<PAGE>
ADDENDUM TO PROSPECTUS
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
FORM NUMBERS GMK99083-10, GMK99083-11
DATED MAY 1, 1999
This addendum provides you with important information regarding two
changes to the investment options under General American's Flexible
Premium Variable Life Insurance Policies.
1. Effective April 10, 2000, General American Life Insurance Separate
Account Eleven (the "Separate Account") is increasing the number
of divisions available for the investment of funds under Flexible
Premium Variable Life Insurance Policies. Ten funds from SEI
Insurance Products Trust will become available to both new and
existing policies. The information in this Addendum updates the
information in the Prospectus to include the names, investment
managers, investment objectives, and fees associated with the new
funds. Beginning on April 10, 2000 you have the option of
transferring existing cash value and/or directing future premium
payments into these funds.
2. Effective January 1, 2000, the Russell Insurance Funds will no
longer be available on new policies. Policies with an effective
date prior to January 1, 2000 will continue to have access to the
Russell Insurance Funds.
You should review this insert and keep it with your Prospectus and other
important papers related to your policy. Please contact your Agent /
Registered Representative if you have any questions regarding this
information.
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THE FOLLOWING INFORMATION REPLACES THE SECTION TITLED "THE SEPARATE
ACCOUNT" IN THE SUMMARY SECTION OF YOUR PROSPECTUS.
==========================================================================
THE SEPARATE ACCOUNT. The separate account consists of divisions, which
represent different types of investments. Each division may either make
money or lose money. Therefore if you invest in a division of the
separate account, you may either make money or lose money, depending on
the investment experience of that division. There is no guaranteed rate
of return in the separate account.
The divisions of the separate account represent investment funds run by
various investment companies. The investment companies hire advisers to
operate or advise on the day-to-day operation of the funds. The
following list shows the investment companies whose funds are available
under the policy, along with the managers or advisers and the divisions
that they oversee.
NOTE: THE RUSSELL INSURANCE FUNDS ARE ONLY AVAILABLE ON POLICIES WITH
AN ISSUE DATE PRIOR TO JANUARY 1, 2000.
INVESTMENT COMPANY INVESTMENT MANAGER/ADVISER
General American Conning Asset
Capital Company Management Company
Russell Insurance Funds Frank Russell Investment
Management Company
American Century American Century
Variable Portfolios Investment Management, Inc.
J.P. Morgan Series Trust II J.P. Morgan Investment
Management, Inc.
Fidelity Investments Fidelity Management &
Variable Insurance Research Company
Products Fund
Fidelity Investments Fidelity Management &
Variable Insurance Research Company
Products Fund II
Van Eck Worldwide Van Eck Associates
Insurance Trust Corporation
SEI Insurance Products Trust SEI Investments
Management Corporation
These investment funds have different investment goals and strategies,
which we have
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summarized in the following table. You should review the prospectus of
each fund, or seek professional guidance in determining which fund(s)
best meet your objectives.
<TABLE>
<CAPTION>
INVESTMENT FUND INVESTMENT OBJECTIVE
---------- ---- ---------- ---------
MANAGER NAME TYPE
------- ---- ----
<S> <C> <C> <C>
Conning
Asset Management
Company S&P 500 Index Fund Growth & Income To achieve a rate of return that parallels
the return of the stock market as a whole,
as represented by the Standard and Poor's
500 Stock Index.
Conning
Asset Management
Company Money Market Fund Money Market To obtain the highest level of current
income consistent with the preservation of
capital and maintenance of liquidity.
Conning
Asset Management
Company Bond Index Fund Corporate Bonds To provide a rate of return that reflects
the performance of the bond market as a
whole, as measured by the Lehman Brothers
Government/Corporate Bond Index.
Conning
Asset Management
Company Asset Allocation Fund Balanced To obtain a high rate of long-term return
composed of capital growth and income.
Conning
Asset Management
Company Managed Equity Fund Growth To obtain long-term capital growth through
investment in common stocks.
Conning
Asset Management
Company International Index Fund Growth:
International Stock To obtain investment results that parallel
the price and yield performance of publicly
traded common stocks in the Morgan Stanley
Capital International, Europe, Australia,
and Far East Index ("EAFE Index").
Conning
Asset Management
Company Mid-Cap Equity Fund Growth To obtain long-term capital appreciation
through investment primarily in common
stocks of U.S.-based, publicly traded
companies with medium market capitalization,
defined as within the range of the S&P Mid-
Cap 400 at the time of the Fund's
investment.
Conning
Asset Management
Company Small-Cap Equity Fund Aggressive Growth To provide a high rate of return through
investment in the common stock of small
companies, making up, at one time, the
smallest 20% of U.S.-based companies on the
New York Stock Exchange.
Fidelity Management
& Research Company Growth Portfolio Growth To seek capital appreciation, normally
through purchases of common stocks, although
its investments are not restricted to any
one type of security.
Fidelity Management
& Research Company Equity-Income Portfolio Growth & Income To seek reasonable income by investing
primarily in income-producing equity
securities.
Fidelity Management
& Research Company Overseas Portfolio Growth:
International Stock To seek long-term growth of capital
primarily through investment in foreign
securities.
2
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<CAPTION>
INVESTMENT FUND INVESTMENT OBJECTIVE
---------- ---- ---------- ---------
MANAGER NAME TYPE
------- ---- ----
<S> <C> <C> <C>
Fidelity Management
& Research Company Asset Manager Portfolio Balanced To seek a high total return with reduced
risk over the long-term by allocating its
assets among domestic and foreign stocks,
bonds, and short-term fixed income
instruments.
Fidelity Management
& Research Company High Income Portfolio High Yield Bond To seek a high level of current income by
investing primarily in high yielding, lower-
rated, fixed income securities, while also
considering growth of capital.
Van Eck Associates
Corporation Worldwide Hard
Assets Fund Aggressive Growth:
Specialty To seek long-term capital appreciation by
investing in equity and debt securities of
companies engaged in the exploration,
development, production, and distribution of
gold and other natural resources such as
strategic and other metals, minerals, forest
products, oil, natural gas, and coal.
Van Eck Associates
Corporation Worldwide Emerging
Markets Fund Aggressive Growth:
International Stock To obtain long-term capital appreciation by
investing in equity securities in emerging
markets around the world. The Fund
emphasizes primarily investment in countries
that, compared to the world's major
economies, exhibit relatively low gross
national product per capita, as well as the
potential for rapid economic growth.
Frank Russell
Investment Management
Company
[ONLY AVAILABLE ON
POLICIES ISSUED BEFORE
1/1/2000.] Multi-Style Equity
Fund Growth & Income To obtain income and capital growth by
investing principally in equity securities.
Frank Russell
Investment Management
Company
[ONLY AVAILABLE ON
POLICIES ISSUED BEFORE
1/1/2000.] Aggressive Equity
Fund Aggressive Growth To provide capital appreciation by assuming
a higher level of volatility than is
ordinarily expected from the Multi-Style
Equity Fund, by investing in equity
securities.
Frank Russell
Investment Management
Company
[ONLY AVAILABLE ON
POLICIES ISSUED BEFORE
1/1/2000.] Non-U.S. Fund Growth:
International Stocks
and Bonds To achieve favorable total return and
additional diversification for United States
investors by investing primarily in equity
and debt securities of non-United States
companies and non-United States governments.
Frank Russell
Investment Management
Company
[ONLY AVAILABLE ON
POLICIES ISSUED BEFORE
1/1/2000.] Core Bond Fund Growth & Income To maximize total return through capital
appreciation and income by assuming a level
of volatility consistent with the broad
fixed-income market, by investing in fixed-
income securities.
J.P. Morgan Investment
Management, Inc. Bond Portfolio Growth & Income To provide a high total return consistent
with moderate risk of capital and
maintenance of liquidity.
3
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<CAPTION>
INVESTMENT FUND INVESTMENT OBJECTIVE
---------- ---- ---------- ---------
MANAGER NAME TYPE
------- ---- ----
<S> <C> <C> <C>
J.P. Morgan Investment
Management, Inc. Small Company
Portfolio Aggressive Growth To provide high total return from a
portfolio of equity securities of small
companies. The Fund invests at least 65% of
the value of its total assets in the common
stock of small U.S. companies primarily with
market capitalizations less than $1 billion.
American Century
Investment
Management, Inc. Income & Growth Fund Growth & Income To attain long-term growth of capital as
well as current income. The Fund pursues a
total return and dividend yield that exceeds
those of the S&P 500 by investing in stocks
of companies with strong dividend growth
potential.
American Century
Investment
Management, Inc. International Fund Aggressive Growth:
International Stock To obtain capital growth over time by
investing in common stocks of foreign
companies considered to have better-than-
average prospects for appreciation. Because
this Fund invests in foreign securities, a
higher degree of short-term price
volatility, or risk, is expected due to
factors such as currency fluctuation and
political instability.
American Century
Investment
Management, Inc. Value Fund Growth To attain long-term capital growth, with
income as a secondary objective. The Fund
invests primarily in equity securities of
well-established companies that are believed
by management to be undervalued at the time
of purchase.
SEI Investments
Management
Corporation Large Cap
Value Fund Long Term Growth
of Capital and Income Utilizing multiple specialist sub-advisers
that manage in a value style, the Fund
invests in large cap income-producing U.S.
common stocks.
SEI Investments
Management
Corporation Large Cap Growth
Fund Capital Appreciation Utilizing multiple specialist sub-advisers
that manage in a growth style, the Fund
invests in large cap U.S. common stocks.
SEI Investments
Management
Corporation Small Cap Value
Fund Capital Appreciation Utilizing multiple specialist sub-advisers
that manage in a value style, the Fund
invests in common stocks of smaller U.S.
companies.
SEI Investments
Management
Corporation Small Cap Growth
Fund Long-Term Capital
Appreciation Utilizing multiple specialist sub-advisers
that manage in a growth style, the Fund
invests in common stocks of smaller U.S.
companies.
SEI Investments
Management
Corporation International Equity
Fund Capital Appreciation Utilizing multiple specialist sub-advisers,
the Fund invests in equity securities of
foreign companies.
SEI Investments
Management
Corporation Emerging Markets
Equity Fund Capital Appreciation Utilizing multiple specialist sub-advisers,
the Fund invests in equity securities of
emerging markets companies.
SEI Investments
Management
Corporation Core Fixed Income
Fund Current Income and
Preservation of
Capital Utilizing multiple specialist sub-advisers
that have fixed income investment expertise,
the Fund invests in investment grade U.S.
fixed income securities.
4
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<CAPTION>
INVESTMENT FUND INVESTMENT OBJECTIVE
---------- ---- ---------- ---------
MANAGER NAME TYPE
------- ---- ----
<S> <C> <C> <C>
SEI Investments
Management
Corporation High Yield Bond Fund Total Return Utilizing a specialist sub-adviser that has
high yield investment expertise, the Fund
invests in high yield, high risk securities.
SEI Investments
Management
Corporation International Fixed
Income Fund Capital Appreciation
and Current Income Utilizing a specialist sub-adviser, the Fund
invests in investment grade fixed income
securities of foreign government and
corporate issuers.
SEI Investments
Management
Corporation Emerging Markets
Debt Fund Total Return Utilizing a specialist sub-adviser, the Fund
invests U.S. dollar denominated debt in
securities of emerging market issuers.
</TABLE>
You may change the investments that you want to use for your future
premiums by notifying our Home Office. You may transfer your cash value
among the various investment funds, and you may withdraw money, but
there are certain rules. We don't charge you a transaction fee for the
first twelve transfers or withdrawals in a policy year, but we charge a
$25 fee for each transfer or withdrawal after the first twelve. (A
policy year is measured beginning on the anniversary of the date that
the policy was issued, and ending on the day before the next
anniversary.)
We have the right to change or eliminate transfers in the future,
although we don't currently intend to do so.
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THE FOLLOWING INFORMATION REPLACES THE TABLE TITLED "ANNUAL FUND
OPERATING EXPENSES" IN THE SUMMARY SECTION OF YOUR PROSPECTUS.
========================================================================
<TABLE>
ANNUAL FUND OPERATING EXPENSES<F1>
As a Percentage of Average Net Assets
<CAPTION>
INVESTMENT
FUND ADVISORY / OTHER EXPENSES TOTAL
MANAGEMENT
FEE
GENERAL AMERICAN CAPITAL COMPANY
<S> <C> <C> <C>
S&P 500 Index Fund .25% .05% .30%
Money Market Fund .125% .08% .205%
Bond Index Fund .25% .05% .30%
Managed Equity Fund .40%<F2> .10% .50%
Asset Allocation Fund .50% .10% .60%
International Index Fund .50%<F3> .30% .80%
Mid-Cap Equity Fund .55%<F4> .10% .65%
Small-Cap Equity Fund .25% .05% .30%
<CAPTION>
RUSSELL INSURANCE FUNDS
(Amounts shown are after fee waivers and expense reimbursements described below.)
THE RUSSELL INSURANCE FUNDS ARE AVAILABLE ONLY ON POLICIES WITH AN ISSUE DATE PRIOR TO JANUARY 1, 2000.
<S> <C> <C> <C>
Multi-Style Equity Fund .09%<F5> .83% .92%<F5>
Aggressive Equity Fund .00%<F6> 1.25% 1.25%<F6>
Non-U.S. Fund .00%<F7> 1.30% 1.30%<F7>
Core Bond Fund .00%<F8> .80% .80%<F8>
5
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<CAPTION>
AMERICAN CENTURY VARIABLE PORTFOLIOS
<S> <C> <C> <C>
Income & Growth Fund .70% .00% .70%
International Fund 1.50% .00% 1.50%
Value Fund 1.00% .00% 1.00%
<CAPTION>
J.P. MORGAN SERIES TRUST II
<S> <C> <C> <C>
Bond Portfolio .30% .45% .75%
Small Company Portfolio .60% .55% 1.15%
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
<S> <C> <C> <C>
Equity-Income Portfolio .50% .08% .58%
Growth Portfolio .60% .09% .69%
Overseas Portfolio .75% .17% .92%
High Income Portfolio .59% .12% .71%
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
<S> <C> <C> <C>
Asset Manager .55% .10% .65%
<CAPTION>
VAN ECK WORLDWIDE INSURANCE TRUST
<S> <C> <C> <C>
Worldwide Hard Assets Fund 1.00% .00% 1.00%
Worldwide Emerging Markets Fund 1.50% .00% 1.50%
<CAPTION>
SEI INSURANCE PRODUCTS TRUST
<S> <C> <C> <C>
SEI VP Large Cap Value Fund 0.35% 0.50%<F9> 0.85%<F9>
SEI VP Large Cap Growth Fund 0.40% 0.45%<F9> 0.85%<F9>
SEI VP Small Cap Value Fund 0.65% 0.45%<F9> 1.10%<F9>
SEI VP Small Cap Growth Fund 0.65% 0.45%<F9> 1.10%<F9>
SEI VP International Equity Fund 0.51% 0.77%<F9> 1.28%<F9>
SEI VP Emerging Markets Equity Fund 1.05% 0.90%<F9> 1.95%<F9>
SEI VP Core Fixed Income Fund 0.28% 0.32%<F9> 0.60%<F9>
SEI VP High Yield Bond Fund 0.49% 0.36%<F9> 0.85%<F9>
SEI VP International Fixed Income Fund 0.40% 0.60%<F9> 1.00%<F9>
SEI VP Emerging Markets Debt Fund 0.85% 0.50%<F9> 1.35%<F9>
<FN>
<F1> The Fund expenses shown above are collected from the underlying
Fund, and are not direct charges against the Separate Account assets or
reductions from the Policy's Cash Value. These underlying Fund Expenses
are taken into consideration in computing each Fund's net asset value,
which is used to calculate the unit values in the Separate Account. The
management fees and other expenses are more fully described in the
prospectus of each individual Fund. The information relating to the
Fund expenses was provided by the Fund and was not independently
verified by General American. Except as otherwise specifically noted,
the management fees and other expenses are not currently subject to fee
waivers or expense reimbursements.
<F2> The fees charged by the Managed Equity Fund are stated as a series
of annual percentages of the average daily value of the net assets of
the Fund. The percentages decrease with respect to assets of the Fund
above certain amounts, as follows: First $10 million, 0.40%; Next $20
million, 0.30%; Balance over $30 million, 0.25%.
<F3> The fees charged by the International Index Fund are stated as a
series of annual percentages of the average daily value of the net
assets of the Funds. The percentages decrease with respect to assets of
the Fund above certain amounts, as follows: First $10 million, 0.50%;
Next $20 million, 0.40%; Balance over $20 million, 0.30%.
<F4> The fees charged by the Mid-Cap Equity Fund are stated as a series
of annual percentages of the average daily value of the net assets of
the Funds. The percentages decrease with respect to assets of the Fund
above certain amounts, as follows: First $10 million, 0.55%; Next $10
million, 0.45%; Balance over $20 million, 0.40%.
<F5> The Manager has voluntarily agreed to waive a portion of its 0.78%
management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed 0.92% of the Fund's
average daily net assets on an annual basis, and to reimburse the Fund
for all remaining expenses
6
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after fee waivers which exceed 0.92% of average daily net assets on an
annual basis. The management fee waivers and reimbursements are
intended to be in effect for 1999, but may be revised or eliminated at
any time thereafter without notice to shareholders. Absent the waiver,
the management fee would have been 0.78%, and total Fund expenses would
have been 1.61% of average daily net assets.
<F6> The Manager has voluntarily agreed to waive a portion of its 0.95%
management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed 1.25% of the Fund's
average daily net assets on an annual basis, and to reimburse the Fund
for all remaining expenses after fee waivers which exceed 1.25% of
average daily net assets on an annual basis. The management fee waivers
and reimbursements are intended to be in effect for 1999, but may be
revised or eliminated at any time thereafter without notice to
shareholders. Absent the waiver, the management fee would have been
0.95%, other expenses would have been 1.27%, and total Fund expenses
would have been 2.22% of average daily net assets.
<F7> The Manager has voluntarily agreed to waive a portion of its 0.95%
management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed 1.30% of the Fund's
average daily net assets on an annual basis, and to reimburse the Fund
for all remaining expenses after fee waivers which exceed 1.30% of
average daily net assets on an annual basis. The management fee waivers
and reimbursements are intended to be in effect for 1999, but may be
revised or eliminated at any time thereafter without notice to
shareholders. Absent the waiver, the management fee would have been
0.95%, other expenses would have been 2.70%, and total Fund expenses
would have been 3.65% of average daily net assets.
<F8> The Manager has voluntarily agreed to waive a portion of its 0.60%
management fee, up to the full amount of that fee, equal to the amount
by which the Fund's total operating expenses exceed 0.80% of the Fund's
average daily net assets on an annual basis, and to reimburse the Fund
for all remaining expenses after fee waivers which exceed 0.80% of
average daily net assets on an annual basis. The management fee waivers
and reimbursements are intended to be in effect for 1999, but may be
revised or eliminated at any time thereafter without notice to
shareholders. Absent the waiver, the management fee would have been
0.60%, other expenses would have been 1.70%, and total Fund expenses
would have been 2.30% of average daily net assets.
<F9> The SEI VP Funds' total actual annual fund operating expenses for
the current fiscal year are expected to be less than the maximum amount
allowed because the Adviser will voluntarily waive a portion of its fee
in order to keep total operating expenses at a specified level. The
Adviser may discontinue all or part of its waiver at any time. With
this fee waiver, the Funds' actual total operating expenses are expected
to be the amounts shown in the table above. Absent the fee waiver, the
Funds' total operating expenses would be: Large Cap Value Fund, 0.95%;
Large Cap Growth Fund, 1.00%; Small Cap Value Fund, 1.20%; Small Cap
Growth Fund, 1.20%; International Equity Fund, 1.41%; Emerging Markets
Equity Fund, 2.34%; Core Fixed Income Fund, 0.70%; High Yield Bond Fund,
0.99%; International Fixed Income Fund, 1.31%; Emerging Markets Debt
Fund, 1.95%.
</TABLE>
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THE FOLLOWING INFORMATION IS ADDED TO THE PROSPECTUS SECTION TITLED "THE
COMPANY AND THE SEPARATE ACCOUNT," IMMEDIATELY AFTER THE DESCRIPTION OF
THE VAN ECK WORLDWIDE INSURANCE TRUST AND IMMEDIATELY BEFORE THE
PARAGRAPH THAT BEGINS, "THERE IS NO ASSURANCE THAT ANY OF THE FUNDS WILL
ACHIEVE ITS STATED OBJECTIVE."
==========================================================================
SEI Insurance Products Trust
SEI Investments is a publicly-traded, diversified financial services
firm dedicated to helping investors more effectively manage their
financial assets. SEI Investments was incorporated in Pennsylvania in
1968 under the original name of Simulated Environments, Inc. SEI
Investments Management Corporation (SIMC), SEI Investments Distribution
Company (SIDCO), and SEI Trust Company are the principal wholly-owned
subsidiaries of the Company.
7
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<PAGE>
SIMC is an investment advisor registered with the Securities and
Exchange Commission (SEC) under the Investment Advisers Act of 1940.
SIDCO is a broker-dealer registered with the SEC under the Securities
Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc.
SEI Insurance Products Trust is a mutual fund family that offers shares
in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies and are designed exclusively as funding
vehicles for variable life insurance and variable annuity contracts.
SEI Investments Management Corporation is the Investment Adviser to SEI
Insurance Products Trust.
The investment objectives and policies of the Funds are summarized
below.
LARGE CAP VALUE FUND: This Fund invests primarily in common
stocks of U.S. Companies with market capitalizations of more than
$1 billion. The Fund uses a multi-manager approach, relying on
Sub-Advisers to manage the Fund's portfolio under the general
supervision of SIMC. Each Sub-Adviser, in managing its portions
of the Funds' assets, selects stocks it believes are undervalued
in light of such fundamental characteristics as earnings, book
value or return on equity. The Fund's portfolio is diversified as
to issuers and industries.
LARGE CAP GROWTH FUND: This Fund invests primarily in common
stocks of U.S. companies with market capitalizations of more than
$1 billion. The Fund uses a multi-manager approach, relying on
Sub-Advisers to manage the Fund's portfolio under the general
supervision of SIMC. Each Sub-Adviser, in managing its portion of
the Fund's assets, selects stocks it believes have significant
growth potential in light of such characteristics as revenue and
earnings growth and positive earnings surprises. The Fund's
portfolio is diversified as to issuers and industries.
SMALL CAP VALUE FUND: This Fund invests primarily in common
stocks of U.S. Companies with market capitalizations of less than
$2 billion. The Fund uses a multi-manager approach, relying on
Sub-Advisers to manage the Fund's portfolio under the general
supervision of SIMC. Each Sub-Adviser, in managing its portions
of the Funds' assets, selects stocks it believes are undervalued
in light of such fundamental characteristics as earnings, book
value or return on equity. The Fund's portfolio is diversified as
to issuers and industries.
SMALL CAP GROWTH FUND: This Fund invests primarily in common
stocks of U.S. companies with market capitalizations of less than
$2 billion. The Fund uses a multi-manager approach, relying on
Sub-Advisers to manage the Fund's portfolio under the general
supervision of SIMC. Each Sub-Adviser, in managing its portion of
the Fund's assets, selects stocks it believes have significant
growth potential in light of such characteristics as revenue and
earnings growth and positive earnings surprises. The Fund's
portfolio is diversified as to issuers and industries.
Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction
costs and additional capital gains tax liabilities.
INTERNATIONAL EQUITY FUND: This Fund invests primarily in common
stocks and other equity securities of foreign companies. The Fund
uses a multi-manager approach, relying on Sub-Advisers to manage
the Fund's portfolio under the general supervision of SIMC. The
Fund's portfolio is diversified as to issuers, markets
capitalization, industry and country. The Fund primarily invests
in companies located in developed countries, but may also invest
in companies located in emerging markets.
EMERGING MARKETS EQUITY FUND: This Fund invests primarily in
common stocks and other equity securities of foreign companies
located in emerging markets countries. The fund uses a multi-
manager approach, relying on Sub-Advisers to manage the Fund's
portfolio under the general supervision of SIMC. The Fund is
diversified as to issuers, market capitalization, industry and
country.
CORE FIXED INCOME FUND: This Fund invests primarily in investment
grade U.S. corporate and government fixed income
8
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<PAGE>
securities, including mortgage-backed securities. The Fund uses a
multi-manager approach, relying on Sub-Advisers to manage the
Fund's portfolio under the general supervision of SIMC. Sub-
Advisers are selected for their expertise in managing various
kinds of fixed income securities, and each Sub-Adviser makes
investment decisions based on an analysis of yield trends, credit
ratings and other factors in accordance with its particular
discipline. While each Sub-Adviser chooses securities of
different types and maturities, the Fund in the aggregate
generally will have a dollar-weighted average duration that is
consistent with that of the broad U.S. fixed income market.
Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction
costs and additional capital gains tax liabilities.
HIGH YIELD BOND FUND: This Fund invests primarily in fixed income
securities rated below investment grade ("junk bonds"), including
corporate bonds and debentures, convertible and preferred
securities, and zero coupon obligations. The Sub-Adviser chooses
securities that offer a high current yield as well as total return
potential. The Fund's securities are diversified as to issuers
and industries. The Fund's average weighted maturity may vary,
and will generally not exceed ten years. There is no limit on the
maturity or on the credit quality of any security.
INTERNATIONAL FIXED INCOME FUND: This Fund invests primarily in
foreign government, corporate, and mortgage-backed securities. In
selecting investments for the Fund, the Sub-Adviser chooses
investment grade securities issued by corporations and governments
located in various developed foreign countries, looking for
opportunities for capital appreciation and gain, as well as
current income. There are no restrictions on the Fund's average
portfolio maturity or on the maturity of any specific security.
Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction
costs and additional capital gains tax liabilities.
EMERGING MARKETS DEBT FUND: This Fund invests primarily in U.S.
dollar denominated debt securities of government, government-
related and corporate issuers in emerging markets countries, as
well as entities organized to restructure the outstanding debt of
such issuers. The Sub-Advisor will spread the Fund's holdings
across a number of countries and industries to limit its exposure
to a single emerging market economy. There are no restrictions on
the Fund's average portfolio maturity, or on the maturity of any
specific security. There is no minimum rating standard for the
Fund's securities, and the Fund's securities will generally be in
the lower or lowest rating categories.
Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction
costs and additional capital gains tax liabilities.
9
