<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
<TABLE>
Check the appropriate box:
<S> <C>
/X/ Preliminary proxy statement. / / Confidential, for use of the Commissioner
/ / Definitive proxy statement. only (as permitted by Rule 14a-6(e)(2).
/ / Definitive additional materials.
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
GENERAL AMERICAN CAPITAL COMPANY
----------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies: N/A
(2) Aggregate number of securities to which
transaction applies: N/A
(3) Per unit price or other underlying value of
transaction computed pursuant to Rule 0-11 (Set
forth the amount on which the filing fee is
calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
<PAGE>
[FORM OF INSURANCE COMPANY LETTER]
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 MARKET STREET
ST. LOUIS, MISSOURI 63101
RICHARD A. LIDDY
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
August 9, 2000
Dear Policy/Contract Holder:
This letter is to advise you of certain circumstances that will affect
shareholders of General American Capital Company ("Capital Company") and
will require a shareholder vote to determine how Capital Company will
respond to these circumstances. The first circumstance, which affects
only certain of the eight funds that compose Capital Company (the
"Funds"), is General American Life Insurance Company's ("General
American") business plan to consolidate operations, which includes
closing certain offices of Capital Company's investment adviser.
General American's business plan results in Capital Company needing to
amend the current investment advisory agreement, and to hire investment
subadvisers for the affected Funds. The second circumstance, which
affects shareholders in each Fund, is that effective at the end of this
year, I will be retiring from my positions as President and as a member
of the board of directors for Capital Company. Therefore, Capital
Company's shareholders will need to elect another member to the board of
directors.
Because you invested money through your variable life insurance policy
or variable annuity contract in one or more of the eight Funds of
Capital Company, you are entitled to instruct us how to vote the shares
of each Fund attributable to your policy or contract at a special
meeting of shareholders, and any adjournment (the "Meeting"), to be held
on September 19, 2000. We have enclosed the following to assist you in
giving us your instructions:
(1) Notice of Special Meeting;
(2) Proxy Statement;
(3) Voting Instruction Form; and
(4) Postage-paid return envelope.
The Meeting is being held for the following purposes:
For policy/contract owners with interests in one or more Fund(s):
1. To elect one member of the board of directors of Capital Company;
<PAGE>
<PAGE>
Richard A. Liddy
August 9, 2000
Page 2
For policy/contract owners with interests in the Managed Equity Fund,
Asset Allocation Fund, or Mid-Cap Equity Fund:
2. To approve or disapprove an investment advisory/subadvisory
arrangement among Capital Company, Conning Asset Management
Company, and State Street Research & Management Company,
with an advisory fee increase to be effective as of January
6, 2002;
For policy/contract owners with interests in the Small-Cap Equity Fund:
3. To approve or disapprove a change in the investment
objective of the Small-Cap Equity Fund whereby the Fund will
become an actively managed fund, and an investment
advisory/subadvisory arrangement among Capital Company,
Conning Asset Management Company, and State Street Research
& Management Company, with an advisory fee increase that
becomes effective immediately; and
For policy/contract owners with interests in any Fund:
4. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
Please read the enclosed Notice of Special Meeting and the Proxy
Statement for details about the Meeting.
In order to be given effect at the Meeting, we must receive a properly
executed Voting Instruction Form no later than September 15, 2000.
We will vote shares of each Fund underlying your policy or contract in
accordance with voting instructions we have received on a timely basis.
We have undertaken to vote the shares of each Fund for which no timely
instructions are received, and the shares of each Fund that we may own
on behalf of group pension customers, in the same proportion as dictated
by the timely voting instructions that we have received. Voting
Instruction Forms that are properly executed and returned but that
provide no voting instructions, will be voted "FOR" each proposal.
Please complete, sign, and date the enclosed Voting Instruction Form and
promptly return it in the enclosed postage-paid envelope. Your
instructions and participation are very important, and we appreciate
your return of the form as soon as possible. Thank you for your
cooperation.
Very truly yours,
Richard A. Liddy
Chairman and Chief Executive Officer
General American Life Insurance Company
2
<PAGE>
<PAGE>
August 9, 2000
GENERAL AMERICAN CAPITAL COMPANY
Money Market Fund
Bond Index Fund
Asset Allocation Fund
Managed Equity Fund
S&P 500 Index Fund
Mid-Cap Equity Fund
Small-Cap Equity Fund
International Index Fund
700 Market Street
St. Louis, Missouri 63101
(877) 882-5714
NOTICE OF SPECIAL MEETING
NOTICE IS HEREBY GIVEN THAT the Board of Directors of General American
Capital Company ("Capital Company"), a Maryland corporation comprising
eight funds (the "Funds"), will hold a special meeting of Capital
Company's shareholders, including any adjournment thereof (the
"Meeting"), at the home office of GenAmerica Financial Corporation,
located at 700 Market Street, St. Louis, Missouri, on Tuesday, September
19, 2000 at 10:00 a.m. Central Time, for the following purposes:
For policy/contract owners with interests in any Fund:
1. To elect one member of the board of directors of Capital
Company;
For policy/contract owners with interests in the Managed Equity Fund,
Asset Allocation Fund, or Mid-Cap Equity Fund:
2. To approve or disapprove an investment advisory/subadvisory
arrangement among Capital Company, Conning Asset Management
Company, and State Street Research & Management Company,
with an advisory fee increase to become effective as of
January 6, 2002;
For policy/contract owners with interests in the Small-Cap Equity Fund:
3. To approve or disapprove a change in the investment
objective of the Small-Cap Equity Fund whereby the Fund will
become an actively managed fund that seeks to provide
investors long-term growth of capital; and an investment
i
<PAGE>
<PAGE>
advisory/subadvisory arrangement among Capital Company, Conning
Asset Management Company, and State Street Research & Management
Company, with an advisory fee increase to become effectively
immediately; and
For all policy/contract owners with interests in any Fund:
4. To transact such other business as may properly come
before the Meeting or any adjournments thereof.
Capital Company's shareholders of record (which are the respective
insurance companies that hold shares of the Funds) at the close of
business on July 31, 2000, the record date for the Meeting, are entitled
to notice of, and to provide instructions for voting at, the Meeting.
Please refer to the accompanying Proxy Statement for more information
about the proposals to be considered and acted upon at the Meeting or
any adjournments.
As an investor, through a variable life insurance policy or a variable
annuity contract, in a separate account of General American Life
Insurance Company, Cova Financial Services Life Insurance Company, Cova
Financial Life Insurance Company, First Cova Life Insurance Company, and
Security Equity Life Insurance Company (collectively, the "Insurance
Companies"), holding shares of Capital Company as of the close of
business on the record date for the Meeting, you are entitled to
instruct the Insurance Companies how to vote the shares of Capital
Company funding your policy or contract.
YOUR VOTING INSTRUCTIONS ARE VERY IMPORTANT, regardless of the number of
Fund shares attributed to your policy or contract. Please complete,
date, sign, and return the enclosed Voting Instruction Form today in the
enclosed postage-paid envelope.
By Order of the Board of Directors
CHRISTOPHER A. MARTIN
Secretary
ii
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY
Money Market Fund
Bond Index Fund
Asset Allocation Fund
Managed Equity Fund
S&P 500 Index Fund
Mid-Cap Equity Fund
Small-Cap Equity Fund
International Index Fund
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 19, 2000
The board of directors (the "Board") of General American Capital Company
("Capital Company"), a Maryland corporation, is furnishing this proxy
statement to solicit voting instructions from shareholders of each of
the eight funds in Capital Company (the "Funds") for use at a special
meeting of Capital Company's shareholders and any adjournments thereof
(the "Special Meeting") to be held on Tuesday, September 19, 2000 at
10:00 a.m. Central Time at the home office of GenAmerica Financial
Corporation, located at 700 Market Street, St. Louis, Missouri. The
Board is requesting voting instructions as to how to vote on the
following proposals being considered at the Meeting:
For policy/contract owners with interests in any Fund:
1. To elect one member of the board of directors of Capital
Company;
For policy/contract owners with interests in the Managed Equity Fund,
Asset Allocation Fund, or Mid-Cap Equity Fund:
2. To approve or disapprove an investment advisory/subadvisory
arrangement among Capital Company, Conning Asset Management
Company, and State Street Research & Management Company,
with an advisory fee increase to become effective as of
January 6, 2002;
For policy/contract owners with interests in the Small-Cap Equity Fund:
3. To approve or disapprove a change in the investment
objective of the Small-Cap Equity Fund whereby the Fund will
become an actively managed fund that seeks to provide
investors long-term growth of capital; and an investment
advisory/subadvisory arrangement among Capital Company,
Conning Asset Management Company, and State Street Research
& Management Company, with an advisory fee increase to
become effective immediately;
1
<PAGE>
<PAGE>
For policy/contract owners with interests in any Fund:
4. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
As an investor, through a variable life insurance policy or a variable
annuity contract, in a separate account of General American Life
Insurance Company, Cova Financial Services Life Insurance Company, Cova
Financial Life Insurance Company, First Cova Life Insurance Company, and
Security Equity Life Insurance Company (collectively, the "Insurance
Companies"), holding shares of Capital Company as of the close of
business on July 31, 2000, the record date for the Meeting ("Record
Date"), you are entitled to instruct the Insurance Companies how to vote
the shares of Capital Company funding your policy or contract.
This proxy statement is being mailed to policy/contract owners on or
about August 9, 2000, accompanied by a notice of the Meeting and a
voting instruction form. If you properly execute and return the
enclosed voting instruction form in time to be voted at the Meeting, the
Insurance Companies will vote the shares of each Fund represented by
your voting instruction form in accordance with the instructions
received. The Insurance Companies have undertaken to vote the shares of
each Fund for which no timely instructions are received, and the shares
of each Fund that may be owned on behalf of group pension customers, in
the same proportion as dictated by the timely voting instructions that
we have received. Unless you mark instructions to the contrary on the
voting instruction form, the Board will vote "FOR" the matters listed in
the accompanying Notice of Special Meeting.
Any policy/contract owner who has given a voting instruction form has
the right to revoke such instructions at any time prior to the date of
the Meeting by submitting a letter of revocation or a later-dated
instruction form that Capital Company receives at the above address no
later than Friday, September 15, 2000.
2
<PAGE>
<PAGE>
Capital Company's Board has asked policy/contract owners to vote on
three proposals at the Meeting as set forth below:
DESCRIPTION OF PROPOSAL VOTING PROCEDURE
----------------------- ----------------
1. Election of director Shareholders of all Funds voting
together as a single group.
2. Approval of investment Shareholders of the Managed Equity
advisory/subadvisory Fund, Asset Allocation Fund, and Mid-Cap
arrangement Equity Fund, each voting separately.
3. Approval of change in Shareholders of the Small-Cap Equity
investment objective Fund.
together with approval
of investment advisory/
subadvisory arrangement
In addition, the Board will transact such other business as may properly
come before the Meeting or any adjournments thereof. The Board will
solicit voting instructions primarily by mail, but may supplement this
effort by telephone calls, telegrams, e-mails, personal interviews and
other communications by officers, employees and agents of General
American Life Insurance Company ("General American") or its affiliates.
Capital Company will bear the cost of soliciting proxies, which is
estimated to be approximately $ .
--------
PROPOSAL NO. 1
ELECTION OF DIRECTOR
Capital Company's bylaws provide that its directors are divided into
three classes (Class I, Class II, and Class III) with the term of office
of one class expiring each year. Directors serve until their respective
successors are elected and qualified. Thereafter, directors of each
class will be elected for three-year terms at the applicable meeting of
shareholders.
The Class I member of the Board, Richard A. Liddy, will be retiring from
his responsibilities at Capital Company at the end of 2000. As an
officer of General American, Mr. Liddy has been considered to be an
"interested" director under the Investment Company Act of 1940. The
Board has nominated Matthew P. McCauley (the "Nominee") as Mr. Liddy's
replacement as a Class I Director to serve for a three-year term or
until the Nominee resigns or his successor is elected and qualified.
Under Proposal No. 1, Capital Company's shareholders, voting as a single
group, are being asked to elect the Nominee. The paragraphs below set
forth pertinent information about the Nominee. The Nominee has
indicated a willingness to serve if elected. If elected, the Nominee
will hold office beginning on January 1, 2001 (or such earlier date of
Mr. Liddy's retirement) until his successor is elected and qualified.
3
<PAGE>
<PAGE>
In evaluating the Nominee, the Board took into account the Nominee's
background and experience, including his familiarity with issues
relating to these types of funds and investments as well as his career
in business, finance, marketing or other areas. The Board also
considered the Nominee's past contributions and service as a director
prior to last December as well as his potential future contributions to
the Board's effectiveness.
INFORMATION REGARDING NOMINEE
The Nominee, Matthew P. McCauley (age 58), is currently a vice president
of Capital Company and is affiliated with Conning and General American.
Accordingly, if elected, he will be considered to be an "interested"
director under the Investment Company Act of 1940. The table below
provides his business experience during the past five years and public
company directorships (if any), to the extent known by Capital Company.
Mr. McCauley was a director of Capital Company since its inception in
1986. Mr. McCauley voluntarily stepped down as a director in December
1999 so Capital Company could comply with a requirement that 75% of its
directors consist of "independent" directors. The 75% independent
director requirement was triggered by the indirect acquisition of
Capital Company's investment adviser by Metropolitan Life Insurance
Company in January 2000.
<TABLE>
<CAPTION>
POSITION WITH BUSINESS EXPERIENCE DURING THE
NAME CAPITAL COMPANY PAST FIVE YEARS
---- --------------- ---------------
<S> <C> <C>
Matthew P. McCauley<F*> Vice President Associate General Counsel and
Vice President - GenAmerica
Management Co., St. Louis,
Missouri
</TABLE>
The Board has no committees. Capital Company's Board held four meetings
in the year ended December 31, 1999. All current directors attended
100% of these meetings.
4
<PAGE>
<PAGE>
INFORMATION REGARDING OTHER DIRECTORS AND EXECUTIVE OFFICERS
The table below provides the name, age, and business experience of the
current Capital Company directors and executive officers.
<TABLE>
<CAPTION>
POSITION WITH BUSINESS EXPERIENCE DURING THE
NAME AND AGE CAPITAL COMPANY PAST FIVE YEARS
------------ --------------- ---------------
<S> <C> <C>
Theodore M. Armstrong (61) Director (since 1990). Senior Vice President-Finance &
Term expires 2002. Administration & CFO, Angelica
Corp., St. Louis, MO (uniform
manufacture & sale, and laundry).
Alan C. Henderson (54) Director (since 1989). President, CEO, & Director RehabCare
Term expires 2001. Group, Inc., St. Louis MO, 6/98 to
present; EVP and CFO, 6/91 to 6/98
(disability rehabilitation
business).
Richard A. Liddy<F*> (64) Director (since 1992) and Chairman & CEO, General American
President (since 1992). Life Insurance Co., St. Louis, MO,
Term as director expires 1/95 to present.
2000.
Harry E. Rich (60) Director (since 1993). Retired Executive Vice President &
Term expires 2002. CFO, Brown Group, Inc., St. Louis,
MO.
E. Thomas Hughes, Jr. (58) Treasurer (since 1994) Corporate Actuary & Treasurer,
GenAmerica Management Co.,
St. Louis, MO.
Christopher A. Martin (37) Secretary (since 1998) Counsel, GenAmerica Management Co.,
St. Louis, MO, 8/96 to present.
Associate, Lewis, Rice & Fingersh,
St. Louis, MO, 8/94 to 8/96.
<FN>
------------------------
<F*> "Interested person" under the Investment Company Act of 1940.
Richard A. Liddy is affiliated with General American and Conning.
</TABLE>
5
<PAGE>
<PAGE>
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the compensation paid to each of the
current directors and executive officers of Capital Company for the year
ended December 31, 1999. Directors who are "interested persons" and
executive officers of Capital Company receive no compensation from
Capital Company for their services.
AGGREGATE
COMPENSATION FROM
NAME OF PERSON, POSITION CAPITAL COMPANY
------------------------ ---------------
Theodore M. Armstrong $8,000
Director
Alan C. Henderson $8,000
Director
Richard A. Liddy 0
Director and President
Matthew P. McCauley 0
Director
Harry E. Rich $8,000
Director
E. Thomas Hughes, Jr. 0
Treasurer
Christopher A. Martin 0
Secretary
VOTE REQUIRED
Shareholders of Capital Company must approve the election of the Nominee
for director by the affirmative vote of a plurality of the shares of
Capital Company voted at the Meeting.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE NOMINEE UNDER PROPOSAL NO. 1.
6
<PAGE>
<PAGE>
PROPOSAL NO. 2
APPROVAL OR DISAPPROVAL OF INVESTMENT ADVISORY/SUBADVISORY
ARRANGEMENT
Under Proposal No. 2, shareholders of each of the Managed Equity Fund,
Asset Allocation Fund, or Mid-Cap Equity Fund (collectively, the
"Subadvised Funds"), voting separately, are being asked to approve or
disapprove an investment advisory/subadvisory arrangement among Capital
Company, Conning Asset Management Company ("Conning"), and State Street
Research & Management Company ("State Street Research"). In approving
this arrangement, shareholders will be approving the following three
components:
(1) amending the advisory agreement between Conning and Capital
Company (the "Advisory Agreement") to approve an advisory
fee increase effective January 6, 2002;
(2) approving a new investment subadvisory agreement among
Capital Company, Conning, and State Street Research (the
"Subadvisory Agreement") to provide day-to-day advisory
services to the Subadvised Funds; and
(3) authorizing Conning to assume responsibility for supervising
State Street Research and paying State Street Research's
subadvisory fees.
Conning currently provides investment advisory services to each of the
Subadvised Funds under the terms of the Advisory Agreement. State
Street Research provides investment advisory services to other
investment companies, some of which have investment objectives that are
similar to the Subadvised Funds' investment objectives. Metropolitan
Life Insurance Company ("MetLife"), the ultimate parent company to both
Conning and State Street Research, has determined to eliminate
redundancies among its subsidiaries. As a result of this determination,
certain of Conning's offices will be consolidated or eliminated, and,
consequently, Conning will not have the personnel and resources to
provide day-to-day investment advisory services to the Subadvised Funds.
The Board recognizes that Conning will need to hire other advisers to
provide day-to-day advisory services to the Subadvised Funds. The
Advisory Agreement permits Conning to employ, at its expense, one or
more investment subadvisers. The Board proposes that Conning engage
State Street Research to provide day-to-day investment advisory services
to the Subadvised Funds. However, in order for Capital Company to
secure the level of quality advisory services provided by State Street
Research, it will be necessary to increase the advisory fee provided in
the Advisory Agreement so that Conning can adequately supervise and
compensate State Street Research. Therefore, the Board is seeking
approval of the investment advisory/subadvisory arrangement to increase
the advisory fee payable under the Advisory Agreement, to permit Conning
to secure appropriate investment subadvisory services from State Street
Research once certain Conning offices are consolidated or eliminated,
and to authorize Conning to supervise State Street Research and pay
State Street Research for its subadvisory services.
The Board, Conning and Capital Company do not anticipate that your
approving the advisory/subadvisory arrangement will cause either any
reduction in the quality of services now provided to the Subadvised
Funds, or any adverse effect on Conning's ability to fulfill its
obligations to the Subadvised Funds. Any agreement between Conning and
an investment subadviser shall be subject to the terms for approval,
renewal, termination, and amendment as provided in the Advisory
Agreement with respect to Conning, and any investment subadviser shall
at all times be subject to Conning or the Board's direction.
7
<PAGE>
<PAGE>
Accordingly, the Board is proposing for approval by each Subadvised
Fund's shareholders, the entire package of the investment advisory/
subadvisory arrangement. A form of the proposed amended Advisory
Agreement is attached as Appendix A, and a form of the proposed
Subadvisory Agreement is attached as Appendix B to this Proxy Statement.
The investment subadvisory services to be provided and responsibilities
of State Street Research under the Subadvisory Agreement are identical
in all material respects to Conning's current investment advisory
services and responsibilities under the Advisory Agreement.
At a Board meeting held on July 26, 2000, the Board members, including
the directors who were not parties to the Advisory Agreement or
"interested persons" of any such party (the "Independent Directors"),
approved unanimously the proposed investment advisory/subadvisory
arrangement. Further, the Board and the Independent Directors approved
unanimously the submission of the arrangement for approval by the
shareholders of each Subadvised Fund. Only shareholders of a Subadvised
Fund vote to approve the advisory/subadvisory arrangement for that
Subadvised Fund.
If a Subadvised Fund's shareholders approve the proposed investment
advisory/subadvisory arrangement, it will take effect on such date of
shareholder approval or such later date as agreed to by the Board,
Conning, and State Street Research. The Subadvisory Agreement will have
an initial term of two years and, thereafter, will continue in effect
from year to year, with respect to each Subadvised Fund, provided that
each such continuance is approved annually: (1) by the Board or by the
vote of a majority of the outstanding voting securities of the
particular Subadvised Fund, and, in either case, (2) by the vote of a
majority of the Independent Directors.
If a Subadvised Fund's shareholders should fail to approve the proposed
advisory/subadvisory arrangement, the Board and Conning will have to
arrange for the provision of investment advisory services to that
Subadvised Fund until the Board, the Independent Directors, and the
Subadvised Fund's shareholders approve an investment subadvisory
agreement for that Subadvised Fund with another investment subadviser.
AMENDING THE ADVISORY AGREEMENT
If shareholders of a Subadvised Fund approve the proposed investment
advisory/subadvisory arrangement, such shareholders will be approving an
amendment to the Advisory Agreement to increase the advisory fees
payable to Conning. Conning will use such increased advisory fees to
supervise and pay State Street Research the investment subadvisory fees
Conning is entitled to receive with respect to that Subadvised Fund.
Although approving the investment advisory/subadvisory arrangement will
result in higher advisory fees, NO INCREASED ADVISORY FEES FOR ANY
SUBADVISED FUND WILL BECOME EFFECTIVE UNTIL JANUARY 6, 2002. The
current advisory fees will remain in effect until that time, although
Conning will be responsible for supervising and compensating State
Street Research. Accordingly, Conning will bear out of its own
resources, all the expenses incurred in supervising State Street
Research's subadvisory services to the Subadvised Funds until January 5,
2002. Policy/contract owners will bear none of these costs.
8
<PAGE>
<PAGE>
The tables below lists the current advisory fees applicable to the
Subadvised Funds, the new advisory fees under the proposed investment
advisory/subadvisory arrangement, and the proposed subadvisory fees
payable by Conning to State Street Research, each as a percentage of a
Subadvised Fund's net assets:
<TABLE>
<CAPTION>
FUND CURRENT ADVISORY FEE PROPOSED ADVISORY FEE (EFFECTIVE
JANUARY 6, 2002)
<S> <C> <C>
Managed Equity Fund 0.40% up to $10 million 0.50% up to $250 million
0.30% from $10 million to $30 million 0.45% from $250 million to $750 million
0.25% above $30 million 0.35% above $750 million
Asset Allocation Fund 0.50% 0.55% up to $500 million
0.45% from $500 million to $1 billion
0.40% above $1 billion
Mid-Cap Equity Fund 0.55% up to $10 million 0.55% up to $250 million
0.45% from $10 million to $20 million 0.50% from $250 million to $750 million
0.40% above $20 million 0.45% above $750 million
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
FUND PROPOSED SUBADVISORY FEE (EFFECTIVE PROPOSED SUBADVISORY FEE (EFFECTIVE
UNTIL JANUARY 5, 2002) JANUARY 6, 2002)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Managed Equity Fund 0.40% up to $10 million 0.40% up to $250 million
0.30% from $10 million to $30 million 0.35% from $250 million to $750 million
0.25% above $30 million 0.30% above $750 million
-------------------------------------------------------------------------------------------------------------------
Asset Allocation Fund 0.50% up to $500 million 0.50% up to $500 million
0.40% from $500 million to $1 billion 0.40% from $500 million to $1 billion
0.35% above $1 billion 0.35% above $1 billion
-------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund 0.45% up to $20 million 0.45% up to $250 million
0.40% from $20 million to $750 million 0.40% from $250 million to $750 million
0.35% above $750 million 0.35% above $750 million
-------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table lists the dollar amount of the advisory fees paid by
each of the Subadvised Funds to Conning during the year ended December
31, 1999, the amount Conning would have received if the advisory fees
under the proposed investment advisory/subadvisory arrangement had been
in effect during that period, and the difference in such amounts as a
percentage of the current advisory fee amount. Please note that the
higher advisory fees for the Managed Equity Fund, Asset Allocation Fund,
and Mid-Cap Equity Fund would not become effective until January 2002.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
FUND CURRENT ADVISORY PROPOSED ADVISORY FEE PERCENTAGE
FEE FOR YEAR ENDED IF IN EFFECT FOR YEAR DIFFERENCE
12/31/99 (ACTUAL) ENDED 12/31/99
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Managed Equity Fund $177,638 $307,468 73.1%
----------------------------------------------------------------------------------------------------
Asset Allocation Fund $671,598 $738,758 10.0%
----------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $45,950 $46,460 1.1%
----------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<PAGE>
PROVISIONS OF THE ADVISORY AND SUBADVISORY AGREEMENTS
The provisions of the proposed amended Advisory Agreement regarding the
investment advisory services provided to the Subadvised Funds are the
same in all material respects as those of the existing Advisory
Agreement, except for the proposed fee arrangements. The Advisory
Agreement requires Conning to act as the investment adviser to Capital
Company for the respective Subadvised Funds and, subject to the
supervision of the Board, to manage the investment and reinvestment of
the assets of each Subadvised Fund, with full investment discretion and
authority, in a manner consistent with the investment objectives,
policies and restrictions of each Subadvised Fund. The Advisory
Agreement also requires Conning:
(a) to perform investment research and evaluate financial data;
(b) to consult with, make recommendations to, and report
regularly to the Board; and,
(c) to furnish requested information to appropriate regulatory
authorities.
The Advisory Agreement provides that Conning is not subject to liability
to Capital Company for any act or omission in the course of, or
connected with, rendering services under the Advisory Agreement, except
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties under the Advisory
Agreement.
The Advisory Agreement may be terminated with respect to a Subadvised
Fund without penalty upon sixty (60) days' written notice to Conning by
the Board or by a majority vote of those persons having voting rights in
respect of the Subadvised Fund, or upon sixty (60) days' written notice
to the Board by Conning. The Advisory Agreement terminates
automatically in the event of its "assignment" (within the meaning of
the Investment Company Act of 1940).
The provisions of the proposed Subadvisory Agreement regarding the
investment advisory services State Street Research will provide to the
Subadvised Funds are identical to those of the current Advisory
Agreement, except that State Street Research may not appoint a
subadviser, and State Street Research acts subject to the supervision of
Conning and the Board.
Appendix C lists the directors and principal executive officers of
Conning. Appendix D lists the aggregate amount of investment advisory
fees paid by each Fund to Conning during the year ended December 31,
1999. Appendix E lists the aggregate amount compensation paid by each
Fund to General American, an affiliate of Conning, for serving as the
Funds' Administrator during the year ended December 31, 1999.
INFORMATION ABOUT STATE STREET RESEARCH
State Street Research & Management Company, One Financial Center,
Boston, Massachusetts 02111, is the proposed investment subadviser for
each of the Subadvised Funds. The firm traces its heritage back to 1924
and the founding of one of America's first mutual funds. State Street
Research is a subsidiary of SSRM Holdings, Inc., which is an indirect
subsidiary of MetLife. As of June 30, 2000, State Street Research had
more than $53 billion in assets under management, including more than
$18 billion in mutual funds.
10
<PAGE>
<PAGE>
The table below lists the name, and principal occupation of State Street
Research's directors and principal executive officers. Each person's
business address is One Financial Center, Boston, Massachusetts 02111.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
Christopher C. Abbott Executive Vice President
Jeffrey J. Hodgman President
Gerard P. Maus Director, Executive Vice President, Treasurer,
Chief Financial Officer, Chief Administrative
Officer
Francis J. McNamara, III Executive Vice President, General Counsel,
Secretary
James C. Pannell Executive Vice President, Head of Fixed Income
Thomas A. Shively Executive Vice President, Chief Investment
Officer -- Fixed Income
James M. Weiss Director, Executive Vice President, Chief
Investment Officer - Equities
Kevin N. Wilkins Executive Vice President
</TABLE>
If shareholders of the Subadvised Funds approve the proposed Subadvisory
Agreement, the following portfolio managers of State Street Research
will be responsible for the day-to-day investment activities of the
respective Subadvised Funds:
MANAGED EQUITY FUND: Peter A. Zuger, CFA (B.A., College of
William and Mary; M.S., Virginia Commonwealth University) will be
responsible for day-to-day portfolio management for the Managed
Equity Fund. Mr. Zuger is a senior vice president of State Street
Research and has been an investment professional since 1976. He
currently serves as a portfolio manager to the State Street
Research Argo Fund, a series of State Street Research Equity
Trust, which has an investment objective and policy similar to
that of the Managed Equity Fund. Prior to joining State Street
Research, Mr. Zuger served as a portfolio manager with American
Century Investment Management.
ASSET ALLOCATION FUND: John T. Wilson (B.A., Trinity College;
M.B.A., Duke University) and John H. Kallis (B.A., Wheaton
College) will be responsible for day-to-day portfolio management
for the Asset Allocation Fund. Mr. Wilson focuses primarily on
the growth portion of the Fund, while Mr. Kallis focuses on the
income portion. Mr. Wilson is a senior vice president of State
Street Research and currently serves as a portfolio manager of a
number of mutual funds, including the equity portion of the State
Street Research Diversified Portfolio of MetLife Series Fund, Inc.
Prior to joining State Street Research in 1996, Mr. Wilson served
as a vice president of Phoenix Investment Counsel. Mr. Kallis
also is a senior vice president of State Street Research and
currently serves as a portfolio manager of a number of mutual
funds, including the income portion
11
<PAGE>
<PAGE>
of the State Street Research Diversified Portfolio of MetLife
Series Fund, Inc. Mr. Kallis joined State Street Research in 1987
and has worked as an investment professional since 1963.
MID-CAP EQUITY FUND: Catherine Dudley (B.A., University of
Connecticut) will be responsible for day-to-day portfolio
management for the Mid-Cap Equity Fund. Ms. Dudley joined State
Street Research in 1998 and is a senior vice president. Ms.
Dudley currently serves as portfolio manager to the State Street
Research Mid-Cap Growth Fund, a series of State Street Research
Capital Trust, which has an investment objective and policy
similar to that of the Mid-Cap Equity Fund. During the past five
years, Ms. Dudley also has served as a senior portfolio manager at
Chancellor Capital Management, and as a portfolio manager at
Phoenix Investment Counsel.
From time to time, Conning or State Street Research may receive
brokerage and research services from brokers that execute securities
transactions for certain of the Subadvised Funds. The commission paid
by a Subadvised Fund to a broker that provides such services to Conning
or State Street Research may be greater than the commission would be if
the Subadvised Fund used a broker that does not provide the same level
of brokerage and research services. Additionally, Conning or State
Street Research may use such services for clients other than the
specific Subadvised Fund from which the related commissions are derived.
State Street Research also serves as investment adviser or investment
subadviser to certain portfolios of other registered investment
companies having an investment objective similar to that of certain
Subadvised Funds. Appendix F to this Proxy Statement lists the size of
such other portfolios and the rate of State Street Research's
compensation.
EVALUATION BY THE BOARD OF DIRECTORS
In determining whether or not to approve the investment advisory/
subadvisory arrangement and recommend approval to shareholders, the
Board of Directors, including the Independent Directors, considered
various materials and representations provided by Conning and State
Street Research at the July 26, 2000 Board meeting.
The Board considered the following information, among other things:
* Conning's good management to date, but reduction in staff
after the consolidation of Conning's offices;
* the necessity to seek alternative day-to-day management of
the "actively managed" funds (i.e., the Subadvised Funds);
* the belief that State Street Research's financial strength,
resources, and commitment to the advisory business could
enhance the operation of the Subadvised Funds in many ways,
including the ability to engage and retain high-caliber
investment personnel, the ability to add investment research
capabilities, and the ability to enhance the quality of
services provided to shareholders;
12
<PAGE>
<PAGE>
* the results achieved by State Street Research for portfolios
it manages that have investment objectives and strategies
similar to the Subadvised Funds;
* State Street Research's personnel, operations, financial
condition, investment management capabilities and
methodologies, and performance; and
* the nature and quality of the services to be rendered by
State Street Research under the proposed Subadvisory
Agreement;
* that the subadvisory fees charged by State Street Research
compare favorably to the fees charged to similar funds
managed by State Street Research;
* the commonality of the provisions of the Subadvisory
Agreement and Advisory Agreement;
* the fairness of the compensation payable to Conning under
the Advisory Agreement, and Conning's responsibility for
State Street Research's compensation (including the fact
that the proposed advisory fees for all three Funds are
below the median advisory fee for similar funds as reported
by Lipper Analytical Services of New York (Lipper Analytical
New Applications Version 3.4, Release Date: March 6, 2000);
and
* that Capital Company would pay no additional advisory fees
under the proposed arrangement until January 6, 2002.
Based upon its review, the Board determined that approving the
investment advisory/subadvisory arrangement will best assure that the
Subadvised Funds will receive uninterrupted high-quality investment
advisory services. The Board also determined that the advisory/
subadvisory arrangement, including the amended Advisory Agreement
and proposed Subadvisory Agreement, is in the best interests
of each Subadvised Fund and its shareholders. Accordingly, after
consideration of the above and such other factors and information it
considered relevant, the Board of Directors unanimously approved the
investment advisory/subadvisory arrangement and voted to recommend its
approval by each Subadvised Fund's shareholders.
VOTE REQUIRED
Shareholders of each Subadvised Fund must separately approve the
investment advisory/subadvisory arrangement for that Subadvised Fund.
Approval of Proposal No. 2 by a Subadvised Fund requires an affirmative
vote of the lesser of: (1) 67% or more of the shares of the Subadvised
Fund's shares present at the Meeting if more than 50% of the outstanding
shares of the Subadvised Fund are present or represented by proxy; or
(2) more than 50% of the outstanding shares of the Subadvised Fund.
THE BOARD OF DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT
DIRECTORS, RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2.
13
<PAGE>
<PAGE>
PROPOSAL NO. 3
APPROVAL OR DISAPPROVAL OF A CHANGE IN INVESTMENT OBJECTIVE AND AN
INVESTMENT ADVISORY/SUBADVISORY ARRANGEMENT FOR THE
SMALL-CAP EQUITY FUND
Under Proposal No. 3, shareholders of the Small-Cap Equity Fund are
being asked to approve or disapprove a change in investment objective
and an investment advisory/subadvisory arrangement on behalf of the
Fund. In approving this Proposal, shareholders will be approving
changes that would:
* make the Fund an "actively managed" fund instead of a
"passively managed" fund;
* amend the Advisory Agreement to approve an increase in the
advisory fee that would become effective immediately; and
* approve a Subadvisory Agreement for State Street Research to
provide day-to-day advisory services to the Small-Cap Equity
Fund.
The Small-Cap Equity Fund currently is a passively managed fund whose
investment objective is "to provide investors with long-term growth of
capital that is consistent with the investment return of smaller
capitalized companies." To pursue this investment objective, every five
years the Fund determines the smallest 20% (in terms of capitalization)
of the companies listed on the New York Stock Exchange, and, over the
next five years, the Fund primarily rebalances itself to hold these
stocks. Conning serves as investment adviser to the Fund, however the
Fund is considered to be "passively managed" because this type of
investment strategy does not require the investment adviser to make day-
to-day decisions regarding which stocks to purchase or sell.
The Board believes that the Small-Cap Equity Fund's performance has not
met with expectations possibly because the investment strategy results
in missing some of the best investment opportunities available in this
capitalization category. This may be due, in part, to the dynamic
changes that occur among companies in the small-capitalization category
during a five-year period. Therefore, the Board believes that current
and future owners of interests in the Small-Cap Equity Fund will be
better served if the Fund changed its investment objective to become an
actively managed fund and entered into an appropriate investment
subadvisory arrangement whereby a portfolio manager would make day-to-
day decisions regarding stock purchases and sales.
The Board proposes that the Small-Cap Equity Fund change its investment
objective to "providing investors long-term growth of capital." The
Small-Cap Equity Fund would pursue its new investment objective by
investing primarily in small company value stocks. Generally, most
investments would be in stocks of companies no larger than the largest
companies in the Russell 2000 Value Index or a similar index. In
choosing among small company value stocks, the portfolio manager would
take a value approach, searching for those companies that appear to be
trading below their true worth.
The Board is proposing that in conjunction with the change in investment
objective and strategy shareholders approve an amendment to the Advisory
Agreement to increase the advisory fee
14
<PAGE>
<PAGE>
Conning receives on behalf of the Fund, and approve an investment
subadvisory agreement whereby State Street Research will make day-to-day
investment decisions on behalf of the Fund. The proposed investment
subadvisory agreement for the Small-Cap Equity Fund would be identical
to the Subadvisory Agreement discussed above under Proposal No. 2. If
shareholders do not approve the change in investment objective, Conning
will continue to serve as investment adviser to the passively managed
Fund, the Advisory Agreement will not change as to the Fund, and the
Subadvisory Agreement will not apply to the Small-Cap Equity Fund.
If shareholders approve the change in investment objective and,
consequently, also approve the amended Advisory Agreement and proposed
Subadvisory Agreement, Conning will continue to serve as investment
adviser to the Small-Cap Equity Fund; however, State Street Research
will serve as investment subadviser and will actively manage the Fund.
The Board believes that changing the Small-Cap Equity Fund's investment
objective and approving the investment advisory/subadvisory arrangement
will benefit current and future shareholders. At the July 26, 2000
Board meeting, the Board voted unanimously to approve both the proposed
change in investment objective and the investment advisory/subadvisory
arrangement, and recommended that shareholders of the Small-Cap Equity
Fund vote on the proposal.
If shareholders approve the proposal, then under the amended Advisory
Agreement, Conning will supervise State Street Research and will pay
State Street Research the investment subadvisory fee it is entitled to
receive with respect to the Small-Cap Equity Fund. The advisory fee for
the Fund will increase as a result of changing from a passively managed
fund to an actively managed fund. However, unlike the delayed increased
advisory fees discussed in Proposal No. 3, this new fee would take
effect once the Subadvisory Agreement becomes effective as to the Small-
Cap Equity Fund.
The table below lists the current advisory fee applicable to the Small-
Cap Equity Fund and the new advisory fee and subadvisory fee under the
proposed investment advisory/subadvisory arrangement, each as a
percentage of the Fund's net assets:
<TABLE>
<CAPTION>
FUND CURRENT PROPOSED ADVISORY FEE PROPOSED SUBADVISORY FEE
ADVISORY
FEE
<S> <C> <C> <C>
Small-Cap 0.25% 0.75% up to $250 million 0.65% up to $250 million
Equity Fund 0.65% from $250 million to $750 million 0.60% from $250 million to $750 million
0.60% above $750 million 0.55% above $750 million
</TABLE>
15
<PAGE>
<PAGE>
The following table lists the dollar amount of the advisory fee paid by
the Small-Cap Equity Fund to Conning during the year ended December 31,
1999 (when the Fund was passively managed), the amount Conning would
have received if the Fund was actively managed and the advisory fee
under the proposed Subadvisory Agreement been in effect during that
period, and the difference in such amounts as a percentage of the
current advisory fee amount.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
FUND CURRENT ADVISORY PROPOSED ADVISORY PERCENTAGE
FEE FOR YEAR ENDED FEE FOR YEAR ENDED DIFFERENCE
12/31/99 12/31/99
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small-Cap Equity Fund $172,379 $517,137 200%
------------------------------------------------------------------------------------------------
</TABLE>
If the Small-Cap Equity Fund's shareholders approve the proposed
advisory/subadvisory arrangement for the Fund, Rudolph K. Kluiber, CFA
(B.A., Harvard College; M.B.A., U.C.L.A.) will be responsible for day-
to-day portfolio management for the Fund. Mr. Kluiber joined State
Street Research in 1989 and currently is a senior vice president, and
serves as portfolio manager to the State Street Research Aurora Fund, a
series of State Street Research Capital Trust which has an investment
objective and policy similar to that of Small-Cap Equity Fund, and to
other mutual funds. Mr. Kluiber has worked as an investment
professional since 1988.
The material factors the Board considered regarding the change in
investment objective and the approval of the advisory/subadvisory
arrangement (in addition to those factors described above under Proposal
No. 2) included:
1. the prior performance of the Small-Cap Equity Fund;
2. the desire to convert the Small-Cap Equity Fund into an
actively managed fund;
3. the nature and quality of services to be rendered by State
Street Research;
4. State Street Research's prior experience managing other
registered investment companies that have investment
objectives, policies, strategies and risks substantially
similar to those of the Fund;
5. the subadvisory fee to be paid to State Street Research;
6. the increased advisory fee would remain below the median
advisory fee for similar funds according to Lipper
Analytical Services (Lipper Analytical New Applications
Version 3.4, Release Date: March 6, 2000); and
7. the subadvisory fee is less than what State Street Research
charges similar funds.
The Board was satisfied that State Street Research (1) was knowledgeable
and experienced in the operations of the relevant financial markets and
in the laws that are applicable to such operations, and (2) had the
personnel, financial resources and standing in the financial community
to enable it to manage the Fund adequately.
After careful consideration, the Board believes that changing the Small-
Cap Equity Fund's investment objective and approving the advisory/
subadvisory arrangement is in the best interests of shareholders.
Accordingly, after consideration of the above and such other factors
and information it considered relevant, the Board unanimously approved
the change in investment objective and the advisory/subadvisory
arrangement, and voted to recommend approval by the Small-Cap Equity
Fund's shareholders.
16
<PAGE>
<PAGE>
VOTE REQUIRED
Only shareholders of the Small-Cap Equity Fund may approve the change in
investment objective and the advisory/subadvisory arrangement for the
Fund. Approval of Proposal No. 3 by requires an affirmative vote of the
lesser of: (1) 67% or more of the shares of the Small-Cap Equity Fund's
shares present at the Meeting if more than 50% of the outstanding shares
of the Small-Cap Equity Fund are present or represented by proxy; or (2)
more than 50% of the outstanding shares of the Small-Cap Equity Fund.
THE BOARD OF DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT
DIRECTORS, RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 3.
GENERAL INFORMATION
VOTING INFORMATION
This Proxy Statement, and the accompanying solicitation of voting
instructions, is being sent to variable life insurance policyholders and
variable annuity contract holders whose policies or contracts are funded
by the separate accounts that invest in Capital Company. The number of
shares as to which voting instructions may be given under a policy or
contract is determined by the number of full and fractional shares of
each Fund held in a separate account with respect to that particular
policy or contract.
A majority of the outstanding shares of Capital Company or each Fund on
the Record Date, represented in person or by proxy, must be present at
the Meeting to constitute a quorum. If a quorum is not present at the
Meeting, or if a quorum is present but the Board does not receive
sufficient votes to approve or disapprove any proposal, the persons
named as proxies on the enclosed proxy card may propose one or more
adjournments of the Meeting to permit further solicitation of proxies.
The persons named in the enclosed proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of
any proposal that has not been adopted, will vote against any
adjournments those proxies required to be voted against any proposal
that has not been adopted, and will not vote any proxies that direct
them to abstain from voting on such proposals. The following factors
may be considered in determining whether to adjourn the Meeting:
* the nature of the proposals that are the subject of the
Meeting;
* the percentage of votes actually cast;
* the percentage of negative votes actually cast;
* the nature of any further solicitation and the information
to be provided to shareholders with respect to the reasons
for the solicitation.
Any adjournment will require the affirmative vote of a majority of those
shares represented at the Meeting in person or by proxy. A shareholder
vote may be taken on one or more of the proposals prior to any such
adjournment if sufficient votes have been received for approval.
17
<PAGE>
<PAGE>
For each Fund, as of the Record Date, the total number of shares
outstanding and entitled to vote was:
Money Market Fund shares
------------
Bond Index Fund shares
------------
Asset Allocation Fund shares
------------
Managed Equity Fund shares
------------
S&P 500 Index Fund shares
------------
Mid-Cap Equity Fund shares
------------
Small-Cap Equity Fund shares
------------
International Index Fund shares
------------
General American Life Insurance Company and affiliated insurance
companies, through certain of their separate accounts, own all of the
shares of each Fund and has undertaken to vote its shares in accordance
with voting instructions received on a timely basis from the holders of
variable life insurance policies and variable annuity contracts who have
allocated amounts to one or more of the separate account subdivisions,
or subaccounts, that invest in each Fund. Each insurance company will
vote the shares of a Fund for which no timely instructions are received,
and any shares owned by separate accounts funding qualified plans, in
proportion to the voting instructions that are received with respect to
all policies and contracts participating in the Fund. Proxies that are
properly executed and returned but that have no voting designation with
respect to a proposal will be voted "FOR" the proposal.
Voting instructions may be revoked at any time prior to close of
business on September 15, 2000 (the deadline set forth above for timely
receipt of voting instructions), by executing and delivering a later-
dated signed proxy card to your insurance company.
To the knowledge of management of Capital Company, as of the Record
Date, no director of Capital Company owned 1% or more of the outstanding
shares of any Fund, and the officers and directors of Capital Company
owned, as a group, less than 1% of the shares of each Fund.
Appendix G to this Proxy Statement lists the persons that, to the
knowledge of the Funds, owned beneficially 5% or more of the outstanding
shares of any Fund as of the Record Date.
OTHER MATTERS TO COME BEFORE THE MEETING
Capital Company's Management does not know of any matters to be
presented at the Meeting other than those described in this Proxy
Statement. If other business should properly come before the Meeting,
the proxy holders will vote thereon in accordance with their best
judgment.
SERVICE PROVIDERS
Capital Company has no underwriter or distributor. General American
Life Insurance Company, located at 700 Market Street, St. Louis, MO
63101, is Capital Company's Administrator.
18
<PAGE>
<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder wishing to recommend a proposal at the annual meeting to
be held in 2000 (if any) and to have such proposal included in any proxy
material distributed in 2000 should notify Capital Company in writing at
700 Market Street, St. Louis, Missouri 63101 at least two business days
before September 15, 2000.
REPORTS TO SHAREHOLDERS
Capital Company will furnish, without charge, a copy of its Annual
Report and Semi-Annual Report upon request. To request an Annual Report
and a Semi-Annual Report, please call General American at (877) 882-
5714.
THE BOARD REQUESTS THAT YOU PROMPTLY EXECUTE AND RETURN THE ENCLOSED
VOTING INSTRUCTION FORM IN ORDER TO ASSURE THE PRESENCE OF A QUORUM AT
THE MEETING. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR
YOUR CONVENIENCE.
August 9, 2000
700 Market Street
St. Louis, Missouri 63101
19
<PAGE>
<PAGE>
APPENDIX A
----------
FORM OF INVESTMENT ADVISORY AGREEMENT
BY AND BETWEEN
GENERAL AMERICAN CAPITAL COMPANY
AND CONNING ASSET MANAGEMENT COMPANY
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of the day of ,
----- --------------
2000, by and between GENERAL AMERICAN CAPITAL COMPANY (the "Company"), a
Maryland corporation, and CONNING ASSET MANAGEMENT COMPANY (the "Adviser"),
a Missouri corporation that 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 as set forth in the Company's prospectus, 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 for
approval, modification, or rejection by the Board;
A-1
<PAGE>
<PAGE>
(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 Company
property, and providing or 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 Funds; and
(e) furnish to regulatory authorities having jurisdiction such
information as may be requested in order for such authorities to
ascertain that Funds that support 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, each 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 the Company 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.
A-2
<PAGE>
<PAGE>
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:
<TABLE>
<S> <C> <C>
Money Market Fund 0.125 Percent
-----------------
Bond Index Fund 0.25 Percent
---------------
S&P 500 Index Fund 0.10 Percent up to $500 million
------------------ 0.08 Percent $500 million up to $750 million
0.05 Percent $750 million and up
Asset Allocation Fund 0.50 Percent
---------------------
<CAPTION>
Provided that effective January 6, 2002, the advisory fees shall be:
<S> <C> <C>
0.55 Percent up to $500 million
0.45 Percent $500 million up to $1 billion
0.40 Percent $1 billion and up
Small-Cap Equity Fund 0.75 Percent up to $250 million
--------------------- 0.65 Percent $250 million up to $750 million
0.60 Percent $750 million and up
Managed Equity Fund 0.40 Percent up to $10 million
------------------- 0.30 Percent $10 million up to $30 million
0.25 Percent $30 million and up
<CAPTION>
Provided that effective January 6, 2002, the advisory fees shall be:
<S> <C> <C>
0.50 Percent up to $250 million
0.45 Percent $250 million up to $750 million
0.35 Percent $750 million and up
International Index Fund 0.50 Percent up to $10 million
------------------------ 0.40 Percent $10 million up to $20 million
0.30 Percent $20 million and up
A-3
<PAGE>
<PAGE>
Mid-Cap Equity Fund 0.55 Percent up to $10 million
------------------- 0.45 Percent $10 million up to $20 million
0.40 Percent $20 million and up
<CAPTION>
Provided that effective January 6, 2002, the advisory fees shall be:
<C> <C>
0.55 Percent up to $250 million
0.50 Percent $250 million up to $750 million
0.45 Percent $750 million and up
</TABLE>
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 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 the Company's directors, officers,
employees and shareholders are or may become interested in the Adviser,
as directors, officers,
A-4
<PAGE>
<PAGE>
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 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 specifically for
such Fund by the Board and its shareholder(s), as required, 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.
A-5
<PAGE>
<PAGE>
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 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. The 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 the Company or as required by regulatory authorities
having jurisdiction.
A-6
<PAGE>
<PAGE>
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.
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
By:
------------------------------------- ---------------------------------
Christopher A. Martin, Secretary Richard A. Liddy, President
CONNING ASSET MANAGEMENT
Attest: COMPANY
By:
------------------------------------- ---------------------------------
Paul W. Kopsky, Senior Vice President James L. Lipscomb, President and
and Chief Financial Officer Chief Executive Officer
A-7
<PAGE>
<PAGE>
APPENDIX B
----------
FORM OF INVESTMENT SUBADVISORY AGREEMENT
BY AND AMONG
GENERAL AMERICAN CAPITAL COMPANY,
CONNING ASSET MANAGEMENT COMPANY, AND
STATE STREET RESEARCH & MANAGEMENT COMPANY
INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT made as of the day of
-----
, 2000, by and among GENERAL AMERICAN CAPITAL COMPANY
----------------
(the "Company"), a Maryland corporation, CONNING ASSET MANAGEMENT
COMPANY (the "Adviser"), a Missouri corporation that is registered as
as an investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act"), and STATE STREET RESEARCH & MANAGEMENT COMPANY
(the "Subadviser"), a Delaware corporation that is registered as an
investment adviser under the Advisers Act, 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 has employed 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 (the "Board"), to manage the
investment and reinvestment of the assets of the funds currently offered
for sale by the Company (the "Funds") pursuant to an investment advisory
agreement dated , 2000 (the "Advisory Agreement").
---------------
Pursuant to its authority under Article I B of the Advisory Agreement,
the Adviser hereby employs the Subadviser to act as the investment
subadviser and, subject to the supervision of the Board and the Adviser,
to manage the day-to-day investment and reinvestment of the Funds listed
on Exhibit A to this Subadvisory Agreement (as Exhibit A may be amended
from time to time) (such Funds collectively referred to as the
"Subadvised Funds").
The Subadviser 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 Subadviser 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
or the Adviser in any way or otherwise be deemed an agent of the Company
or the Adviser. The Subadviser shall, for purposes of this Subadvisory
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 Subadvised Fund's investments, subject to the
supervision of the Board and the Adviser.
B-1
<PAGE>
<PAGE>
A. Duties of the Subadviser. In carrying out its obligations to
------------------------
manage the investment and reinvestment of the Company's assets, the
Subadviser 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 Subadvised Fund as set forth in the Company's
prospectus, as amended from time to time;
(b) consult with the Adviser and the Board and furnish to the
Adviser and the Board recommendations with respect to an overall
investment strategy for each Subadvised Fund for approval,
modification, or rejection by the Adviser and/or the Board;
(c) seek out specific investment opportunities and take such
steps as are necessary to implement any overall investment
strategies approved by the Adviser or the Board, including making
and carrying out day-to-day decisions to acquire or dispose of
permissible investments, management of investments and any other
Company property, and providing or obtaining such services as may
be necessary in managing, acquiring or disposing of investments;
(d) regularly report to the Adviser and/or the Board with
respect to the implementation of any approved overall investment
strategy and any other activities in connection with management of
the Subadvised Fund's assets; and
(e) furnish to regulatory authorities having jurisdiction such
information as may be requested in order for such authorities to
ascertain that Funds that support variable insurance operations
are being conducted in accordance with applicable laws and
regulations.
B. Employment of Other the Subadviser(s). The Subadviser shall
-------------------------------------
have the authority to employ, at its expense or otherwise, one or more
subadvisers to provide any services to a Subadvised Fund, only upon the
consent of the Adviser and any necessary approvals from the Board and
shareholders of the Funds.
C. Limitations on Advisory Services. The Subadviser shall perform
--------------------------------
the services under this Subadvisory Agreement subject to the supervision
and review of the Adviser and the Board and in a manner consistent with
the investment objectives, policies, and restrictions of each Subadvised
Fund as stated in its Registration Statement, as amended from time to
time, filed with the Securities and Exchange Commission, the Company's
Articles of Incorporation and By-Laws, each 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.
B-2
<PAGE>
<PAGE>
The Company or the Adviser has furnished or will furnish the Subadviser
with copies of the Company's Prospectus, Articles of Incorporation, and
By-Laws as currently in effect, and each agrees during the continuance
of the Subadvisory Agreement to furnish the Subadviser with copies of
any amendments or supplements thereto before or at the time the
amendments or supplements become effective. The Subadviser will be
entitled to rely on all documents furnished by the Company or the
Adviser.
ARTICLE II - Compensation by the Adviser of the Subadviser
---------------------------------------------
A. Investment Subadvisory Fee. As compensation for its services to
--------------------------
the Company, the Adviser shall pay the Subadviser the monthly
compensation based on an annual percentage of the average daily value of
the net assets of the Subadvised Funds as shown below:
<TABLE>
<S> <C> <C>
Asset Allocation Fund 0.50 percent up to $500 million
0.40 percent $500 million to $1 billion
0.35 percent $1 billion and up
Managed Equity Fund 0.40 Percent up to $10 million
0.30 Percent $10 million up to $30 million
0.25 Percent $30 million and up
<CAPTION>
Provided that effective January 6, 2002, the subadvisory fees shall be:
<S> <C> <C>
0.40 percent up to $250 million
0.35 percent $250 million to $750 million
0.30 percent $750 million and up
Mid-Cap Equity Fund 0.45 percent up to $20 million
0.40 percent $20 million to $750 million
0.35 percent $750 million and up
<CAPTION>
Provided that effective January 6, 2002, the subadvisory fees shall be:
<S> <C> <C>
0.45 percent up to $250 million
0.40 percent $250 million to $750 million
0.35 percent $750 million and up
Small-Cap Equity Fund 0.65 percent up to $250 million
0.60 percent $250 million to $750 million
0.55 percent $750 million and up
</TABLE>
B. Allocation of Expenses. The Subadviser shall be responsible for
----------------------
payment of all expenses it may incur in performing the services set
forth in Article I hereunder. Except for expenses
B-3
<PAGE>
<PAGE>
specifically assumed by the Adviser as stated above, the Company shall
be responsible for all expenses associated with the Company's
operations.
The Board shall determine the manner in which expenses are allocated to
the Subadvised Funds, and the determination of the Board shall be final
and binding.
ARTICLE III - Fund Transactions and Brokerage
-------------------------------
The Subadviser agrees to determine the securities to be purchased or
sold by each Subadvised Fund, 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 or the Subadviser, as the case may be,
subject to the following limitations.
The Subadviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for each
Subadvised Fund and will use its best efforts to obtain the most
favorable price and efficient execution of the Company's orders, taking
into account all 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 Subadviser
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 Subadviser
----------------------------
The Subadviser's services to the Company under this Subadvisory
Agreement are not to be deemed exclusive, and the Subadviser will be
free to render similar services to others so long as its services under
this Subadvisory Agreement are not impaired. It is understood that the
Company's directors, officers, employees and shareholders are or may
become interested in the Subadviser, as directors, officers, employees
or shareholders or otherwise, and that directors, officers, employees or
shareholders of the Subadviser are or may become similarly interested in
the Company.
It is agreed that the Subadviser may use any supplemental investment
research obtained for the benefit of the Company in providing investment
advice to its other investment advisory accounts. The Subadviser or its
subsidiaries may use such information in managing their own accounts.
B-4
<PAGE>
<PAGE>
Conversely, such supplemental information obtained by the placement of
business for the Subadviser or other entities advised by the Subadviser
will be considered by and may be useful to the Subadviser in carrying
out its obligations to the Company.
Securities held by a Subadvised Fund may also be held by separate
investment accounts or other investment companies for which the
Subadviser may act as an adviser or by the Subadviser or its affiliates.
Because of different investment objectives or other factors, a
particular security may be bought by the Subadviser or its affiliates
for one or more clients when one or more clients are selling the same
security. If purchases or sales of securities for the Subadvised Funds
or other entities for which the Subadviser 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 Subadviser 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
Subadviser 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 Subadviser deems the purchase
or sale of a security to be in the best interests of a Subadvised Fund
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 Subadvised
Funds with those to be sold or purchased for other accounts 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
Subadviser 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 Subadvised Fund.
ARTICLE V - Effectiveness of the Subadvisory Agreement
------------------------------------------
This Subadvisory 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 Subadvisory Agreement or interested persons
of any such party to this Subadvisory Agreement), and by the Company's
shareholders, and this Subadvisory Agreement shall come into full force
and effect on the date on which it is so approved, or such later date as
the Board may determine, provided that it shall not become effective as
to any subsequently created fund until it has been approved specifically
for such fund by the Board and its shareholder(s), as required, and that
implementation of any changes from prior Subadvisory Agreements may be
delayed until the start of the next month after a change is approved by
the shareholders.
B-5
<PAGE>
<PAGE>
ARTICLE VI - Term of the Subadvisory Agreement
---------------------------------
As to each Subadvised Fund, this Subadvisory 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 Subadvised 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 Subadvisory Agreement, cast in person at a
meeting called for the purpose of voting such approval.
As to each Subadvised Fund, this Subadvisory Agreement:
(1) may be terminated without the payment of any penalty upon 60
days' written notice to the Subadviser either by the Board, the
Adviser, or by a majority vote of those persons having voting
rights in respect of the affected Subadvised Fund(s);
(2) shall automatically terminate if it is assigned (within the
meaning of the Investment Company Act) by the Subadviser;
(3) may be terminated by the Subadviser without payment of any
penalty upon 60 days' written notice to the other parties; 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 Subadvisory Agreement shall not be
effective until approved by (a) vote of the holders of a majority
of the outstanding voting securities of the Subadvised Fund(s)
affected; and (b) a majority of those directors of the Company who
are not parties to this Subadvisory 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 Subadviser agrees to preserve for the period prescribed by the rules
and regulations of the Securities and Exchange Commission all records
the Subadviser maintains for the Company as are required to be
maintained pursuant to said rules. The Subadviser 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
Subadviser'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
Subadviser. In addition, Subadviser 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. The Subadviser will keep any information obtained
in the course of
B-6
<PAGE>
<PAGE>
performing under this Subadvisory Agreement in confidence and will not
use such information for its own benefit nor disclose it except as
authorized by the Company or the Adviser or as required by regulatory
authorities having jurisdiction.
ARTICLE VIII - Liability of the Subadviser
---------------------------
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties on the part of the
Subadviser (or its officers, directors, agents, employees, controlling
persons, shareholders, and any other person or entity affiliated with
the Subadviser or retained by it to perform or assist in the performance
of its obligations under this Subadvisory Agreement), neither the
Subadviser 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
Subadvisory 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 Subadviser pursuant to this Subadvisory
Agreement.
ARTICLE IX - Governing Law
-------------
While this Subadvisory Agreement is intended by the parties to be
governed by Missouri law as to matters of state law, this Subadvisory
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 the Investment
Company 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.
B-7
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Investment Subadvisory
Agreement to be signed by their respective officials duly authorized, as
of the day and year first above written.
Attest: GENERAL AMERICAN CAPITAL COMPANY
By:
------------------------------------- ---------------------------------
Christopher A. Martin, Secretary Richard A. Liddy, President
CONNING ASSET MANAGEMENT
Attest: COMPANY
By:
------------------------------------- ---------------------------------
Paul W. Kopsky, Senior Vice President James L. Lipscomb, President and
and Chief Financial Officer Chief Executive Officer
Attest: STATE STREET RESEARCH & MANAGEMENT
COMPANY
By:
------------------------------------- ---------------------------------
[Name, Title] [Name, Title]
B-8
<PAGE>
<PAGE>
APPENDIX C
----------
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER
OF CONNING ASSET MANAGEMENT COMPANY
<TABLE>
<CAPTION>
Position with Conning Asset
Name and Address<F*> Management Company Principal Occupation
---------------- ------------------ --------------------
<S> <C> <C>
James L. Lipscomb President, Chief Executive President, Chief Executive
Officer, and Director Officer, and Director of
Conning Corporation; President
and Chief Executive Officer of
Conning, Inc.
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; Director
and President of Red Oak
Realty and White Oak Realty
Company; Director of Conning
Mortgage Investment Trust,
Inc.
Paul W. Kopsky Senior Vice President, Chief Senior Vice President, and
Financial Officer, and Director Chief Financial Officer of
Conning & Company; Senior Vice
President and Chief Financial
Officer of Conning
Corporation; Senior Vice
President, Chief Financial
Officer, and Director of
Conning Inc.; Treasurer and
Controller of Conning Mortgage
Investment Trust, Inc.
<FN>
--------------------
<F*> The address of Messrs. McLellan and Kopsky is 700 Market Street,
St. Louis, MO 63101. The address of Messrs. Clinton and Lipscomb is
CityPlace II, 185 Asylum St., Hartford, CT 06103.
</TABLE>
C-1
<PAGE>
<PAGE>
APPENDIX D
----------
AGGREGATE AMOUNT OF INVESTMENT ADVISORY FEE
PAID BY EACH FUND OF GENERAL AMERICAN CAPITAL COMPANY
TO CONNING ASSET MANAGEMENT COMPANY
DURING THE YEAR ENDED DECEMBER 31, 1999
Money Market Fund $322,117
Bond Index Fund $179,605
Asset Allocation Fund $671,598
Managed Equity Fund $177,638
S&P 500 Index Fund $1,969,064
Mid-Cap Equity Fund $45,950
Small-Cap Equity Fund $172,379
International Index Fund $56,947
D-1
<PAGE>
<PAGE>
APPENDIX E
----------
AGGREGATE AMOUNT OF COMPENSATION PAID BY
EACH FUND OF GENERAL AMERICAN CAPITAL COMPANY
TO GENERAL AMERICAN LIFE INSURANCE COMPANY
UNDER MANAGEMENT SERVICES AGREEMENT
DURING THE YEAR ENDED DECEMBER 31, 1999
Money Market Fund $206,154
Bond Index Fund $35,921
Asset Allocation Fund $134,320
Managed Equity Fund $61,055
S&P 500 Index Fund $393,813
Mid-Cap Equity Fund $8,355
Small-Cap Equity Fund $34,476
International Index Fund $35,211
E-1
<PAGE>
<PAGE>
APPENDIX F
----------
<TABLE>
OTHER REGISTERED INVESTMENT COMPANY PORTFOLIOS,
ADVISED OR SUBADVISED BY STATE STREET RESEARCH & MANAGEMENT COMPANY WITH INVESTMENT OBJECTIVES
SIMILAR TO CAPITAL COMPANY'S FUNDS
<CAPTION>
Capital Company Fund Name of Comparable Fund Size of State Street's Advisory Fee for
advised or subadvised by State Comparable Comparable Fund<F*>
Street Research Fund (as of
6/30/00)
<S> <C> <C> <C>
Managed Equity Fund State Street Research Argo $112 million 0.65%
Fund<F+>
Asset Allocation Fund State Street Research $2.8 billion 0.35% of first $500 million;
Diversified Portfolio series 0.30% of next $500 million;
of Metropolitan Series Fund, 0.25% of amounts over $1 billion
Inc.<F**>
Mid-Cap Equity Fund State Street Research Mid-Cap $1.0 billion 0.75% of first $500 million;
Growth Fund 0.70% of next $500 million;
0.65% of amounts over $1 billion
Small-Cap Equity Fund State Street Research Aurora $80811 million 0.85%
Fund
Small-Cap Equity Fund Advantus Venture Fund<F**> $33 million 0.65% of first $500 million;
0.60% of next $500 million;
0.50% of amounts over $1 billion<F***>
Small-Cap Equity Fund Advantus Series Fund, Inc.<F**> $16 million 0.65% of first $500 million;
0.60% of next $500 million;
0.50% of amounts over $1 billion<F***>
<FN>
<F*> As a percentage of average net assets, annually.
<F**> State Street Research & Management Company serves as
investment subadviser.
<F***> Average net assets include all "small company value" assets
subadvised by State Street Research & Management Company for
Advantus Capital Management, Inc.
<F+> State Street Research has waived, reduced or otherwise
agreed to reduce its compensation from the Fund.
</TABLE>
F-1
<PAGE>
<PAGE>
APPENDIX G
----------
<TABLE>
BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT
OF THE SERIES OF SHARES ISSUED BY
GENERAL AMERICAN CAPITAL COMPANY
WITH RESPECT TO EACH FUND AS OF JUNE 30, 2000
<CAPTION>
Fund Name and Address<F*> Number of Shares Percentage of Series
---- ---------------- ---------------- ---------------------
<S> <C> <C> <C>
S&P 500 Index Fund General American Life 12,742,354.316 100.00%
Insurance Company
Money Market Fund General American Life 7,138,914.839 60.88%
Insurance Company
Security Equity Life 3,003,401.512 25.61%
Insurance Company
Cova Financial 1,584,095.509 13.51%
Services Life Insurance
Company
Bond Index Fund General American Life 4,034,992.999 100.00%
Insurance Company
Managed Equity Fund General American Life 1,643,652.148 100.00%
Insurance Company
Asset Allocation Fund General American Life 2,660,296.516 81.72%
Insurance Company
RGA Reinsurance Company 594,909.578 18.28%
International General American Life 559,172.510 100.00%
Index Fund Insurance Company
Mid-Cap Equity Fund General American Life 393,907.875 100.00%
Insurance Company
Small-Cap Equity Fund General American Life 1,713,800.605 100.00%
Insurance Company
</TABLE>
G-1
<PAGE>
<PAGE>
[FN]
<F*> Addresses:
General American Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
Security Equity Life Insurance Company
One Madison Avenue
New York, New York 10010
Cova Financial Services Life Insurance Company
One Tower Lane Suite 3000
Oakbrook Terrace, Illinois 60181-4644
RGA Reinsurance Company
1370 Timberlake Manor Parkway
Chesterfield, Missouri 63017
G-2
<PAGE>
<PAGE>
GENERAL AMERICAN CAPITAL COMPANY -- VOTING INSTRUCTIONS SOLICITED FOR
A SPECIAL MEETING OF SHAREHOLDERS
ON SEPTEMBER 19, 2000
Name of policy/contract holder
Address
City, ST 00000
Your policy or contract (no. ) entitles you to give voting
---------
instructions as to the following numbers of shares of General American
Capital Company ("Capital Company"):
Money Market Fund XXX.XXX S&P 500 Index Fund XXX.XXX
Bond Index Fund XXX.XXX Mid-Cap Equity Fund XXX.XXX
Asset Allocation Fund XXX.XXX Small-Cap Equity Fund XXX.XXX
Managed Equity Fund XXX.XXX International Index Fund XXX.XXX
PLEASE COMPLETE, SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. Please use blue or black ink or dark pencil; do not
use red ink. Voting instruction forms must be received by
Insurance Company no later than Friday, September
--------------------
15, 2000 at 5:00 p.m. local time to be included in the tally of timely
voting instructions.
I hereby instruct Insurance Company to vote the
----------------------
shares of Capital Company as to which I am entitled to give instructions
at a special meeting of the shareholders of Capital Company and at any
adjournment thereof, (the "Meeting") to be held at the home office of
GenAmerica Financial Corporation, located at 700 Market Street, St.
Louis, Missouri 63101, on September 19, 2000 at 10:00 a.m. Central Time,
in the manner directed below.
I hereby revoke any and all voting instructions with respect to such
shares previously given by me. I acknowledge receipt of the Proxy
Statement dated August 9, 2000, which describes each of the proposals to
be presented at the Meeting.
THE BOARD OF DIRECTORS OF CAPITAL COMPANY RECOMMENDS A VOTE "FOR" EACH
PROPOSAL. THIS INSTRUCTION WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE AS TO ANY PROPOSAL, THIS INSTRUCTION WILL BE VOTED
"FOR" THAT PROPOSAL.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Proposal For Against Abstain
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect Matthew P. McCauley as a member of Capital / / / / / /
Company's board of directors to serve for a three-year
term, and until his successor is elected and qualified.
----------------------------------------------------------------------------------------------
2. To approve or disapprove an investment advisory/
subadvisory arrangement among Capital Company, Conning
Asset Management Company, and State Street Research &
Management Company on behalf of the following funds:
Managed Equity Fund / / / / / /
Asset Allocation Fund / / / / / /
Mid-Cap Equity Fund / / / / / /
----------------------------------------------------------------------------------------------
3. To approve or disapprove a change in the investment
objective and an investment advisory/subadvisory
arrangement among Capital Company, Conning Asset / / / / / /
Management Company, and State Street Research &
Management Company on behalf of the Small-Cap Equity
Fund.
----------------------------------------------------------------------------------------------
</TABLE>
