American Fidelity Dual Strategy Fund Inc · NSAR-B · For 12/31/03 · EX-99.77C VOTES

Filed On 2/26/04 9:54am ET   ·   SEC File 811-08873   ·   Accession Number 1061130-4-2

Annual Report of a Money-Management Company   ·   Form N-SAR
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: NSAR-B      American Fidelity Dual Strategy Fund, Inc.             9     43K 
 2: EX-99.77B ACCT LTTR  American Fidelity Dual Strategy Fund Acct     1      9K 
                          Letter                                                 
 3: EX-99.77C VOTES  American Fidelity Dual Strategy Fund Board       15±    57K 
                          Mtg Minutes                                            

EX-99.77C VOTES   ·   American Fidelity Dual Strategy Fund Board Mtg Minutes

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AMERICAN FIDELITY DUAL STRATEGY FUND, INC.          

MINUTES OF SPECIAL MEETING OF SHAREHOLDERS          

April 11, 2003          

A  Special Meeting of Shareholders of American Fidelity Dual  Strategy          
Fund,  Inc.,  was  held  at  2000 Classen  Boulevard,  Oklahoma  City,          
Oklahoma on April 11, 2003, at 9:00 a.m.                                        

CALL TO ORDER                                                                   

The meeting was called to order by Ms. Nancy Steeber, Acting Chairman.          

INTRODUCTIONS                                                                   

Ms. Steeber introduced herself and acknowledged certain persons who             
were present.  They were:                                                       

Mr. Daniel D. Adams, Jr.,               Vice President                          
 Investment Department
         American Fidelity Corporation
and                 
         Secretary, Board of Directors
                 American Fidelity Dual Strategy Fund,
Inc.                

Mr. Marvin Ewy                     Second Vice President                        
 Accounting Department
         American Fidelity Corporation

Ms. Cherie Horsfall                     Assistant Vice President                
       Annuity Services Department
               American Fidelity Assurance Company

Mr. Dan Junkin                     President                                    
           Asset Services Corporation, LLC

Mr. Derrick Owens                  Annuity Product Manager AFES                 
Division                                                                        
               American Fidelity Assurance Company

Ms. Nancy Steeber                  Vice President                               
       Annuity Services Department
               American Fidelity Assurance Company
DETERMINATION OF OUORUM                                                         

At  the  request of Ms. Steeber, Ms. Horsfall confirmed that  American          
Fidelity  .Assurance  Company  is the  sole  shareholder  and  by  its          
presence  represented 100% of the 9,236,709.0797  units  of  the  Dual          
Strategy Fund, Inc. owned by variable annuity participants on  January          
31, 2003, the Record Date for this meeting, all of whom were given  an          
opportunity  to vote by proxy or in person on the issues  before  this          
special meeting. She further confirmed that a quorum was present.               

PRESENTATION OF NOTICE OF MEETING                                               

Mr.  Adams  presented and read a copy of the Notice  of  the  Meeting,          
together with Proof of Mailing of the same to each Contract Owner  and          
to each Participant at his address as the same appears on the books as          
of January 31, 2003, the Record Date for this meeting.                          

READING AND APPROV AL OF MINUTES                                                

Mr. Adams read the minutes of the Special Meeting of the Dual Strategy          
Fund held on June 18, 1999, and upon motion duly made, seconded, and            
unanimously carried, it was:                                                    

RESOLVED: That the Minutes of the Special Meeting held on             
June 18, 1999, are hereby approved.                                   

APPROV AL OF SUB-ADVISORY AGREEMENT WITH SENECA                                 

WHEREAS:   The   sub-advisory  agreement  between   American          
Fidelity  Dual Strategy Fund, Inc. (the "Fund") and Lawrence          
W.  Kelly  and  associates was terminated by  the  Board  of          
Directors of the Fund on November 6,2002.                             

WHEREAS:  The  Board of Directors of the  Fund  approved  an          
interim   sub-   advisory  agreement  with  Seneca   Capital          
Management  LLC to assist with the management of the  assets          
of the Fund;                                                          

THEREFORE BE IT RESOLVED: That the sub-advisory contract  by          
and  between American Fidelity Assurance Company and  Seneca          
Capital  Management LLC is hereby ratified by said  variable          
annuity participants.                                                 

Votes for 8,603,070.8368; against 302,040.3869;             
abstain 331,579.8560.                                       

The contract is approved.                                   

APPROVAL OF AMENDED AND RESTATED ADVISORY AGREEMENT                             

WHEREAS: American Fidelity Assurance Company has served               
continuously as .the investment manager of the Fund since             
its inception in 1968;                                                

WHEREAS:  The Board of Directors of the Fund has approved an          
Amended and Restated Management and Investment Advisory               
Agreement subject to shareholder approval.                            

WHEREAS:  The proposed Amended and Restated Agreement does            
not increase the fee paid to American Fidelity Assurance              
Company by the Fund;                                                  

THEREFORE  BE  IT RESOLVED:  That the Amended  and  Restated          
Management  and  Investment  Advisory  Agreement  is  hereby          
ratified by said variable annuity participants.                       

Votes for 8,548,574.2532; against 338,063.5523;             
abstain 350,071.2741.                                       

The agreement is approved.                                  

REVIEW OF OPERATION OF THE FUND                                                 

Mr.  Ewy reported that the Dual Strategy Fund at the close of business          
April  10, 2003, had assets of$155,172,975. The total variable annuity          
business  of American Fidelity Assurance Company on that date  equaled          
$196,695,226.  There  are  over 35,000 participants  in  the  variable          
annuity  product.  After three years of bear market,  there  is  .some          
movement  of customers toward fixed annuity products despite  the  low          
interest  rates  prevalent  in the current market.  American  Fidelity          
Assurance  Company  has  over  61,000  participants  in  fixed  return          
annuities with account balances of over $600,000,000.                           

Mr. Junkin indicated that Seneca Capital Management LLC is a large cap          
growth  manager  located in San Francisco. It was selected  after  the          
records  of  about twenty firms were reviewed and after the  Board  of          
Directors   interviewed  three  finalists.  The  review  of  potential          
managers  emphasizes  finding firms where the  investment  process  is          
rational,   produces  rational  results,  and  involves   staff   with          
considerable tenure with the firm.                                              

PARTICPANT OUESTION AND ANSWER PERIOD                                           

Ms. Steeber thanked those present for assisting with the preparations           
for the meeting.                                                                

ADJOURNMENT                                                                     

There being no further business to transact, the meeting was                    
adjourned.                                                                      

                 /S/
                    Daniel D. Adams, Jr.
         Secretary

/S/                                                                       
Nancy Steeber                                                                   
Acting Chairman                                                                 

AMERICAN FIDELITY DUAL STRATEGY FUND, INC.          

BOARD OF DIRECTORS MEETING          

FEBRUARY 19, 2003         

MINUTES         

A  Meeting of the Board of Directors of American Fidelity Dual Strategy         
Fund,  Inc.  ("the  Fund")  was convened at  3:00  p.m.  on  Wednesday,         
February  19,  2003  in the American Fidelity Corporation  Board  Room,         
Seventh  Floor, North Building, 2000 Classen Boulevard, Oklahoma  City,         
Oklahoma pursuant to valid written notice thereof.                              

The following members of the Board of Directors were present:                   

Jean Gumerson         
Gregory M. Love         
J. Dean Robertson, DDS          
John W. Rex         
G. Rainey Williams, Jr.         
Daniel D. Adams, Jr.          

Also  present by invitation of the Directors were Bill Cameron,  Marvin         
Ewy, Steve Garrett, Al Litchenburg, and Nancy Steeber, all officers  or         
employees of American Fidelity Assurance Company (" AF A"); and  Andrew         
Junkin  and  Dan Junkin, Asset Services Company (" ASC"); and  Jennifer         
Wheeler of McAfee & Taft.                                                       

Mr.  Rex,  Chairman, presided over the meeting. Mr.  Adams,  Secretary,         
kept  the Minutes. The Chairman called the meeting to order, introduced         
the  guests, determined that a quorum of the board members was  present         
and  that  a  quorum of the non-interested members  of  the  Board  was         
present, and proceeded to conduct the meeting.                                  

INVESTMENT PORTFOLIOS                                                           

Mr.  Adams presented the report on the consolidated portfolios  of  the         
Fund  and the individual fund portfolios of each Investment Sub-Advisor         
as  of December 31, 2002 and February 17, 2003. After discussion,  upon         
motion duly made, seconded and unanimously carried it was:                      

RESOLVED: That the Investment Portfolio Report is hereby              
accepted and approved.                                                

INVESTMENT CONSULTANT REPORT                                                    

Mr. Junkin presented the ASC Investment Consultant Report on the Fund           
as of December 31 2002. After discussion, upon motion duly made,                
seconded and unanimously carried it was:                                        

RESOLVED:  That the Investment Consultant Report of Asset             
Services Company is hereby accepted and approved.                     
AMENDMENT TO THE PERFORMANCE ASSESSMENT CRITERIA OF FUND SUB-ADVISORS           

Mr. Junkin presented a proposal by AF A and ASC to change certain score         
definitions in the Performance Assessment Criteria of Fund Sub-Advisors         
from  a  score  of  65  or more being considered "very  good-more  than         
passing,"  to a score of 65 to 79 being considered "more than  passing"         
and  a  score of80 or more being considered "a very good score."  After         
discussion, upon motion duly made, seconded and unanimously carried  it         
was:                                                                            

RESOLVED: That the change in score definitions in the                 
Performance Assessment Criteria of Fund Sub-Advisors as               
proposed is hereby accepted and approved.                             

MARKETING AND OPERATIONS REPORT                                                 

Ms.  Steeber presented the Marketing and Operations Reports  discussing         
the  Fund's Summary of Asset Growth of Separate Accounts A, Band  C  at         
December  31,2000,  December 31,2001, and  December  31,  2002;  and  a         
summary of AFA Annuity Products at December 31, 2002. After discussion,         
upon motion duly made, seconded and unanimously carried it was:                 

RESOLVED: That the Marketing and Operation Reports are hereby         
accepted and approved.                                                

MANAGEMENT FEES REPORT                                                          

Marvin  Ewy presented a Report on Mutual Fund Management Fees with  his         
observations  and a report on AF A Separate Account B Management  Fees.         
He  noted  that,  of the funds available from Separate Account  B,  the         
Fund,  a large cap blend fund, has the lowest fees except for the index         
fund  offered by Separate Account B. The directors requested additional         
information  relating  to  mutual  fund  management  fees;   and   that         
information is attached to these Minutes as Exhibit A.                          

Mr. Ewy also advised that AF A would not propose the establishment of a         
small cap fund until market conditions improve. After discussion,  upon         
motion duly made, seconded and unanimously carried it was:                      

RESOLVED:  That the Report on Mutual Fund Management Fees and         
AFA Separate Account B Management Fees are hereby accepted            
and approved.                                                         

FORM N-IA                                                                       
Ms. Wheeler presented a report on the N-IA annual registration with the         
Securities and Exchange Commission, a draft of which had been delivered         
to the Directors for review prior to this meeting.                              

Mr.  Williams  requested that the language describing  Todd  Investment         
Advisors  ("Todd")  on  page one (I) be made consistent  with  language         
related  to  Seneca  Capital  Management ("Seneca"),  and  the  revised         
language  is  attached  to  these Minutes  as  Exhibit  B-1.  Mr.  Love         
requested that the language describing Seneca on page six (6)  be  made         
consistent  with  that  regarding Todd, and  the  revised  language  is         
attached  to  these  Minutes as Exhibit B-2.   After  discussion,  upon         
motion duly made and seconded, the following resolution was unanimously         
carried:                                                                        

WHEREAS,  the  Directors  have reviewed  and  considered  the         
Registration  Statement on Form N-IA to  be  filed  with  the         
Securities and Exchange Commission pursuant to the Investment         
Company Act of 1940 and the Securities Act of 1933;                   

NOW,   THEREFORE,  BE  IT  RESOLVED,  that  the  Registration         
Statement  on  Form N-1A is hereby accepted and  approved  in         
substantially  the form presented to the Directors  with  the         
changes requested;                                                    

FURTHER  RESOLVED, that the officers of the Fund  are  hereby         
authorized to make such changes and take such action  as  may         
be   necessary   or  appropriate  in  connection   with   the         
Registration  Statement  on Form N- IA,  including,  but  not         
limited  to,  filing  such Registration  Statement  with  the         
Securities and Exchange Commission.                                   

2002 ANNUAL REPORT                                                              

Ms. Wheeler presented the 2002 Annual Report of the Fund, which had             
been delivered to the Directors for their review prior to this meeting.         
After discussion, upon motion duly made and seconded, the following             
resolution was unanimously adopted:                                             

WHEREAS, the Directors have reviewed and considered the  2002         
Annual  Report of the Fund to be provided to its shareholders         
pursuant to the Investment Company Act of 1940;                       

NOW,  THEREFORE, BE IT RESOLVED, that the 2002 Annual  Report         
is  hereby  accepted and approved in substantially  the  form         
presented to the Directors;                                           

FURTHER  RESOLVED, that the officers of the Fund  are  hereby         
authorized to make such changes and take such action  as  may         
be  necessary  or  appropriate in connection  with  the  2002         
Annual Report, including, but not limited to, delivering such         
report  to  the Fund's shareholders and filing  it  with  the         
Securities and Exchange Commission.                                   

NEW SEC REOUIREMENTS                                                            

Ms.  Wheeler  presented the February 12, 2003 McAfee & Taft  memorandum         
regarding  New SEC Requirements. The memorandum had been  delivered  to         
the  Directors for their review prior to the meeting. After discussion,         
upon motion duly made, seconded and unanimously carried it was:                 

RESOLVED:  That the Report on the New SEC Requirements is             
hereby accepted and approved.                                         

DISCLOSURE CONTROLS AND PROCEDURES                                              

Ms.  Wheeler  presented the Form of Disclosure Controls and Procedures.         
After  discussion,  upon motion duly made and seconded,  the  following         
motion was unanimously approved:                                                

WHEREAS,  the  Directors have reviewed the Fund's  Disclosure         
Controls and Procedures;                                              

WHEREAS,  the Disclosure Controls and Procedures are intended         
to  ensure that information required to be disclosed  by  the         
Fund in its Annual and Semi-Annual Reports to Shareholders is         
accumulated, communicated and reported properly;                      

NOW,  THEREFORE, BE IT RESOLVED, that the Disclosure Controls         
and   Procedures   are  hereby  accepted  and   approved   in         
substantially the form presented to the Directors;                    

FURTHER  RESOLVED, that the officers of the Fund  are  hereby         
authorized to make such changes and take such action  as  may         
be  necessary  or  appropriate  in  order  to  implement  and         
maintain the Fund's Disclosure Controls and Procedures.               

CODE OF ETHICS FOR SENIOR OFFICERS                                              

Ms.  Wheeler  presented the Fund's Code of Ethics for Senior  Officers.         
After  discussion,  upon motion duly made and seconded,  the  following         
resolutions were unanimously approved:                                          

WHEREAS,  the  Directors have reviewed  the  Fund's  Code  of         
Ethics for Senior Officers;                                           

WHEREAS,  the Code of Ethics for Senior Officers is  intended         
to  ensure  that  the senior financial and  senior  executive         
officers  of  the  Fund  maintain personal  and  professional         
conduct  consistent  with ethical and professional  standards         
set forth therein;                                                    

NOW,  THEREFORE, BE IT RESOLVED, that the Code of Ethics  for         
Senior   Officers   is  hereby  accepted  and   approved   in         
substantially the form presented to the Directors;                    

FURTHER  RESOLVED, that the officers of the Fund  are  hereby         
authorized  to  take  such action  as  may  be  necessary  or         
appropriate  in order to implement and maintain the  Code  of         
Ethics for Senior Officers.                                           

ELECTION OF OFFICERS; DESIGNATION OF SIGNATORIES                                

Ms. Wheeler presented the following proposed resolution for the                 
election of officers and designation of signatories of the Fund.                

[Proposed], that the following persons are hereby elected  to         
the  offices  set  forth opposite their names,  to  serve  as         
officers  of  the  Fund until the earlier of  such  officer's         
removal or resignation:                                               

John   W.  Rex               President  and  Principal  
Executive Officer                                                     

David R Carpenter        Senior Vice President              
           and Principal Financial Officer

Kenneth D. Klehm         Senior Vice President              

Daniel D. Adams, Jr.     Vice President and Secretary       

[Proposed], that the following persons are hereby  designated         
as  Authorized Employees and/or Authorized Signatories of the         
Fund  in  connection  with the Corporate Custodial  Agreement         
between InvesTrust, N.A. and the Fund:                                

Daniel D. Adams, Jr.                                        
Jo Ann Anderson                                             
David R. Carpenter                                          
Lucy K. Fritts                                              
Kenneth D. Klehm                                            

After  discussion,  the  matter of electing  officers  and  designating         
signatories of the Fund was deferred until the next meeting,  it  being         
agreed  that AF A would take the matter under advisement, at  the  next         
meeting of the Fund's Board of Directors, and make a recommendation  to         
the Fund's directors as to the election of officers of the Fund.                

Ms.  Wheeler also presented a proposed resolution to ratify the  Fund's         
Corporate  Custodial Agreement with InvesTrust, N.A., and provided  (1)         
the  September  17,  1998  McAfee and  Taft  memorandum  re:   American         
Fidelity  Dual  Strategy Fund, Inc: Corporate Custodial Agreement,  and         
(2)  the Fund Corporate Custodial Agreement with InvesTrust, N.A. dated         
September  30, 1998.  Upon motion duly made and seconded, the following         
resolution was unanimously                                                      
approved:                                                                       

RESOLVED, that the Fund's Custodial Agreement with InvesTrust         
dated  September 30, 1998 is hereby confirmed  and  ratified,         
and  any  amendments or subsequent custodial agreements  with         
InvesTrust  adopted  prior  to  the  date  hereof  shall   be         
cancelled and rescinded;                                              

RESOLVED, that Exhibit C of the Custodial Agreement shall  be         
amended  to  reflect the current Authorized Advisors  of  the         
Fund;                                                                 

RESOLVED, that the officers of the Fund are hereby authorized         
to  take  such  action as may be necessary or appropriate  in         
order to effectuate these resolutions.                                

AUTHORIZATION  OF  DIVIDEND DISTRIBUTION AND APPOINTMENT  OF  DIVIDEND          
COMMITTEE                                                                       

Ms. Wheeler presented a proposed resolution for the authorization of  a         
dividend  distribution  by  the Fund and  the  appointment  of  a  Fund         
Dividend  Committee.  After  discussion,  upon  motion  duly  made  and         
seconded, the following resolution was unanimously approved:                    

WHEREAS, the Fund's Board of Directors previously established         
a  Dividend  Distribution Policy pursuant  to  the  following         
resolution:                                                           

"RESOLVED,  that the fund (i) declare and pay  dividends    
from  net  investment income at least once  a  year  and    
automatically reinvest them in additional fund shares at    
net  asset value; and (ii) make distributions  from  net    
realized securities gains, if any, at least once a year,    
but on a more frequent basis if necessary to comply with    
the  distribution  requirements of the Internal  Revenue    
Code, and in all events, in a manner consistent with the    
provisions  of  the  Investment  Company  Act;  provided    
however  that the fund not make distributions  from  net    
realized   securities   gains   unless   capital    loss    
carryovers, if any, have been utilized or have expired."    

WHEREAS, the Directors desire to authorize an ordinary income         
dividend distribution with respect to the year ended December         
31,  2002,  the  amount of such dividend to be determined  in         
accordance with the Fund's Dividend Distribution Policy at  a         
time when such a determination may be made;                           

WHEREAS,  the Directors deem it necessary and appropriate  to         
create a Dividend Committee;                                          

NOW, THEREFORE, BE IT RESOLVED, that a Dividend Committee  is         
hereby established, which committee may take only such action         
as  is  specifically authorized, from time to  time,  by  the         
Board of Directors;                                                   

FURTHER RESOLVED, that Daniel D. Adams, Jr. and John  W.  Rex         
are hereby appointed to the Dividend Committee, each to serve         
until the earlier of his removal or resignation;                      

FURTHER   RESOLVED,   that   an  ordinary   income   dividend         
distribution  is hereby authorized and declared with  respect         
to  the  year  ended December 31, 2002, the  amount  of  such         
dividend  to  be  determined in accordance  with  the  Fund's         
Dividend Distribution Policy and subject to approval  of  the         
Dividend  Committee upon completion of the Fund's tax  return         
for the year 2002, and subject further to ratification of the         
Board   of   Directors  as  soon  as  practicable  upon   the         
determination of the dividend amount;                                 

FURTHER RESOLVED, that the members of the Dividend Committee,         
acting  individually  or together, are hereby  authorized  to         
approve  the dividend authorized herein only upon  completion         
of  the  Fund's  tax return and only in accordance  with  the         
Fund's Dividend Distribution Policy;                                  

FURTHER  RESOLVED,  that the Dividend  Committee  shall  give         
notice  to  the  Board  of Directors of  the  amount  of  the         
dividend  authorized herein as soon as practicable  upon  the         
determination of the dividend amount, and such dividend shall         
be ratified by the Board of Directors.                                

APPROVAL OF MINUTES AND RATIFICATION OF ACTIONS BY WRITTEN CONSENT              

Mr.  Adams  presented  the  Minutes of the Fund's  Board  of  Directors         
Meeting  held  on  November 6, 2002, as amended after delivery  to  the         
Directors  for review prior to this meeting.  Mr. Adams also  presented         
the  Written  Consents  of  the Board of Directors  subsequent  to  the         
November  6,  2002 Board Meeting.  After discussion, upon  motion  duly         
made and seconded, the following resolutions were unanimously adopted:          

Minutes of November 6, 2002 Board Meeting                             

WHEREAS, the Directors have received a copy of the Minutes of         
the  Fund's  Board of Directors Meeting held on  November  6,         
2002;                                                                 

WHEREAS, the Minutes are accurate and correct;                        

NOW, THEREFORE, BE IT RESOLVED, that the Minutes of the Board         
of  Directors  Meeting held on November 6, 2002,  as  amended         
hereby, are approved, ratified and confirmed.                         

Actions by Written Consent                                            

WHEREAS,   the  Directors  have  taken  certain  actions   by         
unanimous  written consent since the November 6,  2002  Board         
meeting;                                                              

WHEREAS,  the  Directors  desire to  ratify  and  affirm  the         
actions  taken  by  the Board of Directors  pursuant  to  the         
actions by Written Consent of Board of Directors, which  have         
been provided herewith;                                               

NOW,  THEREFORE, BE IT RESOLVED, that the actions by  Written         
Consent  of  the  Board  of Directors provided  herewith  are         
approved, ratified and confirmed.                                     

2003 BOARD OF DIRECTORS MEETING SCHEDULE                                        

Mr. Rex presented the revised 2003 Board of Directors Meeting Schedule,         
which had been requested by and coordinated with the Independent                
Directors.                                                                      

ADJOURNMENT                                                                     

There being no further business to come before this meeting, it was             
adjourned.                                                                      

                 /S/
                    Daniel D. Adams, Jr.
         Secretary

APPROVED:                                                                       

/S/                                                                       
John W. Rex                                                                     
Chairman                                                                        
                                                     Exhibit A

REPORT ON MUTUAL FUND MANAGEMENT FEES         

National Association of Variable Annuities reports:                             
Average  variable annuity sub-account charges investment advisory   
fees of                                                           .82%          
Lowest fee reported was Vanguard S & P 500 Index Fund at     .18%     

American Fidelity Assurance Company Separate Account B has selected sub-        
accounts that charge management fees as follow:                                 
American Fidelity Dual Strategy Fund                         .50%     
American Century Variable Portfolios                                  
VP Balanced Fund                                         .90%   
VP Capital Appreciation Fund                            1.00%   
VP Income and Growth Fund                                .70%   
VP Ultra Fund                                           1.00%   
VP International Fund                                   1.26%   
Dreyfus Socially Responsible Growth Fund                     .78%     
Dreyfus Stock Index Fund                                     .26%     
Dreyfus Variable Investment Fund                                      
Growth and Income Portfolio                              .80%   
Small Company Stock Portfolio                           1.03%   
International Value Portfolio                           1.40%   
Dreyfus Investment Portfolios                                         
Technology Growth Portfolio                              .87%   
Federated Insurance Series                                            
Federated Fund for U.S. Government Securities II         .74%   
Federated Capital Appreciation Fund II                   .91%   
Merrill Lynch Variable Series Funds, Inc.                             
Basic Value V.I. Fund I                                  .68%   
Small Cap Value V.I. Fund                                .83%   
Neuberger Berman Advisers Management Trust                            
AMT Balanced Portfolio                                  1.07%   
AMT Growth Portfolio                                     .89%   

Generalizations about mutual fund management fees:                              
(1) Variable annuity sub-account fees tend to be lower                          
than the fees for corresponding retail mutual funds in                          
the same fund family.                                                           
(2) Funds not under active management (index funds)                             
tend to charge the very lowest fees.                                            
(3) Large cap growth funds tend to fall in the middle                           
of the fee range.                                                               
(4) Small cap fees are usually greater than large cap                           
fund fees.                                                                      
(5) International funds and intensely managed funds                             
tend to be highest.                                                             
(6) While it may not be relevant to variable annuities,                         
in the fund market in general the highest fees are                              
levied by hedge funds.                                                          
(7) Fund families with greater dollar amounts under                             
management tend to charge lower fees than smaller fund                          
families.                                                                       
                                                   Exhibit B-1

Dual Investment Strategies                                                      

The  fund  invests primarily in common stocks of U.S.  companies.   The         
fund's  two  sub-advisors independently manage a portion of the  fund's         
portfolio  using  different investment strategies.   One  sub-advisor's         
equity approach is growth oriented and exploits the correlation between         
increasing  company earnings and increasing stock price in stocks  with         
large  capitalizations.  The other sub- advisor focuses on undervalued,         
high quality equity securities with large capitalizations.                      

                                                   Exhibit B-2

Investment Goals and Strategies                                                 

Seneca  Capital Management LLC is a growth-oriented manager. To achieve         
the  goal  of  growth, Seneca blends two types of large  capitalization         
growth  stocks.  First, it invests in stocks that have I produced  long         
records  of  financial success through varying economic cycles.   These         
stocks  provide earnings stability and diversification.  Second, Seneca         
invests  in  stocks  for  which it forecasts major  near-term  earnings         
acceleration.  By  investing  in  this combination  of  stocks,  Seneca         
attempts  to  produce a portfolio that grows at a rate consistent  with         
the  growth style, but is anchored in a foundation of solid, dependable         
companies.                                                                      

Todd  Investment  Advisers,  Inc.  is  a  value-oriented  manager.   It         
emphasizes  high-quality,  large  capitalization  companies  that   are         
undervalued.   Todd  Investment attempts  to  achieve  average-  market         
returns  in an up market and above-market returns in a down market.   A         
dividend discount model is used to identify companies with the greatest         
potential for price appreciation, and then fundamental analysis is used         
to determine which companies have a catalyst for price appreciation.  A         
stock  is  considered for sale when either its price/value ratio  rises         
above  the  median  for large capitalization stocks  or  the  company's         
fundamentals  weaken.  The portion of the funds portfolio  managed  by          
Todd Investment typically holds 40 to 50 issues, and the average annual         
turnover is usually 20 to 40%.                                                  
WRITTEN CONSENT         
OF          
BOARD OF DIRECTORS          
OF          
AMERICAN FIDELITY DUAL STRATEGY FUND, INC.          

Pursuant to Section 2-408 of the Maryland General Corporation Law which         
provides that any action required or permitted to be taken at a meeting         
of  the  board of directors may be taken without a meeting if a consent         
thereto of all the members of the board of directors is filed with  the         
minutes of the proceedings of the board, the undersigned, being all  of         
the directors of American Fidelity Dual Strategy Fund, Inc., a Maryland         
corporation  (the  "Fund"), did, as of the 29th day  of  January,  2003         
adopt and consent to the following resolutions:                                 

Amended and Restated Management and Investment Advisory Agreement               

WHEREAS,  the Fund is a party to that certain Management  and         
Investment  Advisory Agreement, dated December 22,  1998,  as         
amended  as  of  August  1, 2002 (the "Advisory  Agreement"),         
entered  into  by  and between the Fund  and  its  investment         
advisor, American Fidelity Assurance Company (the "Advisor"),         
pursuant  to  which  the Fund retained  the  Advisor  as  its         
manager  and  investment advisor, and the Advisor  agreed  to         
assume   certain  obligations  of  the  Fund  in   connection         
therewith;                                                            

WHEREAS,  certain  terms  of the Advisory  Agreement  do  not         
reflect  the  current practices of the Fund and  the  Advisor         
with  regard to payment of certain fees and expenses  of  the         
Fund;                                                                 

WHEREAS,  the  Board  of  Directors deems  it  necessary  and         
appropriate  to amend and restate the Advisory  Agreement  to         
reflect the current practice of the Advisor to compensate the         
Fund's  personnel,  officers  and  directors,  regardless  of         
whether such persons are employees of the Advisor, and to set         
forth   the   remaining  terms  of  the  Advisory  Agreement,         
including the August 1,2002 amendment;                                

WHEREAS, in approving the Amended and Restated Management and         
Investment  Advisory Agreement, the Board of  Directors  took         
into consideration the following factors:                             

  * the current practice of American Fidelity Assurance Company to pay
     the Fund's personnel, officers and directors, regardless of whether
         those people are also employees of American Fidelity Assurance Company,
    and despite the fact that the original Advisory Agreement does not
require such actions;                                         

  * the fact that the amendments to the original Advisory Agreement do
not result in an increase in the Fund's fees;                 

* the fact that all other material provisions of the Advisory     
   Agreement, as amended as of August I, 2002, remain unchanged; and

* the independence of the Fund's directors who are not "interested
      persons" of the Fund or American Fidelity Assurance Company, and the
        ability of the non-interested directors to maintain their independence
from the Fund and American Fidelity Assurance Company.        

NOW,  THEREFORE, BE IT RESOLVED, that the Advisory  Agreement         
be  amended to reflect the current practice of the Advisor to         
compensate  the  Fund's  personnel, officers  and  directors,         
regardless  of  whether such persons  are  employees  of  the         
Advisor;                                                              

FURTHER   RESOLVED,  that,  in  addition  to  the   amendment         
described   above,  the  remaining  terms  of  the   Advisory         
Agreement,  including the amendment adopted by the  Board  of         
Directors  as  of  August 1, 2002 requiring  the  Advisor  to         
reimburse  the  Fund for expenses incurred  by  the  Fund  in         
connection  with  its  indemnification  agreements  with  its         
directors, be set forth in an Amended and Restated Management         
and  Investment Advisory Agreement, in substantially the same         
form as provided herewith;                                            

FURTHER RESOLVED, that the officers of the Fund be, and  each         
of  them  hereby  is, authorized and directed  to  take  such         
actions  as  may  be necessary or appropriate  to  effectuate         
these  resolutions,  including  submitting  the  Amended  and         
Restated Management and Investment Advisory Agreement to  the         
Fund's   shareholders,  if  such  action  be   necessary   or         
appropriate.                                                          

Approval of Sub-Advisory Agreement                                              

WHEREAS, the Fund's Board of Directors previously approved an         
Investment    Sub-Advisory   Agreement   (the   "Sub-Advisory         
Agreement") with Seneca Capital Management LLC (the "New Sub-         
Advisor"),  pursuant to which the New Sub-Advisor  agreed  to         
serve  as  sub-advisor  of the Fund with  regard  to  certain         
designated  assets  and to assume specified  obligations  and         
responsibilities in connection therewith;                             

WHEREAS, pursuant to the Investment Company Act of 1940,  the         
initial term of the Sub-Advisory Agreement cannot exceed  150         
days  from  November 14, 2002 (the "Interim Period"),  during         
which period the Fund must obtain shareholder approval of the         
Sub-Advisory Agreement with the New Sub-Advisor;                      

NOW,  THEREFORE,  BE IT RESOLVED, that a special  meeting  of         
shareholders of the Fund be called and held for  the  purpose         
of  approving  the Sub-Advisory Agreement with the  New  Sub-         
Advisor.                                                              

Special Shareholders Meeting                                                    

NOW,  THEREFORE, BE IT RESOLVED, that the Board of  Directors         
does  hereby  call a special meeting of shareholders  of  the         
Fund for the purpose of obtaining shareholder approval of the         
Amended  and Restated Advisory Agreement and the Sub-Advisory         
Agreement  with the New Sub- Advisor, as well  as  any  other         
matters that are approved by the Special Proxy Committee  (as         
defined below);                                                       

FURTHER  RESOLVED, that the Board of Directors  directs  that         
such  Special  Meeting of Shareholders of the Fund  shall  be         
held  on  April  11,  2003,  unless  another  date  shall  be         
determined by the Special Proxy Committee;                            

FURTHER  RESOLVED,  that  the record  date  of  such  Special         
Meeting shall be January 31, 2003, unless another date  shall         
be determined by the Special Proxy Committee;                         

FURTHER RESOLVED, that the officers of the Fund be, and  each         
of  .them hereby is, authorized and directed to finalize  the         
Proxy  Statement  that has been presented  to  the  Board  of         
Directors  and any necessary related proxy materials  and  to         
file the same with the Securities and Exchange Commission and         
mail   such   Proxy  Statement  and  related   materials   to         
shareholders of the Fund in accordance with applicable laws;          

FURTHER RESOLVED, that Daniel D. Adams, Jr. and John  W.  Rex         
are  hereby  appointed as members of a newly-created  Special         
Proxy  Committee of the Board of Directors with regard solely         
to  the  Proxy Statement authorized herein, and such  Special         
Proxy  Committee  is  authorized and directed  to  take  such         
actions  as may be necessary to address any matters  relating         
to  the  Special Shareholders Meeting that may arise  in  the         
course of preparing for the meeting.                                  

FURTHER  RESOLVED,  that  this  Consent  be  filed  with  the         
proceedings of the Board of Directors.                                

Dated the day and year first above mentioned.                                   

             /S/
           John W. Rex

             /S/
                    Daniel D. Adams, Jr.

             /S/
                Jean G. Gumerson

             /S/
               Gregory M. Love

             /S/
                      J. Dean Robertson, DDS

             /S/
                       G. Rainey Williams, Jr.

Dates Referenced Herein   and   Documents Incorporated By Reference

This NSAR-B Filing		Date		Other Filings
		9/17/98
		9/30/98
		12/22/98
		6/18/99		DEFS14A
		8/1/02
		11/6/02
		11/14/02
		12/31/02		N-CSR, 24F-2NT, NSAR-B, NSAR-B/A
		1/31/03
		2/12/03
		2/17/03
		2/19/03
		4/10/03
		4/11/03		PRE 14A, DEF 14A
For The Period Ended		12/31/03		N-CSR, 24F-2NT
Filed On / Filed As Of / Effective As Of		2/26/04
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