<PAGE> PAGE 1
000 A000000 02/28/97
000 C000000 0000881166
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001 A000000 SM&R CAPITAL FUNDS, INC
001 B000000 811-6477
001 C000000 4097632767
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002 B000000 GALVESTON
002 C000000 TX
002 D010000 77550
003 000000 N
004 000000 N
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008 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
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010 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
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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 LLP
013 B01AA01 HOUSTON
013 B02AA01 TX
013 B03AA01 77002
014 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
014 B00AA01 8-12745
015 A00AA01 SECURITIES MANAGEMENT AND RESEARCH, INC.
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022 A000001 MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
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022 A000004 FIRST BOSTON CO. (THE)
022 B000004 13-5659485
022 C000004 22487
022 D000004 19409
022 A000005 J. M. LUMMIS & CO.
022 B000005 06-0909285
022 C000005 15721
022 D000005 14489
022 A000006 GOLDMAN, SACHS & CO.
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<PAGE> PAGE 3
022 C000006 12434
022 D000006 13558
022 A000007 FIRST CHICAGO CAPITAL MARKETS, INC.
022 B000007 36-3595942
022 C000007 1485
022 D000007 2528
022 A000008 FIRST SOUTHWEST CO.
022 B000008 75-0708002
022 C000008 1407
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022 A000009 DONALDSON LUFKIN & JENRETTE
022 B000009 13-2741729
022 C000009 1098
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022 A000010 ABN AMRRO CHICAGO CORP.
022 B000010 13-3227945
022 C000010 1750
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
063 B000100 9.4
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<PAGE> PAGE 7
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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
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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SIGNATURE BRENDA T. KOELEMAY
TITLE VP/TREASURER
[ARTICLE] 6
[CIK] 0000881166
[NAME] SM&R CAPITAL FUNDS, INC.
[SERIES]
[NUMBER] 01
[NAME] GOVERNMENT INCOME FUND SERIES
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] AUG-31-1997
[PERIOD-END] FEB-28-1997
[INVESTMENTS-AT-COST] 22672247
[INVESTMENTS-AT-VALUE] 23003096
[RECEIVABLES] 226349
[ASSETS-OTHER] 40480
[OTHER-ITEMS-ASSETS] 3995
[TOTAL-ASSETS] 23273920
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 129605
[TOTAL-LIABILITIES] 129605
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 23186309
[SHARES-COMMON-STOCK] 2239715
[SHARES-COMMON-PRIOR] 2082877
[ACCUMULATED-NII-CURRENT] 1250
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (374093)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 330849
[NET-ASSETS] 23144315
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 779102
[OTHER-INCOME] 0
[EXPENSES-NET] 108564
[NET-INVESTMENT-INCOME] 670538
[REALIZED-GAINS-CURRENT] (3449)
[APPREC-INCREASE-CURRENT] 393175
[NET-CHANGE-FROM-OPS] 1060264
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 669319
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 201896
[NUMBER-OF-SHARES-REDEEMED] 107118
[SHARES-REINVESTED] 62060
[NET-CHANGE-IN-ASSETS] 2016850
[ACCUMULATED-NII-PRIOR] 31
[ACCUMULATED-GAINS-PRIOR] (370644)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 54282
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 115977
[AVERAGE-NET-ASSETS] 21926320
[PER-SHARE-NAV-BEGIN] 10.14
[PER-SHARE-NII] 0.32
[PER-SHARE-GAIN-APPREC] 0.19
[PER-SHARE-DIVIDEND] 0.32
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.33
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0<F1>
<FN>
<F1>Expenses for the calculation are net of reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.07% (annualized) for the six months
ended February 28, 1997.
</FN>
</TABLE>
[ARTICLE] 6
[CIK] 0000881166
[NAME] SM&R CAPTIAL FUNDS, INC.
[SERIES]
[NUMBER] 02
[NAME] PRIMARY FUND SERIES
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] AUG-31-1997
[PERIOD-END] FEB-28-1997
[INVESTMENTS-AT-COST] 31541969
[INVESTMENTS-AT-VALUE] 31541969
[RECEIVABLES] 4935
[ASSETS-OTHER] 17899
[OTHER-ITEMS-ASSETS] 2782
[TOTAL-ASSETS] 31567585
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 173294
[TOTAL-LIABILITIES] 173294
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 31400046
[SHARES-COMMON-STOCK] 31399998
[SHARES-COMMON-PRIOR] 37470797
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (5755)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 31394291
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 1023891
[OTHER-INCOME] 0
[EXPENSES-NET] 147172
[NET-INVESTMENT-INCOME] 876719
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 876719
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 876653
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 24462531
[NUMBER-OF-SHARES-REDEEMED] 31328243
[SHARES-REINVESTED] 794913
[NET-CHANGE-IN-ASSETS] (6070733)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (5755)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 92023
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 182756
[AVERAGE-NET-ASSETS] 37094494
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] 0.02
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] 0.02
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] 0.80
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0<F1>
<FN>
<F1>Expenses for the calculation are net of a reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.00% (annualized) for the six months
ended February 28, 1997.
</FN>
</TABLE>
[ARTICLE] 6
[CIK] 0000881166
[NAME] SM&R CAPTIAL FUNDS, INC.
[SERIES]
[NUMBER] 03
[NAME] TAX FREE FUND SERIES
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] AUG-31-1997
[PERIOD-END] FEB-28-1997
[INVESTMENTS-AT-COST] 9986632
[INVESTMENTS-AT-VALUE] 10196189
[RECEIVABLES] 131489
[ASSETS-OTHER] 38174
[OTHER-ITEMS-ASSETS] 4051
[TOTAL-ASSETS] 10369903
[PAYABLE-FOR-SECURITIES] 299793
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 60115
[TOTAL-LIABILITIES] 359908
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 9866710
[SHARES-COMMON-STOCK] 988790
[SHARES-COMMON-PRIOR] 920950
[ACCUMULATED-NII-CURRENT] 2250
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (68522)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 209557
[NET-ASSETS] 10009995
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 258988
[OTHER-INCOME] 0
[EXPENSES-NET] 15420
[NET-INVESTMENT-INCOME] 243568
[REALIZED-GAINS-CURRENT] (5681)
[APPREC-INCREASE-CURRENT] 185041
[NET-CHANGE-FROM-OPS] 422928
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 243535
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 49590
[NUMBER-OF-SHARES-REDEEMED] 6379
[SHARES-REINVESTED] 24629
[NET-CHANGE-IN-ASSETS] 861798
[ACCUMULATED-NII-PRIOR] 2217
[ACCUMULATED-GAINS-PRIOR] (62841)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 24119
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 58345
[AVERAGE-NET-ASSETS] 9739024
[PER-SHARE-NAV-BEGIN] 9.93
[PER-SHARE-NII] 0.25
[PER-SHARE-GAIN-APPREC] 0.19
[PER-SHARE-DIVIDEND] 0.25
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.12
[EXPENSE-RATIO] 0.32
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0<F1>
<FN>
<F1>Expenses for the calculation are net of reimbursement from Securities
Management & Research, Inc. Without this reimbursement, the ratio of expenses
to average net assets would have been 1.20% (annualized) for the six months
ended February 28, 1997.
</FN>
</TABLE>
