<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
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SM&R CAPITAL FUNDS, INC.
[Name of Registrant as Specified In Its Charter]
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Teresa E. Axelson Jerry L. Adams
One Moody Plaza With Copy To: Greer, Herz & Adams, L.L.P.
Galveston, Texas 77550 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
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SM&R CAPITAL FUNDS, INC
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ONE MOODY PLAZA (409) 763-2767 GALVESTON, TEXAS 77550
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 20, 1997
To the Stockholders of SM&R Capital Funds, Inc.:
NOTICE IS HEREBY GIVEN THAT a Special Meeting (the "Special Meeting") of
the Stockholders of SM&R Capital Funds, Inc. (the "Fund") will be held at the
principal executive offices of the Fund and of Securities Management and
Research, Inc., One Moody Plaza, 17th Floor, Galveston, Texas 77550, on November
20, 1997, at 8:30 a.m. Central Time, for the following purposes:
1. To elect a board of nine (9) directors.
2. To act on such other matters as may properly come before the meeting or any
adjournment or adjournments thereof.
Only the stockholders of record at the close of business on October 22,
1997, 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 except to the extent required by law. A list of the Fund's
stockholders is held in the office of the Fund, One Moody Plaza, Galveston,
Texas 77550.
By Order of the Board of Directors
/s/ Teresa Axelson
Teresa E. Axelson, Secretary
October 28, 1997
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IMPORTANT
YOUR COOPERATION IS SOLICITED!
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED SO THAT A
QUORUM WILL BE PRESENT AND THE MAXIMUM NUMBER OF SHARES MAY BE VOTED. IT IS
MOST IMPORTANT AND IN YOUR INTEREST FOR YOU TO SIGN AND DATE YOUR PROXY AND
RETURN IT. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
ADDITIONALLY, A MAJORITY OF THE OUTSTANDING SHARES OF THE FUND MUST BE PRESENT
IN PERSON OR BY PROXY AT EACH MEETING.
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2
<PAGE>
PROXY STATEMENT FOR
SM&R CAPITAL FUNDS, INC.
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ONE MOODY PLAZA (409) 763-2767 GALVESTON, TEXAS 77550
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GENERAL INFORMATION
This Proxy Statement is being mailed to the stockholders of each series of
SM&R Capital Funds, Inc. (the "Fund") on or about October 28, 1997, and is
furnished in connection with solicitation of proxies by the Board of Directors
of the Fund for use at the Fund's Special Meeting of Stockholders (the "Special
Meeting") to be held on November 20, 1997, and at any adjournment of such
meeting.
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. The cost of printing and mailing this Proxy Statement, the attached
Notice and Proxy will be paid by Securities Management and Research, Inc.
("SM&R"), the Fund's underwriter and investment adviser.
The Fund is a Maryland corporation consisting of three separate series: the
American National Government Income Fund Series (the "Government Income Fund"),
the American National Primary Fund Series (the "Primary Fund") and the American
National Tax Free Fund Series (the "Tax Free Fund").
October 22, 1997 (the "Record Date") has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
Special Meeting. The Fund had 42,533,634 shares of common stock (the "Common
Stock") outstanding on the record date, consisting of 2,269,071 shares of the
Government Income Fund, 39,240,744 shares of the Primary Fund and 1,023,819
shares of the Tax Free Fund. Each share of Common Stock outstanding is entitled
to one vote, but votes may not be cumulated. A majority 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. 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.
If, as the time of the Special Meeting nears, sufficient votes for a quorum
have not been received, the officers of the Fund may make phone calls to certain
of the stockholders in order to gather enough votes for a quorum.
American National and SM&R have advised the Fund that they intend to vote
all of their shares in the same proportion as votes made by other stockholders
of the Fund, in favor of or against the nominees or proposals presented herein
or at the Special Meeting.
PROPOSAL 1. ELECTION OF DIRECTORS
The persons named as proxies intend to vote in favor of the election of the
following listed nominees as members of the Board of Directors unless authority
to vote for one or more of the nominees is specifically withheld. If, at the
time of the Special Meeting, any of the nominees for election as a director
shall be unable to serve, or are otherwise unavailable for election, the proxies
will be voted for such other persons as shall be proposed by the Board of
Directors. The Board of Directors has no reason to believe that any of the
persons nominated will become unavailable for election, and all persons
nominated have consented to serve as directors.
The directors of the Fund serve until the next annual or special meeting of
stockholders at which Directors are elected and until their successors are
elected and qualified. The information set forth below has been furnished by
each nominee.
3
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INFORMATION CONCERNING NOMINEES FOR DIRECTORS
(NAME, ADDRESS, AGE, POSITION AND OFFICES WITH THE FUND, BUSINESS EXPERIENCE IN
LAST FIVE YEARS)
ERNEST S. BARRATT (Department of Psychiatry and Behavioral Sciences, University
of Texas Medical Branch, Galveston, Texas 77550-2777)
72, Professor and Chief of Psychophysiology Laboratory, Department of
Psychiatry and Behavioral Sciences, University of Texas Medical Branch, a
medical school and hospital system, 1981 to present; Director of American
National Investment Accounts, Inc., another investment company advised by
SM&R, 1990 to present.
*MICHAEL W. MCCROSKEY (2) (One Moody Plaza, Galveston, Texas 77550)
54, President, Chief Executive Officer, Director and member of the
Executive Committee of SM&R, 1994 to present; President, Chief Executive
Officer and Director of the Fund, 1994 to present; President and Director
of the American National Growth Fund, Inc., American National Income Fund,
Inc., and Triflex Fund, Inc., also referred to as the "American National
Funds Group," 1994 to present; President and Director of American National
Investment Accounts, Inc., 1994 to present; Executive Vice President of
American National, 1972 to present; Vice President of Standard Life and
Accident Insurance Company, 1988 to present; Vice President, Investments of
American National Property and Casualty Company, 1994 to present; Vice
President, Investments of American National General Insurance Company, 1994
to present; Assistant Secretary of American National Life Insurance Company
of Texas, 1986 to present; Vice President of Investments for Garden State
Life Insurance Company, 1994 to present; Vice President, Pacific Property
and Casualty, 1996 to present, life, health and accident insurance
subsidiaries of American National; President and Director of ANREM
Corporation, 1977 to present; President and Director, ANTAC, Inc., 1995 to
present.
*ALLAN W. MATTHEWS (2) (3) (7114 Youpon, Galveston, Texas 77551)
32, Program Officer of The Moody Foundation, a charitable foundation,
April, 1991 to present; Director of the Fund, 1991 to present.
*LEA MCLEOD MATTHEWS (3) (850 E. Anderson Lane, Austin, Texas 78752)
35, Publications Editor, National Western Life Insurance Co., 1990 to
present; Associate in Customer Service Designation; Director of the Fund,
1994 to present; Director of American National Investment Accounts, Inc.,
another investment company advised by SM&R, 1994 to present; Garden State
Life Insurance Company, an insurance subsidiary of American National, 1993
to present; Director of Kids Exchange of Austin, a non-profit corporation,
1996 to present; Consultant to Austin Writers League.
*ANN MCLEOD MOODY (3) (5 Colony Park Drive, Galveston, Texas 77551)
60, Director of Moody Gardens, Inc., 1994 to present; Director of Bank of
Galveston, National Association, 1989 to present; Director of The Westcap
Corporation, 1990 to present; Director of Seal Fleet, Inc., 1972 to 1996.
EDWIN K. NOLAN (1) (#7 Mt. Lookout Drive, Canyon Lake, Texas 78133)
54, Investor and Attorney, Law Offices, Edwin K. Nolan, P. C., Canyon Lake,
Texas, 1977 to present; Director of the Fund, 1990 to present; Director and
Owner of Canyon Lake Aviation, Inc., a real estate investment company, 1986
to present; Director of Hancock Mini Mart, Inc., 1995 to present.
ROBERT V. SHATTUCK, JR. (1013 23rd Street, Galveston, Texas 77550)
56, Attorney, Law Offices of Robert V. Shattuck, Jr., Galveston, Texas.
4
<PAGE>
JAMIE G. WILLIAMS (3328 Stanford, Dallas, Texas 75225)
51, Academic Language Therapist and Educational Consultant, 1974 to
present; Director of The Learning Therapist Graduate Certificate Program,
1986 to 1995; Adult Assessment Clinic and Adolescent Academic Development
Programs, Division of Evening, Summer and Continuing Studies, Southern
Methodist University, 1994 to 1995; Adjunct Instructor in Department of
Psychology, Dedman College, Southern Methodist University, 1988 to 1995.
FRANK P. WILLIAMSON (200 University Boulevard, Galveston, Texas 77550)
65, Owner of Professional Pharmacy, 1964 to present.
(1) Member of Audit Committee
(2) Member of Nominating Committee
(3) Mr. Matthews and Ms. Matthews are children of Mrs. Ann Moody, a nominee for
Director
* "Interested Persons" as defined in the Investment Company Act of 1940. As
indicated under the business experience section of the above table, Mr.
McCroskey is President and Chief Executive Officer and a director of SM&R. Mr.
Matthews, Ms. Matthews and Mrs. Moody are members of the immediate family of
Robert L. Moody. See "Stock Ownership of Certain Beneficial Owners and Officers
and Directors" below.
ORGANIZATION OF THE BOARD
The Board of Directors maintains two Committees: the Nominating Committee
and the Audit Committee. The Nominating Committee is responsible for making
recommendations to the Board of Directors as to the selection of nominees for
Directors. In performing these functions, the committee will consider nominees
recommended by stockholders. Stockholder recommendations should be submitted,
in writing, to the Secretary of the Fund and should include a description of the
proposed nominee's qualifications, other relevant biographical data and an
indication of the willingness of the proposed nominee to serve if nominated and
elected. Brent E. Masel, M.D., Allan W. Matthews and Michael W. McCroskey are
the present members of the Nominating Committee. No meetings of the Nominating
Committee were held during the fiscal year ended August 31, 1997.
The Audit Committee is responsible for making recommendations to the Board
of Directors as to the selection and appointment of and compensation to the
Fund's independent auditors, to review the scope and results of audits made by
such independent auditors, to make recommendations to the Board as to the scope
of future audits, to inquire into, review and make recommendations with respect
to the adequacy of the Fund's accounting and financial controls, and to
otherwise assure effective communication between such auditors and the Board of
Directors as a whole. Brent E. Masel, M.D. and Edwin K. Nolan are the present
members of the Audit Committee. One meeting of the Audit Committee was held
during the fiscal year ended August 31, 1997. Both committee members were in
attendance at that meeting.
The Fund held four (4) meetings of its Board of Directors during the fiscal
year ended August 31, 1997. All of the directors were in attendance at all
meetings, except Shannon Moody who was absent from two (2) of the four (4)
meetings.
5
<PAGE>
EXECUTIVE OFFICERS
The following information is given with respect to each of the Fund's
executive officers and portfolio managers who are not directors:
TERESA E. AXELSON (One Moody Plaza, Galveston, Texas 77550)
49, Vice President and Secretary of the Fund; Vice President and Secretary
of SM&R, the American National Investment Accounts, Inc., the American
National Growth Fund, Inc., the American National Income Fund, Inc., and
Triflex Fund, Inc., affiliated mutual funds.
TERRY FRANK (One Moody Plaza, Galveston, Texas 77550)
42, Vice President and Portfolio Manager of the Government Income Fund
Series and Tax Free Fund Series, Galveston, Texas, February, 1993 to
present; Former Research/Investment Analyst with Equitable Investment
Services, Des Moines, Iowa 1989-1991.
BRENDA T. KOELEMAY (One Moody Plaza, Galveston, Texas 77550)
40, Vice President and Treasurer of the Fund; Vice President and Treasurer
of SM&R; Vice President and Treasurer of American National Growth Fund,
Inc., American National Income Fund, Inc., Triflex Fund, Inc., and American
National Investment Accounts, Inc., affiliated mutual funds; Senior
Manager, KPMG Peat Marwick, July 1980 to April, 1992.
MICHAEL W. MCCROSKEY (One Moody Plaza, Galveston, Texas 77550)
See "Information Concerning Nominees for Directors" above.
EMERSON V. UNGER, C.L.U. (One Moody Plaza, Galveston, Texas 77550)
53, Vice President of the Fund; Vice President of SM&R; Vice President of
American National Growth Fund, Inc., American National Income Fund, Inc.,
Triflex Fund, Inc., and American National Investment Accounts, Inc.,
affiliated mutual funds.
VERA M. YOUNG (One Moody Plaza, Galveston, Texas 77550)
70, Vice President and Portfolio Manager of the Primary Fund Series; Vice
President and member of the Investment Committee of SM&R; Vice President
and Portfolio Manager of Money Market Portfolio of the American National
Investment Accounts, Inc., affiliated mutual funds; Assistant Vice
President, Securities, American National.
6
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND OFFICERS AND DIRECTORS
According to the Fund's records, the following stockholders owned five
percent (5%) or more of the outstanding Common Stock as of the Record Date:
<TABLE>
<CAPTION>
Name and address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
- -------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
Government American National 624,157 (direct) 27%
Income Fund Insurance Company (1)
Primary Fund American National 10,174,388 (direct) 26%
Insurance Company (1) 18,117,631 (indirect) 46%
Tax Free Fund American National 600,899 (direct) 58%
Insurance Company (1)
Government SM&R (1) 455,077 (direct) 20%
Income Fund
Primary Fund SM&R (1) 747,385 (direct) 2%
Tax Free Fund SM&R (1) 120,179 (direct) 12%
Government Income The Moody Endowment
Fund 1528 Postoffice
Galveston, Texas 77550 296,626 (direct) 13%
</TABLE>
(1) The address of American National Insurance Company and SM&R is One
Moody Plaza, Galveston, Texas 77550.
The Fund is not aware of any other person (including any "group" as such
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) who
held, of record or beneficially, more than 5% of Fund Common Stock outstanding
on the Record Date.
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. RLM
directly owns approximately 348,829 shares of American National.
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.
7
<PAGE>
As of the Record Date, each of the Fund's directors and nominees for
director, and the Fund's directors and officers as a group, had the following
ownership in the Fund:
<TABLE>
<CAPTION>
Name and address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
- -------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
Government Michael W. McCroskey 2,759 (direct) *
Income Fund
Primary Fund Michael W. McCroskey 23,056 (direct) *
Tax Free Fund Michael W. McCroskey 3,592 (direct) *
Primary Fund Brent E. Masel, M.D. 10,068 (direct) *
Tax Free Fund Brent E. Masel, M.D. 1,027 (direct) *
Primary Fund Edwin K. Nolan 1,760 (direct) *
Government Directors and Executive 2,821 (direct) *
Income Fund Officers as a group
Primary Fund Directors and Executive 56,620 (direct) *
Officers as a group
Tax Free Fund Directors and Executive 4,620 (direct) *
Officers as a group
</TABLE>
*Less than 1% owned
The information above was furnished by the Funds' directors and officers.
REMUNERATION OF OFFICERS AND DIRECTORS
The officers of the Fund receive remuneration only from SM&R and not from
the Fund. Directors are paid a $500 per meeting fee by the Fund for attendance
at Board Meetings, a $2,000 annual retainer fee and reimbursement of travel
expenses. The individual directors received the following compensation from the
Fund for the fiscal year ended August 31, 1997:
Total
Compensation
Name of Aggregate From Fund and
Person, Compensation Fund Complex
Position from Fund Paid to Directors
- -------- ------------ -----------------
Samuel K. Finegan
Director $2,000 $2,000
8
<PAGE>
Brent E. Masel, M.D.
Director $4,000 $4,000
Michael W. McCroskey
Director, CEO and President -0- -0- (1) (2)
Allan W. Matthews
Director $4,000 $4,000
Lea McLeod Matthews
Director $4,000 $8,000(2)
Shannon L. Moody
Director $3,000 $3,000
Andrew J. Mytelka
Director $4,000 $4,000
Edwin K. Nolan
Director $4,000 $4,000
Louis E. Pauls, Jr.
Director $4,000 $8,000 (2)
(1) Also serves as director for American National Growth Fund, Inc., American
National Income Fund, Inc. and Triflex Fund, Inc., also referred to as the
"American National Funds Group," a group of investment companies advised by
SM&R.
(2) Also serves as director for American National Investment Accounts, Inc., an
investment company advised by SM&R.
For the period ended August 31, 1997, the directors were paid fees totaling
approximately $29,499.
Approval of the election of the Directors and the nominees requires a
majority of the votes cast by stockholders present in person or represented by
proxy and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING SLATE OF
NOMINEES AS DIRECTORS: ERNEST S. BARRATT, PH.D., MICHAEL W. MCCROSKEY, ALLAN W.
MATTHEWS, LEA MCLEOD MATTHEWS, ANN MOODY, EDWIN K. NOLAN, ROBERT V. SHATTUCK,
JR., JAMIE G. WILLIAMS AND FRANK P. WILLIAMSON.
ACCOUNTANTS
The Audit Committee and Board of Directors appointed KPMG Peat Marwick
("KPMG") as the Fund's independent auditors for the fiscal year ended August 31,
1998. KPMG has indicated that it may not continue as the Fund's independent
auditor for such fiscal year; however, formal resignation has not been received
by the Fund.
9
<PAGE>
There is no disagreement between the Fund and KPMG. KPMG has served as the
Fund's accountant since its inception. At no time did KPMG's report on the
Fund's financial statements contain an adverse opinion or a disclaimer of
opinion or any qualification or modification as to uncertainty, audit scope, or
accounting principles. At no time were there any disagreements with KPMG on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of KPMG, would have caused it to make a reference to the subject
matter of the disagreements in connection with its reports.
In the event that KPMG does resign as independent auditor of the Fund, the
Fund's audit committee and the Fund's Board of Directors, including a majority
of the "not interested" directors, expect to appoint Tait, Weller & Baker as the
new independent auditors of the Fund. Any such appointment will be submitted to
the stockholders of the Fund at the next annual meeting. The Fund does not
expect representatives of KPMG or Tait, Weller & Baker to attend this Special
Meeting.
STOCKHOLDER PROPOSALS
Notice is hereby given that any stockholder proposals for inclusion in
proxy solicitation material for the next annual meeting, if any, or any special
stockholders meeting must be received by the Secretary of the Fund at the Fund's
principal executive offices, One Moody Plaza, Galveston, Texas 77550, not less
than 120 days in advance of the proposed annual or special meeting. At the
present time, no such meetings are scheduled or anticipated. Shareholder
proposals received after such time will not be included in the Fund's proxy
statement or proxy card prepared in connection with any such annual or special
meeting. Any such proposals must comply with the requirements of Rule 14a-8
promulgated under the Securities Exchange Act of 1934.
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 August 31, 1997, including
financial statements, was mailed to stockholders in October, 1997. The Fund
will furnish, without charge, a copy of the Annual Report to a stockholder upon
request. Any such request should be made to Teresa E. Axelson, Secretary of the
Fund, at One Moody Plaza, Galveston, Texas 77550 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
/s/ Teresa Axelson
Teresa E. Axelson, Secretary
10
<PAGE>
VOTING PROXY
SM&R CAPITAL FUNDS, INC.
PROXY FOR SPECIAL SHAREHOLDER'S MEETING
NOVEMBER 20, 1997
Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Edwin K. Nolan and Michael W. McCroskey and each
or any of them, proxies, with power of substitution, to vote all shares of the
undersigned at the Special Meeting of the Shareholders, to be held at One Moody
Plaza, Galveston, Texas on November 20, 1997 at 8:30 a.m. Central Time or at any
adjournment thereof, upon the matters set forth in the Proxy Statement for such
meeting, and in their discretion on such other business as may properly come
before the meeting.
1. ELECTION OF DIRECTORS:
/ /FOR ALL NOMINEES listed below / /WITHHOLD ALL NOMINEES listed below
/ / WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE - Place an X in the
box to the left and strike a line through the nominee's name in the list below.
(1) ERNEST S. BARRATT (4) LEA MCLEOD MATTHEWS (7) ROBERT V. SHATTUCK, JR.
(2) MICHAEL W. MCCROSKEY (5) ANN MOODY (8) JAMIE G. WILLIAMS
(3) ALLAN W. MATTHEWS (6) EDWIN K. NOLAN (9) FRANK P. WILLIAMSON
2. To act on such other matters as may properly come before the meeting or any
adjournment thereof.
--------------------------------------------------------------------------
PLEASE MARK THE PROXY ABOVE, SIGN AND DATE BELOW AND MAIL IN THE ENCLOSED
ENVELOPE. THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Date:
- -----------------------------------------------
- -----------------------------------------------
Signature of Owner
- -----------------------------------------------
Signature of Co-Owner (if account held jointly)
NOTE: WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH MUST SIGN. PERSONS SIGNING
AS EXECUTOR, ADMINISTRATOR, TRUSTEES, ETC. SHOULD SO INDICATE.
11