<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
General American Capital Company Money Market Fund:
We have audited the statement of assets and liabilities, including the
schedule of investments, of the Money Market Fund of General American
Capital Company as of December 31, 1998, the related statement of
operations for the year then ended, the statements of changes in net
assets for each of the years in the two-year period then ended, and the
financial highlights information for the periods presented. These
financial statements and the financial highlights information are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements
and financial highlights information are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of December 31, 1998, by
correspondence with the custodians and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights
information referred to above present fairly, in all material respects,
the financial position of the Money Market Fund of General American
Capital Company as of December 31, 1998, the results of its operations
for the year then ended, the changes in its net assets for each of the
years in the two year period then ended and the financial highlights
information for the periods presented, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
St. Louis, Missouri
February 12, 1999
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
------------------------------------------------------------------------------
The General American Capital Company Money Market Fund produced a net return
of 5.6 percent in 1998.
This fund ranked #1 for its net return in 1998 and for the last five years
when compared with approximately 100 other variable annuity funds of similar
size according to Lipper, Inc., a nationally recognized analytical firm.
While the Federal Reserve held interest rates steady during the first half of
1998, they lowered rates on three separate occasions during the last six
months of the year. Thus the Federal Funds rate was reduced by a total of 75
basis points to 4.75 percent. Prior to these rate cuts, the Federal Reserve
had not changed interest rates since early in 1997.
Throughout the year the average maturity of the fund was extended when value
was found on the yield curve. As a result the weighted average maturity of the
fund on 12/31/98 was lengthened to 36.8 days compared to 23.5 days at the end
of 1997.
Money market funds continue to be an attractive investment for those investors
looking for some security in unstable times.
------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
------------------------------------------------------------------------------
[GRAPH]
DATE MONEY MARKET FUND
12/31/88 10,000.00
06/30/89 10,487.45
12/31/89 10,955.61
06/30/90 11,413.74
12/31/90 11,879.47
06/30/91 12,269.80
12/31/91 12,614.65
06/30/92 12,869.37
12/31/92 13,082.36
06/30/93 13,280.93
12/31/93 13,484.61
06/30/94 13,717.63
12/31/94 14,051.88
06/30/95 14,474.70
12/31/95 14,889.14
06/30/96 15,286.44
12/31/96 15,709.09
06/30/97 16,142.03
12/31/97 16,605.23
06/30/98 17,072.49
12/31/98 17,538.45
<TABLE>
---------------------------------------------------------------------------------------------------
ANNUAL RETURNS
---------------------------------------------------------------------------------------------------
<CAPTION>
PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS LIFE OF FUND
<S> <C> <C> <C> <C>
Annual Returns 5.62% 5.40% 5.78% 5.99%
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<TABLE>
------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------
<S> <C>
December 31, 1998
ASSETS:
Investments, at market value:
(see accompanying schedules)
Short term securities $234,909,622
------------
Total investments 234,909,622
Cash 9,404
Interest receivable 167,097
------------
Total assets 235,086,123
------------
LIABILITIES:
Payable to Conning Asset Management
Company 24,569
Payable to General American Life
Insurance Company 15,725
------------
Total liabilities 40,294
------------
Total net assets $235,045,829
============
TOTAL SHARES OF CAPITAL STOCK
OUTSTANDING 12,209,576
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 19.25
TOTAL AMORTIZED COST OF INVESTMENTS $234,906,040
</TABLE>
<TABLE>
------------------------------------------------------
STATEMENT OF OPERATIONS
------------------------------------------------------
For the year ended December 31, 1998
<S> <C>
INVESTMENT INCOME:
Interest $11,723,154
-----------
Total investment income 11,723,154
-----------
EXPENSES:
Investment management charge 258,922
Administrative charge 165,709
-----------
Total expenses 424,631
-----------
Net investment income 11,298,523
-----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $11,298,523
===========
</TABLE>
<TABLE>
--------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
------------ ------------
1998 1997
------------ ------------
<S> <C> <C>
Operations:
Net investment income $ 11,298,523 $ 5,892,718
------------ ------------
Net increase in net assets from operations 11,298,523 5,892,718
Capital share transactions 49,176,804 67,252,183
------------ ------------
Net increase in net assets 60,475,327 73,144,901
Net assets, beginning of year 174,570,502 101,425,601
------------ ------------
Net assets, end of year $235,045,829 $174,570,502
============ ============
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
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>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 14.36 $ 13.85 $ 13.04 $ 12.03 $ 10.98
Income from operations:
Net investment income 0.44 0.51 0.81 1.01 1.05
-------- -------- -------- ------- -------
Net asset value, end of year $ 14.80 $ 14.36 $ 13.85 $ 13.04 $ 12.03
======== ======== ======== ======= =======
Total return <F2> 3.07% 3.71% 6.19% 8.43% 9.56%
Net assets, end of year (in thousands) $ 84,430 $ 84,880 $ 84,090 $85,901 $53,648
Ratio of expenses to average net assets <F3> 0.21% 0.21% 0.21% 0.21% 0.21%
Ratio of net investment income to average
net assets <F3> 3.06% 3.68% 6.10% 8.17% 9.26%
Portfolio turnover rate <F4> <F4> <F4> <F4> <F4>
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect expenses
that apply to the separate accounts investing in the Fund or to the insurance
or variable annuity contracts. Inclusion of these charges would reduce the
total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> A portfolio turnover rate is not calculated for securities on which the
maturity or expiration dates at the time of acquisition were one year or less.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
PAR INTEREST MATURITY MARKET
SHORT TERM SECURITIES VALUE RATE (%) DATE VALUE
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
Asset Backed (81.02%)
Barton Capital Corp.<F*> $ 1,000,000 5.53 02/02/99 $ 995,188
Barton Capital Corp.<F*> 2,000,000 5.27 01/14/99 1,996,149
Barton Capital Corp.<F*> 2,300,000 5.42 01/27/99 2,291,291
Barton Capital Corp.<F*> 503,000 5.37 03/15/99 497,871
Barton Capital Corp.<F*> 3,116,000 5.79 04/01/99 3,077,013
Bavaria Global Corp.<F*> 5,000,000 5.45 01/15/99 4,989,190
Bavaria Global Corp.<F*> 5,000,000 5.20 03/22/99 4,944,244
Check Point Charlie<F*> 1,400,000 5.76 01/14/99 1,397,305
Check Point Charlie<F*> 2,500,000 5.37 01/27/99 2,490,533
Check Point Charlie<F*> 5,000,000 5.39 01/27/99 4,981,067
Check Point Charlie<F*> 500,000 5.38 01/07/99 499,564
Check Point Charlie<F*> 1,000,000 6.12 01/15/99 997,628
Compass Securitization<F*> 1,525,000 5.88 01/22/99 1,519,796
Edison Asset Securitization<F*> 4,000,000 5.38 01/25/99 3,986,185
Edison Asset Securitization<F*> 7,500,000 5.25 02/16/99 7,449,429
Grand Funding<F*> 1,500,000 5.43 01/20/99 1,495,913
Grand Funding<F*> 8,100,000 5.30 01/22/99 8,074,715
Kitty Hawk Funding Corp.<F*> 1,320,000 5.53 01/29/99 1,314,353
Kitty Hawk Funding Corp.<F*> 5,000,000 6.76 01/05/99 4,996,250
Lexington Parker Capital<F*> 690,000 5.53 01/22/99 687,726
Lexington Parker Capital<F*> 5,000,000 5.29 01/22/99 4,983,779
Lexington Parker Capital<F*> 813,000 5.53 02/05/99 808,692
Lexington Parker Capital<F*> 1,000,000 5.35 01/19/99 997,418
Lexington Parker Capital<F*> 1,146,000 5.53 01/26/99 1,141,824
Market Street Funding<F*> 5,200,000 5.46 02/01/99 5,175,730
Moat Funding<F*> 5,000,000 5.42 01/15/99 4,989,190
Moat Funding<F*> 2,500,000 5.38 01/29/99 2,489,635
Moat Funding<F*> 1,125,000 5.30 03/09/99 1,114,451
Mont Blanc<F*> 1,073,000 5.48 01/14/99 1,070,934
Mont Blanc<F*> 2,315,000 5.68 01/26/99 2,305,917
Mont Blanc<F*> 5,000,000 5.26 01/26/99 4,981,779
MPF Limited<F*> 3,000,000 5.49 01/05/99 2,998,255
MPF Limited<F*> 3,600,000 5.42 01/20/99 3,590,192
MPF Limited<F*> 3,200,000 5.47 01/20/99 3,191,282
Pegasus Two Ltd.<F*> 5,275,000 5.47 01/26/99 5,255,777
Pegasus Two Ltd.<F*> 2,000,000 5.47 02/12/99 1,987,324
Pooled Accounts Receivable 821,000 5.79 01/04/99 820,607
Pooled Accounts Receivable 2,895,000 5.64 01/29/99 2,882,391
Remsen Funding Corp. "A"<F*> 11,000,000 8.01 01/04/99 10,992,667
Sand Dollar Funding<F*> 11,300,000 5.08 02/12/99 11,233,424
Seven Hills Funding Corp.<F*> 7,000,000 6.26 01/04/99 6,996,354
</TABLE>
(continued)
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
PAR INTEREST MATURITY MARKET
SHORT TERM SECURITIES VALUE RATE (%) DATE VALUE
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed (continued)
Sheffield Receivables $ 2,600,000 5.20 02/16/99 $ 2,582,469
Sheffield Receivables 5,000,000 5.20 02/16/99 4,966,286
Sheffield Receivables 2,325,000 5.45 03/05/99 2,304,470
Thames Asset Global Securities<F*> 1,500,000 5.59 01/14/99 1,496,994
Thames Asset Global Securities<F*> 3,000,000 5.28 01/15/99 2,993,514
Thames Asset Global Securities<F*> 3,000,000 5.24 02/16/99 2,979,772
Thames Asset Global Securities<F*> 260,000 5.24 02/16/99 258,247
Thames Asset Global Securities<F*> 650,000 5.36 03/19/99 643,018
Tulip Funding Corp.<F*> 3,000,000 5.47 01/04/99 2,998,691
Tulip Funding Corp.<F*> 5,000,000 5.29 01/05/99 4,997,091
Tulip Funding Corp.<F*> 1,200,000 5.50 01/29/99 1,195,025
Twin Towers<F*> 5,000,000 5.39 02/22/99 4,961,429
Windmill Funding Corp.<F*> 2,000,000 5.50 01/29/99 1,991,522
Windmill Funding Corp.<F*> 1,650,000 5.44 01/14/99 1,646,788
Windmill Funding Corp.<F*> 3,000,000 5.53 01/27/99 2,987,975
Wood Street Funding<F*> 1,000,000 5.79 01/11/99 998,403
Wood Street Funding<F*> 1,796,000 5.27 01/15/99 1,792,117
Wood Street Funding<F*> 5,000,000 5.52 01/29/99 4,979,271
World Omni<F*> 5,000,000 5.52 02/05/99 4,973,741
------------
190,435,855
------------
Financial (10.14%)
Banca CRT Financial Corp. 2,925,000 5.25 02/16/99 2,905,277
Countrywide Home Loans 5,000,000 5.27 01/22/99 4,984,392
Svenska Handelsbanken, Inc.<F*> 11,000,000 7.26 01/04/99 10,993,354
Yorkshire Building Society<F*> 5,000,000 5.12 03/02/99 4,957,905
------------
23,840,928
------------
Bond Insurance (3.25%)
Cooperative Association of Tractor Dealers "A" 700,000 6.03 01/22/99 697,550
Cooperative Association of Tractor Dealers "A" 2,500,000 5.31 02/12/99 2,484,392
Cooperative Association of Tractor Dealers "A" 2,000,000 5.32 03/22/99 1,976,234
Cooperative Association of Tractor Dealers "B" 2,500,000 5.97 01/14/99 2,494,628
------------
7,652,804
------------
Pharmaceutical (1.27%)
Allergan Inc.<F*> 3,000,000 5.53 02/12/99 2,980,535
------------
TOTAL COMMERCIAL PAPER (95.68%) (AMORTIZED COST $224,908,595) 224,910,122
------------
</TABLE>
(continued)
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
PAR INTEREST MATURITY MARKET
SHORT TERM SECURITIES VALUE RATE (%) DATE VALUE
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLOATING RATE NOTE
Federal Home Loan Bank $ 5,000,000 5.00 11/10/99 $ 4,999,500
------------
TOTAL FLOATING RATE NOTE (2.13%) (AMORTIZED COST
$4,997,445) 4,999,500
------------
TIME DEPOSITS
Banco Espirito Santo Euro 5,000,000 5.75 07/20/99 5,000,000
------------
TOTAL TIME DEPOSIT (2.13%) (AMORTIZED COST
$5,000,000) 5,000,000
------------
TOTAL INVESTMENTS (99.94%) (AMORTIZED COST
$234,906,040) 234,909,622
Other net assets (0.06%) 136,207
------------
TOTAL NET ASSETS (100.00%) $235,045,829
============
<FN>
<F*> Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other "accredited
investors". This security has been determined to be liquid under guidelines
established by the board of directors.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
- -------------------------------------------------------------------------
Notes to Financial Statements - December 31, 1998
- -------------------------------------------------------------------------
NOTE 1-ORGANIZATION
General American Capital Company Money Market Fund (the Company or the
Fund), commenced operations on October 1, 1987, and is registered under
the Investment Company Act of 1940 as amended, as an open-end
diversified management investment company.
The Company offers to its shareholders a separate investment fund which
operates as a distinct investment vehicle. As of December 31, 1998, the
Company sells its shares to life insurance and other separate accounts
established by General American Life Insurance Company (General
American), Security Equity Life Insurance Company (Security Equity),
Cova Financial Services Life Insurance Company, Cova Financial Life
Insurance, and First Cova Financial Life Insurance Company, wholly owned
subsidiaries of General American Life Insurance Company.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Company in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting
principles.
A. INVESTMENTS:
The market values for short term securities with maturities of 60
days or more at date of valuation are determined daily by an
independent pricing service based on current market conditions.
Short term securities with maturities of less than 60 days at date
of valuation are valued at amortized cost, which approximates
market value.
B. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:
Investment transactions are recorded on the trade date (date the
order to buy or sell is executed). Interest income and
amortization of premium and discount are recorded on an accrual
basis.
C. FEDERAL INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS:
No provision for Federal income taxes is necessary because the
Fund qualifies as a "regulated investment company" under
Subchapter M of the Internal Revenue Code and intends to
distribute each year substantially all of its net investment
income and realized gains to its shareholders. Shareholders of
the Fund consist of the separate accounts of General American,
Security Equity and Cova, each of which are exempt from Federal
income taxes.
D. CONSENT DIVIDENDS:
The Fund follows the accounting practice known as consent
dividending, whereby substantially all of its net investment
income and realized gains are treated as being distributed daily
to shareholders of the fund and are immediately reinvested in the
Fund.
E. USE OF ESTIMATES:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from
those estimates.
NOTE 3-MANAGEMENT AND ADMINISTRATIVE FEES
The Company has entered into an Investment Advisory Agreement with
Conning Asset Management Company (Investment Advisor). Certain officers
and directors of the Company are also officers and directors of the
Investment Advisor. For its services, the Investment Advisor charges a
fee which is accrued daily. The fees charged, stated as an annual
percentage of the average daily value of the net assets, are .125
percent.
All operational expenses of the Company are paid by General American,
which charges administrative fees to the Fund in return. Certain
officers and directors of the Company are also officers and directors of
General American, Security Equity and Cova.
The administrative expenses are charged at an annual rate based on the
average daily value of the net assets in the Fund and are .08 percent.
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
- -------------------------------------------------------------------------
Notes to Financial Statements - December 31, 1998
- -------------------------------------------------------------------------
NOTE 4-INVESTMENTS
The amortized cost of investments for federal income tax purposes as of
December 31, 1998, is as follows:
MONEY
MARKET
FUND
------------
Short term securities $234,906,040
============
The Money Market Fund, has no unrealized gains or losses as of December
31, 1998.
The "specific identification" method is used to determine the cost of
securities sold.
NOTE 5-CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
MONEY MARKET FUND
----------------------------------------------------------
Year ended Year ended
December 31, 1998 December 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 15,897,608 $ 297,646,784 18,831,392 $ 335,912,294
Shares redeemed (13,265,822) (248,469,980) (15,135,851) (268,660,111)
----------- ------------- ----------- -------------
Net increase 2,631,786 $ 49,176,804 3,695,541 $ 67,252,183
=========== ============= =========== =============
</TABLE>
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
December 31, 1998
BOARD OF DIRECTORS
Theodore M. Armstrong
Alan C. Henderson
Richard A. Liddy, Chairman
Matthew P. McCauley
Harry E. Rich
INVESTMENT ADVISOR
Conning Asset Management Company
CUSTODIAN
Bank of New York
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington D.C.
INDEPENDENT AUDITORS
KPMG LLP
If distributed to perspective investors, this report must be preceded or
accompanied by a current prospectus. The prospectus is incomplete
without reference to the financial data contained in this annual report.
