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SM&R INVESTMENTS, INC.
(SM&R ALGER FUNDS)
DISTRIBUTION PLAN
September 2000
This Distribution Plan (the "Plan") is adopted by SM&R Investments,
Inc., a corporation organized under the laws of the State of Maryland (the
"Fund"), pursuant to Rule 12b-1 ("Rule 12b-1") under the Investment Company Act
of 1940, as amended (the "1940 Act") for four of the Fund's series: the SM&R
Alger Growth Fund, the SM&R Alger Small-Cap Fund, the SM&R Alger Aggressive
Growth Fund, and the SM&R Alger Technology Fund (individually and collectively,
the "Series").
Each of the four Series currently has two classes of shares of common
stock (the "Shares"), designated as Class A Shares and Class B Shares. This Plan
describes distribution services to be provided by Securities Management and
Research, Inc. ("SM&R") (investment adviser and principal underwriter to the
Fund) or any distributor of the Series' Shares (each, a "Distributor") in
connection with the Class A and Class B Shares. The Plan also specifies the
deductions from Series assets to pay for such services.
SECTION 1. AMOUNT OF PAYMENTS: DISTRIBUTION FEES
(a) Each of the four Series will pay distribution fees (the
"Distribution Fees") with respect to each of the Class A and Class B Shares of
that Series (the "12b-1 Classes") for distribution-related services provided to
each such Class of Shares. The Distribution Fee for each Class of Shares shall
be computed as an annual percentage of the value of the average daily net assets
of the four Series attributable to such Class, as follows:
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CLASS DISTRIBUTION FEE
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<S> <C>
Class A Shares: Front-End Load 0.35%
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Class B Shares: Back-End Load (CDSC) 1.00%
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(b) The Distribution Fees to be paid under this Plan will be calculated
daily (as a percentage of average daily net assets) and paid periodically by
each of the four Series with respect to the Shares of the relevant 12b-1 Classes
of that Series at the annual rates indicated above.
(c) Payments under this Plan are not tied exclusively to distribution
expenses actually incurred by SM&R or any Distributor; the payments may exceed
or be less than expenses actually incurred by SM&R and/or any other Distributor.
SECTION 2. DISTRIBUTION SERVICES PROVIDED.
The Distribution Fees payable with respect to Class A and Class B
Shares of the four Series are intended to compensate SM&R, or enable SM&R to
compensate other persons, including other Distributors, for services that are
primarily intended to result in, or that are primarily attributable to, the sale
of such respective Classes of Shares of the Series ("Selling Services").
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"Selling Services" when used in this Plan include, but are not limited
to: compensation of sales personnel, training and supervision of sales
personnel, advertising, marketing, and other promotional expenses (including the
preparation of, printing, and making of sales literature), and the printing and
distribution to prospective investors in the Series of prospectuses and
statements of additional information that are used in connection with sales of
the relevant 12b-1 Classes of the Series and distributing such Classes of Shares
of the Series. In providing compensation for Selling Services in accordance with
this Plan, SM&R is expressly authorized (i) to make, or cause to be made,
payments reflecting an allocation of overhead and other office expenses related
to the distribution of the relevant 12b-1 Classes of each Series; (ii) to make,
or cause to be made, payments, or to provide for the reimbursement of expenses
of, persons who provide support services in connection with the distribution of
the relevant 12b-1 Classes of each Series; and (iii) to make, or cause to be
made, payments to financial intermediaries who have sold the Shares of the
relevant 12b-1 Classes.
SECTION 3. APPROVAL OF PLAN AND RELATED AGREEMENTS.
(a) SHAREHOLDER APPROVAL. Neither this Plan nor any related agreements
will take effect with respect to a 12b-1 Class of a Series, and no fee will be
deducted or payable in accordance with Section 1 of this Plan, with respect to
the Shares of such 12b-1 Class of a Series, until this Plan has been approved by
a vote of at least a majority of the outstanding voting securities represented
by that Class, if adopted after any public offering of the Shares of that Class
or the sale of such Shares to persons who are not affiliated persons of the Fund
or affiliated persons of such persons. This Plan will be deemed to have been
approved by shareholders of a 12b-1 Class of a Series so long as a majority of
the outstanding voting securities of the shareholders of such 12b-1 Class vote
for the approval of the Plan, notwithstanding that: (i) the Plan has not been
approved by a majority of the outstanding voting securities represented by any
other Class; (ii) the Plan has not been approved by a majority of the
outstanding voting securities of the relevant Series of the Fund; or (iii) the
Plan has not been approved by a majority of the outstanding voting securities of
the Fund.
(b) DIRECTOR APPROVAL. Neither this Plan nor any related agreements
will take effect with respect to any Class of Shares of a Series until
approved by:
(i) a majority vote of the full Board of Directors of the Fund (the
"Board"), and
(ii) a majority vote of those directors who are not interested persons
of the Fund and who have no direct or indirect financial interest in
the operation of this Plan or in any agreements related to it (the
"Independent Directors"),
cast in person at a meeting called for the purpose of voting on this
Plan and the related agreements. In voting to approve the implementation or
continuance of this Plan (see Section 4 below), the directors must conclude, in
exercise of reasonable business judgment and in light of their fiduciary duties,
that there is a reasonable likelihood that the Plan will benefit the relevant
Class of the Series and its shareholders.
SECTION 4. CONTINUANCE OF PLAN.
This Plan will continue in effect with respect to a 12b-1 Class of
Shares of a Series from year to year so long as its continuance is specifically
approved annually by vote of the Board in the manner described in Section 3(b)
above. The Board will evaluate the appropriateness of this Plan with respect to
the Shares of each of the respective 12b-1 Classes of each Series and its
payment terms on a continuing basis and in doing so will consider all relevant
factors, including the types and extent of Selling Services provided by SM&R
and/or other Distributors and amounts SM&R and/or other Distributors receive
under this Plan.
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SECTION 5. TERMINATION.
This Plan may be terminated with respect to any 12b-1 Class of a Series
at any time, by vote of a majority of the Independent Directors or by a vote of
a majority of the outstanding voting securities of the relevant Class of the
Series.
SECTION 6. AMENDMENTS.
This Plan may not be amended with respect to any 12b-1 Class of a
Series to increase materially the amount of the fees described in Section 1
above without approval of the shareholders of the relevant Class of the Series
as contemplated in Section 3(a) above. In addition, all material amendments to
this Plan must be approved in the manner described in Section 3(b) above.
SECTION 7. SELECTION OF INDEPENDENT DIRECTORS.
While this Plan is in effect with respect to any 12b-1 Class of a
Series, the selection and nomination of the Fund's Directors who are not
interested persons of the Fund will be committed to the discretion of the
Directors then in office who are not interested persons of the Fund.
SECTION 8. QUARTERLY WRITTEN REPORTS.
In each year during which this Plan remains in effect with respect to a
12b-1 Class, SM&R (and any other person authorized to direct the disposition of
monies paid or payable by the relevant Series pursuant to the Plan or any
related agreement) will prepare and furnish to the Board, and the Board will
review, at least quarterly, written reports complying with the requirements of
Rule 12b-1, which set out the amounts expended under this Plan and the purposes
for which those expenditures were made.
SECTION 9. RECORDKEEPING.
The Fund will preserve copies of this Plan, any agreement relating to
this Plan and any report made pursuant to Section 8 above, for a period of not
less than six years (the first two years in an easily accessible place) from the
date of this Plan, the agreement or the report, or for such other periods as may
be required by applicable law.
SECTION 10. FILING.
This Plan shall be filed as an exhibit to the Fund's Registration
Statement on Form N-1A with the U.S. Securities and Exchange Commission, with
the next amendment of such Registration Statement filed after the date hereof.
SECTION 11. INTERPRETATION; MEANING OF CERTAIN TERMS.
(a) This Plan shall be interpreted in accordance with the 1940 Act and
Rule 12b-1 thereunder.
(b) As used in this Plan, the terms "interested person" and "majority
of the outstanding voting securities" will be deemed to have the same meaning
that those terms have under the 1940 Act and the rules and regulations under the
1940 Act, subject to any exemption that may be granted to the Fund under the
1940 Act by the Securities and Exchange Commission.
(c) The provisions of this Plan are severable for each Class of each
Series.
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SECTION 12. LIMITATION OF LIABILITY.
The obligations of the Fund and each Series under this Plan will not be
binding upon any of the directors, shareholders, nominees, officers, employees
or agents, whether past, present or future, of the Fund, individually, but are
binding only upon the assets and property of the Fund and the relevant Series,
as provided in the Fund's Articles of Incorporation. The execution and delivery
of this Plan have been authorized by the directors of the Fund, and signed by an
authorized officer of the Fund, acting as such, and neither the authorization by
the directors nor the execution and delivery by the officer will be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but will bind only the property of the Fund and each Series, as
applicable.
SECTION 13. DATE OF EFFECTIVENESS.
This Plan has been executed by the Fund as of the 1st day of September,
2000 and will become effective with respect to the Class A and Class B Shares of
a Series as of such date or on such other date as interests in the Class A and
Class B Shares of that Series, as applicable, are first offered to or held by
the public (subject to approvals as provided for in Section 3 above).
SM&R INVESTMENTS, INC.
By:
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Michael W. McCroskey
President
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