<PAGE> 1
Management's Discussion of Fund Performance
MONEY MARKET FUND
The Money Market Fund finished the year above the $100 million mark in net
assets, with $101.4 million, and posted a net annual return of 5.51
percent. Yields on money market securities went up slightly in the fourth
quarter, while the 90-day Treasury Bill yield increased by 15 basis points
during that time. This followed a slight decline in both the 90-day T-bill
rate and short term interest rates in general in the third quarter.
The Federal Reserve took action on short term rates only once in 1996,
lowering the Fed Funds rate by 25 basis points on January 31. The Fed
chose not to take any other action based on the absence of any strong data
to indicate an overheating or rapidly slowing economy. At year end,
economic growth remained moderate and general price levels remained under
control.
<PAGE> 2
<TABLE>
MONEY MARKET FUND
Growth of a $10,000 Investment
10/01/87 - 12/31/96
<CAPTION>
Money Market Fund
<S> <C>
10/01/87 10,000
12/31/87 10,186
12/31/88 10,976
12/31/89 12,025
12/31/90 13,039
12/31/91 13,846
12/31/92 14,360
12/31/93 14,801
12/31/94 15,424
12/31/95 16,343
12/31/96 17,243
</TABLE>
The Money Market Fund's annual returns for the one- and five- years ended
December 31, 1996 and since inception were 5.51%, 4.49% and 6.06%
respectively.
Fund began operations on October 1, 1987.
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
General American Capital Company Money Market Fund:
We have audited the statement of assets and liabilities, including the
schedule of investments, of the Money Market Fund of General American
Capital Company as of December 31, 1996, the related statement of
operations for the year then ended, the statements of changes in net assets
for each of the years in the two-year period then ended, and financial
highlights information for the periods presented. These financial
statements and financial highlights information are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements and financial highlights information based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
financial highlights information are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Investment securities held in
custody were confirmed to us by the custodians. As to securities purchased
and sold but not received or delivered, if any, we requested confirmations
from brokers, and where replies were not received, we carried out other
appropriate auditing procedures to verify their existence. 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
information referred to above present fairly, in all material respects, the
financial position of the Money Market Fund of General American Capital
Company as of December 31, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of the years in the two
year period then ended and financial highlights information for the periods
presented, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
St. Louis, Missouri
January 31, 1997
<PAGE> 4
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<TABLE>
Statement of Assets and Liabilities
December 31, 1996
<CAPTION>
ASSETS:
<S> <C>
Investments, at value:
(see accompanying schedule)
Short term securities $ 101,224,478
-------------
Total investments 101,224,478
Cash 114,921
Interest receivable 101,062
-------------
Total assets 101,440,461
-------------
<CAPTION>
LIABILITIES:
<S> <C>
Payable to Conning Asset
Management Company 9,061
Payable to General American
Life Insurance Company 5,799
-------------
Total liabilities 14,860
-------------
Total net assets 101,425,601
=============
TOTAL SHARES OF CAPITAL
STOCK OUTSTANDING 5,882,249
Net asset value per
share (Total net assets
divided by total shares of
capital stock outstanding) $ 17.24
Total amortized cost of
investments 101,222,173
See accompanying notes to financial statements.
</TABLE>
<TABLE>
Statement of Operations
As of December 31, 1996
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest $ 4,108,668
-----------
Total investment income 4,108,668
-----------
<CAPTION>
EXPENSES:
<S> <C>
Investment management charge 92,359
Administrative charge 59,110
-----------
Total expenses 151,469
-----------
Net Investment income 3,957,199
-----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 3,957,199
===========
</TABLE>
<PAGE> 5
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
Year ended Year ended
December 31 December 31
----------- -----------
1996 1995
----------- -----------
<S> <C> <C>
Operations:
Net investment income $ 3,957,199 $ 4,050,581
------------- ------------
Net increase in net assets from operations 3,957,199 4,050,581
Capital share transactions 26,894,392 (26,815,810)
------------- ------------
Net increase (decrease) in net assets 30,851,591 (22,765,229)
Net assets, beginning of year 70,574,010 93,339,239
------------- ------------
Net assets, end of year $ 101,425,601 $ 70,574,010
============= ============
See accompanying notes to financial statements.
</TABLE>
<TABLE>
Financial Highlights
<CAPTION>
Year ended Year ended Year ended Year ended Year ended
December 31 December 31 December 31 December 31 December 31
----------- ----------- ----------- ----------- -----------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year <F1> $ 16.34 $ 15.42 $ 14.80 $ 14.36 $ 13.85
Income from operations:
Net investment income 0.90 0.92 0.62 0.44 0.51
--------- -------- -------- -------- --------
Net asset value, end of
year $ 17.24 $ 16.34 $ 15.42 $ 14.80 $ 14.36
========= ======== ======== ======== ========
Total return 5.51% 5.96% 4.21% 3.07% 3.71%
Net assets, end of year
(in thousands) $ 101,426 $ 70,574 $ 93,339 $ 84,430 $ 84,880
Ratio of expenses to
average net assets <F2> 0.21% 0.21% 0.21% 0.21% 0.21%
Ratio of net investment
income to average net
assets <F2> 5.37% 5.78% 4.17% 3.06% 3.68%
Portfolio turnover rate <F3> <F3> <F3> <F3> <F3>
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> Computed on an annualized basis.
<F3> A portfolio turnover rate is not calculated for securities on which the
maturity or expiration dates at the time of acquisition were one year.
See accompanying notes to financial statements.
</TABLE>
<PAGE> 6
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
Notes to Financial Statements - December 31, 1996
NOTE 1-ORGANIZATION
General American Capital Company Money Market Fund (the Company or the
Fund), commenced operations on October 1, 1987, and is registered under the
Investment Company Act of 1940 as amended, as an open-end diversified
management investment company.
The Company offers to its shareholders a separate investment fund which
operates as a distinct investment vehicle. As of December 31, 1996, the
Company sells its shares to life insurance and other separate accounts
established by General American Life Insurance Company (General American),
Security Equity Life Insurance Company (Security Equity), and Cova
Financial Services Life Insurance Company (Cova), wholly owned insurance
subsidiaries of General American.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Company in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles.
A. INVESTMENTS:
The market values for short term securities with maturities of 60 days
or more at date of valuation are determined daily by an independent
broker-dealer based on current market conditions. Short term securities
with maturities of less than 60 days at date of valuation are valued at
amortized cost, which approximates market value.
B. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:
Investment transactions are recorded on the trade date (date the order
to buy or sell is executed). Interest income and amortization of
premium and discount are recorded on an accrual basis.
C. FEDERAL INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS:
No provision for Federal income taxes is necessary because the Fund
qualifies as a "regulated investment company" under Subchapter M of the
Internal Revenue Code and intends to distribute each year substantially
all of its net investment income and realized gains to its
shareholders. Shareholders of the fund consist of the separate accounts
of General American, Security Equity and Cova, each of which are exempt
from Federal income taxes.
D. CONSENT DIVIDENDS:
The Fund follows the accounting practice known as consent dividending,
whereby substantially all of its net investment income and realized
gains are treated as being distributed daily to shareholders of the fund
and are immediately reinvested in the Fund.
E. USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease
in net assets from operations during the period. Actual results could
differ from those estimates.
NOTE 3-MANAGEMENT AND ADMINISTRATIVE FEES
The Company has entered into an Investment Advisory Agreement with Conning
Asset Management Company (Investment Advisor). Certain officers and
directors of the Company are also officers and directors of the Investment
Advisor. For its services, the Investment Advisor charges a fee which is
accrued daily. The fees charged, stated as an annual percentage of the
average daily value of the net assets, is .125 percent.
All operational expenses of the Company are paid by General American,
which charges administrative fees to the Fund in return. Certain officers
and directors of the Company are also officers and directors of General
American, Security Equity and Cova.
The administrative expenses are charged at an annual rate based on the
average daily value of the net assets in the Fund and are .08 percent.
<PAGE> 7
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
Notes to Financial Statements - December 31, 1996
NOTE 4-INVESTMENTS
The amortized cost of investments for federal income tax purposes as of
December 31, 1996, is as follows:
<TABLE>
<CAPTION>
Money
Market
Fund
------------
<S> <C>
Short term securities $101,224,478
============
</TABLE>
The Money Market Fund has no unrealized gains or losses as of December 31,
1996.
The "specific identification" method is used to determine the cost of
securities sold.
For the year ended December 31, 1996, cost of purchases and proceeds from
sales and maturities of securities were $599,980,843 and $572,951,811,
respectively.
NOTE 5-CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
MONEY MARKET FUND
-------------------------------------------------------
Year ended Year ended
December 31, 1996 December 31, 1995
--------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold 13,172,752 $222,132,928 12,983,191 $206,236,725
Shares redeemed (11,608,821) (195,238,536) (14,716,458) (233,052,535)
----------- ------------ ----------- ------------
Net increase
(decrease) 1,563,931 $ 26,894,392 (1,733,267) $(26,815,810)
=========== ============ =========== ============
</TABLE>
<PAGE> 8
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<TABLE>
Schedule of Investments - December 31, 1996
<CAPTION>
- ---------------------------------------------------------------------------------------
PAR INTEREST MATURITY MARKET
SHORT TERM SECURITIES VALUE RATE (%) DATE VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
Commercial Banking (45.60%)
Allomon Funding $2,117,000 5.62 01/27/1997 $ 2,108,468
Banca CRT Financial Corp. 1,000,000 5.55 04/25/1997 983,058
Broadway Capital<F*> 1,000,000 5.78 02/03/1997 994,729
Broadway Capital<F*> 1,500,000 5.42 02/10/1997 1,490,917
BTM Financial<F*> 2,800,000 5.49 02/28/1997 2,775,189
Creative Capital<F*> 2,000,000 7.25 01/02/1997 1,999,597
Creative Capital<F*> 1,000,000 5.52 01/29/1997 995,761
Creative Capital<F*> 1,000,000 5.47 02/03/1997 995,050
Creative Capital<F*> 1,000,000 5.55 02/10/1997 993,889
Dynamic Funding Corp. 1,000,000 5.68 01/06/1997 999,250
Dynamic Funding Corp. 1,000,000 6.02 01/07/1997 999,000
Dynamic Funding Corp. 600,000 5.71 01/31/1997 597,285
Dynamic Funding Corp. 1,000,000 5.63 05/02/1997 981,917
Falcon Asset Securitization 2,400,000 5.73 01/21/1997 2,392,400
Frontier Corp.<F*> 2,384,000 5.42 01/17/1997 2,378,310
Industrial Funding Corp. 2,780,000 5.73 01/15/1997 2,773,838
Iris Partners LP (Sumitomo) 1,500,000 5.53 01/30/1997 1,493,499
Iris Partners LP (Sumitomo) 1,000,000 5.57 02/07/1997 994,327
Iris Partners LP (Sumitomo) 1,000,000 5.64 02/21/1997 992,208
Oak Funding 1,000,000 5.70 02/18/1997 992,467
Oak Funding 1,000,000 5.51 02/25/1997 991,597
Orix America (IBJ)<F*> 1,000,000 5.58 03/25/1997 987,319
Orix America (Norinchukin)<F*> 1,000,000 5.59 03/18/1997 988,389
Orix America (Norinchukin)<F*> 1,000,000 5.75 03/18/1997 988,389
Orix America (Sanwa)<F*> 1,000,000 5.88 02/03/1997 994,638
Progress Funding Corp. "A"<F*> 1,000,000 5.70 01/13/1997 998,110
Progress Funding Corp. "A"<F*> 450,000 6.52 01/13/1997 449,025
Progress Funding Corp. "A"<F*> 1,000,000 5.60 01/31/1997 995,475
Progress Funding Corp. "A"<F*> 1,075,000 5.89 02/03/1997 1,069,235
Riverside Funding Inc. 1,414,000 5.81 02/21/1997 1,402,482
Shimizu International Finance
(Dai Ichi Kangyo) 3,000,000 5.56 03/14/1997 2,967,300
Strait Capital 3,000,000 5.59 02/28/1997 2,973,205
Strait Capital 534,000 5.81 02/28/1997 529,053
Strait Capital 1,000,000 5.55 03/05/1997 990,346
------------
46,255,722
------------
Finance (Non-Banking) (38.79%)
AGA Capital Inc. 1,000,000 5.69 02/11/1997 993,565
Anchor Funding<F*> 704,000 6.13 01/31/1997 700,421
Anchor Funding<F*> 2,400,000 5.53 02/11/1997 2,384,967
Anchor Funding<F*> 1,000,000 5.63 03/13/1997 989,251
Astro Capital Corp.<F*> 800,000 5.57 01/31/1997 796,380
Astro Capital Corp.<F*> 2,000,000 5.57 02/28/1997 1,982,278
Atlas Funding<F*> 2,000,000 5.69 02/04/1997 1,989,328
(continued)
<PAGE> 9
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
Schedule of Investments - December 31, 1996
- ---------------------------------------------------------------------------------------
PAR INTEREST MATURITY MARKET
SHORT TERM SECURITIES VALUE RATE (%) DATE VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Finance (Non-Banking) (continued)
Banner Receivables $1,000,000 5.71 03/07/1997 $ 990,160
Banner Receivables 2,000,000 5.63 03/21/1997 1,976,081
Finova Capital 1,500,000 5.72 02/10/1997 1,490,917
Goldman Sachs 5,000,000 8.25 01/02/1997 4,998,845
Gotham Funding<F*> 1,065,000 6.02 01/14/1997 1,062,693
Gotham Funding<F*> 1,000,000 5.62 02/28/1997 991,058
Gotham Funding<F*> 1,500,000 5.52 05/19/1997 1,469,238
Jet Funding 190,000 5.54 01/31/1997 189,145
Jet Funding 1,000,000 6.29 01/31/1997 994,792
Jet Funding 1,000,000 5.57 02/28/1997 991,139
Jet Funding 1,600,000 5.53 02/28/1997 1,585,822
Merrill Lynch & Co. 100,000 6.66 01/08/1997 99,871
Strategic Asset Funding Corp. 1,000,000 5.54 03/06/1997 990,311
Strategic Asset Funding Corp. 1,000,000 5.63 03/14/1997 989,100
Tri-Lateral Capital<F*> 1,000,000 5.48 02/03/1997 995,032
Tri-Lateral Capital<F*> 1,000,000 5.50 02/24/1997 991,750
Tri-Lateral Capital<F*> 1,000,000 5.57 03/05/1997 990,463
Tri-Lateral Capital<F*> 1,260,000 5.56 04/01/1997 1,242,738
Wood Street Funding<F*> 3,000,000 7.10 01/02/1997 2,999,408
Wood Street Funding<F*> 2,000,000 5.71 02/24/1997 1,983,050
Working Capital Management 1,500,000 5.56 02/24/1997 1,487,623
------------
39,345,435
------------
Miscellaneous Conglomerate (2.95%)
Pacific Dunlop Asia<F*> 616,000 5.53 03/31/1997 607,822
Pacific Dunlop Asia<F*> 500,000 5.60 02/03/1997 497,557
Toshiba International Finance 1,900,000 5.48 03/03/1997 1,882,615
------------
2,987,994
------------
Insurance (3.60%)
Triple-A Funding Corp.<F*> 2,690,000 6.23 01/09/1997 2,686,282
Triple-A Funding Corp.<F*> 966,000 6.23 01/10/1997 964,498
------------
3,650,780
------------
Mortgage Backed Securities (2.95%)
Countrywide Home<F*> 3,000,000 6.51 01/09/1997 2,995,666
------------
Motor Vehicles (2.95%)
Cooperative Association of
Tractor Dealers 2,000,000 6.57 01/06/1997 1,998,181
Dealers Capital Access Trust 1,000,000 5.66 03/04/1997 990,700
------------
2,988,881
------------
TOTAL COMMERCIAL PAPER (96.84%)
(AMORTIZED COST, $98,222,173) 98,224,478
(continued)
<PAGE> 10
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
Schedule of Investments - December 31, 1996
- ---------------------------------------------------------------------------------------
PAR INTEREST MATURITY MARKET
SHORT TERM SECURITIES VALUE RATE (%) DATE VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TIME DEPOSITS
Commercial Banking (2.96%)
Banco Espirito Santo Euro $1,000,000 5.8125 05/12/1997 $ 1,000,000
Banco Espirito Santo Euro 1,000,000 5.8125 05/20/1997 1,000,000
Banco Espirito Santo Euro 1,000,000 6.1875 07/31/1997 1,000,000
------------
Total time deposits (2.96%)
(amortized cost $3,000,000) 3,000,000
------------
TOTAL INVESTMENTS (99.80%)
(AMORTIZED COST $101,222,173) 101,224,478
Other net assets (0.20%) 201,123
------------
TOTAL NET ASSETS (100.00%) $101,425,601
============
<FN>
<F*> Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors". This security has been determined to be liquid
under guidelines established by the board of directors.
See accompanying notes to financial statements.
</TABLE>
<PAGE> 11
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
December 31, 1996
BOARD OF DIRECTORS
Richard A. Liddy, Chairman
Theodore M. Armstrong
Harry E. Rich
Alan C. Henderson
Matthew P. McCauley
INVESTMENT ADVISOR
Conning Asset Management Company
SAFEKEEPER OF SECURITIES
Bank of New York
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington D.C.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
If distributed to perspective investors, this report must be preceded or
accompanied by a current prospectus. The prospectus is incomplete without
reference to the financial data contained in this annual report.
