<PAGE> 1
General American Capital Company S & P 500 Index Fund
Management Discussion
On the strength of the large capitalization segment of the market, the S&P
500 Index Fund earned a net return of 17.45 percent in the first half of
1998. Despite ongoing concerns over the economic crisis in Asia and the
threat of a meaningful slowdown in earnings growth, investors poured money
into the largest growth stocks. Meanwhile, large cap value stocks and
virtually all mid-cap and small-cap stocks were neglected in the rallies and
suffered from periodic selloffs. Much of the strength in the equity markets
came from such segments as pharmaceuticals, airlines, large retailers and
select technology issues. These segments have provided the dependable
earnings growth the market demands. Energy, cyclical technology and
commodity-related businesses continued to struggle. An underlying theme
throughout the period was consolidation, highlighted by several blockbuster
bank mergers (Citicorp/Travelers and NationsBank/BankAmerica) and the AT & T
purchase of Telecommunications, Inc.
Growth of a $10,000 Investment
[GRAPH]
<TABLE>
<CAPTION>
S & P 500 Index Fund S & P 500 Index
<S> <C> <C>
06/30/88 10,000.00 10,000.00
12/31/88 10,334.36 10,350.10
06/30/89 11,945.81 12,054.97
12/31/89 13,409.46 13,613.20
06/30/90 13,769.90 14,031.67
12/31/90 12,897.58 13,180.93
06/30/91 14,769.61 15,069.36
12/31/91 16,793.48 17,210.26
06/30/92 16,680.77 17,101.66
12/31/92 18,044.20 18,533.41
06/30/93 18,927.61 19,425.42
12/31/93 19,818.78 20,385.42
06/30/94 19,118.94 19,685.59
12/31/94 20,047.29 20,647.62
06/30/95 24,030.80 24,809.15
12/31/95 27,434.28 28,380.92
06/30/96 30,203.93 31,274.07
12/31/96 33,714.59 34,930.01
06/30/97 40,599.83 42,082.63
12/31/97 44,773.50 46,539.60
06/30/98 52,584.75 54,789.67
</TABLE>
Annual Returns
<TABLE>
<CAPTION>
Periods ended June 30, 1998 Past 1 year Past 5 years Past 10 years Life of fund
<S> <C> <C> <C> <C>
Annual Returns 29.52% 22.67% 18.06% 15.32%
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
3
<PAGE> 2
General American Capital Company S & P 500 Index Fund
<TABLE>
Statement of Assets and Liabilities
June 30, 1998 (unaudited)
<S> <C>
Assets:
Investments, at market value:
(see accompanying schedule)
Common Stocks $616,500,973
Broker receivable 3,251,761
Dividends receivable 600,662
------------
Total assets 620,353,396
------------
Liabilities:
Payable to Conning Asset
Management Company 124,623
Payable to General American
Life Insurance Company 24,925
Cash overdraft 4,138,821
Broker payable 2,489,279
------------
Total liabilities 6,777,648
------------
Total net assets $613,575,748
============
Total shares of capital stock outstanding 13,261,036
Net asset value per share (Total net
assets divided by total shares of capital
stock outstanding) $ 46.27
Total amortized cost of investments $301,389,352
<CAPTION>
Statement of Operations
As of June 30, 1998 (unaudited)
<S> <C>
Investment income:
Dividends $ 4,278,938
Interest 109,348
------------
Total investment income 4,388,286
------------
Expenses:
Investment management charge 713,617
Administrative charge 142,724
------------
Total expenses 856,341
------------
Net investment income 3,531,945
------------
Net realized gain:
Net realized gain on common stock 13,348,426
Net realized loss on futures contracts (298,994)
------------
Net realized gain 13,049,432
------------
Net unrealized gain on investments:
Net unrealized gain on investments 74,394,939
------------
Net increase in net assets from operations $ 90,976,316
============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
Six Months
Ended Year Ended
June 30 December 31
------------ ------------
1998<F*> 1997
------------ ------------
<S> <C> <C>
Operations:
Net investment income $ 3,531,945 $ 6,303,406
Net realized gain 13,049,432 15,455,129
Net unrealized gain 74,394,939 94,588,306
------------ ------------
Net increase in net assets from operations 90,976,316 116,346,841
Capital share transactions 21,022,082 45,029,520
------------ ------------
Net increase in net assets 111,998,398 161,376,361
Net assets, beginning of year 501,577,350 340,200,989
------------ ------------
Net assets, end of period 613,575,748 $501,577,350
============ ============
<FN>
<F*>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
4
<PAGE> 3
General American Capital Company S & P 500 Index Fund<F*>
<TABLE>
Financial Highlights
<CAPTION>
Six Months
Ended
June 30 Year Ended December 31
---------- --------------------------------------------------------
1998<F**> 1997 1996 1995 1994
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year<F1> $ 39.40 $ 29.67 $ 24.14 $ 17.64 $ 17.44
-------- -------- -------- -------- --------
Income from operations:
Net investment income .26 .52 0.53 0.46 0.44
Net realized and unrealized gain (loss)
on investments 6.61 9.21 5.00 6.04 (0.24)
-------- -------- -------- -------- --------
Net increase in asset value per share 6.87 9.73 5.53 6.50 0.20
-------- -------- -------- -------- --------
Net asset value, end of period $ 46.27 $ 39.40 $ 29.67 $ 24.14 $ 17.64
======== ======== ======== ======== ========
Total return<F2> 17.45% 32.80% 22.89% 36.85% 1.15%
Net assets, end of period (in thousands) $613,576 $501,577 $340,201 $247,313 $169,303
Ratio of expenses to average net assets<F3> .30% .30% 0.30% 0.30% 0.30%
Ratio of net investment income to average
net assets<F3> 1.24% 1.48% 1.97% 2.19% 2.50%
Portfolio turnover rate 4.32% 12.61% 8.93% 4.75% 7.38%
Average commission rate<F4> $ 0.03 $ 0.04 $ 0.04 -- --
<CAPTION>
Year ended December 31
------------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year<F1> $ 15.88 $ 14.78 $ 11.35 $ 11.80 $ 9.09
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.41 0.39 0.38 0.38 0.37
Net realized and unrealized gain (loss)
on investments 1.15 0.71 3.05 (0.83) 2.34
-------- -------- -------- -------- --------
Net increase (decrease) in asset value
per share 1.56 1.10 3.43 (0.45) 2.71
-------- -------- -------- -------- --------
Net asset value, end of year $ 17.44 $ 15.88 $ 14.78 $ 11.35 $ 11.80
======== ======== ======== ======== ========
Total return<F2> 9.83% 7.45% 30.21% -3.82% 29.76%
Net assets, end of year (in thousands) $161,761 $123,458 $102,076 $ 72,665 $ 65,211
Ratio of expenses to average net assets<F3> 0.30% 0.30% 0.30% 0.30% 0.32%
Ratio of net investment income to average
net assets<F3> 2.47% 2.67% 2.89% 3.35% 3.57%
Portfolio turnover rate 2.56% 4.38% 3.92% 4.39% 20.56%
Average commission rate<F4> -- -- -- -- --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*>This Fund formerly known as the Equity Index Fund.
<F**>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
5
<PAGE> 4
General American Capital Company S & P 500 Index Fund
<TABLE>
Schedule of Investments - June 30, 1998
<CAPTION>
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Military Technology (1.30%)
Boeing Co. 69,480 $ 3,096,168
Crane & Co. 3,100 150,542
General Dynamics Corp. 8,700 404,550
Lockheed Martin Corp. 13,403 1,419,043
Rockwell International Corp. 13,450 646,434
Textron Inc. 11,200 802,894
United Technologies Corp. 15,800 1,461,500
------------
7,981,131
------------
Air Transport (0.55%)
AMR Corp.<F*> 12,500 1,040,625
Delta Air Lines Inc. 5,200 672,100
FDX Holding Corp.<F*> 10,080 632,520
Southwest Airlines 15,350 454,744
US Air Group<F*> 6,900 546,825
------------
3,346,814
------------
Apparel (0.48%)
CVS Corp. 26,400 1,027,936
Jostens Inc. 2,500 59,687
Liz Claiborne Inc. 4,500 235,125
Nike Inc. Class B 19,800 964,003
Reebok Intl Inc.<F*> 3,800 105,211
Russell Corp. 2,500 75,468
Springs Industries 1,300 59,963
VF Corp. 8,300 427,450
------------
2,954,843
------------
Business Machines (3.25%)
Apple Computer Inc.<F*> 9,100 261,052
Bay Networks Inc.<F*> 15,200 490,200
Cincinnati Milacron 2,700 65,642
Compaq Computer Corp. 113,724 3,226,919
DSC Communications<F*> 8,100 243,000
Data General Corp.<F*> 3,300 49,292
EMC Corp./Mass<F*> 34,200 1,532,570
Gateway 2000 Inc.<F*> 10,700 541,688
Honeywell Inc. 8,700 726,989
IBM Corp. 64,940 7,455,891
Oracle Corp.<F*> 66,962 1,644,721
Pitney Bowes Inc. 18,800 904,750
Unisys Corp.<F*> 17,300 488,725
Xerox Corp. 22,575 2,294,184
------------
19,925,623
------------
Business Services (7.29%)
Adobe Systems Inc. 4,500 190,967
Automatic Data Processing Inc. 20,700 1,508,513
Browning-Ferris Industries Inc. 12,600 437,850
<CAPTION>
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Business Services (continued)
Cabletron Systems<F*> 10,800 $ 145,120
Cendant Corp.<F*> 58,542 1,222,064
Ceridian Corp.<F*> 5,000 293,750
Cisco Systems Inc.<F*> 70,400 6,481,165
Clear Channel Communications<F*> 8,500 927,563
Computer Associates Intl 37,500 2,083,575
Dell Computers<F*> 44,300 4,111,572
Deluxe Corp. 5,500 196,966
Equifax Inc. 10,100 366,751
First Data Corp. 30,700 1,022,678
General Instrument Corp.<F*> 10,300 280,026
HBO & Co. 29,500 1,039,874
Microsoft Corp.<F*> 169,600 18,380,400
Millipore Corp. 3,000 81,750
Moore Corp. Limited 6,000 79,500
National Service Inds Inc. 2,900 147,538
Nielson Media Research 11,200 705,600
Novell Inc.<F*> 24,200 308,550
RH Donnelley Corp. 11,775 423,900
Sun Microsystems Inc.<F*> 26,000 1,129,361
Tellabs<F*> 12,500 895,313
Thermo Electron<F*> 10,900 372,638
3Com Corp.<F*> 24,400 748,763
Waste Management Inc. 32,700 1,144,500
------------
44,726,247
------------
Chemicals (2.65%)
Air Products & Chemicals Inc. 16,100 644,000
AlliedSignal Inc. 38,900 1,726,188
Dow Chemical Co. 15,437 1,492,557
E I Du Pont De Nemours & Co. 77,600 5,790,900
Eastman Chemical 5,375 334,594
Ecolab, Inc. 8,800 272,800
B F Goodrich 5,000 248,125
Great Lakes Chemical 4,000 157,748
Hercules Inc. 6,500 267,313
Mallinckrodt Inc. 5,000 148,435
Monsanto 41,150 2,299,255
Morton International Inc. 8,900 222,500
Nalco Chemicals 4,500 158,063
Owens Corning 3,700 151,004
PPG Industries Inc. 12,200 848,656
Rohm & Haas Co. 4,200 436,535
Rubbermaid Inc. 10,300 341,826
Sigma-Aldrich 6,900 242,363
Union Carbide Corp. 9,300 496,388
------------
16,279,250
------------
<CAPTION>
(continued)
6
<PAGE> 5
General American Capital Company S & P 500 Index Fund
Schedule of Investments - June 30, 1998
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Banking (7.85%)
BB&T Corp. 9,700 $ 655,963
Banc One Corp. 48,243 2,692,538
Bank of New York 25,800 1,565,725
BankAmerica Corp. 46,944 4,057,699
Bankboston Corp. 20,200 1,123,625
Banker's Trust New York Corp. 6,700 777,615
Chase Manhattan Corp. (new) 58,724 4,433,663
Citicorp. 31,100 4,641,675
Comerica Inc. 10,700 708,875
Fifth Third Banc 17,100 1,077,300
First Chicago NBD Corp. 19,764 1,751,585
First Union Corp. 66,694 3,884,924
Huntington Bancshares 13,200 442,200
Keycorp 30,200 1,075,875
Mellon Bank Corp. 17,900 1,246,288
Mercantile Bancorporation Inc. 9,100 458,413
J P Morgan & Co. Inc. 12,300 1,440,638
National City Corp. 22,500 1,597,500
Nationsbank Corp. 65,884 5,040,125
Northern Trust Corp. 7,600 579,500
PNC Financial Corp. 20,700 1,113,908
Summit Bancorporation 12,200 579,500
Suntrust Banks Inc. 14,500 1,179,024
Synovus Financial Corp. 18,100 429,875
US Bancorp 51,119 2,198,116
Wachovia Corp. 14,200 1,199,900
Wells Fargo & Co. 5,933 2,189,277
------------
48,141,326
------------
Construction (0.97%)
Case Corp. 5,100 246,075
Centex Corp. 4,000 151,000
Fluor Corp. 5,600 285,600
Home Depot Inc. 50,600 4,202,937
Masco Corp. 11,700 707,850
Pulte Home Corp. 2,900 86,638
Stanley Works 6,100 253,528
------------
5,933,628
------------
Consumer Durables (0.20%)
Black & Decker Corp. 6,500 396,500
Maytag Corp. 6,400 316,000
Snap-On Inc. 4,000 145,000
Whirlpool Corp. 5,200 357,500
------------
1,215,000
------------
Containers (0.17%)
Crown Cork & Seal 8,500 403,750
Newell Co. 10,900 542,950
Stone Container Corp.<F*> 6,772 105,813
------------
1,052,513
------------
<CAPTION>
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Domestic Oil (1.40%)
Amerada Hess Corp. 6,200 $ 336,734
Amoco Corp. 66,000 2,747,250
Apache 6,700 211,050
Ashland Inc. 5,200 268,450
Arco 22,100 1,726,563
Kerr-McGee Corp. 3,200 185,200
Oryx Energy<F*> 7,300 161,513
Pennzoil Co. 3,200 162,000
Phillips Petroleum Co. 17,900 862,547
Rowan Companies Inc.<F*> 5,900 114,678
Sun Company Inc. 6,400 248,397
USX-Marathon Group 19,859 681,402
Union Pacific Resources Group 17,274 303,366
Unocal Corp. 16,600 593,450
------------
8,602,600
------------
Drugs & Medicines (9.69%)
Abbott Laboratories 106,200 4,340,925
Allergan Inc. 4,500 208,688
Alza Corp.<F*> 5,900 255,175
American Home Products Corp. 90,300 4,673,025
Bard C R Inc. 3,900 148,442
Bausch & Lomb Inc. 3,800 190,475
Baxter International 19,300 1,038,572
Becton Dickinson & Co. 8,400 652,050
Boston Scientific Corp.<F*> 13,300 952,613
Columbia HCA/Healthcare 44,286 1,289,830
Guidant Corp. 10,300 734,514
Healthsouth Corp.<F*> 27,500 733,893
Humana Inc.<F*> 11,400 355,532
Johnson & Johnson 92,500 6,821,875
Eli Lilly & Co. 76,200 5,033,924
Merck & Co Inc. 82,325 11,010,969
Pharmacia-Upjohn Inc. 34,905 1,609,993
Pfizer Inc. 89,900 9,770,960
St Jude Medical<F*> 5,700 209,827
Schering-Plough Corp. 50,500 4,627,062
Tenet Healthcare<F*> 21,200 662,500
US Surgical 5,200 237,250
Warner-Lambert Co. 56,400 3,912,750
------------
59,470,844
------------
Electronics (4.73%)
Advanced Micro Devices Inc.<F*> 9,800 167,208
AMP Inc. 15,100 519,063
Andrew Corp.<F*> 6,000 108,372
Applied Materials Inc.<F*> 25,200 743,400
Emerson Electric Co. 30,400 1,835,400
<CAPTION>
(continued)
7
<PAGE> 6
General American Capital Company S & P 500 Index Fund
Schedule of Investments - June 30, 1998
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Electronics (continued)
General Signal Corp. 3,000 $ 108,000
Harris Corp. 5,500 245,779
Hewlett-Packard Co. 71,300 4,269,088
Intel Corp. 116,700 8,650,388
KLA-Tencor Corp.<F*> 5,900 163,353
LSI Logic Corp.<F*> 9,600 221,395
Medtronic Inc. 32,300 2,059,125
Micron Technology Inc.<F*> 14,600 362,255
Motorola Inc. 41,100 2,160,298
Northern Telecom Ltd. 35,800 2,031,650
Parametric Technology Corp.<F*> 18,600 504,525
Perkin-Elmer Corp. 3,300 205,217
Raytheon Co. 23,300 1,377,613
Seagate Technology Inc.<F*> 16,700 397,660
Silicon Graphics<F*> 12,900 156,413
Texas Instruments Inc. 26,800 1,562,761
Thomas & Betts Corp. 3,800 187,150
Williams Companies Inc. 29,100 982,124
------------
29,018,237
------------
Energy & Utilities (1.57%)
American Electric Power Co. Inc. 13,100 594,413
Baltimore Gas & Electric Co. 10,100 313,726
Burlington Resources 12,192 525,012
Central & South West Corp. 14,600 392,375
Coastal Corp. 7,250 506,137
Columbia Energy Group 5,650 314,281
Consolidated Edison Inc. 16,200 746,204
Consolidated Natural Gas Co. 6,500 382,688
Dominion Resources Inc. 13,400 546,050
Edison International 24,900 736,093
Enron Corp. 22,600 1,221,800
Entergy Corp. 16,900 485,875
FPL Group Inc. 12,400 781,200
Houston Industries Inc. 20,318 627,318
Niagara Mohawk Power Corp.<F*> 11,400 170,282
Northern States Power Co (Minn) 10,300 294,838
Sonat Inc. 7,500 289,688
Texas Utilities Co. 16,805 699,508
------------
9,627,488
------------
Energy Raw Materials (0.84%)
Baker Hughes Inc. 11,600 400,919
Dresser Industries Inc. 12,000 528,744
Halliburton Co. 18,100 806,571
McDermott Intl. 4,100 141,192
Nacco Industries Inc. 600 77,550
Occidental Petroleum Corp. 25,200 680,400
Oneok 2,100 83,738
<CAPTION>
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Energy Raw Materials (continued))
Peoples Energy Corp. 2,400 $ 92,700
Schlumberger 34,300 2,343,102
------------
5,154,916
------------
Finance (Non - Banking) (4.46%)
H F Ahmanson & Company 7,500 532,500
Associates First Capital Corp. 23,853 1,833,699
Bear Stearns Companies Inc. 6,300 358,313
H & R Block Inc. 7,200 303,300
Capital One Financial Corp. 4,200 521,588
Chubb Corp. 11,500 924,313
Cincinnati Financial Corp. 11,400 437,475
Countrywide Credit 7,400 375,550
Fleet Financial Group Inc. 19,542 1,631,757
Franklin Resources Inc. 17,400 939,600
Golden West Financial 3,900 414,617
Green Tree Financial 9,300 398,152
Lehman Brothers Holding Inc. 8,100 628,252
MBIA Inc. 6,700 501,662
MBNA Corp. 34,450 1,136,850
Morgan Stanley, Dean Witter & Co. 41,294 3,773,238
Norwest Corp. 52,000 1,943,500
Progressive Corp. 5,000 705,000
Providian Financial Corp. 6,500 510,653
Republic New York Corp. 7,400 465,734
SLM Holding Corp. 10,600 519,400
Safeco Corp. 9,700 440,738
Schwab (Charles) Corp. 18,350 596,374
State Street Corp. 11,100 771,450
Sunamerica, Inc. 13,400 769,656
Travelers Inc. 79,097 4,795,256
Washington Mutual Inc. 26,565 1,153,904
------------
27,382,531
------------
Food & Agriculture (5.37%)
Archer-Daniels-Midland Co. 39,266 760,779
Bestfoods 19,800 1,149,628
Campbell Soup Co. 31,200 1,657,500
Coca-Cola Company 170,000 14,535,000
Conagra Inc. 33,000 1,045,671
Adolph Coors 2,400 81,600
Darden Restaurants 9,800 155,575
General Mills Inc. 10,800 738,450
Giant Food Inc. 4,100 176,554
H J Heinz Co. 25,150 1,411,544
Hershey Foods Corp. 9,800 676,200
Kellogg Co. 28,100 1,055,492
<CAPTION>
(continued)
8
<PAGE> 7
General American Capital Company S & P 500 Index Fund
Schedule of Investments - June 30, 1998
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Food & Agriculture (continued)
Pepsico Inc. 102,600 $ 4,225,786
Pioneer Hi-Bred International 16,800 695,100
Quaker Oats Co. 9,500 521,902
Ralston Purina Co. 7,300 852,728
Sara Lee Corp. 32,100 1,795,577
Sysco Corp. 23,200 594,500
Wm. Wrigley Jr. Co. 8,000 784,000
------------
32,913,586
------------
Gold (0.15%)
Barrick Gold Corp. 25,600 491,186
Battle Mountain Gold Co. 15,800 93,805
Homestake Mining Co. 14,500 150,438
Placer Dome Inc. 17,200 202,100
------------
937,529
------------
Government & State Agency (1.06%)
Federal Home Loan Mortgage Corp. 46,700 2,197,795
Federal National Mortgage Assn. 71,300 4,331,475
------------
6,529,270
------------
Industrial Miscellaneous (2.17%)
Aeroquip-Vickers Inc. 1,900 110,913
American Greetings 5,000 254,685
Amgen<F*> 17,400 1,137,525
Anadarko Petroleum Co. 4,100 275,467
Armstrong World Industries Inc. 2,700 181,913
Asarco Inc. 2,700 60,075
Autodesk Inc. 3,200 123,600
Avery Dennison Corp. 8,000 430,000
Ball Corp. 2,000 80,374
Biomet Inc. 7,700 254,577
Briggs & Stratton 1,600 59,899
Circuit City Stores Inc. 6,700 314,063
Computer Sciences 10,700 684,800
Cooper Tire & Rubber 5,400 111,375
Corning Inc. 15,900 552,525
Cummins Engine 2,600 133,250
EG & G 3,100 93,000
Engelhard Corp. 9,950 201,488
Fleetwood Enterprises 2,500 100,000
Foster Wheeler 2,800 60,024
Freeport McMoran 12,400 188,319
Fruit Of The Loom<F*> 4,900 162,616
W.R. Grace & Co.<F*> 5,200 88,722
Harnischfeger Industries Inc. 3,200 90,598
Harrahs Entertainment, Inc.<F*> 6,900 160,425
Helmerich & Payne 3,400 75,650
Ikon Office Solutions Inc. 9,300 135,427
<CAPTION>
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Miscellaneous (continued)
Laidlaw Inc. 22,600 $ 275,425
Loews Corp. 7,900 688,287
Lowes Companies Inc. 24,200 981,600
Manor Care 4,300 165,279
Mattel Inc. 20,187 854,152
Mead Corp. 7,100 225,425
National Semiconductor Corp.<F*> 11,300 149,013
Northrop Corp. 4,600 474,375
Praxair 10,800 505,570
Rite Aid Corp. 17,700 664,847
Ryder System Inc. 5,100 160,966
Sealed Air Corp. 5,733 210,688
Service Corp. International 17,600 754,600
Shared Medical Systems Corp. 1,800 132,187
Sherwin-Williams 11,900 394,188
Tektronix Inc. 3,400 120,275
Timken Co. 4,200 129,410
Western Atlas Inc.<F*> 3,700 314,038
------------
13,321,635
------------
Insurance (3.06%)
Aetna Inc. 10,022 762,925
Allstate Insurance 28,848 2,641,381
American International Group Inc. 48,168 7,032,528
Aon Corp. 11,550 811,388
Cigna Corp. 14,800 1,021,200
General Re Corp. 5,300 1,343,550
Jefferson Pilot Corp. 7,250 420,043
Kaufman & Broad Homebuilders 2,700 85,725
Lincoln National Corp. 6,900 630,488
MGIC Investment Corp. 7,800 445,084
Marsh & McLennan Co. Inc. 17,750 1,072,756
St Paul Companies Inc. 16,100 677,197
Torchmark Corp. 9,600 439,200
UNUM Corp. 9,500 527,250
United Healthcare 13,200 838,200
------------
18,748,915
------------
International Oil (4.99%)
Chevron Corp. 45,000 3,737,790
Exxon Corp. 168,400 12,008,942
Mobil Corp. 53,800 4,122,425
Royal Dutch Petroleum Co. 147,600 8,090,251
Tenneco Inc. 11,600 441,519
Texaco Inc. 37,200 2,220,356
------------
30,621,283
------------
<CAPTION>
(continued)
9
<PAGE> 8
General American Capital Company S & P 500 Index Fund
Schedule of Investments - June 30, 1998
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Liquor (0.47%)
Anheuser-Busch Companies Inc. 33,450 $ 1,578,405
Brown Forman Corp. 'B' 4,700 301,975
Seagram Co. Ltd. 23,800 974,301
------------
2,854,681
------------
Media (2.46%)
CBS Corp. 49,400 1,568,450
Comcast Corp. 25,300 1,027,003
R R Donnelley & Sons Co. 9,700 443,775
Dow Jones & Co. 6,400 356,800
Gannett Co Inc. 19,500 1,385,709
Harcourt General Inc. 4,800 285,600
Interpublic Group Co. 9,300 564,389
King World Productions<F*> 5,000 127,500
Knight Ridder Inc. 5,400 297,335
McGraw-Hill Inc. 6,800 554,622
Meredith Corp. 3,600 168,973
New York Times Co. 6,600 523,050
Omnicom Group 11,700 583,538
Tele Communications Inc. New Cl A<F*> 34,900 1,341,451
Time Warner Inc. 40,680 3,475,576
Times Mirror Co. 6,100 383,538
Tribune Co. 8,400 578,021
Viacom Class B<F*> 24,500 1,427,125
------------
15,092,455
------------
Miscellaneous & Conglomerates (0.67%)
Hartford Financial Services Group 8,100 926,438
ITT Industries Inc. 8,100 302,738
Marriott International-Class A 17,550 568,181
Minnesota Mining & Manufacturing 27,850 2,288,907
------------
4,086,264
------------
Miscellaneous Finance (1.50%)
American Express Co. 31,700 3,613,800
American General Corp. 17,426 1,240,505
Beneficial Corp. 3,800 582,111
Household International Inc. 22,100 1,099,474
Merrill Lynch & Co. Inc. 23,800 2,195,550
Transamerica Corp. 4,300 495,038
------------
9,226,478
------------
Motor Vehicles (2.01%)
Chrysler Corp. 44,350 2,500,231
Dana Corp. 7,200 385,200
Eaton Corp. 4,900 380,975
Echlin Inc. 4,300 210,967
Ford Motor Co. 83,500 4,926,501
General Motors 45,950 3,070,011
<CAPTION>
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Motor Vehicles (continued)
Genuine Parts Co. 12,225 $ 422,520
TRW Inc. 8,400 458,850
------------
12,355,255
------------
Non-Durables & Entertainment (0.85%)
Brunswick Corp. 6,800 168,300
Costco Companies Inc.<F*> 14,803 933,507
Hasbro Inc. 9,100 357,738
McDonald's Corp. 47,300 3,263,700
Mirage Resorts Inc.<F*> 12,300 262,138
Wendy's International Inc. 8,975 210,913
------------
5,196,296
------------
Non-Ferrous Metals (0.36%)
Alcan Aluminum Ltd. 15,625 431,641
Aluminum Co of America 11,500 758,276
Cyprus Amax Minerals Co. 6,350 84,138
Inco Ltd. 11,400 155,325
Newmont Mining Corp. 10,677 252,244
Phelps Dodge Corp. 4,000 228,747
Reynolds Metals Co. 4,900 274,091
------------
2,184,462
------------
Optical Photographic Equipment (0.28%)
Eastman Kodak Co. 22,200 1,621,977
Polaroid Corp. 3,045 108,286
------------
1,730,263
------------
Paper & Forest Products (0.98%)
Bemis Co. Inc. 3,600 147,150
Boise Cascade Corp. 3,866 126,612
Champion International 6,600 324,634
Fort James Corp. 15,100 671,950
Georgia-Pacific Corp. 6,300 371,303
International Paper Co. 21,076 906,268
Kimberly-Clark Corp. 38,272 1,755,728
Louisiana Pacific Corp. 7,500 136,875
Potlatch Corp. 1,900 79,800
Temple Inland Inc. 3,800 204,725
Union Camp Corp. 4,700 233,238
Westvaco Corp. 6,925 195,631
Weyerhaeuser Co. 13,650 630,452
Willamette Industries 7,600 243,200
------------
6,027,566
------------
<CAPTION>
(continued)
10
<PAGE> 9
General American Capital Company S & P 500 Index Fund
Schedule of Investments - June 30, 1998
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Producer Goods (4.97%)
Caterpillar Inc. 25,200 $ 1,332,450
Conseco Inc. 12,800 598,400
Cooper Industries Inc. 8,300 455,977
Deere & Co. 17,000 898,875
Dover Corp. 15,300 524,025
FMC Corp.<F*> 2,300 156,830
General Electric Corp. 224,300 20,411,300
W W Grainger Inc. 6,700 333,740
Illinois Tool Works Inc. 17,200 1,147,016
Ingersoll-Rand Co. 11,300 497,901
Johnson Controls Inc. 5,800 331,685
Navistar Intl Corp.<F*> 4,700 135,713
Owens-Illinois Inc.<F*> 10,600 474,350
Pall Corp. 8,500 174,250
Parker Hannifin Corp. 7,525 286,891
Raychem Corp. 5,700 168,503
Tyco International Ltd. 40,100 2,526,300
------------
30,454,206
------------
Railroads & Shipping (0.53%)
Burlington Northern Santa Fe 10,808 1,061,205
CSX Corp. 15,000 682,500
Norfolk Southern Corp. 26,050 776,603
Union Pacific Corp. 17,000 750,125
------------
3,270,433
------------
Retail (4.40%)
Albertsons Inc. 16,900 875,623
American Stores Co. 18,800 454,716
Autozone Inc.<F*> 10,500 335,338
Cardinal Health Inc. 7,600 712,500
Consolidated Stores Corp.<F*> 7,400 268,250
Dayton-Hudson Corp. 30,000 1,455,000
Dillard's Inc. 7,400 306,634
Federated Department Stores<F*> 14,400 774,893
Gap Inc. 27,050 1,666,956
Great Atlantic & Pacific Tea Co. 2,600 85,961
K Mart Corp.<F*> 33,500 644,875
Kroger Co.<F*> 17,600 754,600
Limited Inc. 15,600 516,750
Longs Drug Store 2,600 75,075
May Department Stores Co. 15,884 1,040,402
Mercantile Stores Inc. 2,500 197,343
Nordstrom Inc. 5,200 401,700
J C Penney Co. Inc. 17,200 1,243,766
Pep Boys 4,300 81,429
Sears Roebuck & Co. 26,900 1,642,568
Supervalu Inc. 4,100 181,938
TJX Cos Inc. 21,900 528,338
<CAPTION>
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Retail (continued)
Tandy Corp. 6,900 $ 366,128
Toys 'R' Us<F*> 19,112 450,317
Tricon Global Restaurants<F*> 10,390 329,227
Tupperware Inc. 4,200 118,125
Venator Group Inc.<F*> 9,200 175,950
Wal-Mart Stores Inc. 154,600 9,391,950
Walgreen Co. 34,100 1,408,739
Winn-Dixie Stores Inc. 10,200 522,107
------------
27,007,198
------------
Soaps & Cosmetics (4.52%)
Alberto Culver Co. 'B' 3,900 113,100
Avon Products Inc. 9,000 697,500
Bristol-Myers Squibb Co. 68,480 7,870,886
Clorox Co. 7,100 677,163
Colgate-Palmolive Co. 20,400 1,795,200
Gillette Co. 77,300 4,381,905
International Flavors & Fragrances 7,400 321,434
Procter & Gamble Co. 92,300 8,405,022
Unilever NV 44,000 3,473,228
------------
27,735,438
------------
Steel (0.17%)
Allegheny Teledyne Inc. 13,500 308,813
Armco Inc.<F*> 7,400 47,175
Bethlehem Steel Corp.<F*> 8,800 109,446
Nucor Corp. 6,000 276,000
USX US Steel 5,971 197,042
Worthington Industries, Inc. 6,600 99,409
------------
1,037,885
------------
Telephone (8.46%)
A T & T Corp. 111,747 6,383,547
Airtouch Communications, Inc.<F*> 39,364 2,300,314
Alltel 12,600 585,900
Ameritech Corp. 75,692 3,396,679
Ascend Communications Inc.<F*> 13,200 654,218
Bell Atlantic Corp. 106,840 4,874,575
Bellsouth Corp. 68,094 4,570,810
Frontier Corp. 11,700 368,550
GTE Corp. 66,200 3,682,375
Lucent Technologies 90,282 7,510,289
MCI Communications Corp. 49,800 2,894,625
Mediaone Inc.<F*> 41,864 1,839,379
Nextel Communiations Inc. A<F*> 18,800 467,650
SBC Communications Inc. 126,562 5,062,480
Scientific Atlanta 5,400 137,025
<CAPTION>
(continued)
11
<PAGE> 10
General American Capital Company S & P 500 Index Fund
Schedule of Investments - June 30, 1998
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Telephone (continued)
Sprint Corp. 29,600 $ 2,086,800
US West Inc. 34,507 1,621,843
Worldcom Inc.<F*> 71,000 3,439,027
------------
51,876,086
------------
Tires Rubber Goods (0.11%)
Goodyear Tire & Rubber Co. 10,772 694,115
------------
Tobacco (1.20%)
Fortune Brands Inc. 11,900 457,400
Philip Morris Companies Inc. 167,150 6,581,532
UST Inc. 12,700 342,900
------------
7,381,832
------------
Travel & Recreation (0.88%)
Walt Disney Productions 46,900 4,927,408
Hilton Hotels Corp. 16,900 481,650
------------
5,409,058
------------
Trucking & Freight (0.05%)
Eastern Enterprises 1,400 60,025
Paccar Inc. 5,300 276,925
------------
336,950
------------
Utilities, Electrical & Gas (1.41%)
Ameren Corp. 9,400 373,650
Carolina Power & Light Co. 10,400 451,100
Cinergy Corp. 10,808 378,280
DTE Energy Co. 9,900 399,713
Duke Energy Corp. 24,741 1,465,904
Firstenergy Corp. 15,800 485,850
GPU Inc. 8,800 332,746
Nicor Inc. 3,300 132,413
Peco Energy Co. 15,300 446,561
P G & E Corp. 26,200 826,924
P P & L Resources Inc. 11,500 260,901
Pacificorp 20,400 461,550
Public Service Enterprise Group 15,950 549,270
Sempra Energy<F*> 8,722 242,582
Southern Co. 48,000 1,328,976
Unicom Corp. 14,900 522,423
------------
8,658,843
------------
<CAPTION>
- ------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Total common stock (100.48%)
(cost $301,389,352) $616,500,973
Total investments (100.48%)
(amortized cost $301,389,352) 616,500,973
Other net liabilities (-0.48%) (2,925,225)
------------
Total net assets (100.00%) $613,575,748
============
<FN>
<F*> Non-income producing securities.
See accompanying notes to financial statements
beginning on page 53.
</TABLE>
12
<PAGE> 11
General American Capital Company Money Market Fund
Management Discussion
This fund produced a net return of 2.81 percent in the first six months of
the year as the trend of "benign inflation" seen throughout 1997 continued.
Short-term interest rates declined approximately 25 basis points between
January and the end of June. The absence of significant inflation, general
slowing in the growth of Gross Domestic Product and continued turmoil across
many of the Asian markets convinced the Federal Reserve to maintain the
status quo on monetary policy. That is likely to continue because officials
view financial conditions as "accommodative." Unless the Federal Reserve
takes action, rates are likely to remain within a narrow range in the coming
months.
Growth of a $10,000 Investment
[GRAPH]
<TABLE>
<CAPTION>
Money Market Fund
<S> <C>
06/30/88 10,000.00
12/31/88 10,414.88
06/30/89 10,922.56
12/31/89 11,410.14
06/30/90 11,887.28
12/31/90 12,372.33
06/30/91 12,778.86
12/31/91 13,138.01
06/30/92 13,403.30
12/31/92 13,625.13
06/30/93 13,831.94
12/31/93 14,044.07
06/30/94 14,286.76
12/31/94 14,634.88
06/30/95 15,075.32
12/31/95 15,506.87
06/30/96 15,920.65
12/31/96 16,360.84
06/30/97 16,811.74
12/31/97 17,294.16
06/30/98 17,780.81
</TABLE>
Annual Returns
<TABLE>
<CAPTION>
Periods ended June 30, 1998 Past 1 year Past 5 years Past 10 years Life of fund
<S> <C> <C> <C> <C>
Annual Returns 5.76% 5.15% 5.92% 6.01%
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
13
<PAGE> 12
General American Capital Company Money Market Fund
<TABLE>
Statement of Assets and Liabilities
June 30, 1998 (unaudited)
<S> <C>
Assets:
Investments, at market value:
(see accompanying schedules)
Short term securities $204,832,489
------------
Total investments 204,832,489
Cash 4,518
Interest receivable 79,894
------------
Total assets 204,916,901
------------
Liabilities:
Payable to Conning Asset
Management Company 20,801
Payable to General American
Life Insurance Company 13,313
------------
Total liabilities 34,114
------------
Total net assets $204,882,787
============
Total shares of capital stock outstanding 10,933,215
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 18.74
Total amortized cost of investments $204,835,377
<CAPTION>
Statement of Operations
As of June 30, 1998 (unaudited)
<S> <C>
Investment income:
Interest $ 5,609,491
------------
Total investment income 5,609,491
------------
Expenses:
Investment management charge 120,962
Administrative charge 77,416
------------
Total expenses 198,378
------------
Net investment income 5,411,113
------------
Net increase in net assets from operations $ 5,411,113
============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
Six Months
Ended Year Ended
June 30 December 31
------------ ------------
1998<F*> 1997
------------ ------------
<S> <C> <C>
Operations:
Net investment income 5,411,113 $ 5,892,718
------------ ------------
Net increase in net assets from operations 5,411,113 5,892,718
Capital share transactions 24,901,172 67,252,183
------------ ------------
Net increase in net assets 30,312,285 73,144,901
Net assets, beginning of year 174,570,502 101,425,601
------------ ------------
Net assets, end of period $204,882,787 $174,570,502
============ ============
<FN>
<F*> Unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
14
<PAGE> 13
General American Capital Company Money Market Fund
<TABLE>
Financial Highlights
<CAPTION>
Six Months
Ended June 30 Year ended December 31
----------------------------------------------------------------------
1998<F*> 1997 1996 1995 1994
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year<F1> $ 18.23 $ 17.24 $ 16.34 $ 15.42 $ 14.80
Income from operations:
Net investment income .51 0.99 0.90 0.92 0.62
-------- -------- -------- -------- --------
Net asset value, end of period $ 18.74 $ 18.23 $ 17.24 $ 16.34 $ 15.42
======== ======== ======== ======== ========
Total return<F2> 2.81% 5.71% 5.51% 5.96% 4.21%
Net assets, end of period (in thousands) $204,883 $174,571 $101,426 $ 70,574 $ 93,339
Ratio of expenses to average net assets<F3> 0.20% 0.21% 0.21% 0.21% 0.21%
Ratio of net investment income to average
net assets<F3> 5.54% 5.60% 5.37% 5.78% 4.17%
Portfolio turnover rate <F4> <F4> <F4> <F4> <F4>
<CAPTION>
Year ended December 31
-------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year<F1> $ 14.36 $ 13.85 $ 13.04 $ 12.03 $ 10.98
Income from operations:
Net investment income 0.44 0.51 0.81 1.01 1.05
-------- -------- -------- -------- --------
Net asset value, end of year $ 14.80 $ 14.36 $ 13.85 $ 13.04 $ 12.03
======== ======== ======== ======== ========
Total return<F2> 3.07% 3.71% 6.19% 8.43% 9.56%
Net assets, end of year (in thousands) $ 84,430 $ 84,880 $ 84,090 $ 85,901 $ 53,648
Ratio of expenses to average net assets<F3> 0.21% 0.21% 0.21% 0.21% 0.21%
Ratio of net investment income to average
net assets<F3> 3.06% 3.68% 6.10% 8.17% 9.26%
Portfolio turnover rate <F4> <F4> <F4> <F4> <F4>
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> A portfolio turnover rate is not calculated for securities on which the
maturity or expiration dates at the time of acquisition were one year or
less.
<F*> Unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
15
<PAGE> 14
General American Capital Company Money Market Fund
<TABLE>
Schedule of Investments - June 30, 1998
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Par Interest Maturity Market
Short Term Securities Value Rate (%) Date Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial Paper
Finance (92.74%)
Alloman Funding<F*> $ 4,420,000 5.62 07/10/98 $ 4,413,812
Apex Funding<F*> 1,000,000 5.71 07/31/98 995,171
Apex Funding<F*> 3,000,000 5.69 07/27/98 2,987,841
Apex Funding <F*> 3,000,000 5.67 07/27/98 2,987,841
Banca CRT Financial Corp. 1,150,000 5.65 09/21/98 1,135,375
Banca CRT Financial Corp. 1,000,000 5.65 09/30/98 985,919
Banca CRT Financial Corp. 1,800,000 5.69 11/12/98 1,762,970
Banca CRT Financial Corp. 3,000,000 5.69 11/30/98 2,930,129
Banca CRT Financial Corp. 1,000,000 5.75 12/15/98 974,450
Banner Receivables<F*> 1,150,000 5.68 07/17/98 1,147,122
Banner Receivables<F*> 3,000,000 5.67 07/21/98 2,990,633
Banner Receivables<F*> 1,625,000 5.67 07/21/98 1,619,934
Barton Capital Corp.<F*> 2,561,000 5.62 07/09/98 2,557,813
Broadway Capital<F*> 1,265,000 5.66 07/06/98 1,264,011
Broadway Capital<F*> 3,300,000 5.69 07/21/98 3,289,660
BTM Capital Corp.<F*> 4,000,000 5.73 07/31/98 3,980,684
BTM Capital Corp.<F*> 3,000,000 5.71 07/31/98 2,985,513
BTM Capital Corp.<F*> 2,000,000 5.71 07/31/98 1,990,342
Crown International Finance 1,525,000 5.65 07/23/98 1,519,762
Dealers Capital Access Trust 2,000,000 5.64 07/07/98 1,998,133
Eagle Funding Cap. <F*> 7,560,000 5.65 07/20/98 7,537,576
Fayette Funding 1,015,000 5.61 08/18/98 1,007,419
Gotham Funding<F*> 2,675,000 5.68 07/16/98 2,668,725
Gotham Funding<F*> 5,000,000 5.70 07/16/98 4,988,229
IMI Funding 1,400,000 5.65 08/12/98 1,390,853
IMI Funding 5,000,000 5.71 10/20/98 4,914,495
JLUS Funding Corp. 2,000,000 5.75 07/27/98 1,991,747
JLUS Funding Corp. 1,000,000 5.79 09/10/98 988,954
Kitty Hawk Funding Corp.<F*> 1,275,000 5.59 08/07/98 1,267,740
KZH Soleil Corp.<F*> 539,000 5.75 08/18/98 534,904
KZH Soleil Corp.<F*> 2,005,000 5.64 08/27/98 1,987,229
KZH Soleil Corp.<F*> 2,325,000 5.67 10/05/98 2,290,504
KZH Soleil Corp.<F*> 4,000,000 5.74 07/23/98 3,986,018
KZH Soleil-2 Corp.<F*> 1,336,000 5.63 08/21/98 1,325,052
Lehman Brothers Holdings Inc. 5,000,000 6.40 07/01/98 5,000,000
Lexington Parker Capital<F*> 1,915,000 5.62 07/09/98 1,912,617
Lexington Parker Capital<F*> 7,475,000 5.61 07/10/98 7,464,591
Market Street Funding<F*> 4,450,000 5.58 07/20/98 4,436,965
Mitsubishi Motors 4,000,000 5.72 07/13/98 3,992,440
Old Line Funding<F*> 565,000 6.20 07/01/98 565,000
Old Line Funding<F*> 1,773,000 5.60 07/15/98 1,769,159
Old Line Funding<F*> 2,231,000 5.68 07/23/98 2,223,297
Orix America Inc. (Norin)<F*> 5,000,000 5.76 07/28/98 4,978,956
Orix America Inc. (Norin)<F*> 2,000,000 5.77 08/07/98 1,988,088
Pegasus Four 8,133,000 5.64 07/31/98 8,093,726
Pooled Accounts Receivable 6,060,000 5.58 07/07/98 6,054,395
Progress Funding Corp. "B"<F*> 3,775,000 5.72 07/20/98 3,763,616
Progress Funding Corp. "B"<F*> 5,000,000 5.70 08/19/98 4,961,888
Riverside Funding, Inc. 5,455,000 5.75 07/01/98 5,455,000
<CAPTION>
(continued)
16
<PAGE> 15
General American Capital Company Money Market Fund
Schedule of Investments - June 30, 1998
- --------------------------------------------------------------------------------------------------------------------
Par Interest Maturity Market
Short Term Securities Value Rate (%) Date Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial Paper
Finance (continued)
Riverside Funding, Inc. $ 3,900,000 5.73 07/30/98 $ 3,882,382
Royal Resources Funding<F*> 4,902,000 5.91 07/08/98 4,896,376
Sheffield Receivables 1,800,000 5.92 07/21/98 1,794,100
Thunder Bay Funding Inc.<F*> 280,000 5.59 07/02/98 279,957
Thunder Bay Funding Inc.<F*> 1,000,000 5.76 07/07/98 999,042
Thunder Bay Funding Inc.<F*> 2,000,000 5.63 07/20/98 1,994,089
Thunder Bay Funding Inc.<F*> 1,675,000 5.59 07/21/98 1,669,826
Thunder Bay Funding Inc.<F*> 5,000,000 5.62 07/10/98 4,993,025
Triple A Funding<F*> 2,432,000 5.61 07/10/98 2,428,613
Twin Towers<F*> 1,805,000 5.66 07/09/98 1,802,734
Twin Towers<F*> 2,712,000 5.62 07/09/98 2,708,625
Windmill Funding Corp.<F*> 1,312,000 5.64 08/21/98 1,301,610
Wood Street Funding<F*> 1,494,000 5.60 07/06/98 1,492,844
Wood Street Funding<F*> 1,190,000 5.93 07/07/98 1,188,826
Wood Street Funding<F*> 1,695,000 5.66 07/08/98 1,693,138
Wood Street Funding<F*> 1,765,000 5.60 07/17/98 1,760,646
Wood Street Funding<F*> 2,000,000 5.65 07/23/98 1,993,131
Wood Street Funding<F*> 1,000,000 5.61 08/31/98 990,477
World Omni<F*> 2,895,000 5.60 07/01/98 2,895,000
World Omni<F*> 1,250,000 5.69 08/10/98 1,242,153
Countrywide Home Loans 1,950,000 6.50 07/01/98 1,950,000
Countrywide Home Loans 2,000,000 5.67 07/16/98 1,995,293
------------
190,008,185
------------
Domestic Oil (1.45%)
Explorer Pipeline<F*> 3,000,000 5.61 09/11/98 2,966,406
------------
Motor Vehicles (4.32%)
Cooperative Association of Tractor Dealers "A" 145,000 5.64 07/08/98 144,842
Cooperative Association of Tractor Dealers "A" 800,000 5.68 07/08/98 799,118
Cooperative Association of Tractor Dealers "A" 2,100,000 5.64 09/11/98 2,076,484
Cooperative Association of Tractor Dealers "A" 1,000,000 5.70 11/18/98 978,522
Cooperative Association of Tractor Dealers "B" 1,250,000 5.59 08/07/98 1,242,883
Cooperative Association of Tractor Dealers "B" 3,657,000 5.64 09/11/98 3,616,049
------------
8,857,898
------------
Total Commercial Paper (98.51%) (amortized cost
$201,835,377) 201,832,489
------------
Time Deposits
Banco Espirito Santo Euro 1,000,000 5.84 12/09/98 1,000,000
Banco Espirito Santo Euro 1,000,000 5.97 07/02/98 1,000,000
Banco Espirito Santo Euro 1,000,000 5.91 12/10/98 1,000,000
------------
Total Time Deposits (1.47%) (amortized cost $3,000,000) 3,000,000
------------
Total Investments (99.98%) (amortized cost $204,835,377) 204,832,489
Other net assets (.02%) 50,298
------------
Total Net Assets (100.00%) $204,882,787
============
See accompanying notes to the financial statements beginning on page 53.
</TABLE>
17
<PAGE> 16
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
MANAGEMENT DISCUSSION
For the first half of 1998, the Bond Index Fund generated a net return of
3.98 percent. Rates were largely unchanged in the first quarter and declined
somewhat in the second quarter, primarily in the intermediate and long-term
portions of the bond yield curve. The rate decline resulted from both
positive economic indicators and a flight to quality. International
investors continued to buy U.S. Treasury issues as a safe haven from shaky
markets around the world. A strong U.S. dollar should help continue that
trend. With inflation tame and the economy slowing slightly, there is little
incentive for the Fed to raise interest rates.
GROWTH OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
Lehman Brothers
Bond Index Fund Gov/Corp Bond Index
<S> <C> <C>
06/30/88 10,000.00 10,000.00
12/31/88 10,200.03 10,285.20
06/30/89 10,841.08 11,233.91
12/31/89 11,252.18 11,748.65
06/30/90 11,566.68 12,033.08
12/31/90 12,275.35 12,722.94
06/30/91 12,755.32 13,263.41
12/31/91 13,993.76 14,774.64
06/30/92 14,370.34 15,143.42
12/31/92 14,913.41 15,894.08
06/30/93 16,029.65 17,134.77
12/31/93 16,462.97 17,651.90
06/30/94 15,712.80 16,885.28
12/31/94 15,798.50 17,032.18
06/30/95 17,638.68 19,040.27
12/31/95 18,802.81 20,309.11
06/30/96 18,453.35 19,926.89
12/31/96 19,371.17 20,899.12
06/30/97 19,888.20 21,471.13
12/31/97 21,179.51 22,937.39
06/30/98 22,021.81 23,894.34
</TABLE>
ANNUAL RETURNS
<TABLE>
<CAPTION>
PERIODS ENDED JUNE 30, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF FUND
<S> <C> <C> <C> <C>
Annual Returns 10.73% 6.56% 8.21% 8.53%
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
18
<PAGE> 17
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (Unaudited)
<S> <C>
ASSETS:
Investments, at market value:
(see accompanying schedules)
Bonds $57,696,999
Short term securities 285,000
-----------
Total investments 57,981,999
Cash 756
Interest receivable 901,585
-----------
Total assets 58,884,340
-----------
LIABILITIES:
Payable to Conning Asset
Management Company 12,276
Payable to General American
Life Insurance Company 2,455
-----------
Total liabilities 14,731
-----------
Total net assets $58,869,609
===========
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 2,441,148
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) 24.12
TOTAL AMORTIZED COST OF INVESTMENTS $56,422,663
<CAPTION>
STATEMENT OF OPERATIONS
As of June 30, 1998 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Interest $ 1,742,010
-----------
Total investment income 1,742,010
-----------
EXPENSES:
Investment management charge 69,775
Administrative charge 13,955
-----------
Total expenses 83,730
-----------
Net investment income 1,658,280
-----------
NET REALIZED LOSS ON INVESTMENTS:
Net realized gain on investments 223,779
-----------
NET UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net unrealized gain from investments 295,338
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,177,397
===========
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30<F*> DECEMBER 31
----------- -----------
1998 1997
----------- -----------
<S> <C> <C>
Operations:
Net investment income $ 1,658,280 $ 2,383,298
Net realized gain (loss) on investments 223,779 50,805
Net unrealized gain on investments 295,338 990,628
----------- -----------
Net increase in net assets from operations 2,177,397 3,424,731
Capital share transactions 8,362,522 6,890,277
----------- -----------
Net increase in net assets 10,539,919 10,315,008
Net assets, beginning of year 48,329,690 38,014,682
----------- -----------
Net assets, end of period $58,869,609 $48,329,690
=========== ===========
<FN>
<F*> Unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
19
<PAGE> 18
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND<F*>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
SIX MONTHS
ENDED
JUNE 30 YEAR ENDED DECEMBER 31
---------- -------------------------------------------------
1998<F**> 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year<F1> $ 23.19 $ 21.21 $ 20.59 $ 17.30 $ 18.03
Income from operations:
Net investment income 0.70 1.39 1.29 1.25 1.06
Net realized and unrealized gain (loss)
on investments 0.23 0.59 (0.67) 2.04 (1.79)
-------- -------- -------- -------- --------
Net increase (decrease) in asset value per share 0.93 1.98 0.62 3.29 (0.73)
-------- -------- -------- -------- --------
Net asset value, end of period $ 24.12 $ 23.19 $ 21.21 $ 20.59 $ 17.30
======== ======== ======== ======== ========
Total return<F2> 3.98% 9.34% 3.02% 19.02% -4.04%
Net assets, end of period (in thousands) $ 58,870 $ 48,330 $ 38,015 $ 39,316 $ 26,458
Ratio of expenses to average net assets<F3><F*> 0.30% 0.30% 0.30% 0.30% 0.30%
Ratio of net investment income to average
net assets<F3> 5.94% 6.25% 6.26% 6.43% 6.19%
Portfolio turnover rate 29.17% 47.40% 44.28% 35.35% 46.42%
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year<F1> $ 16.33 $ 15.32 $ 13.44 $ 12.32 $ 11.17
-------- -------- -------- -------- --------
Income from operations:
Net investment income 1.07 1.09 1.08 1.03 0.98
Net realized and unrealized gain (loss)
on investments 0.63 (0.08) 0.80 0.09 0.17
-------- -------- -------- -------- --------
Net increase in asset value per share 1.70 1.01 1.88 1.12 1.15
-------- -------- -------- -------- --------
Net asset value, end of year $ 18.03 $ 16.33 $ 15.32 $ 13.44 $ 12.32
======== ======== ======== ======== ========
Total return<F2> 10.39% 6.57% 14.00% 9.09% 10.32%
Net assets, end of year (in thousands) $ 47,636 $ 20,217 $ 14,438 $ 11,137 $ 9,545
Ratio of expenses to average net assets<F3><F*> 0.30% 0.39% 0.42% 0.42% 0.43%
Ratio of net investment income to average
net assets<F3> 6.11% 6.89% 7.63% 8.12% 8.24%
Portfolio turnover rate 8.80% 43.50% 2.23% 18.88% 28.57%
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F*>Name and investment objective changed from Intermediate Bond Fund on October
1, 1992. The Investment advisor charges changed from .375 percent to .250
percent of the average daily value of the net assets on October 1, 1992. The
objective of the Bond Index Fund is to provide a rate of return that reflects
the performance of the publicly traded bond market as a whole.
<F**>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
20
<PAGE> 19
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
<TABLE>
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS
Business Machines (0.86%)
Comdisco Inc., 6.500%, due 06/15/2000 $ 500,000 $ 503,900
-----------
Commercial Banking (5.43%)
First National Bank Omaha, 7.320%, due 12/01/2010 1,500,000 $ 1,597,665
Nationsbank Corp., 5.375%, due 04/15/2000 500,000 495,460
Wells Fargo Capital, 7.950%, due 12/01/2026 1,000,000 1,104,830
-----------
3,197,955
-----------
Drugs & Medicines (1.52%)
Medpartners Inc., 7.375%, due 10/01/2006 1,000,000 896,300
-----------
Finance (Non - Banking) (3.48%)
Lehman Bros. Holdings Inc., 8.875%, due 03/01/2002 500,000 543,120
Merrill Lynch & Co. Inc., 8.250%, due 11/15/1999 500,000 515,575
Pitney Bowes Credit Corp., 5.650%, due 01/15/2003 1,000,000 989,800
-----------
2,048,495
-----------
Industrial Miscellaneous (8.79%)
Dual Drilling Co., 9.875%, due 01/15/2004 1,000,000 1,070,000
Ikon Office Solutions Inc., 6.750%, due 12/01/2025 1,000,000 955,260
Lowes Companies Inc., 6.875%, due 02/15/28 1,000,000 1,030,440
Norfolk Southern, 7.875%, due 02/15/2004 1,000,000 1,076,370
Potash Corp., 7.125%, due 06/15/2007 1,000,000 1,040,160
-----------
5,172,230
-----------
Insurance (0.52%)
Torchmark Corp., 7.875%, due 05/15/2023 280,000 304,234
-----------
Mortgage Backed Securities (1.31%)
Donaldson Lufkin Jenrette, 6.875%, due 11/01/2005 750,000 769,365
-----------
Retail (0.86%)
Rite-Aid Corp., 6.875%, due 08/15/2013 500,000 509,435
-----------
Telephone (1.76%)
Southwestern Bell, 6.625%, due 07/15/2007 1,000,000 1,037,670
-----------
Travel & Recreation (1.21%)
Hertz Corp., 7.000%, due 04/15/2001 700,000 712,558
-----------
Utilities, Electrical & Gas (5.55%)
Hydro Quebec, 8.400%, due 01/15/2022 1,000,000 1,220,970
Pacific Gas & Electric, 7.250%, due 08/01/2026 500,000 524,130
Philadelphia Electric, 8.625%, due 06/01/2022 938,000 988,127
Texas Utilities Electric, 8.125%, due 02/01/2002 500,000 533,225
-----------
3,266,452
-----------
TOTAL CORPORATE BONDS (31.29%) (AMORTIZED COST $17,795,530) 18,418,594
-----------
<CAPTION>
(continued)
21
<PAGE> 20
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
- ----------------------------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES
United States Government Securities (52.62%)
US Treasury Bonds, 10.750%, due 02/15/2003 $1,000,000 $ 1,208,910
US Treasury Bonds, 9.875%, due 11/15/2015 500,000 728,280
US Treasury Bonds, 7.500%, due 11/15/2016 1,000,000 1,200,470
US Treasury Bonds, 8.750%, due 05/15/2017 1,000,000 1,346,720
US Treasury Bonds, 8.125%, due 08/15/2019 500,000 645,310
US Treasury Bonds, 7.750%, due 02/15/2001 1,000,000 1,053,590
US Treasury Notes, 6.125%, due 11/15/2027 2,000,000 2,143,120
US Treasury Notes, 6.250%, due 06/30/2002 1,000,000 1,025,160
US Treasury Notes, 5.500%, due 02/15/2008 1,000,000 999,370
US Treasury Notes, 9.250%, due 02/15/2016 500,000 695,470
US Treasury Notes, 6.250%, due 08/15/2023 1,000,000 1,070,620
US Treasury Notes, 6.625%, due 03/31/2002 1,000,000 1,035,780
US Treasury Notes, 6.500%, due 05/31/2002 800,000 826,624
US Treasury Notes, 5.750%, due 09/30/1999 1,000,000 1,002,660
US Treasury Notes, 7.500%, due 11/15/2001 1,250,000 1,324,025
US Treasury Notes, 6.000%, due 10/15/1999 400,000 402,248
US Treasury Notes, 5.750%, due 08/15/2003 1,500,000 1,515,930
US Treasury Notes, 6.750%, due 05/31/1999 1,000,000 1,010,780
US Treasury Notes, 6.875%, due 07/31/1999 1,000,000 1,013,910
US Treasury Notes, 7.250%, due 08/15/2004 1,000,000 1,087,970
US Treasury Notes, 7.500%, due 10/31/1999 1,000,000 1,024,840
US Treasury Notes, 7.750%, due 12/31/1999 1,000,000 1,031,560
US Treasury Notes, 6.750%, due 04/30/2000 1,000,000 1,021,090
US Treasury Notes, 6.500%, due 08/15/2005 750,000 791,483
US Treasury Notes, 6.125%, due 09/30/2000 1,000,000 1,012,340
US Treasury Notes, 5.625%, due 11/30/2000 1,000,000 1,002,190
US Treasury Notes, 8.000%, due 08/15/1999 450,000 461,952
US Treasury Notes, 6.500%, due 05/31/2001 1,000,000 1,025,620
US Treasury Notes, 8.500%, due 02/15/2000 650,000 679,556
US Treasury Notes, 8.875%, due 05/15/2000 500,000 529,455
US Treasury Notes, 6.500%, due 10/15/2006 1,000,000 1,061,870
-----------
30,978,903
-----------
Other Government Securities (2.15%)
Manitoba Province, 9.000%, due 12/15/2000 250,000 266,880
State Of Israel, 6.375%, due 12/15/2005 1,000,000 998,820
-----------
1,265,700
-----------
TOTAL GOVERNMENT SECURITIES (54.77%) (AMORTIZED COST $31,463,697) 32,244,603
-----------
<CAPTION>
(continued)
22
<PAGE> 21
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
- ----------------------------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AGENCY SECURITIES
Government & State Agency (11.95%)
FNMA, 8.100%, due 08/12/2019 $ 500,000 $ 625,544
FNMA, 8.950%, due 02/12/2018 300,000 402,468
FNMA, 5.750%, due 02/15/2008 1,000,000 995,310
FNMA, 5.625%, due 03/15/2001 2,000,000 1,996,880
FNMA, 5.750%, due 04/15/2003 1,000,000 1,000,940
FNMA, 5.750%, due 06/15/2005 1,000,000 998,910
FNMA Global Benchmark Note, 6.000%, due 05/15/2008 1,000,000 1,013,750
-----------
7,033,802
-----------
TOTAL GOVERNMENT AND STATE AGENCY (11.95%) (AMORTIZED COST $6,878,436) 7,033,802
-----------
TOTAL BONDS (98.01%) (AMORTIZED COST $56,137,663) 57,696,999
-----------
SHORT TERM SECURITIES
Commercial Paper (0.48%)
Old Line Funding, 6.20%, due 07/01/1998 $ 285,000 $ 285,000
TOTAL SHORT TERM SECURITIES (0.48%) (AMORTIZED COST $285,000) 285,000
-----------
TOTAL INVESTMENTS (98.49%) (AMORTIZED COST $56,422,663) 57,981,999
Other net assets (1.51%) 887,610
-----------
TOTAL NET ASSETS (100.00%) $58,869,609
===========
See accompanying notes to financial statements beginning on page 53.
</TABLE>
23
<PAGE> 22
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
MANAGEMENT DISCUSSION
This fund produced a net return of 9.37 percent in the first six months of
1998, with a fairly sedate second quarter following on the heels of an
excellent first quarter. Large growth stocks showed the most strength as the
market continued to focus on growth and liquidity and frown on value
investing, which has suffered for several consecutive quarters. The weakest
sectors in the portfolio during the period were basic materials, energy and
cyclical technology. The best performing sectors, meanwhile, were discount
retailers, financial services and pharmaceuticals
GROWTH OF A $10,000 INVESTMENT
[CHART]
<TABLE>
<CAPTION>
Managed Equity Fund S & P 500 Index
<S> <C> <C>
06/30/88 10,000.00 10,000.00
12/31/88 10,090.63 10,350.10
06/30/89 11,611.18 12,054.97
12/31/89 13,225.85 13,613.20
06/30/90 13,659.72 14,031.67
12/31/90 12,830.35 13,180.93
06/30/91 14,692.62 15,069.36
12/31/91 16,195.12 17,210.26
06/30/92 16,240.57 17,101.66
12/31/92 17,273.91 18,533.41
06/30/93 17,620.98 19,425.42
12/31/93 18,805.29 20,385.42
06/30/94 18,257.68 19,685.59
12/31/94 18,131.60 20,647.62
06/30/95 21,627.50 24,809.15
12/31/95 24,181.95 28,380.92
06/30/96 26,437.92 31,274.07
12/31/96 29,241.35 34,930.01
03/01/97 31,003.21 37,396.07
06/30/97 33,200.51 39,307.44
12/31/97 36,052.29 43,470.49
06/30/98 39,429.86 51,176.50
</TABLE>
[FN]
<F*>On March 1, 1997 Conning Asset Management Company assumed portfolio
management duties from the former sub-advisor of the fund, Morgan Stanley
Asset Management.
ANNUAL RETURNS
<TABLE>
<CAPTION>
PERIODS ENDED JUNE 30, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF FUND
<S> <C> <C> <C> <C>
Annual Returns 18.76% 17.48% 14.71% 12.09%
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
24
<PAGE> 23
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
ASSETS:
Investments, at market value:
(see accompanying schedules)
Common stocks $59,590,014
Short term securities 1,850,000
-----------
Total investments 61,440,014
Cash 17,633
Receivable from Broker 7,572,474
Dividends receivable 47,964
-----------
Total assets 69,078,085
-----------
LIABILITIES:
Payable to Conning Asset
Management Company 14,562
Payable to General American
Life Insurance Company 5,003
Payable to broker 7,156,165
-----------
Total liabilities 7,175,730
-----------
Total net assets $61,902,355
===========
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 1,814,059
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 34.12
TOTAL AMORTIZED COST OF INVESTMENTS $46,676,921
STATEMENT OF OPERATIONS
As of June 30, 1998 (unaudited)
INVESTMENT INCOME:
Dividends $ 559,590
Interest 52,727
-----------
Total investment income 612,317
-----------
EXPENSES:
Investment management charge 87,853
Administrative charge 30,183
-----------
Total expenses 118,036
-----------
Net investment income 494,281
-----------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 6,122,444
-----------
NET UNREALIZED LOSS ON INVESTMENTS:
Net unrealized loss on investments (1,240,987)
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,375,738
===========
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30 DECEMBER 31
------------ ------------
1998<F*> 1997
------------ ------------
<S> <C> <C>
Operations:
Net investment income $ 494,281 $ 1,205,042
Net realized gain on investments 6,122,444 2,667,587
Net unrealized gain on investments (1,240,987) 7,544,604
------------ ------------
Net increase in net assets from operations 5,375,738 11,417,233
Capital share transactions (2,611,485) (866,166)
------------ ------------
Net increase in net assets 2,764,253 10,551,067
Net assets, beginning of year 59,138,102 48,587,035
------------- ------------
Net assets, end of period $ 61,902,355 $ 59,138,102
============ ============
<FN>
<F*>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
25
<PAGE> 24
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
SIX MONTHS
ENDED
JUNE 30 YEAR ENDED DECEMBER 31
---------- --------------------------------------------------
1998<F*> 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 31.20 $ 25.31 $ 20.93 $ 15.69 $ 16.27
-------- -------- -------- -------- --------
Income from operations:
Net investment income .27 .63 0.68 0.58 0.43
Net realized and unrealized gain (loss)
on investments 2.65 5.26 3.70 4.66 (1.01)
-------- -------- -------- -------- --------
Net increase (decrease) in asset value per share 2.92 5.89 4.38 5.24 (0.58)
-------- -------- -------- -------- --------
Net asset value, end of period $ 34.12 $ 31.20 $ 25.31 $ 20.93 $ 15.69
======== ======== ======== ======== ========
Total return <F2> 9.37% 23.29% 20.92% 33.37% -3.58%
Net assets, end of period (in thousands) $ 60,902 $ 59,138 $ 48,587 $ 40,902 $ 31,487
Ratio of expenses to average net assets <F3> <F5> 0.39% 0.41% 0.47% 0.48% 0.49%
Ratio of net investment income to average
net assets <F3> 1.63% 2.19% 2.97% 3.14% 2.65%
Portfolio turnover rate 37.15% 49.43% 36.44% 44.82% 103.93%
Average commission rate <F4> $ 0.06 $ 0.06 $ 0.04 -- --
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 14.95 $ 14.02 $ 11.10 $ 11.45 $ 8.73
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.32 0.35 0.38 0.38 0.26
Net realized and unrealized gain (loss)
on investments 1.00 0.58 2.54 (0.73) 2.46
-------- -------- -------- -------- --------
Net increase (decrease) in asset value per share 1.32 0.93 2.92 (0.35) 2.72
-------- -------- -------- -------- --------
Net asset value, end of year $ 16.27 $ 14.95 $ 14.02 $ 11.10 $ 11.45
======== ======== ======== ======== ========
Total return <F2> 8.87% 6.66% 26.23% -2.99% 31.07%
Net assets, end of period (in thousands) $ 32,885 $ 29,401 $ 22,006 $ 14,769 $ 11,785
Ratio of expenses to average net assets <F3> 0.50% 0.51% 0.53% 0.57% 0.60%
Ratio of net investment income to average
net assets <F3> 2.07% 2.55% 2.99% 3.47% 2.62%
Portfolio turnover rate 25.89% 9.34% 12.15% 28.38% 51.26%
Average commission rate <F4> -- -- -- -- --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F5> On March 1, 1997, Conning Asset Management Company took over the asset
management of the Managed Equity Fund. The management fee was reduced to .40
percent on the first $10 million of assets, .30 percent on the balance over
$10 million and less than $30 million and .25 percent on the balance in
excess of $30 million.
<F*>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
26
<PAGE> 25
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Military Technology (4.46%)
Boeing Co. 18,900 $ 842,222
Rockwell International Corp. 26,400 1,268,837
United Technologies Corp. 7,000 647,500
-----------
2,758,559
-----------
Air Transport (2.37%)
AMR Corp.<F*> 17,600 1,465,200
-----------
Business Machines (3.25%)
Quantum Corp.<F*> 97,000 2,012,750
-----------
Business Services (3.79%)
Cisco Systems Inc.<F*> 25,500 2,347,581
-----------
Commercial Banking (12.99%)
Banc One Corp. 36,960 2,062,811
BankAmerica Corp. 16,800 1,452,142
Bank Boston Corp. 24,000 1,335,000
Chase Manhattan Corp. (new) 23,200 1,751,600
Wells Fargo & Co. 3,900 1,439,100
-----------
8,040,653
-----------
Domestic Oil (5.66%)
Ashland Inc. 24,400 1,259,650
ArCo. 21,600 1,687,500
Sun Company Inc. 14,300 555,012
-----------
3,502,162
-----------
Drugs & Medicines (6.43%)
Bausch & Lomb Inc. 29,700 1,488,713
Baxter International 16,200 871,754
Merck & Co Inc. 12,100 1,618,375
-----------
3,978,842
-----------
Electronics (2.58%)
Intel Corp. 21,500 1,593,688
-----------
Energy & Utilities (2.92%)
FPL Group Inc. 28,700 1,808,100
-----------
Energy Raw Materials (1.81%)
Baker Hughes Inc. 32,500 1,123,265
-----------
Finance (Non - Banking) (7.38%)
Associates First Capital Corp. 15,000 1,153,125
SLM Holding Corp. 33,950 1,663,550
Travelers Inc. 28,900 1,752,063
-----------
4,568,738
-----------
Food & Agriculture (1.01%)
Archer-Daniel-Midland Co. 32,400 $ 627,750
-----------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Government & State Agency (1.52%)
Federal Home Loan Mort. Corp. 20,000 $ 941,240
-----------
Industrial Miscellaneous (2.97%)
Diamond Offshore Drilling Inc. 24,300 972,000
Potash Corp Of Saskatchewan 11,500 868,963
-----------
1,840,963
-----------
Insurance (3.21%)
Equitable Companies Inc. 26,500 1,985,831
-----------
International Oil (2.04%)
Mobil Corp. 16,500 1,264,313
-----------
Media (3.30%)
McGraw-Hill Inc. 10,900 889,025
Tribune Co. 16,800 1,156,042
-----------
2,045,067
-----------
Miscellaneous Finance (2.75%)
American General Corp. 23,900 1,701,369
-----------
Non-Durables & Entertainment (2.34%)
Costco Companies Inc <F*> 23,000 1,450,426
-----------
Paper & Forest Products (2.48%)
Kimberly-Clark Corp. 33,500 1,536,813
-----------
Producer Goods (3.95%)
Deere & Co. 22,000 1,163,250
Parker Hannifin Corp. 33,600 1,281,000
-----------
2,444,250
-----------
Retail (5.72%)
May Department Stores Co. 29,000 1,899,500
TJX Cos Inc. 68,000 1,640,500
-----------
3,540,000
-----------
Soaps & Cosmetics (2.28%)
Clorox Co. 14,800 1,411,550
-----------
Telephone (5.45%)
Sprint Corp. 23,100 1,628,550
Worldcom Inc. 36,000 1,743,732
-----------
3,372,282
-----------
Tobacco (3.60%)
Philip Morris Companies Inc. 56,600 2,228,622
-----------
TOTAL COMMON STOCK (96.26%)
(COST $44,827,239) 59,590,014
(continued)
27
<PAGE> 26
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PAR MARKET
SHORT TERM SECURITIES VALUE VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper (2.99%)
Old Line Funding,
6.20%, due 7/1/98 1,850,000 $ 1,850,000
-----------
TOTAL SHORT TERM SECURITIES (2.99%)
(AMORTIZED COST $1,850,000) 1,850,000
-----------
TOTAL INVESTMENTS (99.25%)
(AMORTIZED COST $46,677,239) $61,440,014
Other net assets (0.75%) 462,341
-----------
TOTAL NET ASSETS (100.00%) $61,902,355
===========
<FN>
<F*> Non-income producing securities.
See accompanying notes to financial statements beginning on
page 53.
</TABLE>
28
<PAGE> 27
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
MANAGEMENT DISCUSSION
For the first six months of the year, this fund's net return was 9.59
percent, compared to the benchmark Lipper flexible Portfolio funds average of
9.7 percent. As was the case in General American Capital Company's
equity-based funds, equity returns in the Asset Allocation fund were stronger
in the first quarter than in the second. Much of the strength was defined by
a surprisingly small number of large capitalization stocks in such sectors as
pharmaceuticals, large value-oriented retailers, money center banks and
select telecommunications companies; commodity-related businesses, such as in
energy, struggled. Bonds, meanwhile, turned in a steady performance with a
modest rally in the longer maturities. At the end of the second quarter, the
fund maintained an asset mix of 71 percent stocks, 26 percent bonds, and 3
percent cash.
GROWTH OF A $10,000 INVESTMENT
[CHART]
<TABLE>
<CAPTION>
Lehman Brothers
Intermediate
Asset Allocation Fund S & P 500 Index Gov/Corp Bond Index
<S> <C> <C> <C>
06/30/88 10,000.00 10,000.00 10,000.00
12/31/88 10,271.89 10,350.10 10,227.70
06/30/89 11,412.08 12,054.97 11,023.42
12/31/89 12,317.44 13,613.20 11,533.47
06/30/90 12,649.15 14,031.67 11,886.39
12/31/90 12,621.57 13,180.93 12,591.02
06/30/91 13,681.11 15,069.36 13,137.85
12/31/91 15,122.21 17,210.26 14,432.59
06/30/92 15,196.73 17,101.66 14,867.30
12/31/92 16,128.71 18,533.41 15,467.64
06/30/93 16,834.32 19,425.42 16,427.87
12/31/93 17,668.39 20,385.42 16,825.75
06/30/94 17,052.68 19,685.59 16,385.25
12/31/94 16,970.99 20,647.62 16,500.93
06/30/95 19,803.69 24,809.15 18,083.53
12/31/95 21,872.38 28,380.92 19,028.39
06/30/96 23,364.49 31,274.07 18,986.91
12/31/96 25,298.62 34,930.01 19,798.22
06/30/97 28,062.95 42,082.63 20,358.91
12/31/97 30,036.93 46,539.60 21,356.09
06/30/98 32,917.41 54,789.67 22,095.86
</TABLE>
ANNUAL RETURNS
<TABLE>
<CAPTION>
PERIODS ENDED JUNE 30, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF FUND
<S> <C> <C> <C> <C>
Annual Returns 17.30% 14.35% 12.65% 12.33%
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
29
<PAGE> 28
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
ASSETS:
Investments, at market value:
(see accompanying schedules)
Bonds $ 30,320,269
Common stocks 81,890,604
Preferred stocks 1,047,480
Short term securities 3,023,345
-------------
Total investments 116,281,698
Cash 60,969
Dividends and interest receivable 685,245
-------------
Total assets 117,027,912
-------------
LIABILITIES:
Payable to Conning Asset
Management Company 47,772
Payable to General American
Life Insurance Company 9,554
-------------
Total liabilities 57,326
-------------
Total net assets $ 116,970,586
=============
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 3,350,117
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 34.92
TOTAL AMORTIZED COST OF INVESTMENTS $ 85,623,543
STATEMENT OF OPERATIONS
As of June 30, 1998 (unaudited)
INVESTMENT INCOME:
Dividends $ 654,184
Interest 1,159,760
-------------
Total investment income 1,813,944
-------------
EXPENSES:
Investment management charge 283,102
Administrative charge 56,621
-------------
Total expenses 339,723
-------------
Net investment income 1,474,221
-------------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 4,535,902
-------------
NET UNREALIZED GAIN ON INVESTMENTS:
Net unrealized gain on investments 4,313,869
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 10,323,992
=============
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30<F*> DECEMBER 31
------------ ------------
1998 1997
------------ ------------
<S> <C> <C>
Operations:
Net investment income $ 1,474,221 $ 3,266,932
Net realized gain on investments 4,535,902 726,549
Net unrealized gain on investments 4,313,869 13,145,289
------------ ------------
Net increase in net assets from operations 10,323,992 17,138,770
Capital share transactions (4,622,764) 7,939,435
------------ ------------
Net increase in net assets 5,701,228 25,078,205
Net assets, beginning of year 111,269,358 86,191,153
------------ ------------
Net assets, end of period $116,970,586 $111,269,358
============ ============
<FN>
<F*>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
30
<PAGE> 29
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
SIX MONTHS
ENDED
JUNE 30
---------- --------------------------------------------------
1998<F*> 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 31.86 $ 26.83 $ 23.20 $ 18.00 $ 18.74
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.43 0.96 0.93 0.82 0.68
Net realized and unrealized gain (loss)
on investments 2.63 4.07 2.70 4.38 (1.42)
-------- -------- -------- -------- --------
Net increase (decrease) in asset value per share 3.06 5.03 3.63 5.20 (0.74)
-------- -------- -------- -------- --------
Net asset value, end of period $ 34.92 $ 31.86 $ 26.83 $ 23.20 $ 18.00
======== ======== ======== ======== ========
Total return <F2> 9.59% 18.73% 15.66% 28.88% (3.95%)
Net assets, end of period (in thousands) $116,971 $111,269 $ 86,191 $ 73,387 $ 59,975
Ratio of expenses to average net assets <F3> 0.59% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income to average
net assets <F3> 2.58% 3.24% 3.77% 3.92% 3.70%
Portfolio turnover rate 15.23% 36.34% 32.78% 33.74% 75.24%
Average commission rate <F4> $ 0.06 $ 0.06 $ 0.04 -- --
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 17.11 $ 16.04 $ 13.39 $ 13.07 $ 10.90
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.60 0.62 0.65 0.69 0.60
Net realized and unrealized gain (loss)
on investments 1.03 0.45 2.00 (0.37) 1.57
-------- -------- -------- -------- --------
Net increase in asset value per share 1.63 1.07 2.65 0.32 2.17
-------- -------- -------- -------- --------
Net asset value, end of year $ 18.74 $ 17.11 $ 16.04 $ 13.39 $ 13.07
======== ======== ======== ======= ========
Total return <F2> 9.55% 6.66% 19.81% 2.47% 19.91%
Net assets, end of year (in thousands) $ 65,070 $ 53,369 $ 21,149 $ 12,545 $ 5,244
Ratio of expenses to average net assets <F3> 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income to average
net assets <F3> 3.33% 3.80% 4.37% 5.41% 4.82%
Portfolio turnover rate 27.59% 12.14% 5.14% 15.46% 28.06%
Average commission rate <F4> -- -- -- -- --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*> unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
31
<PAGE> 30
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
<TABLE>
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Government & State Agency
FNMA, 8.350%, due 11/10/1999 $ 150,000 $ 153,492
TOTAL GOVERNMENT & STATE AGENCY (0.13%)
(AMORITZED COST $149,749) 153,492
------------
US Government Securities
US Treasury Bonds, 7.250%,
due 05/15/2016 1,500,000 1,757,340
US Treasury Notes, 7.125%,
due 10/15/1998 1,000,000 1,005,470
US Treasury Notes, 6.375%,
due 08/15/2002 1,000,000 1,030,620
US Treasury Notes, 5.750%,
due 08/15/2003 1,000,000 1,010,620
US Treasury Notes, 5.875%,
due 08/15/1998 1,000,000 1,000,470
US Treasury Notes, 8.000%,
due 08/15/1999 1,000,000 1,026,560
US Treasury Notes, 6.125%,
due 08/31/1998 2,500,000 2,503,525
------------
TOTAL GOVERNMENT SECURITIES (7.98%)
(AMORTIZED COST $9,103,373) 9,334,605
------------
CORPORATE BONDS
Air Transport (1.03%)
Delta Airlines, 9.200%,
due 09/23/2014 1,000,000 1,200,950
------------
Commercial Banking (0.22%)
Nationsbank, 6.750%,
due 03/15/2003 250,000 256,025
------------
Finance (Non - Banking) (2.76%)
AON Capital Trust A, 8.205%,
due 01/01/2027 1,000,000 1,163,560
Associates Corp., 6.875%,
due 02/01/2003 500,000 516,040
Bear Stearns Co., 6.750%,
due 04/15/2003 1,000,000 1,021,910
Merrill Lynch & Co, Inc.,
7.375%, due 08/17/2002 500,000 523,465
------------
3,224,975
------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Miscellaneous (3.75%)
Celulosa Arauco & Constitucio,
7.000%, due 12/15/2007 $1,000,000 $ 944,360
Coca-Cola Company, 6.625%,
due 10/01/2002 500,000 513,455
Disney Spin III, 14.000%,
due 03/01/2000 1,000,000 1,020,000
Dual Drilling Co, 9.875%,
due 01/15/2004 1,000,000 1,070,000
E I Dupont De Nemours & Co.,
8.250%, due 09/15/2006 250,000 284,315
Seagram Company Ltd., 8.350%,
due 11/15/2006 500,000 552,275
------------
4,384,405
------------
Liquor (0.43%)
Anheuser-Busch Companies Inc.,
6.900%, due 10/01/2002 500,000 506,410
------------
Media (0.93%)
Continental Cablevision,
11.000%, due 06/01/2007 1,000,000 1,091,790
------------
Miscellaneous & Conglomerates (0.44%)
Hanson Overseas BV, 7.375%,
due 01/15/2003 500,000 522,165
------------
Motor Vehicles (0.90%)
Enterprise Rent A Car, 7.500%,
due 06/15/2003 1,000,000 1,059,500
------------
Municipality (0.91%)
Province of Quebec - Series A,
8.100%, due 04/23/2002 1,000,000 1,062,080
------------
Railroads & Shipping (0.44%)
Canadian National Railway,
6.625%, due 05/15/2003 500,000 509,065
------------
Retail (0.43%)
Dayton Hudson Corp., 7.500%,
due 03/01/1999 500,000 505,150
------------
Telephone (1.40%)
GTE Southwest, 6.540%,
due 12/01/2005 500,000 510,340
US West Communications,
8.875%, due 06/01/2031 1,000,000 1,124,370
------------
1,634,710
------------
(continued)
32
<PAGE> 31
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities, Electrical & Gas (2.88%)
Consolidated Edison, 7.375%,
due 09/15/2000 $ 500,000 $ 515,035
Long Island Lighting Co.,
7.500%, due 03/01/2007 261,000 270,331
Niagara Mohawk Power,
9.750%, due 11/01/2005 500,000 588,710
Northern States Power, 6.125%,
due 12/01/2005 500,000 506,445
Philadelphia Electric, 8.625%,
due 06/01/2022 448,000 471,941
Texas Utilities Co., 7.375%,
due 08/01/2001 500,000 516,650
Virginia Electric Power Co.,
6.250%, due 08/01/1998 500,000 500,215
------------
3,369,327
------------
TOTAL CORPORATE BONDS (16.52%)
(AMORTIZED COST $18,954,235) 19,326,552
------------
MORTGAGE BACKED SECURITIES AND CMO'S
Government & State Agency (1.29%)
FNMA 1992-128G, 6.000%,
due 02/25/2022 500,000 497,500
FNMA 1992-146 PH, 7.500%,
due 09/25/2019 1,000,000 1,008,120
------------
TOTAL MORTGAGE BACKED SECURITIES AND CMO'S (1.29%)
(AMORTIZED COST $1,479,616) 1,505,620
------------
TOTAL BONDS (25.92%)
(AMORTIZED COST $29,686,973) 30,320,269
------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Military Technology (1.64%)
United Technologies Corp. 20,800 1,924,000
------------
Air Transport (1.28%)
AMR Corp.<F*> 18,000 1,498,500
------------
Business Machines (2.56%)
IBM Corp. 12,000 1,377,744
Oracle Corp.<F*> 49,200 1,208,450
Quantum Corp.<F*> 20,000 415,000
------------
3,001,194
------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Business Services (2.93%)
CSG Systems International<F*> 20,000 $ 937,500
Cisco Systems Inc.<F*> 27,000 2,485,674
------------
3,423,174
------------
Chemicals (1.84%)
Monsanto 38,500 2,151,188
------------
Commercial Banking (6.66%)
Bankamerica Corp. 26,400 2,281,937
Chase Manhattan Corp. (new) 35,800 2,702,900
Mellon Bank Corp. 40,300 2,805,888
------------
7,790,725
------------
Domestic Oil (1.47%)
Arco 22,000 1,718,750
------------
Drugs & Medicines (6.98%)
Bausch & Lomb Inc. 23,500 1,177,938
Baxter International 25,000 1,345,300
Immunex Corp.<F*> 10,000 662,500
Eli Lilly & Co. 15,000 990,930
Merck & Co. Inc. 14,400 1,926,000
Pfizer Inc. 18,900 2,054,184
------------
8,156,852
------------
Electronics (7.51%)
Harris Corp. 43,600 1,948,353
Input/Output Inc.<F*> 100,000 1,781,200
Intel Corp. 16,400 1,215,650
Philips NV 17,000 1,445,000
Texas Instruments Inc. 41,000 2,390,792
------------
8,780,995
------------
Energy & Utilities (0.69%)
Sonat Inc. 21,000 811,125
------------
Finance (Non - Banking) (5.43%)
MBIA Inc. 20,000 1,497,500
SLM Holding Corp. 57,050 2,795,450
Travelers Inc. 34,000 2,061,250
------------
6,354,200
------------
(continued)
33
<PAGE> 32
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food & Agriculture (3.71%)
Coca-Cola Co. 20,000 $ 1,710,000
Conagra Inc. 30,000 950,610
H J Heinz Co. 9,150 513,544
Pepsico Inc. 28,000 1,153,236
------------
4,327,390
------------
Industrial Miscellaneous (3.87%)
Circuit City Stores Carmax<F*> 45,300 461,470
Diamond Offshore Drilling Inc. 50,000 2,000,000
Potash Corp of Saskatchewan 11,000 831,182
Ryder System Inc. 38,800 1,224,605
------------
4,517,257
------------
Insurance (1.87%)
American International Group Inc. 15,000 2,190,000
------------
International Oil (0.15%)
Royal Dutch Petroleum Co. 3,200 175,398
------------
Miscellaneous Finance (1.90%)
American General Corp. 31,300 2,228,153
------------
Non-Durable & Entertainment (1.62%)
Costco Companies Inc.<F*> 30,000 1,891,860
------------
Paper & Forest Products (0.98%)
Kimberly-Clark Corp. 25,000 1,146,875
------------
Producer Goods (3.40%)
Deere & Co. 27,000 1,427,625
General Electric Corp. 28,000 2,548,000
------------
3,975,625
------------
Retail (4.12%)
J C Penney Co. Inc. 20,500 1,482,396
TJX Cos. Inc. 138,400 3,338,900
------------
4,821,296
------------
Soaps & Cosmetics (1.44%)
Bristol-Myers Squibb Co. 14,700 1,689,574
------------
Telephone (6.24%)
Bell Atlantic Corp 32,354 1,476,151
Lucent Technologies 18,230 1,516,499
Mediaone Inc.<F*> 8,100 355,890
Sitel Corp.<F*> 82,500 546,563
Sprint Corp. 27,600 1,945,800
US West Inc. 221 10,397
Worldcom Inc.<F*> 30,000 1,453,110
------------
7,304,410
------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tobacco (1.72%)
Philip Morris Companies Inc. 51,100 $ 2,012,063
------------
TOTAL COMMON STOCK (70.01%)
(COST $51,843,066) 81,890,604
------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
MARKET
PREFERRED STOCK SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
International Oil (0.90%)
Lasmo PLC Series A 40,000 1,047,480
------------
TOTAL PREFERRED STOCK (0.90%)
(COST $1,070,000) 1,047,480
------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PAR MARKET
SHORT TERM SECURITIES VALUE VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper (2.58%)
Merrill Lynch & Co.,
6.50%, due 07/06/1998 $ 200,000 $ 199,845
Old Line Funding,
6.50%, due 07/01/1998 1,875,000 1,875,000
Merrill Lynch & Co.,
6.50%, due 07/10/1998 950,000 948,500
------------
TOTAL SHORT TERM SECURITIES (2.58%)
(AMORTIZED COST $3,023,345) 3,023,345
------------
TOTAL INVESTMENTS (99.41%)
(AMORTIZED COST $85,623,384) 116,281,698
------------
Other net assets (0.59%) 688,888
------------
TOTAL NET ASSETS (100.00%) $116,970,586
============
<FN>
<F*> Non-income producing securities.
See accompanying notes to financial statements beginning on page 53.
</TABLE>
34
<PAGE> 33
General American Capital Company International Index Fund
Management Discussion
This fund's investment objective is to obtain results that parallel the price
and yield performance of the benchmark Morgan Stanley Capital International
Europe, Australia and Far East Index (the "EAFE Index"), and it measured up
to that standard in the first half of 1998, earning a net return of 15.81
percent, compared to the EAFE Index's 16.1 percent. The fund trailed its
benchmark at the end of the first quarter, partly due to a modest cash
position, but rebounded well in the second quarter on the strength of its
European holdings, with Europe's economy running relatively strong and
somewhat resembling the U.S. economy. Global markets in general produced
mixed results in the second quarter. The Asian markets fell sharply after
enjoying a robust first quarter, as it appeared more likely the Asian
economic crisis would not end soon.
Growth of a $10,000 Investment
[GRAPH]
<TABLE>
<CAPTION>
International Europe, Asia,
Index Fund Far East Index
<S> <C> <C>
02/16/93 10,000.00 10,000.00
06/30/93 11,568.95 11,977.80
12/31/93 13,102.85 12,897.93
06/30/94 13,956.47 14,049.84
12/31/94 13,944.32 13,938.14
06/30/95 14,416.08 14,322.97
12/31/95 15,108.98 15,547.73
06/30/96 15,974.45 16,273.03
12/31/96 16,226.91 16,534.70
06/30/97 18,174.28 18,415.19
12/31/97 16,595.09 16,876.23
06/30/98 19,219.52 19,590.43
</TABLE>
[FN]
<F*>On January 1, 1997 Conning Asset Management Company assumed portfolio
management duties from the former sub-advisor of the fund, Provident Capital
Management, Inc. On January 1, 1997 the fund also changed its investment
objective to be one which parallels the price and yield performance of the
publicly-traded common stocks in the Morgan Stanley Capital International
Europe, Australia, and Far East Index ("EAFE" Index").
Annual Returns
<TABLE>
<CAPTION>
Periods ended June 30, 1998 Past 1 year Past 5 years Life of fund
<S> <C> <C> <C>
Annual Returns 5.75% 10.69% 12.94
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
35
<PAGE> 34
General American Capital Company International Index Fund
<TABLE>
Statement of Assets and Liabilities
June 30, 1998 (unaudited)
<S> <C>
Assets:
Investments, at market value:
(see accompanying schedules)
Common stocks $ 9,786,729
Warrants 590
Short term securities 349,655
-----------
Total investments 10,136,974
Cash 23,691
Dividends receivable 31,155
-----------
Total assets 10,191,820
-----------
Liabilities:
Payable to Conning Asset
Management Company 4,082
Payable to General American
Life Insurance Company 2,451
-----------
Total liabilities 6,533
-----------
Total net assets $10,185,287
===========
Total shares of capital stock outstanding 529,945
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 19.22
Total amortized cost of investments $ 8,435,496
<CAPTION>
Statement of Operations
As of June 30, 1998 (unaudited)
<S> <C>
Investment income:
Dividend $ 121,903
Interest 8,061
-----------
Total investment income 129,964
-----------
Expenses:
Investment management charge 23,671
Administrative charge 14,212
-----------
Total expenses 37,883
-----------
Net investment income 92,081
-----------
Net realized gain (loss) on investments and
foreign currency:
Net realized gain on investments 13,213
Net realized loss on foreign currency conversions 1,381
-----------
Net realized gain from investments and foreign
currency 14,594
-----------
Net unrealized gain (loss) on investments and
foreign currency:
Net unrealized gain on investments 1,420,975
Net unrealized loss on foreign currency
conversions (173,620)
-----------
Net unrealized gain (loss) from investments and
foreign currency 1,247,355
-----------
Net increase in net assets from operations $1,354,030
===========
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
Six Months
Ended Year Ended
June 30 December 31
----------- -----------
1998<F*> 1997
----------- -----------
<S> <C> <C>
Operations:
Net investment income $ 92,081 $ 120,269
Net realized gain on investments and foreign currency conversions 14,594 95,786
Net unrealized gain (loss) on investments and foreign currency 1,247,355 (64,996)
----------- ----------
Net increase in net assets from operations 1,354,030 151,059
Capital share transactions 404,442 1,260,794
----------- ----------
Net increase in net assets 1,758,472 1,411,853
Net assets, beginning of year 8,426,815 7,014,962
----------- ----------
Net assets, end of period $10,185,287 $8,426,815
=========== ==========
<FN>
<F*>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
36
<PAGE> 35
General American Capital Company International Index Fund<F*>
<TABLE>
Financial Highlights
<CAPTION>
Six Months
Ended
June 30 Year ended December 31
---------- -----------------------------------------------
1998<F***> 1997 1996 1995 1994
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year<F1> $ 16.60 $ 16.23 $ 15.11 $ 13.94 $ 13.10
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.17 0.26 0.24 0.25 0.13
Net realized and unrealized gain (loss)
on investments<F**> 2.45 .11 .88 .92 .71
-------- -------- -------- -------- --------
Net increase (decrease) in asset value per share 2.62 .37 1.12 1.17 .84
-------- -------- -------- -------- --------
Net asset value, end of period $ 19.22 $ 16.60 $ 16.23 $ 15.11 $ 13.94
======== ======== ======== ======== ========
Total return<F2> 15.81% 2.27% 7.40% 8.35% 6.42%
Net assets, end of period (in thousands) $ 10,185 $ 8,427 $ 7,015 $ 5,460 $ 4,242
Ratio of expenses to average net assets<F3><F*> 0.80% 0.80% 1.00% 1.00% 1.00%
Ratio of net investment income to average
Net assets<F3> 1.94% 1.53% 1.57% 1.79% .98%
Portfolio turnover rate 2.14% 57.70% 19.53% 113.91% 46.19%
Average commission rate<F4> $ 0.03 $ 0.01 $ 0.02 -- --
<CAPTION>
February 16 to December 31
---------------------------
1993
--------
<S> <C>
Net asset value, beginning of period<F1> $ 10.00
--------
Income from operations:
Net investment income 0.14
Net realized and unrealized gain (loss)
on investments<F**> 2.96
--------
Net increase in asset value per share 3.10
--------
Net asset value, end of period $ 13.10
========
Total return<F2> 31.03%
Net assets, end of period (in thousands) $ 3,295
Ratio of expenses to average net assets<F3><F*> 1.00%
Ratio of net investment income to average
Net assets<F3> 1.38%
Portfolio turnover rate 26.97%
Average commission rate<F4> --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> Total return is not annualized for the eleven months ended December 31,
1993. The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*> Name and investment objective changed from the International Equity Fund on
January 1, 1997. The investment advisor charges changed from .70% to .50% on
the first $10 million of the average daily value of the net assets on
January 1, 1997. The fund's investment advisor became Conning Asset
Management on January 1, 1997. The objective of the International Index Fund
is to obtain investment results that parallel the price and yield
performance of publicly traded common stocks in the EAFE Index.
<F**>Also includes net realized and unrealized gain (loss) on foreign currency
conversions.
<F***>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
37
<PAGE> 36
General American Capital Company International Index Fund
<TABLE>
Schedule of Investments - June 30, 1998
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Australia (2.20%)
Broken Hill Properties 5,591 $ 47,261
National Australia Bank Ltd. 2,900 38,252
News Corp. Ltd. Au 6,227 50,825
Telstra Corporation 13,400 34,355
Western Mining Ltd. 4,131 12,433
Westpac Banking 6,706 40,905
-----------
224,031
-----------
Austria (0.32%)
Bank Austria AG 400 32,535
-----------
Belgium (1.69%)
Electrabel Sa 200 56,705
Generale de Banque 100 74,241
Petrofina Sa 100 41,051
-----------
171,997
-----------
Denmark (0.96%)
Den Danske Bank 200 23,993
Novo-Nordisk 315 43,423
Tele Danmark 319 30,615
-----------
98,031
-----------
Finland (0.88%)
Nokia AB - A Shares 800 58,836
Rauma Oy 30 615
UPM - Kymmene Corp. 1,100 30,275
-----------
89,726
-----------
France (9.15%)
Alcatel Alsthom 450 91,623
AXA UAP 550 61,859
Carrefour Supermarche 50 31,632
Elf Aquitaine 500 70,294
France Telecom SA<F*> 2,440 168,290
Groupe Danone 250 68,930
L'Air Liquide 338 55,822
L'Oreal 100 55,624
LVMH Moet-Hennessy
Louis Vuitton 200 40,026
Rhone-Poulenc A 1,100 62,041
Societe Generale Paris 400 83,162
St. Gobain 250 46,353
Total SA - B 250 32,501
Vivendi 300 64,059
-----------
932,216
-----------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Germany (continued)
Allianz AG 300 98,892
BASF AG 900 42,631
Deutsche Bank AG 1,150 97,384
Deutsche Telekom AG 2,450 66,102
Dresdner Bank AG 800 43,125
Mannesmann AG Dm 500 50,720
Metro AG 350 21,233
RWE AG 1,450 85,956
SAP AG 200 121,330
SAP AG-Vorzug 50 33,989
Siemens AG 1,550 94,288
VEBA AG 800 54,515
VIAG AG 50 33,795
VolkswAGen AG 50 48,061
-----------
1,047,329
-----------
Great Britain (20.69%)
Abbey National PLC 2,691 47,821
Barclays PLC 4,067 117,266
BAT Industries 6,572 65,797
BG PLC (ADR) 1,323 38,036
British Gas PLC 6,927 40,052
British Petroleum 12,591 183,623
British Sky Broadcasting PLC 2,769 19,891
British Telecommunications 12,921 159,545
BTR PLC Class B 10,455 6,019
BTR PLC Ord 25p 8,495 24,096
Cable & Wireless 5,500 66,811
Centrica PLC<F*> 7,851 13,231
Diago PLC 8,402 99,534
General Electric PLC 7,574 65,276
Glaxo Holdings PLC 4,900 147,090
HSBC Holdings 1,000 25,380
HSBC Holdings 2,300 55,725
Lloyds Tsb Group 5,853 81,891
Marks & Spencer 10,201 92,852
Pearson PLC 3,100 56,796
Prudential Corporation PLC 6,933 91,333
Reuters Holdings PLC 5,256 60,110
Rio Tinto PLC- Reg 3,869 43,577
Royal Sun Alliance Insurance 4,100 42,382
Smithkline Beecham PLC 10,074 122,962
Tesco 6,700 65,401
Unilever PLC 12,036 128,132
Vodafone Group 5,102 64,743
Zeneca Group PLC 1,900 81,542
-----------
2,106,914
-----------
<CAPTION>
(continued)
38
<PAGE> 37
General American Capital Company International Index Fund
Schedule of Investments - June 30, 1998
- ------------------------------------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hong Kong (1.87%)
Bank of East Asia 7,400 $ 8,022
CDL Hotels International 1,000 297
Cheung Kong 8,000 39,337
CLP Holdings Ltd. 5,500 25,056
Hang Seng Bank 3,200 18,089
Hong Kong Telecom 12,600 23,660
HSBC Holdings 200 4,891
Hutchison Whampo 6,000 31,671
New World Development 5,000 9,679
Sun Hung Kai Properties 3,000 12,738
Swire Pacific "A" 3,500 13,212
Wharf Holdings 4,000 3,949
-----------
190,601
-----------
Ireland (0.50%)
Allied Irish 3,528 50,934
-----------
Italy (4.39%)
Assicurazioni Generali 4,300 139,822
Credit Italiano 7,500 39,261
Edison Spa 2,500 20,063
Ente Nazionale Idrocarburi 14,587 95,603
Fiat Spa Itl1000 7,700 33,701
Istituto Bancario San Paolo 1,500 21,645
Telecom Italia Mobile 9,198 56,247
Telecom Italia Spa 5,556 40,896
-----------
447,238
-----------
Japan (19.66%)
Asahi Bank 8,000 35,162
Asahi Glass Co. Ltd. 4,000 21,616
Bank of Tokyo-Mitsubishi 7,000 74,093
Canon 1,000 22,697
Daiwa Securities 5,000 21,508
Denso Corp. 3,000 49,717
East Japan Railway 14 65,771
Fuji Bank 5,000 22,301
Fuji Photo 2,000 69,604
Fujitsu 6702 3,000 31,560
Hitachi Ltd. 12,000 78,251
Honda Motors 1,000 35,595
Industrial Bank Japan 8,000 50,150
Ito Yokado 8264 1,000 47,051
Japan Air Lines<F*> 9,000 25,032
Kansai Electric Power 3,400 59,041
Kinki Nippon Railway 3,000 14,051
Komatsu Ltd. 12,000 58,277
Maruko Co. Ltd. 50 259
Marutomi Group 75 131
Matsushita Electric (ADR) 200 32,150
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Japan (continued)
Matsushita Electronics 7,000 $ 112,476
Mitsubishi Chemical Corp. 157 284
Mitsubishi Corp. 6,000 37,180
Mitsubishi Electric 7,000 16,090
Mitsubishi Estate Co. 5,000 43,953
Mitsubishi Heavy Industries 15,000 56,634
Mitsubishi Trust 4,000 33,981
Mitsui Co. 6,000 32,424
NEC Corp. 4,000 37,266
Nippon Steel Corp. 24,000 42,195
Nippon Telegraph & Telephone 14 116,007
Nissan 7201 9,000 28,339
Nissen<F*> 50 90
Nomura Securities 6,000 69,820
Sakura Bank 12,000 31,127
Sankyo Co., Ltd. 2,000 45,538
Sanyo Electric Co. Ltd. 25,000 75,657
Sharp Corp. 4,000 32,395
Sony Corp. 500 43,052
Sumitomo Bank Ltd. 2,000 19,455
Tohoku Electric Power 1,100 16,209
Tokai Bank 3,000 16,515
Tokio Marine & Fire 6,000 61,649
Tokyo Electric Power 4,600 90,154
Toyota Motor Corp. 5,000 129,337
-----------
2,001,844
-----------
Malaysia (0.42%)
Malayan Banking Berhad 4,000 4,031
Sime Darby Berhad 6,000 4,138
Telekom Malaysia 13,500 22,785
Tenaga Nasional Berhad 9,000 10,850
United Engineers (Malaysia) 2,000 815
-----------
42,619
-----------
Netherlands (5.49%)
ABN Amro Holdings 1,756 41,090
Akzo 135 30,010
Elsevier 1,359 20,510
ING Groep NV 1,234 80,803
Koninklijke Ahold NV 600 19,261
Koninklijke Ptt Nederland 600 23,095
Philips Electronics 436 36,651
Royal Dutch Petroleum 3,028 167,908
TNT Post Group 600 15,338
Unilever NV 1,336 106,003
Wolters Kluwer-CVA 136 18,666
-----------
559,335
-----------
<CAPTION>
(continued)
39
<PAGE> 38
General American Capital Company International Index Fund
Schedule of Investments - June 30, 1998
- ------------------------------------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
New Zealand (0.22%)
Telecom Corp. of New Zealand 5,300 $ 21,845
-----------
Norway (0.45%)
Den Norske Bank ASA 2,900 15,193
Norsk Hydro 700 30,788
-----------
45,981
-----------
Portugal (0.49%)
Portugal Telecom SA 500 26,500
Electricidade de Portugal, SA 1,000 23,246
-----------
49,746
-----------
Singapore (0.57%)
Oversea-Chinese Banking Corp. 4,800 16,337
Singapore Airlines Ltd. 2,000 9,352
Singapore Telecommunications 23,000 32,674
-----------
58,363
-----------
Spain (4.97%)
Banco Bilbao Vizcaya 2,331 119,831
Empresa Nacional Electric 2,920 63,992
Repsol Sa 562 31,020
Repsol (ADR) 800 44,000
Telefonica De Despana 1,440 66,690
Telefonica (ADR) 1,300 180,781
-----------
506,314
-----------
Sweden (2.89%)
ABB AB 2,500 35,424
Astra AB - A 3,700 75,625
Ericsson LM B 3,600 105,180
Foreningssparbanken AB 1,400 42,132
Volvo AB SEK5 1,200 35,737
-----------
294,098
-----------
Switzerland (8.00%)
ABB AG 20 29,536
Credit Suisse Group 600 133,505
Nestle SA 60 128,402
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Market
Common Stock Shares Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Switzerland (continued)
Novartis AG 110 $ 183,043
Roche Holding AG 2 29,635
Roche Holding AG 10 98,200
Schweizerischer Bankverein<F*> 300 111,551
Swiss Reinsurance 40 101,160
-----------
815,032
-----------
Total common stock (96.09%)
(cost $8,085,627) 9,786,729
-----------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Market
Warrants Shares Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Warrants (0.01%)
Compangie Gen De Eaux Wt
2001<F*> 300 $ 590
-----------
Total warrants (0.01%)
(amortized cost $214) 590
-----------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Par Market
Short Term Investments Value Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper (3.43%)
Eagle Funding Capital Corp.,
due 07/07/1998 $350,000 $ 349,655
-----------
Total short term investments (3.43%)
(amortized cost $349,655) 349,655
-----------
Total investments (99.53%)
(amortized cost $8,435,496) 10,136,974
Other net assets (0.47%) 48,313
-----------
Total net assets (100.00%) $10,185,287
===========
<FN>
<F*>Non-income producing securities.
See accompanying notes to financial statements beginning
on page 53.
</TABLE>
40
<PAGE> 39
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
MANAGEMENT DISCUSSION
A difficult second quarter pulled down this fund's net return to 4.66 percent
for the first half of 1998. The benchmark S&P 400 Mid-Cap Index returned 8.6
percent for the period. Returns in the broader market failed to keep pace
with the large-cap stocks, and the fund lost ground with the broad market
sell-off in mid-April. Many of the best-performing stocks in the portfolio
experienced dramatic reversals when the market feared the momentum of
earnings growth might slow. Energy, cyclical technology and other
commodity-based businesses were the weakest.
GROWTH OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
Mid-Cap Equity Fund Russell 2000 Index S&P 400 Index
<S> <C> <C> <C>
02/16/93 10,000.00 10,000.00 10,000.00
06/30/93 10,341.22 10,549.80 10,585.20
12/31/93 11,444.23 11,773.15 11,405.87
06/30/94 11,052.58 11,014.37 10,571.76
12/31/94 11,349.55 11,558.70 10,996.22
06/30/95 12,375.42 13,225.00 12,935.40
12/31/95 13,743.06 14,845.99 14,396.45
06/30/96 14,995.31 16,384.03 15,722.08
12/31/96 16,416.86 17,295.47 17,163.17
06/30/97 19,506.16 19,059.78 19,393.18
12/31/97 22,074.52 21,163.03 22,698.75
06/30/98 23,103.97 22,204.67 24,659.92
</TABLE>
[FN]
<F*>On January 1, 1997 Conning Asset Management Company assumed portfolio
management duties from the former sub-advisor of the fund, Provident Capital
Managment, Inc. On January 1, 1997 the fund also changed its investment
objective to be one which seeks sustained growth of capital by investing
primarily in common stocks of United States-based publicly traded companies
with medium market capitalizations, as defined by the S & P Mid Cap 400 Index
ANNUAL RETURNS
<TABLE>
<CAPTION>
PERIODS ENDED JUNE 30, 1998 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
<S> <C> <C> <C>
Annual Returns 18.44% 17.44% 16.88
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
41
<PAGE> 40
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
<S> <C>
ASSETS:
Investments, at market value:
(see accompanying schedules)
Common stocks $ 7,787,786
Short term securities 849,928
-----------
Total investments 8,637,714
Cash 6,944
Dividends receivable 775
-----------
Total assets 8,645,433
-----------
LIABILITIES:
Payable to Conning Asset
Management Company 3,778
Payable to General American
Life Insurance Company 687
-----------
Total liabilities 4,465
-----------
Total net assets $ 8,640,968
===========
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 374,004
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 23.10
TOTAL AMORTIZED COST OF INVESTMENTS $ 6,775,878
<CAPTION>
STATEMENT OF OPERATIONS
As of June 30, 1998 (unaudited)
<S> <C>
INVESTMENT INCOME:
Dividends $ 17,479
Interest 15,263
-----------
Total investment income 32,742
-----------
EXPENSES:
Investment management charge 21,626
Administrative charge 3,932
-----------
Total expenses 25,558
-----------
Net investment income 7,184
-----------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 104,557
-----------
NET UNREALIZED GAIN ON INVESTMENTS:
Net unrealized gain on investments 164,071
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 275,812
===========
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30 DECEMBER 31
---------- -----------
1998<F*> 1997
---------- -----------
<S> <C> <C>
Operations:
Net investment income $ 7,184 $ 41,475
Net realized gain on investments 104,557 266,957
Net unrealized gain on investments 164,071 1,114,477
---------- ----------
Net increase in net assets from operations 275,812 1,422,909
Capital share transactions 1,513,046 1,309,029
---------- ----------
Net increase (decrease) in net assets 1,788,858 2,731,938
Net assets, beginning of year 6,852,110 4,120,172
---------- ----------
Net assets, end of year $8,640,968 $6,852,110
========== ==========
<FN>
<F*>unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
42
<PAGE> 41
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND<F*>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
SIX MONTHS
ENDED
JUNE 30 YEAR ENDED DECEMBER 31
---------- ----------------------------------------------
1998<F**> 1997 1996 1995 1994
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year<F1> $ 22.07 $ 16.42 $ 13.74 $ 11.35 $ 11.44
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.02 0.16 0.15 0.05 0.10
Net realized and unrealized gain
(loss) on investments 1.01 5.49 2.53 2.34 (0.19)
-------- -------- -------- -------- --------
Net increase (decrease) in asset value per share 1.03 5.65 2.68 2.39 (0.09)
-------- -------- -------- -------- --------
Net asset value, end of period $ 23.10 $ 22.07 $ 16.42 $ 13.74 $ 11.35
======== ======== ======== ======== ========
Total return<F2> 4.66% $ 34.46% 19.46% 21.09% (0.83%)
Net assets, end of period (in thousands) $ 8,641 $ 6,852 $ 4,120 $ 4,260 $ 3,279
Ratio of expenses to average net assets<F3> 0.64% 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income to average
net assets<F3> .18% .81% 1.02% 0.75% 0.85%
Portfolio turnover rate 15.06% 62.22% 56.31% 28.48% 29.48%
Average commission rate<F4> $ 0.05 $ 0.05 $ 0.06 -- --
<CAPTION>
FEBRUARY 16 TO DECEMBER 31
--------------------------
1993
--------
<S> <C>
Net asset value, beginning of year<F1> $ 10.00
--------
Income from operations:
Net investment income 0.06
Net realized and unrealized gain
(loss) on investments 1.38
--------
Net increase (decrease) in asset value per share 1.44
--------
Net asset value, end of period $ 11.44
========
Total return<F2> 14.44%
Net assets, end of period (in thousands) $ 1,998
Ratio of expenses to average net assets<F3> 0.64%
Ratio of net investment income to average
net assets<F3> .64%
Portfolio turnover rate 22.64%
Average commission rate<F4> --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> Total return is not annualized for the eleven months ended December 31,
1993. The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*> Name and investment objective changed from the Special Equity Fund
effective January 1, 1997. The investment advisor changed to Conning Asset
Management. The investment objective is long term capital appreciation, which
it pursues through investment primarily in common stocks of US - based
publicly traded companies with medium market capitalizations.
<F**> unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
43
<PAGE> 42
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
<TABLE>
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
<CAPTION>
- ------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
Air Transport (1.65%)
America West Holdings Corp.-B<F*> 5,000 $ 142,810
----------
Business Machines (7.55%)
Computer Horizons Corp.<F*> 2,798 103,699
Gateway 2000 Inc.<F*> 3,000 151,875
Plantronics<F*> 2,280 117,420
Quantum Corp.<F*> 5,200 107,900
Tech Data Corp.<F*> 4,000 171,500
----------
652,394
----------
Business Services (11.77%)
Butler International Inc.<F*> 3,000 78,375
CSG Systems International<F*> 4,400 206,250
Data Transmission Network Corp.<F*> 4,100 164,000
Intermedia Communications Inc.<F*> 6,000 251,622
Networks Associates 5,100 244,163
Remedytemp Inc.-Cl A<F*> 2,500 72,655
----------
1,017,065
----------
Chemicals (1.46%)
Crompton & Knowles Corp. 5,000 125,935
----------
Commercial Banking (6.00%)
Albank Financial 1,812 127,859
Bankatlantic Bancorp Inc.<F*> 3,326 42,822
Bankatlantic Bancorp Inc. - A<F*> 4,362 51,524
Commerce Bancorp<F*> 1,782 104,247
Star Banc Corp.<F*> 3,000 191,625
----------
518,077
----------
Consumer Durables (4.84%)
Furniture Brands International<F*> 7,500 210,465
Lennar Corp. 7,055 208,123
----------
418,588
----------
Domestic Oil (4.39%)
Basin Exploration Inc.<F*> 5,000 88,125
Domain Energy Corp.<F*> 9,000 108,000
Pride International Inc.<F*> 3,320 56,231
R & B Falcon Corp.<F*> 5,600 126,700
----------
379,056
----------
Drugs & Medicines (7.40%)
Beckman Instruments 2,310 134,557
Depuy Inc.<F*> 4,500 127,125
Express Scripts Inc.<F*> 1,200 96,750
Idec Pharmaceuticals Corp.<F*> 3,500 82,467
Immunex Corp.<F*> 3,000 198,750
----------
639,649
----------
<CAPTION>
- ------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
Electronics (4.52%)
Belden Inc. 3,990 $ 122,194
Dallas Semiconductor Corp. 5,700 176,700
Globalstar Telecommunications<F*> 3,400 91,800
----------
390,694
----------
Finance (Non - Banking) (3.52%)
Astoria Financial Corp. 800 42,800
Peoples Heritage Financial Group 4,600 108,675
Webster Financial Corp. 4,600 152,950
----------
304,425
----------
Food & Agriculture (3.71%)
The Earthgrains Company 2,000 111,750
Suiza Foods Corp.<F*> 3,500 208,904
----------
320,654
----------
Industrial Miscellaneous (3.81%)
Circuit City Stores Carmax<F*> 7,700 78,440
Diamond Offshore Drilling Inc. 3,700 148,000
Flowserve Corp. 4,172 102,735
----------
329,175
----------
Insurance (9.45%)
CMAC Investment Corp. 2,600 159,900
Enhance Financial Services Group 6,000 202,500
Horace Mann 5,000 172,500
State Auto Financial<F*> 5,115 163,041
ESG Re Ltd.<F*> 5,500 118,937
----------
816,878
----------
Media (1.33%)
Primedia Inc.<F*> 8,500 115,277
----------
Miscellaneous & Conglomerates (1.23%)
Quorum Health Group Inc.<F*> 4,000 106,000
----------
Non-Ferrous Metals (1.37%)
Tredegar Industries Inc. 1,400 118,825
----------
Paper & Forest Products (1.67%)
Pentair Inc. 3,400 144,500
----------
Real Estate (1.11%)
Equity Office Properties Trust<F*> 3,375 95,766
----------
<CAPTION>
(continued)
44
<PAGE> 43
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
- ------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
Retail (5.90%)
Brylane Inc.<F*> 2,500 $ 115,000
Ethan Allen Interiors 3,700 184,767
Zale Corp.<F*> 6,600 209,959
----------
509,726
----------
Telephone (4.24%)
Advanced Communications Group<F*> 10,000 69,370
ICG Communications Inc.<F*> 5,000 182,810
P-Com Inc.<F*> 4,500 41,202
Sitel Corp.<F*> 11,000 72,875
----------
366,257
----------
Tobacco (1.69%)
Universal Corp. 3,900 145,762
----------
Trucking & Freight (1.51%)
Midwest Express Holdings 3,600 130,273
----------
TOTAL COMMON STOCK (90.12%)
(COST $5,925,950) 7,787,786
----------
<CAPTION>
- ------------------------------------------------------------------------------
PAR MARKET
SHORT TERM SECURITIES VALUE VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper (9.84%)
Old Line Funding,
6.20%, due 7/ 1/98 425,000 $ 425,000
KZH Soleil,
6.11%, due 7/ 2/98 425,000 424,928
----------
849,928
----------
TOTAL SHORT TERM SECURITIES (9.84%)
(AMORTIZED COST $849,928) 849,928
----------
TOTAL INVESTMENTS (99.96%)
(AMORTIZED COST $6,775,878) 8,637,714
Other net assets (0.04%) 3,254
----------
TOTAL NET ASSETS (100.00%) $8,640,968
==========
<FN>
<F*>Non-income producing securities.
See accompanying notes to financial statements
beginning on page 53.
</TABLE>
45
<PAGE> 44
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
MANAGEMENT DISCUSSION
The Small-Cap Equity Fund uses as its proxy the smallest 20 percent of
companies based on capitalization size, that are listed on the New York Stock
Exchange. The fund seeks to provide a rate of return corresponding to the
performance of the common stock of small companies, as represented by the
fund's benchmark index, the Russell 2000. The fund modestly outperformed the
index in both the first and second quarters, reaching mid-year with at
year-to-date net return of 5.4 percent compared to the index's 4.9 percent.
Negative returns in the second quarter offset the gains made at the beginning
of the year when small-cap stocks staged a modest first quarter rally.
Small-cap stocks have failed to keep pace with the large-cap equities as
investors continue to focus on the liquidity and earnings predictability of
the larger-cap, blue chip stocks. Two sectors that have struggled the most
in small-cap stocks are emerging-growth and technology.
GROWTH OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
Small Cap Equity Fund Russell 2000 Index
<S> <C> <C>
05/01/97 10,000.00 10,000.00
06/30/97 11,769.21 11,621.10
12/31/97 13,102.61 12,903.49
06/30/98 13,808.38 13,538.60
</TABLE>
ANNUAL RETURNS
<TABLE>
<CAPTION>
PERIOD ENDED JUNE 30, 1998 PAST 1 YEAR LIFE OF FUND
<S> <C> <C>
Return 17.33% 31.43%<F*>
<FN>
<F*>The Small Cap Equity Fund began operations on May 1, 1997.
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
46
<PAGE> 45
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND<F*>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
<S> <C>
ASSETS:
Investments, at market value:
(see accompanying schedule)
Common Stocks $ 84,870,961
------------
Total investments 84,870,961
Cash overdraft (5,964)
Dividends receivable 30,826
------------
Total assets 84,895,823
------------
LIABILITIES:
Payable to Conning Asset
Management Company 18,401
Payable to General American
Life Insurance Company 3,680
Broker Payable 2,874
------------
Total liabilities 24,955
------------
Total net assets $ 84,870,868
============
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 1,668,281
Net asset value per share (Total net
assets divided by total shares of capital
stock outstanding) $ 50.87
TOTAL AMORTIZED COST OF INVESTMENTS $ 64,479,892
<CAPTION>
STATEMENT OF OPERATIONS
As of June 30, 1998 (unaudited)
<S> <C>
INVESTMENT INCOME:
Dividends $ 392,998
Interest 45,345
------------
Total investment income 438,343
------------
EXPENSES:
Investment management charge 104,517
Administrative charge 20,903
------------
Total expenses 125,420
------------
Net investment income 312,923
------------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 1,952,604
------------
NET UNREALIZED GAIN ON INVESTMENTS:
Net unrealized gain on investments 1,937,440
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,202,967
============
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS EIGHT MONTHS
ENDED ENDED
JUNE 30 DECEMBER 31
------------ ------------
1998<F***> 1997<F*>
------------ ------------
<S> <C> <C>
Operations:
Net investment income $ 312,923 $ 439,659
Net realized gain on investments 1,952,604 10,577,133
Net unrealized gain on investments 1,937,440 5,750,172
------------ ------------
Net increase in net assets from operations 4,202,967 16,766,964
Capital share transactions 3,022,379 6,441,988
------------ ------------
Net increase in net assets 7,225,346 23,208,952
Net assets, beginning of period<F**> 77,645,522 54,436,570
------------ ------------
Net assets, end of period $ 84,870,868 $ 77,645,522
============ ============
<FN>
<F*> Small-Cap Equity Fund began operations May 1, 1997.
<F**> On May 1, 1997, the assets of General American Separate Account No. 20
were exchanged for shares in the Small-Cap Equity Fund. The net assets,
beginning of period for 1997, are equal to the market value of the net assets
transferred on April 30, 1997. In exchange for the net assets transferred,
1,477,554 shares of the Small-Cap Equity Fund were issued to the General
American Separate No. 20.
<F***> Unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
47
<PAGE> 46
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND<F*>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
SIX MONTHS EIGHT MONTHS
ENDED ENDED
JUNE 30 DECEMBER 31
---------- ------------
1998<F**> 1997
---------- ------------
<S> <C> <C>
Net asset value, beginning of period<F1> $ 48.27 $ 36.84
-------- --------
Income from operations:
Net investment income 0.19 0.29
Net realized and unrealized gain on investments 2.41 11.14
-------- --------
Net increase in asset value per share 2.60 11.43
-------- --------
Net asset value, end of period $ 50.87 $ 48.27
======== ========
Total return<F2> 5.39% 31.03%
Net assets, end of period (in thousands) $ 84,871 $ 77,646
Ratio of expenses to average net assets<F3> 0.30% 0.30%
Ratio of net investment income to average net assets<F3> 0.74% 0.97%
Portfolio turnover rate 12.60% 24.47%
Average commission rate<F4> 0.03% 0.03%
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> Total return is not annualized for the eight months ended December 31,
1997. The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the
value of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*> Small-Cap Equity Fund began operations May 1, 1997.
<F**> unaudited
See accompanying notes to financial statements beginning on page 53.
</TABLE>
48
<PAGE> 47
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
<TABLE>
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
<CAPTION>
- ----------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Military Technology (1.46%)
Banner Aerospace<F*> 35,100 $ 451,913
Fairchild Corp.<F*> 26,200 528,899
Transtechnology Corp. 10,000 256,870
-----------
1,237,682
-----------
Air Transport (1.78%)
Continental Airlines<F*> 24,600 1,500,600
World Corp.<F*> 27,300 8,518
-----------
1,509,118
-----------
Apparel (3.98%)
Chic By HIS Inc.<F*> 19,000 149,625
Dyersburg Corp. 27,600 160,411
Galey & Lord Inc.<F*> 22,900 340,638
Genesco Inc.<F*> 47,500 774,820
Johnson Industries Inc. 13,600 62,900
Pillowtex Corp. 20,700 830,588
Salant Corp.<F*> 27,400 17,125
Shelby Williams 17,600 264,000
Syms Corp.<F*> 34,300 488,775
Texfi Industries<F*> 16,900 21,125
Tultex Corp.<F*> 58,100 141,590
Worldtex Inc.<F*> 21,910 127,340
-----------
3,378,937
-----------
Business Machines (0.92%)
Applied Magnetics Corp.<F*> 43,285 330,048
EA Industries Inc.<F*> 4,150 12,707
ECC International<F*> 10,125 32,906
Nashua Corp.<F*> 12,500 195,313
QMS Inc.<F*> 20,800 74,090
Titan Corp.<F*> 23,100 138,600
-----------
783,664
-----------
Business Services (5.34%)
Allerion Inc.<F*> 14,600 73
Bush Industries 18,250 396,938
Computer Task Group 39,600 1,326,600
Dycom Industries<F*> 16,800 567,000
Hospital Staffing Services<F*> 3,200 202
ITT Educational Services Inc.<F*> 52,650 1,697,963
National Media Corp.<F*> 27,300 30,713
Rightchoice Managed Care<F*> 6,400 81,197
Wackenhut Corp. 18,900 427,610
-----------
4,528,296
-----------
Chemicals (1.91%)
LSB Industries Inc. 5,700 21,728
Lea Ronal Inc. 25,800 615,975
Whittaker Corp.<F*> 16,600 219,950
Wynn's International Inc. 39,405 758,547
-----------
1,616,200
-----------
<CAPTION>
- ----------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
Commercial Banking (2.59%)
American Banknote Corp.<F*> 25,600 $ 78,387
First Banks America Inc.<F*> 3,400 65,025
Firstfed Financial<F*> 20,700 1,076,400
Oriental Financial Group 17,900 660,063
Sterling Bancorp 12,400 322,400
Unionfed Financial Corp.<F*> 440 4
-----------
2,202,279
-----------
Construction (5.66%)
Beazer Homes USA Inc.<F*> 18,200 472,053
Berlitz International<F*> 19,500 526,500
Cavalier Homes Inc. 21,512 278,301
Congoleum Corp.<F*> 8,000 76,000
Corrpro Companies Inc.<F*> 19,000 213,750
Elcor Corp. 25,550 645,138
Giant Group Ltd.<F*> 10,050 66,581
ICF Kaiser International 9,400 20,558
International Aluminum Corp. 8,500 263,500
MDC Holdings Inc. 37,300 736,675
M/I Schottenstein Homes Inc. 17,200 371,950
Presley Companies 10,200 8,925
Puerto Rican Cement Co. Inc. 11,400 538,650
Terex Corp.<F*> 20,100 572,850
Washington Homes Inc. 3,300 15,675
-----------
4,807,106
-----------
Consumer Durables (0.16%)
Craig Corp.<F*> 9,800 108,408
TCC Industries Inc.<F*> 5,500 27,153
-----------
135,561
-----------
Domestic Oil (5.43%)
Burling Resources Coal Seam Gas 14,700 134,138
Cross Timbers Royalty Trust 12,000 173,244
Frontier Oil Corp. 53,100 424,800
Furon Co. 34,000 616,250
Getty Realty Corp. 24,600 476,625
Giant Industries 23,600 410,050
Goodrich Petroleum Corp.<F*> 3,437 19,117
HS Resources Inc. 21,300 310,171
Howell Corp. 10,800 112,720
Kaneb Services 44,200 240,315
RPC Energy Services Inc. 56,100 701,250
Swift Energy Co.<F*> 14,877 237,095
Tokheim Corp.<F*> 15,300 313,650
Unit Corp.<F*> 40,700 246,723
Wiser Oil Co. 17,500 193,584
-----------
4,609,732
-----------
<CAPTION>
(continued)
49
<PAGE> 48
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
- ----------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
Drugs & Medicines (3.31%)
Advocat Inc.<F*> 10,300 $ 70,813
Comprehensive Care<F*> 4,600 45,135
Cooper Co. Inc.<F*> 22,200 808,901
GRC International<F*> 17,600 180,400
Graham Field Health Products<F*> 41,330 232,481
Maxxim Medical<F*> 16,000 464,000
Molecular Biosystems<F*> 23,400 168,176
OEC Medical Systems<F*> 24,400 549,000
PHP Healthcare Corp.<F*> 21,100 155,613
Pharmaceutical Resources<F*> 28,600 130,473
-----------
2,804,992
-----------
Electronics (4.23%)
American Precision Industries<F*> 13,800 210,450
Aydin Corp.<F*> 9,750 85,313
Bell Industries Inc. 16,812 191,237
CTS Corp. 34,552 1,019,284
Chyron Corp. 51,700 190,618
Daniel Industries Inc. 23,500 446,500
Esco Electronics Corp. 21,400 406,600
Kollmorgen Corp. 18,800 377,166
Rex Stores Corp.<F*> 17,600 222,200
Sparton<F*> 14,700 122,186
Tech-Sym<F*> 11,500 319,837
-----------
3,591,391
-----------
Energy & Utilities (0.52%)
Cascade Natural Gas Corp. 17,400 272,954
Compania Boliviana Energia 3,900 166,725
-----------
439,679
-----------
Energy Raw Materials (1.12%)
Dravo Corp.<F*> 29,000 266,423
Wilshire Oil Co. Of Texas 12,692 75,352
Zapata Corp. 61,940 611,658
-----------
953,433
-----------
Finance (Non - Banking) (4.64%)
Advest Group 16,700 482,213
H F Ahmanson & Company 3,798 269,658
Atlanta Sosnoff Capital<F*> 17,200 167,700
DVI<F*> 13,100 334,050
Duff & Phelps Credit Rating 11,000 613,250
First Republic Bank<F*> 15,260 551,268
Hallwood<F*> 3,500 119,655
McDonald & Co. Investments Inc. 34,760 1,140,545
National Discount Brokers Group 24,500 260,311
Rodman & Renshaw Capital Group 1,637 2
-----------
3,938,652
-----------
<CAPTION>
- ----------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
Food & Agriculture (6.78%)
Cke Restaurants Inc. 60,065 $ 2,477,681
Chock Full O Nuts Co.<F*> 20,914 142,466
Cooker Restaurant Corp. 14,100 137,475
Foodmaker Inc.<F*> 75,400 1,272,375
RLI Corp. 18,937 770,490
Spaghetti Warehouse Inc.<F*> 10,400 83,200
Suiza Foods Corp. 4,340 259,042
Super Food Services Inc.<F*> 10,100 155,288
TCBY Enterprises 49,900 458,431
-----------
5,756,448
-----------
Gold (0.02%)
Campbell Resources Inc. 52,700 19,763
-----------
Industrial Miscellaneous (20.35%)
American Waste Services<F*> 600 2,812
Ameron International 8,600 497,183
AMRE Inc.<F*> 14,400 144
Aquarion Company 12,900 441,012
Aviall Inc.<F*> 37,800 517,369
Bairnco Corp.<F*> 20,500 184,500
Bluegreen Corp.<F*> 39,848 351,141
Carlyle Industries Inc.<F*> 4,800 6,000
Chase Industries Inc. 29,400 580,650
Coachmen Industries Inc. 28,900 755,013
Coastcast<F*> 17,800 320,400
Crown Crafts Inc.<F*> 16,600 255,225
Datapoint<F*> 24,900 38,894
EDO Corp. 10,900 103,550
Environmental Elements Corp. 5,500 18,563
Esterline Technologies Corp.<F*> 25,600 534,400
Farah Inc.<F*> 19,200 171,590
Gleason Corp 20,200 568,125
Hexcel Corp.<F*> 14,817 335,235
Interlake Inc.<F*> 36,400 154,700
International Technology Corp.<F*> 50,021 475,201
Monarch Machine Tool Co. 6,800 55,250
Morgan Products<F*> 11,400 52,007
National-Standard Co. 6,000 28,872
Nortek<F*> 24,500 753,375
Northgate Exploration Ltd.<F*> 17,035 11,703
Oil-Dri Corp. 13,600 196,343
Oneida Ltd. 32,619 998,957
Orange Co. 8,600 51,058
Par Technology<F*> 15,000 90,930
Pittston Minerals Group 16,400 96,350
<CAPTION>
(continued)
50
<PAGE> 49
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
- ----------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
Playboy Enterprises<F*> 9,200 $ 150,650
Playboy Enterprises 'B'<F*> 40,700 722,425
Premiumwear Inc. 3,974 19,373
Publicker Inds. Inc.<F*> 13,800 22,425
Raytech Corp-del 6,300 31,500
Republic Group Inc. 22,629 475,209
Robertson Ceco Corp.<F*> 31,500 289,391
Royal Appliance Mfg. Co. 46,800 292,500
Sl Industries Inc. 11,808 162,360
SPS Technologies Inc.<F*> 22,000 1,287,000
Scott's Liquid Gold Inc. 5,000 10,935
Spartech Corp. 17,000 364,429
Starrett LS 13,800 545,100
TRC Companies Inc.<F*> 3,200 14,400
Thomas Industries 29,450 719,670
Toastmaster Inc. 4,800 26,698
Tyler Corp. 38,700 399,074
URS Corp.<F*> 13,742 233,614
United Industrial Corp. 23,800 309,400
Wackenhut Corp.<F*> 14,718 316,437
Wahlco Environmental Systems<F*> 1,100 1,513
Watsco Inc. 17,950 631,607
Waxman Industries<F*> 15,800 59,250
Windmere 32,900 1,178,215
World Fuel Services Corp. 21,025 363,982
-----------
17,273,709
-----------
Insurance (3.89%)
Acceptance Insurance Co.<F*> 20,028 491,928
Fidelity National Financial Inc. 34,385 1,368,936
Hilb, Rogal, and Hamilton Co. 28,800 450,000
MMI Companies Inc. 16,800 388,500
Stewart Info. Services 12,100 587,600
United American Healthcare<F*> 10,900 12,938
-----------
3,299,902
-----------
Media (0.32%)
American Media Inc.<F*> 41,100 272,288
-----------
Miscellaneous Finance (0.63%)
Interstate Securities 12,400 390,600
Stifel Financial 9,404 142,819
-----------
533,419
-----------
Motor Vehicles (0.13%)
Lamson & Sessions Co.<F*> 17,700 109,510
-----------
Non-Durables & Entertainment (0.56%)
Galoob (Lewis) Toys Inc.<F*> 19,700 197,000
General Housewares Corp. 7,400 74,459
<CAPTION>
- ----------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
Non-Durables & Entertainment (continued)
John Q Hammons Hotels<F*> 12,400 $ 87,569
J. Alexanders Corp.<F*> 6,500 28,841
Tandycrafts Inc.<F*> 18,500 86,709
-----------
474,578
-----------
Non-Ferrous Metals (2.46%)
Ekco Group Inc.<F*> 31,500 248,063
Nord Resources Corp.<F*> 29,300 56,754
RMI Titanium Co.<F*> 29,800 677,950
Tremont Corp. 14,400 809,093
United Park City Mines Co.<F*> 5,340 164,205
Zemex Corp.<F*> 14,697 128,598
-----------
2,084,663
-----------
Paper & Forest Products (0.15%)
Chesapeake Utilities Corp. 7,200 126,000
-----------
Producer Goods (6.49%)
Acme Electric Corp.<F*> 9,553 45,969
Aeroflex<F*> 22,885 237,432
Allied Products Corp. 26,650 564,634
Ampco-Pittsburgh Corp. 18,700 287,513
Artra Group Inc. 11,900 46,850
Brown & Sharpe Mfg. Co.<F*> 8,800 105,600
Fansteel Inc.<F*> 10,400 91,000
Genrad Inc.<F*> 37,300 736,675
Hughes Supply Inc. 17,650 646,431
Imo Industries<F*> 15,600 110,167
Insteel Industries 9,900 62,489
Katy Inds. Inc. 17,700 323,025
Kuhlman Corp. 12,988 513,831
Mestek Inc.<F*> 17,600 376,200
Scotsman Industries 16,200 449,550
Sequa Corp.<F*> 6,900 541,650
Twin Disc Inc. 5,500 166,375
Whitehall Corp. 10,600 205,375
-----------
5,510,766
-----------
Railroads & Shipping (1.28%)
Sea Containers Ltd. 5,100 195,713
Sea Containers Ltd. - Class A 21,570 825,053
Todd Shipyards Corp.<F*> 11,700 65,074
-----------
1,085,840
-----------
Real Estate (0.84%)
Amrep Corp.<F*> 14,400 140,400
Christiana Cos. Inc.<F*> 10,700 331,700
Grubb & Ellis Co.<F*> 17,000 242,250
-----------
714,350
-----------
<CAPTION>
(continued)
51
<PAGE> 50
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
SCHEDULE OF INVESTMENTS - JUNE 30, 1998
- ----------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
Retail (5.17%)
Carr-Gottstein Foods<F*> 31,100 $ 229,363
Catalina Lighting Inc.<F*> 6,000 22,872
Chart House Enterprises 16,000 138,000
Cole National Corp.<F*> 19,100 764,000
Kenneth Cole Productions-A 25,300 654,638
Converse Inc.<F*> 32,600 179,300
Fabri-Centers of America<F*> 18,000 492,750
Gottschalks Inc.<F*> 12,300 109,163
Hills Stores Co.<F*> 14,400 82,800
Intertan Inc.<F*> 9,000 48,375
Luria & Son<F*> 300 2
Mortons Restaurant Group<F*> 12,400 298,369
O'Sullivan Industries<F*> 32,800 459,200
Piccadilly Cafeterias Inc. 21,100 271,663
Rowe Furniture Corp. 27,500 271,563
Sizzler International Inc.<F*> 54,300 149,325
Sport Supply Group Inc.<F*> 13,100 106,438
Uno Restaurant Corp.<F*> 14,750 108,778
-----------
4,386,599
-----------
Steel (2.07%)
Huntco Inc. 10,400 123,500
Keystone Consolidated Industries<F*> 10,900 129,438
NS Group Inc.<F*> 26,900 272,363
Reliance Steel & Aluminum 31,900 1,232,137
-----------
1,757,438
-----------
Telephone (0.06%)
Intellicall Inc.<F*> 12,915 50,846
-----------
Tobacco (0.70%)
Brooke Group Ltd. 34,400 387,000
Standard Commercial Corp. 18,544 203,984
-----------
590,984
-----------
Travel & Recreation (0.44%)
Jackpot Enterprises<F*> 18,019 226,355
K2 Inc. 1 18
PS Group Holdings Inc. 11,900 145,774
-----------
372,147
-----------
Trucking & Freight (0.40%)
International Shipholding 13,025 209,208
Matlack Systems Inc. 17,100 133,585
-----------
342,793
-----------
<CAPTION>
- ----------------------------------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
Utilities, Electrical & Gas (4.21%)
Bangor Hydro Electric 13,500 $ 121,500
Central Vermont Public Service 23,000 343,551
Chart Industries 28,950 691,181
Green Mountain Power Corp. 9,500 135,964
Nui Corp. 17,900 455,322
North Carolina Natural Gas 18,650 473,244
St. Joseph Light & Power 15,300 284,963
Southern California Water and Gas 15,300 415,013
TNP Enterprises Inc. 21,100 651,458
-----------
3,572,196
-----------
TOTAL COMMON STOCK (100.00%)
(COST $64,479,892) 84,870,961
-----------
TOTAL INVESTMENTS (100.00%)
(AMORTIZED COST $64,479,892) $84,870,961
-----------
Other net assets (0.00%) (93)
TOTAL NET ASSETS (100.00%) $84,870,868
===========
<FN>
<F*>Non-income producing securities.
See accompanying notes to financial statements beginning on page 53.
</TABLE>
52
<PAGE> 51
GENERAL AMERICAN CAPITAL COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
Note 1-Organization
General American Capital Company (the Company), 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 eight separate investment funds (the
Funds) which operate as distinct investment vehicles. These are the S & P
500 Index Fund, Money Market Fund, Bond Index Fund, Managed Equity Fund,
Asset Allocation Fund, International Index Fund, Mid-Cap Equity Fund and
Small-Cap Equity Fund. The name of the Mid-Cap Equity Fund and the
International Index Fund was changed from the Special Equity Fund and the
International Equity Fund, respectively. The International Index and Mid-Cap
Equity Funds began operations on February 16, 1993. The Small-Cap Equity
Fund began operations on May 1, 1997. As of June 30, 1998, the Company sells
its shares to separate accounts established by General American Life
Insurance Company (General American), RGA Reinsurance Company (RGA) a wholly
owned subsidiary of Reinsurance Group of America, Inc., which is a majority
owned subsidiary of General American, Security Equity Life Insurance Company
(Security Equity) a wholly owned subsidiary of General American Life
Insurance Company and Cova Financial Services Life Insurance Company (Cova) a
wholly owned subsidiary of General American Life Insurance Company.
Note 2-Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Company in the preparation of financial statements. The policies are in
conformity with generally accepted accounting principles.
A. Investments:
Common stocks of domestic companies are valued based on the closing
sale price on the New York Stock Exchange for securities traded on that
exchange, and for securities not so traded, at the last bid price of
over-the-counter market quotations as of the close of business on June
30. Common stocks of foreign companies are valued based on the closing
sale price on the primary exchange for which the security is listed.
The market values for bonds and short term securities with maturities
of 60 days or more at date of valuation are determined daily by an
independent pricing service 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. Repurchase Agreements:
Short-term investments include repurchase agreements with a member bank
of the Federal Reserve System or a primary dealer in U.S. Government
securities. Under such agreements, the bank or primary dealer agrees
to repurchase the underlying U.S. Government securities at a mutually
agreed upon time and price.
C. Foreign Currency Translations:
Securities and other assets and liabilities denominated in foreign
currencies are translated each business day into U.S. dollars based
upon the closing rate of exchange. Foreign currency amounts related to
the purchase or sale of securities and income and expenses are
translated into U.S. dollars based upon the prevailing exchange rate on
the respective dates of the transactions.
In accordance with Statement of Position (SOP) 93-4: Foreign Currency
Accounting and Financial Statement Presentation for Investment
Companies, reported net realized gains or losses from foreign currency
transactions arise from sales of portfolio securities and the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent actually received or paid. Reported net unrealized gains
and losses from foreign currency transactions arise from changes in the
value of assets and liabilities, including investments in securities at
December 31, resulting from changes in the exchange rate.
D. Derivative Financial Instruments:
A derivative financial instrument in very general terms refers to a
security whose value is "derived" from the value of an underlying
asset, reference rate or index.
The Capital Company has a variety of reasons to use derivative
instruments, such as to attempt to protect the Company against possible
changes in the market value of its portfolio and to manage the
portfolio's effective yield, maturity and duration. All of the
Company's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in the
unrealized appreciation/depreciation on securities. Upon disposition,
a realized gain or loss is recognized accordingly, except when taking
delivery of a security underlying a futures contract. In these
instances the recognition of gain or loss is postponed until the
disposal of the security underlying the futures contract. The Capital
Company's utilization of derivative financial instruments is
substantially limited to the use of forward exchange contracts to hedge
foreign currency transactions, interest rate futures contracts to
manage interest rate risk and S&P 500 Index futures contracts to manage
performance.
Forward Foreign Currency Contracts:
The International Index Fund enters into forward exchange contracts to
hedge foreign currency transactions and not to engage in currency
speculation. The Fund's forward exchange contracts do not subject the
company to risk from exchange rate movements
53
<PAGE> 52
because gains and losses on such contracts offset losses and gains,
respectively, on the assets being hedged. At June 30, the company had no
open foreign currency exchange contracts that obligate it to receive or
deliver currency at specified future dates. The forward exchange
contracts generally require the company to exchange U.S. dollars for
foreign currencies at maturity, at rates agreed to at inception of the
contracts. The U.S. dollar value of foreign currency underlying all
contractual commitments held by the fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. If the
counterparties to the exchange contracts (primarily AA rated
international banks) do not fulfill their obligations to deliver the
contracted currencies, the company could be at risk for any currency
related fluctuations.
Futures Contracts:
A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price.
The Company generally invests in futures on U. S. Treasury Bonds and
the S&P 500 Index and typically closes the contract prior to the
delivery date. Upon entering into futures contracts, the Company
maintains, in a segregated account with a custodian, securities with a
value equal to its obligation under the futures contracts. During the
period the futures contract is open, payments are received from or made
to the custodian based upon changes in the value of the contract (the
variation margin). U. S. Treasury Bond futures contracts are entered
into in the Asset Allocation Fund to hedge market price risks of fixed-
rate bonds. S&P 500 Index futures contracts are entered into in the
S&P 500 Index Fund to manage and more closely track the performance of
the S&P 500 Index.
The S&P 500 Fund's transactions in futures contracts for the six months
ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
Contracts
----------------------------------------------------------------------
<S> <C>
Outstanding at December 31, 1997 22
Futures Opened 0
Futures Closed (22)
---
Outstanding at June 30, 1998 0
</TABLE>
The Company had no open U. S. Treasury Bond futures contracts at June
30, 1998 and had no U. S. Treasury Bond futures transactions for the
six months ended June 30, 1998.
E. Investment Transactions and Related Investment Income:
Investment transactions are recorded on a trade date basis (date the
order to buy or sell is executed). Dividends are recognized as income
on the ex-dividend date while interest income and amortization of
premium and discount are recorded on an accrual basis.
F. Federal Income Taxes and Distributions to Shareholders:
No provision for Federal income taxes is necessary because each 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. At June 30, 1998, the Bond Index Fund had an accumulated
capital loss carryforward for tax purposes of $1,788,097. Of this
amount, $1,605,747 and $182,350 will expire on December 31, 2002, and
2003 respectively.
G. Consent Dividends:
The Funds follow 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 their shareholders and
are immediately reinvested in that Fund.
H. 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) with respect to all of its
Funds. Certain officers and directors of the Company are also officers and
directors of the Investment Advisor. For its services to the Funds, the
Investment Advisor charges a fee, which is accrued daily against each Fund.
The fees charged each Fund, stated as an annual percentage of the average
daily value of the net assets, are:
S & P 500 Index Fund .250 Percent
Money Market Fund .125 Percent
Bond Index Fund . 250 Percent
Asset Allocation Fund . 500 Percent
Small-Cap Equity . 250 Percent
54
<PAGE> 53
The fee (percentage effective March 1, 1997) charged the Managed Equity Fund
is stated as a series of annual percentages of the average daily net assets
of that Fund. The percentages decrease with respect to assets of the Fund
above certain amounts as follows:
<TABLE>
<CAPTION>
Investment
Assets Fee
----------------------------------------------------
<S> <C>
First $10 million .40%
Next $20 million .30%
Balance over $30 million .25%
</TABLE>
The fee charged the International Index Fund is stated as a series of annual
percentages of the average daily net assets of that Fund. The percentages
decrease with respect to assets of the fund above certain amounts as follows:
<TABLE>
<CAPTION>
Investment
Assets Fee
----------------------------------------------------
<S> <C>
First $10 million .50%
Next $10 million .40%
Balance over $20 million .30%
</TABLE>
The fee charged for the Mid-Cap Equity Fund is stated as a series of annual
percentages of the average daily net assets of that Fund. The percentages
decrease with respect to assets of the Fund above certain amounts as follows:
<TABLE>
<CAPTION>
Investment
Assets Fee
----------------------------------------------------
<S> <C>
First $10 million .55%
Next $10 million .45%
Balance over $20 million .40%
</TABLE>
All operational expenses of the Company are paid by General American, which
charges administrative fees to each Fund in return. Certain officers and
directors of the Company are also officers and directors of General American,
RGA, Security Equity and Cova.
The administrative expenses are charged at an annual rate based on the
average daily value of the net assets in each Fund, as follows:
S & P 500 Index Fund .05 Percent
Money Market Fund .08 Percent
Bond Index Fund .05 Percent
Managed Equity Fund .10 Percent
Asset Allocation Fund .10 Percent
International Index Fund .30 Percent
Mid-Cap Equity Fund .10 Percent
Small-Cap Equity Fund .05 Percent
Note 4 - Investment Objectives and Manager Changes
Effective January 1, 1997, the International Equity Fund became the
International Index Fund. The investment objective of the International
Index Fund is to obtain investment results that parallel the price and yield
performance of publicly traded common stocks in the Morgan Stanley Capital
International Europe, Australia, and Far East Index ("EAFE Index"). The
portfolio manager of the International Index Fund is Conning Asset
Management. The total investment advisor fees were reduced as a result of
the changes.
Effective January 1, 1997, the Special Equity Fund became the Mid-Cap Equity
Fund. The investment objective of the Mid-Cap Equity Fund is to seek
sustained growth of capital by investing primarily in common stocks of United
States-based publicly traded companies with "medium market capitalizations."
"Medium market capitalization companies" are those whose market capitalization
falls within the range of the S&P Mid-Cap 400 at the time of the Fund's
investment. The portfolio manager of Mid-Cap Equity Fund is Conning Asset
Management Company and the total management fee rate remains unchanged from
that of the Special Equity Fund.
Effective March 1, 1997, the portfolio manager for the Managed Equity Fund
became Conning Asset Management Company. The total investment advisor charges
were reduced due to this change.
The Small-Cap Equity Fund commenced operations on May 1, 1997 subsequent to a
transfer of assets from General American Life Insurance Company Separate
Account No. 20, which had similar investment objectives, policies, and
limitations, in exchange for shares of the Small-Cap Equity Fund. Separate
Account No. 20 was not registered under the Registered Investment Company Act
of 1940 and has a different fee and expense structure than the Small-Cap
Equity Fund. While Separate Account No. 20 continues to exist, its assets
now consist solely of shares of the Small-Cap Equity Fund. The Small-Cap
Equity Fund's portfolio of investments on May 1, 1997 was the same as the
portfolio of Separate Account No. 20 immediately prior to the transfer.
Separate accounts which invested in Separate Account No. 20 prior to the
transfer now invest directly in the Small-Cap Equity Fund. The Small-Cap
Equity Fund seeks to provide a rate of return that corresponds to the
performance of the common stock of small companies, while incurring a level
of risk that is generally equal to the risks associated with small company
common stock. The Fund attempts to duplicate the performance of the smallest
20% of companies, based on capitalization size, that are based in the United
States and listed on the New York Stock Exchange.
55
<PAGE> 54
Note 5-Investments
The amortized cost of investments for federal income tax purposes as of June 30,
1998 is as follows:
<TABLE>
<CAPTION>
S & P 500 Money Bond Managed
Index Market Index Equity
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Bonds $ -0- $ -0- $ 56,137,663 $ -0-
Common stocks -0- -0- 44,827,239
Preferred stocks 301,389,352 -0- -0- -0-
Short term -0-
securities 204,835,377 285,000 1,850,000
------------ ------------ ------------ ------------
Total $301,389,352 $204,835,377 $ 56,422,663 $ 46,677,239
============ ============ ============ ============
<CAPTION>
Asset International Mid-Cap Small-Cap
Allocation Index Equity Equity
Fund Fund Fund Fund
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Bonds $ 26,686,973 $ -0- $ -0- $ -0-
Common stocks 51,843,066 8,085,627 5,925,950 64,479,892
Preferred stocks 1,070,000 -0- -0- -0-
Warrants -0- 214 -0- -0-
Short term
securities 3,023,345 349,655 849,928 0
------------ ------------ ------------ ------------
Total $ 85,623,384 $ 8,435,496 $ 6,775,878 $ 64,479,892
============ ============ ============ ============
</TABLE>
Gross unrealized gains and losses by fund for the period ended June 30, 1998
excluding the Money Market Fund, which has no unrealized gains or losses, are
as follows:
<TABLE>
<CAPTION>
S & P 500 Bond Managed
Index Index Equity
Fund Fund Fund
------------ ------------ ------------
<S> <C> <C> <C>
Unrealized gains $321,778,606 $ 1,694,120 $ 6,017,624
Unrealized losses 6,666,986 134,784 1,254,848
------------ ------------ ------------
Net unrealized
gain on
investments $315,111,620 $ 1,559,336 $ 14,762,776
============ ============ ============
<CAPTION>
Asset International Mid-Cap Small-Cap
Allocation Index Equity Equity
Fund Fund Fund Fund
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Unrealized gains $ 32,684,479 $ 3,072,663 $ 2,381,835 $ 26,984,573
Unrealized losses 2,026,166 1,371,186 519,998 6,593,504
------------ ------------ ------------ ------------
Net unrealized
gain on
investments $ 30,658,313 $ 1,701,477 $ 1,861,837 $ 20,391,069
============ ============ ============ ============
</TABLE>
Purchases and proceeds from sales and maturities of other than short term
securities and United States government obligations for the period ended
June 30, 1998.were as follows:
<TABLE>
<CAPTION>
S & P 500 Bond Managed
Index Index Equity
Fund Fund Fund
------------ ------------ ------------
<S> <C> <C> <C>
Purchases $ 59,779,199 $ 16,727,755 $ 21,868,655
============ ============ ============
Sales and
Maturities $ 24,579,565 $ 4,956,495 $ 23,608,157
============ ============ ============
<CAPTION>
Asset International Mid-Cap Small-Cap
Allocation Index Equity Equity
Fund Fund Fund Fund
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Purchases $ 16,704,132 $ 597,373 $ 2,209,833 $ 15,525,321
============ ============ ============ ============
Sales and
Maturities $ 18,375,119 $ 196,693 $ 1,112,482 $ 10,405,611
============ ============ ============ ============
</TABLE>
Purchases and proceeds from sales and maturities of United States government
obligations for the period .ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
S & P 500 Money Bond Managed
Index Market Index Equity
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Purchases $ -0- $ -0- $ 10,357,079 $ -0-
============ ============ ============ ============
Sales and
Maturities $ -0- $ -0- $ 10,762,820 $ -0-
============ ============ ============ ============
<CAPTION>
Asset International Mid-Cap Small-Cap
Allocation Index Equity Equity
Fund Fund Fund Fund
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Purchases $ -0- $ -0- $ -0- $ -0-
============ ============ ============ ============
Sales and
Maturities $ -0- $-0- $ -0- $ -0-
============ ============ ============ ============
</TABLE>
56
<PAGE> 55
Note 6-Capital Stock
As of June 30, 1998, in the aggregate, there were one billion, five hundred
million (1,500,000,000) shares of $.01 par value capital stock authorized. On
May 1, 1997 shares of the Company, as noted below, were exchanged for cash and
invested assets, less any investment related liabilities of General American
Separate Account No. 20. The unrealized appreciation at the time of the
exchange was $12,703,457 for Separate Account No. 20.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
S & P 500 INDEX FUND
-------------------------------------------------------------
Six months ended Year ended
June 30, 1998 December 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 1,573,269 $ 66,958,004 2,288,656 $ 80,197,159
Shares redeemed (1,043,918) (45,935,922) (1,024,948) (35,167,639)
---------- ------------- ----------- -------------
Net increase 529,351 $ 21,022,082 1,263,708 $ 45,029,520
========== ============= =========== =============
<CAPTION>
MONEY MARKET FUND
-------------------------------------------------------------
Six months ended Year ended
June 30, 1998 December 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 8,324,038 $ 153,650,468 18,831,392 $ 335,912,294
Shares redeemed (6,968,613) (128,749,296) (15,135,851) (268,660,111)
---------- ------------- ----------- -------------
Net increase 1,355,425 $ 24,901,172 3,695,541 $ 67,252,183
========== ============= =========== =============
<CAPTION>
BOND INDEX FUND
-------------------------------------------------------------
Six months ended Year ended
June 30, 1998 December 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 631,915 $ 14,888,511 875,433 $ 19,458,750
Shares redeemed (274,557) (6,525,989) (583,698) (12,568,473)
---------- ------------- ----------- -------------
Net increase
(decrease) 357,358 $ 8,362,522 (291,735) $ (6,890,277)
========== ============= =========== =============
<CAPTION>
MANAGED EQUITY FUND
-------------------------------------------------------------
Six months ended Year ended
June 30, 1998 December 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 182,280 $ 6,112,702 292,535 $ 8,324,432
Shares redeemed (263,635) (8,724,187) (317,082) (9,190,598)
---------- ------------- ----------- -------------
Net (decrease) (81,355) $ (2,611,485) (24,547) $ (866,166)
========== ============= =========== =============
<CAPTION>
ASSET ALLOCATION FUND
-------------------------------------------------------------
Six months ended Year ended
June 30, 1998 December 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 233,062 $ 7,861,428 676,658 $ 19,798,368
Shares redeemed (375,386) (12,484,192) (396,211) (11,858,933)
---------- ------------- ----------- -------------
Net increase 142,324 $ 4,622,764 280,447 $ 7,939,435
========== ============= =========== =============
<CAPTION>
INTERNATIONAL INDEX FUND
-------------------------------------------------------------
Six months ended Year ended
June 30, 1998 December 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 53,893 $ 997,466 120,074 $ 2,031,933
Shares redeemed (31,738) (593,024) (44,588) (771,139)
---------- ------------- ----------- -------------
Net increase 22,155 $ 404,442 75,486 $ 1,260,794
========== ============= =========== =============
<CAPTION>
MID-CAP EQUITY FUND
-------------------------------------------------------------
Six months ended Year ended
June 30, 1998 December 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 85,273 $ 2,015,651 123,498 $ 2,489,536
Shares redeemed (21,677) (502,605) (64,062) (1,180,507)
---------- ------------- ----------- -------------
Net increase
(decrease) 63,596 $ 1,513,046 59,436 $ 1,309,029
========== ============= =========== =============
<CAPTION>
SMALL-CAP EQUITY FUND
-------------------------------------------------------------
Six months ended Year ended
June 30, 1998 December 31, 1997
-------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares issued in
Connection with
the exchange 0 $ 0 1,477,554 $ 54,436,570
Shares sold 152.665 7,759,718 223,963 10,480,160
Shares redeemed (92,850) (4,737,339) (93,051) (4,038,172)
---------- ------------- ----------- -------------
Net increase 59,815 $ 3,022,379 1,608,466 $ 60,878,558
========== ============= =========== =============
</TABLE>
57
<PAGE> 56
GENERAL AMERICAN CAPITAL COMPANY
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
BOARD OF DIRECTORS
Theodore M. Armstrong
Alan C. Henderson
Richard A. Liddy, Chairman
Matthew P. McCauley
Harry E. Rich
INVESTMENT ADVISOR
Conning Asset Management Company
SAFEKEEPER OF SECURITIES
Bank of New York
Goldman Sachs
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington D.C
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.
<PAGE> 57
APPENDIX
Pages 3, 13, 18, 24, 29, 35, 41 and 46 of the printed Semi-Annual Report for
General American Capital Company contain a stock performance. The information
contained in these graphs has been presented in a tabular format that may be
processed by the EDGAR System.