<PAGE>
General American
Capital Company
Annual
Report
December 31, 1998
General
American
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
February, 1999
Dear Shareholder:
It is our privilege to present to you the 11th Annual Report for General
American Capital Company, covering financial results through December
31, 1998. General American Capital Company is an underlying investment
vehicle for variable universal life insurance and variable annuity
products offered by General American Life Insurance Company.
This report follows the successful format we adopted in 1997, separating
all the financial data and management commentary by fund so that you can
see each fund's total picture in one place. We've also included the
Economic Overview for a broader perspective on the events that
influenced investment performance in 1998.
We hope you find this report informative. Thank you for choosing our
investment funds. We look forward to continued asset growth in 1999.
Richard A. Liddy
Chairman of the Board
<PAGE>
<PAGE>
ECONOMIC OVERVIEW
Recent economic data, combined with the fourth quarter performance of
the U.S. equity market suggest little evidence of an economic slowdown.
Both new and existing home sales will post records for 1998. Vehicle
sales last year were the second strongest in history. Payroll gains were
far stronger than expected in December.
Nevertheless, we once again enter a new year with the majority of
economists calling for a slowdown in 1999. They are stating that the
strong U.S. growth experienced last year is "unsustainable." Absent a
liquidity event, it is difficult to agree with the consensus this year.
A high stock market usually implies the prospects for earnings are good.
If this is true, and the cost of capital is low, even lower-return
projects become profitable, and that increases business investment.
The most compelling argument for measurable gross domestic product
growth in 1999 is the action of the Federal Reserve itself. The Fed
lowered interest rates .75 percent over the last four months of 1998.
The lag effects of these moves have yet to be fully realized in the
economy. Likewise, growth in the money supply continues to accelerate.
Bank credit is soaring as well, despite reports of tougher credit
standards. This has once again left the Fed in a difficult situation: it
is in no position to increase rates. Falling commodity prices and low
inflation continue to suggest that "real" rates are high relative to
other countries. Our forecast of slightly higher inflation for 1999 is
based on the premise that commodity prices will not fall as dramatically
as they did in 1998, and that the dollar is unlikely to appreciate much
further. While the inflation rate will be higher, it will remain low.
The stock market capped off another great year in 1998. The S&P 500
returned 28.58 percent, while the Dow Jones Industrial Index returned
16.10 percent. Similar to the flight to liquidity in the bond market,
the stock market performance was largely driven by the large
capitalization, blue chip names. As evidence, the Russell 2000, a proxy
for small cap stocks, declined 3.45 percent in 1998.
The Fed's biggest concern is that the equity bubble will burst in 1999.
While there may be various pullbacks throughout the year, the current
economic foundation of low interest rates and ample liquidity still
provide a very good environment for the Dow to reach 10,000 in 1999.
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
General American Capital Company:
We have audited the statements of assets and liabilities, including
the schedules of investments, of the S & P 500 Index, Money Market,
Bond Index, Managed Equity, Asset Allocation, International Index,
Mid-Cap Equity and Small-Cap Equity Funds of General American
Capital Company as of December 31, 1998, the related statements 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 Company's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights information based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the
financial statements and financial highlights information are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. 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 S & P 500 Index, Money
Market, Bond Index, Managed Equity, Asset Allocation, International
Index, Mid-Cap Equity and Small-Cap Equity Funds of General American
Capital Company as of December 31, 1998, the results of their
operations for the year then ended, the changes in their 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
3
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
------------------------------------------------------------------------------
A strong performance in the fourth quarter propelled the S & P 500 Index Fund
in 1998. The fourth quarter rally was the strongest quarterly advance the
market has seen in 20 years. The S & P 500 Index Fund returned 21.2 percent
for the fourth quarter and 28.2 percent for the year, closely following its
benchmark, the S & P 500 Stock Index.
Investors continued to favor large capitalization growth stocks. Technology
stocks led the way, followed by drug stocks that benefited from patents on new
drug technology. The theme in the fourth quarter saw investors running to buy
anything Internet-related. The S & P 500 did not participate in this mania
until the end of the year. However, this frenzy was contagious enough to drive
the entire sector.
------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
------------------------------------------------------------------------------
[GRAPH]
DATE S&P 500 INDEX FUND S&P 500 INDEX
12/31/88 10,000.00 10,000.00
06/30/89 11,559.31 11,647.20
12/31/89 12,975.60 13,152.72
06/30/90 13,324.38 13,557.03
12/31/90 12,480.29 12,735.07
06/30/91 14,291.75 14,559.62
12/31/91 16,250.13 16,628.11
06/30/92 16,141.07 16,523.19
12/31/92 17,460.38 17,906.51
06/30/93 18,315.21 18,768.35
12/31/93 19,177.55 19,695.88
06/30/94 18,500.36 19,019.72
12/31/94 19,398.67 19,949.21
06/30/95 23,253.29 23,969.97
12/31/95 26,546.65 27,420.93
06/30/96 29,226.70 30,216.22
12/31/96 32,623.76 33,748.50
06/30/97 39,286.24 40,659.18
12/31/97 43,324.87 44,965.39
06/30/98 50,883.39 52,936.40
12/31/98 55,522.55 57,820.31
------------------------------------------------------------------------------
ANNUAL RETURNS
------------------------------------------------------------------------------
<TABLE>
<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 28.15% 23.69% 18.70% 15.47%
</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.
4
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
<TABLE>
------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------
<S> <C>
December 31, 1998
ASSETS:
Investments, at market value:
(see accompanying schedule)
Common Stocks $698,213,424
Short term securities 2,269,064
------------
Total investments 700,482,488
Cash 191,355
Broker receivable 101,958
Dividends receivable 670,896
------------
Total assets 701,446,697
------------
LIABILITIES:
Payable to Conning Asset Management
Company 142,931
Payable to General American Life
Insurance Company 28,586
Payable to broker 785,736
------------
Total liabilities 957,253
------------
Total net assets $700,489,444
============
TOTAL SHARES OF CAPITAL STOCK
OUTSTANDING 13,874,504
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 50.49
TOTAL AMORTIZED COST OF INVESTMENTS $351,591,531
</TABLE>
<TABLE>
------------------------------------------------------
STATEMENT OF OPERATIONS
------------------------------------------------------
<S> <C>
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends $ 8,778,930
Interest 157,660
------------
Total investment income 8,936,590
------------
EXPENSES:
Investment management charge 1,484,539
Administrative charge 296,908
------------
Total expenses 1,781,447
------------
Net investment income 7,155,143
------------
NET REALIZED GAIN (LOSS):
Net realized gain on investments 34,608,046
Net realized loss on futures
contracts (298,994)
------------
NET REALIZED GAIN 34,309,052
------------
NET UNREALIZED GAIN:
Net unrealized gain on investments 108,129,875
Net unrealized gain on futures
contracts 44,400
------------
NET UNREALIZED GAIN 108,174,275
------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $149,638,470
============
</TABLE>
<PAGE>
<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 $ 7,155,143 $ 6,303,406
Net realized gain 34,309,052 15,455,129
Net unrealized gain 108,174,275 94,588,306
------------ ------------
Net increase in net assets from operations 149,638,470 116,346,841
Capital share transactions 49,273,624 45,029,520
------------ ------------
Net increase in net assets 198,912,094 161,376,361
Net assets, beginning of year 501,577,350 340,200,989
------------ ------------
Net assets, end of year $700,489,444 $501,577,350
============ ============
See accompanying notes to the financial statements.
</TABLE>
5
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND<F*>
<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> $ 39.40 $ 29.67 $ 24.14 $ 17.64 $ 17.44
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.53 0.52 0.53 0.46 0.44
Net realized and unrealized gain (loss) on
investments 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> 0.30% 0.30% 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%
Average commission rate <F4> $ 0.03 $ 0.04 $ 0.04 -- --
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 15.88 $ 14.78 $ 11.35 $ 11.80 $ 9.09
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.41 0.39 0.38 0.38 0.37
Net realized and unrealized gain (loss) on
investments 1.15 0.71 3.05 (0.83) 2.34
-------- -------- -------- -------- --------
Net increase (decrease) in asset value per
share 1.56 1.10 3.43 (0.45) 2.71
-------- -------- -------- -------- --------
Net asset value, end of year $ 17.44 $ 15.88 $ 14.78 $ 11.35 $ 11.80
======== ======== ======== ======== ========
Total return <F2> 9.83% 7.45% 30.21% -3.82% 29.76%
Net assets, end of year (in thousands) $161,761 $123,458 $102,076 $ 72,665 $ 65,211
Ratio of expenses to average net assets <F3> 0.30% 0.30% 0.30% 0.30% 0.32%
Ratio of net investment income to average net
assets <F3> 2.47% 2.67% 2.89% 3.35% 3.57%
Portfolio turnover rate 2.56% 4.38% 3.92% 4.39% 20.56%
Average commission rate <F4> -- -- -- -- --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect expenses
that apply to the separate accounts investing in the Fund or to the insurance
or variable annuity contracts. Inclusion of these charges would reduce the
total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*> This Fund formerly known as the Equity Index Fund.
See accompanying notes to the financial statements.
</TABLE>
6
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
<TABLE>
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Aerospace & Military Technology
(1.09%)
Boeing Co. 70,880 $ 2,312,460
Crane & Co. 4,750 143,388
General Dynamics Corp. 8,800 515,900
Lockheed Martin Corp. 14,703 1,246,079
Rockwell International Corp. 13,350 648,303
Textron Inc. 11,900 903,650
United Technologies Corp. 16,900 1,837,875
------------
7,607,655
------------
Air Transport (0.44%)
AMR Corp.<F*> 12,700 754,063
Delta Air Lines Inc. 10,000 520,000
FDX Holding Corp.<F*> 10,280 914,919
Southwest Airlines 23,825 534,562
US Air Group<F*> 6,500 338,000
------------
3,061,544
------------
Apparel (0.44%)
CVS Corp. 27,600 1,518,000
Jostens Inc. 2,500 65,468
Liz Claiborne Inc. 4,600 145,184
Nike Inc. Class B 20,000 811,240
Reebok Intl. Inc.<F*> 3,900 58,013
Russell Corp. 2,500 50,780
Springs Industries 1,300 53,868
VF Corp. 8,500 398,438
------------
3,100,991
------------
Business Machines (4.21%)
Apple Computer Inc.<F*> 9,400 384,808
Compaq Computer Corp. 117,124 4,911,829
Data General Corp.<F*> 3,400 55,886
EMC Corp./Mass 35,300 3,000,500
Gateway 2000 Inc.<F*> 10,900 557,938
Honeywell Inc. 8,800 662,746
IBM Corp. 66,440 12,274,790
Milacron Inc. 2,700 51,975
Oracle Corp.<F*> 68,262 2,943,799
Pitney Bowes Inc. 19,600 1,294,815
Unisys Corp.<F*> 17,700 609,535
Xerox Corp. 23,375 2,758,250
------------
29,506,871
------------
Business Services (8.24%)
Adobe Systems Inc. 4,700 219,725
Automatic Data Processing
Inc. 21,000 1,683,927
BMC Software Inc.<F*> 14,400 641,693
Browning-Ferris Industries
Inc. 12,100 344,088
Cabletron Systems<F*> 11,400 95,475
Cendant Corp.<F*> 59,742 1,138,802
Ceridian Corp.<F*> 5,100 356,041
Cisco Systems Inc.<F*> 109,050 10,121,149
Clear Channel
Communications<F*> 17,300 942,850
Computer Assoc. Intl. 39,100 1,666,638
Dell Computers<F*> 88,700 6,491,686
Deluxe Corp. 5,600 204,747
Equifax Inc. 10,300 352,126
First Data Corp. 31,100 985,466
General Instrument Corp.<F*> 11,800 400,456
HBO & Co. 32,600 935,196
HCR Manor Care Inc.<F*> 7,500 220,313
IMS Health Inc. 11,600 875,069
Microsoft Corp.<F*> 176,700 24,505,993
Millipore Corp. 3,000 85,311
Moore Corp. Limited 6,100 67,100
National Service Inds. Inc. 2,900 110,200
Novell Inc.<F*> 24,600 445,875
Peoplesoft Inc.<F*> 16,000 302,992
Sun Microsystems Inc.<F*> 26,400 2,260,500
Tellabs<F*> 13,500 925,587
Thermo Electron<F*> 11,500 194,776
3Com Corp.<F*> 25,000 1,120,300
------------
57,694,081
------------
<PAGE>
Chemicals (1.97%)
Air Products & Chemicals Inc. 16,100 644,000
Alliedsignal Inc. 39,100 1,732,599
Dow Chemical Co. 15,637 1,421,982
E I Du Pont De Nemours & Co. 79,300 4,207,817
Eastman Chemical 5,575 249,481
Ecolab, Inc. 9,000 325,682
B F Goodrich 5,100 182,963
Great Lakes Chemical 4,100 164,000
Hercules Inc. 6,600 180,675
Mallinckrodt Inc. 5,100 157,141
Monsanto 41,850 1,987,875
Morton International Inc. 9,500 232,750
Nalco Chemicals 4,600 142,600
Owens Corning 3,800 134,661
PPG Industries Inc. 12,300 716,475
Rohm & Haas Co. 12,400 373,550
Rubbermaid Inc. 10,400 326,945
Sigma-Aldrich 7,000 205,625
Union Carbide Corp. 9,400 399,500
------------
13,786,321
------------
(continued)
7
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Commercial Banking (7.55%)
BB&T Corp. 19,900 $ 802,208
Bank of New York 52,500 2,113,125
Banc One Corp. 82,114 4,192,905
BankAmerica Corp. 121,745 7,319,918
BankBoston Corp. 20,500 798,209
Banker's Trust New York Corp. 6,700 572,428
Chase Manhattan Corp. (new) 59,724 4,064,934
Citigroup Inc. 160,247 7,932,227
Comerica Inc. 11,300 770,513
Fifth Third Banc 18,700 1,333,534
First Union Corp. 67,992 4,134,730
Huntington Bancshares 14,720 442,513
Keycorp 31,100 995,200
Mellon Bank Corp. 18,200 1,251,250
Mercantile Bancorporation
Inc. 10,600 488,924
J P Morgan & Co. Inc. 13,300 1,397,325
National City Corp. 23,000 1,667,500
Northern Trust Corp. 7,800 681,034
PNC Financial Corp. 21,000 1,136,625
Regions Financial Corp. 14,900 600,648
Summit Bancorporation 12,100 528,613
Suntrust Banks Inc. 14,600 1,116,900
Synovus Financial Corp. 18,300 446,063
US Bancorp 51,719 1,836,025
Union Planters Corp. 8,900 403,277
Wachovia Corp. 14,400 1,259,093
Wells Fargo & Co.<F*> 113,330 4,526,060
------------
52,811,781
------------
Construction (1.11%)
Case Corp. 5,100 111,241
Centex Corp. 4,600 207,285
Fluor Corp. 5,500 234,091
Home Depot Inc. 103,000 6,302,261
Masco Corp. 23,700 681,375
Pulte Home Corp. 3,000 83,436
Stanley Works 6,200 172,050
------------
7,791,739
------------
Consumer Durables (0.17%)
Black & Decker Corp. 6,500 364,403
Maytag Corp. 6,400 398,400
Snap-On Inc. 4,100 142,729
Whirlpool Corp. 5,300 293,488
------------
1,199,020
------------
Containers (0.11%)
Crown Cork & Seal 9,100 280,389
Newell Co. 11,366 468,848
------------
749,237
------------
Domestic Oil (1.26%)
Amerada Hess Corp. 6,300 313,425
Amoco Corp. 66,500 4,014,938
Apache 6,800 172,121
Ashland Inc. 5,300 256,388
Arco 22,875 1,492,594
Kerr-McGee Corp. 3,300 126,225
Oryx Energy<F*> 7,400 99,434
Phillips Petroleum Co. 18,000 767,250
Rowan Companies Inc.<F*> 5,900 59,000
Sunoco Inc. 6,500 234,403
USX-Marathon Group 21,859 658,502
Union Pacific Resources Group 17,474 158,349
Unocal Corp. 16,800 490,342
------------
8,842,971
------------
<PAGE>
Drugs & Medicines (9.81%)
Abbott Laboratories 107,900 5,287,100
Allergan Inc. 4,600 297,850
Alza Corp.<F*> 6,000 313,500
American Home Products Corp. 92,200 5,191,966
Bard C R Inc. 3,900 193,050
Bausch & Lomb Inc. 3,900 234,000
Baxter International 19,900 1,279,809
Becton Dickinson & Co. 17,200 734,216
Boston Scientific Corp.<F*> 27,200 729,286
Columbia HCA/Healthcare 45,386 1,123,304
Guidant Corp. 10,500 1,157,625
Healthsouth Corp.<F*> 29,400 453,848
Humana Inc.<F*> 11,600 206,619
Johnson & Johnson 94,300 7,909,413
Eli Lilly & Co. 77,300 6,870,038
Merck & Co. Inc. 84,525 12,483,244
Pharmacia-Upjohn Inc. 35,405 2,004,807
Pfizer Inc. 91,100 11,427,311
St. Jude Medical<F*> 6,300 174,428
Schering-Plough Corp. 102,900 5,685,225
Tenet Healthcare<F*> 21,900 574,875
Warner-Lambert Co. 57,700 4,338,290
------------
68,669,804
------------
Electronics (5.50%)
Advanced Micro Devices
Inc.<F*> 10,000 289,370
AMP Inc. 15,200 791,342
Andrew Corp.<F*> 5,900 97,350
Applied Materials Inc.<F*> 25,500 1,088,519
Emerson Electric Co. 30,700 1,857,350
Harris Corp. 5,600 205,100
Hewlett-Packard Co. 72,900 4,979,945
Intel Corp. 116,900 13,859,898
(continued)
8
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Electronics (continued)
KLA-Tencor Corp.<F*> 6,500 $ 281,938
LSI Logic Corp.<F*> 9,800 158,025
Medtronic Inc. 33,200 2,465,100
Micron Technology Inc.<F*> 14,900 753,373
Motorola Inc. 42,200 2,576,816
Northern Telecom Ltd. 45,920 2,301,740
Parametric Technology
Corp.<F*> 18,900 307,125
Perkin-Elmer Corp. 3,400 331,711
Raytheon Co. 23,600 1,256,700
Seagate Technology Inc.<F*> 16,900 511,225
Silicon Graphics 13,100 168,663
Solectron Corp.<F*> 8,400 780,671
Texas Instruments Inc. 27,200 2,327,286
Thomas & Betts Corp. 4,400 190,573
Williams Companies Inc. 29,600 923,135
------------
38,502,955
------------
Energy & Utilities (1.50%)
American Electric Power
Co. Inc. 13,300 625,925
Baltimore Gas & Electric Co. 10,300 318,013
Burlington Resources 12,392 443,782
Central & South West Corp. 14,800 406,067
Coastal Corp. 14,800 517,068
Columbia Energy Group 5,850 337,838
Consolidated Edison Inc. 16,300 861,863
Consolidated Natural Gas Co. 6,671 360,234
Dominion Resources Inc. 13,700 640,475
Edison International 25,100 699,662
Enron Corp. 23,000 1,312,426
Entergy Corp. 17,200 535,350
FPL Group Inc. 13,100 807,287
Houston Industries Inc. 20,618 662,353
New Century Energies Inc. 7,800 380,250
Niagara Mohawk Power
Corp.<F*> 13,000 209,625
Northern States Power
Co. (Minn) 10,500 291,375
Sonat Inc. 7,600 205,671
Texas Utilities Co. 19,505 910,630
------------
10,525,894
------------
Energy Raw Materials (0.54%)
Baker Hughes Inc. 22,110 391,060
Halliburton Co. 30,600 906,524
McDermott Intl. 4,100 101,217
Nacco Industries Inc. 600 55,200
Occidental Petroleum Corp. 25,000 421,875
Oneok 2,200 79,475
Peoples Energy Corp. 2,500 99,687
Schlumberger 37,900 1,748,138
------------
3,803,176
------------
<PAGE>
Finance (Non-Banking) (3.07%)
Associates First Capital
Corp. 48,006 2,034,254
Bear Stearns Companies Inc. 7,900 295,263
H & R Block Inc. 7,000 315,000
Capital One Financial Corp. 5,600 644,000
Chubb Corp. 11,600 752,550
Cincinnati Financial Corp. 12,100 443,162
Countrywide Credit 7,700 386,440
Fleet Financial Group Inc. 39,584 1,768,890
Franklin Resources Inc. 18,100 579,200
Golden West Financial 4,000 366,748
Lehman Brothers Holding Inc. 8,700 383,339
MBIA Inc. 6,900 452,377
MBNA Corp. 52,375 1,306,075
Morgan Stanley, Dean Witter
& Co. 41,294 2,931,874
Paychex Inc. 11,400 586,382
Progressive Corp. 6,100 1,033,188
Providian Financial Corp. 10,400 780,000
Republic New York Corp. 7,500 341,715
SLM Holding Corp. 11,706 561,888
Safeco Corp. 9,800 420,783
Schwab (Charles) Corp. 27,875 1,566,213
State Street Corp. 11,300 786,051
SunAmerica, Inc. 14,900 1,208,762
Washington Mutual Inc. 41,769 1,595,033
------------
21,539,187
------------
Food & Agriculture (4.35%)
Archer-Daniels-Midland Co. 41,724 717,110
Bestfoods 20,000 1,065,000
Campbell Soup Co. 31,300 1,721,500
Coca-Cola Company 172,800 11,556,000
Coca-Cola Enterprises 28,200 1,008,150
Conagra Inc. 34,000 1,071,000
Adolph Coors 2,500 141,093
Darden Restaurants 9,600 172,800
General Mills Inc. 10,800 839,700
H J Heinz Co. 25,250 1,429,781
Hershey Foods Corp. 10,000 621,870
Kellogg Co. 28,300 965,737
Pepsico Inc. 103,200 4,224,698
Pioneer Hi-Bred International 16,800 453,600
Quaker Oats Co. 9,500 565,250
Ralston Purina Co. 21,700 702,538
Sara Lee Corp. 66,000 1,860,342
(continued)
9
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Food & Agriculture (continued)
Sysco Corp. 23,500 $ 644,770
Wm. Wrigley Jr. Co. 8,100 725,452
------------
30,486,391
------------
Gold (0.13%)
Barrick Gold Corp. 26,400 514,800
Battle Mountain Gold Co. 16,000 66,000
Homestake Mining Co. 16,600 152,504
Placer Dome Inc. 17,400 200,100
------------
933,404
------------
Government & State Agency
(1.21%)
Federal Home Loan
Mortgage Corp. 47,800 3,080,089
Federal National Mortgage
Assoc. 72,800 5,387,200
------------
8,467,289
------------
Industrial Miscellaneous (2.52%)
Aeroquip-Vickers Inc. 2,400 71,849
American Greetings 4,900 201,204
Amgen<F*> 17,700 1,850,747
Anadarko Petroleum Co. 8,300 256,263
Armstrong World Industries
Inc. 2,800 168,874
Asarco Inc. 2,700 40,667
Autodesk Inc. 3,300 140,867
Avery Dennison Corp. 8,600 387,533
Ball Corp. 2,100 96,075
Biomet Inc. 7,800 313,950
Briggs & Stratton 1,700 84,787
Circuit City Stores Inc. 7,000 349,559
Computer Sciences 11,000 708,806
Cooper Tire & Rubber 5,800 118,535
Corning Inc. 16,200 729,000
Cummins Engine 2,700 95,850
Danaher Corp. 9,300 505,102
Dun & Bradstreet Corp. (new) 11,875 374,799
EG & G 3,200 88,998
Electronic Data Systems Corp. 34,300 1,723,575
Engelhard Corp. 10,050 195,975
Fleetwood Enterprises 2,400 83,400
Foster Wheeler 2,800 36,924
Freeport McMoran 12,500 130,463
Fruit Of The Loom<F*> 5,000 69,060
W.R. Grace & Co.<F*> 5,200 81,572
Harnischfeger Industries Inc. 3,300 33,617
Harrahs Entertainment,
Inc.<F*> 7,000 109,809
Helmerich & Payne 3,500 67,813
Ikon Office Solutions Inc. 9,400 80,483
Laidlaw Inc. 22,900 230,420
Loews Corp. 9,000 884,250
Lowes Companies Inc. 24,500 1,254,082
Mattel Inc. 20,387 465,068
Mead Corp. 7,200 211,045
National Semiconductor
Corp.<F*> 11,400 153,900
Northrop Corp. 4,800 351,000
Praxair 11,000 387,750
Rite Aid Corp. 18,000 892,115
Ryder System Inc. 5,100 132,600
Sealed Air Corp.<F*> 5,833 297,845
Service Corp. International 17,900 681,310
Shared Medical Systems Corp. 1,900 94,763
Sherwin-Williams 12,000 352,500
Tektronix Inc. 3,300 99,205
Timken Co. 4,300 81,162
Waste Management Inc. 39,835 1,857,307
------------
17,622,478
------------
<PAGE>
Insurance (2.44%)
Aetna Inc. 10,122 795,842
Allstate Insurance 58,196 2,247,821
American International
Group Inc. 74,652 7,213,250
Aon Corp. 11,750 650,655
Cigna Corp. 14,800 1,144,218
Jefferson Pilot Corp. 7,450 558,750
Kaufman & Broad Homebuilders 3,200 92,000
Lincoln National Corp. 7,000 572,684
MGIC Investment Corp. 7,900 314,515
Marsh & McLennan Cos. Inc. 17,850 1,043,100
Provident Companies Inc. 9,400 390,100
St. Paul Companies Inc. 16,900 587,275
Torchmark Corp. 9,800 346,058
UNUM Corp. 9,600 560,400
United Healthcare 13,600 585,643
------------
17,102,311
------------
International Oil (4.38%)
Chevron Corp. 45,600 3,781,927
Exxon Corp. 170,900 12,497,062
Mobil Corp. 55,000 4,791,875
Royal Dutch Petroleum Co. 150,300 7,195,613
Tenneco Inc. 11,800 401,932
Texaco Inc. 37,800 1,998,675
------------
30,667,084
------------
(continued)
10
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Liquor (0.52%)
Anheuser-Busch Companies Inc. 33,650 $ 2,208,281
Brown Forman Corp. 'B' 4,800 363,298
Seagram Co. Ltd. 27,900 1,060,200
------------
3,631,779
------------
Media (2.67%)
CBS Corp. 49,900 1,634,225
Comcast Corp. 26,200 1,537,599
R R Donnelley & Sons Co. 9,700 424,976
Dow Jones & Co. 6,500 312,813
Gannett Co. Inc. 20,300 1,309,350
Harcourt General Inc. 4,900 260,616
Interpublic Group Co. 9,500 757,625
King World Productions<F*> 5,100 150,129
Knight Ridder Inc. 5,500 281,188
McGraw-Hill Inc. 7,400 753,875
Meredith Corp. 3,700 140,137
New York Times Co. 13,200 457,868
Omnicom Group 11,800 684,400
Tele Communications Inc.
Class 'A'<F*> (new) 36,500 2,018,888
Time Warner Inc. 84,560 5,247,963
Times Mirror Co. 6,100 341,600
Tribune Co. 8,550 564,300
Viacom Class B<F*> 25,000 1,850,000
------------
18,727,552
------------
Miscellaneous & Conglomerates
(0.53%)
Hartford Financial Services
Group 16,300 894,462
ITT Industries Inc. 8,200 325,950
Marriott International
Class A 17,850 517,650
Minnesota Mining & Mfg. 28,150 2,002,169
------------
3,740,231
------------
Miscellaneous Finance (1.17%)
American Express Co. 32,300 3,302,675
American General Corp. 17,626 1,374,828
Household International Inc. 34,753 1,377,088
Merrill Lynch & Co. Inc. 24,300 1,622,025
Transamerica Corp. 4,400 508,200
------------
8,184,816
------------
Motor Vehicles (1.43%)
Dana Corp. 11,487 469,531
Eaton Corp. 5,000 353,435
Ford Motor Co. 84,900 4,982,526
General Motors 46,050 3,295,430
Genuine Parts Co. 12,425 415,455
TRW Inc. 8,500 477,590
------------
9,993,967
------------
Non-Durables & Entertainment (0.28%)
Brunswick Corp. 6,900 170,775
Costco Companies Inc.<F*> 15,103 1,090,240
Hasbro Inc. 9,600 346,800
Mirage Resorts Inc.<F*> 12,500 186,713
Wendy's International Inc. 8,775 191,400
------------
1,985,928
------------
Non-Ferrous Metals (0.33%)
Alcan Aluminum Limited 15,825 428,255
Aluminum Co. of America 13,500 1,006,587
Cyprus Amax Minerals Co. 6,450 64,500
Inco Ltd. 11,500 121,463
Newmont Mining Corp. 11,577 209,104
Phelps Dodge Corp. 4,100 208,588
Reynolds Metals Co. 5,000 263,435
------------
2,301,932
------------
Optical Photographic Equipment (0.24%)
Eastman Kodak Co. 22,500 1,620,000
Polaroid Corp. 3,045 56,902
------------
1,676,902
------------
<PAGE>
Paper & Forest Products (0.93%)
Bemis Co. Inc. 3,700 140,367
Boise Cascade Corp. 3,866 119,846
Champion International 6,700 271,350
Fort James Corp. 15,400 616,000
Georgia-Pacific Corp. 6,500 380,653
International Paper Co. 21,876 980,307
Kimberly-Clark Corp. 38,172 2,080,374
Louisiana Pacific Corp. 7,600 139,171
Potlatch Corp. 2,000 73,750
Temple Inland Inc. 3,900 231,317
Union Camp Corp. 5,300 357,750
Westvaco Corp. 7,025 188,354
Weyerhaeuser Co. 13,850 703,746
Willamette Industries 7,700 257,950
------------
6,540,935
------------
Producer Goods (4.78%)
Caterpillar Inc. 25,400 1,168,400
Conseco Inc. 21,723 663,898
Cooper Industries Inc. 7,300 348,115
Deere & Co. 17,000 563,125
Dover Corp. 15,500 567,688
FMC Corp.<F*> 2,400 134,400
(continued)
11
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Producer Goods (continued)
General Electric Corp. 228,100 $ 23,280,342
W W Grainger Inc. 6,806 283,300
Illinois Tool Works Inc. 17,400 1,009,200
Ingersoll-Rand Co. 11,500 539,775
Johnson Controls Inc. 5,900 348,100
Navistar Intl. Corp.<F*> 4,600 131,100
Owens-Illinois Inc.<F*> 10,800 330,750
Pall Corp. 8,600 217,683
Parker Hannifin Corp. 7,725 252,994
Raychem Corp. 5,800 187,410
Tyco International Ltd. 45,443 3,428,156
------------
33,454,436
------------
Railroads & Shipping (0.48%)
Burlington Northern Santa Fe 32,924 1,111,185
CSX Corp. 15,700 651,550
Norfolk Southern Corp. 26,850 850,796
Union Pacific Corp. 17,200 775,066
------------
3,388,597
------------
Retail (5.66%)
Albertsons Inc. 17,600 1,120,891
American Stores Co. 19,100 705,497
Autozone Inc.<F*> 10,600 349,132
Cardinal Health Inc. 13,900 1,054,663
Consolidated Stores Corp.<F*> 8,025 162,001
Dayton-Hudson Corp. 31,100 1,687,175
Dillard's Inc. 7,700 218,487
Dollar General 12,875 304,172
Federated Department
Stores<F*> 14,700 640,361
Gap Inc. 41,525 2,335,780
Great Atlantic & Pacific
Tea Co. 2,600 77,025
K Mart Corp.<F*> 34,300 525,202
Kohl's Corp. (Wisconsin)<F*> 11,000 675,807
Kroger Co.<F*> 17,900 1,082,950
Limited Inc. 16,300 474,738
Longs Drug Store 2,700 101,250
May Department Stores Co. 16,084 971,072
McDonald's Corp. 47,700 3,655,013
Fred Meyer Inc.<F*> 10,700 644,675
Nordstrom Inc. 10,800 374,620
J C Penney Co. Inc. 17,600 825,000
Pep Boys 4,400 69,023
Safeway Inc.<F*> 33,900 2,065,764
Sears Roebuck & Co. 27,800 1,181,500
Staples Inc.<F*> 21,900 956,745
Supervalu Inc. 8,400 235,200
TJX Cos. Inc. 22,100 640,900
Tandy Corp. 7,000 288,309
Toys 'R' Us<F*> 18,112 305,640
Tricon Global Restaurants<F*> 10,620 532,328
Tupperware Inc. 4,000 65,747
Venator Group Inc.<F*> 9,400 60,508
Wal-Mart Stores Inc. 156,700 12,761,178
Walgreen Co. 34,700 2,032,101
Winn-Dixie Stores Inc. 10,800 484,650
------------
39,665,104
------------
Soaps & Cosmetics (4.22%)
Alberto Culver Co. 'B' 3,800 101,411
Avon Products Inc. 18,300 809,775
Bristol-Myers Squibb Co. 69,680 9,324,020
Clorox Co. 8,300 969,540
Colgate-Palmolive Co. 20,600 1,913,225
Gillette Co. 78,700 3,802,154
International Flavors
& Fragrances 7,500 331,403
Procter & Gamble Co. 94,000 8,583,327
Unilever NV 44,600 3,698,990
------------
29,533,845
------------
Steel (0.12%)
Allegheny Teledyne Inc. 13,700 279,987
Bethlehem Steel Corp.<F*> 9,000 75,375
Nucor Corp. 6,100 263,825
USX US Steel 6,071 139,633
Worthington Industries, Inc. 6,700 83,750
------------
842,570
------------
Telephone (10.22%)
A T & T Corp. 126,647 9,530,187
Airtouch Communications
Inc.<F*> 40,464 2,918,466
Alltel 19,100 1,142,409
Ameritech Corp. 77,292 4,898,381
Ascend Communications Inc.<F*> 15,500 1,019,125
Bell Atlantic Corp. 108,840 5,768,520
Bellsouth Corp. 138,188 6,892,126
Frontier Corp. 11,900 404,600
GTE Corp. 67,700 4,400,500
Lucent Technologies 93,182 10,250,020
MCI Worldcom Inc.<F*> 124,446 8,929,001
Mediaone Inc.<F*> 42,464 1,995,808
Nextel Communications
Inc.-A<F*> 19,900 470,138
SBC Communications Inc. 137,162 7,355,312
Scientific Atlanta 5,200 118,622
Sprint Corp.<F*> 30,500 2,565,813
Sprint PCS Group 29,250 676,406
US West Inc. 35,407 2,288,177
------------
71,623,611
------------
(continued)
12
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Tires Rubber Goods (0.08%)
Goodyear Tire & Rubber Co. 10,972 $ 553,395
------------
Tobacco (1.52%)
Fortune Brands Inc. 12,000 379,500
Philip Morris Companies Inc. 170,450 9,119,075
RJR Nabisco Holdings 22,600 670,926
UST Inc. 12,900 449,888
------------
10,619,389
------------
Travel & Recreation (0.95%)
Carnival Cruise Lines
Class A 42,000 2,016,000
Walt Disney Productions 143,600 4,308,000
Hilton Hotels Corp. 18,100 346,163
------------
6,670,163
------------
Trucking & Freight (0.04%)
Eastern Enterprises 1,600 70,000
Paccar Inc. 5,400 222,075
------------
292,075
------------
Utilities, Electrical & Gas (1.47%)
AES Corp.<F*> 12,700 601,663
Ameren Corp. 9,600 409,795
Carolina Power & Light Co. 11,000 517,682
Cinergy Corp. 11,054 379,981
DTE Energy Co. 10,100 433,038
Duke Energy Corp. 25,141 1,610,583
Firstenergy Corp. 16,500 537,273
GPU Inc. 8,900 393,264
Nicor Inc. 3,300 139,425
PECO Energy Co. 15,500 645,188
P G & E Corp. 26,600 837,900
P P & L Resources Inc. 10,500 292,687
Pacificorp 20,700 435,983
Public Service Enterprise
Group 16,150 646,000
Sempra Energy 16,722 424,321
Southern Co. 49,100 1,426,944
Unicom Corp. 15,100 582,286
------------
10,314,013
------------
TOTAL COMMON STOCK (99.68%)
(COST $349,322,467) 698,213,424
------------
<CAPTION>
- ---------------------------------------------------------
PAR MARKET
SHORT TERM SECURITIES VALUE VALUE
- ---------------------------------------------------------
<S> <C> <C>
Commercial Paper (0.32%)
Delmarva Power & Light,
4.95%, due 1/4/99 $2,270,000 $ 2,269,064
------------
TOTAL SHORT TERM SECURITIES (0.32%)
(AMORTIZED COST $2,269,064) 2,269,064
------------
TOTAL INVESTMENTS (100.00%)
(AMORTIZED COST $351,591,531) 700,482,488
Other net assets (0.00%) 6,956
------------
TOTAL NET ASSETS (100.00%) $700,489,444
============
<FN>
<F*> Non-income producing securities.
See accompanying notes to the financial statements.
</TABLE>
13
<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.
14
<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>
15
<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>
16
<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)
17
<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)
18
<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>
19
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
-------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
-------------------------------------------------------------------------------
The Bond Index Fund posted four consecutive quarters of positive returns in
1998. Interest rates remained in a tight range for the first half of the year.
In the second half, interest rates declined, Treasuries rallied, and corporate
bond spreads widened. The currency and economic problems of Russia and Asia
sent the risk premium on corporates upward to levels not seen since the 1991
recession. Jittery investors fled to the highest quality securities they could
find. A buying frenzy in Treasuries ensued. As international problems
developed, the Federal Reserve felt a need to act for the first time since
March 1997. The Fed responded by lowering the Federal Funds rate three times,
bringing the Funds rate to 4.8 percent.
The Bond Index Fund was able to participate in some of the Treasury rally, but
lagged its benchmark index, the Lehman Government/Corporate Bond Index, in the
third quarter due to the portfolio's position in corporate bonds. For the
year, Treasuries outperformed corporates. Treasuries averaged 10.0 percent and
corporates averaged 8.6 percent during the last 12 months. After starting the
year at 5.9 percent, the yield on the benchmark 30-year Treasury finished at
5.1 percent. With little change expected in interest rates and a low inflation
environment, corporate bonds will have an opportunity to outperform Treasuries
in the coming months. Corporate bond spreads are still historically wide,
while debt-service burdens remain low for the corporate sector as a whole.
-------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
-------------------------------------------------------------------------------
[GRAPH]
DATE BOND INDEX FUND LEHMAN BROS GOV/CORP BOND INDEX
12/31/88 10,000.00 10,000.00
06/30/89 10,628.48 10,922.40
12/31/89 11,031.51 11,422.86
06/30/90 11,339.85 11,699.41
12/31/90 12,034.63 12,370.14
06/30/91 12,505.18 12,895.62
12/31/91 13,719.33 14,364.95
06/30/92 14,088.53 14,723.50
12/31/92 14,620.95 15,453.34
06/30/93 15,715.30 16,659.63
12/31/93 16,140.12 17,162.42
06/30/94 15,404.67 16,417.06
12/31/94 15,488.68 16,559.89
06/30/95 17,292.77 18,512.30
12/31/95 18,434.07 19,745.96
06/30/96 18,091.47 19,374.34
12/31/96 18,991.29 20,319.61
06/30/97 19,498.18 20,875.76
12/31/97 20,764.17 22,301.37
06/30/98 21,589.95 23,231.78
12/31/98 22,551.55 24,412.19
<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 8.61% 6.92% 8.47% 8.55%
</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.
20
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
<TABLE>
------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------
<S> <C>
December 31, 1998
ASSETS:
Investments, at market value:
(see accompanying schedules)
Bonds $66,880,432
Short term securities 1,191,248
-----------
Total investments 68,071,680
Cash 4,318
Interest receivable 1,118,387
-----------
Total assets 69,194,385
-----------
LIABILITIES:
Payable to Conning Asset Management
Company 14,406
Payable to General American Life
Insurance Company 2,881
-----------
Total liabilities 17,287
-----------
Total net assets $69,177,098
===========
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 2,746,252
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 25.19
TOTAL AMORTIZED COST OF INVESTMENTS $65,457,879
</TABLE>
<TABLE>
------------------------------------------------------
STATEMENT OF OPERATIONS
------------------------------------------------------
<S> <C>
For the year ended December 31, 1998
INVESTMENT INCOME:
Interest $3,668,432
----------
Total investment income 3,668,432
----------
EXPENSES:
Investment management charge 150,887
Administrative charge 30,177
----------
Total expenses 181,064
----------
Net investment income 3,487,368
----------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 126,562
----------
NET UNREALIZED GAIN ON INVESTMENTS:
Net unrealized gain from investments 1,349,803
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $4,963,733
==========
</TABLE>
<PAGE>
<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 $3,487,368 $ 2,383,298
Net realized gain on investments 126,562 50,805
Net unrealized gain on investments 1,349,803 990,628
----------- -----------
Net increase in net assets from operations 4,963,733 3,424,731
Capital share transactions 15,883,675 6,890,277
----------- -----------
Net increase in net assets 20,847,408 10,315,008
Net assets, beginning of year 48,329,690 38,014,682
----------- -----------
Net assets, end of year $69,177,098 $48,329,690
=========== ===========
See accompanying notes to the financial statements.
</TABLE>
21
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND<F*>
<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> $ 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 0.60 0.59 (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><F*> 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%
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 16.33 $ 15.32 $ 13.44 $ 12.32 $ 11.17
-------- -------- -------- -------- --------
Income from operations:
Net investment income 1.07 1.09 1.08 1.03 0.98
Net realized and unrealized gain (loss) on
investments 0.63 (0.08) 0.80 0.09 0.17
-------- -------- -------- -------- --------
Net increase in asset value per share 1.70 1.01 1.88 1.12 1.15
-------- -------- -------- -------- --------
Net asset value, end of year $ 18.03 $ 16.33 $ 15.32 $ 13.44 $ 12.32
======== ======== ======== ======== ========
Total return <F2> 10.39% 6.57% 14.00% 9.09% 10.32%
Net assets, end of year (in thousands) $ 47,636 $ 20,217 $ 14,438 $ 11,137 $ 9,545
Ratio of expenses to average net assets
<F3><F*> 0.30% 0.39% 0.42% 0.42% 0.43%
Ratio of net investment income to average
net assets <F3> 6.11% 6.89% 7.63% 8.12% 8.24%
Portfolio turnover rate 8.80% 43.50% 2.23% 18.88% 28.57%
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect expenses
that apply to the separate accounts investing in the Fund or to the insurance
or variable annuity contracts. Inclusion of these charges would reduce the
total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F*> Name and investment objective changed from Intermediate Bond Fund on
October 1, 1992. The Investment advisor charges changed from .375 percent to
.250 percent of the average daily value of the net assets on October 1, 1992.
The objective of the Bond Index Fund is to provide a rate of return that
reflects the performance of the publicly traded bond market as a whole.
See accompanying notes to the financial statements.
</TABLE>
22
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
<TABLE>
------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS
Business Machines (0.73%)
Comdisco Inc., 6.5%, due 06/15/2000 $ 500,000 $ 501,940
-----------
Commercial Banking (6.83%)
ABN AMRO Bank-NY, 7.125%, due 10/15/2093 500,000 513,900
First National Bank Omaha, 7.32%, due 12/01/2010 1,500,000 1,638,420
Golden State Escrow Corp., 7.125%, due 08/01/2005 1,000,000 985,320
Nationsbank Corp., 5.375%, due 04/15/2000 500,000 499,845
Wells Fargo Capital, 7.95%, due 12/01/2026 1,000,000 1,090,600
-----------
4,728,085
-----------
Domestic Oil (1.52%)
Dual Drilling Co., 9.875%, due 01/15/2004 1,000,000 1,051,800
-----------
Finance (Non-Banking) (2.20%)
Merrill Lynch & Co. Inc., 8.25%, due 11/15/1999 500,000 511,840
Pitney Bowes Credit Corp., 5.65%, due 01/15/2003 1,000,000 1,012,590
-----------
1,524,430
-----------
Food & Agriculture (0.73%)
Coca Cola Enterprises, 5.75%, due 11/01/2008 500,000 503,700
-----------
Industrial Miscellaneous (1.58%)
Norfolk Southern, 7.875%, due 02/15/2004 1,000,000 1,093,640
-----------
Entertainment (0.72%)
Disney (Walt) Co., 5.125%, due 12/15/2003 500,000 497,230
-----------
Motor Vehicles (0.74%)
Ford Motor Company, 6.625%, due 10/01/2028 500,000 513,465
-----------
Retail (3.80%)
Lowes Companies Inc., 6.875%, due 02/15/2028 1,000,000 1,049,710
Rite-Aid Corp., 6.875%, due 08/15/2013 500,000 517,485
Wal-Mart Stores, 9.10%, due 07/15/2000 1,000,000 1,059,770
-----------
2,626,965
-----------
Telephone (3.04%)
Southwestern Bell, 6.625%, due 07/15/2007 1,000,000 1,079,700
Sprint Capital Corp., 6.125%, due 11/15/2008 1,000,000 1,021,830
-----------
2,101,530
-----------
Travel & Recreation (1.04%)
Hertz Corp., 7.00%, due 04/15/2001 700,000 719,558
-----------
Utilities, Electrical & Gas (3.34%)
Hydro Quebec, 8.40%, due 01/15/2022 1,000,000 1,243,960
Pacific Gas & Electric, 7.25%, due 08/01/2026 500,000 531,580
Texas Utilities Electric, 8.125%, due 02/01/2002 500,000 537,940
-----------
2,313,480
-----------
TOTAL CORPORATE BONDS (26.27%) (AMORTIZED COST $17,295,487) 18,175,823
-----------
(continued)
23
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT SECURITIES
United States Government Securities (52.94%)
US Treasury Bonds, 10.75%, due 02/15/2003 $1,000,000 $ 1,222,500
US Treasury Bonds, 9.875%, due 11/15/2015 500,000 752,030
US Treasury Notes, 9.25%, due 02/15/2016 500,000 717,345
US Treasury Bonds, 7.50%, due 11/15/2016 1,000,000 1,242,190
US Treasury Bonds, 8.75%, due 05/15/2017 1,000,000 1,391,090
US Treasury Bonds, 8.125%, due 08/15/2019 1,000,000 1,335,470
US Treasury Bonds, 7.875%, due 02/15/2021 800,000 1,052,128
US Treasury Notes, 6.25%, due 08/15/2023 1,000,000 1,117,660
US Treasury Notes, 6.125%, due 11/15/2027 1,000,000 1,119,370
US Treasury Bonds, 5.50%, due 08/15/2028 2,000,000 2,093,440
US Treasury Notes, 6.625%, due 03/31/2002 1,000,000 1,057,030
US Treasury Notes, 6.50%, due 05/31/2002 800,000 844,624
US Treasury Notes, 6.25%, due 06/30/2002 1,000,000 1,049,690
US Treasury Notes, 6.00%, due 08/15/2000 1,000,000 1,020,620
US Treasury Notes, 5.75%, due 10/31/2002 700,000 725,158
US Treasury Notes, 5.50%, due 01/31/2003 1,000,000 1,029,530
US Treasury Notes, 5.50%, due 02/15/2008 1,000,000 1,059,690
US Treasury Notes, 7.50%, due 11/15/2001 1,250,000 1,344,138
US Treasury Notes, 6.00%, due 10/15/1999 400,000 404,000
US Treasury Notes, 5.75%, due 08/15/2003 1,500,000 1,566,330
US Treasury Notes, 7.25%, due 05/15/2004 1,000,000 1,120,780
US Treasury Notes, 7.25%, due 08/15/2004 1,000,000 1,124,220
US Treasury Notes, 7.50%, due 10/31/1999 1,000,000 1,022,340
US Treasury Notes, 7.75%, due 12/31/1999 1,000,000 1,029,840
US Treasury Notes, 6.75%, due 04/30/2000 1,000,000 1,026,250
US Treasury Notes, 6.125%, due 09/30/2000 1,000,000 1,024,530
US Treasury Notes, 5.875%, due 11/15/2005 1,000,000 1,066,720
US Treasury Notes, 5.625%, due 11/30/2000 1,000,000 1,017,810
US Treasury Notes, 6.50%, due 05/31/2001 1,000,000 1,041,720
US Treasury Notes, 7.00%, due 07/15/2006 1,000,000 1,138,590
US Treasury Notes, 8.50%, due 02/15/2000 650,000 676,709
US Treasury Notes, 8.875%, due 05/15/2000 500,000 527,420
US Treasury Notes, 6.375%, due 09/30/2001 1,000,000 1,043,750
US Treasury Notes, 6.50%, due 10/18/2006 500,000 554,610
US Treasury Bonds, 7.75%, due 02/15/2001 1,000,000 1,061,720
-----------
36,621,042
-----------
Other Government Securities (1.79%)
State of Israel, 6.375%, due 12/15/2005 1,000,000 969,940
Manitoba Province, 9.00%, due 12/15/2000 250,000 268,228
-----------
1,238,168
-----------
TOTAL GOVERNMENT SECURITIES (54.73%) (AMORTIZED COST
$36,548,658) 37,859,210
-----------
(continued)
24
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
------------------------------------------------------------------------------------------
<S> <C> <C>
AGENCY SECURITIES
Government & State Agency (15.68%)
FNMA, 6.80%, due 01/10/2003 $ 500,000 $ 529,455
FNMA, 5.250%, due 01/15/2003 1,000,000 1,006,870
FNMA, 5.750%, due 02/15/2008 1,000,000 1,035,470
FNMA, 5.625%, due 03/15/2001 2,000,000 2,029,380
FNMA, 5.750%, due 04/15/2003 1,000,000 1,026,560
FNMA, 5.750%, due 06/15/2005 1,000,000 1,032,500
FNMA, 6.160%, due 08/07/2028 401,000 419,546
FNMA, 6.210%, due 08/06/2038 625,000 655,468
FNMA, 5.490%, due 08/18/2000 1,000,000 1,007,810
FNMA Global Benchmark Note, 6.00%, due 05/15/2008 1,000,000 1,055,620
Tennessee Valley Authority, 6.00% due 03/15/2013 1,000,000 1,046,720
-----------
TOTAL GOVERNMENT AND STATE AGENCY SECURITIES (15.68%)
(AMORTIZED COST $10,422,486) 10,845,399
-----------
TOTAL BONDS (96.68%) (AMORTIZED COST $64,266,631) 66,880,432
-----------
<CAPTION>
------------------------------------------------------------------------------------------
PAR MARKET
SHORT TERM SECURITIES VALUE VALUE
------------------------------------------------------------------------------------------
Commercial Paper (1.72%)
<S> <C> <C>
Eagle Funding Capital Corp., due 01/02/1999 1,002,000 1,001,326
Delmarva Power & Light, due 01/04/1999 190,000 189,922
-----------
TOTAL SHORT TERM SECURITIES (1.72%) (AMORTIZED COST
$1,191,248) 1,191,248
-----------
TOTAL INVESTMENTS (98.40%) (AMORTIZED COST $65,457,879) 68,071,680
Other net assets (1.60%) 1,105,418
-----------
TOTAL NET ASSETS (100.00%) $69,177,098
===========
See accompanying notes to the financial statements.
</TABLE>
25
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
------------------------------------------------------------------------------
The Managed Equity Fund made a strong recovery in the fourth quarter with a
return of 24.0 percent compared to 21.3 percent for the S & P 500 Index, 17.8
percent for the benchmark Lipper Growth and Income Funds and 17.4 percent for
the S & P 500/Barra Value Index. For the year, the fund returned 14.2 percent
versus 28.6 for the S & P 500. The outstanding return in 1998 by the S & P
500, for the fourth consecutive year, masks the challenge faced by the broader
market. Investors experienced unprecedented performance divergence in which
the returns for the largest capitalization, growth-oriented stocks sharply
outpaced all other market segments. The strong performance for the fund in the
fourth quarter is due in part to a modest recovery in the traditional value
style, but more to the fund's focus on stocks within the value style that are
both large capitalization and provide earnings visibility.
Throughout the year, positive stock performance followed from the sectors of
the economy that proved most robust: diversified manufacturing,
telecommunications, consumer cyclicals, diversified financials and technology.
In the third quarter, the correction that accompanied fears of a major
economic slowdown set the stage for major recoveries in select industries once
the concern over a meltdown subsided. In the final 2 1/2 months of the year,
retailers such as TJX and Costco rebounded, up 84 and 62 percent respectively;
building materials concern Vulcan Materials gained 34 percent; and
interest-rate-sensitive businesses such Freddie Mac and American General rose
more than 30 percent each. Conversely, the only bright spot in the otherwise
dismal energy sector--where the Fund maintains a modest overweight--was the
boost in the price of Mobil's shares following the announcement of Exxon's
intention to acquire the company.
------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
------------------------------------------------------------------------------
[GRAPH]
DATE MANAGED EQUITY FUND S&P 500 INDEX
12/31/88 10,000.00 10,000.00
06/30/89 11,506.89 11,647.20
12/31/89 13,107.06 13,152.72
06/30/90 13,537.04 13,557.03
12/31/90 12,715.12 12,735.07
06/30/91 14,560.66 14,559.62
12/31/91 16,049.67 16,628.11
06/30/92 16,094.71 16,523.19
12/31/92 17,118.76 17,906.51
06/30/93 17,462.72 18,768.35
12/31/93 18,636.39 19,695.88
06/30/94 18,093.70 19,019.72
12/31/94 17,968.76 19,949.21
06/30/95 21,433.26 23,969.97
12/31/95 23,964.77 27,420.93
06/30/96 26,200.47 30,216.22
12/31/96 28,978.72 33,748.50
03/01/97 30,724.76 36,137.89
06/30/97 32,902.32 40,659.18
12/31/97 35,728.49 44,965.39
06/30/98 39,075.72 52,936.40
12/31/98 40,797.23 57,820.31
[FN]
<F*> On March 1, 1997 Conning Asset Management Company assumed portfolio
management duties from the former sub-advisor of the fund, Morgan Stanley Asset
Management.
<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 14.19% 16.96% 15.10% 11.95%
</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.
26
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
<TABLE>
------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------
<S> <C>
December 31, 1998
ASSETS:
Investments, at market value:
(see accompanying schedules)
Common stocks $59,778,424
Short term securities 1,998,306
-----------
Total investments 61,776,730
Cash 1,676
Dividends receivable 45,356
-----------
Total assets 61,823,762
-----------
LIABILITIES:
Payable to Conning Asset Management
Company 14,925
Payable to General American Life
Insurance Company 5,120
-----------
Total liabilities 20,045
-----------
Total net assets $61,803,717
===========
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 1,734,744
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 35.63
TOTAL AMORTIZED COST OF INVESTMENTS $44,685,891
</TABLE>
<TABLE>
------------------------------------------------------
STATEMENT OF OPERATIONS
------------------------------------------------------
<S> <C>
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends $ 989,281
Interest 99,970
----------
Total investment income 1,089,251
----------
EXPENSES:
Investment management charge 172,210
Administrative charge 58,884
----------
Total expenses 231,094
----------
Net investment income 858,157
----------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 5,970,966
----------
NET UNREALIZED GAIN ON INVESTMENTS:
Net unrealized gain on investments 1,087,077
----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $7,916,200
==========
</TABLE>
<PAGE>
<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 $ 858,157 $ 1,205,042
Net realized gain on investments 5,970,966 2,667,587
Net unrealized gain on investments 1,087,077 7,544,604
----------- -----------
Net increase in net assets from operations 7,916,200 11,417,233
Capital share transactions (5,250,585) (866,166)
----------- -----------
Net increase in net assets 2,665,615 10,551,067
Net assets, beginning of year 59,138,102 48,587,035
----------- -----------
Net assets, end of year $61,803,717 $59,138,102
=========== ===========
See accompanying notes to the financial statements.
</TABLE>
27
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY 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> $ 31.20 $ 25.31 $ 20.93 $ 15.69 $ 16.27
------- ------- ------- -------- --------
Income from operations:
Net investment income 0.48 0.63 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> <F5> 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%
Average commission rate <F4> $ 0.06 $ 0.06 $ 0.04 -- --
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------
1993 1992 1991 1990 1989
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 14.95 $ 14.02 $ 11.10 $ 11.45 $ 8.73
------- ------- ------- -------- --------
Income from operations:
Net investment income 0.32 0.35 0.38 0.38 0.26
Net realized and unrealized gain (loss) on
investments 1.00 0.58 2.54 (0.73) 2.46
------- ------- ------- -------- --------
Net increase (decrease) in asset value per share 1.32 0.93 2.92 (0.35) 2.72
------- ------- ------- -------- --------
Net asset value, end of year $ 16.27 $ 14.95 $ 14.02 $ 11.10 $ 11.45
======= ======= ======= ======== ========
Total return <F2> 8.87% 6.66% 26.23% -2.99% 31.07%
Net assets, end of year (in thousands) $32,885 $29,401 $22,006 $ 14,769 $ 11,785
Ratio of expenses to average net assets <F3> 0.50% 0.51% 0.53% 0.57% 0.60%
Ratio of net investment income to average net
assets <F3> 2.07% 2.55% 2.99% 3.47% 2.62%
Portfolio turnover rate 25.89% 9.34% 12.15% 28.38% 51.26%
Average commission rate <F4> -- -- -- -- --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect expenses
that apply to the separate accounts investing in the Fund or to the insurance
or variable annuity contracts. Inclusion of these charges would reduce the
total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F5> On March 1, 1997, Conning Asset Management Company took over the asset
management of the Managed Equity Fund. The management fee was reduced to .40
percent on the first $10 million of assets, .30 percent on the balance over $10
million and less than $30 million and .25 percent on the balance in excess of
$30 million.
See accompanying notes to the financial statements.
</TABLE>
28
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
<TABLE>
--------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
--------------------------------------------------------
<CAPTION>
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Aerospace & Military Technology
(4.41)
Boeing Co. 27,200 $ 887,400
United Technologies Corp. 16,900 1,837,875
------------
2,725,275
------------
Air Transport (1.69%)
AMR Corp.<F*> 17,600 1,045,000
------------
Business Machines (9.56%)
Honeywell Inc. 22,800 1,717,114
IBM Corp. 14,400 2,660,400
Quantum Corp.<F*> 72,000 1,530,000
------------
5,907,514
------------
Business Services (4.62%)
Cisco Systems Inc.<F*> 30,750 2,853,969
------------
Commercial Banking (10.71%)
Banc One Corp. 36,960 1,887,250
BankAmerica Corp. 19,010 1,142,975
Chase Manhattan Corp. (new) 31,700 2,157,565
Citigroup Inc. 28,900 1,430,550
------------
6,618,340
------------
Construction (2.66%)
Vulcan Materials Co. 12,500 1,644,525
------------
Domestic Oil (4.19%)
Ashland Inc. 24,400 1,180,350
Arco 21,600 1,409,400
------------
2,589,750
------------
Drugs & Medicines (7.58%)
Baxter International 16,200 1,041,853
Merck & Co. Inc. 12,100 1,787,013
Total Renal Care Holdings 62,750 1,855,015
------------
4,683,881
------------
Energy & Utilities (2.86%)
FPL Group Inc. 28,700 1,768,638
------------
Energy Raw Materials (1.24%)
Baker Hughes Inc. 43,500 769,385
------------
Finance (Non-Banking) (6.13%)
Associates First Capital Corp. 39,600 1,678,050
SLM Holding Corp. 43,950 2,109,600
------------
3,787,650
------------
Government & State Agency (2.66%)
Federal Home Loan Mortgage
Corp. 25,500 1,643,144
------------
Industrial Miscellaneous (1.34%)
Diamond Offshore Drilling Inc. 35,000 829,045
------------
Insurance (2.01%)
Equitable Companies Inc. 21,500 1,244,313
------------
International Oil (2.33%)
Mobil Corp. 16,500 1,437,563
------------
Media (1.80%)
McGraw-Hill Inc. 10,900 1,110,438
------------
Miscellaneous Finance (3.02%)
American General Corp. 23,900 1,864,200
------------
Non-Durables & Entertainment
(3.09%)
Costco Companies Inc.<F*> 26,500 1,912,956
------------
Producer Goods (2.39%)
Illinois Tool Works Inc. 25,500 1,479,000
------------
<PAGE>
Retail (5.55%)
May Department Stores Co. 29,000 1,750,875
TJX Cos Inc. 58,000 1,682,000
------------
3,432,875
------------
Telephone (9.31%)
A T & T Corp. 16,300 1,226,575
MCI Worldcom Inc. 36,000 2,583,000
Sprint Corp. 23,100 1,943,288
------------
5,752,863
------------
Tobacco (4.90%)
Philip Morris Companies Inc. 56,600 3,028,100
------------
Travel & Recreation (2.67%)
Walt Disney Productions 55,000 1,650,000
------------
TOTAL COMMON STOCK (96.72%)
(COST $42,687,585) 59,778,424
------------
(continued)
29
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
--------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
--------------------------------------------------------
--------------------------------------------------------
PAR MARKET
SHORT TERM SECURITIES VALUE VALUE
--------------------------------------------------------
<S> <C> <C>
Commercial Paper (3.24%)
Cooperative Assoc. of Trac
"A", 6.21%, due 1/6/99 $1,000,000 $ 999,139
Eagle Funding Capital
Corp., 6.01%,
due 1/6/99 1,000,000 999,167
------------
1,998,306
------------
TOTAL SHORT TERM SECURITIES (3.24%)
(AMORTIZED COST $1,998,306) 1,998,306
------------
TOTAL INVESTMENTS (99.96%)
(AMORTIZED COST $44,685,891) 61,776,730
Other net assets (0.04%) 26,987
------------
TOTAL NET ASSETS (100.00%) $ 61,803,717
============
<FN>
<F*> Non-income producing securities.
See accompanying notes to the financial statements.
</TABLE>
30
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
------------------------------------------------------------------------------
The Asset Allocation Fund gained 17.9 percent in 1998 compared to 13.5 percent
for the benchmark Lipper Flexible Portfolio Average over the same period. The
strong performance of the fund is due in part to the strong return in the
equity portfolio, which rose 30.4 percent in the fourth quarter versus a 21.3
percent increase in the S & P 500 Index.
History will record 1998 as a year of extreme volatility and of extreme
performance divergence by market capitalization strata. Large-capitalization
growth stocks proved to be the narrow segment of the market entirely
responsible for the above-average returns. The biggest contribution to the
outstanding returns in 1998 came from the technology and pharmaceutical
sectors, which soared over 80 percent and 68 percent, respectively. The Asset
Allocation Fund maintains an overweight position in technology and is market
weighted in drug stocks. The energy, transportation and basic materials
sectors posted negative returns on the year, despite the healthy economy.
The fixed income portion of the portfolio, a blend of high quality corporate
and treasury securities, trailed the benchmark Lehman Government/Corporate
Index due primarily to an underweight in U.S. Treasuries, which significantly
outperformed all other fixed income sectors.
At year-end, the fund maintained an asset mix of 74 percent stocks, 18 percent
bonds, and 8 percent cash.
------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
------------------------------------------------------------------------------
[GRAPH]
LEHMAN BROTHERS
ASSET S&P 500 INTERMEDIATE GOV/CORP
DATE ALLOCATION FUND INDEX BOND INDEX
12/31/88 10,000.00 10,000.00 10,000.00
06/30/89 11,110.00 11,647.20 10,778.00
12/31/89 11,991.40 13,152.72 11,276.70
06/30/90 12,314.33 13,557.03 11,621.77
12/31/90 12,287.48 12,735.07 12,310.71
06/30/91 13,318.97 14,559.62 12,845.36
12/31/91 14,721.93 16,628.11 14,111.27
06/30/92 14,794.47 16,523.19 14,536.30
12/31/92 15,701.79 17,906.51 15,123.28
06/30/93 16,388.73 18,768.35 16,062.13
12/31/93 17,200.71 19,695.88 16,451.15
06/30/94 16,601.30 19,019.72 16,020.46
12/31/94 16,521.78 19,949.21 16,133.56
06/30/95 19,279.50 23,969.97 17,680.93
12/31/95 21,293.42 27,420.93 18,604.76
06/30/96 22,746.04 30,216.22 18,564.20
12/31/96 24,628.98 33,748.50 19,357.45
06/30/97 27,320.13 40,659.18 19,905.65
12/31/97 29,241.86 44,965.39 20,880.63
06/30/98 32,046.10 52,936.40 21,603.94
12/31/98 34,463.79 57,820.31 22,637.90
<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 17.86% 14.91% 13.17% 12.47%
</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.
31
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
<TABLE>
------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------
<S> <C>
December 31, 1998
ASSETS:
Investments, at market value:
(see accompanying schedules)
Bonds $ 24,171,230
Common stocks 90,575,932
Preferred stocks 935,000
Short term securities 8,273,206
------------
Total investments 123,955,368
Cash 92,467
Dividends and interest receivable 523,092
------------
Total assets 124,570,927
------------
LIABILITIES:
Payable to Conning Asset Management
Company 51,182
Payable to General American Life
Insurance Company 10,236
------------
Total liabilities 61,418
------------
Total net assets $124,509,509
============
TOTAL SHARES OF CAPITAL STOCK
OUTSTANDING 3,315,873
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 37.55
TOTAL AMORTIZED COST OF INVESTMENTS $ 89,369,639
</TABLE>
<TABLE>
------------------------------------------------------
STATEMENT OF OPERATIONS
------------------------------------------------------
<S> <C>
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends $ 1,126,326
Interest 2,297,784
-----------
Total investment income 3,424,110
-----------
EXPENSES:
Investment management charge 565,993
Administrative charge 113,198
-----------
Total expenses 679,191
-----------
Net investment income 2,744,919
-----------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 7,623,117
-----------
NET UNREALIZED GAIN ON INVESTMENTS:
Net unrealized gain on investments 8,241,285
-----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $18,609,321
===========
</TABLE>
<PAGE>
<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 $ 2,744,919 $ 3,266,932
Net realized gain on investments 7,623,117 726,549
Net unrealized gain on investments 8,241,285 13,145,289
------------ ------------
Net increase in net assets from operations 18,609,321 17,138,770
Capital share transactions (5,369,170) 7,939,435
------------ ------------
Net increase in net assets 13,240,151 25,078,205
Net assets, beginning of year 111,269,358 86,191,153
------------ ------------
Net assets, end of year $124,509,509 $111,269,358
============ ============
See accompanying notes to the financial statements.
</TABLE>
32
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION 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> $ 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%
Average commission rate <F4> $ 0.06 $ 0.06 $ 0.04 -- --
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 17.11 $ 16.04 $ 13.39 $ 13.07 $ 10.90
-------- -------- ------- ------- -------
Income from operations:
Net investment income 0.60 0.62 0.65 0.69 0.60
Net realized and unrealized gain (loss) on
investments 1.03 0.45 2.00 (0.37) 1.57
-------- -------- ------- ------- -------
Net increase in asset value per share 1.63 1.07 2.65 0.32 2.17
-------- -------- ------- ------- -------
Net asset value, end of year $ 18.74 $ 17.11 $ 16.04 $ 13.39 $ 13.07
======== ======== ======= ======= =======
Total return <F2> 9.55% 6.66% 19.81% 2.47% 19.91%
Net assets, end of year (in thousands) $ 65,070 $ 53,369 $21,149 $12,545 $ 5,244
Ratio of expenses to average net assets <F3> 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment income to average net
assets <F3> 3.33% 3.80% 4.37% 5.41% 4.82%
Portfolio turnover rate 27.59% 12.14% 5.14% 15.46% 28.06%
Average commission rate <F4> -- -- -- -- --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect expenses
that apply to the separate accounts investing in the Fund or to the insurance
or variable annuity contracts. Inclusion of these charges would reduce the
total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
See accompanying notes to the financial statements.
</TABLE>
33
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
<TABLE>
-------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
-------------------------------------------------------
<CAPTION>
-------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
-------------------------------------------------------
<S> <C> <C>
Government & State Agency
FNMA, 8.35%,
due 11/10/1999 $ 150,000 $ 154,242
------------
TOTAL GOVERNMENT & STATE
AGENCY (0.12%) (AMORTIZED
COST $149,838) 154,242
------------
US Government Securities
Quebec Province, 8.10%,
due 04/23/2002 1,000,000 1,078,120
US Treasury Bonds, 7.25%,
due 05/15/2016 1,500,000 1,817,115
US Treasury Notes, 6.375%,
due 08/15/2002 1,000,000 1,054,840
US Treasury Notes, 5.75%,
due 08/15/2003 1,000,000 1,044,220
US Treasury Notes, 8.00%,
due 08/15/1999 1,000,000 1,020,000
------------
TOTAL GOVERNMENT SECURITIES
(4.83%) (AMORTIZED COST
$5,628,775) 6,014,295
------------
CORPORATE BONDS
Air Transport (0.96%)
Delta Airlines, 9.20%,
due 09/23/2014 1,000,000 1,200,260
------------
Commercial Banking (0.21%)
Boatmen's Bancshares,
6.75%, due 03/15/2003 250,000 260,458
------------
Chemicals (0.24%)
E I Dupont De Nemours &
Co., 8.25%,
due 09/15/2006 250,000 295,973
------------
Construction (0.43%)
Hanson Overseas BV,
7.375%, due 01/15/2003 500,000 533,005
------------
Domestic Oil (0.84%)
Dual Drilling Co., 9.875%,
due 01/15/2004 1,000,000 1,051,800
------------
Finance (Non-Banking) (1.67%)
Associates Corp., 6.875%,
due 02/01/2003 500,000 524,225
Bear Stearns Co., 6.75%,
due 04/15/2003 1,000,000 1,030,020
Merrill Lynch & Co. Inc.,
7.375%, due 08/17/2002 500,000 529,495
------------
2,083,740
------------
Food & Agriculture (0.42%)
Coca-Cola Company, 6.625%,
due 10/01/2002 500,000 519,685
------------
Insurance (0.91%)
AON Corp., 8.205%,
due 01/01/2027 1,000,000 1,134,590
------------
Liquor (0.41%)
Anheuser-Busch Companies
Inc., 6.90%,
due 10/01/2002 500,000 506,630
------------
Media (1.30%)
Continental Cablevision,
11.00%, due 06/01/2007 1,000,000 1,074,100
Seagram Company Ltd.,
8.35%, due 11/15/2006 500,000 543,765
------------
1,617,865
------------
Motor Vehicles (0.86%)
Enterprise Rent A Car,
7.50%, due 06/15/2003 1,000,000 1,065,450
------------
Paper & Forest Products
(0.69%)
Celulosa Arauco &
Constitucion, 7.00%,
due 12/15/2007 1,000,000 865,060
------------
<PAGE>
Railroads & Shipping (0.42%)
Canadian National Railway,
6.625%, due 05/15/2003 500,000 517,910
------------
Retail (0.41%)
Dayton Hudson Corp.,
7.50%, due 03/01/1999 500,000 501,760
------------
Telephone (1.32%)
GTE Southwest, 6.54%,
due 12/01/2005 500,000 527,720
US West Communications,
8.875%, due 06/01/2031 1,000,000 1,121,330
------------
1,649,050
------------
Utilities, Electrical & Gas
(1.72%)
Consolidated Edison,
7.375%, due 09/15/2000 500,000 516,510
Niagara Mohawk Power,
9.75%, due 11/01/2005 500,000 592,020
Northern States Power,
6.125%, due 12/01/2005 500,000 512,625
Texas Utilities Co.,
7.375%, due 08/01/2001 500,000 523,900
------------
2,145,055
------------
TOTAL CORPORATE BONDS (12.81%)
(AMORTIZED COST $15,522,888) 15,948,291
------------
(continued)
34
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
-------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
-------------------------------------------------------
-------------------------------------------------------
PAR MARKET
BONDS VALUE VALUE
-------------------------------------------------------
<S> <C> <C>
MORTGAGE BACKED SECURITIES
AND CMO'S
Government & State Agency
(0.38%)
FNMA 1992-128g, 6.00%,
due 02/25/2022 $ 474,652 $ 474,206
------------
Media (0.81%)
Disney Spin III, 14.00%,
due 03/01/2000 1,000,000 1,010,000
------------
Mortgage Backed Securities
(0.46%)
FNMA 1992-146 PH, 7.50%,
due 09/25/2019 570,380 570,196
------------
TOTAL MORTGAGE BACKED
SECURITIES AND CMO'S (1.65%)
(AMORTIZED COST $2,103,312) 2,054,402
------------
TOTAL BONDS (19.41%)
(AMORTIZED COST $23,404,813) 24,171,230
------------
<CAPTION>
-------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
-------------------------------------------------------
<S> <C> <C>
Aerospace & Military
Technology (1.82%)
United Technologies Corp. 20,800 2,262,000
------------
Air Transport (0.85%)
AMR Corp.<F*> 18,000 1,068,750
------------
Commercial Banking (5.55%)
BankAmerica Corp. 40,874 2,457,549
Chase Manhattan Corp. (new) 40,800 2,776,930
Citigroup Inc. 34,000 1,683,000
------------
6,917,479
------------
Business Machines (6.27%)
Compaq Computer Corp. 32,000 1,341,984
EMC Corp./Mass<F*> 20,000 1,700,000
IBM Corp. 12,000 2,217,000
Oracle Corp.<F*> 49,200 2,121,750
Quantum Corp.<F*> 20,000 425,000
------------
7,805,734
------------
Business Services (4.28%)
CSG Systems
International<F*> 20,000 1,580,000
Cisco Systems Inc.<F*> 40,500 3,758,886
------------
5,338,886
------------
Chemicals (2.93%)
Ecolab, Inc. 40,000 1,447,480
Monsanto 46,500 2,208,750
------------
3,656,230
------------
Drugs & Medicines (7.46%)
Baxter International 25,000 1,607,800
Immunex Corp.<F*> 10,000 1,258,120
Eli Lilly & Co. 15,000 1,333,125
Merck & Co. Inc. 14,400 2,126,693
Pfizer Inc. 23,700 2,972,857
------------
9,298,595
------------
Electronics (5.89%)
Input/Output Inc.<F*> 100,000 731,200
Intel Corp. 16,400 1,944,417
Philips NV 17,000 1,150,679
Texas Instruments Inc. 41,000 3,508,041
------------
7,334,337
------------
Energy Raw Materials (1.28%)
Halliburton Co. 54,000 1,599,750
------------
<PAGE>
Finance (Non-Banking) (2.20%)
SLM Holding Corp. 57,050 2,738,400
Food & Agriculture (4.17%)
Coca-Cola Company 20,000 1,337,500
Conagra Inc. 40,000 1,260,000
Pepsico Inc. 48,000 1,964,976
Panamerican Beverages Inc.
Class A 29,000 632,547
------------
5,195,023
------------
Government & State Agency
(1.81%)
Federal Home Loan Mortgage
Corp. 35,000 2,255,295
------------
Industrial Miscellaneous
(2.96%)
Circuit City Stores Inc. 36,000 1,797,732
Diamond Offshore Drilling
Inc. 80,000 1,894,960
------------
3,692,692
------------
Insurance (2.05%)
American International
Group Inc. 26,500 2,560,563
------------
Miscellaneous Finance (1.96%)
American General Corp. 31,300 2,441,400
------------
Non-Durables & Entertainment
(1.73%)
Costco Companies Inc.<F*> 30,000 2,165,610
------------
Producer Goods (2.29%)
General Electric Corp. 28,000 2,857,736
------------
Retail (4.63%)
Family Dollar Stores 80,000 1,760,000
TJX Cos. Inc. 138,400 4,013,600
------------
5,773,600
------------
(continued)
35
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
---------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
---------------------------------------------------------------------------
-------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
-------------------------------------------------------
<S> <C> <C>
Soaps & Cosmetics (1.57%)
Bristol-Myers Squibb Co. 14,700 $ 1,967,037
------------
Telephone (7.31%)
Bell Atlantic Corp. 32,354 1,714,762
Lucent Technologies 18,230 2,005,300
MCI Worldcom Inc. 40,000 2,870,000
Sitel Corp.<F*> 82,500 201,053
Sprint Corp. 27,600 2,321,850
------------
9,112,965
------------
Tobacco (2.19%)
Philip Morris Companies
Inc. 51,100 2,733,850
------------
Travel & Recreation (1.44%)
Walt Disney Productions 60,000 1,800,000
------------
TOTAL COMMON STOCK (72.74%)
(COST $56,621,620) 90,575,932
------------
<CAPTION>
-------------------------------------------------------
MARKET
PREFERRED STOCK SHARES VALUE
-------------------------------------------------------
<S> <C> <C>
International Oil (0.75%)
Lasmo PLC Series A 40,000 935,000
------------
TOTAL PREFERRED STOCK (0.75%)
(COST $1,070,000) 935,000
------------
<CAPTION>
--------------------------------------------------------
PAR MARKET
SHORT TERM SECURITIES VALUE VALUE
--------------------------------------------------------
<S> <C> <C>
Commercial Paper
Barton Capital Corp.,
5.20%, due 01/29/1999 $ 275,000 $ 273,836
Cooperative Assoc. of Trac
"A", 6.21%,
due 01/06/1999 2,000,000 1,998,279
Ford Motor Credit Corp.,
4.93%, due 01/07/1999 1,700,000 1,698,603
Lexington Parker Capital,
5.40%, due 01/22/1999 1,000,000 996,879
Moat Funding, 5.67%,
due 01/26/1999 2,000,000 1,992,222
Thames Asset Global Sec.,
5.36%, due 03/19/1999 500,000 494,364
Triple-A1 Funding Corp.,
6.14%, due 01/08/1999 820,000 819,023
------------
TOTAL SHORT TERM SECURITIES
(6.64%) (AMORTIZED COST
$8,273,206) 8,273,206
------------
TOTAL INVESTMENTS (99.56%)
(AMORTIZED COST $89,369,639) 123,955,368
Other net assets (0.44%) 554,141
------------
TOTAL NET ASSETS (100.00%) $124,509,509
============
<FN>
<F*> Non-income producing securities.
See accompanying notes to the financial statements.
</TABLE>
36
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND
------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
------------------------------------------------------------------------------
After a tumultuous year, international investors were saved by very strong
returns in the fourth quarter. The International Index Fund returned 21.8
percent in the fourth quarter and 19.8 percent for the full year, compared
with 20.8 percent and 20.3 percent in the same time periods for the MSCI EAFE
Index. Following a virtual meltdown around the globe in the third quarter, the
Federal Reserve cut rates in September, October and again in November, paving
the way for rate cuts around the world and the subsequent market recovery.
Once again, Europe had the best performance among regions in the EAFE index,
with the largest European markets gaining 15 to 30 percent, while Asia and the
Far East were mixed. Great Britain and Japan, the two largest components in
the index, rose 13.4 percent and 5.4 percent, respectively.
Macroeconomic concerns dominated investor sentiment throughout the year:
default in Russia, currency and budget crisis in Brazil; slumping oil and
commodities prices; recession in Latin America; a very slow recovery for Asia
and minimal improvement in Japan, and high unemployment in Europe. While some
of these issues are better understood today, most remain potential problems
for 1999.
------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
------------------------------------------------------------------------------
[GRAPH]
INTERNATIONAL EUROPE, ASIA,
DATE INDEX FUND FAR EAST INDEX
02/16/93 10,000.00 10,000.00
06/30/93 11,568.95 11,977.80
12/31/93 13,102.85 12,897.93
06/30/94 13,956.47 14,049.84
12/31/94 13,944.32 13,938.14
06/30/95 14,416.08 14,322.97
12/31/95 15,108.98 15,547.73
06/30/96 15,974.45 16,273.03
12/31/96 16,226.91 16,534.70
06/30/97 18,174.28 18,415.19
12/31/97 16,595.09 16,876.23
06/30/98 19,219.52 19,590.43
12/31/98 19,873.97 20,307.64
[FN]
<F*> On January 1, 1998 Conning Asset Management Company assumed portfolio
management duties from the former sub-advisor of the fund, Provident Capital
Management, Inc. On January 1, 1998 the fund also changed its investment
objective to be one which parallels the price and yield performance of the
publicly-traded common stocks in the Morgan Stanley Capital International
Europe, Australia, and Far East Index ("EAFE Index").
<TABLE>
--------------------------------------------------------------------------------------------------
ANNUAL RETURNS
--------------------------------------------------------------------------------------------------
<CAPTION>
PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
<S> <C> <C> <C>
Annual Returns 19.76% 8.69% 12.40%
</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.
37
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND
<TABLE>
- -------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------
<S> <C>
December 31, 1998
ASSETS:
Investments, at market value:
(see accompanying schedules)
Common stocks $10,413,136
Rights and warrants 1,838
Short term securities 224,754
-----------
Total investments 10,639,728
Cash 1,444
Broker receivable 33,925
Dividends receivable 26,557
-----------
Total assets 10,701,654
-----------
LIABILITIES:
Payable to Conning Asset Management
Company 4,361
Payable to General American Life
Insurance Company 2,634
-----------
Total liabilities 6,995
-----------
Total net assets $10,694,659
===========
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 538,124
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 19.87
TOTAL AMORTIZED COST OF INVESTMENTS $ 8,645,920
</TABLE>
<TABLE>
------------------------------------------------------
STATEMENT OF OPERATIONS
------------------------------------------------------
<S> <C>
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends $ 189,770
Interest 12,234
----------
Total investment income 202,004
----------
EXPENSES:
Investment management charge 48,268
Administrative charge 29,027
----------
Total expenses 77,295
----------
Net investment income 124,709
----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investments 24,279
Net realized loss on foreign currency
conversions (1,851)
----------
NET REALIZED GAIN FROM INVESTMENTS AND
FOREIGN CURRENCY 22,428
----------
NET UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY:
Net unrealized gain on investments 1,001,807
Net unrealized gain on foreign currency
conversions 537,868
----------
NET UNREALIZED GAIN FROM INVESTMENTS AND
FOREIGN CURRENCY 1,539,675
----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $1,686,812
==========
</TABLE>
<PAGE>
<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 $ 124,709 $ 120,269
Net realized gain on investments and foreign currency
conversions 22,428 95,786
Net unrealized gain (loss) on investments and foreign
currency 1,539,675 (64,996)
----------- ----------
Net increase in net assets from operations 1,686,812 151,059
Capital share transactions 581,032 1,260,794
----------- ----------
Net increase in net assets 2,267,844 1,411,853
Net assets, beginning of year 8,426,815 7,014,962
----------- ----------
Net assets, end of year $10,694,659 $8,426,815
=========== ==========
See accompanying notes to the financial statements.
</TABLE>
38
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND<F*>
<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> $ 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%
Average commission rate <F4> $ 0.03 $ 0.01 $ 0.02 -- --
<CAPTION>
FEBRUARY 16
(INCEPTION) TO
DECEMBER 31
----------------
1993
----------------
<S> <C>
Net asset value, beginning of year <F1> $ 10.00
-------
Income from operations:
Net investment income 0.14
Net realized and unrealized gain on
investments 2.96<F**>
-------
Net increase in asset value per share 3.10
-------
Net asset value, end of year $ 13.10
=======
Total return <F2> 31.03%
Net assets, end of year (in thousands) $ 3,295
Ratio of expenses to average net
assets <F3><F*> 1.00%
Ratio of net investment income to average
net assets <F3> 1.38%
Portfolio turnover rate 26.97%
Average commission rate <F4> --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> Total return is not annualized for the eleven months ended December 31,
1993. The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*> Name and investment objective changed from the International Equity Fund
on January 1, 1997. The investment advisor charges changed from .70% to .50% on
the first $10 million of the average daily value of the net assets on January
1, 1997. The fund's investment advisor became Conning Asset Management on
January 1, 1997. The objective of the International Index Fund is to obtain
investment results that parallel the price and yield performance of publicly
traded common stocks in the EAFE Index.
<F**>Also includes net realized and unrealized gain (loss) on foreign
currency conversions.
See accompanying notes to the financial statements.
</TABLE>
39
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND
<TABLE>
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Australia (2.30%)
Broken Hill Properties 5,591 $ 41,216
Telstra Corporation Ltd. 13,400 62,710
National Australia Bank Ltd. 2,900 43,756
News Corp. Ltd. AU 6,227 41,172
Western Mining Ltd. 4,131 12,466
Westpac Banking 6,706 44,915
------------
246,235
------------
Austria (0.19%)
Bank Austria AG 400 20,351
------------
Belgium (2.03%)
Fortis AG 231 83,718
Electrabel SA 200 87,912
Generale De Banque 1 470
Petrofina SA 100 45,848
Fortis AG-Strip VVPR<F*> 231 13
------------
217,961
------------
Denmark (1.04)
Den Danske Bank 200 26,868
Tele Danmark 319 43,056
Novo-Nordisk 315 41,576
------------
111,500
------------
Finland (1.21%)
UPM-Kymmene Corp. 1,100 30,849
Nokia AB-A Shares 800 97,960
Rauma OY 30 439
------------
129,248
------------
France (9.26%)
Alcatel Alsthom 450 55,103
L'Air Liquide 337 61,838
AXA UAP 733 106,289
Groupe Danone 250 71,608
Vivendi 300 77,873
Carrefour Supermarche 50 37,764
Societe Generale Paris 400 64,805
L'Oreal 100 72,324
LVMH Moet-Hennessy Louis
Vuitton 200 39,599
Rhone-Poulenc A 1,100 56,634
Total SA-B 250 25,331
France Telecom SA 2,872 228,279
Elf Aquitaine 500 57,823
St. Gobain 250 35,311
------------
990,581
------------
Germany (10.78%)
Deutsche Bank AG 1,150 67,861
Daimler-Chrysler AG<F*> 900 89,433
Dresdner Bank AG 800 33,527
SAP AG 200 86,461
SAP AG-Vorzug 50 24,002
Viag AG 50 29,571
Volkswagen AG 500 40,468
Veba AG 800 47,409
RWE AG 1,450 80,096
Metro AG 350 27,529
Siemens AG 1,550 101,906
Bayer AG 1,300 54,599
BASF AG 900 34,341
Deutsche Telekom AG 3,450 113,412
Mannesmann AG DM 500 57,866
Allianz AG 400 148,904
Banco Bilbao Vizcaya, SA 6,993 115,465
------------
1,152,850
------------
<PAGE>
Great Britain (21.64%)
BTR PLC ORD 8,494 17,525
BG PLC (ADR) 1,323 43,245
Abbey National PLC 2,691 57,626
British Sky Broadcasting PLC 2,769 21,032
Cable & Wireless 5,500 67,629
Centrica PLC<F*> 7,851 15,807
Reuters Group PLC 5,258 55,205
Allied Zurich PLC<F*> 3,286 49,017
British American Tobacco PLC 3,286 28,896
HSBC Holdings ($HK10) 2,300 58,170
HSBC Holdings (75P) 1,000 27,121
Pearson PLC 3,100 61,536
Prudential Corporation PLC 6,933 104,687
Rio Tinto PLC-REG 3,869 44,999
Vodafone Group 5,102 82,854
Barclays PLC 4,067 87,701
Smithkline Beecham PLC 10,074 140,801
Royal Sun Alliance Insurance 4,100 33,479
Lloyds TSB Group 8,206 116,741
Unilever PLC 12,036 134,979
British Gas PLC 6,927 43,712
British Petroleum 12,591 188,027
British Telecommunications 15,724 236,907
General Electric PLC 7,574 68,368
Glaxo Holdings PLC 6,459 222,250
Diago PLC 8,401 95,612
Marks & Spencer 10,201 69,973
Tesco 20,100 57,273
Zeneca Group PLC 1,900 82,734
------------
2,313,906
------------
(continued)
40
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Hong Kong (2.36%)
Sun Hung KAI Properties 3,000 $ 21,879
Cheung Kong 8,000 57,571
HSBC Holdings 200 4,983
Hutchison Whampoa 6,000 42,404
Bank of East Asia 7,400 12,895
CLP Holdings Ltd. 5,500 27,404
CDL Hotels International 1,000 257
Hang Seng Bank 3,200 28,604
Wharf Holdings 4,000 5,835
Hong Kong Telecom 12,600 22,038
New World Development 5,000 12,585
Swire Pacific "A" 3,500 15,677
------------
252,132
------------
Ireland (0.59%)
Allied Irish 3,528 63,280
------------
Italy (4.85%)
Credito Italiano 7,500 44,553
Assicurazioni Generali 4,300 179,939
Fiat SPA ITL1000 7,700 26,805
Ente Nazionale Idrocarburi 14,587 95,543
Edison SPA 2,500 29,512
Telecom Italia Mobile 9,198 68,055
Telecom Italia SPA 5,555 47,501
Istituto Bancario San Paolo
Di Torino 1,500 26,563
------------
518,471
------------
Japan (20.07%)
Matsushita Electric (ADR) 200 34,900
Japan Air Lines<F*> 9,000 23,777
Mitsubishi Corp. 6,000 34,576
Canon 1,000 21,410
Daiwa Securities 5,000 17,110
Fuji Bank 5,000 18,440
Fujitsu 3,000 40,028
Hitachi Ltd. 12,000 74,470
Industrial Bank Japan 8,000 36,951
Ito Yokado 1,000 70,038
Kinki Nippon Railway 3,000 16,091
Komatsu Ltd. 12,000 63,087
Marutomi Group 75 140
Matsushita Electronics 7,000 124,055
Mitsubishi Estate Co. 5,000 44,904
Mitsubishi Heavy Industries 15,000 58,512
Mitsubishi Trust 4,000 25,781
Nippon Steel Corp. 24,000 43,618
Nissan 9,000 27,607
Nomura Securities 6,000 52,395
Asahi Glass Co. Ltd. 4,000 24,859
Bank of Tokyo-Mitsubishi 9,000 93,354
East Japan Railway 14 78,318
Fuji Photo 2,000 74,470
Honda Motors 1,000 32,891
Kansai Electric Power 3,400 74,603
Maruko Co. Ltd. 50 350
Mitsubishi Chemical Corp. 157 331
Mitsubishi Electric 7,000 22,031
Mitsui Company 6,000 33,565
Asahi Bank 8,000 29,363
Denso Corp. 1,000 18,529
NEC Corp. 4,000 36,881
Nippon Telegraph & Telephone 19 146,884
Nissen<F*> 50 106
Sakura Bank 12,000 27,554
Sanyo Electric Co. Ltd. 25,000 77,573
Sankyo Co., Ltd. 2,000 43,796
Sony Corp. 500 36,482
Tohoku Electric Power 1,100 19,504
Tokai Bank 3,000 14,203
Sharp Corp. 4,000 36,136
Sumitomo Bank Ltd. 2,000 20,568
Tokyo Marine & Fire 6,000 71,810
Tokyo Electric Power 4,600 113,780
Toyota Motor Corp. 7,000 190,520
------------
2,146,351
------------
<PAGE>
Malaysia (0.46%)
Malayan Banking Berhad 4,000 5,672
Sime Darby Berhad 6,000 4,818
Telekom Malaysia 13,500 24,863
Tenaga Nasional Berhad 9,000 12,928
United Engineers
(Malaysia)<F*> 2,000 1,020
------------
49,301
------------
Netherlands (5.15%)
ABN AMRO Holdings 1,756 36,960
Akzo 540 24,602
Elsevier 1,359 19,045
Koninklijke PTT Nederland 600 30,053
ING Groep NV 1,234 75,288
Wolters Kluwer-CVA 136 29,117
Koninklijke Ahold NV 600 22,188
TNT Post Group 600 19,342
Koninklijke Ahold NV 600 166
Philips Electronics 436 29,273
Royal Dutch Petroleum 3,028 150,859
(continued)
41
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Netherlands (continued)
Unilever NV 1,336 $ 114,258
------------
551,151
------------
New Zealand (0.22%)
Telecom Corp. of New Zealand 5,300 23,098
------------
Norway (0.31%)
Norsk Hydro 700 23,612
Den Norske Bank ASA 2,900 10,011
------------
33,623
------------
Portugal (0.42%)
Portugal Telecom SA 500 22,925
Electricidade de Portugal, SA 1,000 22,018
------------
44,943
------------
Singapore (0.77%)
Oversea-Chinese Banking Corp. 4,800 32,582
Singapore Telecommunications 23,000 35,127
Singapore Airlines Ltd. 2,000 14,667
------------
82,376
------------
Spain (3.66%)
Empresa Nacional Electric 2,920 77,487
Repsol (ADR) 800 43,700
Repsol SA 562 30,025
Telefonica (ADR) 1,300 175,988
Telefonica de Espana 1,440 64,128
------------
391,328
------------
Sweden (2.36%)
Mandamus Fastigheter<F*> 70 393
Astra AB-A 3,700 75,547
Ericsson LM B 3,600 85,720
Foreningssparbanken AB 1,400 36,272
Volvo AB SEK5 1,200 27,537
ABB AB 2,500 26,679
------------
252,148
------------
Switzerland (7.69%)
ABB AG 20 23,444
Credit Suisse Group 600 93,921
Nestle SA 60 130,615
Roche Holding AG 2 36,221
Roche Holding AG 10 122,024
Schweizerischer Bankverein 311 95,553
Swiss Reinsurance 40 104,288
Novartis AG 110 216,236
------------
822,302
------------
TOTAL COMMON STOCK (97.36%)
(AMORTIZED COST $8,419,236) 10,413,136
------------
<CAPTION>
--------------------------------------------------------
MARKET
RIGHTS SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Rights (0.03%)
Fortis AG CVG 231 $ 1,042
------------
TOTAL RIGHTS (.03%)
(AMORTIZED COST $1,699) 1,042
------------
<PAGE>
<CAPTION>
-------------------------------------------------------
MARKET
WARRANTS SHARES VALUE
-------------------------------------------------------
<S> <C> <C>
Warrants (0.00%)
Compangie Gen de Eaux WT
Expiring 2001<F*> 300 779
Wharf Holdings WT Expiring
12/99<F*> 200 17
------------
TOTAL WARRANTS (0.00%)
(AMORTIZED COST $231) 796
------------
<CAPTION>
-------------------------------------------------------
PAR MARKET
SHORT TERM INVESTMENTS VALUE VALUE
-------------------------------------------------------
<S> <C> <C>
Commercial Paper (2.10%)
Ford Motor Credit Corp.,
5.63%, due 01/14/99 $225,000 $ 224,754
------------
TOTAL SHORT TERM INVESTMENTS
(2.10%) (AMORTIZED COST
$224,754) 224,754
------------
TOTAL INVESTMENTS (99.49%)
(AMORTIZED COST $8,645,920) 10,639,728
Other net assets (0.51%) 54,931
------------
TOTAL NET ASSETS (100.00%) $ 10,694,659
============
<FN>
<F*> Non-income producing securities.
See accompanying notes to the financial statements.
</TABLE>
42
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
------------------------------------------------------------------------------
While the Mid-Cap Equity Fund participated in the market rally in the fourth
quarter, gaining 22.3 percent, it could not keep pace with the benchmark
S & P 400 Mid-Cap Index and for the full year severely lagged. In 1998, the
fund lost 1.5 percent compared to a 19.1 percent gain for the S & P 400.
The extreme performance divergence by market capitalization strata that
uniquely characterized 1998 was most evident in the Mid-Cap Equity Fund. The
S & P 400 has become dominated by companies that previously would be
considered large-cap. The top 50 companies in the Index have market
capitalizations exceeding $4 billion and the weighted average market value of
companies in the Index more than tripled in 1998 to approximately $9 billion.
The most dramatic example is America Online. It rose more than 200 percent in
the fourth quarter and had a market capitalization exceeding $73 billion. At
year's end, it represented almost 4 percent of the index's value.
In contrast, the Mid-Cap Equity Fund had an average market capitalization of
approximately $1.5 billion--the median market value of S & P 400 is $1.75
billion--which makes it closer in comparison to the small cap indices such as
the Russell 2000 and the S & P 600. These two indices declined 2.6 percent and
1.3 percent respectively for the full year compared to a decline of 1.5
percent for the Mid-Cap Equity Fund.
The Fund remains committed to its objective of buying mid-sized companies with
strong growth prospects that sell at reasonable valuations. Some of the
standouts in the portfolio were companies in the healthcare and technology
sectors which posted outstanding growth: Immunex (133 percent), Express
Scripts (124 percent), Gateway (56 percent), Network Associates (88 percent),
and CSG Systems (98 percent). Energy stocks trailed and now sell at distressed
levels but offer tremendous upside opportunity with any recovery in crude oil
prices.
------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
------------------------------------------------------------------------------
[GRAPH]
DATE MID-CAP EQUITY FUND RUSSELL 2000 INDEX S&P 400 INDEX
02/16/93 10,000.00 10,000.00 10,000.00
06/30/93 10,341.22 10,549.80 10,585.20
12/31/93 11,444.23 11,773.15 11,405.87
06/30/94 11,052.58 11,014.37 10,571.76
12/31/94 11,349.55 11,558.70 10,996.22
06/30/95 12,375.42 13,225.00 12,935.40
12/31/95 13,743.06 14,845.99 14,396.45
06/30/96 14,995.31 16,384.03 15,722.08
12/31/96 16,416.86 17,295.47 17,163.17
06/30/97 19,506.16 19,059.78 19,393.18
12/31/97 22,074.52 21,163.03 22,698.75
06/30/98 23,103.97 22,204.67 24,659.92
12/31/98 21,747.68 20,623.25 27,040.59
[FN]
<F*> On January 1, 1997 Conning Asset Management Company assumed portfolio
management duties from the former sub-advisor of the fund, Provident Capital
Managment, Inc. On January 1, 1997 the fund also changed its investment
objective to be one which seeks sustained growth of capital by investing
primarily in common stocks of United States-based publicly traded companies
with medium market capitalizations, as defined by the S & P Mid Cap 400 Index.
<TABLE>
--------------------------------------------------------------------------------------------------
ANNUAL RETURNS
--------------------------------------------------------------------------------------------------
<CAPTION>
PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
<S> <C> <C> <C>
Annual Returns (1.48)% 13.70% 14.14%
</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.
43
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
<TABLE>
------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------
<S> <C>
December 31, 1998
ASSETS:
Investments, at market value:
(see accompanying schedules)
Common stocks $8,385,918
Short term securities 134,629
----------
Total investments 8,520,547
Cash 16,518
Dividends receivable 228
----------
Total assets 8,537,293
----------
LIABILITIES:
Payable to Conning Asset Management
Company 3,706
Payable to General American Life
Insurance Company 674
----------
Total liabilities 4,380
----------
Total net assets $8,532,913
==========
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 392,360
Net asset value per share (Total net
assets divided by total shares of capital
stock outstanding) $ 21.75
TOTAL AMORTIZED COST OF INVESTMENTS $7,286,386
</TABLE>
<TABLE>
------------------------------------------------------
STATEMENT OF OPERATIONS
------------------------------------------------------
<S> <C>
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends $ 34,710
Interest 25,449
----------
Total investment income 60,159
----------
EXPENSES:
Investment management charge 42,637
Administrative charge 7,752
----------
Total expenses 50,389
----------
Net investment income 9,770
----------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 241,176
----------
NET UNREALIZED LOSS ON INVESTMENTS:
Net unrealized loss on investments (463,606)
----------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $ (212,660)
==========
</TABLE>
<PAGE>
<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 $ 9,770 $ 41,475
Net realized gain on investments 241,176 266,957
Net unrealized gain (loss) on investments (463,606) 1,114,477
---------- ----------
Net increase (decrease) in net assets from
operations (212,660) 1,422,909
Capital share transactions 1,893,463 1,309,029
---------- ----------
Net increase in net assets 1,680,803 2,731,938
Net assets, beginning of year 6,852,110 4,120,172
---------- ----------
Net assets, end of year $8,532,913 $6,852,110
========== ==========
See accompanying notes to the financial statements.
</TABLE>
44
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND<F*>
<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> $ 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%
Average commission rate <F4> $ 0.05 $ 0.05 $ 0.06 -- --
<CAPTION>
FEBRUARY 16
(INCEPTION) TO
DECEMBER 31
--------------
1993
--------------
<S> <C>
Net asset value, beginning of year <F1> $ 10.00
-------
Income from operations:
Net investment income 0.06
Net realized and unrealized gain on
investments 1.38
-------
Net increase in asset value per share 1.44
-------
Net asset value, end of year $ 11.44
=======
Total return <F2> 14.44%
Net assets, end of year (in thousands) $ 1,998
Ratio of expenses to average net assets
<F3><F*> 0.64%
Ratio of net investment income to average net
assets <F3> 0.64%
Portfolio turnover rate 22.64%
Average commission rate <F4> --
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> Total return is not annualized for the eleven months ended December 31,
1993. The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*> Name and investment objective changed from the Special Equity Fund
effective January 1, 1997. The investment advisor changed to Conning Asset
Management. The investment objective is long term capital appreciation, which
it pursues through investment primarily in common stocks of US-based publicly
traded companies with medium market capitalizations.
See accompanying notes to the financial statements.
</TABLE>
45
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
<TABLE>
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Air Transport (1.00%)
America West Holdings
Corp.-B<F*> 5,000 $ 85,000
------------
Business Machines (11.40%)
Computer Horizons Corp.<F*> 2,798 74,496
Gateway 2000 Inc.<F*> 2,800 143,324
Lexmark International
Group<F*> 2,000 201,000
Plantronics<F*> 3,280 282,080
Quantum Corp.<F*> 5,200 110,500
Tech Data Corp.<F*> 4,000 161,000
------------
972,400
------------
Business Services (13.09%)
BMC Software Inc.<F*> 4,000 178,248
Butler International Inc.<F*> 3,000 79,311
CSG Systems International<F*> 4,400 347,600
Intermedia Communications
Inc.<F*> 7,000 120,750
Networks Associates<F*> 5,900 390,875
------------
1,116,784
------------
Chemicals (1.70%)
Crompton & Knowles Corp. 7,000 144,809
------------
Commercial Banking (5.42%)
Commerce Bancorp 3,477 182,543
Firstar Corporation 3,000 279,750
------------
462,293
------------
Consumer Durables (4.48%)
Furniture Brands
International<F*> 7,500 204,375
Lennar Corp. 7,055 178,139
------------
382,514
------------
Domestic Oil (2.22%)
Basin Exploration Inc.<F*> 6,000 75,371
R & B Falcon Corp.<F*> 10,100 77,013
Range Resources Corp. 10,874 37,374
------------
189,758
------------
Drugs & Medicines (12.77%)
Beckman Instruments 2,310 125,318
Express Scripts Inc.<F*> 2,400 161,100
IDEC Pharmaceuticals
Corp.<F*> 6,000 282,000
Immunex Corp.<F*> 2,500 314,530
Total Renal Care Holdings<F*> 7,000 206,934
------------
1,089,882
------------
Electronics (3.52%)
Dallas Semiconductor Corp. 5,700 232,275
Globalstar Telecommunications
Ltd.<F*> 3,400 68,425
------------
300,700
------------
Energy & Utilities (1.14%)
CMS Energy Corp 2,000 96,874
------------
Finance (Non-Banking) (5.33%)
Affiliated Managers Group<F*> 4,500 134,437
Charter One Financial Inc. 4,109 114,025
Ocwen Financial Corp.<F*> 6,500 80,028
Webster Financial Corp. 4,600 126,210
------------
454,700
------------
Food & Agriculture (6.57%)
The Earthgrains Co. 6,000 185,622
Suiza Foods Corp.<F*> 5,000 254,685
Panamerican Beverages Inc.
Class A 5,500 119,966
------------
560,273
------------
<PAGE>
Industrial Miscellaneous (1.88%)
Circuit City Stores
Carmax<F*> 7,700 41,865
Diamond Offshore Drilling
Inc. 5,000 118,435
------------
160,300
------------
Insurance (7.67%)
CMAC Investment Corp. 2,600 119,436
Enhance Financial Services
Group 6,000 180,000
Horace Mann 5,000 142,500
ESG Re Ltd. 10,500 212,625
------------
654,561
------------
Media (1.17%)
Primedia Inc.<F*> 8,500 99,875
------------
Miscellaneous & Conglomerates
(2.58%)
Pinnacle West Capital 3,000 127,125
Quorum Health Group Inc.<F*> 7,200 93,146
------------
220,271
------------
Non-Ferrous Metals (1.50%)
Tredegar Industries Inc. 5,700 128,250
------------
Paper & Forest Products (1.96%)
Pentair Inc. 4,200 167,210
------------
Retail (8.10%)
Brylane Inc.<F*> 3,700 86,025
Ethan Allen Interiors 3,700 151,700
Fred Meyer Inc.<F*> 4,000 241,000
Zale Corp.<F*> 6,600 212,850
------------
691,575
------------
Telephone (2.06%)
Advanced Communications
Grp.<F*> 10,000 41,870
ICG Communications Inc.<F*> 5,000 107,500
(continued)
46
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Telephone (continued)
Sitel Corp.<F*> 11,000 $ 26,807
------------
176,177
------------
Tobacco (1.61%)
Universal Corp. 3,900 136,988
------------
Trucking & Freight (1.11%)
Midwest Express Holdings<F*> 3,600 94,724
------------
TOTAL COMMON STOCK (98.28%)
(COST $7,151,758) 8,385,918
------------
<CAPTION>
--------------------------------------------------------
PAR MARKET
SHORT TERM SECURITIES VALUE VALUE
--------------------------------------------------------
<S> <C> <C>
Commercial Paper (1.58%)
Ford Motor Credit Corp.,
5.52%, due 1/19/99 $135,000 $ 134,629
------------
TOTAL SHORT TERM SECURITIES
(1.58%) (AMORTIZED COST
$134,629) 134,629
------------
TOTAL INVESTMENTS (99.86%)
(AMORTIZED COST $7,286,386) 8,520,547
Other net assets (0.14%) 12,366
------------
TOTAL NET ASSETS (100.00%) $ 8,532,913
============
<FN>
<F*> Non-income producing securities.
See accompanying notes to the financial statements.
</TABLE>
47
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
------------------------------------------------------------------------------
The fourth quarter of 1998 saw the Small-Cap Equity Fund still trying to
regain ground lost during the third quarter collapse, as small-capitalization
stocks suffered more than any other equity group.
The fund declined 9.8 percent for 1998 and trailed the Russell 2000 index,
which finished down 2.6 percent for the year. The fund uses the smallest 20
percent of companies listed on the New York Stock Exchange as its proxy. As a
result, the fund does not have the same sector weightings, stock selection
within each sector, or market capitalization as the Russell 2000 Index--the
traditional small cap benchmark. In addition, the fund only holds
approximately 11 percent of the stocks held in the Russell 2000.
For the quarter, technology, transportation, and materials and services were
the top performers followed by consumer durables. The fund's weightings in
those sectors fell below the Russell 2000 and the S & P 600 Index. The worst
performing sectors were basic materials, energy, and anything related to oil
as oil prices slid to historical lows.
Looking ahead, valuations for small cap stocks appear to be reasonable and
earnings growth is expected to remain high. Small cap stock valuations remain
extremely compelling.
------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
------------------------------------------------------------------------------
[GRAPH]
DATE SMALL-CAP EQUITY FUND RUSSELL 2000
05/01/97 10,000.00 10,000.00
06/30/97 11,769.21 11,621.10
12/31/97 13,102.61 12,903.49
06/30/98 13,808.38 13,538.60
12/31/98 11,821.17 12,574.38
<TABLE>
------------------------------------------------------------------------------
ANNUAL RETURNS
------------------------------------------------------------------------------
<CAPTION>
PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR LIFE OF FUND<F*>
<S> <C> <C>
Annual Returns (9.78%) 10.55%
<FN>
<F*> The Small Cap Equity Fund began operations on May 1, 1997.
</TABLE>
The fund's performance reflects administrative and management charges, while
such charges are not reflected in the performance of the index.
Past performance is no assurance of future results.
48
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND<F*>
<TABLE>
------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------
<S> <C>
December 31, 1998
ASSETS:
Investments, at market value:
(see accompanying schedule)
Common stocks $72,510,478
Preferred stocks 77,175
Short term securities 374,845
-----------
Total investments 72,962,498
Cash 2,018
Dividends receivable 46,702
-----------
Total assets 73,011,218
-----------
LIABILITIES:
Payable to Conning Asset Management
Company 14,762
Payable to General American Life
Insurance Company 2,952
-----------
Total liabilities 17,714
-----------
Total net assets $72,993,504
===========
TOTAL SHARES OF CAPITAL STOCK OUTSTANDING 1,676,012
Net asset value per share (Total net
assets divided by total shares of
capital stock outstanding) $ 43.55
TOTAL AMORTIZED COST OF INVESTMENTS $65,408,826
</TABLE>
<TABLE>
------------------------------------------------------
STATEMENT OF OPERATIONS
------------------------------------------------------
<S> <C>
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends $ 761,524
Interest 56,973
------------
Total investment income 818,497
------------
EXPENSES:
Investment management charge 193,191
Administrative charge 38,638
------------
Total expenses 231,829
------------
Net investment income 586,668
------------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 2,415,099
------------
NET UNREALIZED LOSS ON INVESTMENTS:
Net unrealized loss on investments (10,899,956)
------------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $ (7,898,189)
============
</TABLE>
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------------------------
<CAPTION>
EIGHT MONTHS
YEAR ENDED ENDED
DECEMBER 31 DECEMBER 31
------------ ------------
1998 1997
------------ ------------
<S> <C> <C>
Operations:
Net investment income $ 586,668 $ 439,659
Net realized gain on investments 2,415,099 10,577,133
Net unrealized gain (loss) on investments (10,899,956) 5,750,172
------------ -----------
Net increase (decrease) in net assets from
operations (7,898,189) 16,766,964
Capital share transactions 3,246,171 6,441,988
------------ -----------
Net increase (decrease) in net assets (4,652,018) 23,208,952
Net assets, beginning of period<F**> 77,645,522 54,436,570
------------ -----------
Net assets, end of period $72,993,504 $77,645,522
============ ===========
<FN>
<F*> Small-Cap Equity Fund began operations May 1, 1997.
<F**> On May 1, 1997, the assets of General American Separate Account No. 20
were exchanged for shares in the Small-Cap Equity Fund. The net assets,
beginning of period, are equal to the market value of the net assets
transferred on April 30, 1997. In exchange for the net assets transferred,
1,477,554 shares of the Small-Cap Equity Fund were issued to the General
American Separate No. 20.
See accompanying notes to the financial statements.
</TABLE>
49
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND<F*>
<TABLE>
--------------------------------------------------------------------------------------------------
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%
Average commission rate <F4> $ 0.03 $ 0.03
<FN>
Notes:
<F1> Components are computed and accumulated on a daily basis.
<F2> Total return is not annualized for the eight months ended December 31,
1997. The total return information shown in this table does not reflect
expenses that apply to the separate accounts investing in the Fund or to the
insurance or variable annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> Computed only for funds that invest greater than 10 percent of the value
of average net assets in equity securities. Computation represents total
commissions paid divided by the sum of shares purchased and sold for which
commissions were charged.
<F*> Small-Cap Equity Fund began operations May 1, 1997.
See accompanying notes to the financial statements.
</TABLE>
50
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
<TABLE>
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Aerospace & Military
Technology (1.30%)
Banner Aerospace<F*> 35,100 $ 331,239
Fairchild Corp.<F*> 26,000 409,500
Transtechnology Corp. 9,900 205,425
------------
946,164
------------
Air Transport (1.26%)
Continental Airlines<F*> 26,300 912,268
World Corp.<F*> 27,300 3,822
------------
916,090
------------
Apparel (2.66%)
Chic By HIS Inc. 19,000 60,553
Dyersburg Corp. 27,600 77,611
Galey & Lord Inc.<F*> 22,600 194,925
Genesco Inc.<F*> 47,300 268,995
Johnson Industries Inc. 20,700 64,688
Pillowtex Corp. 22,400 599,200
Salant Corp.<F*> 27,400 1,260
Shelby Williams 17,300 207,600
Syms Corp.<F*> 34,400 309,600
Texfi Industries<F*> 16,900 4,225
Tultex Corp.<F*> 57,400 50,225
Worldtex Inc.<F*> 28,610 103,711
------------
1,942,593
------------
Business Machines (0.73%)
Applied Magnetics Corp.<F*> 44,785 277,085
EA Industries Inc.<F*> 4,150 373
ECC International<F*> 10,725 26,812
Nashua Corp.<F*> 12,400 165,069
QMS Inc.<F*> 20,700 65,971
------------
535,310
------------
Business Services (7.43%)
Allerion Inc.<F*> 14,600 73
Avalon Holdings Corp.-A<F*> 75 530
Bush Industries 18,250 226,975
Computer Task Group 40,900 1,109,412
Dycom Industries<F*> 18,200 1,039,675
Hospital Staffing
Services<F*> 3,200 202
ITT Educational Services
Inc.<F*> 55,250 1,878,500
National Media Corp.<F*> 27,600 294,961
Rightchoice Managed Care<F*> 6,400 73,600
Wackenhut Corp-Class A 18,800 478,216
Wackenhut Corp-Class B 14,718 322,869
------------
5,425,013
------------
Chemicals (2.88%)
LSB Industries Inc. 5,900 19,541
Lea Ronal Inc. 26,700 904,462
Whittaker Corp.<F*> 16,500 278,438
Wynn's International Inc. 40,705 900,598
------------
2,103,039
------------
Commercial Banking (4.39%)
American Banknote Corp.<F*> 38,200 54,893
First Banks America Inc.<F*> 3,400 66,300
Firstfed Financial<F*> 42,600 761,475
Keycorp 36,633 1,172,256
Oriental Financial Group 27,700 867,342
Sterling Bancorp 12,400 282,869
Unionfed Financial Corp.<F*> 440 1
------------
3,205,136
------------
<PAGE>
Construction (7.02%)
Beazer Homes USA Inc.<F*> 18,800 470,000
Berlitz International<F*> 20,500 594,500
Cavalier Homes Inc. 21,412 243,561
Congoleum Corp.<F*> 8,000 68,000
Corrpro Companies Inc.<F*> 18,900 230,334
Elcor Corp. 27,350 883,733
Giant Group Ltd.<F*> 10,050 91,706
ICF Kaiser International<F*> 9,600 13,795
International Aluminum Corp. 9,500 280,839
MDC Holings Inc. 38,400 820,800
M/I Schottenstein Homes Inc. 17,100 376,200
Puerto Rican Cement Co. Inc. 12,400 433,219
Terex Corp.<F*> 20,800 594,090
Washington Homes Inc.<F*> 3,500 20,563
------------
5,121,340
------------
Consumer Durables (0.12%)
Craig Corp.<F*> 9,700 78,201
TCC Industries Inc.<F*> 5,500 10,654
------------
88,855
------------
Domestic Oil (3.94%)
Cross Timbers Royalty Trust 11,800 104,725
Frontier Oil Corp.<F*> 52,900 261,167
Furon Co. 35,100 598,876
Getty Realty Corp. 24,600 359,775
Giant Industries 23,500 220,313
Goodrich Petroleum Corp.<F*> 3,637 4,772
HS Resources Inc.<F*> 21,200 160,314
Howell Corp. 10,800 22,270
Kaneb Services<F*> 66,400 269,717
RPC Energy Services Inc. 56,000 413,000
Swift Energy Co.<F*> 14,277 105,293
Tokheim Corp.<F*> 15,300 149,175
Unit Corp.<F*> 40,600 169,992
(continued)
51
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Domestic Oil (continued)
Wiser Oil Co. 17,400 $ 34,800
------------
2,874,189
------------
Drugs & Medicines (3.05%)
Advocat Inc.<F*> 10,200 56,732
Comprehensive Care<F*> 4,200 16,536
Cooper Co. Inc.<F*> 22,100 457,183
GRC International<F*> 17,500 110,460
Graham Field Health
Products<F*> 38,630 130,376
Maxxim Medical<F*> 15,600 464,100
Molecular Biosystems<F*> 23,300 68,432
OEC Medical Systems<F*> 25,100 789,069
PHP Healthcare Corp.<F*> 20,500 615
Pharmaceutical Resources<F*> 28,400 134,900
------------
2,228,403
------------
Electronics (4.57%)
American Precision
Industries<F*> 13,700 141,274
Aydin Corp.<F*> 9,750 99,323
Bell Industries Inc.<F*> 16,712 190,099
CTS Corp. 33,752 1,468,212
Chyron Corp.<F*> 52,100 97,688
Daniel Industries Inc. 23,300 282,512
Esco Electronics Corp.<F*> 21,300 193,021
Kollmorgen Corp. 18,800 286,700
Rex Stores Corp.<F*> 17,600 237,600
Sparton<F*> 14,800 87,868
Tech-Sym<F*> 11,400 253,650
------------
3,337,947
------------
Energy & Utilities (0.66%)
Cascade Natural Gas Corp. 17,300 313,563
Compania Boliviana Energia 3,900 166,725
------------
480,288
------------
Energy Raw Materials (1.15%)
Wilshire Oil Co. Of
Texas<F*> 12,792 57,564
Zapata Corp. 63,840 782,040
------------
839,604
------------
Finance (Non-Banking) (3.13%)
Advest Group 16,600 307,100
Atlanta Sosnoff Capital 17,200 141,900
DVI<F*> 13,000 235,625
Duff & Phelps Credit Rating 12,400 679,669
First Republic Bank<F*> 14,660 367,409
Hallwood<F*> 3,500 65,625
National Discount Brokers
Group<F*> 24,400 486,463
Rodman & Renshaw Capital
Group<F*> 1,637 1
------------
2,283,792
------------
Food & Agriculture (6.89%)
CKE Restaurants Inc. 63,065 1,856,444
Chock Full O Nuts Co.<F*> 20,914 130,713
Cooker Restaurant Corp. 14,000 84,000
Foodmaker Inc.<F*> 77,700 1,714,217
RLI Corp. 19,737 656,255
Spaghetti Warehouse Inc.<F*> 10,900 83,113
Super Food Services Inc.<F*> 10,100 155,288
TCBY Enterprises 49,700 347,900
------------
5,027,930
------------
<PAGE>
Industrial Miscellaneous (19.23%)
Ameron International 8,300 307,100
Amre Inc.<F*> 14,400 14
Aquarion Co. 13,800 565,800
Aviall Inc.<F*> 37,600 441,800
Bairnco Corp. 20,400 145,350
Bluegreen Corp.<F*> 39,648 299,818
Carlyle Industries Inc.<F*> 4,800 5,400
Chase Industries Inc.<F*> 29,400 306,848
Coachmen Industries Inc. 29,800 782,250
Coast Federal<F*> 4,700 31,137
Coastcast<F*> 17,700 154,875
Crown Crafts Inc. 16,400 101,467
Datapoint<F*> 24,900 16,932
EDO Corp. 10,900 91,287
Environmental Elements
Corp.<F*> 5,600 22,047
Esterline Technologies
Corp.<F*> 25,300 550,275
Gleason Corp. 20,100 364,312
Hexcel Corp.<F*> 14,217 119,067
Interlake Inc.<F*> 43,600 305,200
IT Group Inc.<F*> 47,921 533,121
Monarch Machine Tool Co. 6,900 46,575
Morgan Products<F*> 12,300 43,050
National-Standard Co.<F*> 6,100 17,538
Nortek<F*> 25,300 698,912
Oil-Dri Corp. 13,500 202,500
Oneida Ltd. 33,719 499,446
Orange Co.<F*> 20,000 132,500
Par Technology<F*> 14,900 89,400
Pittston Minerals Group 16,300 36,675
Playboy Enterprises<F*> 9,200 175,950
Playboy Enterprises 'B'<F*> 40,500 847,949
Premiumwear Inc.<F*> 3,974 28,561
(continued)
52
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Industrial Miscellaneous
(continued)
Publicard Inc.<F*> 28,100 $ 393,400
Republic Group Inc. 22,529 451,977
Robertson Ceco Corp.<F*> 31,500 244,125
Royal Appliance Mfg. Co.<F*> 46,500 171,446
SL Industries Inc. 11,708 149,277
SPS Technologies Inc.<F*> 23,700 1,342,013
Scott's Liquid Gold Inc. 5,200 7,472
Spartech Corp. 16,900 371,800
Starrett LS 14,800 507,818
TRC Companies Inc.<F*> 3,500 19,467
Thomas Industries 30,550 599,544
Toastmaster Inc. 15,300 107,100
Tyler Corp. 38,600 236,425
URS Corp.<F*> 13,642 318,882
United Industrial Corp. 23,700 232,544
Wahlco Environmental Systems 1,100 102
Watsco Inc. 26,825 449,319
Windmere<F*> 32,000 248,000
World Fuel Services Corp. 20,925 224,944
------------
14,038,811
------------
Insurance (4.42%)
Acceptance Insurance Co.<F*> 19,928 403,542
Fidelity National Financial
Inc. 39,033 1,190,522
Hilb, Rogal and Hamilton Co. 28,700 570,412
MMI Companies Inc. 16,700 279,725
Stewart Info Services 13,500 783,000
------------
3,227,201
------------
Media (0.31%)
American Media Inc.<F*> 40,900 227,486
------------
Miscellaneous Finance (0.70%)
Interstate Securities 13,300 416,450
Stifel Financial 9,204 96,061
------------
512,511
------------
Motor Vehicles (0.13%)
Lamson & Sessions Co.<F*> 18,000 92,250
------------
Non-Durables & Entertainment (0.32%)
General Housewares Corp. 7,300 87,600
John Q Hammons Hotels<F*> 12,300 45,350
J. Alexanders Corp.<F*> 7,300 29,200
Tandycrafts Inc.<F*> 18,800 69,316
------------
231,466
------------
Non-Ferrous Metals (1.79%)
Ekco Group Inc.<F*> 31,900 119,624
Nord Resources Corp.<F*> 29,100 29,100
RTI International Metals<F*> 29,700 415,800
Tremont Corp. 15,400 512,050
United Park City Mines
Co.<F*> 5,340 136,838
Zemex Corp.<F*> 14,888 93,050
------------
1,306,462
------------
Paper & Forest Products (0.18%)
Chesapeake Utilities Corp. 7,100 130,015
------------
<PAGE>
Producer Goods (5.81%)
Acme Electric Corp.<F*> 9,653 45,852
Aeroflex<F*> 22,785 344,623
Allied Products Corp. 26,550 167,584
Ampco-Pittsburgh Corp. 18,600 202,275
Artra Group Inc.<F*> 12,000 50,244
Brown & Sharpe Mfg. Co.<F*> 8,700 69,600
Fansteel Inc.<F*> 10,500 60,375
Genrad Inc.<F*> 38,500 606,375
Hughes Supply Inc. 17,650 516,262
Insteel Industries 14,400 70,200
Katy Inds Inc. 17,600 309,091
Kuhlman Corp. 12,988 491,920
Mestek Inc.<F*> 17,600 352,000
Scotsman Industries 16,100 331,048
Sequa Corp.<F*> 6,900 507,150
Twin Disc Inc. 5,500 113,438
------------
4,238,037
------------
Railroads & Shipping (1.27%)
Sea Containers Ltd. 5,100 151,404
Sea Containers Ltd.-Class A 23,270 696,634
Todd Shipyards Corp.<F*> 16,800 79,800
------------
927,838
------------
Real Estate (0.59%)
Amrep Corp.<F*> 14,400 91,800
Christiana Cos Inc.<F*> 10,700 205,975
Grubb & Ellis Co.<F*> 16,900 136,248
------------
434,023
------------
Retail (4.59%)
Carr-Gottstein Foods<F*> 31,000 346,797
Catalina Lighting Inc.<F*> 6,200 13,950
Chart House Enterprises<F*> 15,900 97,388
Cole National Corp.<F*> 19,000 325,375
Kenneth Cole
Productions-A<F*> 25,200 472,500
Converse Inc.<F*> 32,400 76,950
Gottschalks Inc.<F*> 12,600 96,075
Hills Stores Co.<F*> 14,300 20,556
Intertan Inc.<F*> 19,500 113,334
Jo-Ann Stores Inc.-
Class A<F*> 18,000 290,250
(continued)
53
<PAGE>
<PAGE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
------------------------------------------------------------------------------
--------------------------------------------------------
MARKET
COMMON STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Retail (continued)
Luria & Son<F*> 300 $ 1
Mortons Restaurant Group<F*> 12,400 234,050
O'Sullivan Industries<F*> 32,600 342,300
Piccadilly Cafeterias Inc. 21,000 220,500
Rowe Furniture Corp. 27,300 300,300
Sizzler International
Inc.<F*> 54,100 121,725
Sport Supply Group Inc.<F*> 13,000 120,250
Uno Restaurant Corp.<F*> 19,750 155,531
------------
3,347,832
------------
Steel (1.62%)
Huntco Inc. 10,400 40,300
Keystone Consolidated
Industries<F*> 10,900 88,563
NS Group Inc.<F*> 26,800 118,912
Reliance Steel & Aluminum 33,900 936,487
------------
1,184,262
------------
Telephone (0.04%)
Intellicall Inc.<F*> 13,515 30,409
------------
Tobacco (1.41%)
Brooke Group Ltd. 35,600 867,750
Standard Commercial Corp. 18,444 157,918
------------
1,025,668
------------
Travel & Recreation (0.42%)
Jackpot Enterprises<F*> 18,019 170,045
K2 Inc. 1 11
PS Group Holdings Inc. 11,900 139,825
------------
309,881
------------
Trucking & Freight (0.46%)
International Shipholding 13,025 204,323
Matlack Systems Inc.<F*> 17,100 132,525
------------
336,848
------------
Utilities, Electrical & Gas (4.87%)
American States Water Co. 15,300 416,925
Bangor Hydro Electric<F*> 13,900 178,087
Central Vermont Public
Service 22,900 237,587
Chart Industries 43,225 329,591
Green Mountain Power Corp. 9,400 98,700
Nui Corp. 17,900 479,935
North Carolina Natural Gas 20,350 675,355
St. Joseph Light & Power 15,200 272,642
TNP Enterprises Inc. 22,800 864,963
------------
3,553,785
------------
TOTAL COMMON STOCK (99.34%)
(COST $64,959,862) 72,510,478
------------
<CAPTION>
--------------------------------------------------------
MARKET
PREFERRED STOCK SHARES VALUE
--------------------------------------------------------
<S> <C> <C>
Preferred (0.11%)
Craig Corp. Non Cum-
Class A<F*> 9,800 77,175
------------
TOTAL PREFERRED STOCK (0.11%)
(AMORTIZED COST $74,119) 77,175
------------
<PAGE>
<CAPTION>
--------------------------------------------------------
PAR MARKET
SHORT TERM INVESTMENTS VALUE VALUE
--------------------------------------------------------
Commercial Paper (0.51%)
<S> <C> <C>
Delmarva Power & Light,
4.95%, due 1/4/99 $375,000 $ 374,845
------------
TOTAL SHORT TERM SECURITIES
(0.51%)
(AMORTIZED COST $374,845) 374,845
------------
TOTAL INVESTMENTS (99.96%)
(AMORTIZED COST $65,408,826) 72,962,498
Other net assets (0.04%) 31,006
------------
TOTAL NET ASSETS (100.00%) $ 72,993,504
============
<F*> Non-income producing securities
See accompanying notes to the financial statements.
</TABLE>
54
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1--ORGANIZATION
General American Capital Company (the Company), commenced operations on October
1, 1987, and is registered under the Investment Company Act of 1940 as amended,
as an open-end diversified management investment company. The Company offers to
its shareholders eight separate investment funds (the Funds) which operate as
distinct investment vehicles. These are the S & P 500 Index Fund, Money Market
Fund, Bond Index Fund, Managed Equity Fund, Asset Allocation Fund,
International Index Fund, Mid-Cap Equity Fund and Small-Cap Equity Fund. The
International Index and Mid-Cap Equity Funds began operations on February 16,
1993. The Small-Cap Equity Fund began operations on May 1, 1997. As of December
31, 1998, the Company sells its shares to separate accounts established by
General American Life Insurance Company (General American), RGA Reinsurance
Company (RGA) a wholly owned subsidiary of Reinsurance Group of America, Inc.,
which is a majority owned subsidiary of General American, Security Equity Life
Insurance Company (Security Equity), 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 financial statements. The policies are in
conformity with generally accepted accounting principles.
A. INVESTMENTS:
Common stocks of domestic companies are valued based on the closing sale
price on the New York Stock Exchange for securities traded on that
exchange, and for securities not so traded, at the last bid price of
over-the-counter market quotations as of the close of business on December
31. Common stocks of foreign companies are valued based on the closing sale
price on the primary exchange for which the security is listed. The market
values for bonds and short term securities with maturities of 60 days or
more at date of valuation are determined daily by an independent pricing
service based on current market conditions. Short term securities with
maturities of less than 60 days at date of valuation are valued at
amortized cost, which approximates market value.
B. REPURCHASE AGREEMENTS:
Short-term investments include repurchase agreements with a member bank of
the Federal Reserve System or a primary dealer in U.S. Government
securities. Under such agreements, the bank or primary dealer agrees to
repurchase the underlying U.S. Government securities at a mutually agreed
upon time and price.
C. FOREIGN CURRENCY TRANSLATIONS:
Securities and other assets and liabilities denominated in foreign
currencies are translated each business day into U.S. dollars based upon
the closing rate of exchange. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated into
U.S. dollars based upon the prevailing exchange rate on the respective
dates of the transactions.
In accordance with Statement of Position (SOP) 93-4, "Foreign Currency
Accounting and Financial Statement Presentation for Investment Companies,"
reported net realized gains or losses from foreign currency transactions
arise from sales of portfolio securities and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent actually received or paid.
Reported net unrealized gains and losses from foreign currency transactions
arise from changes in the value of assets and liabilities, including
investments in securities at December 31, resulting from changes in the
exchange rate.
D. DERIVATIVE FINANCIAL INSTRUMENTS:
A derivative financial instrument in very general terms refers to a
security whose value is "derived" from the value of an underlying asset,
reference rate or index.
The Capital Company has a variety of reasons to use derivative instruments,
such as to attempt to protect the Company against possible changes in the
market value of its portfolio and to manage the portfolio's effective
yield, maturity and duration. All of the Company's portfolio holdings,
including derivative instruments, are marked to market each day with the
change in value reflected in the unrealized appreciation/depreciation on
securities. Upon disposition, a realized gain or loss is recognized accord-
ingly, except when taking delivery of a security underlying a futures
contract. In these instances the recognition of gain or loss is postponed
until the disposal of the security underlying the futures contract. The
Capital Company's utilization of derivative financial instruments is
substantially limited to the use of forward exchange contracts to hedge
foreign currency transactions, interest rate futures contracts to manage
interest rate risk and S & P 500 Index futures contracts to manage
performance.
<PAGE>
Forward Foreign Currency Contracts:
The International Index Fund enters into forward exchange contracts to
hedge foreign currency transactions and not to engage in currency
speculation. The Fund's forward exchange contracts do not subject the
company to risk from exchange rate movements because gains and losses on
such contracts offset losses and gains, respectively, on the assets being
hedged. At December 31, the Company had no open foreign currency exchange
contracts that obligate it to receive or deliver currency at specified
future dates. The forward exchange contracts generally require the Company
to exchange U.S. dollars for foreign currencies at maturity, at rates
agreed to at
55
<PAGE>
<PAGE>
inception of the contracts. The U.S. dollar value of foreign currency
underlying all contractual commitments held by the Fund and the resulting
unrealized appreciation or depreciation are determined using foreign
currency exchange rates from an independent pricing service. If the
counterparties to the exchange contracts (primarily AA rated international
banks) do not fulfill their obligations to deliver the contracted
currencies, the Company could be at risk for any currency related
fluctuations.
Futures Contracts:
A futures contract is an agreement involving the delivery of a particular
asset on a specified future date at an agreed upon price. The Company
generally invests in futures on U. S. Treasury Bonds and the S & P 500
Index and typically closes the contract prior to the delivery date. Upon
entering into futures contracts, the Company maintains, in a segregated
account with a custodian, securities with a value equal to its obligation
under the futures contracts. During the period the futures contract is
open, payments are received from or made to the custodian based upon
changes in the value of the contract (the variation margin). U. S. Treasury
Bond futures contracts are entered into in the Asset Allocation Fund to
hedge market price risks of fixed-rate bonds. S & P 500 Index futures
contracts are entered into in the S & P 500 Index Fund to manage and more
closely track the performance of the S & P 500 Index.
For the S & P 500 Fund transactions in futures contracts for the twelve
months ended December 31, 1998, were as follows:
<TABLE>
<CAPTION>
CONTRACTS
--------------------------------------------------
<S> <C>
Outstanding at December 31, 1997 22
Futures Opened 0
Futures Closed (22)
---
Outstanding at December 31, 1998 0
</TABLE>
At December 31, 1998, the Company had no open U. S. Treasury Bond futures
contracts.
E. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME:
Investment transactions are recorded on a trade date basis (date the order
to buy or sell is executed). Dividends are recognized as income on the
ex-dividend date while interest income and amortization of premium and dis-
count are recorded on an accrual basis.
F. FEDERAL INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS:
No provision for Federal income taxes is necessary because each Fund
qualifies as a "regulated investment company" under Subchapter M of the
Internal Revenue Code and intends to distribute each year substantially all
of its net investment income and realized gains to its shareholders. At
December 31, 1998, the Bond Index Fund had an accumulated capital loss
carryforward for tax purposes of $1,885,320. Of this amount, $1,702,970 and
$182,350 will expire on December 31, 2002, and 2003 respectively.
G. CONSENT DIVIDENDS:
The Funds follow the accounting practice known as consent dividending,
whereby substantially all of its net investment income and realized gains
are treated as being distributed daily to their shareholders and are
immediately reinvested in that Fund.
H. USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
NOTE 3--MANAGEMENT AND ADMINISTRATIVE FEES
The Company has entered into an Investment Advisory Agreement with Conning
Asset Management Company (Investment Advisor) with respect to all of its Funds.
Certain officers and directors of the Company are also officers and directors
of the Investment Advisor. For its services to the Funds, the Investment
Advisor charges a fee, which is accrued daily against each Fund. The fees
charged each Fund, stated as an annual percentage of the average daily value of
the net assets, are:
S & P 500 Index Fund .250 Percent
Money Market Fund .125 Percent
Bond Index Fund .250 Percent
Asset Allocation Fund .500 Percent
Small-Cap Equity .250 Percent
<PAGE>
The fee (percentage effective March 1, 1997) charged the Managed Equity Fund is
stated as a series of annual percentages of the average daily net assets of
that Fund. The percentages decrease with respect to assets of the Fund above
certain amounts as follows:
<TABLE>
<CAPTION>
INVESTMENT
ASSETS FEE
--------------------------------------------------
<S> <C>
First $10 million .40%
Next $20 million .30%
Balance over $30 million .25%
</TABLE>
The fee charged the International Index Fund is stated as a series of annual
percentages of the average daily net assets of that Fund. The percentages
decrease with respect to assets of the fund above certain amounts as follows:
<TABLE>
<CAPTION>
INVESTMENT
ASSETS FEE
--------------------------------------------------
<S> <C>
First $10 million .50%
Next $10 million .40%
Balance over $20 million .30%
</TABLE>
56
<PAGE>
<PAGE>
The fee charged for the Mid-Cap Equity Fund is stated as a series of annual
percentages of the average daily net assets of that Fund. The percentages
decrease with respect to assets of the Fund above certain amounts as follows:
<TABLE>
INVESTMENT
ASSETS FEE
--------------------------------------------------
<S> <C>
First $10 million .55%
Next $10 million .45%
Balance over $20 million .40%
</TABLE>
All operational expenses of the Company are paid by General American, which
charges administrative fees to each Fund in return. Certain officers and
directors of the Company are also officers and directors of General American,
RGA, Security Equity and Cova.
The administrative expenses are charged at an annual rate based on the average
daily value of the net assets in each Fund, as follows:
S & P 500 Index Fund .05 Percent
Money Market Fund .08 Percent
Bond Index Fund .05 Percent
Managed Equity Fund .10 Percent
Asset Allocation Fund .10 Percent
International Index Fund .30 Percent
Mid-Cap Equity Fund .10 Percent
Small-Cap Equity Fund .05 Percent
NOTE 4--INVESTMENT OBJECTIVES AND MANAGER CHANGES
Effective January 1, 1997, the International Equity Fund became the
International Index Fund. The investment objective of the International Index
Fund is to obtain investment results that parallel the price and yield
performance of publicly traded common stocks in the Morgan Stanley Capital
International Europe, Australia, and Far East Index ("EAFE Index"). The
portfolio manager of the International Index Fund is Conning Asset Management
Company. The total investment advisor fees were reduced as a result of the
changes.
Effective January 1, 1997, the Special Equity Fund became the Mid-Cap Equity
Fund. The investment objective of the Mid-Cap Equity Fund is to seek sustained
growth of capital by investing primarily in common stocks of United
States-based publicly traded companies with "medium market capitalizations."
"Medium market capitalization companies" are those whose market capitalization
falls within the range of the S & P Mid-Cap 400 at the time of the Fund's
investment. The portfolio manager of Mid-Cap Equity Fund is Conning Asset
Management Company and the total management fee rate remains unchanged from
that of the Special Equity Fund.
Effective March 1, 1997, the portfolio manager for the Managed Equity Fund
became Conning Asset Management Company. The total investment advisor charges
were reduced due to this change.
The Small-Cap Equity Fund commenced operations on May 1, 1997 subsequent to a
transfer of assets from General American Life Insurance Company Separate
Account No. 20, which had similar investment objectives, policies, and
limitations, in exchange for shares of the Small-Cap Equity Fund. Separate
Account No. 20 was not registered under the Registered Investment Company Act
of 1940 and has a different fee and expense structure than the Small-Cap Equity
Fund. While Separate Account No. 20 continues to exist, its assets now consist
solely of shares of the Small-Cap Equity Fund. The Small-Cap Equity Fund's
portfolio of investments on May 1, 1997 was the same as the portfolio of
Separate Account No. 20 immediately prior to the transfer. Separate accounts
which invested in Separate Account No. 20 prior to the transfer now invest
directly in the Small-Cap Equity Fund. The Small-Cap Equity Fund seeks to
provide a rate of return that corresponds to the performance of the common
stock of small companies, while incurring a level of risk that is generally
equal to the risks associated with small company common stock. The Fund
attempts to duplicate the performance of the smallest 20% of companies, based
on capitalization size, that are based in the United States and listed on the
New York Stock Exchange.
NOTE 5--INVESTMENTS
The amortized cost of investments for federal income tax purposes as of
December 31, 1998 is as follows:
<TABLE>
<CAPTION>
S & P 500 MONEY BOND MANAGED
INDEX MARKET INDEX EQUITY
FUND FUND FUND FUND
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Bonds $ -0- $ -0- $64,266,631 $ -0-
Common stocks 349,322,467 -0- -0- 42,687,585
Preferred stocks -0- -0- -0- -0-
Short term
securities 2,269,064 234,906,040 1,191,248 1,998,306
------------ ------------ ----------- -----------
Total $351,591,531 $234,906,040 $65,457,879 $44,685,891
============ ============ =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ASSET INTERNATIONAL MID-CAP SMALL-CAP
ALLOCATION INDEX EQUITY EQUITY
FUND FUND FUND FUND
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Bonds $ 23,404,813 $ -0- $ -0- $ -0-
Common stocks 56,621,620 8,419,236 7,151,758 64,959,862
Preferred stocks 1,070,000 -0- -0- 74,119
Warrants and
rights -0- 1,930 -0- -0-
Short term
securities 8,273,206 224,754 134,628 374,845
------------ ------------ ----------- -----------
Total $ 89,369,639 $ 8,645,920 $ 7,286,386 $65,408,826
============ ============ =========== ===========
</TABLE>
Gross unrealized gains and losses by Fund from inception to December 31, 1998
excluding the Money Market Fund, which has no unrealized gains or losses, are
as follows:
<TABLE>
<CAPTION>
S & P 500 BOND MANAGED
INDEX INDEX EQUITY
FUND FUND FUND
------------ ----------- -----------
<S> <C> <C> <C>
Unrealized gains $361,742,980 $ 2,682,960 $19,409,694
Unrealized losses 12,852,023 69,159 2,318,855
------------ ----------- -----------
Net unrealized
gain on
investments $348,890,957 $ 2,613,801 $17,090,839
============ =========== ===========
</TABLE>
57
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
ASSET INTERNATIONAL MID-CAP SMALL-CAP
ALLOCATION INDEX EQUITY EQUITY
FUND FUND FUND FUND
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Unrealized gains $ 38,323,804 $ 3,308,011 $ 2,456,088 $20,832,422
Unrealized losses 3,738,075 1,314,203 1,221,927 13,278,750
------------ ------------ ----------- -----------
Net unrealized
gain on
investments $ 34,585,729 $ 1,993,808 $ 1,234,161 $ 7,553,672
============ ============ =========== ===========
</TABLE>
Purchases and proceeds from sales and maturities of other than short term
securities and United States government obligations for the period ended
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
S & P 500 BOND MANAGED
INDEX INDEX EQUITY
FUND FUND FUND
------------ ----------- -----------
<S> <C> <C> <C>
Purchases $139,155,351 $24,954,764 $38,203,846
============ =========== ===========
Sales and
Maturities $ 77,282,211 $12,225,977 $41,931,524
============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ASSET INTERNATIONAL MID-CAP SMALL-CAP
ALLOCATION INDEX EQUITY EQUITY
FUND FUND FUND FUND
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Purchases $ 36,426,116 $ 1,189,176 $ 4,633,381 $19,522,728
============ ============ =========== ===========
Sales and
Maturities $ 38,100,387 $ 460,994 $ 2,446,841 $14,309,141
============ ============ =========== ===========
</TABLE>
Purchases and proceeds from sales and maturities of United States government
obligations for the period ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
S & P 500 MONEY BOND MANAGED
INDEX MARKET INDEX EQUITY
FUND FUND FUND FUND
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Purchases $ -0- $ -0- $26,181,298 $ -0-
============ ============ =========== ===========
Sales and
Maturities $ -0- $ -0- $19,178,729 $ -0-
============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ASSET INTERNATIONAL MID-CAP SMALL-CAP
ALLOCATION INDEX EQUITY EQUITY
FUND FUND FUND FUND
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Purchases $ -0- $ -0- $ -0- $ -0-
============ ============ =========== ===========
Sales and
Maturities $ 4,500,000 $ -0- $ -0- $ -0-
============ ============ =========== ===========
</TABLE>
NOTE 6--CAPITAL STOCK
As of December 31, 1998, in the aggregate, there were one billion, five hundred
million (1,500,000,000) shares of $.01 par value capital stock authorized.
Transactions in capital stock were as follows:
<PAGE>
<TABLE>
<CAPTION>
S & P 500 INDEX FUND
---------------------------------------------------------
Year ended Year ended
December 31, 1998 December 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 2,744,937 $ 120,213,688 2,288,656 $ 80,197,159
Shares redeemed (1,602,118) (70,940,064) (1,024,948) (35,167,639)
----------- ------------- ----------- -------------
Net increase 1,142,819 $ 49,273,624 1,263,708 $ 45,029,520
=========== ============= =========== =============
</TABLE>
<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>
<TABLE>
<CAPTION>
BOND INDEX FUND
---------------------------------------------------------
Year ended Year ended
December 31, 1998 December 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 1,222,833 $ 29,466,002 875,433 $ 19,458,750
Shares redeemed (560,371) (13,582,327) (583,698) (12,568,473)
----------- ------------- ----------- -------------
Net increase 662,462 $ 15,883,675 291,735 $ 6,890,277
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
MANAGED EQUITY FUND
---------------------------------------------------------
Year ended Year ended
December 31, 1998 December 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 282,811 $ 9,251,458 292,535 $ 8,324,432
Shares redeemed (443,481) (14,502,043) (317,082) (9,190,598)
----------- ------------- ----------- -------------
Net (decrease) (160,670) $ (5,250,585) (24,547) $ (866,166)
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
---------------------------------------------------------
Year ended Year ended
December 31, 1998 December 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 456,190 $ 15,401,821 676,658 $ 19,798,368
Shares redeemed (632,758) (20,770,991) (396,211) (11,858,933)
----------- ------------- ----------- -------------
Net increase
(decrease) (176,568) $ (5,369,170) 280,447 $ 7,939,435
=========== ============= =========== =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL INDEX FUND
---------------------------------------------------------
Year ended Year ended
December 31, 1998 December 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 96,834 $ 1,801,096 120,074 $ 2,031,933
Shares redeemed (66,500) (1,220,064) (44,588) (771,139)
----------- ------------- ----------- -------------
Net increase 30,334 $ 581,032 75,486 $ 1,260,794
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
MID-CAP EQUITY FUND
---------------------------------------------------------
Year ended Year ended
December 31, 1998 December 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 142,877 $ 3,176,924 123,498 $ 2,489,536
Shares redeemed (60,925) (1,283,461) (64,062) (1,180,507)
----------- ------------- ----------- -------------
Net increase 81,952 $ 1,893,463 59,436 $ 1,309,029
=========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
SMALL-CAP EQUITY FUND
---------------------------------------------------------
Year ended Eight months ended
December 31, 1998 December 31, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 252,394 $ 11,970,218 223,963 $ 10,480,160
Shares redeemed (184,849) (8,724,047) (93,051) (4,038,172)
----------- ------------- ----------- -------------
Net increase 67,545 $ 3,246,171 130,912 $ 6,441,988
=========== ============= =========== =============
</TABLE>
58
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
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.
If distributed to prospective 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.
59
<PAGE>
<PAGE>
General
American
General
American
700 Market Street
St. Louis, Missouri, USA 63101
<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
<OTHER-ITEMS-LIABILITIES> 61
<TOTAL-LIABILITIES> 61
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,316
<SHARES-COMMON-PRIOR> 3,492
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 124,510
<DIVIDEND-INCOME> 1,126
<INTEREST-INCOME> 2,298
<OTHER-INCOME> 0
<EXPENSES-NET> 679
<NET-INVESTMENT-INCOME> 2,745
<REALIZED-GAINS-CURRENT> 7,623
<APPREC-INCREASE-CURRENT> 8,241
<NET-CHANGE-FROM-OPS> 18,609
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 456
<NUMBER-OF-SHARES-REDEEMED> (633)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,240
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 566
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 679
<AVERAGE-NET-ASSETS> 113,230
<PER-SHARE-NAV-BEGIN> 31.860
<PER-SHARE-NII> 0.810
<PER-SHARE-GAIN-APPREC> 4.880
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 37.550
<EXPENSE-RATIO> 0.600
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> GACC - International Index Fund
<NUMBER> 6
<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> 8,646
<INVESTMENTS-AT-VALUE> 10,640
<RECEIVABLES> 61
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,702
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 7
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 538
<SHARES-COMMON-PRIOR> 508
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10,695
<DIVIDEND-INCOME> 190
<INTEREST-INCOME> 12
<OTHER-INCOME> 0
<EXPENSES-NET> 77
<NET-INVESTMENT-INCOME> 125
<REALIZED-GAINS-CURRENT> 22
<APPREC-INCREASE-CURRENT> 1,540
<NET-CHANGE-FROM-OPS> 1,687
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 97
<NUMBER-OF-SHARES-REDEEMED> (67)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,268
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 48
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 77
<AVERAGE-NET-ASSETS> 9,652
<PER-SHARE-NAV-BEGIN> 16.600
<PER-SHARE-NII> 0.240
<PER-SHARE-GAIN-APPREC> 3.030
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.870
<EXPENSE-RATIO> 0.800
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> GACC - Mid-Cap Equity Fund
<NUMBER> 7
<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> 7,286
<INVESTMENTS-AT-VALUE> 8,520
<RECEIVABLES> 0
<ASSETS-OTHER> 17
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,537
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 392
<SHARES-COMMON-PRIOR> 310
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<NAME> GACC - Small-Cap Equity Fund
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