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File Nos. 33-10145
811-04900
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933
Post-Effective Amendment No. 17
and
Registration Statement Under the Investment Company Act of 1940
Amendment No. 17
General American Capital Company
700 Market Street
St. Louis, MO 63101
(314) 444-0499
Christopher A. Martin
GenAmerica Management Company
700 Market Street
St. Louis, Missouri 63101
Copies to:
Stephen E. Roth
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
It is proposed that this filing will become effective (check appropriate
box):
[ X ] Immediately upon filing pursuant to paragraph (b).
[ ] On (date) pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(1).
[ ] On (date) pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] On (date) pursuant to paragraph (a)(2) of Rule 485.
[ ] This post effective amendment designates a new effective date for
a previously filed post-effective amendment.
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GENERAL AMERICAN CAPITAL COMPANY
PROSPECTUS VERSION A
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GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
- PROSPECTUS -
General American Capital Company (the Capital Company) offers
eight different diversified funds. The Capital Company sells shares of
its funds to insurance company separate accounts so that the funds may
serve as investment options under variable life insurance policies,
variable annuity contracts, and certain other plans, such as qualified
pension and retirement plans (collectively referred to as the
Contracts).
The eight Capital Company funds are:
* The Money Market Fund.
* The Bond Index Fund.
* The Asset Allocation Fund.
* The Managed Equity Fund.
* The S&P 500 Index Fund.<F*>
* The Mid-Cap Equity Fund.
* The Small-Cap Equity Fund.
* The International Index Fund.
This prospectus provides information about the Capital Company and
its funds that you ought to know before investing. You should read this
prospectus in conjunction with the prospectus for the applicable
Contract. Please retain both prospectuses for future reference.
The date of this prospectus is May 1, 2000.
The date of the related statement of additional information
is May 1, 2000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[FN]
- ----------
<F*> "Standard & Poor's" and "Standard & Poor's 500" are trademarks of
the Standard & Poor's Corporation and have been licensed for use by the
Capital Company. Capital Company's S&P 500 Index Fund is not sponsored,
sold, or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the fund.
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GENERAL AMERICAN CAPITAL COMPANY
FUND PROSPECTUS
TABLE OF CONTENTS
PAGE
----
Front Cover Page
Table of Contents i
The Funds' Investment Objectives, Principal
Strategies & Risks 1
Fund Performance Charts 6
Fee Tables 10
Shareholder Transaction Expenses 10
Annual Fund Operating Expenses 10
Contract Fees 11
Example 11
Management & Organization 12
The Capital Company 12
The Adviser 12
The Administrator 13
Additional Information About the Funds 13
Purchase & Redemptions of Shares 13
Determination of Share Price 14
Taxes and Dividends 14
Portfolio Turnover 15
Cash Positions 15
Pending Legal Proceedings 16
Financial Highlights 16
Back Cover Page
i
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THE FUNDS' INVESTMENT OBJECTIVES,
PRINCIPAL STRATEGIES & RISKS
Below are the investment objectives, principal strategies, and
risks of the Capital Company's eight funds. Also described below are
the types of individuals who may want to invest in the funds. You can
find more information on the funds in the statement of additional
information. There can be no assurances that the funds will achieve
their investment objectives. There are factors not listed below that
could adversely affect your investment. The share price of the funds
change daily due to market conditions and you may lose money if you
invest in the funds.
* THE MONEY MARKET FUND.
Investment Objective and Principal Strategies. The Money Market Fund's
- ---------------------------------------------
investment objective is to provide investors with current income while
preserving capital and maintaining liquidity. The fund seeks to achieve
this objective by investing primarily in high-quality, short-term money
market instruments. The fund purchases securities that meet the
quality, maturity, and diversification requirements applicable to money
market funds.
Who May Want to Invest. The Money Market Fund may be appropriate for
- ----------------------
investors who are investing for a short period of time or who are
uncomfortable with investments that may have large fluctuations in
value.
Main Risks. The Money Market Fund does not maintain a stable net asset
- ----------
value and loss of money is a risk of investing in the fund. The following
risk factors may significantly affect fund performance. Interest Rate Risk.
The Money Market's rate of income and net asset value varies from day to
day depending on short-term interest rates. Changes in interest rates
could cause the value of your investment to decline. Credit Risk. A
default on a security that the fund holds could cause the value of your
investment to decline. Not Guaranteed. Investments in the fund are not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
* THE BOND INDEX FUND.
Investment Objective and Principal Strategies. The Bond Index Fund's
- ---------------------------------------------
investment objective is to provide investors with current income that
reflects the performance of the publicly traded bond market as a whole.
The fund seeks to achieve this objective by primarily purchasing
corporate and government bonds contained in the Lehman Brothers
Government/Corporate Bond Index. The fund does not replicate the Index,
but uses a "sampling" method to generally reflect the performance of the
Index. Sampling is an investment technique whereby the fund holds
approximately the same mix and weightings of investment sectors, as
measured by quality and duration, as the Index, while not holding all of
the bonds in each Index sector.
Who May Want to Invest. The Bond Index Fund may be appropriate for
- ----------------------
investors who are seeking a higher level of current income than is
available from money market funds and who are able to tolerate
fluctuations in the value of their investment.
1
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Main Risks. Loss of money is a risk of investing in the Bond Index Fund.
- ----------
The following risk factors may significantly affect fund performance.
Interest Rate Risk. Interest rate changes can have a powerful effect
on the value of fixed bond portfolios. In general, bond prices rise
when interest rates fall, and fall when interest rates rise. As a result,
the value of your investment in this fund will rise and fall as interest
rates fluctuate. Credit Risk. It is possible that some of the issuers
will not make payments or will default on the debt securities that the
fund holds. Or, an issuer may suffer adverse changes in financial
condition that could lower the credit quality of a bond, leading to
greater volatility in the price of the bond and in shares of the fund.
A change in the quality rating of a bond can also affect a bond's
liquidity and make it more difficult to sell.
* THE ASSET ALLOCATION FUND.
Investment Objective and Principal Strategies. The Asset Allocation
- ---------------------------------------------
Fund's investment objective is to provide investors with a long-term
investment return composed of capital growth and income payments.
Preservation of capital is the fund's secondary objective and the chief
limit on investment risk. The fund seeks to achieve these objectives by
investing in a diversified combination of U.S. common stocks, bonds, and
money market instruments. Under normal market conditions, the Adviser
expects, but is not required, to maintain a mix falling within the
following ranges: 40% to 80% in stocks, 20% to 50% in bonds, and 0% to
40% in money market securities. The mixture of stocks, bonds, and money
market securities varies over time in an attempt to produce the highest
total return consistent with prudence and preservation of capital. The
stock portion of the fund primarily uses a growth investment style.
This means the stock portion of the fund primarily invests in stocks
that have growth potential.
Who May Want to Invest. The Asset Allocation Fund may be appropriate
- ----------------------
for long-term investors who are seeking a balanced investment program,
protection against inflation, and who are able to tolerate a substantial
loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the Asset Allocation
- ----------
Fund. The following risk factors may significantly affect fund performance.
The Asset Allocation Fund invests in a combination of U.S. common stocks,
bonds, and money market instruments. As a result, the risks described
above for the Money Market Fund and the Bond Index Fund apply to the Asset
Allocation Fund. Market Risk. The prices of the equity securities that
the fund holds may decline in response to changing economic, political,
or market conditions, or due to a company's individual situation or the
market's perception of its situation. Allocation Risk. The fund is
subject to an allocation risk, which is the risk that the Adviser could
fail to correctly predict the optimal mixture of investments. Style Risk.
Because growth investing is a style that involves buying stocks of faster
growing companies in more rapidly growing sectors of the economy, there
are related risk. Growth stocks may:
* be more volatile than other stocks because of their
sensitivity to investor perceptions of the company's growth
potential;
* respond differently to market and other developments than
the general market or value stocks in particular; and
* underperform the general market in a value market
environment.
2
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* THE MANAGED EQUITY FUND.
Investment Objective and Principal Strategies. The Managed Equity
- ---------------------------------------------
Fund's investment objective is to provide investors with long-term
growth of capital that is consistent with the investment returns
of U.S. common stocks. The fund's secondary objective is to provide
investors with a current income. The fund seeks to achieve these
objectives by investing primarily in common stocks of U.S. companies
using a value approach to investing. This means the fund primarily
focuses on stocks' value rather than potential for short-term
appreciation. The fund primarily invests in stocks issued by companies
that are of high quality and deemed undervalued in relation to the rest
of the market.
Who May Want to Invest. The Managed Equity Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the managed Equity
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Style Risk. Because value
investing is a style that involves buying stocks that are out of favor
and/or undervalued in comparison to their peers and/or prospects for
growth, there are related risks. Undervalued stocks may:
* not realize their perceived value for long periods of time;
* respond differently to market and other developments than
the general market or growth stocks in particular; and
* underperform the general market in a growth market
environment.
* THE S&P 500 INDEX FUND.
Investment Objective and Principal Strategies. The S&P 500 Index Fund's
- ---------------------------------------------
investment objective is to provide investors with a long-term capital
appreciation that is consistent with the investment returns of the S&P
500 Index. The fund seeks to achieve this objective by primarily
investing in U.S. common stocks contained in the Standard & Poors' 500
Stock Index. The fund attempts to invest so that its investment results
reflect the return of the S&P 500 Index.
Who May Want to Invest. The S&P 500 Index Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the S&P Index Fund.
- ----------
The following risk factors may significantly affect fund performance.
Market Risk. The prices of the equity securities that the fund holds
may decline in response to changing economic, political, or market
conditions, or due to a company's individual situation or the
market's perception of its situation.
3
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* THE MID-CAP EQUITY FUND.
Investment Objective and Principal Strategies. The Mid-Cap Equity
- ---------------------------------------------
Fund's investment objective is to provide investors with long-term
growth of capital that is consistent with the investment returns of mid-
sized companies. The fund seeks to achieve this objective by investing
primarily in common stocks of U.S. publicly traded companies with medium
market capitalizations. Medium market capitalization companies are
those companies whose market capitalization falls within the range of
the S&P MidCap 400 at the time of the fund's investment. The fund
primarily uses an investment style characterized as "growth-at-a-
reasonable-price." This means the fund primarily invests in medium market
capitalization companies that have growth potential, but that are
reasonably valued in relation to the rest of the market.
Who May Want to Invest. The Mid-Cap Equity Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment as well as the
additional risks of investing in smaller companies.
Main Risks. Loss of money is a risk of investing in the Mid-Cap Equity
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Smaller Companies. Securities of
mid-sized companies may have more risks than those of larger companies
and may be more susceptible to market downturns. Securities of mid-
sized companies may be less liquid than those of larger companies, which
may cause more abrupt or erratic price fluctuations. Style Risk.
Because growth investing is a style that involves buying stocks of
faster growing companies in more rapidly growing sectors of the economy,
there are related risk. Growth stocks may:
* be more volatile than other stocks because of their
sensitivity to investor perceptions of the company's growth
potential;
* respond differently to market and other developments than
the general market or value stocks in particular; and
* underperform the general market in a value market
environment.
* THE SMALL-CAP EQUITY FUND.
Investment Objective and Principal Strategies. The Small-Cap Equity
- ---------------------------------------------
Fund's investment objective is to provide investors long-term growth of
capital that is consistent with the investment return of smaller
capitalized companies. Every five years, the fund determines the
smallest 20% (in terms of capitalization) of the companies listed on the
New York Stock Exchange. Over the next five years, the fund primarily
rebalances itself to hold those stocks. The fund uses a five year
rebalancing period to lower the transaction costs normally associated
with trading in thinly traded, smaller-capitalized stocks. The fund's
most recent determination date for rebalancing was April 2000.
Who May Want to Invest. The Small-Cap Equity Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment as well as the
additional risks of investing in smaller companies.
4
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Main Risks. Loss of money is a risk of investing in the Small-Cap Equity
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Smaller Companies. Securities of
smaller companies may have more risks than those of larger companies and
may be more susceptible to market downturns. Securities of smaller
companies may be less liquid than those of larger companies, which may
cause more abrupt or erratic price fluctuations.
* THE INTERNATIONAL INDEX FUND.
Investment Objective and Principal Strategies. The International Index
- ---------------------------------------------
Fund's investment objective is to provide investors with long-term
growth of capital that is consistent with the investment returns of
foreign stocks. The fund seeks to achieve this objective by primarily
purchasing foreign publicly traded common stocks contained in the Morgan
Stanley Capital International Europe, Australia, and Far East Index
(commonly known as the EAFE Index). The fund does not replicate the
Index, but uses a "sampling" method to generally reflect the performance
of the Index. Sampling is an investment technique whereby the fund
holds approximately the same mix and weightings of investment sectors,
as measured by country and industry, as the Index, while not holding all
of the stocks in each Index sector.
Who May Want to Invest. The International Index Fund may be appropriate
- ----------------------
for investors who are seeking high long-term growth, are looking for
exposure in the international markets and are able to tolerate the
additional risks associated with these markets, and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the International
- ----------
Index Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Foreign Investing. Investments
in foreign securities involves risks relating to political, social, and
economic developments abroad, as well as risks resulting from the
differences between the regulations to which U.S. and foreign issuers
and markets are subject. These risks may include expropriation,
confiscatory taxation, withholding taxes on dividends, limitations on
the use or transfer of portfolio assets, and political or social
instability. Enforcing legal rights may be difficult, costly, and slow
in foreign counties, and there may be special problems enforcing claims
against foreign governments. In addition, foreign companies may not be
subject to accounting standards or governmental supervision comparable
to U.S. companies, and there may be less public information about their
operations. Foreign markets may be less liquid and more volatile than
U.S. markets. Since foreign securities often trade in currencies other
than the U.S. dollar, changes in currency exchange rates affect the
fund's net asset value. The costs of foreign brokerage commissions,
custodial services, and transaction and settlement costs may be higher
than in the U.S. Foreign securities may be subject to taxes in their
country of issue, or other restrictions on the removal of funds may be
imposed by a foreign country. Hedging Risk. The Fund may use various
techniques to increase or decrease its exposure to changing security
prices,
5
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interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions, which may increase the volatility of the fund.
FUND PERFORMANCE CHARTS
The information on the following pages shows the risks of investing in
the funds by showing how the funds' investment returns have varied over
time. In each case the fund's performance is compared to a widely
recognized unmanaged index. The investment return information does not
reflect expenses that apply to the Contracts. Inclusion of these
charges would reduce the return figures for all periods shown. Past
investment performance is no guarantee of future results.
* THE MONEY MARKET FUND.
FOR UP-TO-DATE YIELD INFORMATION, CALL (877) 882-5714.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
[GRAPH]
<TABLE>
<CAPTION>
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HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990 - 1999) (through December 31, 1999)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 2.07% June 30, 1990 Money Market Fund 5.20% 5.60% 5.35%
Lowest 0.74% June 30, 1993 Lehman 90-day Treasury Bill Index 4.91% 5.45% 5.20%
====================================================================================================================
</TABLE>
6
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* THE BOND INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990 - 1999) (through December 31, 1999)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 6.40% June 30, 1995 Bond Index Fund -2.88% 7.18% 7.10%
Lowest -3.35% March 31, 1994 Lehman Government/Corporate Index -2.15% 7.60% 7.66%
====================================================================================================================
</TABLE>
* THE ASSET ALLOCATION FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990 - 1999) (through December 31, 1999)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 20.89% December 31, 1998 Asset Allocation Fund 23.37% 20.81% 13.49%
Lowest -11.04% September 30, 1998 Lipper Flexible Portfolio Fund Ave. 12.07% 17.11% 12.85%
====================================================================================================================
</TABLE>
7
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* THE MANAGED EQUITY FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990 - 1999) (through December 31, 1999)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 24.00% December 31, 1998 Managed Equity Fund 3.04% 18.53% 12.36%
Lowest -15.80% September 30, 1998 Barra Value Index 12.72% 22.87% N/A
S&P 500 Index 21.05% 28.56% 18.21%
====================================================================================================================
</TABLE>
* THE S & P 500 INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990 - 1999) (through December 31, 1999)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 21.24% December 31, 1998 S & P 500 Index Fund 20.57% 28.11% 17.83%
Lowest -13.89% September 30, 1990 S & P 500 Index 21.05% 28.56% 18.21%
====================================================================================================================
</TABLE>
8
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* THE MID-CAP EQUITY FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1994 - 1999) (through December 31, 1999)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years Life of Fund
(since 2/16/93)
<S> <C> <C> <C> <C> <C> <C>
Highest 22.28% December 31, 1998 Mid-Cap Equity Fund 14.09% 16.93% 14.13%
Lowest -23.02% September 30, 1998 S&P 400 Index 14.72% 23.05% 16.25%
Russell 2000 Index 21.26% 16.69% 12.75%
====================================================================================================================
</TABLE>
* THE SMALL-CAP EQUITY FUND. The Fund commenced operations on May
1, 1997, subsequent to a transfer of assets from General American S.A.
20, which has identical investment objectives and policies, in exchange
for shares of the Fund. The Company calculates performance for the Fund
for periods prior to the transfer by including the S.A. 20 total return.
S.A. 20 was not subject to certain investment restrictions that are
imposed by the Investment Company Act of 1940 and the Internal Revenue
Code. If S.A. 20 had been subject to these restrictions its performance
might have been adversely affected.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990 - 1999) (through December 31, 1999)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 35.31% March 31, 1991 Small-Cap Equity Fund -3.93% 12.24% 11.56%
Lowest -21.79% September 30, 1998 Russell 2000 Index 21.26% 16.69% 13.40%
====================================================================================================================
</TABLE>
9
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* THE INTERNATIONAL INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
====================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1994 - 1999) (through December 31, 1999)
- --------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years Life of Fund
(since 2/16/93)
<S> <C> <C> <C> <C> <C> <C>
Highest 21.82% December 31, 1998 International Index Fund 29.08% 12.97% 14.69%
Lowest -15.12% September 30, 1998 MSCI EAFE Index 27.30% 13.15% 13.00%
====================================================================================================================
</TABLE>
FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
You will not have to pay any shareholder transaction expense when
you buy or sell shares of the Capital Company funds. This means that
the Capital Company will not charge you a sales charge (load) when you
purchase shares or reinvest dividends, or a deferred sales charge
(deferred load) when you sell shares. In addition, Capital Company will
not charge you an exchange fee when you allocate money between funds or
a redemption fee when you sell your shares.
ANNUAL FUND OPERATION EXPENSES
The Capital Company funds charge investment advisory fees and
administration fees to cover the cost of portfolio management and
administration. The Capital Company does not charge a 12b-1
distribution fee or an account maintenance fee. The Capital Company
deducts its fees from fund assets on a daily basis. The funds' annual
fees are shown as a percent of net assets below:
10
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<TABLE>
<CAPTION>
Total Fund
Investment Administration Operating
Advisory Fees Fees Expenses
<S> <C> <C> <C>
Money Market Fund .125% .08 % .205%
Bond Index Fund .25 .05 .30
Asset Allocation Fund .50 .10 .60
Managed Equity Fund .29 .10 .39
S&P 500 Index Fund .25 .05 .30
Mid-Cap Equity Fund .54 .10 .64
Small-Cap Equity Fund .25 .05 .30
International Index Fund .49 .30 .79
</TABLE>
CONTRACT FEES
The Capital Company sells its shares to separate accounts of
insurance companies to support the Contracts. Please refer to the
Contract's disclosure documents for information about fees applicable to
the separate accounts and the Contracts.
EXAMPLE
This example is intended to help you compare the costs of
investing in the Capital Company funds with the costs of investing in
other funds available under the Contract. The example assumes that you
invest $10,000 in the funds for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the
funds' operating expenses remain the same. Although you actual costs
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund $21 $ 66 $116 $262
Bond Index Fund 31 97 169 381
Asset Allocation Fund 62 193 336 752
Managed Equity Fund 40 126 219 494
S&P 500 Index Fund 31 97 169 381
Mid-Cap Equity Fund 66 205 358 800
Small-Cap Equity Fund 31 97 169 381
International Index Fund 81 253 440 981
</TABLE>
Because the Capital Company does not charge redemption fees, you would
pay the same amounts if you did not redeem at the end of the time
periods specified.
11
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MANAGEMENT & ORGANIZATION
THE CAPITAL COMPANY
The Capital Company is an open-end, management investment company
with eight different diversified funds. As of December 31, 1999, the
Capital Company held approximately $1.5 billion in assets. The Capital
Company sells shares of its funds to insurance company separate accounts
so that the funds may serve as investment options for the Contracts.
The Board of Directors of the Capital Company is responsible for the
management of the Capital Company's business and affairs, which includes
creating and supervising the execution of the funds' investment
policies.
THE ADVISER
Conning Asset Management Company (the Adviser) is the investment
adviser for each of the Capital Company's funds. The Adviser was formed
in 1982. Its address is 700 Market Street, St. Louis, Missouri 63101.
The Adviser is an indirect subsidiary of MetLife, Inc., a publicly traded
company. As of December 31, 1999, the Adviser provided investment management to
96 unaffiliated institutional accounts and to 52 affiliated institutional
accounts. As of December 31, 1999, the Adviser had approximately $33 billion
of assets under its discretionary management.
Subject to policies set by the Board of Directors of the Capital
Company, the Adviser selects investments and provides investment advice
and some administrative services for each of the Capital Company's
funds. In addition, the Adviser reviews the practices of broker-dealers
buying and selling investments for the Capital Company.
Portfolio Managers.
Douglas R. Koester, CFA, Senior Vice President of the Adviser,
manages the S&P 500 Index Fund and the Small-Cap Equity Fund. He has
managed the S&P 500 Index Fund since its inception on October 1, 1987, and
has managed the Small-Cap Equity Fund since its inception on May 1, 1997.
Mr. Koester has a bachelor's and master's degree from Washington University
(St. Louis, Missouri).
Gary A. Barohn, CFA, Senior Vice President of the Adviser, manages the
Managed Equity Fund, the Asset Allocation Fund, the International Index
Fund, and the Mid-Cap Equity Fund. He has managed these funds since
December 1999. Prior to joining the Adviser in 1999, Mr. Barohn was Senior
Vice President at Evergreen Capital Management, Inc., from 1994 to 1999,
where he oversaw equity research and served as portfolio manager for value
funds. Mr. Barohn has a bachelor's degree from Purdue University and a
master's degree from University of Missouri - St. Louis.
Wm. Michael Cody, CFA, Vice President of the Adviser, manages the
Bond Index Fund. He has managed the Bond Index Fund since January 1996.
Prior to joining the Adviser in 1995,
12
<PAGE>
<PAGE>
Mr. Cody worked for seven years for Walnut Street Securities, Inc. He has
a bachelor's degree from Marquette University and an MBA degree from Drake
University.
Kathleen A. Spaeth, CCM, Assistant Vice President of the Adviser,
manages the Money Market Fund. Ms. Spaeth has managed the Money Market
Fund since its inception on October 1, 1987. Ms. Spaeth has been with
the Adviser since its inception in 1982.
Adviser Compensation.
The Adviser charges a fee for its investment management and
advisory services that accrues daily against each fund. The following
chart shows the investment management fees (as a percentage of average
daily assets) each fund paid during the last fiscal year:
Money Market Fund .125 %
Bond Index Fund .25
Asset Allocation Fund .50
Managed Equity Fund .29
S&P 500 Index Fund .25
Mid-Cap Equity Fund .54
Small-Cap Equity Fund .25
International Index Fund .49
THE ADMINISTRATOR
General American Life Insurance Company (the Administrator) is the
principal administrator for the Capital Company. The Administrator's
address is 700 Market Street, St. Louis, Missouri 63101. Subject to
policies set by the Board of Directors, the Administrator performs
certain administrative services and pays certain administrative
expenses for the Capital Company. These services and expenses include,
but are not limited to, the following: investment accounting services,
transfer agent services, legal services, tax services, conducting
shareholders and Board of Directors meetings, outside Director fees,
printing and distributing communications to current shareholders of the
Capital Company, fidelity bond insurance, and custodial fees. The
Administrator charges the Capital Company a fee for these services and
expenses, at an annual rate based on the average daily value of the net
assets in each fund. These rates are set forth under "Administration
Fees" in the section "Annual Fund Operating Expenses."
ADDITIONAL INFORMATION ABOUT THE FUNDS
PURCHASE & REDEMPTION OF SHARES
Capital Company offers shares of the funds on a continuous basis to
insurance company separate accounts which, in turn, fund the Contracts.
Shares may be purchased or redeemed at a fund's net asset value as next
determined following acceptance of an order. Purchases and redemptions
of shares are made subsequent to corresponding purchases and redemptions
of units of the separate accounts that support the Contracts. All share
transactions are executed without
13
<PAGE>
<PAGE>
any sales or redemption charges. Subject to applicable laws and agreement
between parties, the Capital Company reserves the right to sell and redeem
shares in kind.
DETERMINATION OF SHARE PRICE
Each fund calculates its share price, also called net asset value
(NAV), as of the close of trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time), every day the Exchange is open,
except the day after Thanksgiving, when Capital Company is closed. If,
however, the day after Thanksgiving is the last business day of the
month, NAV is determined on that day. A fund's NAV is generally based
on the market value of the securities held in the fund. If market
values are not available, the fair market value of securities is
determined using procedures that the Board of Directors has approved.
Debt instruments with maturities of 60 days or more are valued at
their market price, Debt instruments with a remaining maturity of less
than 60 days are valued on an amortized cost basis. Under this method of
valuation, the security is initially valued at cost on the date of
purchase or, in the case of securities purchased with 60 days or more
remaining to maturity, the market value at the beginning of the 59th
day prior to maturity, Thereafter, straight line amortization of discount
or premium is assumed until maturity regardless of the impact of
fluctuating interest on the market value of the security. While valuation
at amortized cost provides a more consistent rate of return, it may
result in periods during which the price which could be received upon
sale of the instrument is higher or lower than its amortized cost
value. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security
will be valued by market quotations, if available, or otherwise as
determined in good faith by or under the direction of the Capital Company's
Board of Directors.
Foreign securities are valued based on quotations from the primary
market in which they are traded or the market from which they were
purchased. Foreign securities are converted from the local currency
into U.S. dollars using the current exchange rates. Foreign securities
may trade when the fund does not price its shares. As a result, the
value of the International Index Fund may change on days when
shareholders will not be able to buy or sell shares.
TAXES AND DIVIDENDS
Each fund intends to operate as a regulated investment company
under the Internal Revenue Code. Further, each fund intends to meet
certain distribution requirements applicable to mutual funds underlying
the Contracts. In any fiscal year in which a fund so qualifies and
distributes to shareholders its net investment income and realized
capital gains, the fund itself is relieved of federal income tax. Under
current tax law, distributions that are left to accumulate in a Contract
are not subject to federal income tax until they are withdrawn. See the
prospectus of the applicable Contract for information regarding the
federal income tax treatment of the Contract and distributions to the
separate accounts.
14
<PAGE>
<PAGE>
PORTFOLIO TURNOVER
Portfolio turnover refers to the annual rate of change in a fund's
investment portfolio. Portfolio turnover reflects the extent of trading
in the portfolio. Trading is usually accompanied by the payment of
commissions to brokers which will reduce a fund's return. Portfolio
turnover varies over time and among the funds due to the funds'
different investment objectives and policies. Portfolio turnover data
is included in the Financial Highlights section.
CASH POSITIONS
The funds may hold a substantial portion of their portfolios in cash
and cash equivalents. The extent of each fund's cash position depends on
market conditions, fund purchases and redemptions, and other factors.
This may detract from the achievement of a fund's objectives over the
short-term, or may protect a fund during a market downturn.
15
<PAGE>
<PAGE>
PENDING LEGAL PROCEEDINGS
As of the date of this prospectus, there are no material legal
proceedings to which the Capital Company or the Adviser is a party.
FINANCIAL HIGHLIGHTS INFORMATION
The financial highlights tables are intended to help you
understand the funds' financial performance for the past five years or,
if shorter, the period of the funds' operations. Certain information in
the tables reflects financial results on a per share basis. The total
returns data in the tables represent the rate that an investor would
have earned or lost on an investment in the funds (assuming reinvestment
of all dividends and distributions). This information has been audited
by KPMG LLP, independent auditors, whose report, along with the funds'
financial statements, are included in the annual report. The annual
report is available upon request.
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
===========================================================================================================================
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 19.25 $ 18.23 $ 17.24 $ 16.34 $ 15.42
-------- -------- -------- -------- -------
Income from operations:
Net investment income 1.00 1.02 0.99 0.90 0.92
-------- -------- -------- -------- -------
Net asset value, end of period $ 20.25 $ 19.25 $ 18.23 $ 17.24 $ 16.34
======== ======== ======== ======== =======
Total return <F2> 5.20% 5.62% 5.71% 5.51% 5.96%
Net assets, end of period (in thousands) $256,140 $235,046 $174,571 $101,426 $70,574
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> 5.08% 5.45% 5.60% 5.37% 5.78%
Portfolio turnover 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> A portfolio turnover rate is not calculated for securities
on which the maturity or expiration dates at the time of
acquisition were one year or less.
</TABLE>
16
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
===========================================================================================================================
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $25.19 $ 23.19 $ 21.21 $ 20.59 $ 17.30
------- ------- ------- ------- -------
Income from operations:
Net investment income 1.42 1.40 1.39 1.29 1.25
Net realized and unrealized gain (loss)
on investments (2.15) .60 .59 (0.67) 2.04
------- ------- ------- ------- -------
Net increase (decrease) in asset value
per share (.73) 2.00 1.98 0.62 3.29
------- ------- ------- ------- -------
Net asset value, end of year $ 24.46 $ 25.19 $ 23.19 $ 21.21 $ 20.59
======= ======= ======= ======= =======
Total return <F2> (2.88%) 8.61% 9.34% 3.02% 19.02%
Net assets, end of period (in thousands) $71,041 $69,177 $48,330 $38,015 $39,316
Ratio of expenses to average net assets <F3> 0.30% 0.30% 0.30% 0.30% 0.30%
Ratio of net investment income to average
net assets <F3> 5.75% 5.80% 6.25% 6.26% 6.43%
Portfolio turnover rate 28.86% 54.00% 47.40% 44.28% 35.35%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not reflect expenses that
apply to the separate accounts investing in the Fund or to the insurance or variable
annuity contracts. Inclusion of these charges would reduce the total return figures
for all periods shown.
<F3> Computed on an annualized basis.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
===========================================================================================================================
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 37.55 $ 31.86 $ 26.83 $ 23.20 $ 18.00
-------- -------- -------- ------- -------
Income from operations:
Net investment income 0.63 0.81 0.96 0.93 0.82
Net realized and unrealized gain (loss)
on investments 8.14 4.88 4.07 2.70 4.38
-------- -------- -------- ------- -------
Net increase (decrease) in asset value
per share 8.17 5.69 5.03 3.63 5.20
-------- -------- -------- ------- -------
Net asset value, end of period $ 46.32 $ 37.55 $ 31.86 $ 26.83 $ 23.20
======== ======== ======== ======= =======
Total return <F2> 23.37% 17.86% 18.73% 15.66% 28.88%
Net assets, end of period (in thousands) $152,061 $124,510 $111,269 $86,191 $73,387
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> 1.56% 2.42% 3.24% 3.77% 3.92%
Portfolio turnover rate 12.21% 34.03% 36.34% 32.78% 33.74%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not
reflect expenses that apply to the separate accounts
investing in the Fund or to the insurance or variable
annuity contracts. Inclusion of these charges would reduce
the total return figures for all periods shown.
<F3> Computed on an annualized basis.
</TABLE>
17
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
===========================================================================================================================
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 35.63 $ 31.20 $ 25.31 $ 20.93 $ 15.69
------- ------- ------- ------- -------
Income from operations:
Net investment income 0.42 0.48 0.63 0.68 0.58
Net realized and unrealized gain
on investments 0.66 3.95 5.26 3.70 4.66
------- ------- ------- ------- -------
Net increase in asset value
per share 1.08 4.43 5.89 4.38 5.24
------- ------- ------- ------- -------
Net asset value, end of period $ 36.71 $ 35.63 $ 31.20 $ 25.31 $ 20.93
======= ======= ======= ======= =======
Total return <F2> 3.04% 14.19% 23.29% 20.92% 33.37%
Net assets, end of period (in thousands) $64,712 $61,804 $59,138 $48,587 $40,902
Ratio of expenses to average net assets <F3><F4> 0.39% 0.39% 0.41% 0.47% 0.48%
Ratio of net investment income to average
net assets <F3> 1.14% 1.46% 2.19% 2.97% 3.14%
Portfolio turnover rate 16.00% 67.23% 49.43% 36.44% 44.82%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not
reflect expenses that apply to the separate accounts
investing in the Fund or to the insurance or variable
annuity contracts. Inclusion of these charges would reduce
the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> On March 1, 1997, Conning Asset Management Company took over
the asset management of the Managed Equity Fund. The
management fee was reduced from .50 percent to .40 percent on
the first $10 million of assets, from .35 percent to .30 percent
on the balance over $10 million and less than $30 million, and
from .30 percent to .25 percent on the balance in excess of $30 million.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY S&P 500 INDEX FUND
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
===========================================================================================================================
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 50.49 $ 39.40 $ 29.67 $ 24.14 $ 17.64
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.54 0.53 0.52 0.53 0.46
Net realized and unrealized gain
on investment 9.84 10.56 9.21 5.00 6.04
-------- -------- -------- -------- --------
Net increase in asset value per share 10.38 11.09 9.73 5.53 6.50
-------- -------- -------- -------- --------
Net asset value, end of period $ 60.87 $ 50.49 $ 39.40 $ 29.67 $ 24.14
======== ======== ======== ======== ========
Total return <F2> 20.57% 28.15% 32.80% 22.89% 36.85%
Net assets, end of period (in thousands) $898,689 $700,489 $501,577 $340,201 $247,313
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> 0.99% 1.21% 1.48% 1.97% 2.19%
Portfolio turnover rate 13.46% 13.14% 12.61% 8.93% 4.75%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not
reflect expenses that apply to the separate accounts
investing in the Fund or to the insurance or variable
annuity contracts. Inclusion of these charges would reduce
the total return figures for all periods shown.
<F3> Computed on an annualized basis.
</TABLE>
18
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MID-CAP EQUITY FUND <F*>
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
===========================================================================================================================
1999 1998 1997<F*> 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 21.75 $ 22.07 $ 16.42 $ 13.74 $ 11.35
------- ------- ------- ------- -------
Income from operations:
Net investment income 0.02 0.03 0.16 0.15 0.05
Net realized and unrealized gain
(loss) on investments 3.04 (0.35) 5.49 2.53 2.34
------- ------- ------- ------- -------
Net increase (decrease) in asset value
per share 3.06 (0.32) 5.65 2.68 2.39
------- ------- ------- ------- -------
Net asset value, end of period $ 24.81 $ 21.75 $ 22.07 $ 16.42 $ 13.74
======= ======= ======= ======= =======
Total return <F2> 14.09% -1.48% 34.46% 19.46% 21.09%
Net assets, end of period (in thousands) $ 9,898 $ 8,533 $ 6,852 $ 4,120 $ 4,260
Ratio of expenses to average net assets <F3> 0.64% 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income to average
net assets <F3> 0.08% 0.13% 0.81% 1.02% 0.75%
Portfolio turnover rate 23.92% 33.53% 62.22% 56.31% 28.48%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not
reflect expenses that apply to the separate accounts investing
in the Fund or to the insurance or variable annuity contracts.
Inclusion of these charges would reduce the total return figures
for all periods shown.
<F3> Computed on an annualized basis.
<F*> Name and investment objective changed from the Special Equity Fund
effective January 1, 1997. In addition, Conning Asset Management
Company took over the asset management of the Mid-Cap Equity Fund. The
investment objective is long term capital appreciation, which it pursues
through investment primarily in common stocks of US-based publicly
traded companies with medium market capitalizations.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY SMALL-CAP EQUITY FUND <F*>
- -------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------
<CAPTION>
EIGHT MONTHS
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31 DECEMBER 31 DECEMBER 31<F*>
=================================================================================================
1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year <F1> $ 43.55 $ 48.27 $ 36.84
------- ------- -------
Income from operations:
Net investment income 0.38 0.35 0.29
Net realized and unrealized gain (loss)
on investments (2.09) (5.07) 11.14
------- ------- -------
Net increase (decrease) in asset value
per share (1.71) (4.72) 11.43
------- ------- -------
Net asset value, end of period $ 41.84 $ 43.55 $ 48.27
======= ======= =======
Total return <F2> (3.93%) (9.78%) 31.03%
Net assets, end of period (in thousands) $73,484 $72,994 $77,646
Ratio of expenses to average net assets <F3> 0.30% 0.30% 0.30%
Ratio of net investment income to average
net assets <F3> 0.89% 0.76% 0.97%
Portfolio turnover rate 23.11% 18.77% 24.47%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> Total return is not annualized for the eight months ended
December 31, 1997. The total return information shown in
this table does not reflect expenses that apply to the
separate accounts investing in the Fund or to the insurance
or variable annuity contracts. Inclusion of these charges
would reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F*> Small-Cap Equity Fund began operations May 1, 1997.
</TABLE>
19
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY INTERNATIONAL INDEX FUND <F*>
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
===========================================================================================================================
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 19.87 $ 16.60 $ 16.23 $ 15.11 $ 13.94
------- ------- ------- ------- --------
Income from operations:
Net investment income 0.26 0.24 0.26 0.24 0.25
Net realized and unrealized gain
on investments<F4> 5.52 3.03 0.11 0.88 0.92
------- ------- ------- ------- --------
Net increase in asset value per share 5.78 3.27 0.37 1.12 1.17
------- ------- ------- ------- --------
Net asset value, end of period $ 25.65 $ 19.87 $ 16.60 $ 16.23 $ 15.11
======= ======= ======= ======= ========
Total return <F2> 29.08% 19.76% 2.27% 7.40% 8.35%
Net assets, end of period (in thousands) $14,111 $10,695 $ 8,427 $ 7,015 $ 5,460
Ratio of expenses to average net
assets <F3><F*> 0.79% 0.80% 0.80% 1.00% 1.00%
Ratio of net investment income to average
Net assets <F3> 1.17% 1.29% 1.53% 1.57% 1.79%
Portfolio turnover rate 24.75% 4.90% 57.70% 19.53% 113.91%
<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> Includes net realized and unrealized gain (loss) on foreign
currency conversions.
<F*> Name and investment objective changed from the International
Equity Fund on January 1, 1997. In addition, Conning Asset
Management Company took over the asset management of the
International Index Fund. The investment adviser fee changed
from .70 percent to .50 percent on the first $10 million of the
average daily value of the net assets, from .60 percent to .40 percent
on the balance over $10 million and less than $20 million, and from
.50 percent to .30 percent on the balance in excess of $20 million.
The objective of the International Index Fund is to obtain
investment results that parallel the price and yield performance
of publicly traded common stocks in the EAFE Index.
</TABLE>
20
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Capital Company and its funds is
contained in the Capital Company's statement of additional information.
The statement of additional information is incorporated into this
prospectus by reference. You can receive a copy of the Capital
Company's statement of additional information without charge by calling
the toll free telephone number listed above.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the fund's investments is contained
in the Capital Company's annual and semi-annual reports to shareholders.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the
performance of the Capital Company's funds during the last fiscal year.
You can receive a copy of the Capital Company's annual and semi-annual
reports without charge by calling the toll free telephone number listed
above.
PUBLIC ACCESS
You may review and copy additional information about the Capital
Company and its funds at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. You may obtain information on the
operation of the public reference room by calling the SEC toll free at
(800) SEC-0330. You may also obtain reports and other information about
the Capital Company and its funds on the SEC's Internet site
(www.sec.gov) or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009. The SEC charges a duplication fee for
written requests.
QUESTIONS
If you have any questions about the Capital Company or its funds,
please call the toll free telephone number listed above.
Investment Company Act of 1940 File No. 811-04900
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
PROSPECTUS VERSION B
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
- PROSPECTUS -
General American Capital Company (the Capital Company) offers five
different diversified funds through this prospectus. The Capital
Company sells shares of its funds to insurance company separate accounts
so that the funds may serve as investment options under variable life
insurance policies, variable annuity contracts, and certain other plans,
such as qualified pension and retirement plans (collectively referred to
as the Contracts).
The five Capital Company funds are:
* The Money Market Fund.
* The Bond Index Fund.
* The Asset Allocation Fund.
* The Managed Equity Fund.
* The S&P 500 Index Fund.<F*>
This prospectus provides information about the Capital Company and
its funds that you ought to know before investing. You should read this
prospectus in conjunction with the prospectus for the applicable
Contact. Please retain both prospectuses for future reference.
The date of this prospectus is May 1, 2000.
The date of the related statement of additional information
is May 1, 2000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[FN]
____
<F*> "Standard & Poor's" and "Standard & Poor's 500" are trademarks of
the Standard & Poor's Corporation and have been licensed for use by the
Capital Company. Capital Company's S&P 500 Index Fund is not sponsored,
sold, or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the fund.
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
FUND PROSPECTUS
TABLE OF CONTENTS
PAGE
----
Front Cover Page
Table of Contents i
The Funds' Investment Objectives, Principal
Strategies & Risks 1
Fund Performance Charts 4
Fee Tables 7
Shareholder Transaction Expenses 7
Annual Fund Operation Expenses 7
Contract Fees 7
Example 7
Management & Organization 8
The Capital Company 8
The Adviser 8
The Administrator 9
Additional Information About the Funds 10
Purchase & Redemptions of Shares 10
Determination of Share Price 10
Taxes and Dividends 11
Portfolio Turnover 11
Cash Positions 11
Pending Legal Proceedings 12
Financial Highlights 12
Back Cover Page
i
<PAGE>
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES,
PRINCIPAL STRATEGIES & RISKS
Below are the investment objectives, principal strategies, and
risks of the five Capital Company's funds offered through this
prospectus. Also described below are the types of individuals who may
want to invest in the funds. You can find more information on the funds
in the statement of additional information. There can be no assurances
that the funds will achieve their investment objectives. There are
factors not listed below that could adversely affect your investment.
The share price of the funds change daily due to market conditions and
you may lose money if you invest in the funds.
* THE MONEY MARKET FUND.
Investment Objective and Principal Strategies. The Money Market Fund's
- ---------------------------------------------
investment objective is to provide investors with current income while
preserving capital and maintaining liquidity. The fund seeks to achieve
this objective by investing primarily in high-quality, short-term money
market instruments. The fund purchases securities that meet the
quality, maturity, and diversification requirements applicable to money
market funds.
Who May Want to Invest. The Money Market Fund may be appropriate for
- ----------------------
investors who are investing for a short period of time or who are
uncomfortable with investments that may have large fluctuations in
value.
Main Risks. The Money Market Fund does not maintain a stable net asset
- ----------
value and loss of money is a risk of investing in the fund. The
following risk factors may significantly affect fund performance.
Interest Rate Risk. The Money Market's rate of income and net asset
value varies from day to day depending on short-term interest rates.
Changes in interest rates could cause the value of your investment to
decline. Credit Risk. A default on a security that the fund holds
could cause the value of your investment to decline. Not Guaranteed.
Investments in the fund are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
* THE BOND INDEX FUND.
Investment Objective and Principal Strategies. The Bond Index Fund's
- ---------------------------------------------
investment objective is to provide investors with current income that
reflects the performance of the publicly traded bond market as a whole.
The fund seeks to achieve this objective by primarily purchasing
corporate and government bonds contained in the Lehman Brothers
Government/Corporate Bond Index. The fund does not replicate the Index,
but uses a "sampling" method to generally reflect the performance of the
Index. Sampling is an investment technique whereby the fund holds
approximately the same mix and weightings of investment sectors, as
measured by quality and duration, as the Index, while not holding all of
the bonds in each Index sector.
Who May Want to Invest. The Bond Index Fund may be appropriate for
- ----------------------
investors who are seeking a higher level of current income than is
available from money market funds and who are able to tolerate
fluctuations in the value of their investment.
1
<PAGE>
<PAGE>
Main Risks. Loss of money is a risk of investing in the Bond Index Fund.
- ----------
The following risk factors may significantly affect fund performance.
Interest Rate Risk. Interest rate changes can have a powerful effect on
the value of fixed bond portfolios. In general, bond prices rise when
interest rates fall, and fall when interest rates rise. As a result,
the value of your investment in this fund will rise and fall as interest
rates fluctuate. Credit Risk. It is possible that some of the issuers
will not make payments or will default on the debt securities that the
fund holds. Or, an issuer may suffer adverse changes in financial
condition that could lower the credit quality of a bond, leading to
greater volatility in the price of the bond and in shares of the fund.
A change in the quality rating of a bond can also affect a bond's
liquidity and make it more difficult to sell.
* THE ASSET ALLOCATION FUND.
Investment Objective and Principal Strategies. The Asset Allocation
- ---------------------------------------------
Fund's investment objective is to provide investors with a long-term
investment return composed of capital growth and income payments.
Preservation of capital is the fund's secondary objective and the chief
limit on investment risk. The fund seeks to achieve these objectives by
investing in a diversified combination of U.S. common stocks, bonds, and
money market instruments. Under normal market conditions, the Adviser
expects, but is not required, to maintain a mix falling within the
following ranges: 40% to 80% in stocks, 20% to 50% in bonds, and 0% to
40% in money market securities. The mixture of stocks, bonds, and money
market securities varies over time in an attempt to produce the highest
total return consistent with prudence and preservation of capital. The
stock portion of the fund primarily uses a growth investment style.
This means the stock portion of the fund primarily invests in stocks
that have growth potential.
Who May Want to Invest. The Asset Allocation Fund may be appropriate
- ----------------------
for long-term investors who are seeking a balanced investment program,
protection against inflation, and who are able to tolerate a substantial
loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the Asset
- ----------
Allocation Fund. The following risk factors may significantly affect
fund performance. The Asset Allocation Fund invests in a combination of
U.S. common stocks, bonds, and money market instruments. As a result,
the risks described above for the Money Market Fund and the Bond Index
Fund apply to the Asset Allocation Fund. Market Risk. The prices of
the equity securities that the fund holds may decline in response to
changing economic, political, or market conditions, or due to a
company's individual situation or the market's perception of its
situation. Allocation Risk. The fund is subject to an allocation risk,
which is the risk that the Adviser could fail to correctly predict the
optimal mixture of investments. Style Risk. Because growth investing
is a style that involves buying stocks of faster growing companies in
more rapidly growing sectors of the economy, there are related risk.
Growth stocks may:
* be more volatile than other stocks because of their
sensitivity to investor perceptions of the company's growth
potential;
* respond differently to market and other developments than
the general market or value stocks in particular; and
* underperform the general market in a value market
environment.
2
<PAGE>
<PAGE>
* THE MANAGED EQUITY FUND.
Investment Objective and Principal Strategies. The Managed Equity
- ---------------------------------------------
Fund's investment objective is to provide investors with long-term
growth of capital that is consistent with the investment returns of U.S.
common stocks. The fund's secondary objective is to provide investors
with a current income. The fund seeks to achieve these objectives by
investing primarily in common stocks of U.S. companies using a value
approach to investing. This means the fund primarily focuses on stocks'
value rather than potential for short-term appreciation. The fund
primarily invests in stocks issued by companies that are of high quality
and deemed undervalued in relation to the rest of the market.
Who May Want to Invest. The Managed Equity Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the Managed Equity
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation. Style Risk. Because value
investing is a style that involves buying stocks that are out of favor
and/or undervalued in comparison to their peers and/or prospects for
growth, there are related risks. Undervalued stocks may:
* not realize their perceived value for long periods of time;
* respond differently to market and other developments than
the general market or growth stocks in particular; and
* underperform the general market in a growth market
environment.
* THE S&P 500 INDEX FUND.
Investment Objective and Principal Strategies. The S&P 500 Index Fund's
- ---------------------------------------------
investment objective is to provide investors with a long-term capital
appreciation that is consistent with the investment returns of the S&P
500 Index. The fund seeks to achieve this objective by primarily
investing in U.S. common stocks contained in the Standard & Poors' 500
Stock Index. The fund attempts to invest so that its investment results
reflect the return of the S&P 500 Index.
Who May Want to Invest. The S&P 500 Index Fund may be appropriate for
- ----------------------
investors who are seeking high long-term growth and are able to tolerate
a substantial loss in the value of their investment.
Main Risks. Loss of money is a risk of investing in the S&P 500 Index
- ----------
Fund. The following risk factors may significantly affect fund
performance. Market Risk. The prices of the equity securities that the
fund holds may decline in response to changing economic, political, or
market conditions, or due to a company's individual situation or the
market's perception of its situation.
3
<PAGE>
<PAGE>
FUND PERFORMANCE CHARTS
The information on the following pages shows the risks of investing
in the funds by showing how the funds' investment returns have varied
over time. In each case the fund's performance is compared to a
widely recognized unmanaged index. The investment return information
does not reflect expenses that apply to the Contracts. Inclusion of
these charges would reduce the return figures for all periods shown.
Past investment performance is no guarantee of future results.
* THE MONEY MARKET FUND.
FOR UP-TO-DATE YIELD INFORMATION, CALL (877) 882-5714.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990-1999) (through December 31, 1999)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 2.07% June 30, 1990 Money Market Fund 5.20% 5.60% 5.35%
Lowest 0.74% June 30, 1993 Lehman 90-day Treasury Bill Index 4.91% 5.45% 5.20%
=========================================================================================================================
</TABLE>
4
<PAGE>
<PAGE>
* THE BOND INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990-1999) (through December 31, 1999)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 6.40% June 30, 1995 Bond Index Fund -2.88% 7.18% 7.10%
Lowest -3.35% March 31, 1994 Lehman Government/Corporate Index -2.15% 7.60% 7.66%
=========================================================================================================================
</TABLE>
* THE ASSET ALLOCATION FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990-1999) (through December 31, 1999)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 20.89% December 31, 1998 Asset Allocation Fund 23.37% 20.81% 13.49%
Lowest -11.04% September 30, 1998 Lipper Flexible Portfolio Fund Ave. 12.07% 17.11% 12.85%
=========================================================================================================================
</TABLE>
5
<PAGE>
<PAGE>
* THE MANAGED EQUITY FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990-1999) (through December 31, 1999)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 24.00% December 31, 1998 Managed Equity Fund 3.04% 18.53% 12.36%
Lowest -15.80% September 30, 1998 Barra Value Index 12.72% 22.87% N/A
S & P 500 Index 21.05% 28.56% 18.21%
=========================================================================================================================
</TABLE>
* THE S&P 500 INDEX FUND.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY S & P 500 INDEX FUND
[GRAPH]
<TABLE>
<CAPTION>
=========================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990-1999) (through December 31, 1999)
- -------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 21.24% December 31, 1998 S & P 500 Index Fund 20.57% 28.11% 17.83%
Lowest -13.89% September 30, 1990 S & P 500 Index 21.05% 28.56% 18.21%
=========================================================================================================================
</TABLE>
6
<PAGE>
<PAGE>
FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
You will not have to pay any shareholder transaction expense when
you buy or sell shares of the Capital Company funds. This means that
the Capital Company will not charge you a sales charge (load) when you
purchase shares or reinvest dividends, or a deferred sales charge
(deferred load) when you sell shares. In addition, Capital Company will
not charge you an exchange fee when you allocate money between funds or
a redemption fee when you sell your shares.
ANNUAL FUND OPERATION EXPENSES
The Capital Company funds charge investment advisory fees and
administration fees to cover the cost of portfolio management and
administration. The Capital Company does not charge a 12b-1
distribution fee or an account maintenance fee. The Capital Company
deducts its fees from fund assets on a daily basis. The funds' annual
fees are shown as a percent of net assets below:
<TABLE>
<CAPTION>
Total Fund
Investment Administration Operating
Advisory Fees Fees Expenses
<S> <C> <C> <C>
Money Market Fund .125% .08% .205%
Bond Index Fund .25 .05 .30
Asset Allocation Fund .50 .10 .60
Managed Equity Fund .29 .10 .39
S&P 500 Index Fund .25 .05 .30
</TABLE>
CONTRACT FEES
The Capital Company sells its shares to separate accounts of
insurance companies to support the Contracts. Please refer to the
Contract's disclosure documents for information about fees applicable to
the separate accounts and the Contracts.
EXAMPLE
This example is intended to help you compare the costs of
investing in the Capital Company funds with the costs of investing in
other funds available under the Contract. The example assumes that you
invest $10,000 in the funds for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the
funds' operating expenses remain the same.
7
<PAGE>
<PAGE>
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund $21 $ 66 $116 $262
Bond Index Fund 31 97 169 381
Asset Allocation Fund 62 193 336 752
Managed Equity Fund 40 126 219 494
S&P 500 Index Fund 31 97 169 381
</TABLE>
Because the Capital Company does not charge redemption fees, you
would pay the same amounts if you did not redeem at the end of the time
periods specified.
MANAGEMENT & ORGANIZATION
THE CAPITAL COMPANY
The Capital Company is an open-end, management investment company
with eight different diversified funds, five of which are described in
this prospectus. As of December 31, 1999, the Capital Company held
approximately $1.5 billion in assets. The Capital Company sells shares
of its funds to insurance company separate accounts so that the funds
may serve as investment options for the Contracts. The Board of
Directors of the Capital Company is responsible for the management of
the Capital Company's business and affairs, which includes creating and
supervising the execution of the funds' investment policies.
THE ADVISER
Conning Asset Management Company (the Adviser) is the investment
adviser for each of the Capital Company's funds. The Adviser was formed
in 1982. Its address is 700 Market Street, St. Louis, Missouri 63101.
The Adviser is an indirect subsidiary of MetLife, Inc., a publicly traded
company. As of December 31, 1999, the Adviser provided investment management
to 96 unaffiliated institutional accounts and to 52 affiliated
institutional accounts. As of December 31, 1999, the Adviser had
approximately $33 billion of assets under its discretionary management.
Subject to policies set by the Board of Directors of the Capital
Company, the Adviser selects investments and provides investment advice
and some administrative services for each of the Capital Company's
funds. In addition, the Adviser reviews the practices of broker-dealers
buying and selling investments for the Capital Company.
Portfolio Managers.
Douglas R. Koester, CFA, Senior Vice President of the Adviser,
manages the S&P 500 Index Fund. He has managed the S&P 500 Index Fund
since its inception on October 1, 1987.
8
<PAGE>
<PAGE>
Mr. Koester has a bachelor's and master's degree from Washington
University (St. Louis, Missouri).
Gary A. Barohn, CFA, Senior Vice President of the Adviser,
manages the Managed Equity Fund and the Asset Allocation Fund. He has
managed these funds since December 1999. Prior to joining the Adviser
in 1999, Mr. Barohn was Senior Vice President at Evergreen Capital
Management, Inc., from 1994 to 1999, where he oversaw equity research
and served as portfolio manager for value funds. Mr. Barohn has a
bachelor's degree from Purdue University and a master's degree from
University of Missouri - St. Louis.
Wm. Michael Cody, CFA, Vice President of the Adviser, manages the
Bond Index Fund. He has managed the Bond Index Fund since January 1996.
Prior to joining the Adviser in 1995, Mr. Cody worked for seven years
for Walnut Street Securities, Inc. He has a bachelor's degree from
Marquette University and an MBA degree from Drake University.
Kathleen A. Spaeth, CCM, Assistant Vice President of the Adviser,
manages the Money Market Fund. Ms. Spaeth has managed the Money Market
Fund since its inception on October 1, 1987. Ms. Spaeth has been with
the Adviser since its inception in 1982.
Adviser Compensation.
The Adviser charges a fee for its investment management and
advisory services that accrues daily against each fund. The following
chart shows the investment management fees (as a percentage of average
daily assets) each fund paid during the last fiscal year:
Money Market Fund .125%
Bond Index Fund .25
Asset Allocation Fund .50
Managed Equity Fund .29
S&P 500 Index Fund .25
THE ADMINISTRATOR
General American Life Insurance Company (the Administrator) is the
principal administrator for the Capital Company. The Administrator's
address is 700 Market Street, St. Louis, Missouri 63101. Subject to
policies set by the Board of Directors, the Administrator performs
certain administrative services and pays certain administrative expenses
for the Capital Company. These services and expenses include, but are
not limited to, the following: investment accounting services, transfer
agent services, legal services, tax services, conducting shareholders
and Board of Directors meetings, outside Director fees, printing and
distributing communications to current shareholders of the Capital
Company, fidelity bond insurance, and custodial fees. The Administrator
charges the Capital Company a fee for these services and expenses, at an
annual rate based on the average daily value of the net assets in each
fund. These rates are set forth under "Administration Fees" in the
section "Annual Fund Operating Expenses."
9
<PAGE>
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUNDS
PURCHASE & REDEMPTION OF SHARES
Capital Company offers shares of the funds on a continuous basis
to insurance company separate accounts which, in turn, fund the
Contracts. Shares may be purchased or redeemed at a fund's net asset
value as next determined following acceptance of an order. Purchases
and redemptions of shares are made subsequent to corresponding purchases
and redemptions of units of the separate accounts that support the
Contracts. All share transactions are executed without any sales or
redemption charges. Subject to applicable laws and agreement between
parties, the Capital Company reserves the right to sell and redeem
shares in kind.
DETERMINATION OF SHARE PRICE
Each fund calculates its share price, also called net asset value
(NAV), as of the close of trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time), every day the Exchange is open,
except the day after Thanksgiving, when Capital Company is closed. If,
however, the day after Thanksgiving is the last business day of the
month, NAV is determined on that day. A fund's NAV is generally based
on the market value of the securities held in the fund. If market
values are not available, the fair market value of securities is
determined using procedures that the Board of Directors has approved.
Debt instruments with maturities of 60 days or more are valued at
their market price. Debt instruments with a remaining maturity of less
than 60 days are valued on an amortized cost basis. Under this method
of valuation, the security is initially valued at cost on the date of
purchase or, in the case of securities purchased with 60 days or more
remaining to maturity, the market value at the beginning of the 59th day
prior to maturity. Thereafter, straight line amortization of discount
or premium is assumed until maturity regardless of the impact of
fluctuating interest rates on the market value of the security. While
valuation at amortized cost provides a more consistent rate of return,
it may result in periods during which the price which could be received
upon sale of the instrument is higher or lower than its amortized cost
value. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security
will be valued by market quotations, if available, or otherwise as
determined in good faith by or under the direction of the Capital
Company's Board of Directors.
Foreign securities are valued based on quotations from the primary
market in which they are traded or the market from which they were
purchased. Foreign securities are converted from the local currency
into U.S. dollars using the current exchange rates. Foreign securities
may trade when the fund does not price its shares. As a result, the
value of the International Index Fund may change on days when
shareholders will not be able to buy or sell shares.
10
<PAGE>
<PAGE>
TAXES AND DIVIDENDS
Each fund intends to operate as a regulated investment company
under the Internal Revenue Code. Further, each fund intends to meet
certain distribution requirements applicable to mutual funds underlying
the Contracts. In any fiscal year in which a fund so qualifies and
distributes to shareholders its net investment income and realized
capital gains, the fund itself is relieved of federal income tax. Under
current tax law, distributions that are left to accumulate in a Contract
are not subject to federal income tax until they are withdrawn. See the
prospectus of the applicable Contract for information regarding the
federal income tax treatment of the Contract and distributions to the
separate accounts.
PORTFOLIO TURNOVER
Portfolio turnover refers to the annual rate of change in a fund's
investment portfolio. Portfolio turnover reflects the extent of trading
in the portfolio. Trading is usually accompanied by the payment of
commissions to brokers which will reduce a fund's return. Portfolio
turnover varies over time and among the funds due to the funds'
different investment objectives and policies. Portfolio turnover data
is included in the Financial Highlights section.
CASH POSITIONS
The funds may hold a substantial portion of their portfolios in
cash and cash equivalents. The extent of each fund's cash position
depends on market conditions, fund purchases and redemptions, and other
factors. This may detract from the achievement of a fund's objectives
over the short-term, or may protect a fund during a market downturn.
11
<PAGE>
<PAGE>
PENDING LEGAL PROCEEDINGS
As of the date of this prospectus, there are no material legal
proceedings to which the Capital Company or the Adviser is a party.
FINANCIAL HIGHLIGHTS INFORMATION
The financial highlights tables are intended to help you
understand the funds' financial performance for the past five years or,
if shorter, the period of the funds' operations. Certain information in
the tables reflects financial results on a per share basis. The total
returns data in the tables represent the rate that an investor would
have earned or lost on an investment in the funds (assuming reinvestment
of all dividends and distributions). This information has been audited
by KPMG LLP, independent auditors, whose report, along with the funds'
financial statements, are included in the annual report. The annual
report is available upon request.
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
==================================================================================================================================
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 19.25 $ 18.23 $ 17.24 $ 16.34 $ 15.42
-------- -------- -------- -------- -------
Income from operations:
Net investment income 1.00 1.02 0.99 0.90 0.92
-------- -------- -------- -------- -------
Net asset value, end of period $ 20.25 $ 19.25 $ 18.23 $ 17.24 $ 16.34
======== ======== ======== ======== =======
Total return <F2> 5.20% 5.62% 5.71% 5.51% 5.96%
Net assets, end of period (in thousands) $256,140 $235,046 $174,571 $101,426 $70,574
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> 5.08% 5.45% 5.60% 5.37% 5.78%
Portfolio turnover 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> A portfolio turnover rate is not calculated for
securities on which the maturity or expiration dates at
the time of acquisition were one year or less.
</TABLE>
12
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY BOND INDEX FUND
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
==================================================================================================================================
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 25.19 $ 23.19 $ 21.21 $ 20.59 $ 17.30
------- ------- ------- ------- -------
Income from operations:
Net investment income 1.42 1.40 1.39 1.29 1.25
Net realized and unrealized gain (loss)
on investments (2.15) 0.60 0.59 (0.67) 2.04
------- ------- ------- ------- -------
Net increase (decrease) in asset value
per share (.73) 2.00 1.98 0.62 3.29
------- ------- ------- ------- -------
Net asset value, end of year $ 24.46 $ 25.19 $ 23.19 $ 21.21 $ 20.59
======= ======= ======= ======= =======
Total return <F2> (2.88%) 8.61% 9.34% 3.02% 19.02%
Net assets, end of period (in thousands) $71,041 $69,177 $48,330 $38,015 $39,316
Ratio of expenses to average net assets <F3> 0.30% 0.30% 0.30% 0.30% 0.30%
Ratio of net investment income to average
net assets <F3> 5.75% 5.80% 6.25% 6.26% 6.43%
Portfolio turnover rate 28.86% 54.00% 47.40% 44.28% 35.35%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not
reflect expenses that apply to the separate accounts
investing in the Fund or to the insurance or variable
annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY ASSET ALLOCATION FUND
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
==================================================================================================================================
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 37.55 $ 31.86 $ 26.83 $ 23.20 $ 18.00
-------- -------- -------- ------- -------
Income from operations:
Net investment income 0.63 0.81 0.96 0.93 0.82
Net realized and unrealized gain (loss)
on investments 8.14 4.88 4.07 2.70 4.38
-------- -------- -------- ------- -------
Net increase (decrease) in asset value
per share 8.77 5.69 5.03 3.63 5.20
-------- -------- -------- ------- -------
Net asset value, end of year $ 46.32 $ 37.55 $ 31.86 $ 26.83 $ 23.20
======== ======== ======== ======= =======
Total return <F2> 23.37% 17.86% 18.73% 15.66% 28.88%
Net assets, end of year (in thousands) $152,061 $124,510 $111,269 $86,191 $73,387
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> 1.56% 2.42% 3.24% 3.77% 3.92%
Portfolio turnover rate 12.21% 34.03% 36.34% 32.78% 33.74%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not
reflect expenses that apply to the separate accounts
investing in the Fund or to the insurance or variable
annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
</TABLE>
13
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MANAGED EQUITY FUND
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
==================================================================================================================================
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 35.63 $ 31.20 $ 25.31 $ 20.93 $ 15.69
------- ------- ------- ------- -------
Income from operations:
Net investment income 0.42 0.48 0.63 0.68 0.58
Net realized and unrealized gain (loss)
on investments 0.66 3.95 5.26 3.70 4.66
------- ------- ------- ------- -------
Net increase (decrease) in asset value
per share 1.08 4.43 5.89 4.38 5.24
------- ------- ------- ------- -------
Net asset value, end of period $ 36.71 $ 35.63 $ 31.20 $ 25.31 $ 20.93
======= ======= ======= ======= =======
Total return <F2> 3.04% 14.19% 23.29% 20.92% 33.37%
Net assets, end of period (in thousands) $64,712 $61,804 $59,138 $48,587 $40,902
Ratio of expenses to average net assets <F3><F4> 0.39% 0.39% 0.41% 0.47% 0.48%
Ratio of net investment income to average
net assets <F3> 1.14% 1.46% 2.19% 2.97% 3.14%
Portfolio turnover rate 16.00% 67.23% 49.43% 36.44% 44.82%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not
reflect expenses that apply to the separate accounts
investing in the Fund or to the insurance or variable
annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
<F4> On March 1, 1997, Conning Asset Management Company took
over the asset management of the Managed Equity Fund.
The management fee was reduced from .50 percent to .40
percent on the first $10 million of assets, from .35
percent to .30 percent on the balance over $10 million
and less than $30 million, and from .30 percent to .25
percent on the balance in excess of $30 million.
</TABLE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY S&P 500 INDEX FUND
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
==================================================================================================================================
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 50.49 $ 39.40 $ 29.67 $ 24.14 $ 17.64
-------- -------- -------- -------- --------
Income from operations:
Net investment income 0.54 0.53 0.52 0.53 0.46
Net realized and unrealized gain
on investment 9.84 10.56 9.21 5.00 6.04
-------- -------- -------- -------- --------
Net increase in asset value per share 10.38 11.09 9.73 5.53 6.50
-------- -------- -------- -------- --------
Net asset value, end of period $ 60.87 $ 50.49 $ 39.40 $ 29.67 $ 24.14
======== ======== ======== ======== ========
Total return <F2> 20.57% 28.15% 32.80% 22.89% 36.85%
Net assets, end of year (in thousands) $898,689 $700,489 $501,577 $340,201 $247,313
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> 0.99% 1.21% 1.48% 1.97% 2.19%
Portfolio turnover rate 13.46% 13.14% 12.61% 8.93% 4.75%
<FN>
Notes: <F1> Components are computed and accumulated on a daily basis.
<F2> The total return information shown in this table does not
reflect expenses that apply to the separate accounts
investing in the Fund or to the insurance or variable
annuity contracts. Inclusion of these charges would
reduce the total return figures for all periods shown.
<F3> Computed on an annualized basis.
</TABLE>
14
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Capital Company and its funds is
contained in the Capital Company's statement of additional information.
The statement of additional information is incorporated into this
prospectus by reference. You can receive a copy of the Capital
Company's statement of additional information without charge by calling
the toll free telephone number listed above.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the fund's investments is contained
in the Capital Company's annual and semi-annual reports to shareholders.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the
performance of the Capital Company's funds during the last fiscal year.
You can receive a copy of the Capital Company's annual and semi-annual
reports without charge by calling the toll free telephone number listed
above.
PUBLIC ACCESS
You may review and copy additional information about the Capital
Company and its funds at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. You may obtain information on the
operation of the public reference room by calling the SEC toll free at
(800) SEC-0330. You may also obtain reports and other information about
the Capital Company and its funds on the SEC's Internet site
(www.sec.gov) or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009. The SEC charges a duplication fee for
written requests.
QUESTIONS
If you have any questions about the Capital Company or its funds,
please call the toll free telephone number listed above.
Investment Company Act of 1940 File No. 811-04900
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
PROSPECTUS VERSION C
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
- PROSPECTUS -
General American Capital Company (the Capital Company) offers its
Money Market Fund through this prospectus. The Capital Company sells
shares of the fund to insurance company separate accounts so that the
fund may serve as an investment option under variable life insurance
policies, variable annuity contracts, and certain other plans, such as
qualified pension and retirement plans (collectively referred to as the
Contracts).
This prospectus provides information about the Capital Company and
its Money Market Fund that you ought to know before investing. You
should read this prospectus in conjunction with the prospectus for the
applicable Contact. Please retain both prospectuses for future
reference.
The date of this prospectus is May 1, 2000.
The date of the related statement of additional information
is May 1, 2000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
FUND PROSPECTUS
TABLE OF CONTENTS
PAGE
----
Front Cover Page
Table of Contents i
The Funds' Investment Objectives, Principal
Strategies & Risks 1
Fund Performance Chart 1
Fee Tables 2
Shareholder Transaction Expenses 2
Annual Fund Operation Expenses 2
Contract Fees 3
Example 3
Management & Organization 3
The Capital Company 3
The Adviser 4
The Administrator 4
Additional Information About the Funds 5
Purchase & Redemptions of Shares 5
Determination of Share Price 5
Taxes and Dividends 6
Portfolio Turnover 6
Cash Positions 6
Pending Legal Proceedings 7
Financial Highlights 7
Back Cover Page
i
<PAGE>
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES,
PRINCIPAL STRATEGIES & RISKS
Below are the investment objectives, principal strategies, and
risks of the Capital Company's Money Market Fund. Also described below
are the types of individuals who may want to invest in the fund. You
can find more information on the fund in the statement of additional
information. There can be no assurances that the fund will achieve its
investment objectives. There are factors not listed below that could
adversely affect your investment. The share price of the fund changes
daily due to market conditions and you may lose money if you invest in
the fund.
* THE MONEY MARKET FUND.
Investment Objective and Principal Strategies. The Money Market Fund's
- ---------------------------------------------
investment objective is to provide investors with current income while
preserving capital and maintaining liquidity. The fund seeks to achieve
this objective by investing primarily in high-quality, short-term money
market instruments. The fund purchases securities that meet the
quality, maturity, and diversification requirements applicable to money
market funds.
Who May Want to Invest. The Money Market Fund may be appropriate for
- ----------------------
investors who are investing for a short period of time or who are
uncomfortable with investments that may have large fluctuations in
value.
Main Risks. The Money Market Fund does not maintain a stable net asset
- ----------
value and loss of money is a risk of investing in the fund. The
following risk factors may significantly affect fund performance.
Interest Rate Risk. The Money Market's rate of income and net asset
value varies from day to day depending on short-term interest rates.
Changes in interest rates could cause the value of your investment to
decline. Credit Risk. A default on a security that the fund holds
could cause the value of your investment to decline. Not Guaranteed.
Investments in the fund are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
FUND PERFORMANCE CHART
The information on the following page shows the risks of investing
in the fund by showing how the fund's investment returns have varied
over time. In each case the fund's performance is compared to a widely
recognized unmanaged index. The investment return information does not
reflect expenses that apply to the Contracts. Inclusion of these
charges would reduce the return figures for all periods shown. Past
investment performance is no guarantee of future results.
1
<PAGE>
<PAGE>
* THE MONEY MARKET FUND.
FOR UP-TO-DATE YIELD INFORMATION, CALL (877) 882-5714.
=========================================================================
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
[GRAPH]
<TABLE>
<CAPTION>
===================================================================================================================================
HIGHEST AND LOWEST RETURN AVERAGE ANNUAL TOTAL RETURNS
(Quarterly 1990-1999) (through December 31, 1999)
- -----------------------------------------------------------------------------------------------------------------------------------
Quarter Ending 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C> <C> <C>
Highest 2.07% June 30, 1990 Money Market Fund 5.20% 5.60% 5.35%
Lowest 0.74% June 30, 1993 Lehman 90-day Treasury Bill Index 4.91% 5.45% 5.20%
===================================================================================================================================
</TABLE>
FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
You will not have to pay any shareholder transaction expense when
you buy or sell shares of the Capital Company Money Market Fund. This
means that the Capital Company will not charge you a sales charge (load)
when you purchase shares or reinvest dividends, or a deferred sales
charge (deferred load) when you sell shares. In addition, Capital
Company will not charge you an exchange fee when you allocate money
between funds or a redemption fee when you sell your shares.
ANNUAL FUND OPERATION EXPENSES
The Capital Company funds charge investment advisory fees and
administration fees to cover the cost of portfolio management and
administration. The Capital Company does not charge a 12b-1
distribution fee or an account maintenance fee. The Capital Company
deducts its fees from fund assets on a daily basis. The fund's annual
fees are shown as a percent of net assets below:
2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Total Fund
Investment Administration Operating
Advisory Fees Fees Expenses
<S> <C> <C> <C>
Money Market Fund .125% .08% .205%
</TABLE>
CONTRACT FEES
The Capital Company sells its shares to separate accounts of
insurance companies to support the Contracts. Please refer to the
Contract's disclosure documents for information about fees applicable to
the separate accounts and the Contracts.
EXAMPLE
This example is intended to help you compare the costs of
investing in the Capital Company Money Market Fund with the costs of
investing in other funds available under the Contract. The example
assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund $21 $66 $116 $262
</TABLE>
Because the Capital Company does not charge redemption fees, you
would pay the same amounts if you did not redeem at the end of the time
periods specified.
MANAGEMENT & ORGANIZATION
THE CAPITAL COMPANY
The Capital Company is an open-end, management investment company
with eight different diversified funds, of which only the Money Market
Fund is described in this prospectus. As of December 31, 1999, the
Capital Company held approximately $1.5 billion in assets. The Capital
Company sells shares of its funds to insurance company separate accounts
so that the funds may serve as investment options for the Contracts.
The Board of Directors of the Capital Company is responsible for the
management of the Capital Company's business and affairs, which includes
creating and supervising the execution of the funds' investment
policies.
3
<PAGE>
<PAGE>
THE ADVISER
Conning Asset Management Company (the Adviser) is the investment
adviser for each of the Capital Company's funds. The Adviser was formed
in 1982. Its address is 700 Market Street, St. Louis, Missouri 63101.
The Adviser is an indirect subsidiary of MetLife, Inc., a publicly traded
company. As of December 31, 1999, the Adviser provided investment management
to 96 unaffiliated institutional accounts and to 52 affiliated
institutional accounts. As of December 31, 1999, the Adviser had
approximately $33 billion of assets under its discretionary management.
Subject to policies set by the Board of Directors of the Capital
Company, the Adviser selects investments and provides investment advice
and some administrative services for each of the Capital Company's
funds. In addition, the Adviser reviews the practices of broker-dealers
buying and selling investments for the Capital Company.
Portfolio Manager.
Kathleen A. Spaeth, CCM, Assistant Vice President of the Adviser,
manages the Money Market Fund. Ms. Spaeth has managed the Money Market
Fund since its inception on October 1, 1987. Ms. Spaeth has been with
the Adviser since its inception in 1982.
Adviser Compensation.
The Adviser charges a fee for its investment management and
advisory services that accrues daily against the fund. The following
chart shows the investment management fees (as a percentage of average
daily assets) the fund paid during the last fiscal year:
Money Market Fund .125%
THE ADMINISTRATOR
General American Life Insurance Company (the Administrator) is the
principal administrator for the Capital Company. The Administrator's
address is 700 Market Street, St. Louis, Missouri 63101. Subject to
policies set by the Board of Directors, the Administrator performs
certain administrative services and pays certain administrative expenses
for the Capital Company. These services and expenses include, but are
not limited to, the following: investment accounting services, transfer
agent services, legal services, tax services, conducting shareholders
and Board of Directors meetings, outside Director fees, printing and
distributing communications to current shareholders of the Capital
Company, fidelity bond insurance, and custodial fees. The Administrator
charges the Capital Company a fee for these services and expenses, at an
annual rate based on the average daily value of the net assets in each
fund. These rates are set forth under "Administration Fees" in the
section "Annual Fund Operating Expenses."
4
<PAGE>
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUND
PURCHASE & REDEMPTION OF SHARES
Capital Company offers shares of the Money Market Fund on a
continuous basis to insurance company separate accounts which, in turn,
fund the Contracts. Shares may be purchased or redeemed at a fund's net
asset value as next determined following acceptance of an order.
Purchases and redemptions of shares are made subsequent to corresponding
purchases and redemptions of units of the separate accounts that support
the Contracts. All share transactions are executed without any sales or
redemption charges. Subject to applicable laws and agreement between
parties, the Capital Company reserves the right to sell and redeem
shares in kind.
DETERMINATION OF SHARE PRICE
Each fund calculates its share price, also called net asset value
(NAV), as of the close of trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time), every day the Exchange is open,
except the day after Thanksgiving, when Capital Company is closed. If,
however, the day after Thanksgiving is the last business day of the
month, NAV is determined on that day. A fund's NAV is generally based
on the market value of the securities held in the fund. If market
values are not available, the fair market value of securities is
determined using procedures that the Board of Directors has approved.
Debt instruments with maturities of 60 days or more are valued at
their market price. Debt instruments with a remaining maturity of less
than 60 days are valued on an amortized cost basis. Under this method
of valuation, the security is initially valued at cost on the date of
purchase or, in the case of securities purchased with 60 days or more
remaining to maturity, the market value at the beginning of the 59th day
prior to maturity. Thereafter, straight line amortization of discount
or premium is assumed until maturity regardless of the impact of
fluctuating interest rates on the market value of the security. While
valuation at amortized cost provides a more consistent rate of return,
it may result in periods during which the price which could be received
upon sale of the instrument is higher or lower than its amortized cost
value. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security
will be valued by market quotations, if available, or otherwise as
determined in good faith by or under the direction of the Capital
Company's Board of Directors.
Foreign securities are valued based on quotations from the primary
market in which they are traded or the market from which they were
purchased. Foreign securities are converted from the local currency
into U.S. dollars using the current exchange rates. Foreign securities
may trade when the fund does not price its shares. As a result, the
value of the International Index Fund may change on days when
shareholders will not be able to buy or sell shares.
5
<PAGE>
<PAGE>
TAXES AND DIVIDENDS
The Money Market Fund intends to operate as a regulated investment
company under the Internal Revenue Code. Further, the fund intends to
meet certain distribution requirements applicable to mutual funds
underlying the Contracts. In any fiscal year in which a fund so
qualifies and distributes to shareholders its net investment income and
realized capital gains, the fund itself is relieved of federal income
tax. Under current tax law, distributions that are left to accumulate
in a Contract are not subject to federal income tax until they are
withdrawn. See the prospectus of the applicable Contract for
information regarding the federal income tax treatment of the Contract
and distributions to the separate accounts.
PORTFOLIO TURNOVER
Portfolio turnover refers to the annual rate of change in a fund's
investment portfolio. Portfolio turnover reflects the extent of trading
in the portfolio. Trading is usually accompanied by the payment of
commissions to brokers which will reduce a fund's return. Portfolio
turnover varies over time. Portfolio turnover data is included in the
Financial Highlights section.
CASH POSITIONS
The funds may hold a substantial portion of their portfolios in
cash and cash equivalents. The extent of the fund's cash position
depends on market conditions, fund purchases and redemptions, and other
factors. This may detract from the achievement of the fund's objectives
over the short-term, or may protect the fund during a market downturn.
6
<PAGE>
<PAGE>
PENDING LEGAL PROCEEDINGS
As of the date of this prospectus, there are no material legal
proceedings to which the Capital Company or the Adviser is a party.
FINANCIAL HIGHLIGHTS INFORMATION
The financial highlights tables are intended to help you understand the
funds' financial performance for the past five years or, if shorter, the
period of the funds' operations. Certain information in the tables reflects
financial results on a per share basis. The total returns data in the tables
represent the rate that an investor would have earned or lost on an investment
in the funds (assuming reinvestment of all dividends and distributions). This
information has been audited by KPMG LLP, independent auditors, whose report,
along with the funds' financial statements, are included in the annual report.
The annual report is available upon request.
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
===================================================================================================================================
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year <F1> $ 19.25 $ 18.23 $ 17.24 $ 16.34 $ 15.42
-------- -------- -------- -------- -------
Income from operations:
Net investment income 1.00 1.02 0.99 0.90 0.92
-------- -------- -------- -------- -------
Net asset value, end of period $ 20.25 $ 19.25 $ 18.23 $ 17.24 $ 16.34
======== ======== ======== ======== =======
Total return <F2> 5.20% 5.62% 5.71% 5.51% 5.96%
Net assets, end of period (in thousands) $256,140 $235,046 $174,571 $101,426 $70,574
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> 5.08% 5.45% 5.60% 5.37% 5.78%
Portfolio turnover 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> A portfolio turnover rate is not calculated for
securities on which the maturity or expiration dates at
the time of acquisition were one year or less.
</TABLE>
7
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
SAINT LOUIS, MISSOURI 63101
(877) 882-5714
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Capital Company and its funds is
contained in the Capital Company's statement of additional information.
The statement of additional information is incorporated into this
prospectus by reference. You can receive a copy of the Capital
Company's statement of additional information without charge by calling
the toll free telephone number listed above.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the fund's investments is contained
in the Capital Company's annual and semi-annual reports to shareholders.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the
performance of the Capital Company's funds during the last fiscal year.
You can receive a copy of the Capital Company's annual and semi-annual
reports without charge by calling the toll free telephone number listed
above.
PUBLIC ACCESS
You may review and copy additional information about the Capital
Company and its funds at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. You may obtain information on the
operation of the public reference room by calling the SEC toll free at
(800) SEC-0330. You may also obtain reports and other information about
the Capital Company and its funds on the SEC's Internet site
(www.sec.gov) or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009. The SEC charges a duplication fee for
written requests.
QUESTIONS
If you have any questions about the Capital Company or its funds,
please call the toll free telephone number listed above.
Investment Company Act of 1940 File No. 811-04900
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
700 MARKET STREET
ST. LOUIS, MISSOURI 63101
(877) 882-5714
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
General American Capital Company is an open-end, diversified
management investment company with the following eight funds:
* The Money Market Fund.
* The Bond Index Fund.
* The Asset Allocation Fund.
* The Managed Equity Fund.
* The S&P 500 Index Fund.<F*>
* The Mid-Cap Equity Fund.
* The Small-Cap Equity Fund.
* The International Index Fund.
This statement of additional information is not a prospectus. It
supplements the Capital Company's prospectus dated May 1, 2000. A copy
of the prospectus may be obtained at the address or telephone number
listed above. This statement of additional information should be read
in connection with the Capital Company's prospectus and the insurance
company's separate account prospectus that describes the variable
insurance policy or annuity contract. Please retain these documents for
future reference.
[FN]
- -------
<F*> "Standard & Poor's" and "Standard & Poor's 500" are trademarks of
the Standard & Poor's Corporation and have been licensed for use by the
Capital Company. Capital Company's S&P 500 Index Fund is not sponsored,
sold, or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the fund.
B-1
<PAGE>
<PAGE>
<TABLE>
GENERAL AMERICAN CAPITAL COMPANY
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
Business History B-3
Investment Restrictions B-3
Description of Certain Investments B-5
United States Government Securities B-6
Bank Obligations B-6
Repurchase Agreements B-7
Reverse Repurchase Agreements B-7
Commercial Paper B-8
Stock Index Futures Contracts B-8
Forward Foreign Currency Transactions B-10
Investment Advisory and Other Services B-11
Investment Advisory Agreement B-11
Accountants B-13
Custodian and Foreign Custody Manager B-13
Payment of Expenses B-13
Portfolio Transactions and Brokerage Allocations B-13
Management of the Company B-15
Codes of Ethics B-17
Capital Stock B-17
Fund Ownership B-18
Persons Controlled by or under Common Control with Registrant B-18
Offering and Redemption of Shares B-18
Determination of Net Asset Value B-19
Investment Performance B-20
Money Market Yield Information B-21
Taxes and Dividends B-22
Additional Information B-23
Legal Matters B-23
Reports B-23
Other Information B-23
Financial Statements B-23
</TABLE>
B-2
<PAGE>
<PAGE>
BUSINESS HISTORY
General American Capital Company (the "Company") is an open-ended
diversified management investment company established by General
American Life Insurance Company ("General American") to provide for the
investment of assets of separate accounts of General American,
affiliated insurance companies, and unaffiliated insurance companies.
The Company was incorporated in Maryland on November 15, 1985, and
commenced operations on October 1, 1987. Currently, shares are offered
to General American Separate Account Two, General American Separate
Account Eleven, unregistered separate accounts of General American,
separate accounts of RGA Reinsurance Company, Security Equity Life
Insurance Company, Cova Financial Services Life Insurance Company, Cova
Financial Life Insurance Company, and First Cova Life Insurance Company,
all affiliates of General American. General American Separate Account
Two's assets represent payments for variable annuity contracts, as do
the assets of the Cova separate accounts. General American Separate
Account Eleven's assets and those of RGA Reinsurance Company, and
Security Equity Life Insurance Company are derived from premium payments
made to purchase and continue flexible premium variable life insurance
policies. The unregistered separate accounts hold funds for tax-
qualified employee benefit plans, or variable life contracts sold to a
limited number of wealthy and sophisticated purchasers.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental policies of the
Company and may not be changed without approval of a majority of the
outstanding shares of each affected fund. Each restriction applies to
each fund of the Company unless otherwise indicated. A change in policy
affecting only one fund may be effected with the approval of a majority
of the outstanding shares of that fund only. (As used in the prospectus
and this statement of additional information, the term "majority of the
outstanding voting shares" means the lesser of: (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding
shares are represented; or (ii) more than 50% of the outstanding
shares.) A fund will not:
1. Invest more than 10% of the value of the total assets of a fund in
securities that are not readily marketable, such as repurchase
agreements having a maturity of more than seven days and securities
which are secured by interests in real estate. This restriction does
not apply to obligations issued or guaranteed by the U.S. government,
its agencies, or instrumentalities and does not apply to the
International Index Fund's entrance into forward foreign currency
contracts as described herein;
In determining the liquidity of Rule 144A securities, which are
unregistered securities offered to qualified institutional buyers, and
interest-only and principal-only fixed mortgage-backed securities issued
by the U.S. government or its agencies and instrumentalities, the
investment manager, under guidelines established by the Company's Board
of Directors, will consider any relevant factors including the frequency
of trades, the number of dealers willing to purchase or sell the
security, and the nature of marketplace trades.
B-3
<PAGE>
<PAGE>
In determining the liquidity of commercial paper issued in transactions
not involving a public offering under Section 4(2) of the Securities Act
of 1933, the Adviser, under guidelines established by the Company's
Board of Directors, will evaluate relevant factors such as the issuer
and the size and nature of its commercial paper programs, the
willingness and ability of the issuer or dealer to repurchase the paper,
and the nature of the clearance and settlement procedures for the
commercial paper.
2. Invest more than 5% of the value of the total assets of a fund in
equity securities that are not readily marketable;
3. Invest in real estate, although a fund may buy securities of
companies which deal in real estate and securities which are secured by
interests in real estate, including interests in real estate investment
trusts;
4. Invest in commodities or commodity contracts, except to the extent
provided in Item 14 below;
5. Purchase securities of other investment companies if, as a result,
a fund would own more than 3% of the total outstanding voting stock of
any one investment company, or more than 5% of the fund's assets would
be invested in any one investment company, or more than 10% of the
fund's assets would be invested in investment company securities. These
limitations do not apply to securities acquired in connection with a
merger, consolidation, acquisition, or reorganization, or by purchase in
the open market of securities of closed-end investment companies where
no underwriter or dealer's commission or profit, other than customary
broker's commission, is involved, and so long as immediately thereafter
not more than 10% of such fund's total assets, taken at market value,
would be invested in the securities;
6. Make loans, except by the purchase of debt obligations customarily
distributed privately to institutional investors, and except that a fund
may buy repurchase agreements and the International Index Fund may enter
into forward foreign currency contracts as described herein;
7. As to 75% of the value of the total assets of a fund, invest more
than 5% of the value of such assets in securities of any one issuer,
except that this restriction shall not apply to securities issued or
guaranteed by the U.S. government, its agencies, or instrumentalities;
8. As to 75% of the value of the total assets of a fund, invest in
more than 10% of the outstanding voting securities of any one issuer;
9. Act as an underwriter of securities of other issuers, except to
the extent that it may be deemed to be an underwriter in reselling
securities, such as restricted securities, acquired in private
transactions and subsequently registered under the Securities Act of
1933;
10. Borrow money, except that the Money Market Fund may enter into
reverse repurchase agreements with banks and except that, as a temporary
measure for extraordinary or emergency purposes (such as to permit a
fund to honor redemption requests without being required to
B-4
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<PAGE>
dispose of investments in an inopportune or untimely manner) and not for
investment purposes, any fund may borrow from banks up to 5% of its
assets taken at cost, provided in each case that the total borrowings
have an asset coverage, based on value, of at least 300% and except that
the International Index Fund may enter into forward foreign currency
contracts in accordance with its investment policies;
11. Issue securities senior to its common stock except to the extent
set out in Item 10 above;
12. Sell securities short, or maintain a short position provided that
the International Index Fund's use of forward foreign currency contracts
as described herein shall not be deemed to be selling securities short
or to be maintaining a short position;
13. Buy securities on margin, except that a fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities provided that margin payments and other deposits
in connection with the International Index Fund's use of forward foreign
currency contracts shall not be deemed to constitute purchasing
securities on margin;
14. Invest in or write puts, calls, straddles, or spreads. However,
this restriction shall not prohibit a fund (other than the Money Market
Fund) from writing, selling, or purchasing futures contracts in order to
close transactions or to hedge against market risk or interest rate
movements nor shall it prohibit the International Index Fund from
entering into forward foreign currency contracts as described herein;
nor
15. Invest in companies for the purpose of exercising control of
management. If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage beyond the
specified limit resulting from a change in values of portfolio
securities or amount of net assets shall not be considered a violation
of the restrictions.
In addition to the investment restrictions described above, the funds
will comply with restrictions contained in any current insurance laws in
order that the assets of insurance company separate accounts may be
invested in shares of the funds.
DESCRIPTION OF CERTAIN INVESTMENTS
The following is a description of certain types of investments which may
be made by the funds:
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<PAGE>
UNITED STATES GOVERNMENT SECURITIES
All of the funds may invest in U.S. government obligations. These
consist of securities of the U.S. government and its agencies,
instrumentalities, and government-sponsored enterprises.
The U.S. Treasury issues various types of marketable securities. These
securities include bills, notes, and bonds and others that may be
offered in the future. Such securities are direct obligations of the
U.S. government and differ mainly in the length of their maturity.
Treasury bills, the most frequently issued marketable government
security, have a maturity of up to one year and are issued on a discount
basis. Treasury notes have maturities of more than one and up to ten
years. Treasury bonds have maturities of ten years or more.
Government agency securities are the various types of instruments
currently outstanding or which may be offered in the future issued by
agencies and instrumentalities of the U.S. government. Agencies
include, among others, the Federal Housing Administration, Government
National Mortgage Association, Farmers Home Administration, Export-
Import Bank of the U.S., Maritime Administration, General Services
Administration, and Tennessee Valley Authority. Instrumentalities
include, for example, the Central Bank for Cooperatives, Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Federal Land Banks, and the U.S. Postal Service. A fund
will purchase such securities only so long as they are either guaranteed
by the U.S. Treasury (e.g., Government National Mortgage Association
mortgage-backed securities) or supported by the issuing agency's or
instrumentality's credit or right to borrow from the U.S. Treasury
(e.g., Federal National Mortgage Association Discount Notes). Not all
securities issued by agencies or instrumentalities of the U.S.
government have a guarantee representing the full faith and credit of
the U.S. government.
BANK OBLIGATIONS
All of the funds may acquire obligations of banks, which include
certificates of deposit, time deposits, and bankers' acceptances.
Certificates of deposit are generally short-term, interest-bearing
negotiable certificates issued by banks or savings and loan associations
against funds deposited in the issuing institution. Time deposits are
funds in a bank or other financial institution for a specified period of
time at a fixed interest rate for which a negotiable certificate is not
received. A bankers' acceptance is a time draft drawn on a bank which
unconditionally guarantees to pay the draft at its face amount on the
maturity date. A bank customer, which is also liable for the draft,
typically uses the funds represented by the draft to finance the import,
export, or storage of goods.
The funds will not invest in any security issued by a commercial bank
unless the bank is organized and operating in the U.S., has total assets
of at least $1 billion, and is a member of the Federal Deposit Insurance
Corporation.
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<PAGE>
REPURCHASE AGREEMENTS
All of the funds may invest in repurchase agreements.
A repurchase agreement customarily obligates the seller, at the time it
sells securities to the fund, to repurchase the securities at a mutually
agreed-upon time and price. The total amount received on repurchase
would be calculated to exceed the price paid by the fund, the difference
reflecting an agreed upon interest rate to the settlement date that
would not necessarily be related to the interest rate on the underlying
securities. The differences between the total amount to be received
upon repurchase of the securities and the price which was paid by the
fund upon their acquisition are accrued as interest and included in the
fund's net income as dividends. The Company has the right to sell
securities subject to repurchase agreements but would be required to
deliver identical securities upon maturity of the repurchase agreements
unless the seller fails to pay the repurchase price. No fund will sell
securities subject to repurchase agreements prior to the agreement's
maturity unless it is advantageous for the fund to do so.
During the holding period of a repurchase agreement, the seller must
provide additional collateral if the market value of the obligation
falls below the repurchase price. If a fund acquires a repurchase
agreement and then the seller defaults at a time when the value of the
underlying securities is less than the obligation of the seller, the
Company could incur a loss. If the seller defaults or becomes
insolvent, a fund could experience delays in recovering its money, may
fail to recover part or all of its investment, and may incur costs in
disposing of securities used as collateral. The funds will enter into
repurchase agreements only with sellers that the Adviser, applying
criteria established by the Board of Directors of the Company, believes
to present minimal credit risks.
REVERSE REPURCHASE AGREEMENTS
The Money Market Fund and the Asset Allocation Fund may enter into
reverse repurchase agreements.
Reverse repurchase agreements involve the sale of money market
securities held by a fund pursuant to an agreement to repurchase the
securities at an agreed upon price, date, and interest payment. Both
funds may use the proceeds of reverse repurchase agreements for the
following purposes: (i) to cover net redemptions, (ii) to avoid a
premature sale of securities, and (iii) to purchase other money market
securities which either mature, or can be sold under an agreement to
resell, at or prior to the expiration of the reverse repurchase
agreement. The funds will generally utilize reverse repurchase
agreements when the interest income to be earned from the investment of
proceeds from the transaction is expected to be greater than the
interest expense of the reverse repurchase transaction. When effecting
reverse repurchase transactions, the funds will hold cash and liquid
securities in a segregated account at a custodian bank with a dollar
value equal to the fund's obligations under the reverse repurchase
agreements.
B-7
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<PAGE>
COMMERCIAL PAPER
Commercial paper involves an unsecured obligation that is usually sold
on a discount basis and has a maturity at the time of issuance of one
year or less. On the date of investment by a fund, such paper must be
rated in the highest category for short term debt securities by at least
two nationally recognized securities rating services such as Standard &
Poor's or Moody's Investor's Services (or by one such rating service, if
only one such rating service has rated the security). A fund can invest
in unrated commercial paper if the Company's Board of Directors
determines, in accordance with the procedures of Rule 2a-7, that the
unrated security is of comparable quality to rated securities.
Commercial paper rated A-1 by Standard & Poor's has the following
characteristics: (i) the issuer's liquidity ratios are adequate to meet
cash requirements and its long-term senior debt is rated "A" or better,
although in some cases "BBB" credits may be allowed; (ii) the issuer has
access to at least two additional channels of borrowing; (iii) basic
earnings and cash flow of the issuer have an upward trend, with
allowances made for unusual circumstances; (iv) typically, the issuer's
industry is well established and the issuer has a strong position within
the industry; and (v) the reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors
determines whether the issuer's commercial paper is rated A-1, A-2, or
A-3.
The rating Prime-1 ("P-1") is the highest commercial paper rating
assigned by Moody's Investor's Service, Inc. Among the factors
considered by Moody's in assigning ratings are the following: (i)
evaluation of the management of the issuer; (ii) economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type
risks that may be inherent in certain areas; (iii) evaluation of the
issuer's products in relation to competition and customer acceptance;
(iv) liquidity; (v) amount and quality of long-term debt; (vi) trends of
earnings over a period of ten years; (vii) financial strength of any
parent company and the relationships that exist with the issuer; and
(viii) recognition by the management of obligations that may be
presented or may arise as a result of public interest questions and
preparations to meet such obligations.
STOCK INDEX FUTURES CONTRACTS
The S&P 500 Index Fund and International Index Fund may purchase stock
index futures for the purpose of hedging against an increase in the
price of securities it intends to purchase or, or sell stock index
futures for the purpose of hedging against a decline in values of
securities the funds already own.
A stock index future obligates the seller to deliver (and the purchaser
to take) an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of
the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the
index is made. The S&P 500 Index Fund and International Index Fund
intend to purchase and sell futures contracts on the Standard & Poor's
500 Index and the EAFE Index, respectively.
B-8
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<PAGE>
No consideration will be paid or received by a fund upon the purchase or
sale of a futures contract. Initially, a fund will be required to
deposit with the broker an amount of cash or cash equivalents equal to
5% to 10% of the contract amount. This amount is subject to change by
the exchange board of trade on which the contract is traded and members
of such exchange board of trade may charge a higher amount. This amount
is known as "initial margin," and is in the nature of a performance bond
or good faith deposit on the contract which is returned to the fund upon
termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments to and from the
broker, known as "variation margin," will be made daily as the price of
the index or securities underlying the futures contract fluctuates,
making the long and short positions in the futures contract more or less
valuable, a process known as "marking-to-market." At any time prior to
the expiration of a futures contract, a fund may elect to close the
position by taking an opposite position, which will operate to terminate
the fund's existing position in the contract.
Although the S&P 500 Index Fund and the International Index Fund intend
to purchase or sell futures contracts only if market conditions are
favorable, no assurance can be given that a liquid market will exist for
the contracts at any particular time. Most futures exchanges and boards
of trade limit the amount of fluctuation permitted in futures contracts
during a single trading day. Once the daily limit has been reached in a
particular contract, no trade may be made that day at a price beyond
that limit. Futures contract prices could move to the daily limit for
several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses. In such event and in the event
of adverse price movements, a fund would be required to make daily cash
payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may offset
partially or completely losses on the futures contract.
There can be no assurance of a fund's success at using stock index
futures as a hedging device. One risk arises because of the imperfect
correlation between movements in the price of the stock index future and
movements in the price of the securities that are the subject of the
hedge. The risk of imperfect correlation increases as the composition
of the fund's securities portfolio diverges from the securities included
in the index. If the price of the stock index future moves less than
the price of the securities which are the subject of the hedge, the
hedge will not be fully effective but, if the price of the securities
being hedged were to move in an unfavorable direction, the fund would be
in a better position than if it had not hedged at all. If the price of
the securities being hedged were to move in a favorable direction, this
advantage would be partially offset by changes in the future's value.
If the price of the future were to move more than the price of the
stock, the fund would experience either a loss or a gain on the future
which would not be completely offset by movements in the price of the
securities which are the subject of the hedge.
When futures are purchased to hedge against a possible increase in the
price of stocks before a fund is able to invest its cash (or cash
equivalents) in stocks in an orderly fashion, it is possible that the
market may decline instead; if the fund then decides not to purchase
hedged stocks because of the concern as to possible further market
decline or for other reasons, the fund would realize a loss on the
futures contract that would not be offset by a reduction in the price of
securities purchased.
B-9
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<PAGE>
FORWARD FOREIGN CURRENCY TRANSACTIONS
The value of the assets of the International Index Fund as measured in
U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and
the fund may incur costs in connection with conversions between various
currencies.
The International Index Fund may use forward contracts to purchase or
sell foreign currencies in an effort to control some of the
uncertainties of foreign currency exchange rate fluctuations. A forward
foreign currency exchange contract will involve an obligation by the
fund to purchase or sell a specific amount of currency at a future date,
which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract.
These contracts are transferable in the interbank market conducted
directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit
requirements, and no commissions are charged at any stage for trades.
Forward foreign currency transactions will not eliminate fluctuations in
the prices of the fund's securities or prevent loss if the prices of
such securities should decline.
The International Index Fund may enter into forward foreign currency
exchange contracts only under two circumstances. First, when the fund
enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may desire to "lock in" the U.S.
dollar price of the security. The fund will then enter into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the
amount of foreign currency involved in the underlying securities
transactions. In this manner the fund will be better able to protect
itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency
during the period between the date the securities are purchased or sold
and the date on which payment is made or received.
Second, when the Adviser believes that the currency of a particular
foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount
of dollars, the amount of foreign currency approximating the value of
some or all of the fund's securities denominated in such foreign
currency. The precise matching of the forward contract amounts and the
value of the securities involved will not generally be possible since
the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of those securities
between the date the forward contract is entered into and the date it
matures. The projection of short-term currency market movement is
extremely difficult, and the successful execution of short-term hedging
strategy is highly uncertain. The fund does not intend to enter into
such forward contracts under this second circumstance on a regular or
continuous basis. The fund will also not enter into such forward
contracts or maintain a net exposure to such contracts when the
consummation of the contracts would obligate the fund to deliver an
amount of foreign currency in excess of the value of the fund's
securities or other assets denominated in that currency. The Adviser
believes that it is important to have the flexibility to enter into such
forward foreign currency contracts when it determines that to do so is
in the best interests of the fund. The fund's custodian bank segregates
cash or equity or debt
B-10
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<PAGE>
securities in amounts not less than the value of the fund's total assets
committed to forward foreign currency exchange contracts entered into
under this second type of transaction. If the value of the securities
segregated declines, additional cash or securities are added so that the
segregated amount is not less than the amount of the fund's commitments
with respect to such contracts. Under normal circumstances, the fund
expects that any appreciation or depreciation on such forward exchange
contracts will be approximately offset by the depreciation or
appreciation in translation of the underlying foreign investment arising
from fluctuations in foreign currency exchange rates.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY AGREEMENT
The Company has entered into an Investment Advisory Agreement with
Conning Asset Management Company (the "Adviser") with respect to all of
the funds. The Adviser is an indirect, majority owned subsidiary of
GenAmerica Corporation. During 1999, the Adviser charged Company's
funds the following amounts:
S&P 500 Index Fund $1,969,064
Money Market Fund 322,117
Bond Index Fund 179,605
Managed Equity Fund 177,638
Asset Allocation Fund 671,598
International Index Fund 56,947
Mid-Cap Equity Fund 45,950
Small-Cap Equity Fund 172,379
Richard A. Liddy, Matthew P. McCauley, E. Thomas Hughes, and Christopher
A. Martin are each affiliated with both the Company and with General
American Life Insurance Company. Mr. McCauley is also affiliated with
the Adviser.
The investment advisory agreement between the Company and the Adviser
(the "Investment Advisory Agreement") provides that the Adviser, subject
to control and review by the Company's Board of Directors, is
responsible for the overall management and supervision of each fund and
for providing certain administrative services to the Company. (See the
prospectus.)
The Adviser may provide investment advice to other clients, including,
but not limited to, mutual funds, individuals, pension funds, and
institutional investors. Occasions may arise when combined sales or
purchases of securities are made for more than one client in order to
obtain favorable execution and low brokerage commissions. It is the
practice of the Adviser to allocate such purchases or sales insofar as
feasible among its several clients in a manner deemed equitable and
consistent with legal obligations. The goal in making allocations is
achieving the same average price for the principal factors which the
Adviser considers in making such allocation are the investment
objectives of each client, the relative size of the holdings of each
B-11
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<PAGE>
client of the same or comparable securities, and the availability in
each client's account of funds for investment. Despite these
precautions, there may be circumstances when purchases and sales of
securities for one or more clients will have an adverse effect on other
clients, including a fund of the Company.
For its services to the funds, the Adviser charges a fee which is
accrued daily against each fund. The fees charged each fund, stated as
an annual percentage of the average daily value of the fund's net
assets, are:
S&P 500 Index Fund .25 percent
Money Market Fund .125 percent
Bond Index Fund .25 percent
Asset Allocation Fund .50 percent
Small-Cap Equity Fund .25 percent
The fee charged the International Index Fund, the Mid-Cap Equity Fund,
and the Managed Equity Fund is stated as a series of annual percentages
of the average daily value of the net assets of the funds. The
percentages decrease with respect to assets of the funds above certain
amounts, as follows:
FUND ASSETS PERCENTAGE
- ---- ------ ----------
International Index First $10 million .50 percent
Fund Next $10 million .40 percent
Balance over $20 million .30 percent
Mid-Cap Equity Fund First $10 million .55 percent
Next $10 million .45 percent
Balance over $20 million .40 percent
Managed Equity Fund First $10 million .40 percent
Next $20 million .30 percent
Balance over $30 million .25 percent
The Investment Advisory Agreement was approved at the annual meeting of
shareholders of the Company held December 23, 1999. The Investment Advisory
Agreement will continue in effect henceforth from year to year with respect
to each fund if approved annually: (1) by the Board of Directors of the
Company or by a majority of the outstanding shares of that Series, as
determined pursuant to the Investment Company Act of 1940 (the "1940 Act");
and (2) by a majority of the Board of Directors of the Company who are not
interested persons, within the meaning of the 1940 Act. The Investment
Advisory Agreement is not assignable and may be terminated without penalty
on 60 days' written notice at the option of either party or, with respect to
any fund, by the requisite vote of the shareholders of that fund. See
"CAPITAL STOCK" in this Statement of Additional Information.
B-12
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<PAGE>
ACCOUNTANTS
KPMG LLP is the Company's independent public accounting firm.
CUSTODIAN AND FOREIGN CUSTODY MANAGER
The Bank of New York, 110 Washington Street, New York, NY acts by itself
or in conjunction with Depository Trust Company as custodian of all of
the funds. All securities which are eligible for deposit at Depository
Trust Company of New York, 55 Water Street, New York, NY are deposited
there, in the name and account of the custodian. The Bank of New York
is also the Company's Foreign Custody Manager. Securities purchased for
the fund outside of the U.S. may be maintained in the custody of foreign
banks and trust companies which are members of The Bank of New York's
international custodian network and foreign depositories (foreign sub-
custodians) used by such members. With respect to foreign sub-
custodians, there can be no assurance that the fund and the value of its
shares, will not be adversely affected by acts of foreign governments,
financial or operational difficulties of the foreign sub-custodians,
difficulties and costs of pursuing legal remedies against the foreign
sub-custodians, or application of foreign law to the fund's foreign sub-
custodial arrangements. Accordingly, an investor should be aware that
non-investment risks attendant to holding assets abroad may exceed those
associated with investing in the U.S.
PAYMENT OF EXPENSES
General American Life Insurance Company has paid the organization costs
of the Company and pays the Company's ongoing administrative expenses.
In addition, General American provides, or contract on behalf of the
Company for, administrative services for the Company. In exchange for
these services and the payment of these expenses, General American
receives administrative fees from the Company pursuant to a Management
Service Agreement.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATIONS
Under the Investment Advisory Agreement, the Adviser has responsibility
for selecting the broker-dealers through which securities are to be
purchased and sold for most of the funds, subject to the general control
of the Board of Directors. The following table lists the total amount
of brokerage commissions paid by each Fund for the fiscal periods ending
on December 31st of each year:
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<PAGE>
1997 1998 1999
S&P 500 Index Fund 124,531 108,311 138,717
Money Market Fund N/A N/A N/A
Bond Index Fund N/A N/A N/A
Managed Equity Fund 67,228 85,198 24,675
Asset Allocation Fund 61,059 89,832 40,705
International Index Fund 18,089 1,540 2,044
Mid-Cap Equity Fund 12,096 8,675 6,064
Small-Cap Equity Fund<F*> 44,887 65,972 61,036
[FN]
<F*> Fund established in 1997.
No brokerage commissions were paid on behalf of the Money Market Fund or
the Bond Index Fund.
The Money Market Fund's investments are usually purchased on a principal
basis directly from issuers, underwriters, or dealers. Accordingly,
minimal brokerage charges are expected to be paid on such transactions.
Purchases from an underwriter generally include a commission or
concession paid by the issuer, and transactions with a dealer usually
include the dealer's mark-up.
In placing orders for securities transactions, the Adviser's policy is
to attempt to obtain the most favorable price and efficient execution
available. The Adviser, subject to the review of the Company's Board of
Directors, may pay more than the lowest possible commission in order to
obtain better than average execution of transactions or valuable
investment research information, or both. Research information
ordinarily consists of assessments and analyses of the business or
prospects of a company, industry, or economic sector. In the opinion of
the Adviser, improved execution and investment research information will
benefit the performance of each of the funds.
The Adviser evaluates factors relating to the liquidity of commercial
paper issued in transactions not involving a public offering under
Section 4(2) of the Securities Act of 1933. Factors considered include
the nature and the size of the issuer and its commercial paper programs,
the willingness and ability of the issuer or dealer to repurchase the
paper, and the nature of the clearance of settlement procedures for the
paper.
When selecting broker-dealers to execute portfolio transactions, the
Adviser considers factors including the rate of commission or size of
the broker-dealer's "spread;" the size and difficulty of the order; the
nature of the market for the security, the reliability, financial
condition, and general execution and operational capabilities of the
broker-dealer; and the research, statistical, and economic data
furnished by the broker-dealer to the Adviser. In some cases, the
Adviser may use such information to assist other investment accounts
that it advises and not exclusively for the funds. Brokers or dealers
which supply research may be selected for execution of transactions for
such other accounts, while the data may be used by the Adviser in
providing investment advisory services to the funds.
B-14
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<PAGE>
To the best knowledge of management, no director or officer of the
Company, of the Adviser, or any person affiliated with either of them
has any material direct or indirect interest in any broker employed by
or on behalf of the Company.
MANAGEMENT OF THE COMPANY
The directors and officers of the Company, their addresses, their
positions with the Company, and their principal occupations for the past
five years are set forth below:
<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
HELD WITH DURING THE PAST
NAME, ADDRESS, AND AGE REGISTRANT FIVE YEARS
- ---------------------- ---------- ------------------------
<S> <C> <C>
Theodore M. Armstrong (60) Director Senior Vice President-Finance &
424 South Woods Mill Road Administration & CFO, Angelica
Chesterfield, MO 63017-3406 Corp., St. Louis, MO. (Uniform
manufacture & sale, & laundry).
Alan C. Henderson (54) Director President & CEO, RehabCare
7733 Forsyth Blvd., Suite 1700 Group, Inc., St. Louis, MO
St. Louis, MO 63105 (Disability rehabilitation business).
Richard A. Liddy (64) <F*> President Chairman, President, & CEO,
700 Market Street & Director General American Life Insurance
St. Louis, MO 63101 Co., St. Louis, MO, 1/95 to present.
President & CEO, May 1992 to
January 1995.
Matthew P. McCauley (58) <F*> Vice Associate General Counsel & Vice
700 Market Street President President, GenAmerica
St. Louis, MO 63101 Management Co., St. Louis, MO.
Harry E. Rich (60) Director Executive Vice President & CFO,
8300 Maryland Avenue Brown Group Inc., St. Louis, MO
St. Louis, MO 63105
E. Thomas Hughes, Jr. (58) <F*> Treasurer Corporate Actuary & Treasurer,
700 Market Street GenAmerica Management Co.,
St. Louis, MO 63101 St. Louis, MO.
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<PAGE>
<PAGE>
Christopher A. Martin (37) <F*> Secretary Counsel, GenAmerica Management
700 Market Street Co., 1996 to present. St. Louis,
St. Louis, MO 63110 MO. Associate, Lewis, Rice &
Fingersh, 1994 to 1996.
<FN>
<F*> Messrs. Liddy, McCauley, Hughes, and Martin are "interested
persons" within the meaning of Section 2(a)(19) of the 1940 Act.
Mr. Liddy is President, Mr. McCauley is a Vice President, Mr.
Hughes is the Corporate Actuary and Treasurer, and Mr. Martin is
Counsel of General American Life Insurance Company and/or
GenAmerica Management Company. Mr. McCauley is also General
Counsel of the Adviser.
</TABLE>
<TABLE>
MANAGEMENT COMPENSATION
<CAPTION>
- ------------------------------------------------------
NAME, TOTAL
POSITION WITH COMPENSATION
THE COMPANY FROM THE COMPANY <F*>
- ------------------------------------------------------
<S> <C>
Theodore M. Armstrong $8,000
Director
Alan C. Henderson $8,000
Director
Richard A. Liddy 0
Director and President
Matthew P. McCauley 0
Vice President
Harry E. Rich $8,000
Director
E. Thomas Hughes, Jr. 0
Treasurer
Christopher A. Martin 0
Secretary
<FN>
- -----------
<F*> Compensation is the sum paid in 1999.
</TABLE>
B-16
<PAGE>
<PAGE>
CODES OF ETHICS
The Company and the Adviser have adopted codes of ethics under Rule
17j-1 of the Investment Company Act of 1940. These codes of ethics permit
personnel subject to the codes of ethics to invest in securities,
including securities that may be purchased or held by the Company's
funds, subject to the terms and conditions in the codes of ethics. The
Company and the Adviser have filed their respective codes of ethics with
the SEC as part of the Company's registration statement.
CAPITAL STOCK
The Company is authorized to issue five hundred million (500,000,000)
shares of capital stock having a par value of one cent ($.01) per share.
Of these authorized shares, one hundred thirty million (130,000,000)
have been allocated to the respective series of stock issued by each of
the Company's funds, with the balance of the authorized stock available
for allocation as needed in the future. The present allocations, which
are subject to revision by the Board of Directors of the Company, are:
SHARES SERIES
------ ------
40,000,000 S&P 500 Index Fund
20,000,000 Money Market Fund
10,000,000 Bond Index Fund
20,000,000 Managed Equity Fund
10,000,000 International Index Fund
10,000,000 Mid-Cap Equity Fund
10,000,000 Asset Allocation Fund
10,000,000 Small-Cap Equity Fund
The assets received by the Company for the issuance or sale of shares of
each fund, and all income, earnings, profits and proceeds thereof, are
specifically allocated to each fund. They constitute the underlying
assets of each fund, are required to be segregated on the books of
account, and are to be charged with the expenses of such fund. Any
assets that are not clearly allocable to a particular fund or funds will
be allocated in a manner determined by the Board of Directors. Accrued
liabilities which are not clearly allocable to one or more funds will
generally be allocated among the funds in proportion to their relative
net assets before adjustment for such unallocated liabilities. Each
issued and outstanding share in a fund is entitled to participate
equally in dividends and distributions declared with respect to such
fund, and in the net assets of such fund remaining after satisfaction of
outstanding liabilities upon liquidation or dissolution.
The shares of each fund, when issued, will be fully paid and non-
assessable, will have no preference, preemptive, conversion, exchange,
or similar rights, and will be freely transferable. Shares do not have
cumulative voting rights.
B-17
<PAGE>
<PAGE>
FUND OWNERSHIP
Officers and Directors own less than 1% of the fund's outstanding
shares.
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Shares of the funds may be sold to separate accounts of affiliated and
unaffiliated insurance companies to fund the benefits under certain
variable life insurance policies and variable annuity contracts. As of
the date hereof, all shares of the funds were held by separate accounts
of General American Life Insurance Company and affiliated insurance
companies.
The purchasers of insurance contracts that participate in a separate
account that is registered with the SEC, and that invests in one of the
funds, will have the right to instruct the insurance company from whom
they purchased the contract with respect to the voting of the fund's
shares which are held by the separate account on behalf of insurance
contract holders. Shares attributable to policies for which no
instructions are received, and shares that are owned by the insurance
company but not attributable to policies funded by registered separate
accounts, will be voted by the insurance company on each issue in the
same proportion as shares for which there are instructions.
OFFERING AND REDEMPTION OF SHARES
The Company is currently offering shares of each fund without sales
charge and at each fund's respective net asset value ("NAV") per share,
which is determined in the manner set forth below under "DETERMINATION
OF NET ASSET VALUE." Shares in the Company's funds are sold directly to
separate accounts to support variable annuity contracts and life
insurance policies. The Company does not foresee any disadvantages to
the holders of variable annuity contracts and variable life insurance
policies arising from the fact that the interests of the holders of such
contracts and policies may differ. Nevertheless, the Company's Board of
Directors intends to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what
action, if any, should be taken in response thereto. Actions might
include requiring one separate account to withdraw from the funds.
The Company has no underwriter or distributor. General American Life
Insurance Company pays any distribution expenses and costs (that is,
those arising from any activity which is primarily intended to result in
the sale of shares issued by the Company), including expenses and costs
attributable to the Company, which are related to the printing and
distributing of prospectuses and periodic reports to new or prospective
owners of policies except for such costs which are attributable to sales
to non-affiliates of General American Life Insurance Company.
The Company redeems all full and fractional shares of its funds at the
NAV per share applicable to each fund next calculated after the
redemption request is received. See "DETERMINATION OF NET ASSET VALUE"
below.
B-18
<PAGE>
<PAGE>
Payment upon redemption is made in cash and ordinarily will occur within
seven days of receipt of a proper notice of redemption. The right to
redeem shares or to receive payment with respect to any redemption of
shares of any fund may only be suspended: (i) for any period during
which trading on the New York Stock Exchange is restricted or such
Exchange is closed, other than customary weekend and holiday closings;
(ii) for any period during which an emergency exists as a result of
which disposal of securities or determination of the net asset value of
that fund is not reasonably practicable; or (iii) for such other periods
as the SEC may by order permit for the protection of shareholders of
that fund.
DETERMINATION OF NET ASSET VALUE
The NAV of the shares of each fund of the Company is determined at the
close of trading on the New York Stock Exchange immediately after the
declaration by the Company of dividends, if any, on each day during
which the New York Stock Exchange is open for business. The net asset
value per share of each fund is computed by dividing the sum of the
value of the securities held by that fund, plus any cash or other assets
and minus all liabilities, by the total number of outstanding shares of
that fund at such time. Any expenses borne by the Company, including
the investment management fee payable to the Adviser, are accrued daily,
except for extraordinary or non-recurring expenses. See "INVESTMENT
ADVISORY AND OTHER SERVICES - PAYMENT OF EXPENSES," above.
Fund securities which are traded on national stock exchanges are valued
at the securities' closing prices. In the absence of any reported
sales, fund securities are valued at the latest available bid price.
Securities traded in the over-the-counter market for which closing sale
prices are available are valued at such prices. Over-the-counter
securities for which closing sales prices are not available are valued
at the latest bid price. Securities and assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Company.
The value of foreign securities held by the International Index Fund are
determined based upon its sales price on the foreign exchange or market
on which it is primarily traded or on which it was purchased, as of the
close of the appropriate exchange or, if there have been no sales during
the day, at the mean of the closing bid and asked prices. Trading in
securities on exchanges and over-the-counter markets in Europe,
Australia, and the Far East is normally completed at various times prior
to 3:00 p.m. St. Louis time, the current closing time of the New York
Stock Exchange. Trading on foreign exchanges may not take place on
every day the New York Stock Exchange is open. Conversely, trading in
various foreign markets may take place on days when the New York Stock
Exchange is not open and on other days when the fund's net asset value
is not calculated. Consequently, the calculation of the net asset value
for the fund may not occur contemporaneously with the determination of
the most current market prices of the securities included in such
calculation. In addition, the value of the net assets held by the fund
may be significantly affected on days when shares are not available for
purchase or redemption.
Quotations of foreign securities in foreign currencies are converted
into the U.S. dollar equivalents at the prevailing market rates as
compared by The Bank of New York, custodian of
B-19
<PAGE>
<PAGE>
the assets of the International Index Fund, at the close of business on
the New York Stock Exchange (currently 3:00 p.m., St. Louis time).
Debt instruments with maturities of 60 days or more are valued at their
market price. Debt instruments with a remaining maturity of less than
60 days are valued on an amortized cost basis. Under this method of
valuation, the security is initially valued at cost on the date of
purchase or, in the case of securities purchased with 60 days or more
remaining to maturity, the market value at the beginning of the 59th day
prior to maturity. Thereafter, straight line amortization of discount
or premium is assumed until maturity regardless of the impact of
fluctuating interest rates on the market value of the security. While
valuation at amortized cost provides a more consistent rate of return,
it may result in periods during which the price which could be received
upon sale of the instrument is higher or lower than its amortized cost
value. If for any reason the fair value of any security is not fairly
reflected through the amortized cost method of valuation, such security
will be valued by market quotations, if available, or otherwise as
determined in good faith by or under the direction of the Board of
Directors of the Company.
INVESTMENT PERFORMANCE
The investment performance of each of the funds is presented in the
prospectus and the annual report to shareholders of the Company for the
fiscal year ended December 31, 1999, as filed with the SEC pursuant to
Rule 30a-1.
The Company may include quotations of a fund's total return in
connection with the total return for the appropriate underlying separate
account, in advertisements, sales literature, or reports to annuity and
policy holders or to prospective investors. Total return for a fund
reflects only the performance of a hypothetical investment in the fund
during the particular time period shown as calculated based on the
historical performance of the fund during that period. Such quotations
do not in any way indicate or project future performance. Quotations of
total return will not reflect charges and deductions against the
insurance policies or annuity contracts. Where relevant, the
prospectuses for the insurance policies and annuity contracts contain
performance information which show total return for the separate
accounts, insurance policies, or annuity contracts.
Total return refers to the annual percentage change in value of an
investment in a fund held for a stated period of time as of a stated
ending date. When a fund has been in operation for the stated period,
the total return for such period will be provided if performance
information is quoted. Total return quotations are expressed as annual
compound rates of return for each of the periods quoted. They also
reflect the deduction of a fund's investment advisory fee and
administrative expenses, and assume that all dividends and capital gains
distributions during the period are reinvested in the fund when made.
The Company's Small-Cap Equity Fund commenced operations on May 1, 1997,
subsequent to a transfer of assets from General American Life Insurance
Company Separate Account Twenty, which has identical investment
objectives, policies, and limitations, in exchange for shares of the
Small-Cap Equity Fund. While Separate Account Twenty continues to
exist, its assets now consist solely of shares of the Company's Small-
Cap Equity Fund. The Small-Cap Equity Fund's
B-20
<PAGE>
<PAGE>
portfolio of investments on May 1, 1997 was the same as the portfolio of
Separate Account Twenty immediately prior to the transfer.
Separate Account Twenty is not a registered investment company, as it is
exempt from registration under the Investment Company Act of 1940 (the
"1940 Act"). Since, in a practical sense, Separate Account Twenty
constitutes a "predecessor" of the Small-Cap Equity Fund, the Company
calculates the performance for its Small-Cap Equity Fund for periods
commencing prior to the transfer of the Separate Account Twenty assets
to the Small-Cap Equity Fund by including the Separate Account Twenty
total return.
The quoted performance data for the Small-Cap Equity Fund includes the
performance of Separate Account Twenty for periods before the Small-Cap
Equity Fund began operations. As noted above, Separate Account Twenty
was not registered under the 1940 Act and thus was not subject to
certain investment restrictions that are imposed by the 1940 Act, nor
was it subject to restrictions imposed by the Internal Revenue Code. If
Separate Account Twenty had been registered under the 1940 Act and
subject to the Internal Revenue Code, its performance might have been
adversely affected.
Each of the funds from time to time may advertise certain investment
performance figures. These figures are based on historic earnings but
past performance data is not necessarily indicative of future
performance of the funds.
MONEY MARKET YIELD INFORMATION
The Company may make current yield and effective yield quotations
available for the Money Market Fund. The Money Market Fund's yield is
its investment income, less expenses, expressed as a percentage of
assets on an annualized basis for a seven-day period. The yield is
expressed as a simple annualized yield and as a compounded effective
yield.
The simple annualized yield is computed by determining the net change
(exclusive of realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of
the seven-day period, subtracting a hypothetical charge reflecting
deductions from the account, dividing the net change in account value by
the value of the account at the beginning of the period, and annualizing
the resulting quotient (base period return) on a 365-day basis (i.e.,
multiplying it by 365/7). The net change in unit value reflects the
value of additional shares purchased with dividends from the original
shares in the account during the seven-day period, dividends declared on
such additional shares during the period, and expenses accrued during
the period.
The compounded effective yield is computed by determining the
unannualized base period return, adding one to the base period return,
raising the sum to a power equal to 365 divided by seven, and
subtracting one from the result, as follows:
Effective yield = [(seven day period return + 1)365/7] - 1
B-21
<PAGE>
<PAGE>
The Money Market Fund's actual yields will fluctuate, and are not
necessarily indicative of future actual yields. Actual yields will
depend on such variables as portfolio quality, average portfolio
maturity, the type of portfolio instruments in which investments are
made, changes in interest rates on money market instruments, portfolio
expenses and other factors. Because the fund's actual yields will
fluctuate, such information may not provide a basis for comparison with
bank deposits, other investments which pay a fixed yield for a stated
period of time, or other investment companies which may use a different
method of determining yield. In addition, the yield quotation does not
reflect the charges deducted from the separate accounts (see the
prospectus for the variable life insurance policies or annuity contracts
funded by the Company). If these charges were deducted to reflect the
effective yield to a policy owner, that yield would be lower than the
yield calculated for the Money Market Fund.
TAXES AND DIVIDENDS
For federal income tax purposes, each fund of the Company is treated as
a separate entity. Each fund intends to qualify and elect to be taxed
as a "regulated investment company" under certain provisions of the
Internal Revenue Code (the "Code"). If a fund qualifies as a "regulated
investment company," and complies with the provisions of the Code
relieving regulated investment companies which distribute substantially
all of their net income (both net ordinary income and net capital gain)
from federal income tax, it will be relieved from such tax on the part
of its net ordinary income and net realized capital gain which it
distributes to shareholders. To qualify for treatment as a "regulated
investment company," each fund must, among other things, derive in each
taxable year at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities or foreign currencies (subject
to the authority of the Secretary of the Treasury to exclude foreign
currency gains which are not ancillary to the fund's principal business
of investing in stock or securities or options and futures with respect
to such stock or securities), or other income (including but not limited
to gains from options, futures, or forward contracts) derived with
respect to its investing in such stocks, securities, or currencies.
The funds follow the accounting practice known as consent dividending,
whereby substantially all of its net investment income and realized
gains are treated as being distributed daily to shareholders and are
immediately reinvested in that fund.
The federal tax laws impose a four percent nondeductible excise tax on
each regulated investment company with respect to an amount, if any, by
which such company does not meet distribution requirements specified in
such tax laws. Each fund of the Company intends to comply with such
distribution requirements and thus does not expect to incur the four
percent nondeductible excise tax.
Since the sole shareholders of the Company will be separate accounts of
General American and separate accounts of General American affiliates
and, possibly in the future, separate accounts of unaffiliated insurance
companies, there is no discussion herein as to the federal income tax
consequences at the shareholder level.
B-22
<PAGE>
<PAGE>
ADDITIONAL INFORMATION
LEGAL MATTERS
Sutherland, Asbill & Brennan, Washington, DC, has provided advice on
certain matters relating to the federal securities laws.
REPORTS
Annual and semi-annual reports containing financial statements of the
Company, as well as proxy soliciting material for the Company, will be
sent to owners of policies participating in the funds.
OTHER INFORMATION
This statement of additional information and the prospectus for the
Company do not contain all the information set forth in the registration
statement and exhibits relating thereto, which the Company has filed
with the SEC, Washington, DC, under the Securities Act of 1933 and the
Investment Company Act of 1940. Anyone seeking further information
should refer to the registration statement and its exhibits.
FINANCIAL STATEMENTS
The audited financial statements for the Company, including the notes
thereto, are included in the Annual Report to Shareholders of the
Company for the fiscal year ended December 31, 1999. Such financial
statements are incorporated herein by reference. You may receive a copy
of such financial statements without charge upon request to General
American Capital Company at the address and phone number shown on the
cover of this statement of additional information.
B-23
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Articles of Incorporation <F2>
(b) Bylaws <F1>
(c) Instruments Defining Rights of Security Holders <F1>,<F2>
(d) Investment Advisory Agreement - filed herewith
(e) Not Applicable
(f) Not Applicable
(g)(1) Custodial Agreement <F3>
(g)(2) Foreign Custody Manager Agreement <F5>
(h) Amended and Restated Management Services Agreement <F6>
(i) Opinion and Consent of Counsel <F4>
(j) Consents of the Independent Public Accountant - filed herewith
(k) Not Applicable
(l) Stock Subscription Agreement with General American Life
Company <F1>
(m) Not Applicable
(n) Financial Data Schedules - filed herewith
(o) Not Applicable
(p)(1) Registrant's Code of Ethics - filed herewith
(p)(2) Adviser's Code of Ethics - filed herewith
Other Exhibits:
(1) Powers of Attorney for:
Theodore M. Armstrong <F6>
Alan C. Henderson <F6>
Harry E. Rich <F6>
(2) Diagram of GenAmerica Family of Companies <F5>
* * * *
[FN]
<F1> Filed with Registration Statement, November 12, 1986.
<F2> Filed with Pre-Effective Amendment No. 1, June 25, 1987.
<F3> Filed with Post-Effective Amendment No. 7, December 1, 1992.
<F4> Filed with Post-Effective Amendment No. 14, May 1, 1998.
<F5> Filed with Post-Effective Amendment No. 15, February 25, 1999.
<F6> Filed with Post-Effective Amendment No. 16, April 30, 1999.
C-1
<PAGE>
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
REGISTRANT
Because, as of the date hereof, all of the shares of the funds are held
by separate accounts of General American Life Insurance Company and its
affiliates, General American Life Insurance Company may be said to
control the Company. "Echo voting," the practice under which General
American Life Insurance Company and its affiliates solicit instructions
from purchasers of insurance contracts for voting shares of the Company,
and votes shares attributable to unregistered separate accounts in
accordance with the instructions received, means that this control is
not exercised. Nevertheless, a schedule of GenAmerica Corporation's
family of companies appears in Exhibit (2). No financial statements for
any of these companies is included in the Company's registration
statement because the company is owned and controlled by the purchasers
of participating separate accounts.
ITEM 25. INDEMNIFICATION
Reference is made to Article Eight of the Registrant's Articles of
Incorporation, Exhibit (a), and to Article 11 of the Registrant's
Bylaws, Exhibit (b). The Articles and Bylaws provide that the
Registrant will indemnify its directors and officers to the extent
permitted or required by Maryland law. A resolution of the Board of
Directors specifically approving payment or advancement of expenses to
an officer is required by the Bylaws. Indemnification may not be made
if the director or officer has incurred liability by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of
duties in the conduct of his office ("Disabling Conduct"). The means of
determining whether indemnification shall be made are either: (1) a
final decision by a court or other body before whom the proceeding is
brought that the director or officer was not liable by reason of
Disabling Conduct; or (2) in the absence of such a decision, a
reasonable determination, based on a review of the facts, that the
director or officer was not liable by reason of Disabling Conduct. Such
latter determination may be made either by: (a) vote of a majority of a
quorum of directors who are neither interested persons (as defined in
the 1940 Act) nor parties to the proceeding or (b) any other reasonable
and fair means consistent with the objectives outlined in the
Registrant's Bylaws. The advancement of legal expenses may not occur
unless the director or officer agrees to repay the advance (if it is
determined that he is not entitled to the indemnification) and one of
three other conditions is satisfied: (1) he provides security for his
agreement to repay; (2) the Registrant is insured against loss by reason
of lawful advances; or (3) a majority of a quorum of the directors who
are not interested persons and are not parties to the proceedings,
determine that there is reason to believe that the director or officer
will be found entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("the Act") may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the
opinion of the SEC such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
C-2
<PAGE>
<PAGE>
such director, officer, or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Conning Asset Management Company (the "Adviser"), formerly known as
General American Investment Management Company, was incorporated in
Missouri on September 13, 1982. It is registered as an investment
adviser with the SEC. It is a majority-owned, indirect subsidiary of
GenAmerica Corporation. The Adviser serves as investment adviser to the
general and separate accounts of affiliated life insurance companies as
well as to unaffiliated clients.
<TABLE>
<CAPTION>
NAME OF DIRECTOR OR POSITION AT OTHER BUSINESS
OFFICER OF CONNING CONNING ASSET PROFESSION VOCATION
ASSET MANAGEMENT MANAGEMENT OR EMPLOYMENT
COMPANY COMPANY DURING PAST TWO YEARS
- ------------------- ------- ---------------------
<S> <C> <C>
James L. Lipscomb President, Chief President, Chief Executive Officer and
Executive Officer Director of Conning Corporation; President
and Director and Chief Executive Officer of Conning Inc.;
Senior Vice President of Metropolitan Life
Insurance Company
John B. Clinton Executive Vice President Executive Vice President of Conning Corporation;
Executive Vice President of Conning & Company
Michael D. McLellan Executive Vice President Executive Vice President of Conning Corporation;
President and Director of Red Oak Realty Company
and White Oak Royalty Company; Director of Conning
Mortgage Investment Trust, Inc.
Thomas D. Sargent Executive Vice President Executive Vice President of Conning Corporation;
Executive Vice President and Director of Conning
& Company
C-3
<PAGE>
<PAGE>
Paul W. Kopsky, Jr. Senior Vice President Senior Vice President and CFO of Conning
and CFO and Director Corporation; Senior Vice President, CFO,
and Director of Conning, Inc.; Senior Vice
President and CFO of Conning & Company;
Treasurer and Controller of Conning Mortgage
Investment Trust, Inc.
<CAPTION>
BUSINESS ADDRESSES:
<S> <C>
700 MARKET STREET Conning Corporation
- ----------------- Conning Asset Management Company
ST. LOUIS, MO 63101 Red Oak Realty Company
- ------------------- White Oak Royalty Company
CITY PLACE II, 185 ASYLUM STREET Conning and Company
- -------------------------------- Conning, Inc.
HARTFORD, CT 06103-4105
- -----------------------
ONE MADISON AVENUE METROPOLITAN LIFE INSURANCE COMPANY
- ------------------
NEW YORK, NY 10010
- ------------------
</TABLE>
C-4
<PAGE>
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITER
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The following entities prepare, maintain, and preserve the records
required by Section 31(a) of the 1940 Act for the Registrant. These
services are provided to the Registrant through written agreements
between the parties to the effect that such services will be provided to
the Registrant for such periods prescribed under the 1940 Act and such
records will be surrendered promptly on request. General American Life
Insurance Company, 700 Market Street, St. Louis, Missouri 63101 will
serve as custodian of the books and records for the Registrant and in
such capacity will keep records regarding securities, bank statements,
and canceled checks. General American Life Insurance Company, 700
Market Street, St. Louis, Missouri will serve as transfer agent of the
Registrant and in such capacity will keep shareholder's account records,
canceled stock certificates, and all other records required by Section
31(a) of the Act.
ITEM 29. MANAGEMENT SERVICES
General American Life Insurance Company will provide any management
services needed by the Company and will charge the Company fees based on
calculations using its cost accounting procedures.
ITEM 30. UNDERTAKINGS
The Registrant undertakes to provide each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report, upon request
and at no charge.
C-5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Post-Effective
Amendment No. 17 to this Registration Statement under Rule 485(b) under
the Securities Act and has duly caused this Post-Effective Amendment No.
17 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, and
State of Missouri, on May 1, 2000.
GENERAL AMERICAN CAPITAL COMPANY
Attest: By: /s/ Richard A. Liddy
-----------------------------
Richard A. Liddy, President
/s/ Christopher A. Martin
- --------------------------------
Christopher A. Martin, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Richard A. Liddy President and Director 5/1/00
- ------------------------------- (Principal Executive Officer)
Richard A. Liddy
/s/ Matthew P. McCauley Vice President 5/1/00
- -------------------------------
Matthew P. McCauley
/s/ E. Thomas Hughes Principal Financial 5/1/00
- ------------------------------- Officer - Treasurer
E. Thomas Hughes
<F*> Director 5/1/00
- -------------------------------
Theodore M. Armstrong
<F*> Director 5/1/00
- -------------------------------
Alan C. Henderson
<F*> Director 5/1/00
- -------------------------------
Harry E. Rich
By: /s/ Christopher A. Martin
---------------------------
Christopher A. Martin
<FN>
<F*> Limited Powers of Attorney, authorizing the Registrant's President,
Secretary, and Treasurer to sign the Registration Statement and
amendments thereto on behalf of certain members of the Board of General
American Capital Company have been filed with Post-Effective Amendment
No. 16.
</TABLE>
C-6
<PAGE>
<PAGE>
EXHIBIT (d)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of the sixth day of January, 2000,
by and between GENERAL AMERICAN CAPITAL COMPANY ("Company"), a Maryland
corporation, and CONNING ASSET MANAGEMENT COMPANY ("Adviser"), a
Missouri corporation which is registered as an investment adviser under
the Investment Advisers Act of 1940, whereby the Adviser will act as
investment adviser to the Company as follows:
ARTICLE I
Advisory Services
-----------------
The Company is an open-end, diversified management investment company,
incorporated under the laws of the State of Maryland on November 15,
1985. The Company hereby employs the Adviser to act as the investment
adviser to and manager of the Company, and, subject to the supervision
of the Board of Directors of the Company ("Board"), to manage the
investment and reinvestment of the assets of the funds currently offered
for sale by the Company ("Funds") for the period and on the terms and
conditions set forth in this Agreement. The Adviser hereby accepts such
employment and agrees during such period, at its own expense, to render
the services and to assume the obligations herein set forth for the
compensation provided for herein. The Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized herein, have no authority to
act for or represent the Company in any way or otherwise be deemed an
agent of the Company. The Adviser shall, for purposes of this
Agreement, have and exercise full investment discretion and authority to
act as agent for the Company in buying, selling or otherwise disposing
or managing the Company's investments, subject to the supervision of the
Board.
A. Duties of Adviser. In carrying out its obligations to manage
-----------------
the investment and reinvestment of the assets of the Company, the
Adviser shall, as appropriate and consistent with the limitations set
forth in Section C hereof:
(a) perform research and obtain and evaluate pertinent economic,
statistical, and financial data relevant to the investment
policies of each Fund of the Company as set forth in the
prospectus for the Company, as amended from time to time;
(b) consult with the Board and furnish to the Board
recommendations with respect to an overall investment strategy for
each Fund of the Company for approval, modification, or rejection
by the Board;
(c) seek out specific investment opportunities and take such
steps as are necessary to implement any overall investment
strategies approved by the Board, including making and carrying
out day-to-day decisions to acquire or dispose of permissible
investments, management of investments and any other property of
the Company, and providing or
C-7
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<PAGE>
obtaining such services as may be necessary in managing, acquiring
or disposing of investments;
(d) regularly report to the Board with respect to the
implementation of any approved overall investment strategy and any
other activities in connection with management of the assets of
the Company; and
(e) furnish to regulatory authorities having jurisdiction such
information as may be requested in order for such authorities to
ascertain that variable insurance operations are being conducted
in accordance with applicable laws and regulations.
B. Employment of Sub-Adviser(s). The Adviser shall have the
----------------------------
authority to employ, at its expense, one or more sub-advisers. Where
applicable, reference herein to the Adviser shall include any sub-
advisers employed by the Adviser. Any agreement between the Adviser and
any sub-adviser shall be subject to the terms for approval, renewal,
termination and amendment as provided herein with respect to the
Adviser, and such sub-adviser shall at all times be subject to the
direction of the Adviser and the Board, and any duly constituted
committee thereof, or any officer of the Company acting pursuant to like
authority.
C. Limitations on Advisory Services. The Adviser shall perform the
--------------------------------
services under this Agreement subject to the supervision and review of
the Board and in a manner consistent with the investment objectives,
policies, and restrictions of each Fund of the Company as stated in its
Registration Statement, as amended from time to time, filed with the
Securities and Exchange Commission, its Articles of Incorporation and
By-Laws, as amended from time to time, the provisions of the Investment
Company Act of 1940, as amended (the "Investment Company Act") and the
applicable requirements of the Internal Revenue Code of 1986, as
amended.
The Company has furnished or will furnish the Adviser with copies of the
Company's Prospectus, Articles of Incorporation, and By-Laws as
currently in effect and agrees during the continuance of the Agreement
to furnish the Adviser with copies of any amendments or supplements
thereto before or at the time the amendments or supplements become
effective. The Adviser will be entitled to rely on all documents
furnished by the Company.
ARTICLE II
Compensation of the Adviser
---------------------------
A. Investment Advisory Fee. As compensation for its services to the
-----------------------
Company, the Adviser shall receive monthly compensation based on an
annual percentage of the average daily value of the net assets of the
Funds of the Company as shown below:
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<PAGE>
S&P 500 Index Fund .25 Percent
Money Market Fund .125 Percent
Bond Index Fund .25 Percent
Asset Allocation Fund .50 Percent
Small-Cap Equity Fund .25 Percent
Managed Equity Fund Assets
--------------------------
First $10 million .40%
Next $20 million .30%
Balance over $30 million .25%
International Index Fund Assets
-------------------------------
First $10 million .50%
Next $10 million .40%
Balance over $20 million .30%
Mid-Cap Equity Fund Assets
--------------------------
First $10 million .55%
Next $10 million .45%
Balance over $20 million .40%
B. Allocation of Expenses. The Adviser shall be responsible for
----------------------
payment of all expenses it may incur in performing the services set
forth in Article I hereunder. Except for expenses specifically assumed
by the Adviser as stated above, the Company shall be responsible for all
expenses associated with the operations of the Company.
The Board shall determine the manner in which expenses are allocated to
the Funds of the Company, and the determination of the Board shall be
final and binding.
ARTICLE III
Fund Transactions and Brokerage
-------------------------------
The Adviser agrees to determine the securities to be purchased or sold
by each Fund of the Company, subject to the provisions of Article I, and
to place orders pursuant to its determinations either directly with the
issuer, with any broker-dealer or underwriter that specializes in the
securities for which the order is made, or with any other broker or
dealer selected by the Adviser, subject to the following limitations.
The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for each Fund of
the Company and will use its best efforts to obtain the most favorable
price and efficient execution of the Company's orders, taking into
account all
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<PAGE>
appropriate factors, including: price; dealer spread or commission, if
any; size and difficulty of the transaction; the nature of the market
for the security; the reliability, financial condition and general
execution and operational capabilities of the broker-dealer; and the
research, statistical, and economic data furnished by the broker-dealer
to the Company.
Subject to the above requirements, nothing shall prohibit the Adviser
from selecting brokers or dealers with which it or the Company are
affiliated and from selecting brokers or dealers by virtue of sales of
insurance policies of General American Life Insurance Company or its
affiliates by such broker-dealers or their affiliates.
ARTICLE IV
Activities of the Adviser
-------------------------
The services of the Adviser to the Company under this Agreement are not
to be deemed exclusive and the Adviser will be free to render similar
services to others so long as its services under this Agreement are not
impaired. It is understood that directors, officers, employees and
shareholders of the Company are or may become interested in the Adviser,
as directors, officers, employees or shareholders or otherwise, and that
directors, officers, employees or shareholders of the Adviser are or may
become similarly interested in the Company.
It is agreed that the Adviser may use any supplemental investment
research obtained for the benefit of the Company in providing investment
advice to its other investment advisory accounts. The Adviser or its
subsidiaries may use such information in managing their own accounts.
Conversely, such supplemental information obtained by the placement of
business for the Adviser or other entities advised by the Adviser will
be considered by and may be useful to the Adviser in carrying out its
obligations to the Company.
Securities held by a Fund may also be held by separate investment
accounts or other investment companies for which the Adviser may act as
an adviser or by the Adviser or its affiliates. Because of different
investment objectives or other factors, a particular security may be
bought by the Adviser or its affiliates or for one or more clients when
one or more clients are selling the same security. If purchases or
sales of securities for the Company or other entities for which the
Adviser or its affiliates act as investment adviser or for their
advisory clients arise for consideration at or about the same time, the
Company agrees that the Adviser may make transactions in such
securities, insofar as feasible, for the respective entities and clients
in a manner deemed equitable to all. To the extent that transactions on
behalf of more than one client of the Adviser during the same period may
increase the demand for securities being purchased or the supply of
securities being sold, the Company recognizes that there may be an
adverse effect on price.
It is agreed that, on occasions when the Adviser deems the purchase or
sale of a security to be in the best interests of the Company as well as
other accounts or companies, it may, to the extent permitted by
applicable laws and regulations, but will not be obligated to, aggregate
the securities to be so sold or purchased for the Company with those to
be sold or purchased for other accounts
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<PAGE>
or companies in order to obtain favorable execution and lower brokerage
commissions. In that event, allocation of the securities purchased or
sold, as well as the expenses incurred in the transaction, will be made
by the Adviser in the manner it considers to be most equitable and
consistent with its fiduciary obligations to the Company and to such
other accounts or companies. The Company recognizes that in some cases
this procedure may adversely affect the size of the position obtainable
for a Fund of the Company.
ARTICLE V
Effectiveness of the Agreement
------------------------------
This Agreement shall not become effective unless and until it is
approved by the Company's Board (including a majority of directors who
are not parties to this Agreement or interested persons of any such
party to this Agreement), and by the Company's shareholders, and this
Agreement shall come into full force and effect on the date on which it
is so approved, provided that it shall not become effective as to any
subsequently created Fund until it has been approved by the Board
specifically for such Fund, and that implementation of any changes from
prior Agreements may be delayed until the start of the next month after
a change is approved by the shareholders.
ARTICLE VI
Term of the Agreement
---------------------
As to each Fund of the Company, this Agreement shall continue in effect
from year to year so long as its continuance is approved annually by a
majority of the votes cast by those persons having voting rights in
respect of the Fund or by a vote by a majority of the members of the
Board, but in either event by the vote of a majority of the Board who
are not "interested persons" (as defined in the Investment Company Act)
of any party to this Agreement, cast in person at a meeting called for
the purpose of voting such approval.
As to each Fund of the Company, this Agreement:
(1) may be terminated without the payment of any penalty upon 60
days' written notice to the Adviser either by the Board or by a
majority vote of those persons having voting rights in respect of
the affected Fund(s) of the Company:
(2) shall automatically terminate if it is assigned (within the
meaning of the Investment Company Act) by the Adviser;
(3) may be terminated by the Adviser without payment of any
penalty upon 60 days' written notice to the Secretary of the Board
of the Company; and
(4) may be amended, changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought. An amendment of this Agreement shall not be effective
until approved by (a) vote of the holders of a majority of the
outstanding voting
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<PAGE>
securities of the Fund or Funds affected; and (b) a majority of
those directors of the Company who are not parties to this
Agreement or interested persons of such a party, cast in person
at a meeting called for the purpose of voting on such approval.
ARTICLE VII
Recordkeeping
-------------
The Adviser agrees to preserve for the period prescribed by the rules
and regulations of the Securities and Exchange Commission all records
the Adviser maintains for the Company as are required to be maintained
pursuant to said rules. The Adviser agrees that all such records shall
be the property of the Company and shall be made available, within five
(5) business days of the request, to the Company's accountants or
auditors during regular business hours at the Adviser's offices upon
such prior written notice. In the event of termination for any reason,
all such records shall be returned promptly to the Company, free from
any claim or retention of rights by the Adviser. In addition, the
Adviser will provide any materials, reasonably related to the investment
advisory services provided hereunder, as may be reasonably requested in
writing by the directors or officers of the Company or as may be
required by any governmental agency having jurisdiction. Adviser will
keep any information obtained in the course of performing under this
Agreement in confidence, and will not use such information for its own
benefit nor disclose it except as authorized by Company or as required
by regulatory authorities having jurisdiction.
ARTICLE VIII
Liability of the Adviser
------------------------
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties on the part of the Adviser
(or its officers, directors, agents, employees, controlling persons,
shareholders, and any other person or entity affiliated with the Adviser
or retained by it to perform or assist in the performance of its
obligations under this Agreement), neither the Adviser nor any of its
officers, directors, employees or agents shall be subject to liability
to the Company or to any shareholder or to any other person with a
beneficial interest in the Company for any act or omission in the course
of, or connected with, rendering advisory services hereunder, including
without limitation any error or judgment or mistake of law or for any
loss suffered by the Company or any shareholder or other person in
connection with the matters to which this Agreement relates, except to
the extent specified in Section 36(b) of the Investment Company Act
concerning loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services. The provisions of this
Article VIII shall not apply to services other than those relating
solely to the provision of investment advice rendered by the Adviser
pursuant to this Agreement.
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ARTICLE IX
Governing Law
-------------
While this Agreement is intended by the parties to be governed by
Missouri law as to matters of state law, this Investment Advisory
Agreement is also subject to the provisions of the Investment Company
Act, as amended, and the rules and regulations of the Securities and
Exchange Commission thereunder, including such exemptions therefrom as
the Securities and Exchange Commission may grant. Words and phrases
used herein shall be interpreted in accordance with that Act and those
rules and regulations. As used with respect to the Company and the
holders of voting shares of any class of the Company's Capital Stock,
the term "majority of the outstanding voting shares" means the lesser of
(i) 67% or more of the voting shares represented at a meeting at which
the holders of more than 50% of the outstanding voting shares are
represented or (ii) more than 50% of the outstanding voting shares.
IN WITNESS WHEREOF, the parties have caused this Investment Advisory
Agreement to be signed by their respective officials duly authorized, as
of the day and year first above written.
Attest: GENERAL AMERICAN CAPITAL COMPANY
/s/ Christopher A. Martin By: /s/ Richard A. Liddy
- ------------------------------ --------------------------------
Christopher A. Martin, Richard A. Liddy,
Secretary President
CONNING ASSET MANAGEMENT
Attest: COMPANY
/s/ Fred M. Schpero By: /s/ Douglas R. Koester
- ------------------------------ --------------------------------
Fred M. Schpero, Douglas R. Koester,
Secretary Senior Vice President
CAM/CapCo-259.doc
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<PAGE>
EXHIBIT (j)
The Board of Directors
General American Capital Company:
We consent to the use of our report incorporated herein by reference,
to the reference to our firm under the heading "Financial Highlights
Information" and to the reference to our firm under "Accountants" in the
Post-Effective Amendment No. 17 to the Registration Statement (No.
33-10145) of General American Capital Company.
KPMG LLP
St. Louis, Missouri
May 1, 2000
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<PAGE>
EXHIBIT (p1)
GENERAL AMERICAN CAPITAL COMPANY
CODE OF ETHICS
This Code of Ethics (this "Code") has been reviewed and adopted by the
Board of Directors of General American Capital Company (the "Company"),
including a majority of the Disinterested Directors.
This Code governs the Securities transactions of the Company's Access
Persons. The Adviser has adopted and separately maintains and
administers its own code of ethics (the "Adviser's Code").
The Company has contracted with the Adviser to conduct investment
research, perform portfolio trading, and fulfill the Company's other
portfolio management duties, subject to the investment guidelines and
restrictions established by the Company's Board of Directors. As a
result, the Company's officers and directors are not involved in the
Company's day-to-day investment research, trading, or other portfolio
management duties. Except in circumstances where the Adviser needs pre-
trade direction or instructions regarding an unusual event, the
Company's officers and directors will not have advance or
contemporaneous knowledge of the Company's Securities transactions. The
Company's officers and directors normally become aware of the Company's
executed Securities transactions at the Board of Directors' regularly
scheduled quarterly meetings, which are generally held three weeks after
the end of each quarter. As a result, exposure to potential conflicts
of interests and abuses in the Securities transactions of the Company's
officers and directors is low. Nonetheless, this Code is designed to
prevent conflicts of interest in connection with the Access Persons'
Securities transactions in accordance with securities and corporate
laws.
I. DEFINED TERMS. Some of the terms used in this Code have special
-------------
meanings. These terms are defined below:
A. Access Persons. You are an Access Person of the Company if
--------------
you are an officer or director of the Company.
B. Adviser. Adviser means the investment adviser(s) to the
-------
Company's Funds. Conning Asset Management Company is the
investment adviser to all of the Company's funds.
C. Being Considered For Purchase or Sale. A Security is
-------------------------------------
Being Considered for Purchase or Sale when a recommendation
to purchase or sell a Security (including an option on such
Security and any Security that is convertible into or
exchangeable for such Security) has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making
such a recommendation.
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D. Beneficial Ownership. You have Beneficial Ownership of a
--------------------
Security if you, your spouse, your dependent children, or
any person that shares your household has voting or
investment power over that Security. You have "beneficial
ownership" over Securities in a brokerage or other type of
account if you exercise investment discretion over that
account or provide investment advice with respect to that
account.
E. Code. The Code means this Code of Ethics.
----
F. Company. The Company means General American Capital Company.
-------
The Company is an open-end investment company that sells its
shares to insurance company separate accounts. The Company is
registered under the Investment Company Act of 1940 (the "1940
Act"), and its shares are registered under the Securities Act
of 1933.
G. Compliance Administrator. The Compliance Administrator is
------------------------
the person who is responsible for receiving and reviewing
the Access Persons' securities reports under this Code. The
address of the Compliance Administrator is: Conning Asset
Management Company, Compliance Department, 700 Market
Street, Saint Louis, Missouri 63101.
H. Disinterested Director. A Disinterested Director is a
----------------------
director of the Company who is not an "interested person" of
the Company within the meaning of Section 2(a)(19) of the
1940 Act. Generally, a director will be deemed a
Disinterested Director if he or she has no affiliation with
the Company, the Adviser, or the Company's underwriter,
other than being a member of the Company's Board of
Directors. Another term for a Disinterested Director is an
outside director.
I. Funds. Funds means the Company's funds.
-----
J. Purchase or Sale of a Security. Purchase or Sale of a
------------------------------
Security includes, among other things, the writing of an
option to purchase or sell a Security, or the use of a
derivative product to take a position that would otherwise
be prohibited if taken directly.
K. Security. The term Security is defined in Section 2(a)(36)
--------
of the 1940 Act, and except as set forth below, has the same
meaning when used in this Code. Shares of registered open-
end mutual funds, securities issued by the U.S. government,
bankers' acceptances, bank certificates of deposit,
commercial paper, insurance annuities or life insurance
policies, and short term debt securities that are government
securities within the meaning of Section 2(a)(16) of the
1940 Act are not deemed Securities under this Code.
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II. STATEMENT OF GENERAL PRINCIPLES. This Code is based on the
-------------------------------
following principles.
A. The Company's Access Persons are under a duty at all times
to place the interests of the Funds' shareholders first.
B. All of the Securities transactions of the Company's Access
Persons must be conducted consistent with this Code and in
such a manner as to avoid any actual or potential conflict
of interest or any abuse of a position of trust.
C. The Company's Access Persons should not take inappropriate
advantage of their position. If you are an Access Person,
you should keep the following guidelines in mind:
1. You should not profit, directly or indirectly, due to
your position with respect to the Company. If you
learn about an investment opportunity due to your
position, you should not take advantage of and profit
from that opportunity.
2. You should not accept any special favors, benefits, or
preferential treatment that might stem from your
fiduciary relationship with the Company.
3. You should not release any information regarding
actual or contemplated Securities transactions by the
Company or any actual or proposed changes in the
Funds' investments, except in the performance of your
employment duties or in connection with any official
report or disclosure which makes such information
public knowledge.
III. PURPOSE OF THE CODE OF ETHICS.
-----------------------------
A. Background. The Company's Access Persons, in carrying out
----------
their responsibilities, may have access to information about
impending Fund transactions that they could use for their
own benefit. Virtually anytime the Company's Access Persons
buy and sell Securities for their personal securities
accounts, the potential exists for real and perceived
conflicts of interest with the Funds' shareholders to arise.
B. Rule 17j-1. Section 17(j) of the 1940 Act, and Rule 17j-1
----------
promulgated thereunder, address potential conflicts arising
from the personal investment activities of an investment
company's access persons. Rule 17j-1:
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1. prohibits the Company's Access Persons from engaging
in a fraudulent, deceptive, or manipulative act,
practice, or course of business in connection with
their personal transactions in those Securities held
within the most recent 15 days or Being Considered for
Purchase or Sale by the Company;
2. requires the Company to adopt a code of ethics that is
reasonably designed to prevent the Company's Access
Persons from engaging in an act, practice, or course
of business prohibited in the subparagraph immediately
above; and
3. requires the Company's Access Persons to report their
personal Securities transactions.
C. What the Code Does Not Prohibit. It is not the intention of
-------------------------------
this Code to prohibit personal Securities transactions by
Access Persons, but rather to prescribe rules designed to
prevent actual and apparent conflicts of interest. Indeed,
the Company believes that personal investment experience
over time can lead to better performance of an Access
Person's professional investment responsibility.
Accordingly, this Code is intended to permit personal
investment subject to reasonable restrictions designed to
address the concerns of possible conflicts of interests and
to preclude any overreaching.
D. What To Do If You Have Questions About the Code. While it
-----------------------------------------------
is not possible to specifically define and prescribe rules
addressing all possible situations in which conflicts may
arise, this Code sets forth standards regarding conduct in
those situations in which conflicts are most likely to
develop. It is also important to note that compliance with
the technical provisions of this Code does not in every case
prevent scrutiny of personal Securities transactions which
show a pattern or potential for abuse. The Company
recognizes that an individual legitimately may be uncertain
about the application of this Code in a particular
circumstance. Often, a single question can forestall
disciplinary action or complex legal problems. You should
immediately direct any questions relating to this Code to
the Company's Secretary if you have any reason to believe
that a violation of this Code has occurred or is about to
occur.
IV. RESTRICTION ON PERSONAL INVESTING. The following substantive
---------------------------------
restriction has been adopted to guard against the most likely
cases in which conflicts occur.
The Company's Access Persons shall not purchase or sell, directly
or indirectly, any Security in which they have, or by reason of
such transaction acquire, any direct or
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indirect Beneficial Ownership and which, to their actual knowledge
at the time of such purchase or sale: (i) is Being Considered for
Purchase or Sale by the Company; or (ii) is being purchased or
sold by the Company. Any profits realized by an Access Person on
personal Securities transactions in contravention of the above
restriction must be disgorged.
V. EXCEPTIONS FROM THE CODE OF ETHICS. The following transactions
----------------------------------
are exempt from the restriction on personal investing that is set
forth in Section IV of this Code.
A. Purchases or sales of Securities effected in any account
over which an Access Person has no direct or indirect
influence or control.
B. Purchases or sales of Securities that are not eligible for
purchase or sale by the Company.
C. Purchases or sales of Securities which are non-volitional on
the part of either the Access Person or the Company (e.g.,
purchases through dividend reinvestment plans, transactions
in corporate mergers, stock splits, tender offers).
D. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its Securities,
to the extent such rights were acquired from such issuer,
and sales of such rights so acquired.
E. Purchases or sales of Securities issued by companies with
market capitalization of at least $1 billion. Please note
that the fiduciary principles outlined herein nonetheless
still apply.
F. De minimus purchases and sales of Securities. A de minimus
purchase or sale means a Securities transaction involving
100 shares or less issued by the same issuer per year.
Please note that the fiduciary obligations outlined herein
nonetheless still apply.
G. Purchases or sales of high quality, short-term debt
instruments (any instrument that has a maturity at issuance
of less than 366 days and that is rated in one of the two
highest rating categories by a nationally recognized rating
organization).
H. Purchases or sales which receive the prior approval of the
Compliance Administrator to exempt the transaction. The
Compliance Administrator may grant an exception from one or
more provisions of this Code only after careful
consideration of the circumstances of the proposed
transaction or activity, the potential conflicts it may
raise, and whether it is consistent with the objectives and
spirit of this Code.
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VI. PROCEDURES TO IMPLEMENT CODE OF ETHICS. The following procedures
--------------------------------------
have been established to aid the persons to whom this Code is
applicable in avoiding a violation of its provisions, and to aid
the Company in preventing, detecting, and imposing sanctions for
violations of this Code. Every person to whom this Code applies
must follow these procedures or risk serious sanctions, including
dismissal, substantial personal liability, and criminal penalties.
If you have any questions about these procedures, you should
contact the Company's Secretary.
A. Acknowledgment and Certification. Upon becoming subject to
--------------------------------
this Code all persons to whom this Code is applicable are
required to sign an acknowledgment and certification of
their receipt of and intent to comply with this Code. Each
year thereafter, all persons to whom this Code is applicable
are required to sign an acknowledgment and certification of
their receipt of and intent to comply with this Code, and
their compliance with this Code.
B. Mandatory Reporting of Personal Securities Transactions.
-------------------------------------------------------
The Company's Access Persons shall comply with the personal
Securities reporting requirements set forth below:
1. Access Persons who are not Disinterested Directors.
--------------------------------------------------
The Company Access Persons, other than the Company's
Disinterested Directors, must provide, no less
frequently than quarterly, either: (i) duplicate
confirmations of all transactions in any Security in
which they have or had Beneficial Ownership and copies
of periodic account statements for all securities
accounts in which they have Beneficial Ownership; or
(ii) a completed personal securities transaction
report (a copy of which is attached hereto). The
duplicate confirmations/statements or the transaction
reports required under this Section VI.B.1. shall be
provided not later than 10 days after the end of each
calendar quarter in which the transactions to which
they relate were effected.
2. Access Persons who are Disinterested Directors. The
----------------------------------------------
Company's Disinterested Directors are not required to
provide the information set forth in Section VI.B.1.
above. However, the Company's Disinterested Directors
must file a personal securities transaction report (a
copy of which is attached hereto) with the Compliance
Administrator with respect to any transaction in a
Security if such Disinterested Director at the time of
that transaction, knew or, in the ordinary course of
fulfilling his or her official duties as a director of
the Company, should have known that, during
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the 15-day period immediately preceding or following
the date of the transaction by the director, such
Security was purchased or sold by the Company or was
Being Considered for Purchase or Sale by the Company.
The reports required under this Section VI.B.2. shall
be made not later than 10 days after the end of each
calendar quarter in which the transaction to which the
report relates was effected.
C. Initial Holdings Reports. Access Persons shall submit an
------------------------
initial holdings report to the Compliance Administrator
which discloses the name, number of shares, and principal
amount of all Securities owned by the Access Person and any
securities account the Access Person maintains with a
broker, dealer, or bank within 10 days of becoming an Access
Person. Disinterested Directors shall not be subject to
this requirement.
D. Annual Holdings Reports. Access Persons shall submit an
-----------------------
annual holdings report to the Compliance Administrator which
discloses the name, number of shares, and principal amount
of all Securities owned by the Access Person and any
securities account the Access Person maintains with a
broker, dealer, or bank. Disinterested Directors shall not
be subject to this requirement.
E. Compliance Administrator Review of Reports. The duplicate
------------------------------------------
confirmations, account statements, quarterly reports, and
the initial and annual holdings reports (collectively, the
"Reports") required to be submitted under Sections VI.B.,
VI.C., and VI.D. shall be delivered to the Compliance
Administrator. The Compliance Administrator shall review
the Reports and maintain copies thereof as required by Rule
17j-1(d), with a view to identifying any pattern of personal
securities transactions that suggests any actual or
potential conflict of interest, the appearance of a conflict
of interest, or any abuse of such person's position of trust
and responsibility within the Company. Before making any
determination that a violation has been committed by any
person or that any personal Securities transaction is
otherwise problematic under this Code and the purposes
thereof, such person shall be given an opportunity to supply
additional explanatory material.
F. Board of Directors' Review and Approval. The Company's
---------------------------------------
Board of Directors, including a majority of the
Disinterested Directors, shall, at least once per year
review and, if appropriate, approve this Code and the
Adviser's Code. In addition, the Company's Board of
Directors, including a majority of the Disinterested
Directors, shall review and, if appropriate, approve any
material changes to this Code and the Adviser's Code within
six months of the change. Before granting any such
approvals, the Board
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must receive a written certification from the Company and
the Adviser that they have adopted procedures reasonably
necessary to prevent access persons from violations their
respective codes of ethics and a written report that
describes any issues and material violations arising under
their respective codes of ethics since the last compliance
report.
G. Miscellaneous.
-------------
1. Confidentiality. All duplicate confirmations, account
---------------
statements, reports of securities transactions and any
other information filed with the Company or furnished
to any person pursuant to this Code shall be treated
as confidential, but are subject to review as provided
herein and by representatives of the Securities and
Exchange Commission.
2. Beneficial Ownership. No duplicate confirmation or
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account statement filed in accordance with this
Section VI.A. shall be construed as an admission by
the person submitting such duplicate confirmation or
account statement or making such report that he or she
has any direct or indirect Beneficial Ownership in the
Security to which the report relates.
VII. RECORDS. The Company shall maintain records with respect to
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this Code in the manner and to the extent set forth below, which
records may be maintained on microfilm under the conditions
described in Rule 31a-2(f)(1) under the 1940 Act and which shall
be available for examination by representatives of the Securities
and Exchange Commission.
A. A copy of this Code that is, or at any time within the past
five years has been, in effect shall be preserved in an
easily accessible place.
B. A record of any violation of this Code and of any action
taken as a result of such violation shall be preserved in an
easily accessible place for a period of not less than five
years following the end of the fiscal year in which the
violation occurs.
C. A copy of each report made or duplicate confirmation or
account statement received pursuant to this Code shall be
preserved for a period of not less than five years from the
end of the fiscal year in which it is made, the first two
years in an easily accessible place.
D. A list of all persons who are, or within the past five years
have been, required to submit duplicate confirmations or
account statements or to
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make reports pursuant to this Code shall be maintained in a
easily accessible place.
VIII. SANCTIONS. Upon determination that a violation of this Code has
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occurred, the Board of Directors may impose such sanctions as it
deems appropriate, including, among other things, a letter of
censure or suspension or termination of the employment of the
violator. All violations of this Code and any sanctions imposed
with respect thereto shall be periodically reported to the
Company's Board of Directors.
IX. ADVISER'S CODE OF ETHICS. The Adviser must maintain and enforce
------------------------
a Code appropriate to the Adviser's business activities as an
investment adviser to and employer of portfolio managers of the
Company's Funds. The Adviser's code of ethics shall meet all
applicable legal requirements and shall be consistent with the
goals and scope of this Code and the requirements hereof. The
Adviser shall report to the Company's Board of Directors any
violations of its code of ethics that could potentially affect the
Company as well as the action taken by the Adviser with respect to
any such violation.
HISTORY:
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Board adopted on February 3, 2000.
CAM/CapCo-192b.doc
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EXHIBIT (p2)
CONNING ASSET MANAGEMENT COMPANY
CODE OF ETHICS
CODE OF ETHICS; EMPLOYEE SECURITY TRANSACTIONS
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Conning Asset Management Company (CAM) has adopted a Code of
Ethics to specify and prohibit certain types of personal securities
transactions deemed to create a conflict of interest. The Code of
Ethics establishes reporting requirements and preventative procedures
pursuant to the provisions of Rule 204-2 of the Advisers Act and Rule
17j-1(b)(1) under the Investment Company Act.
DEFINITIONS. The following definitions are applicable to terms used
in CAM's Code of Ethics:
(a) "ACCESS PERSON" means any director, officer or Advisory
Person of CAM.
(b) "ADVISORY PERSON" means any employee of CAM who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or
sale of securities by CAM's advisory clients or whose functions
relate to any recommendations with respect to such purchases or
sales.
(c) "INVESTMENT PERSONNEL" means an employee of CAM who, in
connection with his or her regular functions or duties, makes or
participates in making recommendations regarding the purchase or
sale of securities of an advisory client (i.e. portfolio managers,
securities analysts and traders).
(d) "PORTFOLIO MANAGER" means any person or persons with the
direct responsibility and authority to make investment decisions
affection an advisory client's portfolio.
Questions regarding your classification should be directed to the
Compliance Officer.
(e) "Beneficial Ownership" of a security means any security
in which you, your spouse, your dependent children, or any person
that shares your household has voting or investment power over that
security.
(f) "Compliance Officer" means the individual(s) designated
by CAM with the primary responsibility for monitoring compliance
with applicable laws, regulations, and requirements promulgated by
self-regulatory organizations.
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(g) "Covered Security" means all securities as defined in
section 2(a)(36) of the Investment Company Act of 1940 excluding
direct obligations of the United States Government, banker's
acceptances bank certificates of deposit, commercial paper,
repurchase agreements, and shares issued by open-end investment
companies.
(h) "Initial Public Offering" means an offering of
securities registered under the Securities Act of 1933 the issuer of
which, immediately before the registration was not subject to the
reporting requirements of the Securities Exchange Act of 1934.
(i) "Personal Securities Account" means any securities
account maintained with a bank, broker or dealer in which you have a
beneficial or controlling interest (such as a family account) or
where you exercise investment discretion over the account or provide
investment advice with respect to that account.
GENERAL PRINCIPLES. In conducting personal investment activities,
each employee shall adhere to the highest ethical standards and shall at
all times:
(a) place the interests of CAM's advisory clients before his
or her personal interests;
(b) conduct all personal securities transactions in a manner
consistent with this Code of Ethics, so as to avoid any actual or
potential conflicts of interest, or an abuse of position of trust
and responsibility;
(c) not take any inappropriate advantage of his or her
position with or on behalf of CAM's advisory clients.
RESTRICTIONS ON PERSONAL INVESTMENT ACTIVITIES. The following rules
govern the personal securities transactions of Access Persons, Advisory
Persons and Investment Personnel as applicable:
Personal Trading Information
----------------------------
* No later than 10 days after becoming an ACCESS PERSON,
all Access Persons must complete an "Initial Holdings
Report" obtained from the Compliance Officer. The
"Initial Holdings Report" must include (i) the title,
number of shares and principal amount of each Covered
Security Beneficially Owned by the Access Person, (ii)
all Personal Securities Accounts of the Access Person
and (iii) the date the "Initial Holdings Report" is
submitted by the Access Person.
* Duplicate confirmations and statements of ACCESS
PERSONS' Personal Securities Accounts that hold or are
used to transact Covered Securities must be sent
directly to the Compliance Department by the bank,
broker or dealer on a timely basis.
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* On a quarterly basis, ACCESS PERSONS will be requested
to review the completeness and accuracy of (i) Personal
Securities Account information and (ii) Covered
Securities held or transacted outside of a Personal
Securities Account as reported to the Compliance
Officer. The Access Person must provide any additions,
deletions or changes to such information to the
Compliance Officer by no later than 10 days after the
end of the calendar quarter.
* On at least an annual basis, ACCESS PERSONS will be
requested to sign a statement confirming the
completeness and accuracy of all information reported
through the above procedures.
* A person need not report information in accordance with
the above procedures with respect to transactions
effected for, and Covered Securities held in, any
account over which the person does not have direct or
indirect influence or control.
* All trading and holdings information will be reviewed
under the direction of the Compliance Officer and will
be compared against Conning & Company's Restricted List.
The Compliance Officer maintains the names of
individuals responsible for reviewing trading and
holdings information.
Pre-Clearance of Trades.
-----------------------
Personal transactions by any ACCESS PERSON in the following
securities must be approved by the Compliance Officer prior to
execution:
* securities of companies in the insurance, insurance
related, and HMO industries;
* securities of investment companies affiliated with CAM
(excluding the purchase of a variable insurance contract
or annuity which is invested in a registered separate
account);
* securities offered in a private placement; and
* securities issued by any of CAM's advisory clients.
INVESTMENT PERSONNEL of any of CAM's investment company
clients registered under the Investment Company Act of 1940 must
obtain approval from the Compliance Officer before directly or
indirectly acquiring beneficial ownership in:
* any securities in an Initial Public Offering (IPO); and
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* any securities offered in a limited offering such as a
private placement exempt from registration as well as
offerings that are not public.
* The Compliance Officer will review all proposed
investments on a case-by-case basis. In deciding
whether to approve an investment, the Compliance
Officer will consider potential conflicts that may
cause CAM or its Investment Personnel to violate their
fiduciary obligations to CAM's advisory clients. The
Compliance Officer will retain a record of any
approvals of direct or indirect acquisition by
Investment Personnel of a beneficial interest in
securities in an IPO or limited offering.
Other Personal Investment Restrictions.
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From time to time, Access Persons may be prohibited from
trading other securities in which they have positions due to
potential conflict of interest situations.
An approval received from the Compliance Officer is valid only
on the day on which it was issued.
If, for its advisory client, CAM decides to purchase
securities of an issuer, the securities of which have been
previously acquired by a PORTFOLIO MANAGER, the decision to purchase
the securities for the advisory client is subject to an independent
review by an ADVISORY PERSON with no personal interest in the
issuer.
Personal transactions in securities issued by Conning
Corporation shall be governed by the "Insider Trading and Reporting
Policy of Conning Corporation"-- a copy is included in the
"Appendix" of CAM's Compliance Manual).
Blackout Periods
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* AN ACCESS PERSON WHO KNOWS THAT AN ACTIVELY-MANAGED
CAM ADVISORY CLIENT HAS TRADED IN A COVERED SECURITY,
HAS A PENDING "BUY" OR "SELL" ORDER FOR A COVERED
SECURITY, OR INTENDS TO TRADE IN OR PLACE AN ORDER TO
"BUY" OR "SELL" A COVERED SECURITY, SHALL NOT TRANSACT
IN THAT COVERED SECURITY DURING THE RESTRICTED PERIOD.
*******************************
For purposes of this blackout policy, the phrase:
* "actively managed CAM advisory client" means an
account or portfolio over which CAM has investment
discretion and excludes accounts that are managed
pursuant to a passive investment formula (e.g., index
funds).
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* "business day" means any day on which the national
securities markets are open for trading.
* "Restricted Period" means the day of and five (5)
business days before and after the day of a trade,
entry of an order to "buy" or "sell" the Covered
Security on behalf of the client, or the date on which
an Access Person intends to engage in such
transactions on behalf of a CAM client.
* "Transact" in a Covered Security means a transaction
in which the Access Person acquires or divests (i) any
direct or indirect Beneficial Ownership of the Covered
Security, (ii) any position covering a long or short-
sale of the Covered Security, or (iii) any derivative
of the Covered Security such as an option to purchase
or sell such security or any security that is
exchangeable for or convertible into such security.
Exemptions. The above restrictions and procedures do not
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apply to:
* transactions effected in personal accounts in which the
only security holdings are mutual funds;
* transactions effected in accounts in which an outside
investment manager has full discretion and the Access
Person cannot participate in or be informed about
investment decisions until after the transactions are
effected;
* transactions that are non-volitional on the part of the
Access Person or CAM client, such as mergers,
recapitalizations, and automatic dividend reinvestment
plans; and
* transactions that are effected upon the exercise of
rights issued by an issuer on a pro-rata basis to all
holders of a class of securities.
IN ALL CASES, CAM RESERVES THE RIGHT TO REVERSE OR CANCEL FOR CAUSE
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ANY TRADE AT THE INDIVIDUAL'S EXPENSE WITHOUT PRIOR NOTIFICATION TO THE
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INDIVIDUAL.
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CAM/CapCo-17-wrapper.doc
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