or disposed of in the ordinary course of business within seven
days at approximately the value at which a mutual fund has valued the
investment. The types of securities that are considered illiquid will vary over
time based on changing market conditions and regulatory interpretations.
Restricted securities are considered illiquid unless they are determined to be
liquid pursuant to guidelines and procedures adopted by a mutual fund's board of
directors. Under current SEC staff interpretations, a mutual fund, other than a
money market mutual fund, must limit investment in illiquid securities to 15% of
its net assets. A money market mutual fund must limit illiquid investments to
10% of its net assets.
The Board of Directors believes that the Series' current fundamental
investment restriction on restricted securities is more limiting than is
required under current law in that it encompasses both liquid and illiquid
securities and provides that only 5% of the value of the Series' total assets
can be invested in illiquid or restricted securities. The Board proposes that
the fundamental investment restriction on illiquid and restricted securities be
eliminated. If the shareholders of a Series vote to eliminate that Series'
investment restriction on restricted securities, the Board of Directors would
adopt a non-fundamental policy on investment in illiquid securities that is
consistent with the SEC staff
26
<PAGE>
position. The change would expand a Series' ability to invest in securities that
have restrictions on resale but that may be determined to be liquid pursuant to
guidelines and procedures adopted by the Board of Directors. Such liquid
restricted securities would include securities with restrictions on resale that
nonetheless have a readily available institutional market, such as commercial
paper and securities eligible for resale under Rule 144A under the Securities
Act of 1933. The Board of Directors believes that eliminating the Series'
fundamental restriction on restricted securities will permit these Series to
take advantage of the increasingly liquid institutional trading markets.
Although illiquid securities may be resold in privately negotiated
transactions, the prices realized from these sales could be less than those
originally paid by a Series. A Series' investments in illiquid securities are
subject to the risk that should the Series decide to sell any of these
securities when a ready buyer is not available at a price that the Fund deems
representative of their value, the value of the Series' net assets could be
adversely affected. Restricted securities are considered illiquid unless they
are determined to be liquid pursuant to guidelines and procedures adopted by a
mutual fund's board of directors.
The Board of Directors is recommending that the current investment
restriction be changed to limit each Series' investments in "illiquid" (rather
than "restricted") securities to 15% of its net assets (10% for any money market
Series). This will permit a Series to invest in certain securities such as Rule
144A securities, foreign securities, or so-called "Section 4(2)" commercial
paper that, while presumptively restricted, could be determined under procedures
approved by the Board to be "liquid."
The Board of Directors proposes that each Series adopt the following
non-fundamental investment restriction in lieu of its current fundamental policy
on restricted securities:
THE SERIES MAY NOT PURCHASE ANY SECURITY WHICH IS AN "ILLIQUID SECURITY" IF MORE
THAN 15% (10% FOR THE MONEY MARKET PORTFOLIO) OF THE NET ASSETS OF THE SERIES
TAKEN AT MARKET VALUE WOULD BE INVESTED IN SUCH SECURITIES.
PROPOSAL 3(N): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE SERIES'
INVESTMENT RESTRICTION ON INVESTMENTS IN SECURITIES OF COMPANIES WITH LESS THAN
THREE YEARS' CONTINUOUS OPERATIONS.
The Series currently have a fundamental investment restriction that
prohibits the Series from investing more than 5% of the total of the Series'
total assets in securities issued by companies which have not been in continuous
operation for three years (typically referred to as "unseasoned issuers"). This
investment restriction is based on restrictions on investment in unseasoned
issuers contained in certain state securities laws and regulations. The 1940 Act
currently does not contain any equivalent restrictions. As a result of the
recent
27
<PAGE>
enactment of NSMIA, state law restrictions on permissible investments no longer
apply to the Series. The Directors therefore have concluded that it is in the
best interests of the Series and their shareholders to eliminate the policy on
unseasoned issuers. In addition, the Directors believe that elimination of this
policy will increase the Series' flexibility to invest in unseasoned issuers
that otherwise might meet their investment objectives and policies.
Securities of unseasoned issuers may be subject to greater risk than
securities of more established companies because these issuers have only a brief
operating history and may have more limited markets and financial resources. The
Directors believe it is in the best interests of the Series and their
shareholders to eliminate the current restriction on investment in unseasoned
issuers.
PROPOSAL 3(O): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE SERIES'
INVESTMENT RESTRICTION ON INVESTMENTS IN AN ISSUER OF WHICH FUND OFFICERS AND
DIRECTORS OR PORTFOLIO MANAGERS OWN MORE THAN A CERTAIN PERCENTAGE.
The Series currently have a fundamental investment restriction that
prohibits them from purchasing or retaining the securities of any issuer if any
officer or director of the Fund or of its investment manager owns 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. This restriction was
mandated by certain state securities laws. The 1940 Act currently does not
contain any equivalent restrictions. As a result of the recent enactment of
NSMIA, state law percentage restrictions on investment by Fund management no
longer apply to the Series. The Directors therefore have concluded that it is in
the best interests of each Series and its shareholders to eliminate such
restriction.
PROPOSAL 3(P): THE APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF THE SERIES'
INVESTMENT RESTRICTION ON CERTAIN PURCHASES OR SALES FROM OR TO ANY OFFICER OR
DIRECTOR OF THE SERIES OR THEIR INVESTMENT MANAGER.
The Series currently have a fundamental investment restriction that provides
that no Series may purchase from or sell to any officer or director of the
Series or its investment manager any securities other than shares of the capital
stock of the Series. The 1940 Act limits the extent to which a mutual fund may
purchase and sell securities from its officers, directors, and investment
adviser, but does not require a mutual fund to adopt a fundamental investment
restriction with respect to such purchases and sales. The Series' current
fundamental investment restriction is redundant in that it merely recites
prohibitions set forth in the 1940 Act with respect to purchases and sales to
affiliated persons. The Board of Directors believes that the Series' current
fundamental restriction on purchases from and sales to officers, directors, and
28
<PAGE>
investment managers is unnecessary and should be eliminated. The Board also
believes that the 1940 Act provisions regarding such purchases and sales may
change from time to time, and therefore such fundamental restriction should be
eliminated in order to permit the Series maximum flexibility in responding to a
changing regulatory environment. The Directors believe it is in the best
interests of the Series and their shareholders to eliminate the current
restriction of purchases from and sales to officers, directors, and investment
managers of the Series.
REQUIRED VOTE
Approval of each proposed amendment, restatement or elimination of a Series'
fundamental investment restrictions requires the affirmative vote of a majority
of the outstanding shares of that Series, as determined by the provisions of the
1940 Act. Pursuant to the 1940 Act, a "vote of a majority of the Series'
outstanding voting securities" means the approval by the lesser of (i) more than
50% of the Series' outstanding voting securities, or (ii) 67% or more of the
Series' outstanding voting securities present at a meeting if the holders of
more than 50% of the outstanding voting securities of the Series are present (in
person or by proxy). If a proposed amendment is not approved with respect to a
Series, the current investment restriction will continue in effect unchanged for
a Series.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors believes that each proposed amendment, restatement,
or elimination of the Series' fundamental investment restrictions will more
clearly reflect current regulatory practice, will provide a more complete range
of investment opportunities, and will clarify and simplify the Series'
restrictions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF EACH SERIES VOTE
"FOR" THE APPROVAL OF THE AMENDMENT, RESTATEMENT, OR ELIMINATION OF EACH SERIES'
INVESTMENT RESTRICTIONS.
SHAREHOLDER PROPOSALS
As a general matter, the Fund does not hold annual meetings of shareholders,
and, therefore, the anticipated date of the next special meeting of shareholders
of a Series cannot be provided. Any shareholder proposal that properly may be
included in proxy solicitation materials for a special meeting of shareholders
must be received by the Fund a reasonable time prior to the date voting
instructions or proxy materials are mailed to shareholders. Any such proposals
must comply with the requirements of Rule 14a-8 promulgated under the Securities
Exchange Act of 1934.
29
<PAGE>
ANNUAL REPORT
The financial statements of the Fund, as contained in the Annual Report,
should be read in conjunction with this Proxy Statement. A copy of the Annual
Report of the Fund for the fiscal year ended December 31, 1999, including
financial statements, was mailed to shareholders in February 2000. The Fund will
furnish, without charge, a copy of the Annual Report to a shareholder upon
request. Any such request should be made to Teresa E. Axelson, Secretary of the
Fund, at 2450 South Shore Boulevard, Suite 400, League City, Texas 77573 or
(800) 526-8346, ext. 229.
OTHER BUSINESS
Management knows of no other business which will be presented for
consideration at the meeting other than as stated above. If any other business
shall properly come before the meeting, the enclosed Proxy authorizes the
persons named therein to vote on any such other business in accordance with
their best judgement.
All shares represented by proxies received by management, not revoked, will
be voted at the meeting or at any adjournment thereof. Accordingly, we hope that
you will be able to attend the meeting, but if not, we ask that you promptly
mark, sign and mail the enclosed Proxy in the enclosed envelope.
By Order of the Board of Directors
Teresa E. Axelson
SECRETARY
30
<PAGE>
APPENDIX A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
ARTICLE I
The undersigned, Jerry L. Adams, whose <#>post office</#> address is c/o
Greer, Herz & Adams, L.L.P., One Moody Plaza, <#>14th</#> 18th Floor, Galveston,
Texas 77550 and who is an adult of full legal age, does hereby declare that he
is an incorporator intending to form a corporation under and by virtue of the
Maryland General Corporation Law authorizing the formation of corporations.
ARTICLE II
The name of the Corporation is AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
ARTICLE III
PURPOSES AND POWERS
The <#>purposes</#> purpose for which the Corporation is formed and its
objects, rights, power and privileges are:
(1) To conduct and carry on the business of an <#>investment company of
the open end management type</#> open-end, management type investment
company registered under the Investment Company Act of 1940 (as amended and
together with any successor act thereto and all rules, regulations and
orders thereunder, referred to as the " '40 Act"), and to have and exercise
any and all rights and powers necessary and appropriate to the conduct of
such business or in any way incidental thereto;
(2) To subscribe for, or otherwise acquire, purchase, pledge, sell,
assign, transfer, exchange, distribute or otherwise dispose of, and
generally deal in and hold all forms of securities and other investments,
including, but not limited to, stocks (preferred and common), notes, bonds,
debentures, scrip, warrants, participation certificates, bankers
acceptances, futures, options of all types on securities and futures,
mortgages, commercial paper, choses in action, evidences of indebtedness and
other obligations of every kind and description, precious metals and
contracts and rights to acquire or dispose of precious metals, and in
Appendix A-1
<PAGE>
connection therewith to hold part or all of its assets in cash or cash
equivalents or money market instruments.
(3) To continuously issue and sell shares of its own capital stock (all
without the vote or consent of the stockholders of the Corporation) in such
amounts and on such terms and conditions, for such purposes and for such
<#>amount</#> amounts or <#>kind</#> kinds of consideration now or hereafter
permitted by the Maryland General Corporation Law, or any act amendatory
thereof, supplemental thereto, or in substitution therefor (the "Maryland
General Corporation Law"), and by the Articles of Incorporation of the
Corporation, as its Board of Directors may determine;
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue, retire or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner
and to the extent now or hereafter permitted by the <#>laws of</#> Maryland
<#>and</#> General Corporation Law and by the Articles of Incorporation of
the Corporation;
(5) To borrow or raise money for any purpose of the Corporation and from
time to time to draw, make, accept, endorse, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds, debentures and other
negotiable and nonnegotiable instruments and evidences of indebtedness, and
to pledge, hypothecate and borrow upon the credit of the assets of the
Corporation;
(6) To take all such action as shall be desirable and necessary to cause
its shares to be licensed or registered for sale under the laws of the
United States and in any state, county, city or other municipality of the
United States, the territories thereof, the District of Columbia or in any
foreign country and in any town, city or subdivision thereof;
(7) To make contracts and generally to do any and all acts and things
necessary or desirable in furtherance of any of the corporate purposes or
designed to protect, preserve and/or enhance the value of the corporate
assets, all to the extent permitted to business corporations authorized
under the laws of the State of Maryland, as now or may in the future be
authorized by said laws;
(8) To do all and everything necessary, suitable and proper for the
accomplishment of any of the purposes, objects or powers hereinbefore set
forth to the same extent and as fully as a natural person might or could do,
in any part of the world and either alone or in association or partnership
with other corporations, firms or individuals;
(9) To have all the rights, powers and privileges now or hereafter
conferred by the laws of the State of Maryland upon a corporation
Appendix A-2
<PAGE>
organized under the Maryland General Corporation Law; <#>or under any act
amendatory thereof, supplemental thereto or in substitution therefor,</#>
and
(10) To do any and all such further acts or things and to exercise any
and all such further powers or rights as may be necessary, incidental,
relative, conducive, appropriate or desirable for the accomplishment,
carrying out or attainment of all or any of the foregoing purposes, objects
or powers.
The foregoing clauses <#>shall be construed both as objectives and powers,
and it is hereby expressly provided that the enumeration herein of any specific
objective and power shall not be held to limit or restrict</#> are and shall be
regarded as independent and separate and the enumeration in any such clause of
any specified objectives and/or powers shall not be construed as limiting or
restricting in any way the general <#>powers of the Corporation, nor shall
such</#> objectives and powers stated in any other clause; nor shall any of the
objectives and/or powers stated above, except when otherwise expressly provided,
be in any way limited or restricted by reference to, or inference from, the
terms of any other clause of <#>the</#> these Articles of Incorporation <#> of
the Corporation but the objectives and powers specified in each of the foregoing
clauses of this Article shall be regarded as independent objectives and
powers</#>.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The <#>post office</#> address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, <#>32 South
Street</#> 300 East Lombard, Baltimore, Maryland 21202. The resident agent of
the Corporation in the State of Maryland is The Corporation Trust Incorporated,
a corporation of the State of Maryland, whose <#>post office</#> address is
<#>32 South Street</#> 300 East Lombard, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital stock <#>which</#> that the
Corporation <#>initially</#> shall have authority to issue is <#>One Hundred
Million (100,000,000) shares of common stock</#> two billion (2,000,000,000)
shares, of the par value of one cent <#>($.01) each, such shares to be
classified as "Common Shares", and to be</#> ($0.01) per share and of the
aggregate par value of <#>One Million dollars ($1,000,000). Unless otherwise
prohibited by law, so long as the corporation is registered as an open-end
investment company under the Investment Company Act of 1940, as amended, the
total number of shares
Appendix A-3
<PAGE>
which</#> twenty million dollars ($20,000,000.00), all of which two billion
(2,000,000,000) shares are designated Common Shares.
(2) The Board of Directors of the Corporation is authorized, from time to
time, to classify or to reclassify, as the case may be, any unissued shares of,
or any shares previously issued and reacquired by, the Corporation, whether now
or hereafter authorized, in separate series and classes that may <#>to issue may
be increased or decreased by the Board of Directors in accordance with the
applicable provisions of the Maryland General Corporation Law. The Corporation
is authorized to issue its Common Shares in two or more series or two or more
classes, and, subject to the requirements of the Investment Company Act of 1940,
as amended, particularly Section 18(f) thereof and Rule 18f 2 thereunder, the
different series or classes of Common Shares shall</#> be established and
designated, <#>and the variations in the relative</#> from time to time. The
shares of said series and classes of stock shall have such preferences,
conversion <#>and</#> or other rights, voting powers, restrictions, limitations
as to dividends, qualifications, and terms and conditions of redemption as
<#>between the different series of classes of Common Shares</#> shall be fixed
and determined from time to time by the Board of Directors <#>; provided that
the Board of Directors shall not classify or reclassify any of such Common
Shares into any class or series of stock which is prior to any class or series
of Common Stock then outstanding with respect to rights upon the liquidation,
dissolution or winding up of the affairs of, or upon any distribution of the
general s assets of, the Corporation, except that there may be variations so
fixed and determined between different series or classes of Common Shares as to
investment objective, purchase price, right of redemption, special rights as to
dividends and on liquidation with respect to assets belonging to a particular
series of class of Common Shares, voting powers and conversion rights. All
references to Common Shares in these Articles shall be deemed to be to shares of
any or all series and classes as the context may require</#>. The Board of
Directors is authorized to increase or decrease the number of shares of any
series or class, but the number of shares of any series or class shall not be
decreased by the Board of Directors below the number of shares thereof then
outstanding.
(3) <#>The following is a description of</#> The Board of Directors may
redesignate a class or series of shares of capital stock whether or not shares
of such class or series are issued and outstanding, provided that such
redesignation does not in itself affect the preferences, conversion <#>and</#>
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications <#>and</#> or terms <#>and</#> or conditions of redemption of
<#>the series designated as the "Growth Portfolio" (of which there are initially
authorized 15,000,000 shares), the "Money Market Portfolio" (of which there are
initially authorized 50,000,000 shares),</#> such shares of stock.
Appendix A-4
<PAGE>
(4) There is hereby established and classified four separate series of
stock, the "Growth Portfolio", to be comprised of one hundred fifteen million
(115,000,000) shares; the "Managed Portfolio", to be comprised of one hundred
twenty million (120,000,000) shares; the "Balanced Portfolio" <#> (of which
there are initially authorized 15,000,000 shares), the "Managed Portfolio" (of
which there are initially authorized 20,000,000 shares) and any additional class
or series of Common Shares of the Corporation (unless provided otherwise by</#>,
to be comprised of one hundred fifteen million (115,000,000) shares; and the
"Money Market Portfolio", to be comprised of one billion fifty million
(1,050,000,000) shares; each of the shares of such series to have a par value of
one cent ($0.01) per share. Without limiting the authority of the Board of
Directors <#>with respect to any such additional class or series at the time of
establishing and designating such additional class or series).</#> set forth
herein to establish and designate any further series or classes, and to classify
and reclassify any unissued shares, and subject to such authority, shares of
each series, now authorized and hereafter authorized, shall be subject to the
following provisions:
(a) <#>The number of authorized Common Shares and the number of Common
Shares of each series or of each class that may be issued shall be in such
number as may be determined by the Board of Directors. The Directors may
classify or reclassify any unissued Common Shares or any Common Shares
previously issued and reacquired of any series or class into one or more
series or one or more classes that may be established and designated from
time to time. The Directors may hold as treasury shares (of the same or some
other series or class) reissue for such consideration and on such terms as
they may determine, or cancel any Common Shares of any series or any class
reacquired by the Corporation at their discretion from time to time</#> As
more fully set forth hereafter, the assets and liabilities and the income
and expenses of each series shall be determined separately and, accordingly,
the net asset value, the dividends payable to holders, and the amounts
distributable in the event of dissolution of the Corporation to holders of
shares of the Corporation's stock may vary from series to series.
(b) All consideration received by the Corporation for the issue or sale
of <#>Common Shares</#> shares of a particular series<#> or class</#>,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits and proceeds thereof, including
<#>any</#> all proceeds derived from the sale, exchange or liquidation <#>of
such assets</#> thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series <#>or class</#> for all purposes, subject
only to the rights of creditors of that series <#>or class, and</#> and
shall be referred to as "assets belonging to" that series.
Appendix A-5
<PAGE>
The assets belonging to a particular series shall be so recorded upon the
books of <#>account of the corporation. Such consideration, assets, income,
earnings, profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, any asset derived from any
reinvestment of such proceeds in whatever form the name may be shall be
referred to in these Articles of Incorporation as "assets belonging to" or
"belonging to" such series or class</#> the Corporation. In the event that
there are any assets, income, earnings, profits and proceeds thereof, funds,
or payments which are not readily identifiable as belonging to any
particular series <#>or class</#>, the Directors shall allocate them among,
and they shall then belong to, any one or more of the series <#>or
classes</#> established and designated from time to time in such manner and
on such basis as they, in their sole discretion, deem fair and equitable.
Each such allocation by the Corporation shall be conclusive and binding upon
the stockholders of all series <#>or classes</#> for all purposes. The
Directors shall have full discretion, to the extent not inconsistent with
the <#>Investment Company Act of 1940, as amended,</#> '40 Act and the
Maryland General Corporation Law, to determine which items shall be treated
as income and which items shall be treated as capital, and each such
determination and allocation shall be conclusive and binding upon the
stockholders.
(c) The assets belonging to each particular series <#>or class</#> shall
be charged with the liabilities of the Corporation <#>in respect of</#>
attributable to that series <#>or class</#> and all expenses, costs, charges
and reserves attributable to that series<#> or class</#>. Any general
liabilities, expenses, costs, charges or reserves of the Corporation which
are not readily identifiable as belonging to any particular series <#>or
class</#> shall be allocated and charged by the Directors to and among any
one or more of the series <#>or classes</#> established and designated from
time to time in such manner and on such basis as the Directors in their sole
discretion deem fair and equitable. Each allocation of liabilities,
expenses, costs, charges and reserves by the Directors shall be conclusive
and binding upon the <#>stockholder of all series or classes for all
purposes.</#> stockholders of all series for all purposes.
(d) <#>Dividends and distributions on common Shares of a particular
series or class may be paid with such frequency as the Directors may
determine, which may be daily or otherwise,</#> Shares of each series shall
be entitled to such dividends and distributions, in shares or in cash or
both, as may be declared from time to time by the Board of Directors, acting
in its sole discretion, with respect to such series, provided that dividends
and distributions shall be paid on shares of a series only out of lawfully
available assets belonging to that series. Dividends may be declared daily
or otherwise pursuant to a standing resolution or resolutions adopted only
Appendix A-6
<PAGE>
once or with such frequency as the Board of Directors may determine<#>, to
the holders</#>. All dividends and distributions on Common Shares of a
particular series shall be distributed pro-rata to the holders of that
series in proportion to the number of Common Shares of that series <#>or
class, from such of the income and capital gains, accrued or realized, from
the assets belonging to that series or class, as the Directors may
determine, after providing for actual and accrued liabilities belonging to
that series or class. All dividends and distributions on Common Shares of a
particular series or class shall be distributed pro rata to the holders of
that series or class in proportion to the number of Common Shares of that
series or class</#> held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that
in connection with any dividend or distribution program or procedure, the
Board of Directors may determine that no dividend or distribution shall be
payable on shares as to which the stockholder's purchase order <#>and/or</#>
or payment <#>have</#> has not been received by the time or times
established by the Board of Directors under such program or procedure.
(e) The <#>Corporation intends to have each separate series or class
qualify as a "regulated investment company" under the Internal Revenue Code
of 1986, or any successor comparable statute thereto, and regulations
promulgated thereunder. Inasmuch as the computation of net income and gains
for Federal income tax purposes may vary from the computation thereof on the
books of the Corporation, the</#> Board of Directors shall have the power,
in its sole discretion, to distribute in any fiscal year as dividends,
(including dividends designated in whole or in part as capital <#>gains
distributions, amounts</#> gain distributions) an amount sufficient, in the
opinion of the Board of Directors, to enable <#>the respective</#> each
series <#>or classes</#> of the Corporation to qualify as a regulated
investment <#>companies</#> company under the Internal Revenue Code of 1986,
as from time to time amended, or any successor or comparable statute
thereto, and regulations promulgated thereunder, and to avoid liability of
<#>such</#> each series <#>or class</#> of the Corporation for
<#>Federal</#> federal income <#>tax</#> and excise taxes in respect of that
year. However, nothing in the foregoing shall limit the authority of the
Board of Directors to make distributions greater than or less than the
amount necessary to qualify <#>the series or classes as</#> as a regulated
investment <#>companies</#> company and to avoid liability of <#>such</#>
any series of the Corporation for such <#>tax</#> taxes. Dividends and
distributions may be made in cash, property or additional shares of the same
or another class or series, or a combination thereof, as determined by the
Board of Directors or pursuant to any program that the Board of Directors
may have in effect at the time for the election by each stockholder of the
mode of the making of such dividend or distribution to that stockholder. Any
such dividend or distribution paid in shares
Appendix A-7
<PAGE>
will be paid at the net asset value thereof as defined in the '40 Act and as
determined <#>section (3) below. Each holder of any series or class of stock
of the Corporation who surrenders his certificate in good delivery form to
the Corporation, or, if the shares in question are not represented by
certificates, who delivers to the Corporation a written request in good
order signed by the shareholder, shall be entitled to convert the shares in
question on the basis hereinafter set forth into shares of stock of any
other series or class of the Corporation. The Corporation shall determine
the net asset value, as defined in the By-Laws, of the shares to be
converted, shall deduct any conversion cost as specified</#> by the Board of
Directors <#>, within five (5) business days after each surrender and
payment, and shall issue to the shareholder such number of shares of stock
of the series or class desired as, taken at the net asset value thereof
determined in the same manner and at the same time as that of the shares
surrendered, shall equal the net asset value of the shares surrendered, less
the conversion cost as aforesaid. Any amount representing a fraction of a
share may be paid in cash at the option of the Corporation. Upon any
conversion taking place proper transfer shall be made between the assets
belonging to the various series or classes of stock involved. The Board of
Directors may limit this privilege to shares which have been held for such
reasonable period as the directors may determine.</#> of the Corporation.
(f) In the event of the liquidation or dissolution of the Corporation or
of a particular <#>class or</#> series, the <#>stockholder of each class
or</#> stockholders of a series that has been established and designated and
is being liquidated shall be entitled to receive, as a <#>class or</#>
series, when and as declared by the Board of Directors, <#>the excess of</#>
out of the assets of the Corporation available for distribution to
stockholders, the assets belonging to that <#>class or series over the
liabilities belonging to that class or series. The holders of shares of any
particular class or series shall not be entitled thereby to any distribution
upon liquidation of any other class or</#> series. The assets so
distributable to the stockholders of <#>any particular class or</#> a series
shall be distributed among such stockholders in <#>proporation</#>
proportion to the number of shares of that <#>class or</#> series held by
them and recorded on the books of the Corporation <#>The liquidation of any
particular class or series in which there are shares then outstanding may be
authorized by vote of a majority of</#> or, in the event that the series is
divided into classes, in the manner determined by the Board of Directors
<#>then in office, subject to the approval of a majority of the outstanding
securities</#> in accordance with the '40 Act. In the event that there are
any assets available for distribution which are not readily identifiable as
belonging to any particular series, such assets shall be allocated by the
Directors to and among any one or more of the series established and
designated from time to time in such manner and on such basis as the
Appendix A-8
<PAGE>
Directors in their sole discretion deem fair and equitable, and then
distributed to the holders of stock of each series as aforesaid. Each
allocation of such assets by the Directors shall be conclusive and binding
upon the stockholders of all series for all purposes.
(g) The Corporation shall, upon due presentation of a share or shares of
stock for redemption, redeem such share or shares of stock at a redemption
price prescribed by the Board of Directors in accordance with applicable
laws and regulations. The proceeds of the redemption of the shares of any
class of stock of the Corporation may be reduced by the amount of any
contingent deferred sales charge, liquidation charge, or other charge (which
charges may vary within and among the classes) payable on such redemption
pursuant to the terms of issuance of such shares, all in accordance with the
'40 Act and applicable rules and regulations of the National Association of
Securities Dealers, Inc. and NASD Regulation, Inc. (together, the "NASD").
(h) To the extent permitted by the '40 Act and Maryland General
Corporation Law, the Corporation may redeem shares of Common Shares of any
series or class not offered for redemption held by any shareholder whose
shares have a value less than such minimum amount as may be fixed by the
Board of Directors (the "Minimum Required Investment").
(i) Notwithstanding Article V(4)(h) of these Articles of Incorporation,
to the extent permitted by the '40 Act and Maryland General Corporation Law,
the Corporation may redeem shares of Common Shares of any series or class
not offered for redemption held by any shareholder without regard to the
value of such shares.
(j) If shares of stock are redeemed pursuant to Articles V(4)(h) or
V(4)(i) of these Articles of Incorporation, the Corporation shall pay the
redemption price in cash or in kind in such manner as is consistent with and
not in contravention of the '40 Act. Redemption prices shall be paid
exclusively out of the assets of the series whose shares are being redeemed.
Notwithstanding the foregoing, the Corporation may postpone payment of the
redemption price and may suspend the right of holders of shares of any class
or series to require the Corporation to redeem shares of that class or
series<#>, as defined in the Investment Company Act of 1940, as amended, and
without the vote of the holders of any other class or series. The
liquidation or dissolution of a particular class or series may be
accomplished, in whole or in part, by the transfer of assets of such class
or series to another class or series or by the exchange of shares of such
class or series for the</#> during any period or at any time when and to the
extent permissible under the '40 Act.
Appendix A-9
<PAGE>
(k) At such times (which may vary between and among the holders of
particular classes) as may be determined by the Board of Directors (or with
the authorization of the Board of Directors, by the officers of the
Corporation) in accordance with the '40 Act and applicable rules and
regulations of the NASD and reflected in the pertinent registration
statement of the Corporation, shares of any particular class of stock of the
Corporation may be automatically converted into shares of another class
<#>or series</#> of stock of the Corporation based on the relative net asset
values of such classes at the time of conversion, subject, however, to any
conditions of conversion that may be imposed by the Board of Directors (or
with the authorization of the Board of Directors, by the officers of the
Corporation) and reflected in the pertinent registration statement of the
Corporation as aforesaid.
Except as provided above, all provisions of the Articles of Incorporation
relating to stock of the Corporation shall apply to shares of, and to the
holders of, all classes of stock.
(5) On each matter submitted to a vote of the stockholders, each holder of a
share shall be entitled to one vote for each share standing in his name on the
books of the Corporation on a date reasonably determined by the Board of
Directors of the Corporation, irrespective of the class or series thereof, and
all shares of all classes or series shall vote as a single class or series
("Single Class <#>voting")</#> Voting"); provided, however, that (i) as to any
matter with respect to which a separate vote of any class or series is required
by the <#>Investment Company Act of 1940, as amended</#> '40 Act, or by the
Maryland General Corporation Law, such requirement as to a separate vote by that
class or series shall apply in lieu of Single Class <#>voting</#> Voting as
described above; (ii) in the event that the separate vote requirements referred
to in (i) above apply with respect to one or more classes or series, then,
subject to (iii) below, the shares of all other classes or series shall vote as
a single class or series; and (iii) as to any matter which does not affect the
interest of particular class or series, only the holders of shares of the one or
more affected classes or series shall be entitled to vote.
(6) The establishment and designation of any series or class of Common
Shares shall be effective upon (1) the adoption by a majority of the then
Directors of a resolution setting forth such establishment and designation and
the relative rights and preferences of such series or class, or as otherwise
provided in such instrument and (2) the filing with the proper authority of the
State of Maryland of Articles Supplementary setting forth such establishment and
designation and relative rights and preferences.
(7) Unless otherwise required by the '40 Act or by the Maryland General
Corporation Law, the presence in person or by proxy of the holders of one-
Appendix A-10
<PAGE>
third (1/3) of the shares of capital stock of the Corporation outstanding and
entitled to vote thereat shall constitute a quorum for the transaction of
business at a stockholders' meeting, except that where any provision of law or
of the Charter of the Corporation permit or require that holders of any series
or class shall vote as a separate series or class, then one-third (1/3) of the
aggregate number of shares of capital stock of that series or class, as
applicable, outstanding and entitled to vote shall constitute a quorum for the
transaction of business by that series or class, as applicable.
(8) No holder of stock of the Corporation by virtue of being such a holder
shall have any right to purchase, subscribe for, or otherwise acquire any shares
of the Corporation or any other security that the Corporation may issue or sell
(whether out of the number of shares authorized by the Charter of the
Corporation or out of any shares of the Corporation's capital stock that the
Corporation may acquire) other than a right that <#>The Corporation shall, upon
due presentation of a share or shares of stock for redemption, redeem such share
or shares of stock at a redemption price prescribe by</#> the Board of Directors
in <#>accordance with applicable laws and regulations; provided that in no event
shall such price be less than the applicable net asset value per share of such
class or series as determined in accordance with the provisions of this section
(3), less such redemption charge as is determined by the Board of Directors,
which redemption charge shall not exceed eight percent (8%) of such net asset
value per share. The Corporation may redeem, at the current net asset value,
shares of any series not offered for redemption held by any shareholder whose
shares have a value of less than $1,000,, or such lesser amount as may be fixed
by the Board of Directors (the "Minimum Required Investment"); provided, that
before the Corporation redeems such shares it must notify the shareholder that
the value of his shares is less than the Minimum Required Investment and allow
him 60 days to make an addition investment in an amount which will increase the
value of his account to the Minimum Required Investment or more. The Corporation
shall pay redemption prices in cash, except that the Corporation may pay
redemption price in kind in such manner as is consistent with and not in
contravention of Section 18(f) of the Investment Company Act of 1940, as
amended, and any Rules of Regulations thereunder. Redemption prices shall be
paid exclusively out of the assets of the series whose shares are being
redeemed.</#> its discretion may determine to grant.
<#>Notwithstanding the foregoing, the Corporation may postpone payment of
the redemption price and may suspend the right of the holders of shares of any
class or series to require the Corporation to redeem shares of that class or
series during any period or at any time when and to the extent permissible under
the Investment Act of 1940, as amended, or any rule or order thereunder.</#>
Appendix A-11
<PAGE>
(9) All persons who shall acquire stock in the Corporation shall acquire the
same subject to the provisions of the Charter of the Corporation and the By-Laws
of the Corporation, as from time to time amended or supplemented.
<#>The net asset value of a share of any class or series of Common Stock of
the Corporation shall be determined in accordance with applicable laws and
regulations and under the supervision of such persons and at such time or times
as shall from time to time be prescribed by the Board of Directors.</#>
(10) The Corporation may issue, sell, redeem, repurchase and otherwise deal
in and with shares of its stock in fractional denominations and such fractional
denominations shall, for all purposes, be shares of <#>common stock</#> Common
Shares having proportionately to the respective fractions represented thereby
all the rights of whole shares, including without limitation, the right to vote,
the right to receive dividends <#>and distributions,</#> and the right to
participate upon liquidation of the Corporation; provided that the issue of
shares in fractional denominations shall be limited to such <#>transaction</#>
transactions and be made upon such terms as may be fixed by or under authority
of the By-Laws.
(11) The Corporation shall not be obligated to issue certificates
representing shares of any class or series unless it shall receive a written
request therefor from the record holder thereof in accordance with procedures
established in the By-Laws or by the Board of Directors.
(12) The Board of Directors of the Corporation shall have the final decision
upon questions concerning the method of computing net asset value, valuation of
assets, procedure in repurchase, and other matters in connection with placing in
effect the offering price and repurchase of the Corporation's Common Shares.
ARTICLE VI
PREEMPTIVE RIGHTS
No stockholder of the Corporation of any class or series <#>or class,</#>
whether now or hereafter authorized, shall have any preemptive or preferential
or other right of purchase of or subscription to any shares of any class or
series of stock, or securities <#>covertible</#> convertible into, exchangeable
for or evidencing the right to purchase stock of any class or series whatever,
whether or not the stock in question <#>be</#> is of the same class or series as
may be held by such stockholders, and whether now or hereafter authorized and
whether issued for cash, property, services or otherwise, other than such, if
any, as the Board of Directors in its discretion may from time to time fix.
Appendix A-12
<PAGE>
ARTICLE VII
NUMBER AND POWERS OF DIRECTORS
(1) The number of directors of the Corporation shall be <#>three (3) or</#>
such <#>other</#> number, not less than <#>five (5)</#> three (3), as may
<#>from time to time</#> be specified in or fixed in the manner prescribed by
the By-Laws of the Corporation. <#>The</#> Until a different number is fixed as
provided by the By-Laws, the Corporation shall have nine (9) directors. Unless
otherwise provided by the By-Laws of the Corporation, <#>shall also specify the
number of directors which shall be necessary to and shall constitute a quorum;
provided, however, that in no case shall a quorum be less than one third (1/3)
of the total number of directors or less than two (2) directors. Unless
otherwise provided by the by laws of the corporation,</#> directors need not be
stockholders thereof.
(2) The names of the current directors who shall act until their successors
are duly chosen <#>and qualify</#> are:
Ernest S. Barratt
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
(3) So long as permitted by Maryland law and by the '40 Act, directors
elected at a meeting of shareholders shall not have a specified term and shall
serve until their successors are elected and qualified. Cumulative voting in the
election of directors is prohibited.
(4) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance <#>form</#> from time to time of shares of capital stock,
whether now or hereafter authorized, for such consideration as the Board of
Directors may deem advisable, subject to such limitations as may be set forth in
the Charter or the By-Laws of the Corporation or in the Maryland General
Corporation Law or in the '40 Act.
(5) Each Director and each officer of the Corporation shall be indemnified
by the Corporation to the <#>full</#> fullest extent permitted by the Maryland
General Corporation Law and the By-Laws of the Corporation, as such Law and
By-Laws may now or in the future <#>may</#> be in effect, subject only to such
limitations as may be required by the <#>Investment Company Act of 1940, as
amended</#> '40 Act.
Appendix A-13
<PAGE>
(6) The Board of Directors of the Corporation may make, alter or repeal from
time to time any of the By-Laws of the Corporation except any particular By-Law
which is specified as not subject to alteration or repeal by the Board of
Directors.
(7) The Corporation may employ such custodian or custodians for the
safekeeping of the property of the Corporation and of its shares, such dividend
disbursing agent or agents, and such transfer agents or agents and registrar or
registrars for its shares, and may make and perform such contracts for the
aforesaid purposes as in the opinion of the Board of Directors of this
Corporation may be reasonable, necessary, or proper for the conduct of the
affairs of the Corporation, and may pay the fees and disbursements of such
custodians, dividend disbursing agents, transfer agents, and registrars out of
the income and/or any other property of the Corporation. Notwithstanding any
other provisions of these Articles of Incorporation or the By-Laws of the
Corporation, the Board of Directors may cause any or all of the property of the
Corporation to be transferred or to be acquired and held in the name of a
custodian so appointed or in the name of any nominee or nominees of this
Corporation or nominee or nominees of such custodian satisfactory to the said
Board of Directors.
(8) The Corporation may enter into a written contract or contracts with any
person, including any firm, corporation, trust or association in which any
officer, other employee, director or stockholder of <#>this</#> the Corporation
may be interested, providing for a delegation of the management of all or part
of <#>this</#> the Corporation's securities portfolio and also for the
delegation of the performance of administrative corporate functions, subject
always to the direction of the Board of Directors. The compensation payable by
the Corporation under such contracts shall be such as is deemed fair and
equitable to both parties by the said Board of Directors. Any such contracts
shall in all respects be consistent with and subject to the requirements of the
<#>Investment Company Act of 1940 as then in effect and regulations of the
Securities and Exchange Commission (or any succeeding governmental authority)
promulgated thereunder</#> '40 Act.
ARTICLE VIII
STOCKHOLDER VOTE
Notwithstanding any provisions of Maryland law requiring <#>a greater
proportion</#> the affirmative vote of more than a majority of the votes of all
classes or of any class of stock entitled to be cast, to take or authorize any
action, the Corporation, if permitted by the <#>Investment Company Act of
1940</#> '40 Act, may take or authorize any such action upon the concurrence of
a majority of the aggregate number of the votes entitled to be cast thereon.
Appendix A-14
<PAGE>
Without intending any limitation of the foregoing sentence, such majority
approval shall be sufficient, valid and effective, after due authorization,
approval and/or other action by the Board of Directors, as required by law, to
approve and authorize the following acts of the Corporation:
(a) the amendment of the Charter of the Corporation;
(b) the consolidation of the Corporation with one or more corporations
to form a new consolidated corporation;
(c) the merger of the Corporation into another corporation or the merger
of one or more other corporations into the Corporation;
(d) the sale, lease, exchange or other transfer of all, or substantially
all, of the property and assets of the Corporation, including its goodwill
and franchises;
(e) the participation by the Corporation in a share exchange (as defined
by applicable Maryland laws) as the Corporation the stock of which is to be
acquired;
(f) the voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation.
ARTICLE IX
LIMITATION OF DIRECTORS AND OFFICERS LIABILITY
The personal liability of the Corporation's directors and officers to the
Corporation or to its stockholders shall be limited to the fullest extent
permitted by the Maryland General Corporation Law. In particular, but without
limiting in any way the preceding sentence, directors and officers of the
Corporation shall not be personally liable to the Corporation or to its
stockholders for monetary damages arising out of any act or omission in their
capacity as director or officer, except:
(1) To the extent that it is proved that a director or officer actually
received an improper benefit or profit in money, property, or services, such
director or officer shall believable to the corporation for the amount of
the benefit or profit in money, property, or services actually received; or
(2) To the extent that a judgment or other final adjudication adverse to
a director or officer is entered in a proceeding based on a finding in the
proceeding that such director's or officer's action, or failure to act, was
the result of active and deliberate dishonesty and was material to the cause
of action adjudicated in the proceeding.
Appendix A-15
<PAGE>
ARTICLE X <#>ARTICLE IX</#>
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
<#>article x</#>
<#>Amendment</#>
<#>The Corporation reserves the right from time to time to make any
amendment of its Articles of Incorporation now or hereafter authorized by law,
including any amendment which alters the contract rights, as expressly set forth
in its Articles of Incorporation, of any outstanding Common Shares by
classification, reclassification or otherwise, but no such amendment which
changes such terms or contract rights of any of its outstanding stock shall be
valid unless such amendment shall have been authorized by not less than a
majority of the aggregate number of the votes entitled to be cast thereon, by a
vote at a meeting or in writing with or without a meeting.</#>
Appendix A-16
<PAGE>
APPENDIX B
Current and Proposed Fundamental Restrictions
<TABLE>
EXISTING FUNDAMENTAL RESTRICTIONS PROPOSED FUNDAMENTAL RESTRICTIONS
<S> <C> <C>
Issuer Diversification A Portfolio will not purchase securities The Series, with respect to 75% of the Series'
Proposal 3(a) (including commercial paper) of any issuer if such total assets, may not purchase securities of an
purchase would at that time (i) cause more than issuer (other than cash or cash items, or
5% of the value of the individual Portfolio's securities of the U.S. Government, its agencies,
total assets to be invested in securities of any or instrumentalities or of other investment
one issuer other than the U.S. Government or its companies), if (i) such purchase would cause more
corporate instrumentalities or (ii) cause the than 5% of the Series' total assets taken at
Portfolio to own more than 10% of the outstanding market value to be invested in the securities of
voting securities of any issuer. such issuer, or (ii) such purchase would at the
time result in more than 10% of the outstanding
voting securities of such issuer being held by the
Series.
Industry Concentration A Portfolio will not concentrate its investments The Series may not invest 25% or more of its total
Proposal 3(b) in any one industry by investment of more than 25% assets in the securities of one or more issuers
of the value of its total assets in such industry. conducting their principal business activities in
the same industry (excluding the U.S. Government
or any of its agencies or instrumentalities).
</TABLE>
Appendix B-1
<PAGE>
<TABLE>
EXISTING FUNDAMENTAL RESTRICTIONS PROPOSED FUNDAMENTAL RESTRICTIONS
<S> <C> <C>
Borrowing and Margin A Portfolio will not borrow money. The Series may not borrow money, except (a) the
Transactions A Portfolio will not engage in margin transactions Series may borrow from banks (as defined in the
Proposal 3(c) or arbitrage. Act) or through reverse repurchase agreements in
amounts up to 33 1/3% of its total assets
(including the amount borrowed), (b) the
Series may, to the extent permitted by applicable
law, borrow up to an additional 5% of its total
assets for temporary purposes, (c) the Series may
obtain such short-term credits as may be necessary
for the clearance of purchases and sales of
portfolio securities, (d) the Series may purchase
securities on margin to the extent permitted by
applicable law, and (e) the Series may engage in
transactions in mortgage dollar rolls which are
accounted for as financings.
</TABLE>
Appendix B-2
<PAGE>
<TABLE>
EXISTING FUNDAMENTAL RESTRICTIONS PROPOSED FUNDAMENTAL RESTRICTIONS
<S> <C> <C>
Loan Restriction A Portfolio will not lend money, and the Money The Series may not make loans, except through
Proposal 3(d) Market Portfolio will not lend securities except (a) the purchase of debt obligations in
that the Portfolio may purchase obligations accordance with the Series' investment objective
subject to repurchase agreements. The purchase of and policies, (b) repurchase agreements with
publicly held debt securities is not considered banks, brokers, dealers, and other financial
lending money for the purpose of this restriction. institutions, and (c) loans of securities as
permitted by applicable law.
Underwriting Restriction A Portfolio will not underwrite securities of The Series may not underwrite securities issued by
Proposal 3(e) other issuers, except where the Company may be others, except to the extent that the sale of
deemed to be a statutory underwriter for purposes portfolio securities by the Series may be deemed
of certain federal securities laws in connections to be an underwriting.
with the disposition of portfolio securities,
restricted securities or not readily marketable
securities.
</TABLE>
Appendix B-3
<PAGE>
<TABLE>
EXISTING FUNDAMENTAL RESTRICTIONS PROPOSED FUNDAMENTAL RESTRICTIONS
<S> <C> <C>
Real Estate Proposal 3(f) A Portfolio will not buy or sell real estate The Series may not purchase, hold or deal in real
although a Portfolio may invest in the securities estate, although the Series may purchase and sell
of real estate investment trusts. securities that are secured by real estate or
interests therein, securities of real estate
investment trusts, and mortgage-related securities
and may hold and sell real estate acquired by the
Series as a result of the ownership of securities.
Oil and Gas A Portfolio will not invest in oil, gas or other N/A
Proposal 3(g) mineral leases, rights on royalty contracts or in
real estate or real estate limited partnerships.
Commodities A Portfolio will not purchase or sell commodities The Series may not invest in commodities or
Proposal 3 (h) or commodity contracts. commodity contracts, except that the Series may
invest in currency and financial instruments and
contracts that are commodities or commodity
contracts.
</TABLE>
Appendix B-4
<PAGE>
<TABLE>
EXISTING FUNDAMENTAL RESTRICTIONS PROPOSED FUNDAMENTAL RESTRICTIONS
<S> <C> <C>
Senior Securities A Portfolio will not issue senior securities, The Series may not issue senior securities to the
Proposal 3(i) except as permitted by sections 18(f) and (g) and extent such issuance would violate applicable law.
the rules thereunder of the Investment Company Act
of 1940.
Short Sales of Securities A Portfolio will not make short sales of N/A
Proposal 3(j) securities.
Exercise Control or A Portfolio will not invest in companies for the N/A
Management purpose of exercising management or control.
Proposal 3(k)
</TABLE>
Appendix B-5
<PAGE>
<TABLE>
EXISTING FUNDAMENTAL RESTRICTIONS PROPOSED FUNDAMENTAL RESTRICTIONS
<S> <C> <C>
Investment in other A Portfolio will not invest more than 5% of the N/A
Investment Companies value of its total assets in any closed-end
Proposal 3(l) investment company and will not hold more than 3%
of the outstanding voting stock of any closed-end
investment company.
A Portfolio 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.
Restricted Securities A Portfolio will not invest more than 5% of the N/A
Proposal 3(m) value of its total assets in securities which are
not readily marketable including restricted
securities.
Continuous Operation A Portfolio will not invest more than 5% of the N/A
Proposal 3(n) value of its total assets in securities of
companies having a record of less than three years
continuous operations
</TABLE>
Appendix B-6
<PAGE>
<TABLE>
EXISTING FUNDAMENTAL RESTRICTIONS PROPOSED FUNDAMENTAL RESTRICTIONS
<S> <C> <C>
Officer, Director, A Portfolio will not purchase or retain securities N/A
Portfolio Manager of any issuer if any officer or director of the
Ownership Fund or of its investment manager own individually
Proposal 3(o) 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.
Purchases from or Sales A Portfolio will not purchase from or sell to any N/A
to Officers or Directors officer or director of the Fund or its investment
of Fund or its Portfolio manager any securities other than shares of the
Manager capital stock of the Portfolio.
Proposal 3(p)
</TABLE>
Appendix B-7
<PAGE>
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
SPECIAL SHAREHOLDERS' MEETING ON APRIL 13, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
-Please fold and detach card at perforation before mailing-
PORTFOLIO NAME PRINTS HERE
The undersigned hereby appoints EDWIN K. NOLAN and MICHAEL W. McCROSKEY, and
each of them, as proxies with full power of substitution, and hereby
authorizes each of them to represent and to vote, as designated on the reverse
side, all the shares of the American National Investment Accounts, Inc., for
the above referenced Portfolio, that the undersigned is entitled to vote at
the special meeting of shareholders to be held in Galveston, Texas, on
Thursday, April 13, 2000, and at any postponement or adjournment thereof for
each of the Proposals contained in the Proxy Statement.
You are encouraged to specify your choices by marking the appropriate boxes
by each Proposal presented. You need not mark any boxes if you wish to vote
in accordance with the Board of Directors' recommendations. If you sign this
form without checking a box with respect to any proposal listed, the timely
return of this Proxy Voting Ballot will be deemed an instruction to vote in
favor of the proposals. The named proxies cannot vote your shares unless you
sign and return this Proxy Voting Ballot in the envelope provided. In their
discretion, the named proxies will vote on such other business as is properly
brought before the meeting and any adjournment or adjournments thereof.
I hereby revoke any and all proxies with
respect to shares of the Portfolio heretofore given
by me. I acknowledge receipt of the proxy
statement dated March 15, 2000. THIS PROXY VOTING
BALLOT MAY BE REVOKED AT ANY TIME PRIOR TO THE
MEETING BY NOTIFYING THE SECRETARY OF THE FUND IN
WRITING.
Date , 2000
-------------------------
---------------------------------------------------
---------------------------------------------------
Signature(s) (Title(s), if applicable)
Note: Please sign exactly as your name or names
appear on the Proxy Voting Ballot. Joint owners
must each sign. When signing as a fiduciary (i.e.
attorney, executor, administrator, trustee, or
guardian), give the full title as to the capacity
in which you are signing.
<PAGE>
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
SPECIAL SHAREHOLDERS' MEETING ON APRIL 13, 2000
-Please fold and detach card at perforation before mailing-
VOTING INSTRUCTION CARD
FUND NAME PRINTS HERE AMERICAN NATIONAL INSURANCE COMPANY
THESE VOTING INSTRUCTIONS ARE REQUESTED BY THE ABOVE-NAMED INSURANCE COMPANY
IN CONNECTION WITH A SOLICITATION OF PROXIES BY THE TRUSTEES OF AMERICAN
NATIONAL INVESTMENT ACCOUNTS, INC. FOR THE SPECIAL MEETING OF SHAREHOLDERS TO
BE HELD ON APRIL 13, 2000.
This Voting Instruction Card, if properly executed, will be voted by your
insurance company in the manner directed by you. If this voting instruction
card is executed and no direction is made, this voting instruction card will
be voted FOR all proposal(s) and, in the discretion of the insurance company,
upon such other business as may properly come before the Special Meeting.
By signing below, I instruct the insurance company to vote the shares of the
above-named Fund related to my contract at the Special Meeting of
Shareholders to be held in Galveston, Texas on Thursday, April 13, 2000 and
at any adjournments of the Special Meeting as indicated on the reverse side.
DATE
----------------------
-----------------------------
-----------------------------
Signature(s)
If a contract is held jointly,
each contract owner should
sign. If only one signs, it
will be binding. If a contract
owner is a business entity,
please indicate the title of
the person signing.
<PAGE>
YOUR VOTE IS IMPORTANT TO US
THANK YOU FOR TAKING THE TIME TO VOTE THIS PROXY BALLOT!!!
-Please fold and detach card at perforation before mailing-
<TABLE>
<S><C>
VOTE ON PROPOSALS (The Board of Directors recommends a vote FOR items 1, 2, and 3.) FOR AGAINST ABSTAIN
ALL ALL ALL
1. To ratify appointment of Tait, Weller & Baker as independent auditors for the Fund. / / / / / /
/ / / / / /
2. To approve certain amendments to the Fund's Articles of Incorporation.
3. To approve amending, restating or eliminating the Portfolio's fundamental investment
restrictions as described in Proposal 3 of the Proxy Statement:
STOP HERE AND SIGN ON THE REVERSE SIDE, AS DIRECTED UNLESS YOU WOULD LIKE TO VOTE ON
EACH ELEMENT OF PROPOSAL 3 INDIVIDUALLY.
A VOTE "FOR THE ENTIRE SLATE OF PROPOSAL 3 IN THE AGGREGATE COUNTS AS A VOTE "FOR" EACH
PROPOSED ELEMENT, REGARDLESS OF WHETHER YOU VOTE ON AN ELEMENT OF PROPOSAL 3 INDIVIDUALLY.
3(a). Issuer Diversification: 3(h). Commodities: 3(n). Investments in Companies FOR AGAINST ABSTAIN
3(b). Industry Concentration: 3(i). Senior Securities: Based on Company's Years ALL ALL ALL
3(c). Borrowing, Margin Transactions 3(j). Short Sales of Securities: In Continuous Operation: / / / / / /
and Arbitrage: 3(k). Investing to Exercise 3(o). Purchasing Securities in
3(d). Loan Restriction: Control or Management: Which Certain Affiliated
3(e). Underwriting Restriction: 3(l). Investing in Other Investment Persons Also Invest:
3(f). Real Estate Investments: Companies: 3(p). Sales and Purchases from
3(g). Oil and Gas: 3(m). Investment in Restricted or to Officers, Directors
Securities: and Investment Manager:
</TABLE>
IF YOU DO NOT WISH TO APPROVE A PARTICULAR INVESTMENT POLICY CHANGE APPLICABLE
TO YOUR PORTFOLIO, WRITE THE LETTER(S) OF THE SUB-PROPOSAL ON THE LINE BELOW.
- -------------------------------------------------------------------------------
4. To act on such other matters as may properly come before the meeting or any
adjournment thereof.
