-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JX89RWOOe0Q3xZouwO9O5k4z3CHZFOmdtxELkJNF99Oh94qdb671af77xRRfntB+ 9Qy3tFCtEZPLPj7QqIws+g== 0000867050-10-000004.txt : 20100308 0000867050-10-000004.hdr.sgml : 20100308 20100308125942 ACCESSION NUMBER: 0000867050-10-000004 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100308 DATE AS OF CHANGE: 20100308 EFFECTIVENESS DATE: 20100308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. CENTRAL INDEX KEY: 0000867050 IRS NUMBER: 760324563 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06155 FILM NUMBER: 10662938 BUSINESS ADDRESS: STREET 1: 2450 SO. SHORE BLVD. STREET 2: SUITE 400 CITY: LEAGUE CITY STATE: TX ZIP: 77573 BUSINESS PHONE: (281) 334-2469 MAIL ADDRESS: STREET 1: P. O. BOX 58969 CITY: HOUSTON STATE: TX ZIP: 77258-8969 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN NATIONAL INVESTMENT ACCOUNTS INC DATE OF NAME CHANGE: 19920703 0000867050 S000010286 American National Growth Portfolio C000028458 American National Growth Portfolio 0000867050 S000010287 American National Balanced Portfolio C000028459 American National Balanced Portfolio 0000867050 S000010288 American National Equity Income Portfolio C000028460 American National Equity Income Portfolio 0000867050 S000010289 American National Money Market Portfolio C000028461 American National Money Market Portfolio N-CSR 1 ania_n-csr1209complete.txt UNITED STATES Securities and Exchange Commission Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6155 American National Investment Accounts, Inc. P.O. Box 58969 Houston, TX 77258-8969 Securities Management and Research, Inc. P.O. Box 58969 Houston, TX 77258-8969 (800) 231-4639 Fiscal year end: December 31 Reporting period: December 31, 2009 Item 1 Report to Shareholders ANNUAL REPORT AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. - - GROWTH PORTFOLIO - - EQUITY INCOME PORTFOLIO - - BALANCED PORTFOLIO - - MONEY MARKET PORTFOLIO Form 9429 ANNUAL REPORT 02/10 DECEMBER 31, 2009 AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. 2450 South Shore Boulevard, League City, TX 77573 The report contained herein is included for the general information of our shareholders. This report is not authorized for distribution to prospective investors unless it is preceded or accompanied by a current prospectus. ALL INVESTORS ARE ADVISED TO CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES OF THE INVESTMENT COMPANIES CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE INVESTMENT COMPANIES. YOU SHOULD READ IT CAREFULLY BEFORE INVESTING. The investment adviser is responsible for exercising the voting rights associated with the securities purchased and held by the Funds. A description of the policies and procedures the investment adviser uses in fulfilling this responsibility is included in the Funds' Statement of Additional Information and is available without charge, upon request, by calling 1-800-231-4639. The policies and procedures are also available on the Securities and Exchange Commission's website at http://www.sec.gov. Information on how the Funds voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 is available without charge, upon request, by calling 1-800-231-4639 and is also available on the SEC's website at http://www.sec.gov. The Funds file their complete schedule of holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds' Form N-Q is available on the SEC's website, beginning with the September 30, 2004 report, at http://www.sec.gov. You may review and make copies at the SEC's Public Reference Room in Washington, D.C. You may also obtain copies after paying a duplicating fee by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102 or by electronic request to publicinfo@sec.gov. A copy of the quarterly holdings report is available, without charge, upon request, by calling 1-800-231-4639. AN EXAMPLE OF ONGOING EXPENSES Each shareholder of the Fund may incur two types of expenses: (1) transactional, if applicable, and (2) ongoing (e.g., asset-based charges such as investment advisory fees and distribution and/or 12b-1 fees). The example, included below, is intended to help a shareholder better understand the ongoing expenses of investing in this Fund and to compare these expenses with other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period, July 1, 2009, and held for six months ending December 31, 2009. ACTUAL EXPENSES The example below provides information about actual account values and actual expenses. A shareholder may use the information in this example, together with the amount they have invested, to estimate the expenses that they have paid over the period. Simply divide the account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in actual column under the heading entitled "Expenses Paid During Period" to estimate the expenses paid on their account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The example also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses a shareholder paid for the period. This information may be used to compare the ongoing expenses of investing in the Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other mutual funds. Please note that the expenses shown in this table are meant to help a shareholder understand the ongoing expenses only and do not reflect any transactional expenses, such as sales charges, contingent deferred sales charges on redemptions or redemption fees. Therefore, the table is useful in comparing ongoing expenses only, and will not help determine the relative total costs of owning different funds. In addition, if these transactional expenses were included, the expenses would have been higher.
ACTUAL HYPOTHETICAL BEGINNING ENDING EXPENSES ENDING EXPENSES ACCOUNT ANNUALIZED ACCOUNT PAID ACCOUNT PAID VALUE EXPENSE VALUE DURING VALUE DURING FUNDS (07/01/09) RATIOS (12/31/09) (1) PERIOD (2) (12/31/09) PERIOD (2) - ----------------------- ---------- ---------- -------------- ---------- ---------- ---------- Growth Portfolio $1,000.00 0.87% $1,201.10 $4.83 $1,020.82 $4.43 Equity Income Portfolio 1,000.00 0.79% 1,205.33 4.39 1,021.22 4.02 Balanced Portfolio 1,000.00 0.81% 1,142.69 4.37 1,021.12 4.13 Money Market Portfolio 1,000.00 0.16% 1,000.00 0.81 1,024.40 0.82
(1) The actual ending account value is based on actual total return of each of the funds for the period July 1, 2009 to December 31, 2009 after actual expenses and will differ from the hypothetical ending account value which is based on each of the funds' actual expense ratios and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the annualized expense ratios, shown in the table above, multiplied by the average account value over the period, then multiplied by 184/365 (to reflect the six month period). 1 APPROVAL OF INVESTMENT ADVISORY AGREEMENTS On November 19, 2009, the Board of Directors of American National Investment Accounts, Inc. (the "Board") unanimously approved the renewal and extension of the investment advisory agreements with Securities Management and Research, Inc. (the "Manager") for the Growth Portfolio, Equity Income Portfolio, Balanced Portfolio and Money Market Portfolio, ("the Portfolios"). The Board considered a variety of factors in connection with its review of the advisory contracts (the "Contracts"), also taking into account information provided by the Manager during the course of the year, as discussed below: NATURE, EXTENT, AND QUALITY OF SERVICES The Board considered the nature, quality and extent of the services provided to the Portfolios by the Manager based upon information and discussion provided by the Manager relating to the services performed by the Manager under the Contracts and relating to the Manager's operations, systems, and personnel. These services included, but were not limited to, management of the investment portfolios and a variety of activities related to investment portfolio management. The Board also took into account its familiarity with the Manager's investment management for the Fund through regular Board meetings, discussions and reports during the preceding year. The Board further considered the Manager's research and portfolio management capabilities and that the Manager also provides oversight of day-to-day Fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. After careful consideration of these matters, the Board concluded that it was satisfied with the nature, quality and extent of the services provided by the Manager. EXPENSES AND PERFORMANCE The Board evaluated reports prepared by the Manager detailing the total expense ratios of each of the Portfolios as compared to other open-end investment companies deemed to be comparable based upon the Morningstar Principia Pro database with similar Morningstar category and prospectus objective to each Portfolio. The Board compared the total expense ratios of the Portfolios for the quarter ending September 30, 2009 to funds advised by other advisors that were deemed comparable by the Morningstar database for the quarter ending September 30, 2009. The Growth Portfolio's total expense ratio was lower than the Morningstar sub-account average total expense ratio; as was that of the Balanced Portfolio. The total expense ratios for the Equity Income Portfolio and Money Market Portfolio were slightly higher than the Morningstar sub-account average total expense ratio. Therefore, the Board took into account that the Manager has voluntarily agreed to waive fees and/or limit expenses of this and the other Portfolios through April 30, 2011 so that total expenses are limited to a specified percentage of average daily net assets of each Portfolio. Total expenses include the management fees and administrative service fees which are paid to the Manager, but do not include interest, taxes, commissions, and other expenses incidental to portfolio transactions. Also taken under consideration were the current size of each Portfolio, and the level and method of computing the management fees. In light of these factors, the Board concluded that the fee paid to the Manager by the Fund is reasonable. The Board reviewed the Portfolios' monthly performance and compared these returns to comparable performance measures supplied by Lipper for their respective indices. On the basis of this evaluation of investment results, the Board concluded that the Portfolios' performance was satisfactory. 2 COST, BENEFITS, PROFITS AND ECONOMIES OF SCALE The Board reviewed detailed information regarding the revenues received by the Manager under the Contracts and other benefits that the Manager may have realized from its relationship with the Portfolios. The Board also received information on the direct costs incurred by the Manager as well as profits realized. After careful consideration of this information, the Board concluded that the Manager's profits were reasonable in light of the services provided to the Portfolios. APPROVAL OF THE CONTRACTS As noted, the Board approved the renewal of the Contracts. No single factor was considered in isolation or to be determinative to the decision. Rather, the Board concluded, in light of a weighing and balancing of all factors considered, that the advisory fee structures are fair and reasonable and that the Contracts should be renewed. 3 AMERICAN NATIONAL GROWTH PORTFOLIO MANAGER DISCUSSION The Growth Portfolio's objective continues to be providing the opportunity for long-term capital appreciation. The Portfolio is guided by a strategy of investing primarily in the stocks of well-established companies with records of consistent and increasing earnings and cash flow growth. In 2009, the Portfolio produced a return of 23.48%, after portfolio expenses, but before product specific charges. Over that same time frame, the S&P 500 Index produced a return of 26.46%. Within the Portfolio, sector allocation and security selection determine the performance of the fund against the market. Relative to the S&P 500, the fund benefited by sector allocations in Industrials, Telecom Services, and Consumer Staples. Security selection benefited performance in the Energy and Healthcare sectors, while having negative impact in Materials and Financials. The Portfolio's strongest individual performers were Apple and NASDAQ EFT exposure. Holdings that hampered performance included Exxon Mobil and Genzyme. All ten sectors in the S&P 500 finished in positive territory for the year for the first time since 2006. For the fourth quarter, nine of the ten sectors had positive returns, with the lone negative return coming from Financials (-3.3%) as investors remained concerned about earnings, especially at banks. Information Technology was the strongest performing sector, rising 10.7% as investors anticipated a significant increase in corporate IT spending. Consumer Discretionary and Healthcare were the second-best performing sectors, each gaining 9.1%. Economic activity in the fourth quarter has exceeded expectations, but the growth appears to have come from areas that are not all sustainable. Survey data has suggested that the jump in GDP is just a brief recovery from low levels of activity and nothing of a longer-term up-swing. It has been estimated that net exports may have accounted for a half-point rise in GDP while most of the expected growth came from a significant slowing in inventory liquidations. Typically, small business sector growth has led economic recoveries, but that is not the case presently, which provides further evidence that the quarter's growth is likely not of a broad nature. Higher oil prices were likely responsible for a widening of the trade deficit and not a higher level of broad-based spending on imports. A moderate recovery in consumer spending has occurred. Non-stimulus income, consisting mostly of wages and salaries, has increased over the past six months and appears to be trending higher, indicating that support for consumer spending may be based upon more enduring sources of income. Real spending increased by an estimated annualized 2.7% in the fourth quarter, up from 1.6% in the prior quarter. Despite still tight credit markets, overall financial conditions continue to improve. The recovery in financial markets has bolstered household wealth, and although still not near previous levels, households may be more willing to spend even though uncertainty exists concerning employment prospects and stability. Economic data concerning labor are beginning to suggest a stabilization in employment conditions. Job layoff activity is rapidly falling. In 2009 government support for the economy amounted to $600 billion (Bureau of Economic Analysis and CIRA), representing the main aid to economic growth which propped up consumer spending and averted a more widespread decline in economic activity. Now, support has shifted back to non-stimulus income. The employment outlook has been clouded by employers reliance to a greater extent on temporary and part-time workers due to future economic uncertainty. Employment data suggest that about 4% of the labor force's jobless status is essentially permanent. During 2009, interest rates rose on almost all points on the yield curve with the largest increases at the long end, steepening the curve even further. The Federal Reserve's Fed Fund target rate has been between 0-0.25% for all of 2009. This low target kept rates low at the short end of the curve, with inflation expectations helping to raise rates at the middle and long end. There is less concern that the Fed will raise interest rates soon, and it is suggested that rate changes are unlikely through most of 2010, with the possibility for rate increases in the fourth quarter. The ten-year Treasury rate is currently about 3.70%, up from 3.20% on November 30, 2009. Sincerely, Anne M. LeMire, CPA, CFA Portfolio Manager, Growth Portfolio 4 COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN GROWTH PORTFOLIO, LIPPER LARGE-CAP CORE FUND INDEX AND THE S&P 500 [CHART]
LIPPER GROWTH LARGE-CAP CORE PORTFOLIO S&P 500 FUND INDEX 12/31/1999 10000 10000 10000 12/31/2000 9567 9089 9263 12/31/2001 7999 7892 8074 12/31/2002 6004 6076 6360 12/31/2003 7447 8029 7937 12/31/2004 8058 8685 8595 12/31/2005 8310 9587 9087 12/31/2006 9398 10815 10303 12/31/2007 9788 10725 10986 12/31/2008 6108 6582 6913 12/31/2009 7744 9089 8859
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE OF THE PORTFOLIO AND DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE OF ANY AMERICAN NATIONAL INSURANCE COMPANY (AMERICAN NATIONAL) VARIABLE PRODUCT INVESTMENT OPTION CHANGES OVER TIME AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE CURRENT TO THE MOST RECENT MONTH-END, CONTACT AMERICAN NATIONAL AT 1-800-306-2959 OR ASK YOUR REGISTERED REPRESENTATIVE. The Growth Portfolio's performance figures reflect reinvestment of all dividends and capital gains distributions and changes in net asset value. These returns do not reflect the deduction of taxes that a contractowner might pay on a distribution or redemption of Portfolio shares (units). The performance information presented does not include the charges and expenses imposed by American National Insurance Company's variable product. The inclusion of such charges would lower performance. Please refer to the applicable American National variable product prospectus for a complete listing of these expenses. The Portfolio's shares are available exclusively as a funding vehicle for American National's variable life insurance policies and variable annuity contracts. 5 SCHEDULE OF INVESTMENTS December 31, 2009 GROWTH PORTFOLIO COMMON STOCK
SHARES VALUE CONSUMER DISCRETIONARY-- AUTO COMPONENTS--0.43% China Automotive Systems, Inc. * 3,200 $ 59,872 Fuel Systems Solutions Inc. * 500 20,620 ----------- 80,492 HOTELS, RESTAURANTS & LEISURE--0.74% Home Inns & Hotels Management, Inc. ADR * 2,100 74,235 Starwood Hotels & Resorts Worldwide, Inc. 1,775 64,912 ----------- 139,147 HOUSEHOLD DURABLES--0.63% China-Biotics Inc. * 4,800 74,256 Newell Rubbermaid Inc. 3,000 45,030 ----------- 119,286 INTERNET & CATALOG RETAIL--1.08% Ctrip.com International, Ltd. ADR * 1,000 71,860 Priceline.com Inc. * 600 131,100 ----------- 202,960 MEDIA--1.22% Focus Media Holding Ltd. ADR * 2,000 31,700 VisionChina Media Inc. * 3,500 38,220 Walt Disney Co. (The) 5,000 161,250 ----------- 231,170 MULTILINE RETAIL--0.86% J.C. Penney Co., Inc. 2,500 66,525 Target Corp. 2,000 96,740 ----------- 163,265 SPECIALTY RETAIL--2.96% Bed Bath & Beyond Inc. * 2,000 77,260 Best Buy Co., Inc. 5,002 197,379 Home Depot, Inc. (The) 3,670 106,173 Limited Brands, Inc. 3,500 67,340 Lowe's Companies, Inc. 3,116 72,883 Lumber Liquidators Holdings, Inc. * 1,400 37,520 ----------- 558,555 TEXTILES, APPAREL & LUXURY GOODS--0.51% J. Crew Group, Inc. * 1,400 62,636 Lululemon Athletica Inc. * 1,100 33,110 ----------- 95,746 ----------- TOTAL CONSUMER DISCRETIONARY--8.43% 1,590,621 ----------- CONSUMER STAPLES-- BEVERAGES--2.89% Coca-Cola Co. (The) 4,782 272,574 PepsiCo, Inc. 4,500 273,600 ----------- 546,174 FOOD PRODUCTS--0.39% Green Mountain Coffee Roasters, Inc. * 400 32,588 Origin Agritech Ltd. * 3,500 41,195 ----------- 73,783 FOOD & STAPLES RETAILING--1.76% CVS Caremark Corp. 3,950 127,230 Companhia Brasileira de Distribuicao Grupo Pao de Acucar ADR 1,300 97,656 Wal-Mart Stores, Inc. 2,000 106,900 ----------- 331,786 HOUSEHOLD PRODUCTS--1.61% Procter & Gamble Co. (The) 5,000 303,150 TOBACCO--0.45% Philip Morris International Inc. 1,775 85,537 ----------- TOTAL CONSUMER STAPLES--7.10% 1,340,430 ----------- ENERGY-- ENERGY EQUIPMENT & SERVICES--3.03% Baker Hughes Inc. 2,700 109,296 Noble Corp. 3,800 154,660 Schlumberger Ltd. 2,200 143,198 Transocean Ltd. * 1,179 97,620 Weatherford International Ltd. * 3,700 66,267 ----------- 571,041 OIL, GAS & CONSUMABLE FUELS--7.06% Anadarko Petroleum Corp. 1,000 62,420 BP PLC ADR 2,400 139,128 Chevron Corp. 2,275 175,152 Clean Energy Fuels Corp. * 2,500 38,525 El Paso Corp. 9,481 93,198 Exxon Mobil Corp. 8,750 596,663 Royal Dutch Shell PLC ADR, (Class A) 3,780 227,216 ----------- 1,332,302 ----------- TOTAL ENERGY--10.09% 1,903,343 ----------- EXCHANGE TRADED FUNDS--4.79% PowerShares QQQ Trust Series 1 10,000 459,200 SPDR Trust Series 1 4,000 445,760 ----------- 904,960 ----------- TOTAL EXCHANGE TRADED FUNDS--4.79% 904,960 -----------
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SHARES VALUE FINANCIALS-- CAPITAL MARKETS--2.54% Bank of New York Mellon Corp. 3,800 $ 106,286 Charles Schwab Corp. (The) 4,900 92,218 Goldman Sachs Group, Inc. (The) 778 131,358 Morgan Stanley 3,000 88,800 State Street Corp. 1,400 60,956 ----------- 479,618 COMMERCIAL BANKS--2.74% PNC Financial Services Group, Inc. 5,000 263,950 U.S. Bancorp 6,000 135,060 Wells Fargo & Co. 4,383 118,297 ----------- 517,307 CONSUMER FINANCE--0.68% American Express Co. 1,000 40,520 Discover Financial Services 1,500 22,065 NYSE Euronext 2,550 64,515 ----------- 127,100 DIVERSIFIED FINANCIAL SERVICES--0.98% Bank of America Corp. 3,601 54,231 Citigroup Inc. 7,075 23,418 JPMorgan Chase & Co. 2,573 107,217 ----------- 184,866 INSURANCE--1.65% Aspen Insurance Holdings Ltd. 2,000 50,900 Brown & Brown, Inc. 2,000 35,940 Hartford Financial Services Group, Inc. (The) 1,300 30,238 Principal Financial Group, Inc. 1,725 41,469 Prudential Financial, Inc. 2,000 99,520 RenaissanceRe Holdings Ltd. 1,000 53,150 ----------- 311,217 ----------- TOTAL FINANCIALS--8.59% 1,620,108 ----------- HEALTH CARE-- BIOTECHNOLOGY--3.05% 3SBio, Inc. * 4,900 67,081 Amgen Inc. * 1,250 70,712 Celgene Corp. * 2,500 139,200 Facet Biotech Corp. * 540 9,493 Genzyme Corp. * 2,000 98,020 Gilead Sciences, Inc. * 4,000 173,120 PDL BioPharma Inc. 2,700 18,522 ----------- 576,148 HEALTH CARE PROVIDERS & SERVICES--0.55% DaVita, Inc. * 850 49,929 UnitedHealth Group Inc. 1,800 54,864 ----------- 104,793 HEALTH EQUIPMENT & SUPPLIES--1.70% Covidien PLC 775 37,115 Genoptix Inc. * 800 28,424 Given Imaging Ltd. 8,000 139,680 Hologic, Inc. * 3,400 49,300 Varian Medical Systems, Inc. * 1,400 65,590 ----------- 320,109 LIFE SCIENCES TOOLS & SERVICES--0.35% Thermo Fisher Scientific, Inc. * 1,375 65,574 PHARMACEUTICALS--4.74% Abbott Laboratories 2,200 118,778 Alexion Pharmaceuticals, Inc. * 700 34,174 Amylin Pharmaceuticals, Inc. * 4,500 63,855 Cephalon, Inc. * 1,450 90,495 Eli Lilly & Co. 6,800 242,828 Endo Pharmaceuticals Holdings Inc. * 2,100 43,071 Merck & Co. Inc. 6,003 219,350 Pfizer Inc. 1,920 34,925 WuXi PharmaTech Cayman Inc. * 2,900 46,284 ----------- 893,760 ----------- TOTAL HEALTH CARE--10.39% 1,960,384 ----------- INDUSTRIALS-- AEROSPACE & DEFENSE--4.38% Boeing Co. (The) 2,637 142,741 Goodrich Corp. 3,481 223,654 Honeywell International Inc. 2,128 83,418 Northrop Grumman Corp. 800 44,680 Rockwell Collins, Inc. 3,500 193,760 United Technologies Corp. 2,000 138,820 ----------- 827,073 AIR FREIGHT & LOGISTICS--1.18% FedEx Corp. 800 66,760 United Parcel Service, Inc. (Class B) 2,700 154,899 ----------- 221,659 COMMERCIAL SERVICES & SUPPLIES--1.16% 51job, Inc. * 2,000 35,440 RINO International Corp. * 3,200 88,480 Verisk Analytics, Inc. * 1,800 54,504 VistaPrint Ltd. * 700 39,662 ----------- 218,086 CONSTRUCTION & ENGINEERING--0.26% Cemex SAB de CV ADR * 4,160 49,171 ELECTRICAL EQUIPMENT--1.37% American Superconducter Corp. * 700 28,630 A-Power Energy Generation Systems Ltd. * 2,200 40,238 Harbin Electric, Inc. * 3,500 71,890
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SHARES VALUE Jinpan International Ltd. 800 $ 38,136 Ocean Power Technologies, Inc. * 2,900 26,129 Trina Solar Ltd. * 1,000 53,970 ----------- 258,993 INDUSTRIAL CONGLOMERATES--2.05% 3M Co. 1,300 107,471 General Electric Co. 16,625 251,536 Tyco International Ltd. 775 27,652 ----------- 386,659 MACHINERY--2.83% Barnes Group Inc. 1,800 30,420 Bucyrus International, Inc. 1,200 67,644 Caterpillar Inc. 1,100 62,689 China Yuchai International Ltd. 4,200 61,908 Danaher Corp. 2,000 150,400 Duoyuan Global Water Inc. ADR * 2,300 82,317 Force Protection, Inc. * 4,000 20,840 SmartHeat, Inc. * 4,000 58,080 ----------- 534,298 ----------- TOTAL INDUSTRIALS--13.23% 2,495,939 ----------- INFORMATION TECHNOLOGY-- COMMUNICATIONS EQUIPMENT--4.02% Arris Group Inc. * 4,250 48,578 Cisco Systems, Inc. * 12,900 308,826 Harris Corp. 2,400 114,120 Nokia Oyj ADR 5,557 71,407 Nortel Networks Corp. * 236 5 QUALCOMM Inc. 2,500 115,650 Research In Motion Ltd. * 950 64,163 Telestone Technologies Corp. * 1,800 35,712 ----------- 758,461 COMPUTERS & PERIPHERALS--5.01% Apple Inc. * 1,350 284,661 EMC Corp. * 4,626 80,816 Hewlett-Packard Co. 5,787 298,088 International Business Machines Corp. 2,150 281,435 ----------- 945,000 ELECTRONIC EQUIPMENT & INSTRUMENTS--1.40% Agilent Technologies, Inc. * 1,265 39,304 Cree, Inc. * 3,000 169,110 Maxwell Technologies, Inc. * 2,000 35,680 Tyco Electronics Ltd. 775 19,026 ----------- 263,120 INTERNET SOFTWARE & SERVICES--2.45% Akamai Technologies, Inc. * 2,750 69,657 AsiaInfo Holdings, Inc. * 3,700 112,739 China Information Security Technology, Inc. * 2,000 12,320 Equinix, Inc. * 600 63,690 MercadoLibre Inc. * 2,200 114,114 SINA Corp. * 2,000 90,360 ----------- 462,880 INFORMATION TECHNOLOGY SERVICES--0.38% Amdocs Ltd. * 1,375 39,229 VanceInfo Technologies Inc. * 1,700 32,657 ----------- 71,886 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--5.70% Analog Devices, Inc. 2,154 68,023 Atheros Communications * 1,800 61,632 CEVA, Inc. * 4,500 57,870 Cavium Networks, Inc. * 3,500 83,405 EZchip Semiconductor Ltd. * 3,000 36,270 Intel Corp. 10,000 204,000 KLA-Tencor Corp. 1,743 63,027 Linear Technology Corp. 2,222 67,860 Marvell Technology Group Ltd. * 5,250 108,938 Maxim Integrated Products, Inc. 1,743 35,383 Netlogic Microsystems Inc. * 2,400 111,024 QuickLogic Corp. * 32,200 67,942 STMicroelectronics N.V. 5,600 51,912 Silicon Laboratories Inc. * 1,200 58,008 ----------- 1,075,294 SOFTWARE--5.72% ArcSight, Inc. * 1,000 25,580 Blue Coat Systems, Inc. * 2,525 72,064 Electronic Arts Inc. * 1,700 30,175 Fortinet Inc. * 2,500 43,925 Intuit Inc. * 3,490 107,178 K12 Inc. * 2,200 44,594 Longtop Financial Technologies Ltd. ADR * 2,100 77,742 Microsoft Corp. 8,375 255,354 Oracle Corp. 9,789 240,222 Pegasystems, Inc. 1,900 64,600 Salesforce.com, Inc. * 1,200 88,524 Sourcefire Inc. * 1,100 29,425 ----------- 1,079,383 ----------- TOTAL INFORMATION TECHNOLOGY--24.68% 4,656,024 ----------- MATERIALS-- CHEMICALS--2.40% China Agritech, Inc. * 2,500 69,875 China Green Agriculture, Inc. * 4,000 58,800 Monsanto Co. 775 63,356 PPG Industries, Inc. 3,622 212,032 Praxair, Inc. 600 48,186 ----------- 452,249
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SHARES VALUE CONTAINERS & PACKAGING--0.27% Sealed Air Corp. 2,325 $ 50,825 METALS & MINING--0.35% Gulf Resources Inc. * 5,700 66,462 ----------- TOTAL MATERIALS--3.02% 569,536 ----------- TELECOMMUNICATION SERVICES-- DIVERSIFIED TELECOMMUNICATION SERVICES--1.70% AT&T Inc. 5,500 154,165 Verizon Communications Inc. 5,056 167,505 ----------- 321,670 WIRELESS TELECOMMUNICATION SERVICES--0.66% American Tower Corporation (Class A) * 1,050 45,370 Rogers Communications, Inc. (Class B) 1,100 34,100 Tim Participacoes S.A. 1,500 44,565 ----------- 124,035 ----------- TOTAL TELECOMMUNICATION SERVICES--2.36% 445,705 ----------- UTILITIES-- ELECTRIC UTILITIES--1.29% Allegheny Energy, Inc. 1,400 32,872 Ameren Corp. 1,778 49,695 Exelon Corp. 1,250 61,088 FPL Group, Inc. 950 50,179 Wisconsin Energy Corp. 1,000 49,830 ----------- 243,664 MULTI-UTILITIES--0.61% Dominion Resources Inc. 1,500 58,380 Sempra Energy 1,000 55,980 ----------- 114,360 ----------- TOTAL UTILITIES--1.90% 358,024 ----------- TOTAL COMMON STOCK--94.58% (Cost $17,988,372) 17,845,074 ----------- TOTAL INVESTMENTS--94.58% (Cost $17,988,372) 17,845,074 CASH AND OTHER ASSETS, LESS LIABILITIES--5.42% 1,022,167 ----------- NET ASSETS--100.00% $18,867,241 ===========
*--Non-income producing securities ABBREVIATIONS ADR--American Depositary Receipt SPDR--Standard & Poor's Depositary Receipt See notes to financial statements. SECTOR WEIGHTINGS BY TOTAL INVESTMENTS [CHART] 8.91% Consumer Discretionary 7.51% Consumer Staples 10.67% Energy 5.07% Exchange Traded Funds 9.08% Financials 10.99% Health Care 13.99% Industrials 26.08% Information Technology 3.19% Materials 2.50% Telecommunication Services 2.01% Utilities
9 STATEMENT OF ASSETS AND LIABILITIES December 31, 2009 GROWTH PORTFOLIO ASSETS Investments in securities, at value (Cost $17,988,372) $ 17,845,074 Cash and cash equivalents 1,019,210 Prepaid expenses 5,306 Receivable for: Dividends 13,631 Capital stock sold 5,417 Expense reimbursement 5,152 ------------ TOTAL ASSETS 18,893,790 ------------ LIABILITIES Capital stock reacquired 2,541 Payable to investment adviser for fund expenses 7,160 Accrued: Investment advisory fees 7,991 Administrative service fees 3,995 Other liabilities 4,862 ------------ TOTAL LIABILITIES 26,549 ------------ NET ASSETS $ 18,867,241 ============ NET ASSETS ARE COMPRISED OF THE FOLLOWING: Capital (par value and additional paid-in) $ 20,774,022 Undistributed net investment loss (698) Accumulated net realized loss on investments (1,762,785) Net unrealized depreciation of investments (143,298) ------------ NET ASSETS $ 18,867,241 ============ SHARES OUTSTANDING ($.01 par value per share) 14,397,713 ============ NET ASSET VALUE $ 1.31 ============ Shares authorized 155,000,000
STATEMENT OF OPERATIONS Year Ended December 31, 2009 GROWTH PORTFOLIO INVESTMENT INCOME Dividends (Net of foreign tax withheld of $3,067) $ 297,235 Interest 5,942 ---------- TOTAL INVESTMENT INCOME 303,177 ---------- EXPENSES Investment advisory fees 82,082 Administrative service fees 41,041 Professional fees 23,269 Custody and transaction fees 38,372 Directors' fees and expenses 7,569 Compliance expenses 2,464 Qualification fees 782 Insurance expenses 7,654 ---------- TOTAL EXPENSES 203,233 LESS EXPENSES REIMBURSED (60,429) ---------- NET EXPENSES 142,804 ---------- INVESTMENT INCOME--NET 160,373 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments (667,293) Change in unrealized depreciation of investments 4,173,080 ---------- NET GAIN ON INVESTMENTS 3,505,787 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,666,160 ==========
See notes to financial statements. 10 STATEMENTS OF CHANGES IN NET ASSETS GROWTH PORTFOLIO
YEAR ENDED DECEMBER 31, ------------------------- 2009 2008 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Investment income--net $ 160,373 $ 234,813 Net realized loss on investments (667,293) (1,076,641) Change in unrealized appreciation (depreciation) of investments 4,173,080 (7,452,347) ----------- ----------- Net increase (decrease) in net assets resulting from operations 3,666,160 (8,294,175) DISTRIBUTIONS TO SHAREHOLDERS FROM Investment income--net (161,086) (242,950) ----------- ----------- Total distributions to shareholders (161,086) (242,950) CAPITAL SHARE TRANSACTIONS--Net (119,741) 3,415,153 ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 3,385,333 (5,121,972) NET ASSETS Beginning of year 15,481,908 20,603,880 ----------- ----------- End of year $18,867,241 $15,481,908 =========== =========== Undistributed net investment income (loss) $ (698) $ 15 =========== ===========
FINANCIAL HIGHLIGHTS Selected data for a share of capital stock outstanding throughout the years indicated. GROWTH PORTFOLIO
YEAR ENDED DECEMBER 31, ------------------------------------------------ 2009 2008 2007 2006 2005 ------- ------- ------- ------- ------- Net asset value, beginning of year $ 1.07 $ 1.73 $ 1.69 $ 1.57 $ 1.54 Income (loss) from investment operations Investment income--net 0.01 0.02 0.03 0.02 0.02 Net realized and unrealized gain (loss) on investments 0.24 (0.66) 0.06 0.19 0.03 ------- ------- ------- ------- ------- Total from investment operations 0.25 (0.64) 0.09 0.21 0.05 Less distributions Investment income--net (0.01) (0.02) (0.03) (0.02) (0.02) Capital gains 0.00 0.00 (0.02) (0.07) 0.00 ------- ------- ------- ------- ------- Total distributions (0.01) (0.02) (0.05) (0.09) (0.02) ------- ------- ------- ------- ------- Net asset value, end of year $ 1.31 $ 1.07 $ 1.73 $ 1.69 $ 1.57 ======= ======= ======= ======= ======= Total return 23.48% (37.15)% 5.37% 13.09% 3.13% ======= ======= ======= ======= ======= RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $18,867 $15,482 $20,604 $20,160 $18,499 Ratio of expenses with reimbursement to average net assets (1) 0.87% 0.87% 0.87% 0.87% 0.87% Ratio of expenses without reimbursement to average net assets 1.24% 1.01% 0.95% 0.96% 0.96% Ratio of net investment income (loss) to average net assets 0.98% 1.39% 1.45% 1.17% 1.16% Portfolio turnover rate 87.59% 13.68% 4.96% 93.06% 34.92%
(1) SM&R has voluntarily agreed to waive or reduce expenses to 0.87% on the Growth Portfolio until April 30, 2011. See notes to financial statements. 11 AMERICAN NATIONAL EQUITY INCOME PORTFOLIO MANAGER DISCUSSION The Equity Income Portfolio's investment objective continues to be current income and long-term capital appreciation. In selecting common and preferred stocks, the Portfolio focuses primarily on well-established companies with consistent and increasing dividend payment histories and future earnings potential sufficient to continue such dividend payments. The Portfolio's goal is to maintain a dividend yield (before fees and expenses) greater than that of the S&P 500 Index. We are pleased to report that the Portfolio posted a mid-teens positive return following a negative return in 2008. For 2009, the Portfolio had a total return including reinvested dividends of 16.27%, after portfolio expenses, but before product specific charges. The Portfolio's benchmark, the Lipper Equity Income Index, returned 23.85% for the year. The Portfolio continued to meet the goal of maintaining a dividend yield greater than that of the market, as represented by the Standard & Poor's 500 Index. The current dividend yield at December 31, 2009 for the Portfolio was 3.1% (before expenses) versus 2.0% for the S&P 500. The U.S. equity markets in 2009 were, to paraphrase Charles Dickens, a tale of two markets. For the first three months of the year, it was the worst of times, as investors shunned risk and drove the S&P 500 Index to levels not seen in twelve years. The second, third and fourth quarters became the best of times as investors began to purchase risky assets again thanks to growing confidence in improving economic conditions and the prospects for corporate earnings to turn the corner and begin rising again. The S&P 500 Index had its best annual performance in six years, returning 26.46% including reinvested dividends. The rally of almost 68% from March lows was the largest rebound in the post WW II era. For the fourth quarter, the Index returned 6.04%. All ten sectors in the S&P 500 finished in positive territory for the year for the first time since 2006. For the fourth quarter, nine of the ten sectors had positive returns, with the lone negative return coming from Financials (-3.3%) as investors remained concerned about earnings, especially at banks. Information Technology was the strongest performing sector, rising 10.7% as investors anticipated a significant increase in corporate IT spending. Consumer Discretionary and Healthcare were the second-best performing sectors, each gaining 9.1%. The performance of the Portfolio was enhanced by security selection in the Energy and Consumer Discretionary sectors, while security selection in the Healthcare and Information Technology sectors hampered performance. The Portfolio's best performing individual holdings for the year were Tupperware Brands (+105.2%), Starwood Hotels & Resorts (+104.3%), Limited Brands (+91.6%) and Morgan Stanley (+84.5%). Stocks posting the largest declines were Citigroup (-50.7%), Trustco Bank NY (-33.8%), Regions Financial (-33.5%) and Allegheny Energy (-30.7%). The current significant economic downturn appears to almost certainly have ended. The economy now seems to be entering a recovery phase that will probably be slow and below par for a protracted period of time. Although the worst of the recession seems to have passed, unemployment remains high at 10% and consumer spending, which is almost two-thirds of the economy, is still restrained as consumers continue to worry about additional job losses. Current barometers of economic activity are mixed. On the positive side, inflation remains tame. The Producer Price Index, a barometer of wholesale prices, rose 0.2% in December, the slowest month-over-month rate since May of last year. The core PPI (excluding food and energy costs) was flat for the month, lower than expected. The Index of Leading Economic Indicators rose to the highest level on record in December, the ninth consecutive increase. On the negative side, housing starts ended 2009 on a weak note, down 4% from November. Builders began construction on just 557,000 new units in December. The decline was entirely due to a 6.9% decline in single-family starts. The NAHB Housing Market Index fell in January to the lowest level in seven months. The economy lost another 85,000 jobs in December, after an upwardly-revised 4,000 job gain in November, which was the first gain in 2 years. Even though unemployment appears to have peaked in October at 10.2%, the highest rate in 26 years, unemployment will probably remain elevated for an extended period as employers are slow to hire new workers. 12 Corporate earnings reports for the fourth quarter have mostly met or exceeded expectations thus far. Third quarter 2009 operating earnings per share for companies in the S&P 500 Index was $17.50, the eighth consecutive quarter of year-over-year earnings declines. Based on analysts' consensus estimates, fourth quarter earnings are now expected to be 41% higher than the fourth quarter of last year and up 2.5% from the third quarter. For 2010, corporate earnings are forecast to rise 26% over 2009. The trailing twelve-month P/E ratio for the S&P 500 is currently 18.4x, and the forward twelve-month P/E is 14.4x. Using current earnings forecasts, the year-end 2010 P/E is 14x, and the 2011 year-end P/E is 12x. Under the current highly uncertain outlook for economic activity and corporate profitability, many equities appear to be fairly priced at this time. Under current economic and financial market conditions, we believe it is critically important to adhere to our conservative stock selection discipline that strives to purchase attractively valued equities for long-term appreciation potential while maintaining an above-market dividend yield. These characteristics should make this, well-diversified Portfolio a core holding for conservative, income-oriented investors. Sincerely, John S. Maidlow, CFA Portfolio Manager, Equity Income Portfolio 13 COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN EQUITY INCOME PORTFOLIO, LIPPER EQUITY INCOME FUND INDEX AND THE S&P 500 [CHART]
EQUITY LIPPER INCOME EQUITY INCOME PORTFOLIO S&P 500 FUND INDEX 12/31/1999 10000 10000 10000 12/31/2000 10964 9089 10746 12/31/2001 9818 7892 10187 12/31/2002 8613 6076 8513 12/31/2003 10514 8029 10712 12/31/2004 11566 8685 12107 12/31/2005 11830 9587 12809 12/31/2006 13995 10815 15166 12/31/2007 14002 10725 15618 12/31/2008 9708 6582 10089 12/31/2009 11581 9089 12495
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE OF THE PORTFOLIO AND DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE OF ANY AMERICAN NATIONAL INSURANCE COMPANY (AMERICAN NATIONAL) VARIABLE PRODUCT INVESTMENT OPTION CHANGES OVER TIME AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE CURRENT TO THE MOST RECENT MONTH-END, CONTACT AMERICAN NATIONAL AT 1-800-306-2959 OR ASK YOUR REGISTERED REPRESENTATIVE. The Equity Income Portfolio's performance figures reflect reinvestment of all dividends and capital gains distributions and changes in net asset value. These returns do not reflect the deduction of taxes that a contractowner might pay on a distribution or redemption of Portfolio shares (units). The performance information presented does not include the charges and expenses imposed by American National Insurance Company's variable product. The inclusion of such charges would lower performance. Please refer to the applicable American National variable product prospectus for a complete listing of these expenses. The Portfolio's shares are available exclusively as a funding vehicle for American National's variable life insurance policies and variable annuity contracts. 14 SCHEDULE OF INVESTMENTS December 31, 2009 EQUITY INCOME PORTFOLIO COMMON STOCK
SHARES VALUE CONSUMER DISCRETIONARY-- HOTELS, RESTAURANTS & LEISURE--1.97% McDonald's Corp. 2,800 $ 174,832 Starwood Hotels & Resorts Worldwide, Inc. 4,500 164,565 ----------- 339,397 HOUSEHOLD DURABLES--1.25% Newell Rubbermaid Inc. 5,000 75,050 Tupperware Brands Corp. 3,000 139,710 ----------- 214,760 MEDIA--0.85% CBS Corp. (Class B) 3,800 53,390 Walt Disney Co. (The) 2,875 92,719 ----------- 146,109 MULTILINE RETAIL--1.26% J.C. Penney Co., Inc. 4,300 114,423 Target Corp. 2,100 101,577 ----------- 216,000 SPECIALTY RETAIL--1.59% Foot Locker, Inc. 5,800 64,612 Limited Brands, Inc. 7,057 135,777 TJX Companies, Inc. (The) 2,000 73,100 ----------- 273,489 ----------- TOTAL CONSUMER DISCRETIONARY--6.92% 1,189,755 ----------- CONSUMER STAPLES-- BEVERAGES--2.36% Coca-Cola Co. (The) 3,900 222,300 PepsiCo, Inc. 3,000 182,400 ----------- 404,700 FOOD PRODUCTS--3.39% ConAgra Foods, Inc. 8,000 184,400 H.J. Heinz Co. 3,641 155,689 Kraft Foods, Inc. (Class A) 4,400 119,592 McCormick & Co., Inc. (a) 3,420 123,565 ----------- 583,246 FOOD & STAPLES RETAILING--1.40% Wal-Mart Stores, Inc. 4,500 240,525 HOUSEHOLD PRODUCTS--3.82% Colgate-Palmolive Co. 1,800 147,870 Kimberly-Clark Corp. 3,100 197,501 Procter & Gamble Co. (The) 5,125 310,729 ----------- 656,100 PERSONAL PRODUCTS--1.06% Alberto-Culver Co. 2,200 64,438 Avon Products, Inc. 3,725 117,337 ----------- 181,775 TOBACCO--1.07% Lorillard, Inc. 1,050 84,241 Philip Morris International Inc. 2,075 99,994 ----------- 184,235 ----------- TOTAL CONSUMER STAPLES--13.10% 2,250,581 ----------- ENERGY-- ENERGY EQUIPMENT & SERVICES--1.80% Baker Hughes Inc. 1,800 72,864 Schlumberger Ltd. 2,300 149,707 Weatherford International Ltd. * 4,825 86,416 ----------- 308,987 OIL, GAS & CONSUMABLE FUELS--12.19% Anadarko Petroleum Corp. 3,000 187,260 BP PLC ADR 3,310 191,881 Boardwalk Pipeline Partners, L.P. 3,800 114,114 Chevron Corp. 6,400 492,736 Enterprise Products Partners L.P. 3,200 100,512 Exxon Mobil Corp. 9,000 613,710 Plains All American Pipeline, L.P. 2,000 105,700 Royal Dutch Shell PLC ADR, (Class A) 3,419 205,516 Spectra Energy Corp. 4,050 83,066 ----------- 2,094,495 ----------- TOTAL ENERGY--13.99% 2,403,482 ----------- FINANCIALS-- CAPITAL MARKETS--1.65% Charles Schwab Corp. (The) 6,425 120,918 Morgan Stanley 3,300 97,680 State Street Corp. 1,500 65,310 ----------- 283,908 COMMERCIAL BANKS--4.18% Comerica Inc. 4,000 118,280 PNC Financial Services Group, Inc. 3,254 171,779 Regions Financial Corp. 3,433 18,161 U.S. Bancorp 9,800 220,598 Wells Fargo & Co. 7,000 188,930 ----------- 717,748 CONSUMER FINANCE--0.46% NYSE Euronext 3,125 79,062
15
SHARES VALUE DIVERSIFIED FINANCIAL SERVICES--2.68% Bank of America Corp. 9,928 $ 149,516 Citigroup Inc. 12,000 39,720 JPMorgan Chase & Co. 6,500 270,855 ----------- 460,091 INSURANCE--5.28% Allstate Corp. (The) 2,427 72,907 Aspen Insurance Holdings Ltd. 4,500 114,525 Arthur J. Gallagher & Co. 3,650 82,161 Hartford Financial Services Group, Inc. (The) 1,475 34,308 Marsh & McLennan Companies, Inc. 3,550 78,384 Principal Financial Group, Inc. 4,154 99,862 Prudential Financial, Inc. 2,950 146,792 RenaissanceRe Holdings Ltd. 2,275 120,916 Travelers Companies, Inc. (The) 3,150 157,059 ----------- 906,914 REAL ESTATE INVESTMENT TRUSTS--4.47% AvalonBay Communities, Inc. 825 67,741 Boston Properties, Inc. 900 60,363 BRE Properties, Inc. 1,750 57,890 Duke Realty Corp. 2,650 32,250 HCP, Inc. 2,000 61,080 Health Care REIT, Inc. 1,200 53,184 Liberty Property Trust 2,400 76,824 Mack-Cali Realty Corp. 2,000 69,140 National Retail Properties Inc. 2,200 46,684 ProLogis 1,500 20,535 Simon Property Group, Inc. 1,045 83,425 Weingarten Realty Investors 7,000 138,530 ----------- 767,646 THRIFTS & MORTGAGE FINANCE--0.46% New York Community Bancorp, Inc. 5,000 72,550 TrustCo Bank Corp. NY 1,200 7,560 ----------- 80,110 ----------- TOTAL FINANCIALS--19.18% 3,295,479 ----------- HEALTH CARE-- BIOTECHNOLOGY--0.62% Genzyme Corp. * 950 46,560 Gilead Sciences, Inc. * 1,400 60,592 ----------- 107,152 HEALTH EQUIPMENT & SUPPLIES--0.27% Covidien PLC 975 46,693 PHARMACEUTICALS--8.22% Abbott Laboratories 4,000 215,960 Eli Lilly & Co. 5,800 207,118 Johnson & Johnson 5,000 322,050 Merck & Co. Inc. 6,300 230,202 Pfizer Inc. 24,006 436,669 ----------- 1,411,999 ----------- TOTAL HEALTH CARE--9.11% 1,565,844 ----------- INDUSTRIALS-- AEROSPACE & DEFENSE--2.07% Boeing Co. (The) 1,600 86,608 Northrop Grumman Corp. 975 54,454 United Technologies Corp. 3,100 215,171 ----------- 356,233 AIR FREIGHT & LOGISTICS--0.69% United Parcel Service, Inc. (Class B) 2,075 119,043 COMMERCIAL SERVICES & SUPPLIES--0.87% Pitney Bowes Inc. 3,400 77,384 Sovran Self Storage, Inc. 2,000 71,460 ----------- 148,844 INDUSTRIAL CONGLOMERATES--2.86% 3M Co. 1,986 164,183 General Electric Co. 19,300 292,009 Tyco International Ltd. 975 34,788 ----------- 490,980 MACHINERY--0.26% Barnes Group Inc. 2,600 43,940 MARINE--0.34% Seaspan Corp. 6,300 58,086 ROAD & RAIL--0.46% Union Pacific Corp. 1,250 79,875 ----------- TOTAL INDUSTRIALS--7.55% 1,297,001 ----------- INFORMATION TECHNOLOGY-- COMMUNICATIONS EQUIPMENT--1.20% Harris Corp. 2,700 128,385 Nokia Oyj ADR 1,700 21,845 QUALCOMM Inc. 1,225 56,668 ----------- 206,898 COMPUTERS & PERIPHERALS--2.08% Diebold, Inc. 3,100 88,195 International Business Machines Corp. 2,050 268,345 ----------- 356,540 ELECTRONIC EQUIPMENT & INSTRUMENTS--0.35% Tyco Electronics Ltd. 2,475 60,761
16
SHARES VALUE SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.40% Intel Corp. 11,700 $ 238,680 Linear Technology Corp. 2,900 88,566 Taiwan Semiconductor Manufacturing Company Ltd. 7,425 84,942 ----------- 412,188 SOFTWARE--2.08% Microsoft Corp. 11,700 356,733 ----------- TOTAL INFORMATION TECHNOLOGY--8.11% 1,393,120 ----------- MATERIALS-- CHEMICALS--1.59% E. I. du Pont de Nemours and Co. 1,600 53,872 PPG Industries, Inc. 1,215 71,126 Praxair, Inc. 700 56,217 Sensient Technologies Corp. 3,533 92,918 ----------- 274,133 METALS & MINING--0.32% Alcoa Inc. 3,420 55,130 PAPER & FOREST PRODUCTS--0.56% Potlatch Corp. 3,000 95,640 ----------- TOTAL MATERIALS--2.47% 424,903 ----------- TELECOMMUNICATION SERVICES-- DIVERSIFIED TELECOMMUNICATION SERVICES--5.15% AT&T Inc. 12,093 338,967 Frontier Communications Corp. 16,000 124,960 Verizon Communications Inc. 9,969 330,273 Windstream Corp. 8,225 90,393 ----------- 884,593 WIRELESS TELECOMMUNICATION SERVICES--0.43% Rogers Communications, Inc. (Class B) 2,400 74,400 ----------- TOTAL TELECOMMUNICATION SERVICES--5.58% 958,993 ----------- UTILITIES-- ELECTRIC UTILITIES--5.10% Allegheny Energy, Inc. 1,715 40,268 Ameren Corp. 3,088 86,310 Consolidated Edison, Inc. 3,300 149,919 Duke Energy Corp. 7,500 129,075 FPL Group, Inc. 1,700 89,794 PPL Corp. 1,000 32,310 Pinnacle West Capital Corp. 4,000 146,320 Progress Energy, Inc. 3,000 123,030 Southern Co. 2,400 79,968 ----------- 876,994 GAS UTILITIES--1.30% Nicor Inc. 2,000 84,200 NiSource Inc. 9,000 138,420 ----------- 222,620 MULTI-UTILITIES--1.56% DTE Energy Co. 5,200 226,668 Sempra Energy 725 40,586 ----------- 267,254 ----------- TOTAL UTILITIES--7.96% 1,366,868 ----------- TOTAL COMMON STOCK--93.97% (Cost $17,719,720) 16,146,026 ----------- TOTAL INVESTMENTS--93.97% (Cost $17,719,720) 16,146,026 CASH AND OTHER ASSETS, LESS LIABILITIES--6.03% 1,035,350 ----------- NET ASSETS--100.00% $17,181,376 ===========
*--Non-income producing securities ABBREVIATIONS ADR--American Depositary Receipt NOTE TO SCHEDULE OF INVESTMENTS (a) Non-voting shares See notes to financial statements. SECTOR WEIGHTINGS BY TOTAL INVESTMENTS [CHART] 7.37% Consumer Discretionary 13.94% Consumer Staples 14.89% Energy 20.40% Financials 9.70% Health Care 8.03% Industrials 8.63% Information Technology 2.63% Materials 5.94% Telecommunication Services 8.47% Utilities
17 STATEMENT OF ASSETS AND LIABILITIES December 31, 2009 EQUITY INCOME PORTFOLIO ASSETS Investments in securities, at value (Cost $17,719,720) $ 16,146,026 Cash and cash equivalents 1,013,369 Prepaid expenses 4,782 Receivable for: Dividends 29,219 Capital stock sold 11,076 Expense reimbursement 2,910 ------------ TOTAL ASSETS 17,207,382 ------------ LIABILITIES Capital stock reacquired 3,078 Payable to investment adviser for fund expenses 7,160 Accrued: Investment advisory fees 7,288 Administrative service fees 3,644 Other liabilities 4,836 ------------ TOTAL LIABILITIES 26,006 ------------ NET ASSETS $ 17,181,376 ============ NET ASSETS ARE COMPRISED OF THE FOLLOWING: Capital (par value and additional paid-in) $ 19,906,254 Undistributed net investment income 18 Accumulated net realized loss on investments (1,151,202) Net unrealized depreciation of investments (1,573,694) ------------ NET ASSETS $ 17,181,376 ============ SHARES OUTSTANDING ($.01 par value per share) 13,425,476 ============ NET ASSET VALUE $ 1.28 ============ Shares authorized 120,000,000
STATEMENT OF OPERATIONS Year Ended December 31, 2009 EQUITY INCOME PORTFOLIO INVESTMENT INCOME Dividends (Net of foreign tax withheld of $2,152) $ 558,827 Interest 5,616 ----------- TOTAL INVESTMENT INCOME 564,443 ----------- EXPENSES Investment advisory fees 75,334 Administrative service fees 37,667 Professional fees 23,269 Custody and transaction fees 8,459 Directors' fees and expenses 7,570 Compliance expenses 2,172 Qualification fees 782 Insurance expenses 7,819 ----------- TOTAL EXPENSES 163,072 LESS EXPENSES REIMBURSED (44,097) ----------- NET EXPENSES 118,975 ----------- INVESTMENT INCOME--NET 445,468 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments (1,071,426) Change in unrealized appreciation of investments 3,124,815 ----------- NET GAIN ON INVESTMENTS 2,053,389 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,498,857 ===========
See notes to financial statements. 18 STATEMENTS OF CHANGES IN NET ASSETS EQUITY INCOME PORTFOLIO
YEAR ENDED DECEMBER 31, ------------------------- 2009 2008 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Investment income--net $ 445,468 $ 640,444 Net realized gain (loss) on investments (1,071,426) 446,995 Change in unrealized appreciation (depreciation) of investments 3,124,815 (7,918,223) ----------- ----------- Net increase (decrease) in net assets resulting from operations 2,498,857 (6,830,784) DISTRIBUTIONS TO SHAREHOLDERS FROM Investment income--net (445,470) (645,538) Capital gains -- (221,937) ----------- ----------- Total distributions to shareholders (445,470) (867,475) CAPITAL SHARE TRANSACTIONS--Net 42,114 (800,627) ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 2,095,501 (8,498,886) NET ASSETS Beginning of year 15,085,875 23,584,761 ----------- ----------- End of year $17,181,376 $15,085,875 =========== =========== Undistributed net investment income $ 18 $ 20 =========== ===========
FINANCIAL HIGHLIGHTS Selected data for a share of capital stock outstanding throughout the years indicated. EQUITY INCOME PORTFOLIO
YEAR ENDED DECEMBER 31, ------------------------------------------------ 2009 2008 2007 2006 2005 ------- ------- ------- ------- ------- Net asset value, beginning of year $ 1.13 $ 1.71 $ 1.80 $ 1.69 $ 1.72 Income (loss) from investment operations Investment income--net 0.03 0.05 0.05 0.06 0.03 Net realized and unrealized gain (loss) on investments 0.15 (0.56) (0.04) 0.25 0.01 ------- ------- ------- ------- ------- Total from investment operations 0.18 (0.51) 0.01 0.31 0.04 Less distributions Investment income--net (0.03) (0.05) (0.05) (0.06) (0.03) Capital gains 0.00 (0.02) (0.05) (0.14) (0.04) ------- ------- ------- ------- ------- Total distributions (0.03) (0.07) (0.10) (0.20) (0.07) ------- ------- ------- ------- ------- Net asset value, end of year $ 1.28 $ 1.13 $ 1.71 $ 1.80 $ 1.69 ======= ======= ======= ======= ======= Total return 16.27% (29.83)% 0.64% 18.30% 2.28% ======= ======= ======= ======= ======= RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $17,181 $15,086 $23,585 $24,433 $22,686 Ratio of expenses with reimbursement to average net assets (1) 0.79% 0.79% 0.79% 0.79% 0.79% Ratio of expenses without reimbursement to average net assets 1.08% 0.99% 0.92% 0.93% 0.93% Ratio of net investment income (loss) to average net assets 2.96% 3.28% 2.92% 3.23% 1.64% Portfolio turnover rate 9.67% 14.44% 5.98% 54.68% 25.57%
(1) SM&R has voluntarily agreed to waive or reduce expenses to 0.79% on the Equity Income Portfolio until April 30, 2011. See notes to financial statements. 19 AMERICAN NATIONAL BALANCED PORTFOLIO MANAGER DISCUSSION The Portfolio's investment objectives are to conserve principal, produce current income and achieve long-term capital appreciation. The Portfolio seeks to accomplish these objectives with a balance of both growth and income through its well-diversified portfolio of stocks of primarily large-cap companies, U.S. Government agency and corporate fixed income securities, and money market instruments. The Portfolio significantly improved its performance for 2009 from 2008, posting a high-teens return. The Portfolio had a total return for the year of 18.28%, after portfolio expenses, but before product specific charges. For comparison, the Portfolio's benchmark, the Lipper Balanced Fund Index, had a total return of 23.35% over the same time period. As of December 31, the Portfolio's asset allocation was approximately 64% equities, 21% bonds and 15% cash equivalents. The equity portion of the Portfolio produced a total return (capital appreciation plus dividend income) of 24.81%, while the broad equity market, as measured by the S&P 500 Index, rose 26.46% for the twelve months. The U.S. equity markets in 2009 were, to paraphrase Charles Dickens, a tale of two markets. For the first three months of the year, it was the worst of times, as investors shunned risk and drove the S&P 500 Index to levels not seen in twelve years. The second, third and fourth quarters became the best of times as investors began to purchase risky assets again thanks to growing confidence in improving economic conditions and the prospects for corporate earnings to turn the corner and begin rising again. The S&P 500 Index had its best annual performance in six years, returning 26.46% including reinvested dividends. The rally of almost 68% from March lows was the largest rebound in the post WW II era. For the fourth quarter, the Index returned 6.04%. All ten sectors in the S&P 500 finished in positive territory for the year for the first time since 2006. For the fourth quarter, nine of the ten sectors had positive returns, with the lone negative return coming from Financials (-3.3%) as investors remained concerned about earnings, especially at banks. Information Technology was the strongest performing sector, rising 10.7% as investors anticipated a significant increase in corporate IT spending. Consumer Discretionary and Healthcare were the second-best performing sectors, each gaining 9.1%. The performance of the Portfolio was enhanced by security selection in the Industrials and Consumer Discretionary sectors, while security selection in the Utilities and Information Technology sectors hampered performance. The Portfolio's best performing individual holdings for the year were Louisiana-Pacific (+347.4%), Wyndham Worldwide (+207.9%), MeadWestvaco (+155.9%) and Apple (+146.9%). Stocks suffering the largest declines for the year were Citigroup (-50.7%), Allegheny Energy (-30.7%) Genzyme (-26.2%), and Endo Pharmaceuticals (-20.7%). The current significant economic downturn appears to almost certainly have ended. The economy now seems to be entering a recovery phase that will probably be slow and below par for a protracted period of time. Although the worst of the recession seems to have passed, unemployment remains high at 10% and consumer spending, which is almost two-thirds of the economy, is still restrained as consumers continue to worry about additional job losses. Current barometers of economic activity are mixed. On the positive side, inflation remains tame. The Producer Price Index, a barometer of wholesale prices, rose 0.2% in December, the slowest month-over-month rate since May of last year. The core PPI (excluding food and energy costs) was flat for the month, lower than expected. The Index of Leading Economic Indicators rose to the highest level on record in December, the ninth consecutive increase. On the negative side, housing starts ended 2009 on a weak note, down 4% from November. Builders began construction on just 557,000 new units in December. The decline was entirely due to a 6.9% decline in single-family starts. The NAHB Housing Market Index fell in January to the lowest level in seven months. The economy lost another 85,000 jobs in December, after an upwardly-revised 4,000 job gain in November, which was the first gain in 2 years. Even though unemployment appears to have peaked in October at 10.2%, the highest rate in 26 years, unemployment will probably remain elevated for an extended period as employers are slow to hire new workers. 20 Corporate earnings reports for the fourth quarter have mostly met or exceeded expectations thus far. Third quarter 2009 operating earnings per share for companies in the S&P 500 Index was $17.50, the eighth consecutive quarter of year-over-year earnings declines. Based on analysts' consensus estimates, fourth quarter earnings are now expected to be 41% higher than the fourth quarter of last year and up 2.5% from the third quarter. For 2010, corporate earnings are forecast to rise 26% over 2009. The trailing twelve-month P/E ratio for the S&P 500 is currently 18.4x, and the forward twelve-month P/E is 14.4x. Using current earnings forecasts, the year-end 2010 P/E is 14x, and the 2011 year-end P/E is 12x. Under the current highly uncertain outlook for economic activity and corporate profitability, many equities appear to be fairly priced at this time. During 2009, interest rates rose on almost all points on the yield curve, with the largest increases at the long end, steepening the curve even further. The Federal Reserve's Fed Fund target rate has been between 0-0.25% for all of 2009. This low target kept rates low at the short end of the curve, with inflation expectations helping to raise rates at the middle and long end. There is less concern that the Fed will raise interest rates soon, and it is suggested that rate changes are unlikely through most of 2010, with the possibility for rate increases in the fourth quarter. The ten-year Treasury rate is currently about 3.70%, up from 3.20% on November 30, 2009. Under current economic and financial market conditions, we believe it is critically important to adhere to our conservative stock selection discipline that strives to purchase attractively valued equities for long-term appreciation potential while maintaining a high-quality, well-diversified fixed income allocation. These characteristics should make this well-diversified Portfolio a core long-term holding for conservative, income-oriented investors. Sincerely John S. Maidlow, CFA Anne M. LeMire, CPA CFA Portfolio Manager, Balanced Portfolio Portfolio Manager, Balanced Portfolio 21 COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN BALANCED PORTFOLIO, LIPPER BALANCED FUND INDEX AND THE S&P 500 [CHART]
LIPPER BALANCED BALANCED FUND PORTFOLIO S&P 500 INDEX 12/31/1999 10000 10000 10000 12/31/2000 10341 9089 10239 12/31/2001 9865 7892 9907 12/31/2002 9356 6076 8849 12/31/2003 11139 8029 10613 12/31/2004 11811 8685 11566 12/31/2005 11866 9587 12167 12/31/2006 13215 10815 13579 12/31/2007 13852 10725 14465 12/31/2008 10571 6582 10679 12/31/2009 12710 9089 13173
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE OF THE PORTFOLIO AND DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE OF ANY AMERICAN NATIONAL INSURANCE COMPANY (AMERICAN NATIONAL) VARIABLE PRODUCT INVESTMENT OPTION CHANGES OVER TIME AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE CURRENT TO THE MOST RECENT MONTH-END, CONTACT AMERICAN NATIONAL AT 1-800-306-2959 OR ASK YOUR REGISTERED REPRESENTATIVE. The Balanced Portfolio's performance figures reflect reinvestment of all dividends and capital gains distributions and changes in net asset value. These returns do not reflect the deduction of taxes that a contractowner might pay on a distribution or redemption of Portfolio shares (units). The performance information presented does not include the charges and expenses imposed by American National Insurance Company's variable product. The inclusion of such charges would lower performance. Please refer to the applicable American National variable product prospectus for a complete listing of these expenses. The Portfolio's shares are available exclusively as a funding vehicle for American National's variable life insurance policies and variable annuity contracts. 22 SCHEDULE OF INVESTMENTS December 31, 2009 BALANCED PORTFOLIO COMMON STOCK
SHARES VALUE CONSUMER DISCRETIONARY-- HOTELS, RESTAURANTS & LEISURE--1.15% McDonald's Corp. 1,800 $ 112,392 Starwood Hotels & Resorts Worldwide, Inc. 1,902 69,556 Wyndham Worldwide Corp. 645 13,010 ----------- 194,958 HOUSEHOLD DURABLES--0.24% Newell Rubbermaid Inc. 2,700 40,527 MEDIA--1.02% CBS Corp. (Class B) 1,266 17,787 Viacom Inc. (Class B) * 1,250 37,162 Walt Disney Co. (The) 3,650 117,712 ----------- 172,661 MULTILINE RETAIL--1.12% J.C. Penney Co., Inc. 2,675 71,182 Target Corp. 2,450 118,506 ----------- 189,688 SPECIALTY RETAIL--2.13% Best Buy Co., Inc. 1,925 75,960 Foot Locker, Inc. 3,200 35,648 Limited Brands, Inc. 4,900 94,276 Lowe's Companies, Inc. 3,750 87,713 TJX Companies, Inc. (The) 1,875 68,531 ----------- 362,128 ----------- TOTAL CONSUMER DISCRETIONARY--5.66% 959,962 ----------- CONSUMER STAPLES-- BEVERAGES--1.52% Coca-Cola Co. (The) 2,732 155,724 PepsiCo, Inc. 1,675 101,840 ----------- 257,564 FOOD PRODUCTS--1.52% ConAgra Foods, Inc. 1,350 31,118 H.J. Heinz Co. 1,857 79,405 Kraft Foods, Inc. (Class A) 1,925 52,321 McCormick & Co., Inc. (b) 2,615 94,480 ----------- 257,324 FOOD & STAPLES RETAILING--1.52% CVS Caremark Corp. 2,750 88,577 Wal-Mart Stores, Inc. 3,175 169,704 ----------- 258,281 HOUSEHOLD PRODUCTS--2.12% Colgate-Palmolive Co. 925 75,989 Kimberly-Clark Corp. 1,300 82,823 Procter & Gamble Co. (The) 3,325 201,595 ----------- 360,407 PERSONAL PRODUCTS--0.55% Alberto-Culver Co. 1,125 32,951 Avon Products, Inc. 1,900 59,850 ----------- 92,801 TOBACCO--0.55% Lorillard, Inc. 425 34,098 Philip Morris International Inc. 1,225 59,033 ----------- 93,131 ----------- TOTAL CONSUMER STAPLES--7.78% 1,319,508 ----------- ENERGY-- ENERGY EQUIPMENT & SERVICES--1.45% Baker Hughes Inc. 1,225 49,588 Schlumberger Ltd. 1,463 95,227 Transocean Ltd. * 575 47,610 Weatherford International Ltd. * 2,974 53,264 ----------- 245,689 OIL, GAS & CONSUMABLE FUELS--5.48% Anadarko Petroleum Corp. 1,975 123,280 BP PLC ADR 2,410 139,708 Chevron Corp. 2,957 227,659 Exxon Mobil Corp. 5,938 404,912 Spectra Energy Corp. 1,675 34,354 ----------- 929,913 ----------- TOTAL ENERGY--6.93% 1,175,602 ----------- FINANCIALS-- CAPITAL MARKETS--2.41% Bank of New York Mellon Corp. 2,875 80,414 Charles Schwab Corp. (The) 3,575 67,282 Goldman Sachs Group, Inc. (The) 775 130,851 Morgan Stanley 2,732 80,867 State Street Corp. 1,125 48,983 ----------- 408,397 COMMERCIAL BANKS--2.02% PNC Financial Services Group, Inc. 2,850 150,452 U.S. Bancorp 3,800 85,538 Wells Fargo & Co. 3,916 105,693 ----------- 341,683
23
SHARES VALUE CONSUMER FINANCE--0.60% Discover Financial Services 3,600 $ 52,956 NYSE Euronext 1,950 49,335 ----------- 102,291 DIVERSIFIED FINANCIAL SERVICES--1.69% Bank of America Corp. 5,900 88,854 Citigroup Inc. 6,533 21,624 JPMorgan Chase & Co. 4,201 175,056 ----------- 285,534 INSURANCE--2.51% Allstate Corp. (The) 951 28,568 Aspen Insurance Holdings Ltd. 2,425 61,716 Hartford Financial Services Group, Inc. (The) 900 20,934 Principal Financial Group, Inc. 2,250 54,090 Prudential Financial, Inc. 2,137 106,337 RenaissanceRe Holdings Ltd. 1,050 55,808 Travelers Companies, Inc. (The) 1,976 98,523 ----------- 425,976 REAL ESTATE INVESTMENT TRUSTS--0.08% Host Hotels & Resorts Inc. 1,188 13,864 ----------- TOTAL FINANCIALS--9.31% 1,577,745 ----------- HEALTH CARE-- BIOTECHNOLOGY--1.22% Amgen Inc. * 600 33,942 Celgene Corp. * 1,700 94,656 Genzyme Corp. * 875 42,884 Gilead Sciences, Inc. * 800 34,624 ----------- 206,106 HEALTH CARE PROVIDERS & SERVICES--0.96% DaVita, Inc. * 575 33,775 Patterson Companies Inc. * 1,400 39,172 UnitedHealth Group Inc. 1,200 36,576 WellPoint Inc.* 900 52,461 ----------- 161,984 HEALTH EQUIPMENT & SUPPLIES--0.50% Covidien PLC 575 27,537 Hologic, Inc. * 1,050 15,225 Varian Medical Systems, Inc. * 900 42,165 ----------- 84,927 LIFE SCIENCES TOOLS & SERVICES--0.28% Thermo Fisher Scientific, Inc. * 1,000 47,690 PHARMACEUTICALS--5.42% Abbott Laboratories 2,500 134,975 Cephalon, Inc. * 1,100 68,651 Endo Pharmaceuticals Holdings Inc. * 900 18,459 Eli Lilly & Co. 2,425 86,597 Johnson & Johnson 4,000 257,640 Merck & Co. Inc. 3,150 115,101 Pfizer Inc. 13,069 237,725 ----------- 919,148 ----------- TOTAL HEALTH CARE--8.38% 1,419,855 ----------- INDUSTRIALS-- AEROSPACE & DEFENSE--2.10% Boeing Co. (The) 1,350 73,075 General Dynamics Corp. 825 56,240 Goodrich Corp. 945 60,716 L-3 Communications Holdings, Inc. 400 34,780 Northrop Grumman Corp. 600 33,510 Rockwell Collins, Inc. 725 40,136 United Technologies Corp. 825 57,263 ----------- 355,720 AIR FREIGHT & LOGISTICS--0.66% FedEx Corp. 550 45,897 United Parcel Service, Inc. (Class B) 1,150 65,976 ----------- 111,873 COMMERCIAL SERVICES & SUPPLIES--0.16% Avis Budget Group, Inc. * 230 3,018 Pitney Bowes Inc. 1,025 23,329 ----------- 26,347 INDUSTRIAL CONGLOMERATES--1.70% 3M Co. 1,100 90,937 General Electric Co. 11,650 176,264 Tyco International Ltd. 575 20,516 ----------- 287,717 MACHINERY--2.11% Barnes Group Inc. 1,200 20,280 Caterpillar Inc. 500 28,495 Danaher Corp. 875 65,800 Dover Corp. 800 33,288 Eaton Corp. 500 31,810 Illinois Tool Works Inc. 1,125 53,989 Ingersoll-Rand Co. Ltd. (Class A) 1,200 42,888 PACCAR Inc. 1,125 40,804 Parker Hannifin Corp. 750 40,410 ----------- 357,764 MARINE--0.07% Seaspan Corp. 1,325 12,217
24
SHARES VALUE ROAD & RAIL--0.44% Ryder System, Inc. 500 $ 20,585 Union Pacific Corp. 850 54,315 ----------- 74,900 ----------- TOTAL INDUSTRIALS--7.24% 1,226,538 ----------- INFORMATION TECHNOLOGY-- COMMUNICATIONS EQUIPMENT--2.72% Arris Group Inc. * 3,900 44,577 Cisco Systems, Inc. * 6,700 160,398 Harris Corp. 1,450 68,947 Nokia Oyj ADR 3,087 39,668 QUALCOMM Inc. 2,200 101,772 Research In Motion Ltd. * 675 45,590 ----------- 460,952 COMPUTERS & PERIPHERALS--3.94% Apple Inc. * 975 205,589 EMC Corp. * 5,000 87,350 Hewlett-Packard Co. 3,210 165,347 International Business Machines Corp. 1,600 209,440 ----------- 667,726 ELECTRONIC EQUIPMENT & INSTRUMENTS--0.45% Agilent Technologies, Inc. * 1,200 37,284 Tyco Electronics Ltd. 1,575 38,666 ----------- 75,950 INFORMATION TECHNOLOGY SERVICES--0.34% Amdocs Ltd. * 1,000 28,530 Global Payments Inc. 550 29,623 ----------- 58,153 INTERNET SOFTWARE & SERVICES--0.16% Akamai Technologies, Inc. * 1,075 27,230 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.57% Intel Corp. 6,057 123,563 Linear Technology Corp. 1,100 33,594 Taiwan Semiconductor Manufacturing Company Ltd. 4,975 56,914 Texas Instruments Inc. 2,000 52,120 ----------- 266,191 SOFTWARE--2.83% Electronic Arts Inc. * 714 12,673 Microsoft Corp. 11,282 343,988 Oracle Corp. 4,988 122,406 ----------- 479,067 ----------- TOTAL INFORMATION TECHNOLOGY--12.01% 2,035,269 ----------- MATERIALS-- CHEMICALS--1.37% E. I. du Pont de Nemours and Co. 1,000 33,670 International Flavors & Fragrances Inc. 570 23,450 Monsanto Co. 575 47,006 PPG Industries, Inc. 413 24,177 Praxair, Inc. 450 36,140 Sensient Technologies Corp. 2,600 68,380 ----------- 232,823 CONTAINERS & PACKAGING--0.09% Ball Corp. 300 15,510 METALS & MINING--0.23% Nucor Corp. 600 27,990 United States Steel Corp. 200 11,024 ----------- 39,014 PAPER & FOREST PRODUCTS--0.11% Louisiana-Pacific Corp. * 650 4,537 MeadWestvaco Corp. 500 14,315 ----------- 18,852 ----------- TOTAL MATERIALS--1.80% 306,199 ----------- TELECOMMUNICATION SERVICES-- DIVERSIFIED TELECOMMUNICATION SERVICES--2.02% AT&T Inc. 6,675 187,100 Verizon Communications Inc. 3,200 106,016 Windstream Corp. 4,500 49,455 ----------- 342,571 WIRELESS TELECOMMUNICATION SERVICES--0.65% American Tower Corporation (Class A) * 725 31,327 Rogers Communications, Inc. (Class B) 750 23,250 Vodafone Group PLC ADR 2,392 55,231 ----------- 109,808 ----------- TOTAL TELECOMMUNICATION SERVICES--2.67% 452,379 ----------- UTILITIES-- ELECTRIC UTILITIES--1.82% Allegheny Energy, Inc. 1,050 24,654 Ameren Corp. 1,900 53,105 CenterPoint Energy, Inc. 2,000 29,020 Duke Energy Corp. 1,325 22,803 Exelon Corp. 900 43,983 FPL Group, Inc. 650 34,333 NRG Energy, Inc. * 750 17,708 PPL Corp. 625 20,194 Southern Co. 1,900 63,308 ----------- 309,108
25
SHARES VALUE MULTI-UTILITIES--0.15% Sempra Energy 450 $ 25,191 ----------- TOTAL UTILITIES--1.97% 334,299 ----------- TOTAL COMMON STOCK--63.75% (Cost $11,007,758) 10,807,356 ----------- FACE AMOUNT U S GOVERNMENT AGENCY SECURITIES U S GOVERNMENT AGENCY SECURITIES--0.01% Federal Home Loan Mortgage Corp., Pool # 360100, 9.00%, 04/01/20 $ 1,064 1,213 ----------- TOTAL U S GOVERNMENT AGENCY SECURITIES--0.01% (Cost $1,059) 1,213 ----------- CORPORATE BONDS CONSUMER DISCRETIONARY-- DIVERSIFIED CONSUMER SERVICES--1.20% Hertz Corp., 7.40%, 03/01/11 200,000 202,500 MULTILINE RETAIL--1.60% Target Corp., 5.125%, 01/15/13 250,000 271,451 ----------- TOTAL CONSUMER DISCRETIONARY--2.80% 473,951 ----------- ENERGY-- OIL, GAS & CONSUMABLE FUELS--1.56% ConocoPhillips, 4.40%, 05/15/13 250,000 263,773 ----------- TOTAL ENERGY--1.56% 263,773 ----------- FINANCIALS-- CAPITAL MARKETS--3.12% Ameriprise Financial, Inc., 5.65%, 11/15/15 250,000 263,603 Goldman Sachs Group, Inc. (The), 5.30%, 02/14/12 250,000 265,251 ----------- 528,854 DIVERSIFIED FINANCIAL SERVICES--3.17% Bank of America, 5.375%, 09/11/12 250,000 265,227 JPMorgan Chase & Co., 6.625%, 03/15/12 250,000 272,916 ----------- 538,143 INSURANCE--1.42% Prudential Financial, Inc., 5.10%, 12/14/11 231,000 241,106 THRIFTS & MORTGAGE FINANCE--1.42% Washington Mutual Inc., 4.20%, 01/15/10 (a) 250,000 240,000 ----------- TOTAL FINANCIALS--9.13% 1,548,103 -----------
CORPORATE BONDS
FACE AMOUNT VALUE INDUSTRIALS-- ELECTRICAL EQUIPMENT--3.10% Emerson Electric Company, 5.25%, 10/15/18 $500,000 $ 525,423 MACHINERY--4.54% Eaton Corp., 5.60%, 05/15/18 500,000 524,085 Harsco Corp., 5.75%, 05/15/18 250,000 246,078 ----------- 770,163 ----------- TOTAL INDUSTRIALS--7.64% 1,295,586 ----------- TOTAL CORPORATE BONDS--21.13% (Cost $3,361,522) 3,581,413 ----------- TOTAL BONDS AND NOTES--21.14% (Cost $3,362,581) 3,582,626 ----------- COMMERCIAL PAPER FINANCIALS-- CAPITAL MARKETS--5.01% ING America Insurance Holdings, 1.00%, 01/11/10 850,000 849,764 ----------- TOTAL FINANCIALS--5.01% 849,764 ----------- TOTAL COMMERCIAL PAPER--5.01% (Cost $849,764) 849,764 ----------- TOTAL INVESTMENTS--89.90% (Cost $15,220,103) 15,239,746 CASH AND OTHER ASSETS, LESS LIABILITIES--10.10% 1,712,242 ----------- NET ASSETS--100.00% $16,951,988 ===========
*--Non-income producing securities ABBREVIATIONS ADR--American Depositary Receipt NOTES TO SCHEDULE OF INVESTMENTS (a) Long term obligations that will mature in less than one year. (b) Non-voting shares See notes to financial statements. 26 SECTOR WEIGHTINGS BY TOTAL INVESTMENTS [CHART] 9.41% Consumer Discretionary 8.66% Consumer Staples 9.44% Energy 26.08% Financials 9.32% Health Care 16.55% Industrials 13.36% Information Technology 2.01% Materials 2.97% Telecommunication Services 0.01% U S Government 2.19% Utilities
27 STATEMENT OF ASSETS AND LIABILITIES December 31, 2009 BALANCED PORTFOLIO ASSETS Investments in securities, at value (Cost $15,220,103) $ 15,239,746 Cash and cash equivalents 1,655,792 Prepaid expenses 5,032 Receivable for: Investment securities sold 8 Dividends 14,979 Capital stock sold 16,557 Interest 39,598 Expense reimbursement 3,101 ------------ TOTAL ASSETS 16,974,813 ------------ LIABILITIES Payable to investment adviser for fund expenses 7,124 Accrued: Investment advisory fees 7,216 Administrative service fees 3,608 Other liabilities 4,877 ------------ TOTAL LIABILITIES 22,825 ------------ NET ASSETS $ 16,951,988 ============ NET ASSETS ARE COMPRISED OF THE FOLLOWING: Capital (par value and additional paid-in) $ 17,612,751 Undistributed net investment income 90 Accumulated net realized loss on investments (680,496) Net unrealized appreciation of investments 19,643 ------------ NET ASSETS $ 16,951,988 ============ SHARES OUTSTANDING ($.01 par value per share) 12,842,743 ============ NET ASSET VALUE $ 1.32 ============ Shares authorized 115,000,000
STATEMENT OF OPERATIONS Year Ended December 31, 2009 BALANCED PORTFOLIO INVESTMENT INCOME Dividends (Net of foreign tax withheld of $579) $ 239,542 Interest 246,174 ---------- TOTAL INVESTMENT INCOME 485,716 ---------- EXPENSES Investment advisory fees 78,268 Administrative service fees 39,134 Professional fees 23,269 Custody and transaction fees 11,170 Directors' fees and expenses 7,570 Compliance expenses 2,337 Qualification fees 783 Insurance expenses 7,936 ---------- TOTAL EXPENSES 170,467 LESS EXPENSES REIMBURSED (43,709) ---------- NET EXPENSES 126,758 ---------- INVESTMENT INCOME--NET 358,958 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments (156,978) Change in unrealized appreciation of investments 2,469,583 ---------- NET GAIN ON INVESTMENTS 2,312,605 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,671,563 ==========
See notes to financial statements. 28 STATEMENTS OF CHANGES IN NET ASSETS BALANCED PORTFOLIO
YEAR ENDED DECEMBER 31, ------------------------- 2009 2008 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Investment income--net $ 358,958 $ 462,883 Net realized loss on investments (156,978) (528,806) Change in unrealized appreciation (depreciation) of investments 2,469,583 (4,738,214) ----------- ----------- Net increase (decrease) in net assets resulting from operations 2,671,563 (4,804,137) DISTRIBUTIONS TO SHAREHOLDERS FROM Investment income--net (359,163) (490,141) ----------- ----------- Total distributions to shareholders (359,163) (490,141) CAPITAL SHARE TRANSACTIONS--Net (659,605) (806,309) ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,652,795 (6,100,587) NET ASSETS Beginning of year 15,299,193 21,399,780 ----------- ----------- End of year $16,951,988 $15,299,193 =========== =========== Undistributed net investment income $ 90 $ 295 =========== ===========
FINANCIAL HIGHLIGHTS Selected data for a share of capital stock outstanding throughout the years indicated. BALANCED PORTFOLIO
YEAR ENDED DECEMBER 31, -------------------------------------------------- 2009 2008 2007 2006 2005 ------- ------- ------- ------- ------- Net asset value, beginning of year $ 1.14 $ 1.53 $ 1.50 $ 1.40 $ 1.45 Income (loss) from investment operations Investment income--net 0.03 0.04 0.04 0.04 0.03 Net realized and unrealized gain (loss) on investments 0.18 (0.39) 0.03 0.12 (0.02) ------- ------- ------- ------- ------- Total from investment operations 0.21 (0.35) 0.07 0.16 0.01 Less distributions Investment income--net (0.03) (0.04) (0.04) (0.04) (0.03) Capital gains 0.00 0.00 0.00*** (0.02) (0.03) ------- ------- ------- ------- ------- Total distributions (0.03) (0.04) (0.04) (0.06) (0.06) ------- ------- ------- ------- ------- Net asset value, end of year $ 1.32 $ 1.14 $ 1.53 $ 1.50 $ 1.40 ======= ======= ======= ======= ======= Total return 18.28% (23.01)% 4.82% 11.37% 0.46% ======= ======= ======= ======= ======= RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $16,952 $15,299 $21,400 $16,986 $14,414 Ratio of expenses with reimbursement to average net assets (1) 0.81% 0.81% 0.81% 0.81% 0.81% Ratio of expenses without reimbursement to average net assets 1.09% 1.02% 0.96% 1.00% 1.01% Ratio of net investment income (loss) to average net assets 2.29% 2.46% 2.63% 2.56% 2.09% Portfolio turnover rate 7.05% 17.44% 19.04% 15.09% 25.83%
*** Amount less than $0.01 (1) SM&R has voluntarily agreed to waive or reduce expenses to 0.81% on the Balanced Portfolio until April 30, 2011. See notes to financial statements. 29 SCHEDULE OF INVESTMENTS December 31, 2009 MONEY MARKET PORTFOLIO
INTEREST/ MATURITY STATED FACE DATE RATE(%) AMOUNT VALUE U S GOVERNMENT AGENCY SHORT-TERM OBLIGATIONS U S GOVERNMENT AGENCY SECURITIES--70.49% Federal Agricultural Mortgage Corp. 01/05/10 0.020 $8,076,000 $ 8,075,982 Federal Agricultural Mortgage Corp. 01/22/10 0.020 5,606,000 5,605,935 Federal Home Loan Bank 01/04/10 0.030 4,624,000 4,623,988 Federal Home Loan Bank 01/08/10 0.020 7,475,000 7,474,971 Federal Home Loan Bank 01/21/10 0.020 6,175,000 6,174,931 Federal Home Loan Bank 01/25/10 0.020 5,682,000 5,681,924 Federal Home Loan Bank 01/27/10 0.040 3,340,000 3,339,903 Federal Home Loan Bank 01/28/10 0.010 7,655,000 7,654,943 Federal Home Loan Mortgage Corp. 01/20/10 0.030 4,506,000 4,505,929 Federal National Mortgage Association 02/08/10 0.030 3,818,000 3,817,879 ----------- 56,956,385 ----------- TOTAL U S GOVERNMENT AGENCY SHORT-TERM OBLIGATIONS--70.49% (Cost $56,956,385) 56,956,385 ----------- COMMERCIAL PAPER FINANCIALS-- CONSUMER FINANCE--10.01% American Honda Finance Corp. 01/11/10 0.120 4,043,000 4,042,865 General Electric Capital Corp. 01/07/10 0.080 4,043,000 4,042,946 ----------- 8,085,811 DIVERSIFIED FINANCIAL SERVICES--6.64% Metlife Funding, Inc. 1/6/10 0.120 3,867,000 3,866,936 Nordea North America Inc. 1/29/10 0.120 1,500,000 1,499,860 ----------- 5,366,796 ----------- TOTAL FINANCIALS--16.65% 13,452,607 ----------- UTILITIES-- ELECTRIC UTILITIES--4.39% Florida Power & Light Co. 1/12/10 0.110 3,544,000 3,543,881 ----------- TOTAL UTILITIES--4.39% 3,543,881 ----------- TOTAL COMMERCIAL PAPER--21.04% (Cost $16,996,488) 16,996,488 ----------- TOTAL INVESTMENTS--91.53% (Cost $73,952,873) 73,952,873 CASH AND OTHER ASSETS, LESS LIABILITIES--8.47% 6,844,257 ----------- NET ASSETS--100.00% $80,797,130 ===========
See notes to financial statements. 30 STATEMENT OF ASSETS AND LIABILITIES December 31, 2009 MONEY MARKET PORTFOLIO ASSETS Investments in securities, at value (Cost $73,952,873) $ 73,952,873 Cash and cash equivalents 6,902,523 Prepaid expenses 27,108 Receivable for: Capital stock sold 290,652 Interest 4 Expense reimbursement 54,057 -------------- TOTAL ASSETS 81,227,217 -------------- LIABILITIES Capital stock reacquired 364,224 Payable to investment adviser for fund expenses 8,671 Accrued: Investment advisory fees 34,574 Administrative service fees 17,287 Other liabilities 5,331 -------------- TOTAL LIABILITIES 430,087 -------------- NET ASSETS $ 80,797,130 ============== NET ASSETS ARE COMPRISED OF THE FOLLOWING: Capital (par value and additional paid-in) $ 80,797,130 -------------- NET ASSETS $ 80,797,130 ============== SHARES OUTSTANDING ($.01 par value per share) 80,797,130 ============== NET ASSET VALUE $ 1.00 ============== Shares authorized 1,050,000,000
STATEMENT OF OPERATIONS Year Ended December 31, 2009 MONEY MARKET PORTFOLIO INVESTMENT INCOME Interest $ 136,876 --------- TOTAL INVESTMENT INCOME 136,876 --------- EXPENSES Investment advisory fees 434,361 Administrative service fees 217,180 Professional fees 23,269 Custody and transaction fees 16,800 Directors' fees and expenses 7,570 Compliance expenses 16,177 Qualification fees 783 Insurance expenses 43,723 --------- TOTAL EXPENSES 759,863 LESS EXPENSES REIMBURSED (624,445) --------- NET EXPENSES 135,418 --------- INVESTMENT INCOME--NET 1,458 --------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,458 =========
See notes to financial statements. 31 STATEMENTS OF CHANGES IN NET ASSETS MONEY MARKET PORTFOLIO
YEAR ENDED DECEMBER 31, ------------------------- 2009 2008 ----------- ----------- INCREASE IN NET ASSETS FROM OPERATIONS Investment income--net $ 1,458 $ 825,260 DISTRIBUTIONS TO SHAREHOLDERS FROM Investment income--net (1,458) (825,260) CAPITAL SHARE TRANSACTIONS--Net (6,269,215) 36,200,340 ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS (6,269,215) 36,200,340 NET ASSETS Beginning of year 87,066,345 50,866,005 ----------- ----------- End of year $80,797,130 $87,066,345 =========== ===========
FINANCIAL HIGHLIGHTS Selected data for a share of capital stock outstanding throughout the years indicated. MONEY MARKET PORTFOLIO
YEAR ENDED DECEMBER 31, -------------------------------------------------- 2009 2008 2007 2006 2005 ------- ------- ------- ------- ------- Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income (loss) from investment operations Investment income--net 0.00*** 0.01 0.04 0.04 0.03 ------- ------- ------- ------- ------- Total from investment operations 0.00 0.01 0.04 0.04 0.03 Less distributions Investment income--net (0.00)*** (0.01) (0.04) (0.04) (0.03) ------- ------- ------- ------- ------- Total distributions (0.00) (0.01) (0.04) (0.04) (0.03) ------- ------- ------- ------- ------- Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= Total return 0.00%^ 1.46% 4.54% 4.42% 2.61% ======= ======= ======= ======= ======= RATIOS (IN PERCENTAGES)/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) $80,797 $87,066 $50,866 $40,693 $34,341 Ratio of expenses with reimbursement to average net assets (1) 0.16% 0.55% 0.56% 0.56% 0.56% Ratio of expenses without reimbursement to average net assets 0.87% 0.83% 0.86% 0.87% 0.88% Ratio of net investment income to average net assets 0.00%^ 1.36% 4.43% 4.37% 2.60%
*** Amount less than $0.01 ^ Amount less than 0.01% (1) SM&R has voluntarily agreed to waive or reduce expenses on the Money Market Portfolio until April 30, 2011. See notes to financial statements. 32 NOTES TO FINANCIAL STATEMENTS December 31, 2009 AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. NOTE 1--SIGNIFICANT ACCOUNTING POLICIES The American National Investment Accounts, Inc. (the "Fund") is a diversified open-end management investment company registered as a series fund under the Investment Company Act of 1940, as amended. The Fund is comprised of the Growth, Equity Income, Balanced and Money Market Portfolios. Shares of the Fund, other than the initial capitalization, will be sold only to separate accounts of American National Insurance Company ("American National"). The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. SECURITY VALUATION: Investments in securities listed on national exchanges are valued at the last sales price of the day, or if there were no sales, then at the last bid price. Other securities are valued based on market quotations or at fair value as determined by a pricing service approved by the Board of Directors. Prices provided by the pricing service represent valuations at bid prices or on a basis determined without exclusive reliance on quoted prices and may reflect appropriate factors such as institution-size trading in similar groups of securities, yield quality, coupon rate, maturity, type of issue, individual trading characteristics and other market data. Securities for which market quotations are not readily available are valued as determined by the Board of Directors. Commercial paper and short-term obligations are stated at amortized cost, which is equivalent to fair value. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: The Fund records security transactions based on trade date. Dividend income is recognized on the ex-dividend date, and interest income is recognized on an accrual basis. Premiums and discounts on securities are amortized, over the lives of the respective securities. Withholding taxes on foreign dividends have been provided for in accordance with the Fund's understanding of the applicable country's tax rules and rates. FEDERAL INCOME TAXES: For federal income tax purposes, each portfolio is treated as a separate entity. The Fund intends to comply with requirements of the Internal Revenue Code relating to regulated investment companies and intends to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is recorded in the accompanying financial statements.
TAX YEAR ENDING EXPIRATION DECEMBER 31, 2009 LOSS CARRYFORWARDS DATES - ----------------------- ------------------ ---------- Growth Portfolio $1,088,532 2016 $1,331,521 2017 Equity Income Portfolio $1,151,194 2017 Balanced Portfolio $ 528,511 2016 $ 645,746 2017
Capital loss carryovers are available to offset future realized capital gains and thereby reduce further taxable gain distributions. 33 CAPITAL STOCK TRANSACTIONS AND DISTRIBUTIONS TO SHAREHOLDERS: Fund shares are sold in a continuous public offering at net asset value. The Fund may repurchase shares at net asset value. Dividends and other distributions are recorded by each portfolio on the ex-dividend date and may be reinvested at net asset value. Each Portfolio may periodically make reclassifications among certain of its capital accounts as a result of the timing and characterization of certain income and capital gains distributions determined in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. These reclassifications are due to differing treatment for items such as deferral of wash sales, post-October losses and net operating losses. EXPENSES: Operating expenses not directly attributable to a portfolio are prorated among the portfolios of the Fund based on the relative amount of each portfolio's net assets or shareholders. SUBSEQUENT EVENTS: Subsequent events have been evaluated through February 19, 2010, which is the date the financial statements were issued. NOTE 2--INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICE FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund has entered into an investment advisory agreement and an administrative service agreement with Securities Management and Research, Inc. ("SM&R"). SM&R is a wholly-owned subsidiary of American National. Investment advisory and administrative service fees paid to SM&R are computed as a percentage of the average daily net assets as follows:
INVESTMENT ADMINISTRATIVE ADVISORY FEE SERVICE FEE Growth Portfolio 0.50% 0.25% Equity Income Portfolio 0.50% 0.25% Balanced Portfolio 0.50% 0.25% Money Market Portfolio 0.50% 0.25%
In addition to the investment advisory fee and the administrative service fee, the Fund is responsible for paying most other operating expenses including independent directors' fees and expenses, safekeeping fees, legal fees, auditing services, insurance, interest, the salary and other expenses of the Chief Compliance Officer, and miscellaneous expenses. SM&R is waiving all or a portion of its fees due from the Money Market Portfolio to prevent such portfolio's net yield from decreasing below zero. This fee waiver, which is voluntary, may be discontinued by SM&R at any time. Effective June 1, 2002, and until April 30, 2011, SM&R has voluntarily agreed to reimburse expenses (after applicable waivers) which exceed the following percentages of each portfolio's average daily net assets: Growth Portfolio 0.87% Equity Income Portfolio 0.79% Balanced Portfolio 0.81% Money Market Portfolio 0.56%
Fee waivers and/or reductions, other than those stated in the Administrative Service Agreement, may be rescinded by SM&R at any time after April 30, 2011 without notice to investors. 34 As of December 31, 2009, SM&R and American National had the following ownership in the Fund:
AMERICAN NATIONAL AMERICAN NATIONAL SM&R CORPORATE ACCOUNTS SEPARATE ACCOUNTS --------------------------- ----------------------------- ------------------------------ PERCENT OF SHARES PERCENT OF SHARES PERCENT OF SHARES SHARES OUTSTANDING SHARES OUTSTANDING SHARES OUTSTANDING Growth Portfolio 240,525 1.67% 3,619,704 25.14% 10,537,484 73.19% Equity Income Portfolio 250,476 1.87% 4,805,527 35.79% 8,369,473 62.34% Balanced Portfolio 120,725 0.94% 4,087,312 31.83% 8,634,706 67.23% Money Market Portfolio 266,279 0.33% 3,110,031 3.85% 77,420,820 95.82%
NOTE 3--COST, PURCHASES AND SALES OF INVESTMENTS Aggregate purchases and sales of investments, other than commercial paper and short-term obligations, were as follows:
PURCHASES SALES Growth Portfolio $13,413,186 $13,574,155 Equity Income Portfolio $ 1,376,425 $ 1,353,783 Balanced Portfolio $ 942,092 $ 1,915,902
Gross unrealized appreciation and depreciation as of December 31, 2009, based on the cost for federal income tax purposes is as follows:
NET APPRECIATION COST APPRECIATION DEPRECIATION (DEPRECIATION) Growth Portfolio $17,988,372 $2,392,667 $2,535,965 $ (143,298) Equity Income Portfolio $17,719,720 $1,730,479 $3,304,173 $(1,573,694) Balanced Portfolio $15,220,103 $1,656,216 $1,636,573 $ 19,643
NOTE 4--CAPITAL STOCK GROWTH PORTFOLIO
YEAR ENDED DECEMBER 31, --------------------------------------------------- 2009 2008 ------------------------ ------------------------ SHARES AMOUNT SHARES AMOUNT ---------- ----------- ---------- ----------- Sale of capital shares 970,666 $ 1,073,005 654,764 $ 838,281 Investment income dividends reinvested 122,035 161,086 231,390 242,960 Distributions from net realized gains reinvested -- -- 1 1 Shares from Merger -- -- 2,668,253 3,782,941 ---------- ----------- ---------- ----------- Subtotals 1,092,701 1,234,091 3,554,408 4,864,183 Redemptions of capital shares outstanding (1,182,411) (1,353,832) (997,505) (1,449,030) ---------- ----------- ---------- ----------- Net increase (decrease) in capital shares outstanding (89,710) $ (119,741) 2,556,903 $ 3,415,153 =========== =========== Shares outstanding at beginning of year 14,487,423 11,930,520 ---------- ---------- Shares outstanding at end of year 14,397,713 14,487,423 ========== ==========
35 EQUITY INCOME PORTFOLIO
YEAR ENDED DECEMBER 31, --------------------------------------------------- 2009 2008 ------------------------ ------------------------ SHARES AMOUNT SHARES AMOUNT ---------- ----------- ---------- ----------- Sale of capital shares 934,364 $ 1,032,263 685,272 $ 1,037,033 Investment income dividends reinvested 345,325 445,470 581,566 645,538 Distributions from net realized gains reinvested -- -- 199,944 221,938 ---------- ----------- ---------- ----------- Subtotals 1,279,689 1,477,733 1,466,782 1,904,509 Redemptions of capital shares outstanding (1,252,103) (1,435,619) (1,823,175) (2,705,136) ---------- ----------- ---------- ----------- Net increase (decrease) in capital shares outstanding 27,586 $ 42,114 (356,393) $ (800,627) =========== =========== Shares outstanding at beginning of year 13,397,890 13,754,283 ---------- ---------- Shares outstanding at end of year 13,425,476 13,397,890 ========== ==========
BALANCED PORTFOLIO
YEAR ENDED DECEMBER 31, --------------------------------------------------- 2009 2008 ------------------------ ------------------------ SHARES AMOUNT SHARES AMOUNT ---------- ----------- ---------- ----------- Sale of capital shares 1,496,432 $ 1,846,387 1,698,413 $ 2,402,017 Investment income dividends reinvested 270,047 359,162 433,753 490,141 ---------- ----------- ---------- ----------- Subtotals 1,766,479 2,205,549 2,132,166 2,892,158 Redemptions of capital shares outstanding (2,320,476) (2,865,154) (2,677,175) (3,698,467) ---------- ----------- ---------- ----------- Net decrease in capital shares outstanding (553,997) $ (659,605) (545,009) $ (806,309) =========== =========== Shares outstanding at beginning of year 13,396,740 13,941,749 ---------- ---------- Shares outstanding at end of year 12,842,743 13,396,740 ========== ==========
MONEY MARKET PORTFOLIO
YEAR ENDED DECEMBER 31, ------------------------------------------------------- 2009 2008 -------------------------- -------------------------- SHARES AMOUNT SHARES AMOUNT ----------- ------------ ----------- ------------ Sale of capital shares 24,093,527 $ 24,093,527 54,531,621 $ 54,531,621 Investment income dividends reinvested 1,452 1,452 831,192 831,192 ----------- ------------ ----------- ------------ Subtotals 24,094,979 24,094,979 55,362,813 55,362,813 Redemptions of capital shares outstanding (30,364,194) (30,364,194) (19,162,473) (19,162,473) ----------- ------------ ----------- ------------ Net increase (decrease) in capital shares outstanding (6,269,215) $ (6,269,215) 36,200,340 $ 36,200,340 ============ ============ Shares outstanding at beginning of year 87,066,345 50,866,005 ----------- ----------- Shares outstanding at end of year 80,797,130 87,066,345 =========== ===========
36 NOTE 5--DISCLOSURE ABOUT FAIR VALUE OF ASSETS Effective September 1, 2007, the Fund adopted Financial Accounting Standards Board (FASB) ACCOUNTING STANDARD CODIFICATION (ASC) Topic 820. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosures about fair value measurement. ASC 820 requires funds to classify their assets based on valuation method, using three levels. Level 1 securities are valued based on quoted prices for identical securities in active markets that are unadjusted. Level 2 securities are valued based on external market ("significant observable") inputs, such as quoted prices for similar assets in active markets, quoted prices for identical or similar assets in non-active markets, or inputs derived from or corroborated by observable market data by correlation or other means. They reflect assumptions market participants would use in pricing based on market data obtained from independent sources. Level 3 securities are valued based on internal ("significant unobservable") inputs that are based on the funds own assumptions that market participants would use based on the best information available. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables present the valuation levels of the Fund's securities as of December 31, 2009: Growth Portfolio
HOLDINGS MARKET VALUE LEVEL 1 LEVEL 2 LEVEL 3 - ----------------------------------------------------------- ------------ ----------- ------- ------- Common Stock: Consumer Discretionary $ 1,590,621 $ 1,590,621 $0 $0 Common Stock: Consumer Staples 1,340,430 1,340,430 0 0 Common Stock: Energy 1,903,343 1,903,343 0 0 Common Stock: Exchange Traded Funds 904,960 904,960 0 0 Common Stock: Financials 1,620,108 1,620,108 0 0 Common Stock: Healthcare 1,960,384 1,960,384 0 0 Common Stock: Industrials 2,495,939 2,495,939 0 0 Common Stock: Information Technology 4,656,024 4,656,024 0 0 Common Stock: Materials 569,536 569,536 0 0 Common Stock: Telecomm. Services 445,705 445,705 0 0 Common Stock: Utilities 358,024 358,024 0 0 Investments in Money Market 1,019,210 1,019,210 0 0 ----------- ----------- --- --- Total Growth Portfolio $18,864,284 $18,864,284 $0 $0
Equity Income Portfolio
HOLDINGS MARKET VALUE LEVEL 1 LEVEL 2 LEVEL 3 - ----------------------------------------------------------- ------------ ----------- ------- ------- Common Stock: Consumer Discretionary $ 1,189,755 $ 1,189,755 $0 $0 Common Stock: Consumer Staples 2,250,581 2,250,581 0 0 Common Stock: Energy 2,403,482 2,403,482 0 0 Common Stock: Financials 3,295,479 3,295,479 0 0 Common Stock: Healthcare 1,565,844 1,565,844 0 0 Common Stock: Industrials 1,297,001 1,297,001 0 0 Common Stock: Information Technology 1,393,120 1,393,120 0 0 Common Stock: Materials 424,903 424,903 0 0 Common Stock: Telecomm. Services 958,993 958,993 0 0 Common Stock: Utilities 1,366,868 1,366,868 0 0 Investments in Money Market 1,013,369 1,013,369 0 0 ----------- ----------- --- --- Total Equity Income Portfolio $17,159,395 $17,159,395 $0 $0
37 Balanced Portfolio
HOLDINGS MARKET VALUE LEVEL 1 LEVEL 2 LEVEL 3 - ----------------------------------------------------------- ------------ ----------- ---------- ------- U.S. Treasury & other U.S. Gov't. corporations and agencies $ 1,213 $ 0 $ 1,213 $0 Corporate Debt Securities 3,581,413 0 3,581,413 0 Common Stock: Consumer Discretionary 959,962 959,962 0 0 Common Stock: Consumer Staples 1,319,508 1,319,508 0 0 Common Stock: Energy 1,175,602 1,175,602 0 0 Common Stock: Financials 1,577,745 1,577,745 0 0 Common Stock: Healthcare 1,419,855 1,419,855 0 0 Common Stock: Industrials 1,226,538 1,226,538 0 0 Common Stock: Information Technology 2,035,269 2,035,269 0 0 Common Stock: Materials 306,199 306,199 0 0 Common Stock: Telecomm. Services 452,379 452,379 0 0 Common Stock: Utilities 334,299 334,299 0 0 Commercial Paper 849,764 0 849,764 0 Investments in Money Market 1,655,792 1,655,792 0 0 ----------- ----------- ---------- --- Total Balanced Portfolio $16,895,538 $12,463,148 $4,432,390 $0
Money Market Portfolio
HOLDINGS MARKET VALUE LEVEL 1 LEVEL 2 LEVEL 3 - ----------------------------------------------------------- ------------ ----------- ----------- ------- U.S. Gov corporations and agencies Short Term $56,956,385 $ 0 $56,956,385 $0 Commercial Paper 16,996,488 0 16,996,488 0 Investments in Money Market 6,902,523 6,902,523 0 0 ----------- ---------- ----------- --- Total Money Market Portfolio $80,855,396 $6,902,523 $73,952,873 $0
Money market securities are valued using amortized cost, in accordance with rules under the Investment Company Act of 1940. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2. 38 NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions paid during the following years ended December 31:
2009 2008 -------- -------- GROWTH PORTFOLIO Distributions paid from: Ordinary income $161,086 $242,950 Long-term capital gain -- -- -------- -------- $161,086 $242,950 ======== ======== EQUITY INCOME PORTFOLIO Distributions paid from: Ordinary income $445,470 $694,261 Long-term capital gain -- 173,214 -------- -------- $445,470 $867,475 ======== ======== BALANCED PORTFOLIO Distributions paid from: Ordinary income $359,163 $490,141 Long-term capital gain -- -- -------- -------- $359,163 $490,141 ======== ======== MONEY MARKET PORTFOLIO Distributions paid from: Ordinary income $ 1,458 $825,260 Long-term capital gain -- -- -------- -------- $ 1,458 $825,260 ======== ========
39 TAX COMPONENTS OF NET ASSETS: As of December 31, 2009, the components of accumulated earnings (deficit) on a tax basis were as follows: GROWTH PORTFOLIO Undistributed ordinary income $ -- Undistributed long-term capital gains -- ----------- Tax Accumulated Earnings -- Accumulated capital and other losses (1,763,483) Unrealized depreciation (143,298) ----------- Total Accumulated Deficit $(1,906,781) =========== EQUITY INCOME PORTFOLIO Undistributed ordinary income $ -- Undistributed long-term capital gains -- ----------- Tax Accumulated Earnings -- Accumulated capital and other losses (1,151,184) Unrealized depreciation (1,573,694) ----------- Total Accumulated Deficit $(2,724,878) =========== BALANCED PORTFOLIO Undistributed ordinary income $ -- Undistributed long-term capital gains -- ----------- Tax Accumulated Earnings -- Accumulated capital and other losses (680,406) Unrealized appreciation 19,643 ----------- Total Accumulated Deficit $ (660,763) ===========
NOTE 7--SUBSEQUENT EVENTS On February 18, 2010, the Board of Directors of the Fund approved a Plan of Liquidation and Dissolution (the "Plan") with respect to the American National Growth Portfolio, American National Equity Income Portfolio, American National Balanced Portfolio and the American National Money Market Portfolio, (together, the "Portfolios", each a "Portfolio"). This Plan would provide for the liquidation of each of the Portfolio's assets and the distribution to shareholders of the cash proceeds of the liquidation after paying or providing for the payment of all debts and liabilities of the Portfolios. The Board of Directors of the Fund determined that action should be taken because of the small asset size of each Portfolio. The Board has concluded that it would be in the best interests of each of the Portfolios and their shareholders and Policyowners to liquidate the Portfolios. 40 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Audit Committee, Board of Directors and Shareholders American National Investment Accounts, Inc. League City, Texas We have audited the accompanying statements of assets and liabilities of American National Investment Accounts, Inc. (comprised of the Growth Portfolio, Equity Income Portfolio, Balanced Portfolio and Money Market Portfolio, hereafter referred to as "the Funds"), including the schedules of investments, as of December 31, 2009, and the related statements of operations for the year then ended, changes in net assets for each of the two years then ended and financial highlights for each of the four years then ended. These financial statements and the financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures with respect to unsettled portfolio security transactions. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of American National Investment Accounts, Inc., as of December 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years then ended and the financial highlights for each of the four years then ended in conformity with accounting principles generally accepted in the United States of America. Houston, Texas February 19, 2010 41 SUPPLEMENTAL INFORMATION (Unaudited) (As of 2/28/10) Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request by calling (800) 231-4639. INDEPENDENT DIRECTORS
NUMBER OF PORTFOLIOS IN TERM OF OFFICE FUND COMPLEX NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY AND AGE WITH FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR - ----------------------- ---------------- -------------- ---------------------------------------------------- ------------- Florentino F. Gonzalez Director Indefinite HR Director, Galveston Children's Center, Inc. 9* 2450 South Shore Blvd., Since 11/05 League City, TX 77573 HR Consultant, The University of Texas Medical Age 50 Branch at Galveston Edwin K. Nolan Director Indefinite Investor and Attorney, Law Offices, Edwin K. 9* 2450 South Shore Blvd., Since 11/97 Nolan, P.C. League City, TX 77573 Age 66 Nominating Indefinite Director/Owner of Canyon Lake Aviation, Inc. Committee Since 11/00 Audit Indefinite Director of Hancock Mini Mart, Inc. Committee Since 11/03 Robert V. Shattuck Director Indefinite Attorney, Law Offices, Robert V. Shattuck, Jr. 9* 2450 South Shore Blvd., Since 11/97 League City, TX 77573 Nominating Age 68 Committee Indefinite Since 11/00 Donald P. Stevens Director Indefinite Retired, Assistant to the President for Governmental 9* 2450 South Shore Blvd., Since 9/00 Relations of the University of Texas Medical League City, TX 77573 Branch, Galveston, TX Age 62 Nominating Indefinite Committee Since 11/00 President and Director, Jamail Galveston Foundation (a family charitable foundation) Audit Indefinite Committee Since 11/05 Steven H. Stubbs Director Indefinite President and Director of Dancing Rabbit Press, 9* 2450 South Shore Blvd., Since 9/00 Inc. (a publishing company) League City, TX 77573 Age 71 Audit Indefinite Director, Neshoba County Public Library Committee Since 8/03 Chairman
42 INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS IN TERM OF OFFICE FUND COMPLEX INTERESTED NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTOR AND AGE WITH FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR RELATIONSHIP - ----------------------- ---------------- -------------- ----------------------------------- ------------- ------------ Michael W. McCroskey President & Indefinite President, CEO, Director and member 9* 2450 South Shore Blvd., Director Since 8/94 of Executive Committee of League City, TX 77573 Securities Management and Research, Age 66 Inc. (SM&R)^ Executive Vice President and Treasurer of American National Insurance Company Vice President of Garden State Life (1) Insurance Company^ Vice President of American National Property & Casualty Company^ Vice President of Standard Life & Accident Insurance Company^ Vice President of Pacific Property and Casualty Company^ Assistant Secretary of American National General Insurance Company^ Assistant Secretary of American National Life Insurance Company of Texas^ Director and President of ANREM Corporation (real estate management company)^ Vice President and Director of ANTAC Corporation (real estate management company)^ Director of Comprehensive Investment Services, Inc. (investment services company)^ Vice President of Farm Family Life Insurance Company^ Vice President of Farm Family Casualty Insurance Company^ Vice President of United Farm Family Insurance Company^ Vice President and Director of Eagle 99, Inc. (real estate investment company)^ President and Director of ANH2O, Inc. (real estate investment company)^ American National Property and Casualty Holdings, Inc.^ Vice President, Investments of American National Life Insurance Company of New York
43
NUMBER OF PORTFOLIOS IN TERM OF OFFICE FUND COMPLEX INTERESTED NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTOR AND AGE WITH FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR RELATIONSHIP - ----------------------- ---------------- -------------- ----------------------------------- ------------- ------------ Lea McLeod Matthews Director Indefinite Proposal Project Manager, America 9* (2) 2450 South Shore Blvd., Since 8/94 Service Group 105 Westpark Road League City, TX 77573 Brentwood, TN 37027 (11/08-present) Age 47 Psychology Intern, Vanderbilt University Medical Center, Division of Adult Psychiatry (8/05-present) Communications Specialist, National Western Life Insurance Company (5/02-8/05) Director of Garden State Life Insurance Company^ Senior Communications Specialist, Texas Guaranteed Student Loan Corporation (1/01-5/02) Internal Publications Manager, Tivoli Software (4/00-1/01) Communications Consultant, Texas Association of School Boards (8/99-4/00) Technical Writer/Publications Editor, National Western Life Insurance Company (1/92-8/99) Ann McLeod Moody Director Indefinite Housewife, Personal Investments 9* (3,2) 2450 South Shore Blvd., Since 11/97 League City, TX 77573 Director of Moody Gardens, Inc. Age 72 (charitable organization) Jamie G. Williams Director Indefinite Regional Grants Director, The Moody 9* (4) 2450 South Shore Blvd., Since 11/97 Foundation (charitable foundation) League City, TX 77573 Age 63 President's Advisory Council, Dallas Center for the Performing Arts Foundation (organization that supports the arts in the Dallas, TX area)
(1) Mr. McCroskey serves as an officer and director of SM&R, the Funds' investment adviser. He also serves as an officer of SM&R's parent company, American National Insurance Company ("American National"). (2) Ms. Matthews is the step-daughter of Robert L. Moody. Mr. Moody is the Chairman of the Board and Chief Executive Officer of American National, the parent of SM&R. Mr. Moody is also a trustee of The Moody Foundation, a charitable foundation established for charitable and educational purposes, which owns approximately 23.23% of the outstanding common shares of American National, and he serves as Chairman of the Board, President and Chief Executive Officer of The Moody National Bank of Galveston (the "Bank"), which, in its capacity as trustee and custodian, votes approximately 46.55% of the outstanding common shares of American National. Mr. Moody is also the President and a director of the companies owning the controlling interests in such bank, and he is a life income beneficiary of one of such trusts. Ms. Matthews is the daughter of Funds' director Ann McLeod Moody. (3) Ms. Moody is the spouse of Robert L. Moody. See footnote 2 above. Ms. Moody is the mother of Funds' director Lea McLeod Matthews. (4) Ms. Williams is an employee of The Moody Foundation, which owns approximately 23.23% of American National, the parent of SM&R. * Also a Director of SM&R Investments, Inc., another investment company advised by SM&R, which has 5 portfolios. ^ Under control of American National. 44 OFFICERS
NUMBER OF PORTFOLIOS IN TERM OF OFFICE FUND COMPLEX NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY AND AGE WITH FUND TIME SERVED DURING PAST 5 YEARS OFFICER - ----------------------- ---------------- -------------- ---------------------------------------------------- ------------- Michael W. McCroskey President & Indefinite SEE INTERESTED DIRECTOR TABLE ABOVE 9 Director(PARA) Since 08/94 Brenda T. Koelemay Vice Indefinite Vice President & Treasurer of SM&R 9 2450 South Shore Blvd., President & Since 7/92 League City, TX 77573 Treasurer(PARA) Vice President, Assistant Corporate Treasurer of Age 55 Indefinite American National Insurance Company Since 4/07 Teresa E. Axelson Vice Indefinite Vice President / Secretary and CCO of SM&R 9 2450 South Shore Blvd., President & Since 05/83 League City, TX 77573 Secretary Age 62
(PARA) Positions also held with SM&R Investments, Inc. another investment company advised by SM&R. 45 AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. 2450 South Shore Boulevard, League City, TX 77573 DIRECTORS Florentino F. Gonzalez Lea McLeod Matthews Michael W. McCroskey Ann McLeod Moody Edwin K. Nolan Robert V. Shattuck, Jr. Donald P. Stevens Steven H. Stubbs Jamie G. Williams OFFICERS Michael W. McCroskey, President Brenda T. Koelemay, Vice President and Treasurer Teresa E. Axelson, Vice President, Secretary and Chief Compliance Officer INVESTMENT ADVISER AND MANAGER Securities Management and Research, Inc. P.O. Box 58969 Houston, TX 77258-8969 CUSTODIAN Moody National Bank 2302 Post Office Galveston, TX 77550 LEGAL COUNSEL Greer, Herz & Adams, LLP One Moody Plaza Galveston, TX 77550 UNDERWRITER AND REDEMPTION AGENT Securities Management and Research, Inc. P.O. Box 58969 Houston, TX 77258-8969 TRANSFER AGENT, REGISTRAR AND DIVIDEND PAYING AGENT Securities Management and Research, Inc. P.O. Box 58969 Houston, TX 77258-8969 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM BKD, LLP 2800 Post Oak Blvd., Suite 3200 Houston, TX 77056 Item 2 Code of Ethics. (a) The registrant has adopted a code of ethics that applies to the registrants principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions (the Code). (b) For purposes of this Item, the term code of ethics means written standards that are reasonably designed to deter wrong- doing and to promote: (1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to , the Commission and in other public communications made by the registrant; (3) Compliance with applicable governmental laws, rules, and regulations; (4) The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and (5) Accountability for adherence to the Code. (c) There were no amendments to the Code during the period covered by the report. (d) The registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions during the period covered by this report. (e) Not applicable (f) See item 12(a)(1) regarding the filing of the Code of Ethics for Principal Executive and Principal Financial Officers of American National Investment Accounts, Inc. Item 3 Audit Committee Financial Expert. (a) The Board of Directors has determined that the registrant has at least one Audit committee financial expert serving on its Audit Committee. (b) The Audit Committee financial expert is Steven H. Stubbs. Mr. Stubbs is independent within the meaning of that term used in Form N-CSR. Item 4 Principal Accountant Fees and Services. (a) Audit fees for American National Investment Accounts, Inc. totaled approximately $67,000 in 2009 and approximately $60,000 in 2008, including fees associated with the annual audit and filings of the Portfolios Form N-1A and Form N-SAR. (b) None (c) Fees for tax services to American National Investment Accounts, Inc., including tax compliance, tax advice and tax planning, totaled approximately $0 in 2009 and $0 in 2008. (d) None (e) (1) The regristrants audit committee has adopted policies and procedures that require the audit committee to pre-approve all audit and non-audit services provided to the registrant by the principal accountant. (2) All of the services described in paragraphs (b) through (d) of item 4 were approved by the audit committee. (f) All services performed on the engagement to audit the registrants financial statements for the most recent fiscal year-end were performed by the principal accountants full-time, permanent employees. (g) None (h) The registrants independent auditor did not provide any non-audit services to the registrants investment adviser or any entity controlling, controlled by or controlled with the registrants investment adviser that provides ongoing services to the registrant. Item 5 Audit Committee of Listed Registrants. Not applicable Item 6 Schedule of Investments. The Schedule of Investments is filed under Item 1 of this form. Item 7 Disclosure of Proxy Voting Policies and Procedures for Closed-end Management Investment Companies. Not applicable Item 8 Portfolio Managers of Closed-end Management Investment Companies. Not applicable Item 9 Purchases of Equity Securities by Closed-end Management Investment Company and Affiliated Purchasers. Not applicable Item 10 Submission of Matters to a Vote of Security Holders. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrants board of directors during this period. Item 11 Controls and Procedures. (a) As of February 19, 2010, an evaluation was performed under the supervision and with the participation of the officers of American National Investment Accounts, Inc. (the Company), including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company's disclosure controls and procedures. Based on that evaluation, the officers, including the CEO and CFO, conclude that, as of February 19, 2010, the Company's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) were reasonably designed so as to ensure that material information relating to the Company is made known to the CEO and CFO. (b) There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation and until the filing of this report, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 12 Exhibits. (a) (1) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto. (2) Certifications pursuant to Rule 30a-2(a) under the Investment Act of 1940 are filed and attached hereto. (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are filed and attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. American National Investment Accounts, Inc. By: Michael W. McCroskey, Principal Executive Officer Date: February 25, 2010 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: Michael W. McCroskey, Principal Executive Officer Date: February 25, 2010 By: Brenda T. Koelemay, Principal Financial Officer Date: February 25, 2010 EX-99.CODE ETH 2 ania_ncsr1209codeofethics.txt EXHIBIT 12 (a) (1) CODE OF ETHICS Adoption of a Code of Ethics for Senior Officers WHEREAS, the Funds management recommends to the Board the adoption of a Senior Officer Code of Ethics in compliance with the Sarbanes-Oxley Act; ACCORDINGLY BE IT FURTHER RESOLVED, that the following resolution is hereby adopted and approved: BE IT RESOLVED, that the SM&R Family of Funds adopts the Senior Officers Code of Ethics as follows: THE SM&R FAMILY OF FUNDS CODES OF ETHICS FOR SENIOR OFFICERS STATEMENT OF GENERAL PRINCIPLES The Board of Directors of the SM&R Family of Funds (the "Funds") have adopted this Code of Ethics ("Code") applicable to their Principal Executive Officer and Principal Financial and Accounting Officer and others who may serve in similar functions (the "Covered Officers") to promote: * Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * Full, fair, accurate, timely and understandable disclosure in documents filed with the Securities and Exchange Commissions ("SEC") and in other public communications; * Compliance with applicable governmental laws, rules and regulations; * The prompt internal reporting to an appropriate person or persons identified in the Code of violations of the Code; and * Accountability for adherence to the Code. No Code can address every situation that a Senior Officer might face. As a guiding principle, Senior Officers should adhere to a high standard of business ethics and strive to implement the spirit as well as the letter of applicable laws, rules and regulations, and to provide the type of clear and complete disclosure and information that Fund shareholders have a right to expect. SECTION 1. HONEST AND ETHICAL CONDUCT Each Covered Officer named in Exhibit A of this Code owes a duty to the Funds and the Funds shareholders to act with integrity and honesty in the conduct of his/her duties and responsibilities while maintaining the confidentiality of information. Integrity requires, among other things, being honest and candid. Deceit and subordination of principle are inconsistent with integrity. SECTION 2. AVOIDANCE OF CONFLICTS OF INTERESTS Definition: A "conflict of interest" occurs when a Covered Officers private interest interferes with the interests of, or his service to, the Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Funds. Covered Officers must avoid any actual or apparent conflict of interest, direct or indirect, between personal and professional relationships. A Covered Officer should not engage in personal, business or professional relationships or dealings which would impair his/her independence or judgment or adversely affect the performance of his/her duties in the best interests of the Funds and its shareholders. Any relationship or dealing that would present a conflict for a Covered Officer could also present a conflict if it is related to a member of his/her immediate family. Certain conflicts of interest covered by this Code arise out of the relationships between Covered Officers and the Funds and are already subject to conflict of interest provisions in the Investment Company Act of 1940 and the Investment Advisers Act of 1940. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. It is recognized by the Board that, conflicts may arise from, or as a result of, the contractual relationship between the Funds and the investment adviser of which the Covered Officers are also officers or employees. As a result, the Board recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Funds or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Funds. The Board recognizes that participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and the adviser and is consistent with the expectation of the Board of the performance by the Covered Officers of their duties as officers of the Funds. Each Covered Officer must: * Handle any actual or apparent conflict of interest ethically; * Avoid conflicts of interest wherever possible; * Not use his/her personal influence or personal relationships to influence investment decisions or financial reporting by the Funds whereby the Covered Officer would benefit personally to the detriment of any of the Funds; * Not cause any of the Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of any of the Funds; Not use knowledge of portfolio transactions made or contemplated for the Funds to profit or cause others to profit, by market effect of such transactions; Some conflict of interest or potential conflict of interest situations should always be discussed with the Funds Legal Counsel, if material, include: * Service as a director on the board of any public or private company; * Any outside business activity that detracts from an individual's ability to devote appropriate time and attention to his/her responsibilities with the Funds; * The receipt of any entertainment from any company with which the Funds have current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety or other formulation as the Funds already use in another code of ethics or conduct; * A direct ownership interest in, or any consulting or employment relationship with, any of the Funds; service providers, other than its investment adviser, principal underwriter, or other SM&R and its parent organization's affiliated entities and other than a de minimis ownership interest (for purposes of this section of the Code an ownership interest of 1% or less shall constitute a de minimis ownership interest, and any ownership interest of more than 1% creates a rebuttable presumption that there may be a material conflict of interest); and * A direct or indirect financial interest in commissions, transaction charges or spreads paid by the Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officers employment with SM&R, its subsidiaries, its parent organizations and any affiliates or subsidiaries thereof, such as compensation or equity ownership, and other than an interest arising from a de minimis ownership interest in a company with the Funds execute portfolio transactions or a company that receives commissions or other fees related to its sales and redemptions of shares of the Funds (for purposes of this section of the Code an ownership interest of 1% or less shall constitute a de minimis ownership interest, and an ownership interest of more than 1% creates a rebuttable presumption that there may be a material conflict of interest). SECTION 3. DISCLOSURE Covered Officers have a supervisory role with respect to the financial information included in reports filed with regulatory agencies and public disclosures by the Funds, and have particular responsibilities in connection with these communications. Therefore, Each Covered Officer must: * familiarize himself/herself with the disclosure requirements applicable to the Funds as well as the business and financial operations of the Funds; * not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Funds directors and auditors, and to governmental regulators and self-regulatory organizations; * ensure that reasonable steps are taken within his/her area of responsibility and consult with other officers and employees of the Funds and the adviser to promote full, fair, accurate, timely and understandable disclosure in all regulatory filings, as well as when communicating with the Funds shareholders or the general public, in accordance with applicable law. SECTION 4. COMPLIANCE It is each Funds policy to comply in all material respects with all applicable governmental laws, rules and regulations. It is the personal responsibility of each Covered Officer to adhere to the standards and restrictions imposed by those laws, rules and regulations, including those relating to affiliated transactions, accounting and auditing matters. SECTION 5. REPORTING AND ACCOUNTABILITY Each Covered Officer must: * Upon receipt of the Code or upon becoming a Covered Officer, sign and submit to the Chief Compliance Officer of the Funds an acknowledgement stating that he/she has received, read and understands the Code; * Annually thereafter submit a form to the Chief Compliance Officer of the Funds confirming that he/she has received, read and understands the Code and has complied with the requirements of the Code; * Notify Legal Counsel promptly if he/she becomes aware of any existing or potential violation of this Code;. * Not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith. Except as described otherwise below, Legal Counsel is responsible for applying this Code to specific situations in which questions are presented to him/her and has the authority to interpret this Code in any particular situation. Legal Counsel shall take all action he/she considers appropriate to investigate any actual or potential violations reported to him/her. Legal Counsel is authorized to consult, as appropriate, with Chairman of the Audit Committee of the Board and is encouraged to do so. Legal Counsel is responsible for granting waivers and determining sanctions, as appropriate. Additionally, the Chairman of the Audit Committee may also consider approvals, interpretations, or waivers sought by the Covered Officers. The Funds will follow these procedures in investigating and enforcing this Code; * Legal Counsel will take all appropriate action to investigate any potential violations reported to him/her; * violations and potential violations will be reported to the Chairman of the Audit Committee of the Board after the investigation has been completed; * if the Chairman of the Audit Committee determines that a violation has occurred, he/she will inform the Board, which will take all appropriate disciplinary or preventive action; * appropriate disciplinary action, may include a letter of censure, suspension, dismissal or, in the event of criminal or other serious violations of law, notification to the SEC or other appropriate law enforcement authorities; * Legal Counsel will be responsible for granting waivers, as appropriate; and * any changes to or waivers of this Code will, to the extent required, be disclosed on Form N-CSR as provided by SEC rules. SECTION 6. OTHER POLICIES AND PROCEDURES The Funds' and their investment adviser's and principal underwriter's codes of ethics under Rule 17j-1 of the Investment Company Act and the Corporate Policies and Conflict of Interest and Sensitive Transaction Policies of SM&Rs parent, American National Insurance Company are separate requirements applying to the Covered Officers and others, and are not part of this Code. SECTION 7. AMENDMENTS Any amendments to this Code, other than amendments to Exhibit A, must be in written form and approved or ratified by a majority vote of the Funds Boards, including a majority of the independent directors. SECTION 8. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and its counsel. SECTION 9. INTERNAL USE The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Funds, as to any fact, circumstance, or legal conclusion. Date: October 1, 2003 Exhibit A Persons Covered by this Code of Ethics Michael W. McCroskey, President, Chief Executive Officer Brenda T. Koelemay, Chief Financial Officer THE SM&R FAMILY OF FUNDS CODES OF ETHICS FOR SENIOR OFFICERS ACKNOWLEDGEMENT I hereby acknowledged that I am a Principal Officer of the Funds and I am aware of and subject to the Funds' Code of Ethics. Accordingly, I have read and understood the requirements of the Code of Ethics and I am committed to fully comply with the Code of Ethics. I recognize my obligations to promote: 1. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; 2. Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Funds file with, or submit to, the Commission and in other public communications made by the Funds; and 3. Compliance with applicable governmental laws, rules and regulations. Date: February 25, 2010 Name:/S/ Michael W. McCroskey Title: President, Chief Executive Officer THE SM&R FAMILY OF FUNDS CODES OF ETHICS FOR SENIOR OFFICERS ACKNOWLEDGEMENT I hereby acknowledged that I am a Principal Officer of the Funds and I am aware of and subject to the Funds' Code of Ethics. Accordingly, I have read and understood the requirements of the Code of Ethics and I am committed to fully comply with the Code of Ethics. I recognize my obligations to promote: 1. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; 2. Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Funds file with, or submit to, the Commission and in other public communications made by the Funds; and 3. Compliance with applicable governmental laws, rules and regulations. Date: February 25, 2010 Name:__/S/ Brenda T. Koelemay__ Title:_Vice President, Chief Financial Officer EX-99.CERT 3 ncsr_ania1209302cert.txt Exhibit 12 (a) (2) Rule 30a-2(a) I, Brenda T. Koelemay, certify that: 1. I have reviewed this report on Form N-CSR of American National Investment Accounts, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. Date: February 25, 2010 Brenda T. Koelemay, Vice President and Treasurer Exhibit (a) (2) Rule 30a-2(a) I, Michael W. McCroskey, certify that: 1. I have reviewed this report on Form N-CSR of American National Investment Accounts, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report fairly, present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. Date: February 25, 2010 Michael W. McCroskey, Principal Executive Officer EX-99.906 CERT 4 ania_ncsr1209906cert.txt EXHIBIT (b) CERTIFICATION OF SHAREHOLDER REPORT In connection with the Certified Shareholder Report of American National Investment Accounts, Inc. (the Company) on Form N-CSR for the period ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Michael W. McCroskey, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 25, 2010 \S\ Michael W. McCroskey ------------------------------------- President A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EXHIBIT (b) CERTIFICATION OF SHAREHOLDER REPORT In connection with the Certified Shareholder Report of American National Investment Accounts, Inc. (the Company) on Form N-CSR for the period ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Brenda T. Koelemay, Vice President and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 25, 2010 \S\ Brenda T. Koelemay ------------------------------------- Vice President and Treasurer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----