<PAGE> PAGE 1
000 B000000 08/31/95
000 C000000 0000881166
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 SM&R CAPITAL FUNDS, INC
001 B000000 811-6477
001 C000000 4097632767
002 A000000 ONE MOODY PLAZA
002 B000000 GALVESTON
002 C000000 TX
002 D010000 77550
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 Y
007 B000000 3
007 C010100 1
007 C020100 GOVERNMENT INCOME FUND SERIES
007 C030100 N
007 C010200 2
007 C020200 PRIMARY FUND SERIES
007 C030200 N
007 C010300 3
007 C020300 TAX FREE FUND SERIES
007 C030300 N
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
008 B00AA01 A
008 C00AA01 801-8002
008 D01AA01 GALVESTON
008 D02AA01 TX
008 D03AA01 77550
010 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
010 C01AA01 GALVESTON
010 C02AA01 TX
010 C03AA01 77550
012 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
012 B00AA01 84-00749
012 C01AA01 GALVESTON
<PAGE> PAGE 2
012 C02AA01 TX
012 C03AA01 77550
013 A00AA01 KPMG PEAT MARWICK
013 B01AA01 HOUSTON
013 B02AA01 TX
013 B03AA01 77210
013 B04AA01 4545
014 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
014 B00AA01 8-12745
015 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
015 B00AA01 C
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015 C03AA01 77550
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<PAGE> PAGE 3
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<PAGE> PAGE 4
055 A00AA00 N
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<PAGE> PAGE 5
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<PAGE> PAGE 6
049 000100 N
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<PAGE> PAGE 7
070 G010100 N
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
070 A010200 Y
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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028 A010300 15
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034 000300 N
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039 000300 Y
<PAGE> PAGE 14
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041 000300 N
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050 000300 N
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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SIGNATURE BRENDA T. KOELEMAY
TITLE VP/TREASURER
[DESCRIPTION] ACCOUNTANT'S REPORT ON INTERNAL CONTROL
Independent Auditors Report on Internal Control and Consent
The Board of Directors
SM&R Capital Funds, Inc.
In planning and performing our audit of the financial statements of SM&R Capital
Funds, Inc. for the year ended August 31, 1995, we considered its internal
control structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on the internal control structure.
The management of SM&R Capital Funds, Inc. is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that trans-
actions are executed in accordance with managements authorization and recorded
properly to permit preparation of financial statements in conformity with
generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
August 31, 1995.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
We consent to the use of this report in connection with the filing of the report
of SM&R Capital Funds, Inc. with the Securities and Exchange Commission on
Form N-SAR.
KPMG Peat Marwick LLP
Houston, Texas
October 16, 1995
[ARTICLE] 6
[CIK] 0000881166
[NAME] SM&R CAPITAL FUNDS, INC.
[SERIES]
[NUMBER] 01
[NAME] GOVERNMENT INCOME FUND SERIES
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] AUG-31-1995
[PERIOD-END] AUG-31-1995
[INVESTMENTS-AT-COST] 19,242,424
[INVESTMENTS-AT-VALUE] 20,251,525
[RECEIVABLES] 164,652
[ASSETS-OTHER] 10,627
[OTHER-ITEMS-ASSETS] 71,010
[TOTAL-ASSETS] 20,497,814
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 32,005
[TOTAL-LIABILITIES] 32,005
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 20,140,309
[SHARES-COMMON-STOCK] 1,946,741
[SHARES-COMMON-PRIOR] 1,965,669
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (353,200)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 678,700
[NET-ASSETS] 20,465,809
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 1,462,303
[OTHER-INCOME] 0
[EXPENSES-NET] 134,412
[NET-INVESTMENT-INCOME] 1,327,891
[REALIZED-GAINS-CURRENT] (10,778)
[APPREC-INCREASE-CURRENT] 823,605
[NET-CHANGE-FROM-OPS] 2,140,718
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1,327,891
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 170,678
[NUMBER-OF-SHARES-REDEEMED] 304,466
[SHARES-REINVESTED] 114,860
[NET-CHANGE-IN-ASSETS] 675,714
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (342,422)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 96,210
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 203,823
[AVERAGE-NET-ASSETS] 19,246,069
[PER-SHARE-NAV-BEGIN] 10.07
[PER-SHARE-NII] .70
[PER-SHARE-GAIN-APPREC] .44
[PER-SHARE-DIVIDEND] .70
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.51
[EXPENSE-RATIO] .70<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.06% for the year ended August 31, 1995.
</FN>
</TABLE>
[ARTICLE] 6
[CIK] 0000881166
[NAME] SM&R CAPITAL FUNDS, INC.
[SERIES]
[NUMBER] 02
[NAME] PRIMARY FUND SERIES
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] AUG-31-1995
[PERIOD-END] AUG-31-1995
[INVESTMENTS-AT-COST] 20,913,842
[INVESTMENTS-AT-VALUE] 20,913,842
[RECEIVABLES] 54,863
[ASSETS-OTHER] 591
[OTHER-ITEMS-ASSETS] 66,948
[TOTAL-ASSETS] 21,036,244
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 51,968
[TOTAL-LIABILITIES] 51,968
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 20,990,031
[SHARES-COMMON-STOCK] 20,990,035
[SHARES-COMMON-PRIOR] 15,211,965
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (5,755)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 20,984,276
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 940,824
[OTHER-INCOME] 0
[EXPENSES-NET] 137,463
[NET-INVESTMENT-INCOME] 803,361
[REALIZED-GAINS-CURRENT] (9)
[APPREC-INCREASE-CURRENT] (1,522)
[NET-CHANGE-FROM-OPS] 801,830
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 803,361
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 19,960,125
[NUMBER-OF-SHARES-REDEEMED] 15,015,405
[SHARES-REINVESTED] 833,350
[NET-CHANGE-IN-ASSETS] 5,776,535
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (5,746)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 81,835
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 198,562
[AVERAGE-NET-ASSETS] 16,374,479
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] .05
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .05
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .84<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.21% for the year ended August 31, 1995.
</FN>
</TABLE>
[ARTICLE] 6
[CIK] 0000081166
[NAME] SM&R CAPITAL FUNDS, INC.
[SERIES]
[NUMBER] 03
[NAME] TAX FREE FUND SERIES
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] AUG-31-1995
[PERIOD-END] AUG-31-1995
[INVESTMENTS-AT-COST] 8,208,779
[INVESTMENTS-AT-VALUE] 8,263,411
[RECEIVABLES] 127,493
[ASSETS-OTHER] 14,700
[OTHER-ITEMS-ASSETS] 15,631
[TOTAL-ASSETS] 8,421,235
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 22,119
[TOTAL-LIABILITIES] 22,119
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 8,394,092
[SHARES-COMMON-STOCK] 844,414
[SHARES-COMMON-PRIOR] 758,510
[ACCUMULATED-NII-CURRENT] 2,218
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (51,826)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 54,632
[NET-ASSETS] 8,399,116
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 417,823
[OTHER-INCOME] 0
[EXPENSES-NET] 0
[NET-INVESTMENT-INCOME] 417,823
[REALIZED-GAINS-CURRENT] (34,685)
[APPREC-INCREASE-CURRENT] 316,014
[NET-CHANGE-FROM-OPS] 699,152
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 415,605
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 60,669
[NUMBER-OF-SHARES-REDEEMED] 19,738
[SHARES-REINVESTED] 44,973
[NET-CHANGE-IN-ASSETS] 1,103,730
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (17,141)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 38,447
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 96,087
[AVERAGE-NET-ASSETS] 7,692,452
[PER-SHARE-NAV-BEGIN] 9.62
[PER-SHARE-NII] .51
[PER-SHARE-GAIN-APPREC] .33
[PER-SHARE-DIVIDEND] .51
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.95
[EXPENSE-RATIO] 0<F1>
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.25% for the year ended August 31, 1995.
</FN>
</TABLE>
