<PAGE>
File Nos. 33-10145
811-04900
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933
Post-Effective Amendment No. 16
and
Registration Statement Under the Investment Company Act of 1940
Amendment No. 16
General American Capital Company
700 Market Street
St. Louis, MO 63101
(314) 444-0499
Christopher A. Martin
GenAmerica Management Company
700 Market Street
St. Louis, Missouri 63101
Copies to:
Stephen E. Roth
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
It is proposed that this filing will become effective (check appropriate
box):
[ ] Immediately upon filing pursuant to paragraph (b).
[ X ] On May 1, 1999 pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(1).
[ ] On (date) pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] On (date) pursuant to paragraph (a)(2) of Rule 485.
[ ] This post effective amendment designates a new effective date for
a previously filed post-effective amendment.
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GENERAL AMERICAN CAPITAL COMPANY
PROSPECTUS VERSION A
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GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
- PROSPECTUS -
General American Capital Company (the Capital Company) offers
eight different diversified funds. The Capital Company sells shares of
its funds to insurance company separate accounts so that the funds may
serve as investment options under variable life insurance policies,
variable annuity contracts, and certain other plans, such as qualified
pension and retirement plans (collectively referred to as the
Contracts).
The eight Capital Company funds are:
* The Money Market Fund.
* The Bond Index Fund.
* The Asset Allocation Fund.
* The Managed Equity Fund.
* The S&P 500 Index Fund.<F*>
* The Mid-Cap Equity Fund.
* The Small-Cap Equity Fund.
* The International Index Fund.
This prospectus provides information about the Capital Company and
its funds that you ought to know before investing. You should read this
prospectus in conjunction with the prospectus for the applicable
Contract. Please retain both prospectuses for future reference.
The date of this prospectus is May 1, 1999.
The date of the related statement of additional information
is May 1, 1999.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[FN]
- ----------
<F*> "Standard & Poor's" and "Standard & Poor's 500" are trademarks of
the Standard & Poor's Corporation and have been licensed for use by the
Capital Company. Capital Company's S&P 500 Index Fund is not sponsored,
sold, or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the fund.
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GENERAL AMERICAN CAPITAL COMPANY
FUND PROSPECTUS
TABLE OF CONTENTS
PAGE
----
Front Cover Page
Table of Contents i
The Funds' Investment Objectives, Principal
Strategies & Risks 1
Fund Performance Charts 6
Fee Tables 10
Shareholder Transaction Expenses 10
Annual Fund Operating Expenses 10
Contract Fees 11
Example 11
Management & Organization 12
The Capital Company 12
The Adviser 12
The Administrator 13
Additional Information About the Funds 13
Purchase & Redemptions of Shares 13
Determination of Share Price 14
Taxes and Dividends 14
Portfolio Turnover 15
Cash Positions 15
General Information 15
Year 2000 15
Euro Conversion 15
Pending Legal Proceedings 16
Financial Highlights 16
Back Cover Page
i
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THE FUNDS' INVESTMENT OBJECTIVES,
PRINCIPAL STRATEGIES & RISKS
Below are the investment objectives, principal strategies, and
risks of the Capital Company's eight funds. Also described below are
the types of individuals who may want to invest in the funds. You can
find more information on the funds in the statement of additional
information. There can be no assurances that the funds will achieve
their investment objectives. There are factors not listed below that
could adversely affect your investment. The share price of the funds
change daily due to market conditions and you may lose money if you
invest in the funds.
* THE MONEY MARKET FUND.
Investment Objective and Principal Strategies. The Money Market Fund's
- ---------------------------------------------
investment objective is to provide investors with current income while
preserving capital and maintaining liquidity. The fund seeks to achieve
this objective by investing primarily in high-quality, short-term money
market instruments. The fund purchases securities that meet the
quality, maturity, and diversification requirements applicable to money
market funds.
Who May Want to Invest. The Money Market Fund may be appropriate for
- ----------------------
investors who are investing for a short period of time or who are
uncomfortable with investments that may have large fluctuations in
value.
Main Risks. The Money Market Fund does not maintain a stable net asset
- ----------
value and loss of money is a risk of investing in the fund. The following
risk factors may significantly affect fund performance. Interest Rate Risk.
The Money Market's rate of income and net asset value varies from day to
day depending on short-term interest rates. Changes in interest rates
could cause the value of your investment to decline. Credit Risk. A
default on a security that the fund holds could cause the value of your
investment to decline. Not Guaranteed. Investments in the fund are not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
* THE BOND INDEX FUND.
Investment Objective and Principal Strategies. The Bond Index Fund's
- ---------------------------------------------
investment objective is to provide investors with current income that
reflects the performance of the publicly traded bond market as a whole.
The fund seeks to achieve this objective by primarily purchasing
corporate and government bonds contained in the Lehman Brothers
Government/Corporate Bond Index. The fund does not replicate the Index,
but uses a "sampling" method to generally reflect the performance of the
Index. Sampling is an investment technique whereby the fund holds
approximately the same mix and weightings of investment sectors, as
measured by quality and duration, as the Index, while not holding all of
the bonds in each Index sector.
Who May Want to Invest. The Bond Index Fund may be appropriate for
- ----------------------
investors who are seeking a higher level of current income than is
available from money market funds and who are able to tolerate
fluctuations in the value of their investment.
1
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Main Risks. Loss of money is a risk of investing in the Bond Index Fund.
- ----------
The following risk factors may significantly affect fund performance.
Interest Rate Risk. Interest rate changes can have a powerful effect
on the value of fixed bond portfolios. In general, bond prices rise
when interest rates fall, and fall when interest rates rise. As a result,
the value of your investment in this fund will rise and fall as interest
rates fluctuate. Credit Risk. It is possible that some of the issuers
will not make payments or will default on the debt securities that the
fund holds. Or, an issuer may suffer adverse changes in financial
condition that could lower the credit quality of a bond, leading to
greater volatility in the price of the bond and in shares of the fund.
A change in the quality rating of a bond can also affect a bond's
liquidity and make it more difficult to sell.
* THE ASSET ALLOCATION FUND.
Investment Objective and Principal Strategies. The Asset Allocation
- ---------------------------------------------
Fund's investment objective is to provide investors with a long-term
investment return composed of capital growth and income payments.
Preservation of capital is the fund's secondary objective and the chief
limit on investment risk. The fund seeks to achieve these objectives by
investing in a diversified combination of U.S. common stocks, bonds, and
money market instruments. Under normal market conditions, the Adviser
expects, but is not required, to maintain a mix falling within the
following ranges: 40% to 80% in stocks, 20% to 50% in bonds, and 0% to
40% in money market securities. The mixture of stocks, bonds, and money
market securities varies over time in an attempt to produce the highest
total return consistent with prudence and preservation of capital. The
stock portion of the fund primarily uses a growth investment style.
This means the stock portion of the fund primarily invests in stocks
that have growth potential.
Who May Want to Invest. The Asset Allocation Fund may be appropriate
- ----------------------
for long-term investors who are seeking a balanced investment program,
protection against inflation, and who are able to tolerate a substantial
loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the Asset Allocation
- ----------
Fund. The following risk factors may significantly affect fund performance.
The Asset Allocation Fund invests in a combination of U.S. common stocks,
bonds, and money market instruments. As a result, the risks described
above for the Money Market Fund and the Bond Index Fund apply to the Asset
Allocation Fund. Market Risk. The prices of the equity securities that
the fund holds may decline in response to changing economic, political,
or market conditions, or due to a company's individual situation or the
market's perception of its situation. Allocation Risk. The fund is
subject to an allocation risk, which is the risk that the Adviser could
fail to correctly predict the optimal mixture of investments. Style Risk.
Because growth investing is a style that involves buying stocks of faster
growing companies in more rapidly growing sectors of the economy, there
are related risk. Growth stocks may:
* be more volatile than other stocks because of their
sensitivity to investor perceptions of the company's growth
potential;
* respond differently to market and other developments than
the general market or value stocks in particular; and
* underperform the general market in a value market
environment.
2
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* THE MANAGED EQUITY FUND.
Investment Objective and Principal Strategies. The Managed Equity
- ---------------------------------------------
Fund's investment objective is to provide investors with long-term
growth of capital that is consistent with the investment returns
of U.S. common stocks. The fund's secondary objective is to provide
investors with a current income. The fund seeks to achieve these
objectives by investing primarily in common stocks of U.S. companies
using a value approach to investing. This means the fund primarily
focuses on stocks' value rather than potential for short-term
appreciation. The fund primarily invests in stocks issued by companies
that are of high quality and deemed undervalued in relation to the rest
of the market.
Who May Want to Invest. The Managed Equity Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the managed Equity
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Style Risk. Because value
investing is a style that involves buying stocks that are out of favor
and/or undervalued in comparison to their peers and/or prospects for
growth, there are related risks. Undervalued stocks may:
* not realize their perceived value for long periods of time;
* respond differently to market and other developments than
the general market or growth stocks in particular; and
* underperform the general market in a growth market
environment.
* THE S&P 500 INDEX FUND.
Investment Objective and Principal Strategies. The S&P 500 Index Fund's
- ---------------------------------------------
investment objective is to provide investors with a long-term capital
appreciation that is consistent with the investment returns of the S&P
500 Index. The fund seeks to achieve this objective by primarily
investing in U.S. common stocks contained in the Standard & Poors' 500
Stock Index. The fund attempts to invest so that its investment results
reflect the return of the S&P 500 Index.
Who May Want to Invest. The S&P 500 Index Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the S&P Index Fund.
- ----------
The following risk factors may significantly affect fund performance.
Market Risk. The prices of the equity securities that the fund holds
may decline in response to changing economic, political, or market
conditions, or due to a company's individual situation or the
market's perception of its situation.
3
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* THE MID-CAP EQUITY FUND.
Investment Objective and Principal Strategies. The Mid-Cap Equity
- ---------------------------------------------
Fund's investment objective is to provide investors with long-term
growth of capital that is consistent with the investment returns of mid-
sized companies. The fund seeks to achieve this objective by investing
primarily in common stocks of U.S. publicly traded companies with medium
market capitalizations. Medium market capitalization companies are
those companies whose market capitalization falls within the range of
the S&P MidCap 400 at the time of the fund's investment. The fund
primarily uses an investment style characterized as "growth-at-a-
reasonable-price." This means the fund primarily invests in medium market
capitalization companies that have growth potential, but that are
reasonably valued in relation to the rest of the market.
Who May Want to Invest. The Mid-Cap Equity Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment as well as the
additional risks of investing in smaller companies.
Main Risks. Loss of money is a risk of investing in the Mid-Cap Equity
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Smaller Companies. Securities of
mid-sized companies may have more risks than those of larger companies
and may be more susceptible to market downturns. Securities of mid-
sized companies may be less liquid than those of larger companies, which
may cause more abrupt or erratic price fluctuations. Style Risk.
Because growth investing is a style that involves buying stocks of
faster growing companies in more rapidly growing sectors of the economy,
there are related risk. Growth stocks may:
* be more volatile than other stocks because of their
sensitivity to investor perceptions of the company's growth
potential;
* respond differently to market and other developments than
the general market or value stocks in particular; and
* underperform the general market in a value market
environment.
* THE SMALL-CAP EQUITY FUND.
Investment Objective and Principal Strategies. The Small-Cap Equity
- ---------------------------------------------
Fund's investment objective is to provide investors long-term growth of
capital that is consistent with the investment return of smaller
capitalized companies. Every five years, the fund determines the
smallest 20% (in terms of capitalization) of the companies listed on the
New York Stock Exchange. Over the next five years, the fund primarily
rebalances itself to hold those stocks. The fund uses a five year
rebalancing period to lower the transaction costs normally associated
with trading in thinly traded, smaller-capitalized stocks. The fund's
next determination date for rebalancing is scheduled for April 2000.
Who May Want to Invest. The Small-Cap Equity Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment as well as the
additional risks of investing in smaller companies.
4
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Main Risks. Loss of money is a risk of investing in the Small-Cap Equity
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Smaller Companies. Securities of
smaller companies may have more risks than those of larger companies and
may be more susceptible to market downturns. Securities of smaller
companies may be less liquid than those of larger companies, which may
cause more abrupt or erratic price fluctuations.
* THE INTERNATIONAL INDEX FUND.
Investment Objective and Principal Strategies. The International Index
- ---------------------------------------------
Fund's investment objective is to provide investors with long-term
growth of capital that is consistent with the investment returns of
foreign stocks. The fund seeks to achieve this objective by primarily
purchasing foreign publicly traded common stocks contained in the Morgan
Stanley Capital International Europe, Australia, and Far East Index
(commonly known as the EAFE Index). The fund does not replicate the
Index, but uses a "sampling" method to generally reflect the performance
of the Index. Sampling is an investment technique whereby the fund
holds approximately the same mix and weightings of investment sectors,
as measured by country and industry, as the Index, while not holding all
of the stocks in each Index sector.
Who May Want to Invest. The International Index Fund may be appropriate
- ----------------------
for long-term investors who are seeking high long-term growth, are
looking for exposure in the international markets and are able to
tolerate the additional risks associated with these markets, and are
able to tolerate a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the International
- ----------
Index Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Foreign Investing. Investments
in foreign securities involves risks relating to political, social, and
economic developments abroad, as well as risks resulting from the
differences between the regulations to which U.S. and foreign issuers
and markets are subject. These risks may include expropriation,
confiscatory taxation, withholding taxes on dividends, limitations on
the use or transfer of portfolio assets, and political or social
instability. Enforcing legal rights may be difficult, costly, and slow
in foreign counties, and there may be special problems enforcing claims
against foreign governments. In addition, foreign companies may not be
subject to accounting standards or governmental supervision comparable
to U.S. companies, and there may be less public information about their
operations. Foreign markets may be less liquid and more volatile than
U.S. markets. Since foreign securities often trade in currencies other
than the U.S. dollar, changes in currency exchange rates affect the
fund's net asset value. The costs of foreign brokerage commissions,
custodial services, and transaction and settlement costs may be higher
than in the U.S. Foreign securities may be subject to taxes in their
country of issue, or other restrictions on the removal of funds may be
imposed by a foreign country. Hedging Risk. The Fund may use various
techniques to increase or decrease its exposure to changing security
prices,
5
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interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions, which may increase the volatility of the fund.
FUND PERFORMANCE CHARTS
The information on the following pages shows the risks of investing in
the funds by showing how the funds' investment returns have varied over
time. In each case the fund's performance is compared to a widely
recognized unmanaged index. The investment return information does not
reflect expenses that apply to the Contracts. Inclusion of these
charges would reduce the return figures for all periods shown. Past
investment performance is no guarantee of future results.
* THE MONEY MARKET FUND.
FOR UP-TO-DATE YIELD INFORMATION, CALL (877) 882-5714.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
[GRAPH]
<TABLE>
<CAPTION>
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HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 - 1998) (through December 31, 1998)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 2.44% June 30, 1989 Money Market Fund 5.62% 5.40% 5.78%
Lowest 0.74% June 30, 1993 Lehman 90-day Treasury Bill Index 5.33% 5.32% 5.57%
====================================================================================================================
</TABLE>
6
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* THE BOND INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 - 1998) (through December 31, 1998)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 6.40% June 30, 1995 Bond Index Fund 8.61% 6.92% 8.47%
Lowest -3.35% March 31, 1994 Lehman Government/Corporate Index 9.47% 7.30% 9.34%
====================================================================================================================
</TABLE>
* THE ASSET ALLOCATION FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 - 1998) (through December 31, 1998)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 20.89% December 31, 1998 Asset Allocation Fund 17.86% 14.91% 13.17%
Lowest -11.04% September 30, 1998 Lipper Flexible Portfolio Fund Ave. 13.50% 13.64% 12.57%
====================================================================================================================
</TABLE>
7
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* THE MANAGED EQUITY FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 - 1998) (through December 31, 1998)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 24.00% December 31, 1998 Managed Equity Fund 14.19% 16.96% 15.10%
Lowest -15.80% September 30, 1998 Barra Value Index 14.68% 19.69% N/A
S&P 500 Index 28.58% 24.07% 19.21%
====================================================================================================================
</TABLE>
* THE S&P 500 INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY S&P 500 INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 - 1998) (through December 31, 1998)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 21.24% December 31, 1998 S&P 500 Index Fund 28.15% 23.69% 18.70%
Lowest -13.89% September 30, 1990 S&P 500 Index 28.58% 24.07% 19.21%
====================================================================================================================
</TABLE>
8
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* THE MID-CAP EQUITY FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1994 - 1998) (through December 31, 1998)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years Life of Fund
(since 2/16/93)
<S> <C> <C> <C> <C> <C> <C>
Highest 22.28% December 31, 1998 Mid-Cap Equity Fund -1.48% 13.70% 14.14%
Lowest -23.02% September 30, 1998 S&P 400 Index 19.13% 18.84% 16.75%
Russell 2000 Index -2.55% 11.86% 11.62%
====================================================================================================================
</TABLE>
* THE SMALL-CAP EQUITY FUND. The Fund commenced operations on May
1, 1997, subsequent to a transfer of assets from General American S.A.
20, which has identical investment objectives and policies, in exchange
for shares of the Fund. The Company calculates performance for the Fund
for periods prior to the transfer by including the S.A. 20 total return.
S.A. 20 was not subject to certain investment restrictions that are
imposed by the Investment Company Act of 1940 and the Internal Revenue
Code. If S.A. 20 had been subject to these restrictions its performance
might have been adversely affected.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 - 1998) (through December 31, 1998)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 35.31% March 31, 1991 Small-Cap Equity Fund -9.78% 13.47% 13.30%
Lowest -21.79% September 30, 1998 Russell 2000 Index -2.55% 11.86% 12.92%
====================================================================================================================
</TABLE>
9
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* THE INTERNATIONAL INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1994 - 1998) (through December 31, 1998)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years Life of Fund
(since 2/16/93)
<S> <C> <C> <C> <C> <C> <C>
Highest 21.82% December 31, 1998 International Index Fund 19.76% 8.69% 12.40%
Lowest -15.12% September 30, 1998 MSCI EAFE Index 20.33% 9.50% 12.82%
====================================================================================================================
</TABLE>
FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
You will not have to pay any shareholder transaction expense when
you buy or sell shares of the Capital Company funds. This means that
the Capital Company will not charge you a sales charge (load) when you
purchase shares or reinvest dividends, or a deferred sales charge
(deferred load) when you sell shares. In addition, Capital Company will
not charge you an exchange fee when you allocate money between funds or
a redemption fee when you sell your shares.
ANNUAL FUND OPERATION EXPENSES
The Capital Company funds charge investment advisory fees and
administration fees to cover the cost of portfolio management and
administration. The Capital Company does not charge a 12b-1
distribution fee or an account maintenance fee. The Capital Company
deducts its fees from fund assets on a daily basis. The funds' annual
fees are shown as a percent of net assets below:
10
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<TABLE>
<CAPTION>
Total Fund
Investment Administration Operating
Advisory Fees Fees Expenses
<S> <C> <C> <C>
Money Market Fund .125% .08 % .205%
Bond Index Fund .25 .05 .30
Asset Allocation Fund .50 .10 .60
Managed Equity Fund .29 .10 .39
S&P 500 Index Fund .25 .05 .30
Mid-Cap Equity Fund .55 .10 .65
Small-Cap Equity Fund .25 .05 .30
International Index Fund .50 .30 .80
</TABLE>
CONTRACT FEES
The Capital Company sells its shares to separate accounts of
insurance companies to support the Contracts. Please refer to the
Contract's disclosure documents for information about fees applicable to
the separate accounts and the Contracts.
EXAMPLE
This example is intended to help you compare the costs of
investing in the Capital Company funds with the costs of investing in
other funds available under the Contract. The example assumes that you
invest $10,000 in the funds for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the
funds' operating expenses remain the same. Although you actual costs
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund $21 $ 66 $116 $262
Bond Index Fund 31 97 169 381
Asset Allocation Fund 62 193 336 752
Managed Equity Fund 40 126 219 494
S&P 500 Index Fund 31 97 169 381
Mid-Cap Equity Fund 67 209 363 812
Small-Cap Equity Fund 31 97 169 381
International Index Fund 81 253 440 981
</TABLE>
Because the Capital Company does not charge redemption fees, you would
pay the same amounts if you did not redeem at the end of the time
periods specified.
11
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MANAGEMENT & ORGANIZATION
THE CAPITAL COMPANY
The Capital Company is an open-end, management investment company
with eight different diversified funds. As of December 31, 1998, the
Capital Company held approximately $1.3 billion in assets. The Capital
Company sells shares of its funds to insurance company separate accounts
so that the funds may serve as investment options for the Contracts.
The Board of Directors of the Capital Company is responsible for the
management of the Capital Company's business and affairs, which includes
creating and supervising the execution of the funds' investment
policies.
THE ADVISER
Conning Asset Management Company (the Adviser) is the investment
adviser for each of the Capital Company's funds. The Adviser was formed
in 1982. Its address is 700 Market Street, St. Louis, Missouri 63101.
The Adviser is a wholly-owned indirect subsidiary of Conning
Corporation, a publicly traded company, which is, in turn, a majority-
owned, indirect subsidiary of GenAmerica Corporation. As of December
31, 1998, the Adviser provided investment advice to 33 unaffiliated
institutional accounts and to 69 affiliated institutional accounts. As
of December 31, 1998, the Adviser had approximately $30 billion of
assets under its discretionary management.
Subject to policies set by the Board of Directors of the Capital
Company, the Adviser selects investments and provides investment advice
and some administrative services for each of the Capital Company's
funds. In addition, the Adviser reviews the practices of broker-dealers
buying and selling investments for the Capital Company.
Portfolio Managers.
David A. Kaslow, CFA, Vice President of the Adviser, manages the
Managed Equity Fund, the Asset Allocation Fund, the International Index
Fund, and the Mid-Cap Equity Fund. He has managed the Asset Allocation
Fund, International Index Fund, and Mid-Cap Equity Fund since
January 1997 and the Managed Equity Fund since October 1998. Prior to
joining the Adviser in 1994, Mr. Kaslow performed equity research at FBW
Investment Management. Mr. Kaslow has a bachelor's degree from Tulane
University and a master's degree from Washington University (St. Louis,
Missouri).
Wm. Michael Cody, CFA, Vice President of the Adviser, manages the
Bond Index Fund. He has managed the Bond Index Fund since January 1996.
Prior to joining the Adviser in 1995, Mr. Cody worked for seven years
for Walnut Street Securities, Inc. He has a bachelor's degree from
Marquette University and an MBA degree from Drake University.
Lisa D. Longo, CPA, Assistant Vice President of the Adviser,
manages the S&P 500 Index Fund and the Small-Cap Equity Fund. She has
managed the S&P 500 Index Fund since January 1995 and the Small-Cap
Equity Fund since its inception on May 1, 1997. Ms. Longo
12
<PAGE>
<PAGE>
has managed small-cap equity funds since January 1995. Ms. Longo
worked for General American Life Insurance Company for four years prior
to joining the Adviser in 1995. Ms. Longo has a bachelor's degree from
John Carroll University.
Kathleen A. Spaeth, CCM, Assistant Vice President of the Adviser,
manages the Money Market Fund. Ms. Spaeth has managed the Money Market
Fund since its inception on October 1, 1987. Ms. Spaeth has been with
the Adviser since its inception in 1982.
Adviser Compensation.
The Adviser charges a fee for its investment management and
advisory services that accrues daily against each fund. The following
chart shows the investment management fees (as a percentage of average
daily assets) each fund paid during the last fiscal year:
Money Market Fund .125 %
Bond Index Fund .25
Asset Allocation Fund .50
Managed Equity Fund .29
S&P 500 Index Fund .25
Mid-Cap Equity Fund .55
Small-Cap Equity Fund .25
International Index Fund .50
THE ADMINISTRATOR
General American Life Insurance Company (the Administrator) is the
principal administrator for the Capital Company. The Administrator's
address is 700 Market Street, St. Louis, Missouri 63101. Subject to
policies set by the Board of Directors, the Administrator performs
certain administrative services and pays certain administrative
expenses for the Capital Company. These services and expenses include,
but are not limited to, the following: investment accounting services,
transfer agent services, legal services, tax services, conducting
shareholders and Board of Directors meetings, outside Director fees,
printing and distributing communications to current shareholders of the
Capital Company, fidelity bond insurance, and custodial fees. The
Administrator charges the Capital Company a fee for these services and
expenses, at an annual rate based on the average daily value of the net
assets in each fund. These rates are set forth under "Administration
Fees" in the section "Annual Fund Operating Expenses."
ADDITIONAL INFORMATION ABOUT THE FUNDS
PURCHASE & REDEMPTION OF SHARES
Capital Company offers shares of the funds on a continuous basis to
insurance company separate accounts which, in turn, fund the Contracts.
Shares may be purchased or redeemed at a fund's net asset value as next
determined following acceptance of an order. Purchases and redemptions
of shares are made subsequent to corresponding purchases and redemptions
of units
13
<PAGE>
<PAGE>
of the separate accounts that support the Contracts. All share
transactions are executed without any sales or redemption charges.
Subject to applicable laws and agreement between parties, the Capital
Company reserves the right to sell and redeem shares in kind.
DETERMINATION OF SHARE PRICE
Each fund calculates its share price, also called net asset value
(NAV), as of the close of trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time), every day the Exchange is open,
except the day after Thanksgiving, when Capital Company is closed. If,
however, the day after Thanksgiving is the last business day of the
month, NAV is determined on that day. A fund's NAV is generally based
on the market value of the securities held in the fund. If market
values are not available, the fair market value of securities is
determined using procedures that the Board of Directors has approved.
Debt instruments with maturities of 60 days or more are valued at
their market price, Debt instruments with a remaining maturity of less
than 60 days are valued on an amortized cost basis. Under this method of
valuation, the security is initially valued at cost on the date of
purchase or, in the case of securities purchased with 60 days or more
remaining to maturity, the market value at the beginning of the 59th
day prior to maturity, Thereafter, straight line amortization of discount
or premium is assumed until maturity regardless of the impact of
fluctuating interest on the market value of the security. While valuation
at amortized cost provides a more consistent rate of return, it may
result in periods during which the price which could be received upon
sale of the instrument is higher or lower than its amortized cost
value. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security
will be valued by market quotations, if available, or otherwise as
determined in good faith by or under the direction of the Capital Company's
Board of Directors.
Foreign securities are valued based on quotations from the primary
market in which they are traded or the market from which they were
purchased. Foreign securities are converted from the local currency
into U.S. dollars using the current exchange rates. Foreign securities
may trade when the fund does not price its shares. As a result, the
value of the International Index Fund may change on days when
shareholders will not be able to buy or sell shares.
TAXES AND DIVIDENDS
Each fund intends to operate as a regulated investment company
under the Internal Revenue Code. Further, each fund intends to meet
certain distribution requirements applicable to mutual funds underlying
the Contracts. In any fiscal year in which a fund so qualifies and
distributes to shareholders its net investment income and realized
capital gains, the fund itself is relieved of federal income tax. Under
current tax law, distributions that are left to accumulate in a Contract
are not subject to federal income tax until they are withdrawn. See the
prospectus of the applicable Contract for information regarding the
federal income tax treatment of the Contract and distributions to the
separate accounts.
14
<PAGE>
<PAGE>
PORTFOLIO TURNOVER
Portfolio turnover refers to the annual rate of change in a fund's
investment portfolio. Portfolio turnover reflects the extent of trading
in the portfolio. Trading is usually accompanied by the payment of
commissions to brokers which will reduce a fund's return. Portfolio
turnover varies over time and among the funds due to the funds'
different investment objectives and policies. Portfolio turnover data
is included in the Financial Highlights section.
CASH POSITIONS
The funds may hold a substantial portion of their portfolios in cash
and cash equivalents. The extent of each fund's cash position depends on
market conditions, fund purchases and redemptions, and other factors.
This may detract from the achievement of a fund's objectives over the
short-term, or may protect a fund during a market downturn.
GENERAL INFORMATION
YEAR 2000
The "Year 2000" issue stems from the use of a two-digit format to
define the year in certain date-sensitive computer systems rather than
the use of a four-digit format. As a result, date-sensitive software
programs could recognize a date using "00" as the year 1900, rather than
the year 2000. This could result in major systems or process failures
or the generation of erroneous data, which could lead to disruption in
the Capital Company's business operations. In addition, if the value of
a security held by a fund is adversely affected by a Year 2000 problem,
the net asset value of the fund may be affected as well.
The Capital Company has no computer systems of its own and is
entirely dependent on its service providers' systems and software. The
Capital Company is working with its service providers, including the
Adviser, to identify and take action that is reasonably designed to
address Year 2000 issues. However, the Capital Company cannot guarantee
that all Year 2000 issues will be identified and remedied, and the
failure to successfully identify and remedy all Year 2000 issues could
result in an adverse impact on the funds.
EURO CONVERSION
On January 1, 1999, 11 European countries adopted the Euro as
their official currency. The Euro conversion presents investors with
unique risks and uncertainties, including: (1) the readiness of the
Euro payment, clearing, and other operational systems; (2) the legal
treatment of debt instruments and financial contracts denominated in or
referring to existing national currencies rather than the Euro; (3)
exchange-rate fluctuations between Euro and non-Euro currencies; and (4)
the European Central Bank's ability to manage monetary policies among
the participating countries. These and other factors could adversely
affect the value of, or income from, the funds' securities.
15
<PAGE>
<PAGE>
PENDING LEGAL PROCEEDINGS
As of the date of this prospectus, there are no material legal
proceedings to which the Capital Company or the Adviser is a party.
FINANCIAL HIGHLIGHTS INFORMATION
The financial highlights tables are intended to help you
understand the funds' financial performance for the past five years or,
if shorter, the period of the funds' operations. Certain information in
the tables reflects financial results on a per share basis. The total
returns data in the tables represent the rate that an investor would
have earned or lost on an investment in the funds (assuming reinvestment
of all dividends and distributions). This information has been audited
by KPMG LLP, independent auditors, whose report, along with the funds'
financial statements, are included in the annual report. The annual
report is available upon request.
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------
1998 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 1.02 0.99 0.90 0.92 0.62
-------- -------- -------- ------- -------
Net asset value, end of year $ 19.25 $ 18.23 $ 17.24 $ 16.34 $ 15.42
======== ======== ======== ======= =======
Total return <F2> 5.62% 5.71% 5.51% 5.96% 4.21%
Net assets, end of period (in thousands) $235,046 $174,571 $101,426 $70,574 $93,339
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> 5.45% 5.60% 5.37% 5.78% 4.17%
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.
</TABLE>
16
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------
1998 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 1.40 1.39 1.29 1.25 1.06
Net realized and unrealized gain (loss)
on investments .60 .59 (0.67) 2.04 (1.79)
------- ------- ------- ------- -------
Net increase (decrease) in asset value
per share 2.00 1.98 0.62 3.29 (0.73)
------- ------- ------- ------- -------
Net asset value, end of year $ 25.19 $ 23.19 $ 21.21 $ 20.59 $ 17.30
======= ======= ======= ======= =======
Total return <F2> 8.61 9.34% 3.02% 19.02% -4.04%
Net assets, end of period (in thousands) $69,177 $48,330 $38,015 $39,316 $26,458
Ratio of expenses to average net assets <F3> 0.30% 0.30% 0.30% 0.30% 0.30%
Ratio of net investment income to average
net assets <F3> 5.80% 6.25% 6.26% 6.43% 6.19%
Portfolio turnover rate 54.00% 47.40% 44.28% 35.35% 46.42%
<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.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------
1998 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 0.81 0.96 0.93 0.82 0.68
Net realized and unrealized gain (loss)
on investments 4.88 4.07 2.70 4.38 (1.42)
-------- -------- ------- ------- --------
Net increase (decrease) in asset value
per share 5.69 5.03 3.63 5.20 (0.74)
-------- -------- ------- ------- --------
Net asset value, end of year $ 37.55 $ 31.86 $ 26.83 $ 23.20 $ 18.00
======== ======== ======= ======= ========
Total return <F2> 17.86% 18.73% 15.66% 28.88% -3.95%
Net assets, end of year (in thousands) $124,510 $111,269 $86,191 $73,387 $ 59,975
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> 2.42% 3.24% 3.77% 3.92% 3.70%
Portfolio turnover rate 34.03% 36.34% 32.78% 33.74% 75.24%
<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.
</TABLE>
17
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------
1998 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 .48 .63 0.68 0.58 0.43
Net realized and unrealized gain (loss)
on investments 3.95 5.26 3.70 4.66 (1.01)
------- ------- ------- ------- --------
Net increase (decrease) in asset value
per share 4.43 5.89 4.38 5.24 (0.58)
------- ------- ------- ------- --------
Net asset value, end of year $ 35.63 $ 31.20 $ 25.31 $ 20.93 $ 15.69
======= ======= ======= ======= ========
Total return <F2> 14.19% 23.29% 20.92% 33.37% -3.58%
Net assets, end of period (in thousands) $61,804 $59,138 $48,587 $40,902 $ 31,487
Ratio of expenses to average net assets <F3><F4> 0.39% 0.41% 0.47% 0.48% 0.49%
Ratio of net investment income to average
net assets <F3> 1.46% 2.19% 2.97% 3.14% 2.65%
Portfolio turnover rate 67.23% 49.43% 36.44% 44.82% 103.93%
<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> 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 from .30 percent to
.25 percent on the balance in excess of $30 million.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY S&P 500 INDEX FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------
1998 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 .53 .52 0.53 0.46 0.44
Net realized and unrealized gain (loss)
on investment 10.56 9.21 5.00 6.04 (0.24)
-------- -------- -------- -------- --------
Net increase in asset value per share 11.09 9.73 5.53 6.50 0.20
-------- -------- -------- -------- --------
Net asset value, end of year $ 50.49 $ 39.40 $ 29.67 $ 24.14 $ 17.64
======== ======== ======== ======== ========
Total return <F2> 28.15% 32.80% 22.89% 36.85% 1.15%
Net assets, end of year (in thousands) $700,489 $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> 1.21% 1.48% 1.97% 2.19% 2.50%
Portfolio turnover rate 13.14% 12.61% 8.93% 4.75% 7.38%
<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.
</TABLE>
18
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND <F*>
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------
1998 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 0.03 0.16 0.15 0.05 0.10
Net realized and unrealized gain
(loss) on investments (0.35) 5.49 2.53 2.34 (0.19)
------- ------- ------- ------- -------
Net increase (decrease) in asset value
per share (0.32) 5.65 2.68 2.39 (0.09)
------- ------- ------- ------- -------
Net asset value, end of period $ 21.75 $ 22.07 $ 16.42 $ 13.74 $ 11.35
======= ======= ======= ======= =======
Total return <F2> -1.48% 34.46% 19.46% 21.09% -0.83%
Net assets, end of period (in thousands) $ 8,533 $ 6,852 $ 4,120 $ 4,260 $ 3,279
Ratio of expenses to average net assets <F3> 0.65% 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income to average
net assets <F3> 0.13% .81% 1.02% 0.75% 0.85%
Portfolio turnover rate 33.53% 62.22% 56.31% 28.48% 29.48%
<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 the Special Equity Fund
effective January 1, 1997. In addition, Conning Asset Management
Company took over the asset management of the Mid-Cap Equity Fund. 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.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND <F*>
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
<CAPTION>
EIGHT MONTHS
YEAR ENDED ENDED
DECEMBER 31 DECEMBER 31
- ------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year <F1> $ 48.27 $ 36.84
------- -------
Income from operations:
Net investment income 0.35 0.29
Net realized and unrealized gain (loss)
on investments (5.07) 11.14
------- -------
Net increase (decrease) in asset value
per share (4.72) 11.43
------- -------
Net asset value, end of period $ 43.55 $ 48.27
======= =======
Total return <F2> (9.78%) 31.03%
Net assets, end of period (in thousands) $72,994 $77,646
Ratio of expenses to average net assets <F3> 0.30% 0.30%
Ratio of net investment income to average
net assets <F3> 0.76% 0.97%
Portfolio turnover rate 18.77% 24.47%
<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.
<F*> Small-Cap Equity Fund began operations May 1, 1997.
</TABLE>
19
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND <F*>
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------
1998 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 0.24 0.26 0.24 0.25 0.13
Net realized and unrealized gain
on investments 3.03<F**> 0.11<F**> 0.88<F**> 0.92<F**> 0.71<F**>
------- ------- ------- -------- -------
Net increase in asset value per share 3.27 0.37 1.12 1.17 0.84
------- ------- ------- -------- -------
Net asset value, end of period $ 19.87 $ 16.60 $ 16.23 $ 15.11 $ 13.94
======= ======= ======= ======== =======
Total return <F2> 19.76% 2.27% 7.40% 8.35% 6.42%
Net assets, end of period (in thousands) $10,695 $ 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> 1.29% 1.53% 1.57% 1.79% 0.98%
Portfolio turnover rate 4.90% 57.70% 19.53% 113.91% 46.19%
<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 the International
Equity Fund on January 1, 1997. In addition, Conning Asset
Management Company took over the asset management of the
International Index Fund. The investment adviser fee changed
from .70% to .50% on the first $10 million of the average daily
value of the net assets, from .60 percent to .40 percent on the
balance over $10 million and less than $20 million, and from .50
percent to .30 percent on the balance in excess of $20 million.
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.
</TABLE>
20
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Capital Company and its funds is
contained in the Capital Company's statement of additional information.
The statement of additional information is incorporated into this
prospectus by reference. You can receive a copy of the Capital
Company's statement of additional information without charge by calling
the toll free telephone number listed above.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the fund's investments is contained
in the Capital Company's annual and semi-annual reports to shareholders.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the
performance of the Capital Company's funds during the last fiscal year.
You can receive a copy of the Capital Company's annual and semi-annual
reports without charge by calling the toll free telephone number listed
above.
PUBLIC ACCESS
You may review and copy additional information about the Capital
Company and its funds at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. You may obtain information on the
operation of the public reference room by calling the SEC toll free at
(800) SEC-0330. You may also obtain reports and other information about
the Capital Company and its funds on the SEC's Internet site
(www.sec.gov) or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009. The SEC charges a duplication fee for
written requests.
QUESTIONS
If you have any questions about the Capital Company or its funds,
please call the toll free telephone number listed above.
Investment Company Act of 1940 File No. 811-04900
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
PROSPECTUS VERSION B
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
- PROSPECTUS -
General American Capital Company (the Capital Company) offers five
different diversified funds through this prospectus. The Capital
Company sells shares of its funds to insurance company separate accounts
so that the funds may serve as investment options under variable life
insurance policies, variable annuity contracts, and certain other plans,
such as qualified pension and retirement plans (collectively referred to
as the Contracts).
The five Capital Company funds are:
* The Money Market Fund.
* The Bond Index Fund.
* The Asset Allocation Fund.
* The Managed Equity Fund.
* The S&P 500 Index Fund.<F*>
This prospectus provides information about the Capital Company and
its funds that you ought to know before investing. You should read this
prospectus in conjunction with the prospectus for the applicable
Contact. Please retain both prospectuses for future reference.
The date of this prospectus is May 1, 1999.
The date of the related statement of additional information
is May 1, 1999.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[FN]
____
<F*> "Standard & Poor's" and "Standard & Poor's 500" are trademarks of
the Standard & Poor's Corporation and have been licensed for use by the
Capital Company. Capital Company's S&P 500 Index Fund is not sponsored,
sold, or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the fund.
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
FUND PROSPECTUS
TABLE OF CONTENTS
PAGE
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Front Cover Page
Table of Contents i
The Funds' Investment Objectives, Principal
Strategies & Risks 1
Fund Performance Charts 4
Fee Tables 7
Shareholder Transaction Expenses 7
Annual Fund Operation Expenses 7
Contract Fees 7
Example 7
Management & Organization 8
The Capital Company 8
The Adviser 8
The Administrator 9
Additional Information About the Funds 10
Purchase & Redemptions of Shares 10
Determination of Share Price 10
Taxes and Dividends 11
Portfolio Turnover 11
Cash Positions 11
General Information 11
Year 2000 11
Euro Conversion 12
Pending Legal Proceedings 12
Financial Highlights 12
Back Cover Page
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THE FUNDS' INVESTMENT OBJECTIVES,
PRINCIPAL STRATEGIES & RISKS
Below are the investment objectives, principal strategies, and
risks of the five Capital Company's funds offered through this
prospectus. Also described below are the types of individuals who may
want to invest in the funds. You can find more information on the funds
in the statement of additional information. There can be no assurances
that the funds will achieve their investment objectives. There are
factors not listed below that could adversely affect your investment.
The share price of the funds change daily due to market conditions and
you may lose money if you invest in the funds.
* THE MONEY MARKET FUND.
Investment Objective and Principal Strategies. The Money Market Fund's
- ---------------------------------------------
investment objective is to provide investors with current income while
preserving capital and maintaining liquidity. The fund seeks to achieve
this objective by investing primarily in high-quality, short-term money
market instruments. The fund purchases securities that meet the
quality, maturity, and diversification requirements applicable to money
market funds.
Who May Want to Invest. The Money Market Fund may be appropriate for
- ----------------------
investors who are investing for a short period of time or who are
uncomfortable with investments that may have large fluctuations in
value.
Main Risks. The Money Market Fund does not maintain a stable net asset
- ----------
value and loss of money is a risk of investing in the fund. The
following risk factors may significantly affect fund performance.
Interest Rate Risk. The Money Market's rate of income and net asset
value varies from day to day depending on short-term interest rates.
Changes in interest rates could cause the value of your investment to
decline. Credit Risk. A default on a security that the fund holds
could cause the value of your investment to decline. Not Guaranteed.
Investments in the fund are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
* THE BOND INDEX FUND.
Investment Objective and Principal Strategies. The Bond Index Fund's
- ---------------------------------------------
investment objective is to provide investors with current income that
reflects the performance of the publicly traded bond market as a whole.
The fund seeks to achieve this objective by primarily purchasing
corporate and government bonds contained in the Lehman Brothers
Government/Corporate Bond Index. The fund does not replicate the Index,
but uses a "sampling" method to generally reflect the performance of the
Index. Sampling is an investment technique whereby the fund holds
approximately the same mix and weightings of investment sectors, as
measured by quality and duration, as the Index, while not holding all of
the bonds in each Index sector.
Who May Want to Invest. The Bond Index Fund may be appropriate for
- ----------------------
investors who are seeking a higher level of current income than is
available from money market funds and who are able to tolerate
fluctuations in the value of their investment.
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Main Risks. Loss of money is a risk of investing in the Bond Index Fund.
- ----------
The following risk factors may significantly affect fund performance.
Interest Rate Risk. Interest rate changes can have a powerful effect on
the value of fixed bond portfolios. In general, bond prices rise when
interest rates fall, and fall when interest rates rise. As a result,
the value of your investment in this fund will rise and fall as interest
rates fluctuate. Credit Risk. It is possible that some of the issuers
will not make payments or will default on the debt securities that the
fund holds. Or, an issuer may suffer adverse changes in financial
condition that could lower the credit quality of a bond, leading to
greater volatility in the price of the bond and in shares of the fund.
A change in the quality rating of a bond can also affect a bond's
liquidity and make it more difficult to sell.
* THE ASSET ALLOCATION FUND.
Investment Objective and Principal Strategies. The Asset Allocation
- ---------------------------------------------
Fund's investment objective is to provide investors with a long-term
investment return composed of capital growth and income payments.
Preservation of capital is the fund's secondary objective and the chief
limit on investment risk. The fund seeks to achieve these objectives by
investing in a diversified combination of U.S. common stocks, bonds, and
money market instruments. Under normal market conditions, the Adviser
expects, but is not required, to maintain a mix falling within the
following ranges: 40% to 80% in stocks, 20% to 50% in bonds, and 0% to
40% in money market securities. The mixture of stocks, bonds, and money
market securities varies over time in an attempt to produce the highest
total return consistent with prudence and preservation of capital. The
stock portion of the fund primarily uses a growth investment style.
This means the stock portion of the fund primarily invests in stocks
that have growth potential.
Who May Want to Invest. The Asset Allocation Fund may be appropriate
- ----------------------
for long-term investors who are seeking a balanced investment program,
protection against inflation, and who are able to tolerate a substantial
loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the Asset
- ----------
Allocation Fund. The following risk factors may significantly affect
fund performance. The Asset Allocation Fund invests in a combination of
U.S. common stocks, bonds, and money market instruments. As a result,
the risks described above for the Money Market Fund and the Bond Index
Fund apply to the Asset Allocation Fund. Market Risk. The prices of
the equity securities that the fund holds may decline in response to
changing economic, political, or market conditions, or due to a
company's individual situation or the market's perception of its
situation. Allocation Risk. The fund is subject to an allocation risk,
which is the risk that the Adviser could fail to correctly predict the
optimal mixture of investments. Style Risk. Because growth investing
is a style that involves buying stocks of faster growing companies in
more rapidly growing sectors of the economy, there are related risk.
Growth stocks may:
* be more volatile than other stocks because of their
sensitivity to investor perceptions of the company's growth
potential;
* respond differently to market and other developments than
the general market or value stocks in particular; and
* underperform the general market in a value market
environment.
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* THE MANAGED EQUITY FUND.
Investment Objective and Principal Strategies. The Managed Equity
- ---------------------------------------------
Fund's investment objective is to provide investors with long-term
growth of capital that is consistent with the investment returns of U.S.
common stocks. The fund's secondary objective is to provide investors
with a current income. The fund seeks to achieve these objectives by
investing primarily in common stocks of U.S. companies using a value
approach to investing. This means the fund primarily focuses on stocks'
value rather than potential for short-term appreciation. The fund
primarily invests in stocks issued by companies that are of high quality
and deemed undervalued in relation to the rest of the market.
Who May Want to Invest. The Managed Equity Fund may be appropriate for
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investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the Managed Equity
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Style Risk. Because value
investing is a style that involves buying stocks that are out of favor
and/or undervalued in comparison to their peers and/or prospects for
growth, there are related risks. Undervalued stocks may:
* not realize their perceived value for long periods of time;
* respond differently to market and other developments than
the general market or growth stocks in particular; and
* underperform the general market in a growth market
environment.
* THE S&P 500 INDEX FUND.
Investment Objective and Principal Strategies. The S&P 500 Index Fund's
- ---------------------------------------------
investment objective is to provide investors with a long-term capital
appreciation that is consistent with the investment returns of the S&P
500 Index. The fund seeks to achieve this objective by primarily
investing in U.S. common stocks contained in the Standard & Poors' 500
Stock Index. The fund attempts to invest so that its investment results
reflect the return of the S&P 500 Index.
Who May Want to Invest. The S&P 500 Index Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the S&P 500 Index
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation.
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FUND PERFORMANCE CHARTS
The information on the following pages shows the risks of investing
in the funds by showing how the funds' investment returns have varied
over time. In each case the fund's performance is compared to a
widely recognized unmanaged index. The investment return information
does not reflect expenses that apply to the Contracts. Inclusion of
these charges would reduce the return figures for all periods shown.
Past investment performance is no guarantee of future results.
* THE MONEY MARKET FUND.
FOR UP-TO-DATE YIELD INFORMATION, CALL (877) 882-5714.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 -1998) (through December 31, 1998)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 2.44% June 30, 1989 Money Market Fund 5.62% 5.40% 5.78%
Lowest 0.74% June 30, 1993 Lehman 90-day Treasury Bill Index 5.33% 5.32% 5.57%
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</TABLE>
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* THE BOND INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 -1998) (through December 31, 1998)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 6.40% June 30, 1995 Bond Index Fund 8.61% 6.92% 8.47%
Lowest -3.35% March 31, 1994 Lehman Government/Corporate Index 9.47% 7.30% 9.34%
=========================================================================================================================
</TABLE>
* THE ASSET ALLOCATION FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 -1998) (through December 31, 1998)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 20.89% December 31, 1998 Asset Allocation Fund 17.86% 14.91% 13.17%
Lowest -11.04% September 30, 1998 Lipper Flexible Portfolio Fund Ave. 13.50% 13.64% 12.57%
=========================================================================================================================
</TABLE>
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* THE MANAGED EQUITY FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 -1998) (through December 31, 1998)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 24.00% December 31, 1998 Managed Equity Fund 14.19% 16.96% 15.10%
Lowest -15.80% September 30, 1998 Barra Value Index 14.68% 19.69% N/A
S & P 500 Index 28.58% 24.07% 19.21%
=========================================================================================================================
</TABLE>
* THE S&P 500 INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989 -1998) (through December 31, 1998)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 21.24% December 31, 1998 S & P 500 Index Fund 28.15% 23.69% 18.70%
Lowest -13.89% September 30, 1990 S & P 500 Index 28.58% 24.07% 19.21%
=========================================================================================================================
</TABLE>
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FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
You will not have to pay any shareholder transaction expense when
you buy or sell shares of the Capital Company funds. This means that
the Capital Company will not charge you a sales charge (load) when you
purchase shares or reinvest dividends, or a deferred sales charge
(deferred load) when you sell shares. In addition, Capital Company will
not charge you an exchange fee when you allocate money between funds or
a redemption fee when you sell your shares.
ANNUAL FUND OPERATION EXPENSES
The Capital Company funds charge investment advisory fees and
administration fees to cover the cost of portfolio management and
administration. The Capital Company does not charge a 12b-1
distribution fee or an account maintenance fee. The Capital Company
deducts its fees from fund assets on a daily basis. The funds' annual
fees are shown as a percent of net assets below:
<TABLE>
<CAPTION>
Total Fund
Investment Administration Operating
Advisory Fees Fees Expenses
<S> <C> <C> <C>
Money Market Fund .125% .08% .205%
Bond Index Fund .25 .05 .30
Asset Allocation Fund .50 .10 .60
Managed Equity Fund .29 .10 .39
S&P 500 Index Fund .25 .05 .30
</TABLE>
CONTRACT FEES
The Capital Company sells its shares to separate accounts of
insurance companies to support the Contracts. Please refer to the
Contract's disclosure documents for information about fees applicable to
the separate accounts and the Contracts.
EXAMPLE
This example is intended to help you compare the costs of
investing in the Capital Company funds with the costs of investing in
other funds available under the Contract. The example assumes that you
invest $10,000 in the funds for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the
funds' operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
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<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund $21 $ 66 $116 $262
Bond Index Fund 31 97 169 381
Asset Allocation Fund 62 193 336 752
Managed Equity Fund 40 126 219 494
S&P 500 Index Fund 31 97 169 381
</TABLE>
Because the Capital Company does not charge redemption fees, you
would pay the same amounts if you did not redeem at the end of the time
periods specified.
MANAGEMENT & ORGANIZATION
THE CAPITAL COMPANY
The Capital Company is an open-end, management investment company
with eight different diversified funds, five of which are described in
this prospectus. As of December 31, 1998, the Capital Company held
approximately $1.3 billion in assets. The Capital Company sells shares
of its funds to insurance company separate accounts so that the funds
may serve as investment options for the Contracts. The Board of
Directors of the Capital Company is responsible for the management of
the Capital Company's business and affairs, which includes creating and
supervising the execution of the funds' investment policies.
THE ADVISER
Conning Asset Management Company (the Adviser) is the investment
adviser for each of the Capital Company's funds. The Adviser was formed
in 1982. Its address is 700 Market Street, St. Louis, Missouri 63101.
The Adviser is a wholly-owned indirect subsidiary of Conning
Corporation, a publicly traded company, which is, in turn, a majority-
owned, indirect subsidiary of GenAmerica Corporation. As of December
31, 1998, the Adviser provided investment advice to 33 unaffiliated
institutional accounts and to 69 affiliated institutional accounts. As
of December 31, 1998, the Adviser had approximately $30 billion of
assets under its discretionary management.
Subject to policies set by the Board of Directors of the Capital
Company, the Adviser selects investments and provides investment advice
and some administrative services for each of the Capital Company's
funds. In addition, the Adviser reviews the practices of broker-dealers
buying and selling investments for the Capital Company.
Portfolio Managers.
David A. Kaslow, CFA, Vice President of the Adviser, manages the
Managed Equity Fund and the Asset Allocation Fund. He has managed the
Asset Allocation Fund since January 1997 and the Managed Equity Fund
since October 1998. Prior to joining the Adviser in 1994, Mr. Kaslow
performed equity research at FBW Investment Management. Mr. Kaslow has
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a bachelor's degree from Tulane University and a master's degree from
Washington University (St. Louis, Missouri).
Wm. Michael Cody, CFA, Vice President of the Adviser, manages the
Bond Index Fund. He has managed the Bond Index Fund since January 1996.
Prior to joining the Adviser in 1995, Mr. Cody worked for seven years
for Walnut Street Securities, Inc. He has a bachelor's degree from
Marquette University and an MBA degree from Drake University.
Lisa D. Longo, CPA, Assistant Vice President of the Adviser,
manages the S&P 500 Index Fund. She has managed the S&P 500 Index Fund
since January 1995 and has managed small-cap equity funds since
January 1995. Ms. Longo worked for General American Life Insurance
Company for four years prior to joining the Adviser in 1995. Ms. Longo
has a bachelor's degree from John Carroll University.
Kathleen A. Spaeth, CCM, Assistant Vice President of the Adviser,
manages the Money Market Fund. Ms. Spaeth has managed the Money Market
Fund since its inception on October 1, 1987. Ms. Spaeth has been with
the Adviser since its inception in 1982.
Adviser Compensation.
The Adviser charges a fee for its investment management and
advisory services that accrues daily against each fund. The following
chart shows the investment management fees (as a percentage of average
daily assets) each fund paid during the last fiscal year:
Money Market Fund .125%
Bond Index Fund .25
Asset Allocation Fund .50
Managed Equity Fund .29
S&P 500 Index Fund .25
THE ADMINISTRATOR
General American Life Insurance Company (the Administrator) is the
principal administrator for the Capital Company. The Administrator's
address is 700 Market Street, St. Louis, Missouri 63101. Subject to
policies set by the Board of Directors, the Administrator performs
certain administrative services and pays certain administrative expenses
for the Capital Company. These services and expenses include, but are
not limited to, the following: investment accounting services, transfer
agent services, legal services, tax services, conducting shareholders
and Board of Directors meetings, outside Director fees, printing and
distributing communications to current shareholders of the Capital
Company, fidelity bond insurance, and custodial fees. The Administrator
charges the Capital Company a fee for these services and expenses, at an
annual rate based on the average daily value of the net assets in each
fund. These rates are set forth under "Administration Fees" in the
section "Annual Fund Operating Expenses."
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ADDITIONAL INFORMATION ABOUT THE FUNDS
PURCHASE & REDEMPTION OF SHARES
Capital Company offers shares of the funds on a continuous basis
to insurance company separate accounts which, in turn, fund the
Contracts. Shares may be purchased or redeemed at a fund's net asset
value as next determined following acceptance of an order. Purchases
and redemptions of shares are made subsequent to corresponding purchases
and redemptions of units of the separate accounts that support the
Contracts. All share transactions are executed without any sales or
redemption charges. Subject to applicable laws and agreement between
parties, the Capital Company reserves the right to sell and redeem
shares in kind.
DETERMINATION OF SHARE PRICE
Each fund calculates its share price, also called net asset value
(NAV), as of the close of trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time), every day the Exchange is open,
except the day after Thanksgiving, when Capital Company is closed. If,
however, the day after Thanksgiving is the last business day of the
month, NAV is determined on that day. A fund's NAV is generally based
on the market value of the securities held in the fund. If market
values are not available, the fair market value of securities is
determined using procedures that the Board of Directors has approved.
Debt instruments with maturities of 60 days or more are valued at
their market price. Debt instruments with a remaining maturity of less
than 60 days are valued on an amortized cost basis. Under this method
of valuation, the security is initially valued at cost on the date of
purchase or, in the case of securities purchased with 60 days or more
remaining to maturity, the market value at the beginning of the 59th day
prior to maturity. Thereafter, straight line amortization of discount
or premium is assumed until maturity regardless of the impact of
fluctuating interest rates on the market value of the security. While
valuation at amortized cost provides a more consistent rate of return,
it may result in periods during which the price which could be received
upon sale of the instrument is higher or lower than its amortized cost
value. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security
will be valued by market quotations, if available, or otherwise as
determined in good faith by or under the direction of the Capital
Company's Board of Directors.
Foreign securities are valued based on quotations from the primary
market in which they are traded or the market from which they were
purchased. Foreign securities are converted from the local currency
into U.S. dollars using the current exchange rates. Foreign securities
may trade when the fund does not price its shares. As a result, the
value of the International Index Fund may change on days when
shareholders will not be able to buy or sell shares.
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TAXES AND DIVIDENDS
Each fund intends to operate as a regulated investment company
under the Internal Revenue Code. Further, each fund intends to meet
certain distribution requirements applicable to mutual funds underlying
the Contracts. In any fiscal year in which a fund so qualifies and
distributes to shareholders its net investment income and realized
capital gains, the fund itself is relieved of federal income tax. Under
current tax law, distributions that are left to accumulate in a Contract
are not subject to federal income tax until they are withdrawn. See the
prospectus of the applicable Contract for information regarding the
federal income tax treatment of the Contract and distributions to the
separate accounts.
PORTFOLIO TURNOVER
Portfolio turnover refers to the annual rate of change in a fund's
investment portfolio. Portfolio turnover reflects the extent of trading
in the portfolio. Trading is usually accompanied by the payment of
commissions to brokers which will reduce a fund's return. Portfolio
turnover varies over time and among the funds due to the funds'
different investment objectives and policies. Portfolio turnover data
is included in the Financial Highlights section.
CASH POSITIONS
The funds may hold a substantial portion of their portfolios in
cash and cash equivalents. The extent of each fund's cash position
depends on market conditions, fund purchases and redemptions, and other
factors. This may detract from the achievement of a fund's objectives
over the short-term, or may protect a fund during a market downturn.
GENERAL INFORMATION
YEAR 2000
The "Year 2000" issue stems from the use of a two-digit format to
define the year in certain date-sensitive computer systems rather than
the use of a four-digit format. As a result, date-sensitive software
programs could recognize a date using "00" as the year 1900, rather than
the year 2000. This could result in major systems or process failures
or the generation of erroneous data, which could lead to disruption in
the Capital Company's business operations. In addition, if the value of
a security held by a fund is adversely affected by a Year 2000 problem,
the net asset value of the fund may be affected as well.
The Capital Company has no computer systems of its own and is
entirely dependent on its service providers' systems and software. The
Capital Company is working with its service providers, including the
Adviser, to identify and take action that is reasonably designed to
address Year 2000 issues. However, the Capital Company cannot guarantee
that all Year 2000 issues will be identified and remedied, and the
failure to successfully identify and remedy all Year 2000 issues could
result in an adverse impact on the funds.
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EURO CONVERSION
On January 1, 1999, 11 European countries adopted the Euro as
their official currency. The Euro conversion presents investors with
unique risks and uncertainties, including: (1) the readiness of the
Euro payment, clearing, and other operational systems; (2) the legal
treatment of debt instruments and financial contracts denominated in or
referring to existing national currencies rather than the Euro; (3)
exchange-rate fluctuations between Euro and non-Euro currencies; and (4)
the European Central Bank's ability to manage monetary policies among
the participating countries. These and other factors could adversely
affect the value of, or income from, the funds' securities.
PENDING LEGAL PROCEEDINGS
As of the date of this prospectus, there are no material legal
proceedings to which the Capital Company or the Adviser is a party.
FINANCIAL HIGHLIGHTS INFORMATION
The financial highlights tables are intended to help you
understand the funds' financial performance for the past five years or,
if shorter, the period of the funds' operations. Certain information in
the tables reflects financial results on a per share basis. The total
returns data in the tables represent the rate that an investor would
have earned or lost on an investment in the funds (assuming reinvestment
of all dividends and distributions). This information has been audited
by KPMG LLP, independent auditors, whose report, along with the funds'
financial statements, are included in the annual report. The annual
report is available upon request.
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<CAPTION>
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31
==================================================================================================================================
1998 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 1.02 0.99 0.90 0.92 0.62
-------- -------- -------- ------- -------
Net asset value, end of year $ 19.25 $ 18.23 $ 17.24 $ 16.34 $ 15.42
======== ======== ======== ======= =======
Total return <F2> 5.62% 5.71% 5.51% 5.96% 4.21%
Net assets, end of period (in thousands) $235,046 $174,571 $101,426 $70,574 $93,339
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> 5.45% 5.60% 5.37% 5.78% 4.17%
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.
</TABLE>
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<TABLE>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
<CAPTION>
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31
==================================================================================================================================
1998 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 1.40 1.39 1.29 1.25 1.06
Net realized and unrealized gain (loss)
on investments .60 .59 (0.67) 2.04 (1.79)
------- ------- ------- ------- -------
Net increase (decrease) in asset value
per share 2.00 1.98 0.62 3.29 (0.73)
------- ------- ------- ------- -------
Net asset value, end of year $ 25.19 $ 23.19 $ 21.21 $ 20.59 $ 17.30
======= ======= ======= ======= =======
Total return <F2> 8.61 9.34% 3.02% 19.02% -4.04%
Net assets, end of period (in thousands) $69,177 $48,330 $38,015 $39,316 $26,458
Ratio of expenses to average net assets <F3> 0.30% 0.30% 0.30% 0.30% 0.30%
Ratio of net investment income to average
net assets <F3> 5.80% 6.25% 6.26% 6.43% 6.19%
Portfolio turnover rate 54.00% 47.40% 44.28% 35.35% 46.42%
<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.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
<CAPTION>
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31
==================================================================================================================================
1998 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 0.81 0.96 0.93 0.82 0.68
Net realized and unrealized gain (loss)
on investments 4.88 4.07 2.70 4.38 (1.42)
-------- -------- ------- ------- -------
Net increase (decrease) in asset value
per share 5.69 5.03 3.63 5.20 (0.74)
-------- -------- ------- ------- -------
Net asset value, end of year $ 37.55 $ 31.86 $ 26.83 $ 23.20 $ 18.00
======== ======== ======= ======= =======
Total return <F2> 17.86% 18.73% 15.66% 28.88% -3.95%
Net assets, end of year (in thousands) $124,510 $111,269 $86,191 $73,387 $59,975
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> 2.42% 3.24% 3.77% 3.92% 3.70%
Portfolio turnover rate 34.03% 36.34% 32.78% 33.74% 75.24%
<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.
</TABLE>
13
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
<CAPTION>
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31
==================================================================================================================================
1998 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 .48 .63 0.68 0.58 0.43
Net realized and unrealized gain (loss)
on investments 3.95 5.26 3.70 4.66 (1.01)
------- ------- ------- ------- -------
Net increase (decrease) in asset value
per share 4.43 5.89 4.38 5.24 (0.58)
------- ------- ------- ------- -------
Net asset value, end of year $ 35.63 $ 31.20 $ 25.31 $ 20.93 $ 15.69
======= ======= ======= ======= =======
Total return <F2> 14.19% 23.29% 20.92% 33.37% -3.58%
Net assets, end of period (in thousands) $61,804 $59,138 $48,587 $40,902 $31,487
Ratio of expenses to average net assets <F3><F4> 0.39% 0.41% 0.47% 0.48% 0.49%
Ratio of net investment income to average
net assets <F3> 1.46% 2.19% 2.97% 3.14% 2.65%
Portfolio turnover rate 67.23% 49.43% 36.44% 44.82% 103.93%
<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> 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 from .30
percent to .25 percent on the balance in excess of $30
million.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY S&P 500 INDEX FUND
<CAPTION>
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31
==================================================================================================================================
1998 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 .53 .52 0.53 0.46 0.44
Net realized and unrealized gain (loss)
on investment 10.56 9.21 5.00 6.04 (0.24)
-------- -------- -------- -------- --------
Net increase in asset value per share 11.09 9.73 5.53 6.50 0.20
-------- -------- -------- -------- --------
Net asset value, end of year $ 50.49 $ 39.40 $ 29.67 $ 24.14 $ 17.64
======== ======== ======== ======== ========
Total return <F2> 28.15% 32.80% 22.89% 36.85% 1.15%
Net assets, end of year (in thousands) $700,489 $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> 1.21% 1.48% 1.97% 2.19% 2.50%
Portfolio turnover rate 13.14% 12.61% 8.93% 4.75% 7.38%
<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.
</TABLE>
14
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Capital Company and its funds is
contained in the Capital Company's statement of additional information.
The statement of additional information is incorporated into this
prospectus by reference. You can receive a copy of the Capital
Company's statement of additional information without charge by calling
the toll free telephone number listed above.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the fund's investments is contained
in the Capital Company's annual and semi-annual reports to shareholders.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the
performance of the Capital Company's funds during the last fiscal year.
You can receive a copy of the Capital Company's annual and semi-annual
reports without charge by calling the toll free telephone number listed
above.
PUBLIC ACCESS
You may review and copy additional information about the Capital
Company and its funds at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. You may obtain information on the
operation of the public reference room by calling the SEC toll free at
(800) SEC-0330. You may also obtain reports and other information about
the Capital Company and its funds on the SEC's Internet site
(www.sec.gov) or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009. The SEC charges a duplication fee for
written requests.
QUESTIONS
If you have any questions about the Capital Company or its funds,
please call the toll free telephone number listed above.
Investment Company Act of 1940 File No. 811-04900
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
PROSPECTUS VERSION C
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
- PROSPECTUS -
General American Capital Company (the Capital Company) offers its
Money Market Fund through this prospectus. The Capital Company sells
shares of the fund to insurance company separate accounts so that the
fund may serve as an investment option under variable life insurance
policies, variable annuity contracts, and certain other plans, such as
qualified pension and retirement plans (collectively referred to as the
Contracts).
This prospectus provides information about the Capital Company and
its Money Market Fund that you ought to know before investing. You
should read this prospectus in conjunction with the prospectus for the
applicable Contact. Please retain both prospectuses for future
reference.
The date of this prospectus is May 1, 1999.
The date of the related statement of additional information
is May 1, 1999.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
FUND PROSPECTUS
TABLE OF CONTENTS
PAGE
----
Front Cover Page
Table of Contents i
The Funds' Investment Objectives, Principal
Strategies & Risks 1
Fund Performance Chart 1
Fee Tables 2
Shareholder Transaction Expenses 2
Annual Fund Operation Expenses 2
Contract Fees 3
Example 3
Management & Organization 3
The Capital Company 3
The Adviser 4
The Administrator 4
Additional Information About the Funds 5
Purchase & Redemptions of Shares 5
Determination of Share Price 5
Taxes and Dividends 6
Portfolio Turnover 6
Cash Positions 6
General Information 6
Year 2000 6
Euro Conversion 7
Pending Legal Proceedings 7
Financial Highlights 7
Back Cover Page
i
<PAGE>
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES,
PRINCIPAL STRATEGIES & RISKS
Below are the investment objectives, principal strategies, and
risks of the Capital Company's Money Market Fund. Also described below
are the types of individuals who may want to invest in the fund. You
can find more information on the fund in the statement of additional
information. There can be no assurances that the fund will achieve its
investment objectives. There are factors not listed below that could
adversely affect your investment. The share price of the fund changes
daily due to market conditions and you may lose money if you invest in
the fund.
* THE MONEY MARKET FUND.
Investment Objective and Principal Strategies. The Money Market Fund's
- ---------------------------------------------
investment objective is to provide investors with current income while
preserving capital and maintaining liquidity. The fund seeks to achieve
this objective by investing primarily in high-quality, short-term money
market instruments. The fund purchases securities that meet the
quality, maturity, and diversification requirements applicable to money
market funds.
Who May Want to Invest. The Money Market Fund may be appropriate for
- ----------------------
investors who are investing for a short period of time or who are
uncomfortable with investments that may have large fluctuations in
value.
Main Risks. The Money Market Fund does not maintain a stable net asset
- ----------
value and loss of money is a risk of investing in the fund. The
following risk factors may significantly affect fund performance.
Interest Rate Risk. The Money Market's rate of income and net asset
value varies from day to day depending on short-term interest rates.
Changes in interest rates could cause the value of your investment to
decline. Credit Risk. A default on a security that the fund holds
could cause the value of your investment to decline. Not Guaranteed.
Investments in the fund are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
FUND PERFORMANCE CHART
The information on the following page shows the risks of investing
in the fund by showing how the fund's investment returns have varied
over time. In each case the fund's performance is compared to a widely
recognized unmanaged index. The investment return information does not
reflect expenses that apply to the Contracts. Inclusion of these
charges would reduce the return figures for all periods shown. Past
investment performance is no guarantee of future results.
1
<PAGE>
<PAGE>
* THE MONEY MARKET FUND.
FOR UP-TO-DATE YIELD INFORMATION, CALL (877) 882-5714.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
[GRAPH]
<TABLE>
<CAPTION>
===================================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1989-1998) (through December 31, 1998)
- -----------------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 2.44% June 30, 1989 Money Market Fund 5.62% 5.40% 5.78%
Lowest 0.74% June 30, 1993 Lehman 90-day Treasury Bill Index 5.33% 5.32% 5.57%
===================================================================================================================================
</TABLE>
FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
You will not have to pay any shareholder transaction expense when
you buy or sell shares of the Capital Company Money Market Fund. This
means that the Capital Company will not charge you a sales charge (load)
when you purchase shares or reinvest dividends, or a deferred sales
charge (deferred load) when you sell shares. In addition, Capital
Company will not charge you an exchange fee when you allocate money
between funds or a redemption fee when you sell your shares.
ANNUAL FUND OPERATION EXPENSES
The Capital Company funds charge investment advisory fees and
administration fees to cover the cost of portfolio management and
administration. The Capital Company does not charge a 12b-1
distribution fee or an account maintenance fee. The Capital Company
deducts its fees from fund assets on a daily basis. The fund's annual
fees are shown as a percent of net assets below:
2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Total Fund
Investment Administration Operating
Advisory Fees Fees Expenses
<S> <C> <C> <C>
Money Market Fund .125% .08% .205%
</TABLE>
CONTRACT FEES
The Capital Company sells its shares to separate accounts of
insurance companies to support the Contracts. Please refer to the
Contract's disclosure documents for information about fees applicable to
the separate accounts and the Contracts.
EXAMPLE
This example is intended to help you compare the costs of
investing in the Capital Company Money Market Fund with the costs of
investing in other funds available under the Contract. The example
assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund $21 $66 $116 $262
</TABLE>
Because the Capital Company does not charge redemption fees, you
would pay the same amounts if you did not redeem at the end of the time
periods specified.
MANAGEMENT & ORGANIZATION
THE CAPITAL COMPANY
The Capital Company is an open-end, management investment company
with eight different diversified funds, of which only the Money Market
Fund is described in this prospectus. As of December 31, 1998, the
Capital Company held approximately $1.3 billion in assets. The Capital
Company sells shares of its funds to insurance company separate accounts
so that the funds may serve as investment options for the Contracts.
The Board of Directors of the Capital Company is responsible for the
management of the Capital Company's business and affairs, which includes
creating and supervising the execution of the funds' investment
policies.
3
<PAGE>
<PAGE>
THE ADVISER
Conning Asset Management Company (the Adviser) is the investment
adviser for each of the Capital Company's funds. The Adviser was formed
in 1982. Its address is 700 Market Street, St. Louis, Missouri 63101.
The Adviser is a wholly-owned indirect subsidiary of Conning
Corporation, a publicly traded company, which is, in turn, a majority-
owned, indirect subsidiary of GenAmerica Corporation. As of December
31, 1998, the Adviser provided investment advice to 33 unaffiliated
institutional accounts and to 69 affiliated institutional accounts. As
of December 31, 1998, the Adviser had approximately $30 billion of
assets under its discretionary management.
Subject to policies set by the Board of Directors of the Capital
Company, the Adviser selects investments and provides investment advice
and some administrative services for each of the Capital Company's
funds. In addition, the Adviser reviews the practices of broker-dealers
buying and selling investments for the Capital Company.
Portfolio Manager.
Kathleen A. Spaeth, CCM, Assistant Vice President of the Adviser,
manages the Money Market Fund. Ms. Spaeth has managed the Money Market
Fund since its inception on October 1, 1987. Ms. Spaeth has been with
the Adviser since its inception in 1982.
Adviser Compensation.
The Adviser charges a fee for its investment management and
advisory services that accrues daily against the fund. The following
chart shows the investment management fees (as a percentage of average
daily assets) the fund paid during the last fiscal year:
Money Market Fund .125%
THE ADMINISTRATOR
General American Life Insurance Company (the Administrator) is the
principal administrator for the Capital Company. The Administrator's
address is 700 Market Street, St. Louis, Missouri 63101. Subject to
policies set by the Board of Directors, the Administrator performs
certain administrative services and pays certain administrative expenses
for the Capital Company. These services and expenses include, but are
not limited to, the following: investment accounting services, transfer
agent services, legal services, tax services, conducting shareholders
and Board of Directors meetings, outside Director fees, printing and
distributing communications to current shareholders of the Capital
Company, fidelity bond insurance, and custodial fees. The Administrator
charges the Capital Company a fee for these services and expenses, at an
annual rate based on the average daily value of the net assets in each
fund. These rates are set forth under "Administration Fees" in the
section "Annual Fund Operating Expenses."
4
<PAGE>
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUND
PURCHASE & REDEMPTION OF SHARES
Capital Company offers shares of the Money Market Fund on a
continuous basis to insurance company separate accounts which, in turn,
fund the Contracts. Shares may be purchased or redeemed at a fund's net
asset value as next determined following acceptance of an order.
Purchases and redemptions of shares are made subsequent to corresponding
purchases and redemptions of units of the separate accounts that support
the Contracts. All share transactions are executed without any sales or
redemption charges. Subject to applicable laws and agreement between
parties, the Capital Company reserves the right to sell and redeem
shares in kind.
DETERMINATION OF SHARE PRICE
Each fund calculates its share price, also called net asset value
(NAV), as of the close of trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time), every day the Exchange is open,
except the day after Thanksgiving, when Capital Company is closed. If,
however, the day after Thanksgiving is the last business day of the
month, NAV is determined on that day. A fund's NAV is generally based
on the market value of the securities held in the fund. If market
values are not available, the fair market value of securities is
determined using procedures that the Board of Directors has approved.
Debt instruments with maturities of 60 days or more are valued at
their market price. Debt instruments with a remaining maturity of less
than 60 days are valued on an amortized cost basis. Under this method
of valuation, the security is initially valued at cost on the date of
purchase or, in the case of securities purchased with 60 days or more
remaining to maturity, the market value at the beginning of the 59th day
prior to maturity. Thereafter, straight line amortization of discount
or premium is assumed until maturity regardless of the impact of
fluctuating interest rates on the market value of the security. While
valuation at amortized cost provides a more consistent rate of return,
it may result in periods during which the price which could be received
upon sale of the instrument is higher or lower than its amortized cost
value. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security
will be valued by market quotations, if available, or otherwise as
determined in good faith by or under the direction of the Capital
Company's Board of Directors.
Foreign securities are valued based on quotations from the primary
market in which they are traded or the market from which they were
purchased. Foreign securities are converted from the local currency
into U.S. dollars using the current exchange rates. Foreign securities
may trade when the fund does not price its shares. As a result, the
value of the International Index Fund may change on days when
shareholders will not be able to buy or sell shares.
5
<PAGE>
<PAGE>
TAXES AND DIVIDENDS
The Money Market Fund intends to operate as a regulated investment
company under the Internal Revenue Code. Further, the fund intends to
meet certain distribution requirements applicable to mutual funds
underlying the Contracts. In any fiscal year in which a fund so
qualifies and distributes to shareholders its net investment income and
realized capital gains, the fund itself is relieved of federal income
tax. Under current tax law, distributions that are left to accumulate
in a Contract are not subject to federal income tax until they are
withdrawn. See the prospectus of the applicable Contract for
information regarding the federal income tax treatment of the Contract
and distributions to the separate accounts.
PORTFOLIO TURNOVER
Portfolio turnover refers to the annual rate of change in a fund's
investment portfolio. Portfolio turnover reflects the extent of trading
in the portfolio. Trading is usually accompanied by the payment of
commissions to brokers which will reduce a fund's return. Portfolio
turnover varies over time. Portfolio turnover data is included in the
Financial Highlights section.
CASH POSITIONS
The funds may hold a substantial portion of their portfolios in
cash and cash equivalents. The extent of the fund's cash position
depends on market conditions, fund purchases and redemptions, and other
factors. This may detract from the achievement of the fund's objectives
over the short-term, or may protect the fund during a market downturn.
GENERAL INFORMATION
YEAR 2000
The "Year 2000" issue stems from the use of a two-digit format to
define the year in certain date-sensitive computer systems rather than
the use of a four-digit format. As a result, date-sensitive software
programs could recognize a date using "00" as the year 1900, rather than
the year 2000. This could result in major systems or process failures
or the generation of erroneous data, which could lead to disruption in
the Capital Company's business operations. In addition, if the value of
a security held by a fund is adversely affected by a Year 2000 problem,
the net asset value of the fund may be affected as well.
The Capital Company has no computer systems of its own and is
entirely dependent on its service providers' systems and software. The
Capital Company is working with its service providers, including the
Adviser, to identify and take action that is reasonably designed to
address Year 2000 issues. However, the Capital Company cannot guarantee
that all Year 2000 issues will be identified and remedied, and the
failure to successfully identify and remedy all Year 2000 issues could
result in an adverse impact on the funds.
6
<PAGE>
<PAGE>
EURO CONVERSION
On January 1, 1999, 11 European countries adopted the Euro as
their official currency. The Euro conversion presents investors with
unique risks and uncertainties, including: (1) the readiness of the
Euro payment, clearing, and other operational systems; (2) the legal
treatment of debt instruments and financial contracts denominated in or
referring to existing national currencies rather than the Euro; (3)
exchange-rate fluctuations between Euro and non-Euro currencies; and (4)
the European Central Bank's ability to manage monetary policies among
the participating countries. These and other factors could adversely
affect the value of, or income from, the funds' securities.
PENDING LEGAL PROCEEDINGS
As of the date of this prospectus, there are no material legal
proceedings to which the Capital Company or the Adviser is a party.
FINANCIAL HIGHLIGHTS INFORMATION
The financial highlights tables are intended to help you understand the
funds' financial performance for the past five years or, if shorter, the
period of the funds' operations. Certain information in the tables reflects
financial results on a per share basis. The total returns data in the tables
represent the rate that an investor would have earned or lost on an investment
in the funds (assuming reinvestment of all dividends and distributions). This
information has been audited by KPMG LLP, independent auditors, whose report,
along with the funds' financial statements, are included in the annual report.
The annual report is available upon request.
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<CAPTION>
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31
===================================================================================================================================
1998 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 1.02 0.99 0.90 0.92 0.62
-------- -------- -------- ------- -------
Net asset value, end of year $ 19.25 $ 18.23 $ 17.24 $ 16.34 $ 15.42
======== ======== ======== ======= =======
Total return <F2> 5.62% 5.71% 5.51% 5.96% 4.21%
Net assets, end of period (in thousands) $235,046 $174,571 $101,426 $70,574 $93,339
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> 5.45% 5.60% 5.37% 5.78% 4.17%
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.
</TABLE>
7
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Capital Company and its funds is
contained in the Capital Company's statement of additional information.
The statement of additional information is incorporated into this
prospectus by reference. You can receive a copy of the Capital
Company's statement of additional information without charge by calling
the toll free telephone number listed above.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the fund's investments is contained
in the Capital Company's annual and semi-annual reports to shareholders.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the
performance of the Capital Company's funds during the last fiscal year.
You can receive a copy of the Capital Company's annual and semi-annual
reports without charge by calling the toll free telephone number listed
above.
PUBLIC ACCESS
You may review and copy additional information about the Capital
Company and its funds at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. You may obtain information on the
operation of the public reference room by calling the SEC toll free at
(800) SEC-0330. You may also obtain reports and other information about
the Capital Company and its funds on the SEC's Internet site
(www.sec.gov) or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009. The SEC charges a duplication fee for
written requests.
QUESTIONS
If you have any questions about the Capital Company or its funds,
please call the toll free telephone number listed above.
Investment Company Act of 1940 File No. 811-04900
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
ST. LOUIS, MISSOURI 63101
(877) 882-5714
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1999
General American Capital Company is an open-end, diversified
management investment company with the following eight funds:
* The Money Market Fund.
* The Bond Index Fund.
* The Asset Allocation Fund.
* The Managed Equity Fund.
* The S&P 500 Index Fund.<F*>
* The Mid-Cap Equity Fund.
* The Small-Cap Equity Fund.
* The International Index Fund.
This statement of additional information is not a prospectus. It
supplements the Capital Company's prospectus dated May 1, 1999. A copy
of the prospectus may be obtained at the address or telephone number
listed above. This statement of additional information should be read
in connection with the Capital Company's prospectus and the insurance
company's separate account prospectus that describes the variable
insurance policy or annuity contract. Please retain these documents for
future reference.
[FN]
- -------
<F*> "Standard & Poor's" and "Standard & Poor's 500" are trademarks of
the Standard & Poor's Corporation and have been licensed for use by the
Capital Company. Capital Company's S&P 500 Index Fund is not sponsored,
sold, or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the fund.
B-1
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
Business History B-3
Investment Restrictions B-3
Description of Certain Investments B-5
United States Government Securities B-6
Bank Obligations B-6
Repurchase Agreements B-7
Reverse Repurchase Agreements B-7
Commercial Paper B-8
Stock Index Futures Contracts B-8
Forward Foreign Currency Transactions B-10
Investment Advisory and Other Services B-11
Investment Advisory Agreement B-11
Accountants B-13
Custodian and Foreign Custody Manager B-13
Payment of Expenses B-13
Portfolio Transactions and Brokerage Allocations B-13
Management of the Company B-15
Capital Stock B-17
Fund Ownership B-17
Persons Controlled by or under Common Control with Registrant B-17
Offering and Redemption of Shares B-18
Determination of Net Asset Value B-19
Investment Performance B-20
Money Market Yield Information B-21
Taxes and Dividends B-22
Additional Information B-23
Legal Matters B-23
Reports B-23
Other Information B-23
Financial Statements B-23
</TABLE>
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BUSINESS HISTORY
General American Capital Company (the "Company") is an open-ended
diversified management investment company established by General
American Life Insurance Company ("General American") to provide for the
investment of assets of separate accounts of General American,
affiliated insurance companies, and unaffiliated insurance companies.
The Company was incorporated in Maryland on November 15, 1985, and
commenced operations on October 1, 1987. Currently, shares are offered
to General American Separate Account Two, General American Separate
Account Eleven, unregistered separate accounts of General American,
separate accounts of RGA Reinsurance Company, Security Equity Life
Insurance Company, Cova Financial Services Life Insurance Company, Cova
Financial Life Insurance Company, and First Cova Life Insurance Company,
all affiliates of General American. General American Separate Account
Two's assets represent payments for variable annuity contracts, as do
the assets of the Cova separate accounts. General American Separate
Account Eleven's assets and those of RGA Reinsurance Company, and
Security Equity Life Insurance Company are derived from premium payments
made to purchase and continue flexible premium variable life insurance
policies. The unregistered separate accounts hold funds for tax-
qualified employee benefit plans, or variable life contracts sold to a
limited number of wealthy and sophisticated purchasers.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies of the
Company and may not be changed without approval of a majority of the
outstanding shares of each affected fund. Each restriction applies to
each fund of the Company unless otherwise indicated. A change in policy
affecting only one fund may be effected with the approval of a majority
of the outstanding shares of that fund only. (As used in the prospectus
and this statement of additional information, the term "majority of the
outstanding voting shares" means the lesser of: (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding
shares are represented; or (ii) more than 50% of the outstanding
shares.) A fund will not:
1. Invest more than 10% of the value of the total assets of a fund in
securities that are not readily marketable, such as repurchase
agreements having a maturity of more than seven days and securities
which are secured by interests in real estate. This restriction does
not apply to obligations issued or guaranteed by the U.S. government,
its agencies, or instrumentalities and does not apply to the
International Index Fund's entrance into forward foreign currency
contracts as described herein;
In determining the liquidity of Rule 144A securities, which are
unregistered securities offered to qualified institutional buyers, and
interest-only and principal-only fixed mortgage-backed securities issued
by the U.S. government or its agencies and instrumentalities, the
investment manager, under guidelines established by the Company's Board
of Directors, will consider any relevant factors including the frequency
of trades, the number of dealers willing to purchase or sell the
security, and the nature of marketplace trades.
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In determining the liquidity of commercial paper issued in transactions
not involving a public offering under Section 4(2) of the Securities Act
of 1933, the Adviser, under guidelines established by the Company's
Board of Directors, will evaluate relevant factors such as the issuer
and the size and nature of its commercial paper programs, the
willingness and ability of the issuer or dealer to repurchase the paper,
and the nature of the clearance and settlement procedures for the
commercial paper.
2. Invest more than 5% of the value of the total assets of a fund in
equity securities that are not readily marketable;
3. Invest in real estate, although a fund may buy securities of
companies which deal in real estate and securities which are secured by
interests in real estate, including interests in real estate investment
trusts;
4. Invest in commodities or commodity contracts, except to the extent
provided in Item 14 below;
5. Purchase securities of other investment companies if, as a result,
a fund would own more than 3% of the total outstanding voting stock of
any one investment company, or more than 5% of the fund's assets would
be invested in any one investment company, or more than 10% of the
fund's assets would be invested in investment company securities. These
limitations do not apply to securities acquired in connection with a
merger, consolidation, acquisition, or reorganization, or by purchase in
the open market of securities of closed-end investment companies where
no underwriter or dealer's commission or profit, other than customary
broker's commission, is involved, and so long as immediately thereafter
not more than 10% of such fund's total assets, taken at market value,
would be invested in the securities;
6. Make loans, except by the purchase of debt obligations customarily
distributed privately to institutional investors, and except that a fund
may buy repurchase agreements and the International Index Fund may enter
into forward foreign currency contracts as described herein;
7. As to 75% of the value of the total assets of a fund, invest more
than 5% of the value of such assets in securities of any one issuer,
except that this restriction shall not apply to securities issued or
guaranteed by the U.S. government, its agencies, or instrumentalities;
8. As to 75% of the value of the total assets of a fund, invest in
more than 10% of the outstanding voting securities of any one issuer;
9. Act as an underwriter of securities of other issuers, except to
the extent that it may be deemed to be an underwriter in reselling
securities, such as restricted securities, acquired in private
transactions and subsequently registered under the Securities Act of
1933;
10. Borrow money, except that the Money Market Fund may enter into
reverse repurchase agreements with banks and except that, as a temporary
measure for extraordinary or emergency purposes (such as to permit a
fund to honor redemption requests without being required to
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dispose of investments in an inopportune or untimely manner) and not for
investment purposes, any fund may borrow from banks up to 5% of its
assets taken at cost, provided in each case that the total borrowings
have an asset coverage, based on value, of at least 300% and except that
the International Index Fund may enter into forward foreign currency
contracts in accordance with its investment policies;
11. Issue securities senior to its common stock except to the extent
set out in Item 10 above;
12. Sell securities short, or maintain a short position provided that
the International Index Fund's use of forward foreign currency contracts
as described herein shall not be deemed to be selling securities short
or to be maintaining a short position;
13. Buy securities on margin, except that a fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities provided that margin payments and other deposits
in connection with the International Index Fund's use of forward foreign
currency contracts shall not be deemed to constitute purchasing
securities on margin;
14. Invest in or write puts, calls, straddles, or spreads. However,
this restriction shall not prohibit a fund (other than the Money Market
Fund) from writing, selling, or purchasing futures contracts in order to
close transactions or to hedge against market risk or interest rate
movements nor shall it prohibit the International Index Fund from
entering into forward foreign currency contracts as described herein;
nor
15. Invest in companies for the purpose of exercising control of
management. If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage beyond the
specified limit resulting from a change in values of portfolio
securities or amount of net assets shall not be considered a violation
of the restrictions.
In addition to the investment restrictions described above, the funds
will comply with restrictions contained in any current insurance laws in
order that the assets of insurance company separate accounts may be
invested in shares of the funds.
DESCRIPTION OF CERTAIN INVESTMENTS
The following is a description of certain types of investments which may
be made by the funds:
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UNITED STATES GOVERNMENT SECURITIES
All of the funds may invest in U.S. government obligations. These
consist of securities of the U.S. government and its agencies,
instrumentalities, and government-sponsored enterprises.
The U.S. Treasury issues various types of marketable securities. These
securities include bills, notes, and bonds and others that may be
offered in the future. Such securities are direct obligations of the
U.S. government and differ mainly in the length of their maturity.
Treasury bills, the most frequently issued marketable government
security, have a maturity of up to one year and are issued on a discount
basis. Treasury notes have maturities of more than one and up to ten
years. Treasury bonds have maturities of ten years or more.
Government agency securities are the various types of instruments
currently outstanding or which may be offered in the future issued by
agencies and instrumentalities of the U.S. government. Agencies
include, among others, the Federal Housing Administration, Government
National Mortgage Association, Farmers Home Administration, Export-
Import Bank of the U.S., Maritime Administration, General Services
Administration, and Tennessee Valley Authority. Instrumentalities
include, for example, the Central Bank for Cooperatives, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Federal Land Banks, and the U.S. Postal Service. A fund
will purchase such securities only so long as they are either guaranteed
by the U.S. Treasury (e.g., Government National Mortgage Association
mortgage-backed securities) or supported by the issuing agency's or
instrumentality's credit or right to borrow from the U.S. Treasury
(e.g., Federal National Mortgage Association Discount Notes). Not all
securities issued by agencies or instrumentalities of the U.S.
government have a guarantee representing the full faith and credit of
the U.S. government.
BANK OBLIGATIONS
All of the funds may acquire obligations of banks, which include
certificates of deposit, time deposits, and bankers' acceptances.
Certificates of deposit are generally short-term, interest-bearing
negotiable certificates issued by banks or savings and loan associations
against funds deposited in the issuing institution. Time deposits are
funds in a bank or other financial institution for a specified period of
time at a fixed interest rate for which a negotiable certificate is not
received. A bankers' acceptance is a time draft drawn on a bank which
unconditionally guarantees to pay the draft at its face amount on the
maturity date. A bank customer, which is also liable for the draft,
typically uses the funds represented by the draft to finance the import,
export, or storage of goods.
The funds will not invest in any security issued by a commercial bank
unless the bank is organized and operating in the U.S., has total assets
of at least $1 billion, and is a member of the Federal Deposit Insurance
Corporation.
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REPURCHASE AGREEMENTS
All of the funds may invest in repurchase agreements.
A repurchase agreement customarily obligates the seller, at the time it
sells securities to the fund, to repurchase the securities at a mutually
agreed-upon time and price. The total amount received on repurchase
would be calculated to exceed the price paid by the fund, the difference
reflecting an agreed upon interest rate to the settlement date that
would not necessarily be related to the interest rate on the underlying
securities. The differences between the total amount to be received
upon repurchase of the securities and the price which was paid by the
fund upon their acquisition are accrued as interest and included in the
fund's net income as dividends. The Company has the right to sell
securities subject to repurchase agreements but would be required to
deliver identical securities upon maturity of the repurchase agreements
unless the seller fails to pay the repurchase price. No fund will sell
securities subject to repurchase agreements prior to the agreement's
maturity unless it is advantageous for the fund to do so.
During the holding period of a repurchase agreement, the seller must
provide additional collateral if the market value of the obligation
falls below the repurchase price. If a fund acquires a repurchase
agreement and then the seller defaults at a time when the value of the
underlying securities is less than the obligation of the seller, the
Company could incur a loss. If the seller defaults or becomes
insolvent, a fund could experience delays in recovering its money, may
fail to recover part or all of its investment, and may incur costs in
disposing of securities used as collateral. The funds will enter into
repurchase agreements only with sellers that the Adviser, applying
criteria established by the Board of Directors of the Company, believes
to present minimal credit risks.
REVERSE REPURCHASE AGREEMENTS
The Money Market Fund and the Asset Allocation Fund may enter into
reverse repurchase agreements.
Reverse repurchase agreements involve the sale of money market
securities held by a fund pursuant to an agreement to repurchase the
securities at an agreed upon price, date, and interest payment. Both
funds may use the proceeds of reverse repurchase agreements for the
following purposes: (i) to cover net redemptions, (ii) to avoid a
premature sale of securities, and (iii) to purchase other money market
securities which either mature, or can be sold under an agreement to
resell, at or prior to the expiration of the reverse repurchase
agreement. The funds will generally utilize reverse repurchase
agreements when the interest income to be earned from the investment of
proceeds from the transaction is expected to be greater than the
interest expense of the reverse repurchase transaction. When effecting
reverse repurchase transactions, the funds will hold cash and liquid
securities in a segregated account at a custodian bank with a dollar
value equal to the fund's obligations under the reverse repurchase
agreements.
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COMMERCIAL PAPER
Commercial paper involves an unsecured obligation that is usually sold
on a discount basis and has a maturity at the time of issuance of one
year or less. On the date of investment by a fund, such paper must be
rated in the highest category for short term debt securities by at least
two nationally recognized securities rating services such as Standard &
Poor's or Moody's Investor's Services (or by one such rating service, if
only one such rating service has rated the security). A fund can invest
in unrated commercial paper if the Company's Board of Directors
determines, in accordance with the procedures of Rule 2a-7, that the
unrated security is of comparable quality to rated securities.
Commercial paper rated A-1 by Standard & Poor's has the following
characteristics: (i) the issuer's liquidity ratios are adequate to meet
cash requirements and its long-term senior debt is rated "A" or better,
although in some cases "BBB" credits may be allowed; (ii) the issuer has
access to at least two additional channels of borrowing; (iii) basic
earnings and cash flow of the issuer have an upward trend, with
allowances made for unusual circumstances; (iv) typically, the issuer's
industry is well established and the issuer has a strong position within
the industry; and (v) the reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors
determines whether the issuer's commercial paper is rated A-1, A-2, or
A-3.
The rating Prime-1 ("P-1") is the highest commercial paper rating
assigned by Moody's Investor's Service, Inc. Among the factors
considered by Moody's in assigning ratings are the following: (i)
evaluation of the management of the issuer; (ii) economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type
risks that may be inherent in certain areas; (iii) evaluation of the
issuer's products in relation to competition and customer acceptance;
(iv) liquidity; (v) amount and quality of long-term debt; (vi) trends of
earnings over a period of ten years; (vii) financial strength of any
parent company and the relationships that exist with the issuer; and
(viii) recognition by the management of obligations that may be
presented or may arise as a result of public interest questions and
preparations to meet such obligations.
STOCK INDEX FUTURES CONTRACTS
The S&P 500 Index Fund and International Index Fund may purchase stock
index futures for the purpose of hedging against an increase in the
price of securities it intends to purchase or, or sell stock index
futures for the purpose of hedging against a decline in values of
securities the funds already own.
A stock index future obligates the seller to deliver (and the purchaser
to take) an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of
the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the
index is made. The S&P 500 Index Fund and International Index Fund
intend to purchase and sell futures contracts on the Standard & Poor's
500 Index and the EAFE Index, respectively.
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No consideration will be paid or received by a fund upon the purchase or
sale of a futures contract. Initially, a fund will be required to
deposit with the broker an amount of cash or cash equivalents equal to
5% to 10% of the contract amount. This amount is subject to change by
the exchange board of trade on which the contract is traded and members
of such exchange board of trade may charge a higher amount. This amount
is known as "initial margin," and is in the nature of a performance bond
or good faith deposit on the contract which is returned to the fund upon
termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments to and from the
broker, known as "variation margin," will be made daily as the price of
the index or securities underlying the futures contract fluctuates,
making the long and short positions in the futures contract more or less
valuable, a process known as "marking-to-market." At any time prior to
the expiration of a futures contract, a fund may elect to close the
position by taking an opposite position, which will operate to terminate
the fund's existing position in the contract.
Although the S&P 500 Index Fund and the International Index Fund intend
to purchase or sell futures contracts only if market conditions are
favorable, no assurance can be given that a liquid market will exist for
the contracts at any particular time. Most futures exchanges and boards
of trade limit the amount of fluctuation permitted in futures contracts
during a single trading day. Once the daily limit has been reached in a
particular contract, no trade may be made that day at a price beyond
that limit. Futures contract prices could move to the daily limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses. In such event and in the event
of adverse price movements, a fund would be required to make daily cash
payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may offset
partially or completely losses on the futures contract.
There can be no assurance of a fund's success at using stock index
futures as a hedging device. One risk arises because of the imperfect
correlation between movements in the price of the stock index future and
movements in the price of the securities that are the subject of the
hedge. The risk of imperfect correlation increases as the composition
of the fund's securities portfolio diverges from the securities included
in the index. If the price of the stock index future moves less than
the price of the securities which are the subject of the hedge, the
hedge will not be fully effective but, if the price of the securities
being hedged were to move in an unfavorable direction, the fund would be
in a better position than if it had not hedged at all. If the price of
the securities being hedged were to move in a favorable direction, this
advantage would be partially offset by changes in the future's value.
If the price of the future were to move more than the price of the
stock, the fund would experience either a loss or a gain on the future
which would not be completely offset by movements in the price of the
securities which are the subject of the hedge.
When futures are purchased to hedge against a possible increase in the
price of stocks before a fund is able to invest its cash (or cash
equivalents) in stocks in an orderly fashion, it is possible that the
market may decline instead; if the fund then decides not to purchase
hedged stocks because of the concern as to possible further market
decline or for other reasons, the fund would realize a loss on the
futures contract that would not be offset by a reduction in the price of
securities purchased.
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FORWARD FOREIGN CURRENCY TRANSACTIONS
The value of the assets of the International Index Fund as measured in
U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and
the fund may incur costs in connection with conversions between various
currencies.
The International Index Fund may use forward contracts to purchase or
sell foreign currencies in an effort to control some of the
uncertainties of foreign currency exchange rate fluctuations. A forward
foreign currency exchange contract will involve an obligation by the
fund to purchase or sell a specific amount of currency at a future date,
which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract.
These contracts are transferable in the interbank market conducted
directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit
requirements, and no commissions are charged at any stage for trades.
Forward foreign currency transactions will not eliminate fluctuations in
the prices of the fund's securities or prevent loss if the prices of
such securities should decline.
The International Index Fund may enter into forward foreign currency
exchange contracts only under two circumstances. First, when the fund
enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may desire to "lock in" the U.S.
dollar price of the security. The fund will then enter into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the
amount of foreign currency involved in the underlying securities
transactions. In this manner the fund will be better able to protect
itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency
during the period between the date the securities are purchased or sold
and the date on which payment is made or received.
Second, when the Adviser believes that the currency of a particular
foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount
of dollars, the amount of foreign currency approximating the value of
some or all of the fund's securities denominated in such foreign
currency. The precise matching of the forward contract amounts and the
value of the securities involved will not generally be possible since
the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of those securities
between the date the forward contract is entered into and the date it
matures. The projection of short-term currency market movement is
extremely difficult, and the successful execution of short-term hedging
strategy is highly uncertain. The fund does not intend to enter into
such forward contracts under this second circumstance on a regular or
continuous basis. The fund will also not enter into such forward
contracts or maintain a net exposure to such contracts when the
consummation of the contracts would obligate the fund to deliver an
amount of foreign currency in excess of the value of the fund's
securities or other assets denominated in that currency. The Adviser
believes that it is important to have the flexibility to enter into such
forward foreign currency contracts when it determines that to do so is
in the best interests of the fund. The fund's custodian bank segregates
cash or equity or debt
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securities in amounts not less than the value of the fund's total assets
committed to forward foreign currency exchange contracts entered into
under this second type of transaction. If the value of the securities
segregated declines, additional cash or securities are added so that the
segregated amount is not less than the amount of the fund's commitments
with respect to such contracts. Under normal circumstances, the fund
expects that any appreciation or depreciation on such forward exchange
contracts will be approximately offset by the depreciation or
appreciation in translation of the underlying foreign investment arising
from fluctuations in foreign currency exchange rates.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY AGREEMENT
The Company has entered into an Investment Advisory Agreement with
Conning Asset Management Company (the "Adviser") with respect to all of
the funds. The Adviser is an indirect, majority owned subsidiary of
GenAmerica Corporation. During 1998, the Adviser charged Company's
funds the following amounts:
S&P 500 Index Fund $1,484,539
Money Market Fund 258,922
Bond Index Fund 150,887
Managed Equity Fund 172,210
Asset Allocation Fund 565,993
International Index Fund 48,268
Mid-Cap Equity Fund 42,637
Small-Cap Equity Fund 193,191
Richard A. Liddy, Matthew P. McCauley, E. Thomas Hughes, and Christopher
A. Martin are each affiliated with both the Company and with General
American Life Insurance Company. Mr. McCauley is also affiliated with
the Adviser.
The investment advisory agreement between the Company and the Adviser
(the "Investment Advisory Agreement") provides that the Adviser, subject
to control and review by the Company's Board of Directors, is
responsible for the overall management and supervision of each fund and
for providing certain administrative services to the Company. (See the
prospectus.)
The Adviser may provide investment advice to other clients, including,
but not limited to, mutual funds, individuals, pension funds, and
institutional investors. Occasions may arise when combined sales or
purchases of securities are made for more than one client in order to
obtain favorable execution and low brokerage commissions. It is the
practice of the Adviser to allocate such purchases or sales insofar as
feasible among its several clients in a manner deemed equitable and
consistent with legal obligations. The goal in making allocations is
achieving the same average price for the principal factors which the
Adviser considers in making such allocation are the investment
objectives of each client, the relative size of the holdings of each
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client of the same or comparable securities, and the availability in
each client's account of funds for investment. Despite these
precautions, there may be circumstances when purchases and sales of
securities for one or more clients will have an adverse effect on other
clients, including a fund of the Company.
For its services to the funds, the Adviser 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 fund's net
assets, are:
S&P 500 Index Fund .25 percent
Money Market Fund .125 percent
Bond Index Fund .25 percent
Asset Allocation Fund .50 percent
Small-Cap Equity Fund .25 percent
The fee charged the International Index Fund, the Mid-Cap Equity Fund,
and the Managed Equity Fund is stated as a series of annual percentages
of the average daily value of the net assets of the funds. The
percentages decrease with respect to assets of the funds above certain
amounts, as follows:
FUND ASSETS PERCENTAGE
- ---- ------ ----------
International Index First $10 million .50 percent
Fund Next $10 million .40 percent
Balance over $20 million .30 percent
Mid-Cap Equity Fund First $10 million .55 percent
Next $10 million .45 percent
Balance over $20 million .40 percent
Managed Equity Fund First $10 million .40 percent
Next $20 million .30 percent
Balance over $30 million .25 percent
The Investment Advisory Agreement was approved at the annual meeting of
shareholders of the Company held July 22, 1993 and was amended pursuant
to shareholder approvals on December 16, 1996 and April 28, 1997. The
Investment Advisory Agreement will continue in effect henceforth from
year to year with respect to each fund if approved annually: (1) by the
Board of Directors of the Company or by a majority of the outstanding
shares of that Series, as determined pursuant to the Investment Company
Act of 1940 (the "1940 Act"); and (2) by a majority of the Board of
Directors of the Company who are not interested persons, within the
meaning of the 1940 Act. The Investment Advisory Agreement is not
assignable and may be terminated without penalty on 60 days' written
notice at the option of either party or, with respect to any fund, by
the
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requisite vote of the shareholders of that fund. See "CAPITAL STOCK" in
this Statement of Additional Information.
ACCOUNTANTS
KPMG LLP is the Company's independent public accounting firm.
CUSTODIAN AND FOREIGN CUSTODY MANAGER
The Bank of New York, 110 Washington Street, New York, NY acts by itself
or in conjunction with Depository Trust Company as custodian of all of
the funds. All securities which are eligible for deposit at Depository
Trust Company of New York, 55 Water Street, New York, NY are deposited
there, in the name and account of the custodian. The Bank of New York
is also the Company's Foreign Custody Manager. Securities purchased for
the fund outside of the U.S. may be maintained in the custody of foreign
banks and trust companies which are members of The Bank of New York's
international custodian network and foreign depositories (foreign sub-
custodians) used by such members. With respect to foreign sub-
custodians, there can be no assurance that the fund and the value of its
shares, will not be adversely affected by acts of foreign governments,
financial or operational difficulties of the foreign sub-custodians,
difficulties and costs of pursuing legal remedies against the foreign
sub-custodians, or application of foreign law to the fund's foreign sub-
custodial arrangements. Accordingly, an investor should be aware that
non-investment risks attendant to holding assets abroad may exceed those
associated with investing in the U.S.
PAYMENT OF EXPENSES
General American Life Insurance Company has paid the organization costs
of the Company and pays the Company's ongoing administrative expenses.
In addition, General American provides, or contract on behalf of the
Company for, administrative services for the Company. In exchange for
these services and the payment of these expenses, General American
receives administrative fees from the Company pursuant to a Management
Service Agreement.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATIONS
Under the Investment Advisory Agreement, the Adviser has responsibility
for selecting the broker-dealers through which securities are to be
purchased and sold for most of the funds, subject to the general control
of the Board of Directors. The following table lists the total amount
of brokerage commissions paid by each Fund for the fiscal periods ending
on December 31st of each year:
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1996 1997 1998
S&P 500 Index Fund 63,376 124,531 108,311
Money Market Fund N/A N/A N/A
Bond Index Fund N/A N/A N/A
Managed Equity Fund 32,780 67,228 85,198
Asset Allocation Fund 18,274 61,059 89,832
International Index Fund 6,922 18,089 1,540
Mid-Cap Equity Fund 7,445 12,096 8,675
Small-Cap Equity Fund<F*> N/A 44,887 65,972
[FN]
<F*> Fund established in 1997.
No brokerage commissions were paid on behalf of the Money Market Fund or
the Bond Index Fund.
The Money Market Fund's investments are usually purchased on a principal
basis directly from issuers, underwriters, or dealers. Accordingly,
minimal brokerage charges are expected to be paid on such transactions.
Purchases from an underwriter generally include a commission or
concession paid by the issuer, and transactions with a dealer usually
include the dealer's mark-up.
In placing orders for securities transactions, the Adviser's policy is
to attempt to obtain the most favorable price and efficient execution
available. The Adviser, subject to the review of the Company's Board of
Directors, may pay more than the lowest possible commission in order to
obtain better than average execution of transactions or valuable
investment research information, or both. Research information
ordinarily consists of assessments and analyses of the business or
prospects of a company, industry, or economic sector. In the opinion of
the Adviser, improved execution and investment research information will
benefit the performance of each of the funds.
The Adviser evaluates factors relating to the liquidity of commercial
paper issued in transactions not involving a public offering under
Section 4(2) of the Securities Act of 1933. Factors considered include
the nature and the size of the issuer and its commercial paper programs,
the willingness and ability of the issuer or dealer to repurchase the
paper, and the nature of the clearance of settlement procedures for the
paper.
When selecting broker-dealers to execute portfolio transactions, the
Adviser considers factors including the rate of commission or size of
the broker-dealer's "spread;" the size and difficulty of the order; the
nature of the market for the security, the reliability, financial
condition, and general execution and operational capabilities of the
broker-dealer; and the research, statistical, and economic data
furnished by the broker-dealer to the Adviser. In some cases, the
Adviser may use such information to assist other investment accounts
that it advises and not exclusively for the funds. Brokers or dealers
which supply research may be selected for execution of transactions for
such other accounts, while the data may be used by the Adviser in
providing investment advisory services to the funds.
B-14
<PAGE>
<PAGE>
To the best knowledge of management, no director or officer of the
Company, of the Adviser, or any person affiliated with either of them
has any material direct or indirect interest in any broker employed by
or on behalf of the Company.
MANAGEMENT OF THE COMPANY
The directors and officers of the Company, their addresses, their
positions with the Company, and their principal occupations for the past
five years are set forth below:
<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
HELD WITH DURING THE PAST
NAME, ADDRESS, AND AGE REGISTRANT FIVE YEARS
- ---------------------- ---------- ------------------------
<S> <C> <C>
Theodore M. Armstrong (59) Director Senior Vice President-Finance &
424 South Woods Mill Road Administration & CFO, Angelica
Chesterfield, MO 63017-3406 Corp., St. Louis, MO. (Uniform
manufacture & sale, & laundry).
Alan C. Henderson (53) Director President & CEO, RehabCare
7733 Forsyth Blvd., Suite 1700 Group, Inc., St. Louis, MO
St. Louis, MO 63105 (Disability rehabilitation business).
Richard A. Liddy (63) <F*> President Chairman, President, & CEO,
700 Market Street & Director General American Life Insurance
St. Louis, MO 63101 Co., St. Louis, MO, 1/95 to present.
President & CEO, May 1992 to
January 1995.
Matthew P. McCauley (57) <F*> Director Associate General Counsel & Vice
700 Market Street President, GenAmerica
St. Louis, MO 63101 Management Co., St. Louis, MO.
Harry E. Rich (59) Director Executive Vice President & CFO,
8300 Maryland Avenue Brown Group Inc., St. Louis, MO
St. Louis, MO 63105
E. Thomas Hughes, Jr. (57) <F*> Treasurer Corporate Actuary & Treasurer,
700 Market Street GenAmerica Management Co.,
St. Louis, MO 63101 St. Louis, MO.
B-15
<PAGE>
<PAGE>
Christopher A. Martin (36) <F*> Secretary Counsel, GenAmerica Management
700 Market Street Co., 1996 to present. St. Louis,
St. Louis, MO 63110 MO. Associate, Lewis, Rice &
Fingersh, 1994 to 1996.
<FN>
<F*> Messrs. Liddy, McCauley, Hughes, and Martin are "interested
persons" within the meaning of Section 2(a)(19) of the 1940 Act.
Mr. Liddy is President, Mr. McCauley is a Vice President, Mr.
Hughes is the Corporate Actuary and Treasurer, and Mr. Martin is
Counsel of General American Life Insurance Company and/or
GenAmerica Management Company. Mr. McCauley is also General
Counsel of the Adviser.
</TABLE>
<TABLE>
MANAGEMENT COMPENSATION
<CAPTION>
- --------------------------------------------------------------------------------
NAME, TOTAL TOTAL COMPENSATION
POSITION WITH COMPENSATION FROM THE COMPANY
THE COMPANY FROM THE COMPANY <F*> AND FUND COMPLEX <F**>
- --------------------------------------------------------------------------------
<S> <C> <C>
Theodore M. Armstrong $7,000 $8,000
Director
Alan C. Henderson $7,000 $8,000
Director
Richard A. Liddy 0 0
Director and President
Matthew P. McCauley 0 0
Director
Harry E. Rich $7,000 $8,000
Director
E. Thomas Hughes, Jr. 0 0
Treasurer
Christopher A. Martin 0 0
Secretary
<FN>
- -----------
<F*> Compensation is the sum paid in 1998.
<F**> Includes compensation from The Walnut Street Prime Reserve Fund,
operated by an affiliate of General American Life Insurance Company.
</TABLE>
B-16
<PAGE>
<PAGE>
CAPITAL STOCK
The Company is authorized to issue five hundred million (500,000,000)
shares of capital stock having a par value of one cent ($.01) per share.
Of these authorized shares, one hundred thirty million (130,000,000)
have been allocated to the respective series of stock issued by each of
the Company's funds, with the balance of the authorized stock available
for allocation as needed in the future. The present allocations, which
are subject to revision by the Board of Directors of the Company, are:
SHARES SERIES
------ ------
40,000,000 S&P 500 Index Fund
20,000,000 Money Market Fund
10,000,000 Bond Index Fund
20,000,000 Managed Equity Fund
10,000,000 International Index Fund
10,000,000 Mid-Cap Equity Fund
10,000,000 Asset Allocation Fund
10,000,000 Small-Cap Equity Fund
The assets received by the Company for the issuance or sale of shares of
each fund, and all income, earnings, profits and proceeds thereof, are
specifically allocated to each fund. They constitute the underlying
assets of each fund, are required to be segregated on the books of
account, and are to be charged with the expenses of such fund. Any
assets that are not clearly allocable to a particular fund or funds will
be allocated in a manner determined by the Board of Directors. Accrued
liabilities which are not clearly allocable to one or more funds will
generally be allocated among the funds in proportion to their relative
net assets before adjustment for such unallocated liabilities. Each
issued and outstanding share in a fund is entitled to participate
equally in dividends and distributions declared with respect to such
fund, and in the net assets of such fund remaining after satisfaction of
outstanding liabilities upon liquidation or dissolution.
The shares of each fund, when issued, will be fully paid and non-
assessable, will have no preference, preemptive, conversion, exchange,
or similar rights, and will be freely transferable. Shares do not have
cumulative voting rights.
FUND OWNERSHIP
Officers and Directors own less than 1% of the fund's outstanding
shares.
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Shares of the funds may be sold to separate accounts of affiliated and
unaffiliated insurance companies to fund the benefits under certain
variable life insurance policies and variable annuity contracts. As of
the date hereof, all shares of the funds were held by separate accounts
of General American Life Insurance Company and affiliated insurance
companies.
B-17
<PAGE>
<PAGE>
The purchasers of insurance contracts that participate in a separate
account that is registered with the SEC, and that invests in one of the
funds, will have the right to instruct the insurance company from whom
they purchased the contract with respect to the voting of the fund's
shares which are held by the separate account on behalf of insurance
contract holders. Shares attributable to policies for which no
instructions are received, and shares that are owned by the insurance
company but not attributable to policies funded by registered separate
accounts, will be voted by the insurance company on each issue in the
same proportion as shares for which there are instructions.
OFFERING AND REDEMPTION OF SHARES
The Company is currently offering shares of each fund without sales
charge and at each fund's respective net asset value ("NAV") per share,
which is determined in the manner set forth below under "DETERMINATION
OF NET ASSET VALUE." Shares in the Company's funds are sold directly to
separate accounts to support variable annuity contracts and life
insurance policies. The Company does not foresee any disadvantages to
the holders of variable annuity contracts and variable life insurance
policies arising from the fact that the interests of the holders of such
contracts and policies may differ. Nevertheless, the Company's Board of
Directors intends to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what
action, if any, should be taken in response thereto. Actions might
include requiring one separate account to withdraw from the funds.
The Company has no underwriter or distributor. General American Life
Insurance Company pays any distribution expenses and costs (that is,
those arising from any activity which is primarily intended to result in
the sale of shares issued by the Company), including expenses and costs
attributable to the Company, which are related to the printing and
distributing of prospectuses and periodic reports to new or prospective
owners of policies except for such costs which are attributable to sales
to non-affiliates of General American Life Insurance Company.
The Company redeems all full and fractional shares of its funds at the
NAV per share applicable to each fund next calculated after the
redemption request is received. See "determination of net asset value" below.
Payment upon redemption is made in cash and ordinarily will occur within
seven days of receipt of a proper notice of redemption. The right to
redeem shares or to receive payment with respect to any redemption of
shares of any fund may only be suspended: (i) for any period during
which trading on the New York Stock Exchange is restricted or such
Exchange is closed, other than customary weekend and holiday closings;
(ii) for any period during which an emergency exists as a result of
which disposal of securities or determination of the net asset value of
that fund is not reasonably practicable; or (iii) for such other periods
as the SEC may by order permit for the protection of shareholders of
that fund.
B-18
<PAGE>
<PAGE>
DETERMINATION OF NET ASSET VALUE
The NAV of the shares of each fund of the Company is determined at the
close of trading on the New York Stock Exchange immediately after the
declaration by the Company of dividends, if any, on each day during
which the New York Stock Exchange is open for business. The net asset
value per share of each fund is computed by dividing the sum of the
value of the securities held by that fund, plus any cash or other assets
and minus all liabilities, by the total number of outstanding shares of
that fund at such time. Any expenses borne by the Company, including
the investment management fee payable to the Adviser, are accrued daily,
except for extraordinary or non-recurring expenses. See "INVESTMENT
ADVISORY AND OTHER SERVICES - PAYMENT OF EXPENSES," above.
Fund securities which are traded on national stock exchanges are valued
at the securities' closing prices. In the absence of any reported
sales, fund securities are valued at the latest available bid price.
Securities traded in the over-the-counter market for which closing sale
prices are available are valued at such prices. Over-the-counter
securities for which closing sales prices are not available are valued
at the latest bid price. Securities and assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Company.
The value of foreign securities held by the International Index Fund are
determined based upon its sales price on the foreign exchange or market
on which it is primarily traded or on which it was purchased, as of the
close of the appropriate exchange or, if there have been no sales during
the day, at the mean of the closing bid and asked prices. Trading in
securities on exchanges and over-the-counter markets in Europe,
Australia, and the Far East is normally completed at various times prior
to 3:00 p.m. St. Louis time, the current closing time of the New York
Stock Exchange. Trading on foreign exchanges may not take place on
every day the New York Stock Exchange is open. Conversely, trading in
various foreign markets may take place on days when the New York Stock
Exchange is not open and on other days when the fund's net asset value
is not calculated. Consequently, the calculation of the net asset value
for the fund may not occur contemporaneously with the determination of
the most current market prices of the securities included in such
calculation. In addition, the value of the net assets held by the fund
may be significantly affected on days when shares are not available for
purchase or redemption.
Quotations of foreign securities in foreign currencies are converted
into the U.S. dollar equivalents at the prevailing market rates as
compared by The Bank of New York, custodian of the assets of the
International Index Fund, at the close of business on the New York Stock
Exchange (currently 3:00 p.m., St. Louis time).
Debt instruments with maturities of 60 days or more are valued at their
market price. Debt instruments with a remaining maturity of less than
60 days are valued on an amortized cost basis. Under this method of
valuation, the security is initially valued at cost on the date of
purchase or, in the case of securities purchased with 60 days or more
remaining to maturity, the market value at the beginning of the 59th day
prior to maturity. Thereafter, straight line amortization of discount
or premium is assumed until maturity regardless of the impact of
fluctuating interest rates on the market value of the security. While
valuation at amortized cost provides a more consistent rate of return,
it may result in periods during which the price which could be received
B-19
<PAGE>
<PAGE>
upon sale of the instrument is higher or lower than its amortized cost
value. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security
will be valued by market quotations, if available, or otherwise as
determined in good faith by or under the direction of the Board of
Directors of the Company.
INVESTMENT PERFORMANCE
The investment performance of each of the funds is presented in the
prospectus and the annual report to shareholders of the Company for the
fiscal year ended December 31, 1998, as filed with the SEC pursuant to
Rule 30a-1.
The Company may include quotations of a fund's total return in
connection with the total return for the appropriate underlying separate
account, in advertisements, sales literature, or reports to annuity and
policy holders or to prospective investors. Total return for a fund
reflects only the performance of a hypothetical investment in the fund
during the particular time period shown as calculated based on the
historical performance of the fund during that period. Such quotations
do not in any way indicate or project future performance. Quotations of
total return will not reflect charges and deductions against the
insurance policies or annuity contracts. Where relevant, the
prospectuses for the insurance policies and annuity contracts contain
performance information which show total return for the separate
accounts, insurance policies, or annuity contracts.
Total return refers to the annual percentage change in value of an
investment in a fund held for a stated period of time as of a stated
ending date. When a fund has been in operation for the stated period,
the total return for such period will be provided if performance
information is quoted. Total return quotations are expressed as annual
compound rates of return for each of the periods quoted. They also
reflect the deduction of a fund's investment advisory fee and
administrative expenses, and assume that all dividends and capital gains
distributions during the period are reinvested in the fund when made.
The Company's Small-Cap Equity Fund commenced operations on May 1, 1997,
subsequent to a transfer of assets from General American Life Insurance
Company Separate Account Twenty, which has identical investment
objectives, policies, and limitations, in exchange for shares of the
Small-Cap Equity Fund. While Separate Account Twenty continues to
exist, its assets now consist solely of shares of the Company's 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 Twenty
immediately prior to the transfer.
Separate Account Twenty is not a registered investment company, as it is
exempt from registration under the Investment Company Act of 1940 (the
"1940 Act"). Since, in a practical sense, Separate Account Twenty
constitutes a "predecessor" of the Small-Cap Equity Fund, the Company
calculates the performance for its Small-Cap Equity Fund for periods
commencing prior to the transfer of the Separate Account Twenty assets
to the Small-Cap Equity Fund by including the Separate Account Twenty
total return.
B-20
<PAGE>
<PAGE>
The quoted performance data for the Small-Cap Equity Fund includes the
performance of Separate Account Twenty for periods before the Small-Cap
Equity Fund began operations. As noted above, Separate Account Twenty
was not registered under the 1940 Act and thus was not subject to
certain investment restrictions that are imposed by the 1940 Act, nor
was it subject to restrictions imposed by the Internal Revenue Code. If
Separate Account Twenty had been registered under the 1940 Act and
subject to the Internal Revenue Code, its performance might have been
adversely affected.
Each of the funds from time to time may advertise certain investment
performance figures. These figures are based on historic earnings but
past performance data is not necessarily indicative of future
performance of the funds.
MONEY MARKET YIELD INFORMATION
The Company may make current yield and effective yield quotations
available for the Money Market Fund. The Money Market Fund's yield is
its investment income, less expenses, expressed as a percentage of
assets on an annualized basis for a seven-day period. The yield is
expressed as a simple annualized yield and as a compounded effective
yield.
The simple annualized yield is computed by determining the net change
(exclusive of realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of
the seven-day period, subtracting a hypothetical charge reflecting
deductions from the account, dividing the net change in account value by
the value of the account at the beginning of the period, and annualizing
the resulting quotient (base period return) on a 365-day basis (i.e.,
multiplying it by 365/7). The net change in unit value reflects the
value of additional shares purchased with dividends from the original
shares in the account during the seven-day period, dividends declared on
such additional shares during the period, and expenses accrued during
the period.
The compounded effective yield is computed by determining the
unannualized base period return, adding one to the base period return,
raising the sum to a power equal to 365 divided by seven, and
subtracting one from the result, as follows:
Effective yield = [(seven day period return + 1)365/7] - 1
The Money Market Fund's actual yields will fluctuate, and are not
necessarily indicative of future actual yields. Actual yields will
depend on such variables as portfolio quality, average portfolio
maturity, the type of portfolio instruments in which investments are
made, changes in interest rates on money market instruments, portfolio
expenses and other factors. Because the fund's actual yields will
fluctuate, such information may not provide a basis for comparison with
bank deposits, other investments which pay a fixed yield for a stated
period of time, or other investment companies which may use a different
method of determining yield. In addition, the yield quotation does not
reflect the charges deducted from the separate accounts (see the
prospectus for the variable life insurance policies or annuity contracts
funded by the Company).
B-21
<PAGE>
<PAGE>
If these charges were deducted to reflect the effective yield to a
policy owner, that yield would be lower than the yield calculated for
the Money Market Fund.
TAXES AND DIVIDENDS
For federal income tax purposes, each fund of the Company is treated as
a separate entity. Each fund intends to qualify and elect to be taxed
as a "regulated investment company" under certain provisions of the
Internal Revenue Code (the "Code"). If a fund qualifies as a "regulated
investment company," and complies with the provisions of the Code
relieving regulated investment companies which distribute substantially
all of their net income (both net ordinary income and net capital gain)
from federal income tax, it will be relieved from such tax on the part
of its net ordinary income and net realized capital gain which it
distributes to shareholders. To qualify for treatment as a "regulated
investment company," each fund must, among other things, derive in each
taxable year at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities or foreign currencies (subject
to the authority of the Secretary of the Treasury to exclude foreign
currency gains which are not ancillary to the fund's principal business
of investing in stock or securities or options and futures with respect
to such stock or securities), or other income (including but not limited
to gains from options, futures, or forward contracts) derived with
respect to its investing in such stocks, securities, or currencies.
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 shareholders and are
immediately reinvested in that fund.
The federal tax laws impose a four percent nondeductible excise tax on
each regulated investment company with respect to an amount, if any, by
which such company does not meet distribution requirements specified in
such tax laws. Each fund of the Company intends to comply with such
distribution requirements and thus does not expect to incur the four
percent nondeductible excise tax.
Since the sole shareholders of the Company will be separate accounts of
General American and separate accounts of General American affiliates
and, possibly in the future, separate accounts of unaffiliated insurance
companies, there is no discussion herein as to the federal income tax
consequences at the shareholder level.
B-22
<PAGE>
<PAGE>
ADDITIONAL INFORMATION
LEGAL MATTERS
Sutherland, Asbill & Brennan, Washington, DC, has provided advice on
certain matters relating to the federal securities laws.
REPORTS
Annual and semi-annual reports containing financial statements of the
Company, as well as proxy soliciting material for the Company, will be
sent to owners of policies participating in the funds.
OTHER INFORMATION
This statement of additional information and the prospectus for the
Company do not contain all the information set forth in the registration
statement and exhibits relating thereto, which the Company has filed
with the SEC, Washington, DC, under the Securities Act of 1933 and the
Investment Company Act of 1940. Anyone seeking further information
should refer to the registration statement and its exhibits.
FINANCIAL STATEMENTS
The audited financial statements for the Company, including the notes
thereto, are included in the Annual Report to Shareholders of the
Company for the fiscal year ended December 31, 1998. Such financial
statements are incorporated herein by reference. You may receive a copy
of such financial statements without charge upon request to General
American Capital Company at the address and phone number shown on the
cover of this statement of additional information.
B-23
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Articles of Incorporation <F2>
(b) Bylaws <F1>
(c) Instruments Defining Rights of Security Holders <F1>,<F2>
(d) Investment Advisory Agreement <F4>
(e) Not Applicable
(f) Not Applicable
(g)(1) Custodial Agreement <F3>
(g)(2) Foreign Custody Manager Agreement <F5>
(h) Amended and Restated Management Services Agreement - filed
herewith
(i) Opinion and Consent of Counsel <F4>
(j) Consents of the Independent Public Accountant - filed herewith
(k) Not Applicable
(l) Stock Subscription Agreement with General American Life
Company <F1>
(m) Not Applicable
(n) Financial Data Schedules - filed herewith
(o) Not Applicable
Other Exhibits:
(1) Powers of Attorney for:
Theodore M. Armstrong - filed herewith
Alan C. Henderson - filed herewith
Harry E. Rich - filed herewith
(2) Diagram of GenAmerica Family of Companies <F5>
* * * *
[FN]
<F1> Filed with Registration Statement, November 12, 1986.
<F2> Filed with Pre-Effective Amendment No. 1, June 25, 1987.
<F3> Filed with Post-Effective Amendment No. 7, December 1, 1992.
<F4> Filed with Post-Effective Amendment No. 14, May 1, 1998.
<F5> Filed with Post-Effective Amendment No. 15, February 25, 1999.
C-1
<PAGE>
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
REGISTRANT
Because, as of the date hereof, all of the shares of the funds are held
by separate accounts of General American Life Insurance Company and its
affiliates, General American Life Insurance Company may be said to
control the Company. "Echo voting," the practice under which General
American Life Insurance Company and its affiliates solicit instructions
from purchasers of insurance contracts for voting shares of the Company,
and votes shares attributable to unregistered separate accounts in
accordance with the instructions received, means that this control is
not exercised. Nevertheless, a schedule of GenAmerica Corporation's
family of companies appears in Exhibit (2). No financial statements for
any of these companies is included in the Company's registration
statement because the company is owned and controlled by the purchasers
of participating separate accounts.
ITEM 25. INDEMNIFICATION
Reference is made to Article Eight of the Registrant's Articles of
Incorporation, Exhibit (a), and to Article 11 of the Registrant's
Bylaws, Exhibit (b). The Articles and Bylaws provide that the
Registrant will indemnify its directors and officers to the extent
permitted or required by Maryland law. A resolution of the Board of
Directors specifically approving payment or advancement of expenses to
an officer is required by the Bylaws. Indemnification may not be made
if the director or officer has incurred liability by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of
duties in the conduct of his office ("Disabling Conduct"). The means of
determining whether indemnification shall be made are either: (1) a
final decision by a court or other body before whom the proceeding is
brought that the director or officer was not liable by reason of
Disabling Conduct; or (2) in the absence of such a decision, a
reasonable determination, based on a review of the facts, that the
director or officer was not liable by reason of Disabling Conduct. Such
latter determination may be made either by: (a) vote of a majority of a
quorum of directors who are neither interested persons (as defined in
the 1940 Act) nor parties to the proceeding or (b) any other reasonable
and fair means consistent with the objectives outlined in the
Registrant's Bylaws. The advancement of legal expenses may not occur
unless the director or officer agrees to repay the advance (if it is
determined that he is not entitled to the indemnification) and one of
three other conditions is satisfied: (1) he provides security for his
agreement to repay; (2) the Registrant is insured against loss by reason
of lawful advances; or (3) a majority of a quorum of the directors who
are not interested persons and are not parties to the proceedings,
determine that there is reason to believe that the director or officer
will be found entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("the Act") may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
C-2
<PAGE>
<PAGE>
such director, officer, or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Conning Asset Management Company (the "Adviser"), formerly known as
General American Investment Management Company, was incorporated in
Missouri on September 13, 1982. It is registered as an investment
adviser with the SEC. It is a majority-owned, indirect subsidiary of
GenAmerica Corporation. The Adviser serves as investment adviser to the
general and separate accounts of affiliated life insurance companies as
well as to unaffiliated clients.
<TABLE>
<CAPTION>
NAME OF DIRECTOR OR POSITION AT OTHER BUSINESS
OFFICER OF CONNING CONNING ASSET PROFESSION VOCATION
ASSET MANAGEMENT MANAGEMENT OR EMPLOYMENT
COMPANY COMPANY DURING PAST TWO YEARS
- ------------------- ------- ---------------------
<S> <C> <C>
Leonard M. Rubenstein Chief Executive Chairman, President and Chief
Officer, President and Executive Officer of Conning
Director Corporation and Conning Asset
Management Company; President and
Chief Executive Officer of
Conning, Inc.; Director of
General Life Insurance Company of
America, General Life Insurance
Company, Security Equity Life
Insurance Company, Cova
Corporation, Cova Financial
Services Life Insurance Company,
Cova Financial Life Insurance
Company, First Cova Life
Insurance Company, Cova
Investment Advisory Corporation,
Cova Investment Allocation
Corporation, Cova Life Management
Company, Paragon Life Insurance
Company, General American Holding
Company, Red Oak Realty Company,
Collaborative Strategies, Inc.,
Reinsurance Group of America,
Incorporated, and RGA Reinsurance
Company; Member of BHIF America
Seguros de Vida, S.A., First Vice
President and Treasurer,
GenAmerica Foundation, 700 Market
Street, St. Louis, MO 63101,
Director, Reinsurance Company of
Missouri, Incorporated, 700
Market Street, St. Louis, MO
63101
C-3
<PAGE>
<PAGE>
John B. Clinton Executive Vice President Conning Corporation; Executive
Vice President of Conning Asset
Management Company; Executive
Vice President of Conning &
Company
Mike McLellan Executive Vice President Conning Corporation; President
and Director of Red Oak Realty
and White Oak Royalty Company;
Executive Vice President of
Conning Asset Management Company;
Director of Conning Mortgage
Investment Trust, Inc.
Donald L. McDonald Executive Vice President Executive Vice President of
and Chief Investment Conning Corporation and Conning
Officer & Company
Tom Sargent Executive Vice President Conning Corporation; Executive
Vice President of Conning Asset
Management Company; Executive
Vice President of Conning &
Company
Fred M. Schpero Senior Vice President, Conning Corporation; Senior
and CFO and Director Vice President, Secretary, CFO,
and Director of Conning, Inc.,
and Conning & Company; Director
of Conning Mortgage Investment
Trust, Inc.
Christopher J. Swift Executive Vice President Conning Corporation; Executive
Vice President of Conning &
Company and Conning Asset
Management Company
C-4
<PAGE>
<PAGE>
<CAPTION>
BUSINESS ADDRESSES:
<S> <C>
700 MARKET STREET Cova Corporation
- ----------------- Conning Corporation
ST. LOUIS, MO 63101 Conning Asset Management Company
- ------------------- GenAmerica Foundation
Red Oak Realty Company
Reinsurance Company of America, Incorporated
White Oak Royalty Company
13045 TESSON FERRY ROAD General American Holding Company
- -----------------------
ST. LOUIS, MO 63128
- -------------------
CITY PLACE II, 185 ASYLUM STREET Conning and Company
- -------------------------------- Conning, Inc.
HARTFORD, CT 06103-4105
- -----------------------
660 MASON RIDGE CENTER DRIVE Reinsurance Group of America, Incorporated
- ---------------------------- RGA Reinsurance Company
ST. LOUIS, MO 63141
- -------------------
670 MASON RIDGE CENTER DRIVE Collaborative Strategies, Inc.
- ----------------------------
ST. LOUIS, MO 63141
- -------------------
ONE TOWER LANE, SUITE 3000 Cova Financial Services Life Insurance Company
- -------------------------- Cova Financial Life Insurance Company
OAKBROOK TERRACE, IL 60181-4644 Cova Investment Advisory Corporation
- ------------------------------- Cova Investment Allocation Corporation
Cova Life Management Company
95 NORTH RESEARCH DRIVE General Life Insurance Company of America
- -----------------------
EDWARDSVILLE, IL 62025
- ----------------------
901 CONGRESS AVENUE General Life Insurance Company
- -------------------
AUSTIN, TX 78714
- ----------------
100 SOUTH BRENTWOOD Paragon Life Insurance Company
- -------------------
CLAYTON, MO 63105
- -----------------
84 BUSINESS PARK DRIVE, SUITE 303 Security Equity Life Insurance Company
- ---------------------------------
ARMONK, NY 10504
- ----------------
120 BROADWAY, 10th Floor First Cova Life Insurance Company
- ------------------------
NEW YORK, NY 10271
- ------------------
Argentina BHIF America Seguros de Vida, S.A.
- ---------
</TABLE>
C-5
<PAGE>
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITER
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The following entities prepare, maintain, and preserve the records
required by Section 31(a) of the 1940 Act for the Registrant. These
services are provided to the Registrant through written agreements
between the parties to the effect that such services will be provided to
the Registrant for such periods prescribed under the 1940 Act and such
records will be surrendered promptly on request. General American Life
Insurance Company, 700 Market Street, St. Louis, Missouri 63101 will
serve as custodian of the books and records for the Registrant and in
such capacity will keep records regarding securities, bank statements,
and canceled checks. General American Life Insurance Company, 700
Market Street, St. Louis, Missouri will serve as transfer agent of the
Registrant and in such capacity will keep shareholder's account records,
canceled stock certificates, and all other records required by Section
31(a) of the Act.
ITEM 29. MANAGEMENT SERVICES
General American Life Insurance Company will provide any management
services needed by the Company and will charge the Company fees based on
calculations using its cost accounting procedures.
ITEM 30. UNDERTAKINGS
The Registrant undertakes to provide each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report, upon request
and at no charge.
C-6
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Post-Effective
Amendment No. 16 to this Registration Statement under Rule 485(b) under
the Securities Act and has duly caused this Post-Effective Amendment No.
16 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, and
State of Missouri, on April 30, 1999.
GENERAL AMERICAN CAPITAL COMPANY
Attest: By: /s/ Richard A. Liddy
-----------------------------
Richard A. Liddy, President
/s/ Christopher A. Martin
- --------------------------------
Christopher A. Martin, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Richard A. Liddy President and Director 4/30/99
- ------------------------------- (Principal Executive Officer)
Richard A. Liddy
/s/ Matthew P. McCauley Director 4/30/99
- -------------------------------
Matthew P. McCauley
/s/ E. Thomas Hughes Principal Financial 4/30/99
- ------------------------------- Officer - Treasurer
E. Thomas Hughes
<F*> Director 4/30/99
- -------------------------------
Theodore M. Armstrong
<F*> Director 4/30/99
- -------------------------------
Alan C. Henderson
<F*> Director 4/30/99
- -------------------------------
Harry E. Rich
By: /s/ Christopher A. Martin
---------------------------
Christopher A. Martin
<FN>
<F*> Limited Powers of Attorney, authorizing the Registrant's President,
Secretary, and Treasurer to sign the Registration Statement and
amendments thereto on behalf of certain members of the Board of General
American Capital Company have been filed with this Post-Effective
Amendment No. 16.
</TABLE>
C-7
<PAGE>
<PAGE>
EXHIBIT (h)
AMENDED AND RESTATED
MANAGEMENT SERVICES AGREEMENT
This Amended and Restated Management Services Agreement (this
"Agreement") sets forth the understandings and arrangements between
General American Capital Company (the "Company"), a Maryland
corporation registered as an investment company under the Investment
Company Act of 1940, and General American Life Insurance Company (the
"Administrator"), an insurance company organized under the laws of
Missouri.
WHEREAS, the Company offers shares in its investment funds (the
"Funds") for sale to separate accounts owned by the Administrator, the
Administrator's affiliated insurers, and unaffiliated insurers;
WHEREAS, the Company has no employees and numerous obligations as
a closely regulated company;
WHEREAS, the Administrator is equipped and staffed to help the
Company discharge its obligations;
WHEREAS, the Company and the Administrator entered into a
Management Service Agreement, dated June 24, 1987, as amended on January
29, 1988, (the "Original Management Service Agreement"); and
WHEREAS, the Company and the Administrator desire to amend and
restate the Original Management Services Agreement as set forth in this
Agreement;
NOW THEREFORE, in exchange for the mutual obligation contained
herein and for other consideration, the sufficiency and adequacy of
which is hereby acknowledged, the Company and the Administrator hereby
agree as follows:
1. EMPLOYMENT OF THE ADMINISTRATOR. The Company hereby employs the
-------------------------------
Administrator to administer its business and administrative operations,
subject to the direction of the Board of Directors and officers of the
Company, for the period, in the manner, and on the terms herein set
forth. The Administrator hereby accepts such employment and agrees
during such period to render the services and to assume the obligations
herein set forth. Each party to this Agreement expressly reserves into
itself the ultimate authority and responsibility for conduct of its
business. The Administrator shall for all purposes herein be deemed to
be an independent contractor and shall, except as expressly provided or
authorized (whether herein or otherwise), have no authority to act or
represent the Company in any way.
2. OBLIGATIONS AND SERVICES TO BE PROVIDED BY THE ADMINISTRATOR. The
------------------------------------------------------------
Administrator undertakes to provide the services and assume the
obligations hereinafter set forth. The Administrator may have such
services performed and obligations satisfied by its affiliates or by
third parties.
C-8
<PAGE>
<PAGE>
The Administrator will: (i) act as the Company's transfer and dividend
disbursing agent; (ii) perform the Company's administrative functions;
(iii) value the assets and liabilities of each Fund and compute the
daily income and net asset value of each Fund; (iv) recommend
independent auditors and custodians and coordinate and supervise their
activities; (v) maintain records not otherwise maintained; (vi) prepare
and file tax returns and reports and filings which pertain to federal
and state securities laws; (vii) schedule and plan the agenda for
meetings of the Company's directors and shareholders; (viii) pay
directors who are not interested persons of the Company, including their
travel expenses; (ix) furnish office space and equipment for meetings of
the Company's directors and shareholders; (x) pay the costs of printing
and distributing communications to current shareholders of the Company;
(xi) pay the costs of association membership dues; (xii) pay the costs
of insurance premiums; (xiii) pay the costs of the custodian,
accountants, and legal counsel; and (xiv) perform other necessary
services and pay other necessary expenses as agreed to by the parties.
3. COMPENSATION OF THE ADMINISTRATOR. As consideration for the
---------------------------------
Administrator's services to, and payment of expenses on behalf of, the
Company and its Funds, the Administrator shall receive from each Fund an
annual management fee payable monthly in arrears at an annual rate based
on the average daily value of the net assets in each of the Company's
Funds, as follows:
S&P 500 Index Fund .05%
Money Market Fund .08%
Bond Index Fund .05%
Managed Equity Fund .10%
Asset Allocation Fund .10%
International Index Fund .30%
Mid-Cap Equity Fund .10%
Small-Cap Equity Fund .05%
Should the Company create additional Funds, or in the event the parties
hereto agree to modify one or more of the foregoing fees, the new charge
shall be incorporated into this Agreement by means of an amendment
signed by both parties hereto.
4. EXPENSES OF THE COMPANY. The Company will pay directly the
-----------------------
following expenses: (i) investment advisory fees relating to the
portfolio management of the Company's Funds; (ii) brokerage fees and
commissions and transfer taxes; (iii) interest and other borrowing
costs; (iv) other state, federal, and local taxes and filing fees;
(v) fees and expenses for qualification of the Company and its shares
under federal and state securities laws subsequent to the effective
date of the prospectus filed on the Company's behalf with the
Securities and Exchange Commission; (vi) extraordinary or non-
recurring expenses such as those for litigation and the legal
obligation of the Company to indemnify its directors, officers, and
shareholders; and (vii) other expenses not expressly assumed by the
Administrator or investment advisers to the Company.
C-9
<PAGE>
<PAGE>
5. REGULATORY COMPLIANCE. Each party to this Agreement shall furnish
---------------------
to regulatory authorities having jurisdiction such information as may be
requested in order for such authorities to ascertain that the
Administrator's, and its affiliates', variable products operations are
being conducted in accordance with applicable laws and regulations.
6. TERMINATION AND ASSIGNMENT. This Agreement amends and restates
--------------------------
the Original Management Service Agreement. This Agreement shall become
effective upon its execution and approval, if required, by the Missouri
Department of Insurance and shall continue in effect until it is
terminated. Either party may terminate this Agreement without penalty
upon sixty (60) days notice. In the event either party to this
Agreement fails to perform in a satisfactory manner, the other party may
cancel this Agreement. This Agreement may not be assigned without the
prior written consent of the non-assigning party.
7. RECORDS. Ownership and control of records shall not be affected
-------
by this Agreement. Each party to this Agreement has the right to
inspect, audit, and copy all pertinent records of the other party
pertaining to performance under this Agreement. In the event this
Agreement is ended for any reason each party agrees to return all
records belonging to the other party promptly and free from all claims.
8. NONEXCLUSIVITY. The services of the Administrator and its
--------------
affiliated corporations to the Company hereunder are not to be deemed
exclusive and the Administrator and its affiliates shall be free to
render similar services to others.
9. CONFIDENTIALITY. Each party to this Agreement will keep any
---------------
information obtained in the course of its relationship to the other
party in confidence and will not use such information for its own
benefit or disclose it except as authorized by the other party or as
required by regulatory authorities having jurisdiction.
10. LIABILITY. Each party to this Agreement shall be liable for its
---------
own misconduct and negligence. Neither party to this Agreement shall
attempt to immunize itself from liability solely in reliance upon an
opinion of that party's own counsel.
11. CONFLICTS. Neither party to this Agreement shall undertake any
---------
activity which might conflict with its faithful discharge of the duties
outlined in this Agreement.
12. GOVERNING LAW. This Agreement shall be governed by the laws of
-------------
the State of Missouri, including laws regarding statutes of limitations.
13. SEVERABILITY. If any provision of this Agreement shall be held or
------------
made invalid by a court decision, statute, rule, or otherwise, the
remainder of this Agreement shall not be affected thereby.
C-10
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Parties hereto set their hands this 27th day of
April, 1999.
GENERAL AMERICAN LIFE GENERAL AMERICAN
INSURANCE COMPANY CAPITAL COMPANY
By: /s/ Richard A. Liddy By: /s/ Richard A. Liddy
------------------------- --------------------------
Richard A. Liddy Richard A. Liddy
Chairman, President and President
Chief Executive Officer
C-11
<PAGE>
<PAGE>
EXHIBIT (j)
The Board of Directors
General American Capital Company:
We consent to the use of our reports incorporated herein by reference,
to the reference to our firm under the heading "Financial Highlights
Information" and to the reference to our firm under "Accountants" in the
Post-Effective Amendment No. 16 to the Registration Statement (No. 33-
10145) of General American Capital Company.
KPMG LLP
St. Louis, Missouri
April 30, 1999
C-12
<PAGE>
EXHIBIT (l)
LIMITED POWER OF ATTORNEY WITH RESPECT TO
AMENDMENTS TO THE REGISTRATION STATEMENT OF
GENERAL AMERICAN CAPITAL COMPANY
The undersigned hereby constitutes and appoints the President, the
Secretary, and the Treasurer of General American Capital Company, and
each of them singly, his or her attorneys-in-fact, each with the power
of substitution, for him or her in any and all capacities, to sign any
amendments to Securities and Exchange Commission registration statement
of General American Capital Company, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities
and Exchange Commission, hereby ratifying and confirming all that each
of said attorneys-in-fact, or his or her substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Theodore M. Armstrong
- ---------------------------
Theodore M. Armstrong
Date: April 27, 1999
C-13
<PAGE>
<PAGE>
LIMITED POWER OF ATTORNEY WITH RESPECT TO
AMENDMENTS TO THE REGISTRATION STATEMENT OF
GENERAL AMERICAN CAPITAL COMPANY
The undersigned hereby constitutes and appoints the President, the
Secretary, and the Treasurer of General American Capital Company, and
each of them singly, his or her attorneys-in-fact, each with the power
of substitution, for him or her in any and all capacities, to sign any
amendments to Securities and Exchange Commission registration statement
of General American Capital Company, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities
and Exchange Commission, hereby ratifying and confirming all that each
of said attorneys-in-fact, or his or her substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Alan C. Henderson
- --------------------------
Alan C. Henderson
Date: April 27, 1999
C-14
<PAGE>
<PAGE>
LIMITED POWER OF ATTORNEY WITH RESPECT TO
AMENDMENTS TO THE REGISTRATION STATEMENT OF
GENERAL AMERICAN CAPITAL COMPANY
The undersigned hereby constitutes and appoints the President, the
Secretary, and the Treasurer of General American Capital Company, and
each of them singly, his or her attorneys-in-fact, each with the power
of substitution, for him or her in any and all capacities, to sign any
amendments to Securities and Exchange Commission registration statement
of General American Capital Company, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities
and Exchange Commission, hereby ratifying and confirming all that each
of said attorneys-in-fact, or his or her substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Harry E. Rich
- -----------------------
Harry E. Rich
Date: April 27, 1999
C-15
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> GACC - S & P 500 Index Fund
<NUMBER> 1
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 351,591
<INVESTMENTS-AT-VALUE> 700,483
<RECEIVABLES> 773
<ASSETS-OTHER> 191
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 701,447
<PAYABLE-FOR-SECURITIES> 786
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 172
<TOTAL-LIABILITIES> 958
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 13,875
<SHARES-COMMON-PRIOR> 12,732
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 700,489
<DIVIDEND-INCOME> 8,779
<INTEREST-INCOME> 157
<OTHER-INCOME> 0
<EXPENSES-NET> 1,781
<NET-INVESTMENT-INCOME> 7,155
<REALIZED-GAINS-CURRENT> 34,309
<APPREC-INCREASE-CURRENT> 108,174
<NET-CHANGE-FROM-OPS> 149,638
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,745
<NUMBER-OF-SHARES-REDEEMED> (1,602)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 198,912
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,484
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,781
<AVERAGE-NET-ASSETS> 590,368
<PER-SHARE-NAV-BEGIN> 39.400
<PER-SHARE-NII> 0.530
<PER-SHARE-GAIN-APPREC> 10.560
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 50.490
<EXPENSE-RATIO> 0.300
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> GACC - Money Market Fund
<NUMBER> 2
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 234,906
<INVESTMENTS-AT-VALUE> 234,910
<RECEIVABLES> 167
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 235,086
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40
<TOTAL-LIABILITIES> 40
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 12,210
<SHARES-COMMON-PRIOR> 9,578
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 235,046
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,724
<OTHER-INCOME> 0
<EXPENSES-NET> 425
<NET-INVESTMENT-INCOME> 11,299
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 11,299
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,898
<NUMBER-OF-SHARES-REDEEMED> (13,266)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 60,475
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 259
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 425
<AVERAGE-NET-ASSETS> 207,166
<PER-SHARE-NAV-BEGIN> 18.230
<PER-SHARE-NII> 1.020
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.250
<EXPENSE-RATIO> 0.205
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> GACC - Bond Index Fund
<NUMBER> 3
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 65,458
<INVESTMENTS-AT-VALUE> 68,072
<RECEIVABLES> 1,118
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 69,194
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17
<TOTAL-LIABILITIES> 17
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2,746
<SHARES-COMMON-PRIOR> 2,084
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 69,177
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,668
<OTHER-INCOME> 0
<EXPENSES-NET> 181
<NET-INVESTMENT-INCOME> 3,487
<REALIZED-GAINS-CURRENT> 127
<APPREC-INCREASE-CURRENT> 1,350
<NET-CHANGE-FROM-OPS> 4,964
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,223
<NUMBER-OF-SHARES-REDEEMED> (560)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 20,847
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 151
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 181
<AVERAGE-NET-ASSETS> 60,166
<PER-SHARE-NAV-BEGIN> 23.190
<PER-SHARE-NII> 1.400
<PER-SHARE-GAIN-APPREC> 0.600
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 25.190
<EXPENSE-RATIO> 0.300
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> GACC - Managed Equity Fund
<NUMBER> 4
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 44,686
<INVESTMENTS-AT-VALUE> 61,777
<RECEIVABLES> 45
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61,824
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 20
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,735
<SHARES-COMMON-PRIOR> 1,895
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 61,804
<DIVIDEND-INCOME> 989
<INTEREST-INCOME> 100
<OTHER-INCOME> 0
<EXPENSES-NET> 231
<NET-INVESTMENT-INCOME> 858
<REALIZED-GAINS-CURRENT> 5,971
<APPREC-INCREASE-CURRENT> 1,087
<NET-CHANGE-FROM-OPS> 7,916
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 283
<NUMBER-OF-SHARES-REDEEMED> (443)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,666
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 172
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 231
<AVERAGE-NET-ASSETS> 58,675
<PER-SHARE-NAV-BEGIN> 31.200
<PER-SHARE-NII> 0.480
<PER-SHARE-GAIN-APPREC> 3.950
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 35.630
<EXPENSE-RATIO> 0.390
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> GACC - Asset Allocation Fund
<NUMBER> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 89,370
<INVESTMENTS-AT-VALUE> 123,955
<RECEIVABLES> 523
<ASSETS-OTHER> 93
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 124,571
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
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