<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
Year ended December 31, 1999
(With Independent Auditors' Report Thereon)
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Table of Contents
Year ended December 31, 1999
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................... F-1
Statements of Assets and Liabilities....................................... F-2
Statements of Operations................................................... F-7
Statements of Changes in Net Assets........................................ F-12
Notes to Financial Statements.............................................. F-17
</TABLE>
<PAGE>
Independent Auditors' Report
Contractholders
GE Capital Life Separate Account II
and
The Board of Directors
GE Capital Life Assurance Company of New York:
We have audited the accompanying statements of assets and liabilities of GE
Capital Life Separate Account II (the Account) (comprising the GE Investments
Funds, Inc.--S&P 500 Index, Money Market, Total Return, International Equity,
Real Estate Securities, Global Income, Value Equity, Income, and U.S. Equity;
the Variable Insurance Products Fund--Equity-Income, Growth and Overseas
Portfolios; the Variable Insurance Products Fund II--Asset Manager and
Contrafund Portfolios; the Variable Insurance Products III--Growth & Income
and Growth Opportunities Portfolios; the Oppenheimer Variable Account Funds--
High Income/VA, Bond/VA, Aggressive Growth/VA, Capital Appreciation/VA, and
Multiple Strategies/VA Funds; the Federated Insurance Series--American
Leaders, High Income Bond and Utility Funds II; the Janus Aspen Series--
Balanced, Aggressive Growth, Growth, Worldwide Growth, Flexible Income,
International Growth and Capital Appreciation Portfolios; the Alger American
Fund--Small Capitalization and Growth Portfolios; the PBHG Insurance Series
Fund, Inc.--PBHG Large Cap Growth and PBHG Growth II Portfolios; and the
Goldman Sachs Variable Insurance Trust--Growth and Income and Mid Cap Value
Funds) as of December 31, 1999 and the related statements of operations and
changes in net assets for the aforementioned funds for the period then ended.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999,
by correspondence with the underlying mutual funds or their transfer agent. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
portfolios constituting GE Capital Life Separate Account II as of December 31,
1999 and the results of their operations and changes in their net assets for
the period then ended in conformity with generally accepted accounting
principles.
KPMG LLP
Richmond, Virginia
February 11, 2000
F-1
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
------------------------------------------------------------------------------------
Money Total International Real Estate Global Value U.S.
S&P 500 Market Return Equity Securities Income Equity Income Equity
Index Fund Fund Fund Fund Fund Fund Fund Fund Fund
Assets ---------- --------- ------ ------------- ----------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in GE
Investments Funds,
Inc., at fair value
(note 2):
S&P 500 Index Fund
(78,181 shares,
cost -- $2,066,174)... $2,196,898 -- -- -- -- -- -- -- --
Money Market Fund
(1,703,159 shares,
cost -- $1,703,159)... -- 1,703,159 -- -- -- -- -- -- --
Total Return Fund
(5,580 shares,
cost -- $88,102)...... -- -- 88,501 -- -- -- -- -- --
International Equity
Fund
(1,865 shares, cost --
$25,210)............. -- -- -- 26,992 -- -- -- -- --
Real Estate Securities
Fund
(170 shares, cost --
$2,095).............. -- -- -- -- 1,852 -- -- -- --
Global Income Fund
(6,598 shares, cost --
$64,328)............. -- -- -- -- -- 63,274 -- -- --
Value Equity Fund
(7,554 shares,
cost-- $118,646)...... -- -- -- -- -- -- 119,283 -- --
Income Fund (14,004
share,
cost -- $167,623).... -- -- -- -- -- -- -- 161,190 --
U.S. Equity Fund (8,682
shares
cost -- $323,828).... -- -- -- -- -- -- -- -- 329,053
Receivable from
affiliate (note 3)..... -- 1,688 -- -- -- -- -- -- --
---------- --------- ------ ------ ----- ------ ------- ------- -------
Total assets........... 2,196,898 1,704,847 88,501 26,992 1,852 63,274 119,283 161,190 329,053
---------- --------- ------ ------ ----- ------ ------- ------- -------
Liabilities
Accrued expenses payable
to affiliates (note
3)..................... 1,111 710 47 14 1 74 65 86 172
Payable for units
withdrawn.............. -- -- -- -- -- -- -- -- --
---------- --------- ------ ------ ----- ------ ------- ------- -------
Total liabilities...... 1,111 710 47 14 1 74 65 86 172
---------- --------- ------ ------ ----- ------ ------- ------- -------
Net assets attributable
to variable deferred
annuity
contractholders........ $2,195,787 1,704,137 88,454 26,978 1,851 63,200 119,218 161,104 328,881
========== ========= ====== ====== ===== ====== ======= ======= =======
Outstanding units....... 172,354 161,990 7,632 2,208 209 6,423 10,625 16,078 26,227
========== ========= ====== ====== ===== ====== ======= ======= =======
Net asset value per
unit................... $ 12.74 10.52 11.59 12.22 8.84 9.84 11.22 10.02 12.54
========== ========= ====== ====== ===== ====== ======= ======= =======
</TABLE>
F-2
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance Variable Insurance
Products Fund Products Fund II Products Fund III
----------------------------- -------------------- -----------------------
Equity- Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Assets --------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments in Variable
Insurance Products
Fund,
at fair value (note 2):
Equity-Income Portfolio
(19,836 shares,
cost -- $511,803)..... $509,982 -- -- -- -- -- --
Growth Portfolio
(12,867 shares,
cost -- $607,122)..... -- 706,762 -- -- -- -- --
Overseas Portfolio
(4,946 shares, cost --
$106,143)............ -- -- 135,707 -- -- -- --
Investments in Variable
Insurance Products Fund
II,
at fair value (note 2):
Asset Manager Portfolio
(6,460 shares,
cost -- $114,149)..... -- -- -- 120,613 -- -- --
Contrafund Portfolio
(44,369 shares,
cost -- $1,179,317)... -- -- -- -- 1,293,371 -- --
Investments in Variable
Insurance Products Fund
III,
at fair value (note 2):
Growth & Income
Portfolio (8,804
shares,
cost -- $146,121)..... -- -- -- -- -- 152,302 --
Growth Opportunities
Portfolio (20,404
shares,
cost -- $456,535)..... -- -- -- -- -- -- 472,342
Receivable from
affiliate (note 3)..... -- 4 2 -- 1 -- --
-------- ------- ------- ------- --------- ------- -------
Total assets........... 509,982 706,766 135,709 120,613 1,293,372 152,302 472,342
-------- ------- ------- ------- --------- ------- -------
Liabilities
Accrued expenses payable
to affiliates (note
3)..................... 258 369 73 58 653 81 268
Payable for units
withdrawn.............. -- -- -- -- -- -- --
-------- ------- ------- ------- --------- ------- -------
Total liabilities...... 258 369 73 58 653 81 268
-------- ------- ------- ------- --------- ------- -------
Net assets attributable
to variable deferred
annuity
contractholders........ $509,724 706,397 135,636 120,555 1,292,719 152,221 472,074
======== ======= ======= ======= ========= ======= =======
Outstanding units....... 48,133 46,688 10,084 10,584 97,637 13,010 41,888
======== ======= ======= ======= ========= ======= =======
Net asset value per
unit................... $ 10.59 15.13 13.45 11.39 13.24 11.70 11.27
======== ======= ======= ======= ========= ======= =======
</TABLE>
F-3
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds Federated Insurance Series
--------------------------------------------------- ----------------------------
High Aggressive Capital Multiple American High
Income Bond Growth Appreciation Strategies Leaders Income Bond Utility
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA Fund II Fund II Fund II
Assets -------- ------- ---------- ------------ ---------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in
Oppenheimer Variable
Account Funds, at fair
value (note 2):
High Income Fund/VA
(16,514 shares,
cost -- $175,813)..... $177,029 -- -- -- -- -- -- --
Bond Fund/VA (37,194
shares,
cost-- $427,468)...... -- 428,477 -- -- -- -- -- --
Aggressive Growth
Fund/VA (1,811 shares,
cost -- $109,793)..... -- -- 149,068 -- -- -- -- --
Capital Appreciation
Fund/VA (2,012 shares,
cost -- $82,025)...... -- -- -- 100,296 -- -- -- --
Multiple Strategies
Fund/VA (2,921 shares,
cost -- $48,869)...... -- -- -- -- 51,001 -- -- --
Investments in Federated
Insurance Series, at
fair value (note 2):
American Leaders Fund
II (10,866 shares,
cost -- $222,665)..... -- -- -- -- -- 226,237 -- --
High Income Bond Fund
II (19,068 shares,
cost -- $194,005)..... -- -- -- -- -- -- 195,256 --
Utility Fund II (16,815
shares,
cost -- $240,944)..... -- -- -- -- -- -- -- 241,300
Receivable from
affiliate (note 3)..... -- -- 1 -- -- -- -- --
-------- ------- ------- ------- ------ ------- ------- -------
Total assets........... 177,029 428,477 149,069 100,296 51,001 226,237 195,256 241,300
-------- ------- ------- ------- ------ ------- ------- -------
Liabilities
Accrued expenses payable
to affiliates (note
3)..................... 95 207 78 51 28 120 105 131
Payable for units
withdrawn.............. -- -- -- -- -- -- -- --
-------- ------- ------- ------- ------ ------- ------- -------
Total liabilities...... 95 207 78 51 28 120 105 131
-------- ------- ------- ------- ------ ------- ------- -------
Net assets attributable
to variable deferred
annuity
contractholders........ $176,934 428,270 148,991 100,245 50,973 226,117 195,151 241,169
======== ======= ======= ======= ====== ======= ======= =======
Outstanding units....... 18,241 43,260 8,356 6,857 4,655 20,556 19,995 22,004
======== ======= ======= ======= ====== ======= ======= =======
Net asset value per
unit................... $ 9.70 9.90 17.83 14.62 10.95 11.00 9.76 10.96
======== ======= ======= ======= ====== ======= ======= =======
</TABLE>
F-4
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Janus Aspen Series Alger American Fund
------------------------------------------------------------------------------ ------------------------
Aggressive Worldwide Flexible International Capital Small
Balanced Growth Growth Growth Income Growth Appreciation Capitalization Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Assets ---------- ---------- --------- --------- --------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments in
Janus Aspen
Series, at fair
value (note 2):
Balanced
Portfolio
(93,440 shares,
cost --
$2,401,229)... $2,608,851 -- -- -- -- -- -- -- --
Aggressive
Growth
Portfolio
(52,148 shares,
cost --
$2,230,874).... -- 3,112,739 -- -- -- -- -- -- --
Growth Portfolio
(38,459 shares,
cost --
$1,135,111)... -- -- 1,294,136 -- -- -- -- -- --
Worldwide Growth
Portfolio
(34,071 shares,
cost --
$1,316,287).... -- -- -- 1,626,898 -- -- -- -- --
Flexible Income
Portfolio
(6,152 shares,
cost --
$72,403)...... -- -- -- -- 70,259 -- -- -- --
International
Growth
Portfolio
(8,373 shares,
cost --
$241,185)...... -- -- -- -- -- 323,777 -- -- --
Capital
Appreciation
Portfolio
(102,297
shares,
cost --
$2,706,916).... -- -- -- -- -- -- 3,393,176 -- --
Investments in
Alger American
Fund, at fair
value (note 2):
Small
Capitalization
Portfolio
(6,969 shares,
cost --
$308,329)...... -- -- -- -- -- -- -- 384,322 --
Growth Portfolio
(10,758 shares,
cost --
$589,639)..... -- -- -- -- -- -- -- -- 692,601
Receivable from
affiliate
(note 3)........ -- 58 6 20 -- 7 35 5 2
---------- --------- --------- --------- ------ ------- --------- ------- -------
Total assets.... 2,608,851 3,112,797 1,294,142 1,626,918 70,259 323,784 3,393,211 384,327 692,603
---------- --------- --------- --------- ------ ------- --------- ------- -------
Liabilities
Accrued expenses
payable to
affiliates (note
3).............. 1,342 1,713 663 810 39 163 1,763 204 372
Payable for units
withdrawn....... 2,583 2,804 -- 2,692 -- -- 2,721 -- --
---------- --------- --------- --------- ------ ------- --------- ------- -------
Total
liabilities.... 3,925 4,517 663 3,502 39 163 4,484 204 372
---------- --------- --------- --------- ------ ------- --------- ------- -------
Net assets
attributable to
variable
deferred annuity
contractholders ... $2,604,926 3,108,280 1,293,479 1,623,416 70,220 323,621 3,388,727 384,123 692,231
========== ========= ========= ========= ====== ======= ========= ======= =======
Outstanding
units........... 186,199 121,228 81,608 100,959 6,851 19,367 179,393 26,274 47,413
========== ========= ========= ========= ====== ======= ========= ======= =======
Net asset value
per unit........ $ 13.99 25.64 15.85 16.08 10.25 16.71 18.89 14.62 14.60
========== ========= ========= ========= ====== ======= ========= ======= =======
</TABLE>
F-5
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Assets and Liabilities, Continued
December 31, 1999
<TABLE>
<CAPTION>
Goldman Sachs
PBHG Insurance Variable Insurance
Series Fund, Inc. Trust
------------------- ------------------
PBHG
Large Cap PBHG Growth and Mid Cap
Growth Growth II Income Value
Portfolio Portfolio Fund Fund
Assets --------- --------- ---------- -------
<S> <C> <C> <C> <C>
Investments in PBHG Insurance Series
Fund, Inc., at fair value (note 2):
PBHG Large Cap Growth Portfolio (2,432
shares, cost -- $46,826)............. $62,050 -- -- --
PBHG Growth II Portfolio (6,089
shares, cost -- $94,474)............. -- 140,340 -- --
Investments in Goldman Sachs Variable
Insurance Trust, at fair value (note
2):
Growth and Income Fund (5,524 shares,
cost -- $57,831)..................... -- -- 60,155 --
Mid Cap Value Fund (31,488 shares,
cost -- $278,198).................... -- -- -- 265,132
Receivable from affiliate (note 3)..... 1 3 -- --
------- ------- ------ -------
Total assets.......................... 62,051 140,343 60,155 265,132
------- ------- ------ -------
Liabilities
Accrued expenses payable to affiliates
(note 3).............................. 32 76 34 147
Payable for units withdrawn............ -- -- -- --
------- ------- ------ -------
Total liabilities..................... 32 76 34 147
------- ------- ------ -------
Net assets attributable to variable
deferred annuity contractholders...... $62,019 140,267 60,121 264,985
======= ======= ====== =======
Outstanding units...................... 3,577 7,052 6,067 28,190
======= ======= ====== =======
Net asset value per unit............... $ 17.34 19.89 9.91 9.40
======= ======= ====== =======
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements Of Operations
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------------------------
Money Total International
S&P 500 Index Market Return Equity Real Estate
Fund Fund Fund Fund Securities Fund
-------------- ----------------- --------------- ------------------ ---------------
Period from Period from Period from
May 6, 1999 to Period from May 26, 1999 to Period from July 9, 1999 to
December 31, April 29, 1999 to December 31, August 26, 1999 to December 31,
1999 December 31, 1999 1999 December 31, 1999 1999
-------------- ----------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 14,793 10,043 1,782 68 102
Expenses -- Mortality
and expense risk
charges and
admistrative expenses
(note 3).............. 7,863 3,051 279 71 13
---------- ------------ ------------ ------------ ------------
Net investment income
(expense).............. 6,930 6,992 1,503 (3) 89
---------- ------------ ------------ ------------ ------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 11,914 -- 61 292 (1)
Unrealized appreciation
(depreciation)........ 130,724 -- 399 1,782 (243)
Capital gain
distribution.......... 20,428 -- 2,092 1,639 5
---------- ------------ ------------ ------------ ------------
Net realized and
unrealized gain (loss)
on investments......... 163,066 -- 2,552 3,713 (239)
---------- ------------ ------------ ------------ ------------
Increase (decrease) in
net assets from
operations............. $ 169,996 6,992 4,055 3,710 (150)
========== ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
---------------------------------------------------------------
Global Value U.S.
Income Equity Income Equity
Fund Fund Fund Fund
--------------- --------------- --------------- ---------------
Period from Period from Period from Period from
May 14, 1999 to May 14, 1999 to May 14, 1999 to June 2, 1999 to
December 31, December 31, December 31, December 31,
1999 1999 1999 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. 905 890 8,293 1,680
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 349 492 874 1,613
--------- ---------- ---------- ----------
Net investment income
(expense).............. 556 398 7,419 67
--------- ---------- ---------- ----------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (573) 299 (1,204) (2,044)
Unrealized appreciation
(depreciation)........ (1,054) 637 (6,432) 5,225
Capital gain
distribution.......... 68 -- 257 15,120
--------- ---------- ---------- ----------
Net realized and
unrealized gain (loss)
on investments......... (1,559) 936 (7,379) 18,301
--------- ---------- ---------- ----------
Increase (decrease) in
net assets from
operations............. (1,003) 1,334 40 18,368
========= ========== ========== ==========
</TABLE>
F-7
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements Of Operations, Continued
<TABLE>
<CAPTION>
Variable Insurance
Variable Insurance Products Fund Products Fund II
---------------------------------------------- ------------------------------
Equity-
Income Growth Overseas Asset Manager Contrafund
Portfolio Portfolio Portfolio Portfolio Portfolio
--------------- -------------- --------------- --------------- --------------
Period from Period from Period from Period from Period from
May 13, 1999 to May 6, 1999 to May 14, 1999 to June 7, 1999 to May 6, 1999 to
December 31, December 31, December 31, December 31, December 31,
1999 1999 1999 1999 1999
--------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 372 -- -- -- --
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 2,097 2,299 737 545 4,439
------------ ------------ ------------ ----------- ------------
Net investment income
(expense).............. (1,725) (2,299) (737) (545) (4,439)
------------ ------------ ------------ ----------- ------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (2,045) 1,438 872 358 22,338
Unrealized appreciation
(depreciation)........ (1,822) 99,641 29,565 6,464 114,054
Capital gain
distribution.......... 828 -- -- -- --
------------ ------------ ------------ ----------- ------------
Net realized and
unrealized gain (loss)
on investments......... (3,039) 101,079 30,437 6,822 136,392
------------ ------------ ------------ ----------- ------------
Increase (decrease) in
net assets from
operations............. $ (4,764) 98,780 29,700 6,277 131,953
============ ============ ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Variable Insurance
Products Fund III
---------------------------------
Growth
Growth & Income Opportunities
Portfolio Portfolio
----------------- ---------------
Period from
Period from May 11, 1999 to
April 12, 1999 to December 31,
December 31, 1999 1999
----------------- ---------------
<S> <C> <C>
Investment income:
Income -- Ordinary Dividends................ -- --
Expenses -- Mortality and expense risk
charges and administrative expenses
(note 3)................................... 795 2,161
----------- ------------
Net investment income (expense).............. (795) (2,161)
----------- ------------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss).................... 649 (1,607)
Unrealized appreciation (depreciation)...... 6,182 15,807
Capital gain distribution................... -- --
----------- ------------
Net realized and unrealized gain (loss) on
investments................................. 6,831 14,200
----------- ------------
Increase (decrease) in net assets from
operations.................................. 6,036 12,039
=========== ============
</TABLE>
F-8
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Operations, Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-------------------------------------------------------------------------------
Capital Multiple
High Income Bond Aggressive Appreciation Strategies
Fund/VA Fund/VA Growth Fund/VA Fund/VA Fund/VA
--------------- -------------- -------------- ----------------- ---------------
Period from Period from Period from Period from
May 21, 1999 to May 6, 1999 to May 5, 1999 to Period from May 14, 1999 to
December 31, December 31, December 31, April 23, 1999 to December 31,
1999 1999 1999 December 31, 1999 1999
--------------- -------------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ -- -- -- -- --
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 698 1,470 513 477 220
------------ ------------ ------------ ------------ ------------
Net investment income
(expense).............. (698) (1,470) (513) (477) (220)
------------ ------------ ------------ ------------ ------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 1,328 183 7,258 265 281
Unrealized appreciation
(depreciation)........ 1,216 1,010 39,274 18,271 2,132
Capital gain
distribution.......... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net realized and
unrealized gain (loss)
on investments......... 2,544 1,193 46,532 18,536 2,413
------------ ------------ ------------ ------------ ------------
Increase (decrease) in
net assets from
operations............. $ 1,846 (277) 46,019 18,059 2,193
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Federated Insurance Series
-------------------------------------------------
High
American Leaders Income Bond Utility
Fund II Fund II Fund II
----------------- --------------- ---------------
Period from Period from
Period from May 11, 1999 to July 8, 1999 to
April 23, 1999 to December 31, December 31,
December 31, 1999 1999 1999
----------------- --------------- ---------------
<S> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends.................. -- -- --
Expenses -- Mortality and
expense risk charges and
administrative expenses
(note 3)................... 1,030 792 1,059
------------ -------- --------
Net investment income
(expense)................... (1,030) (792) (1,059)
------------ -------- --------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss).... (2,562) (137) (314)
Unrealized appreciation
(depreciation)............. 3,572 1,251 356
Capital gain distribution... -- -- --
------------ -------- --------
Net realized and unrealized
gain (loss) on investments.. 1,010 1,114 42
------------ -------- --------
Increase (decrease) in net
assets from operations...... (20) 322 (1,017)
============ ======== ========
</TABLE>
F-9
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements Of Operations, Continued
<TABLE>
<CAPTION>
Janus Aspen Series
---------------------------------------------------------------------------------------------
Worldwide Flexible
Balanced Aggressive Growth Growth Growth Income
Portfolio Portfolio Portfolio Portfolio Portfolio
----------------- ----------------- --------------- ----------------- ---------------
Period from Period from
Period from Period from May 11, 1999 to Period from May 21, 1999 to
April 12, 1999 to April 23, 1999 to December 31, April 23, 1999 to December 31,
December 31, 1999 December 31, 1999 1999 December 31, 1999 1999
----------------- ----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ 28,510 601 1,154 120 3,201
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 8,582 8,601 3,526 3,896 428
------------ --------- -------- --------- ---------
Net investment income
(expense).............. 19,928 (8,000) (2,372) (3,776) 2,773
------------ --------- -------- --------- ---------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 33,494 130,943 21,250 26,067 70
Unrealized appreciation
(depreciation)........ 207,622 881,865 159,025 310,611 (2,145)
Capital gain
distribution........... -- 1,024 193 -- 98
------------ --------- -------- --------- ---------
Net realized and
unrealized gain (loss)
on investments......... 241,116 1,013,832 180,468 336,678 (1,977)
------------ --------- -------- --------- ---------
Increase (decrease) in
net assets from
operations............. $ 261,044 1,005,832 178,096 332,902 796
============ ========= ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series (continued) Alger American Fund
--------------------------------- --------------------------------
International Capital Small
Growth Appreciation Capitalization Growth
Portfolio Portfolio Portfolio Portfolio
--------------- ----------------- -------------- -----------------
Period from Period from
May 26, 1999 to Period from May 6, 1999 to Period from
December 31, April 29, 1999 to December 31, April 29, 1999 to
1999 December 31, 1999 1999 December 31, 1999
--------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. 72 517 -- 23
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 903 9,883 1,488 3,169
----------- ----------- ----------- ------------
Net investment income
(expense).............. (831) (9,366) (1,488) (3,146)
----------- ----------- ----------- ------------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 14,943 48,923 14,121 (1,623)
Unrealized appreciation
(depreciation)........ 82,593 686,260 75,993 102,963
Capital gain
distribution........... -- 5,942 124 2,305
----------- ----------- ----------- ------------
Net realized and
unrealized gain (loss)
on investments......... 97,536 741,125 90,238 103,645
----------- ----------- ----------- ------------
Increase (decrease) in
net assets from
operations............. 96,705 731,759 88,750 100,499
=========== =========== =========== ============
</TABLE>
F-10
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Operations, Continued
<TABLE>
<CAPTION>
PBHG Insurance Series Goldman Sachs Variable
Fund, Inc. Insurance Trust
------------------------------------- -------------------------------
PBHG
Large Cap Growth and Mid Cap
Growth PBHG Growth II Income Value
Portfolio Portfolio Fund Fund
--------------------- --------------- --------------- ---------------
Period from Period from Period from Period from
September 21, 1999 to July 2, 1999 to May 14, 1999 to May 14, 1999 to
December 31, December 31, December 31, December 31,
1999 1999 1999 1999
--------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
Dividends............. $ -- -- 657 2,047
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3)..... 127 481 321 1,071
------- ------ ----- -------
Net investment income
(expense).............. (127) (481) 336 976
------- ------ ----- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ 1,640 139 (951) (5,954)
Unrealized appreciation
(depreciation)........ 15,224 45,866 2,324 (13,066)
Capital gain
distribution.......... -- -- -- --
------- ------ ----- -------
Net realized and
unrealized gain (loss)
on investments......... 16,864 46,005 1,373 (19,020)
------- ------ ----- -------
Increase (decrease) in
net assets from
operations............. $16,737 45,524 1,709 (18,044)
======= ====== ===== =======
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------------------------
S&P 500 Money Total International
Index Market Return Equity Real Estate
Fund Fund Fund Fund Securities Fund
-------------- ----------------- --------------- ------------------ ---------------
Period from Period from Period from
May 6, 1999 to Period from May 26, 1999 to Period from July 9, 1999 to
December 31, April 29, 1999 to December 31, August 26, 1999 to December 31,
1999 December 31, 1999 1999 December 31, 1999 1999
-------------- ----------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ 6,930 6,992 1,503 (3) 89
Net realized gain
(loss)............... 11,914 -- 61 292 (1)
Unrealized apprecia-
tion (depreciation)
on investments....... 130,724 -- 399 1,782 (243)
Capital gain distribu-
tion................. 20,428 -- 2,092 1,639 5
---------- --------- ------ ------ -----
Increase (decrease)
in net assets from
operations......... 169,996 6,992 4,055 3,710 (150)
---------- --------- ------ ------ -----
From capital transac-
tions:
Net premiums.......... 1,916,894 1,884,687 78,294 23,207 2,000
Transfer (to) from the
general account of GE
Capital Life:
Surrenders........... (4,344) (207) (208) -- --
Transfer gains (loss)
and transfer fees
(note 3)............ 236 1,697 (92) 61 1
Transfers (to) from
the Guarantee Ac-
count................ 106,565 (51,805) 5,388 -- --
Interfund transfers... 6,440 (137,227) 1,017 -- --
---------- --------- ------ ------ -----
Increase (decrease)
in net assets from
capital
transactions....... 2,025,791 1,697,145 84,399 23,268 2,001
---------- --------- ------ ------ -----
Increase (decrease) in
net assets............ 2,195,787 1,704,137 88,454 26,978 1,851
Net assets at beginning
of period............. -- -- -- -- --
---------- --------- ------ ------ -----
Net assets at end of
year.................. $2,195,787 1,704,137 88,454 26,978 1,851
========== ========= ====== ====== =====
</TABLE>
F-12
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statement of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
GE Investments Funds, Inc. (continued)
---------------------------------------------------------------
Global Value U.S.
Income Equity Income Equity
Fund Fund Fund Fund
--------------- --------------- --------------- ---------------
Period from Period from Period from Period from
May 14, 1999 to May 14, 1999 to May 14, 1999 to June 2, 1999 to
December 31, December 31, December 31, December 31,
1999 1999 1999 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ 556 398 7,419 67
Net realized gain
(loss)............... (573) 299 (1,204) (2,044)
Unrealized apprecia-
tion (depreciation)
on investments....... (1,054) 637 (6,432) 5,225
Capital gain distribu-
tion................. 68 -- 257 15,120
------- ------- ------- -------
Increase (decrease)
in net assets from
operations......... (1,003) 1,334 40 18,368
------- ------- ------- -------
From capital transac-
tions:
Net premiums.......... 64,472 130,953 155,833 207,811
Transfer (to) from the
general account of GE
Capital Life:
Surrenders........... (204) -- -- (1,558)
Transfer gains (loss)
and transfer fees
(note 3)............ (65) 15 64 423
Transfers (to) from
the Guarantee Ac-
count................ -- -- 17,167 (3,965)
Interfund transfers... -- (13,084) (12,000) 107,802
------- ------- ------- -------
Increase (decrease)
in net assets from
capital
transactions....... 64,203 117,884 161,064 310,513
------- ------- ------- -------
Increase (decrease) in
net assets............ 63,200 119,218 161,104 328,881
Net assets at beginning
of period............. -- -- -- --
------- ------- ------- -------
Net assets at end of
year.................. $63,200 119,218 161,104 328,881
======= ======= ======= =======
</TABLE>
F-13
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Products Fund
----------------------------------------------
Equity-
Income Growth Overseas
Portfolio Portfolio Portfolio
--------------- -------------- ---------------
Period from Period from Period from
May 13, 1999 to May 6, 1999 to May 14, 1999 to
December 31, December 31, December 31,
1999 1999 1999
--------------- -------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net as-
sets
From operations:
Net investment income (ex-
pense)........................ $ (1,725) (2,299) (737)
Net realized gain (loss)....... (2,045) 1,438 872
Unrealized appreciation (depre-
ciation) on investments....... (1,822) 99,641 29,565
Capital gain distribution...... 828 -- --
-------- ------- -------
Increase (decrease) in net
assets from operations...... (4,764) 98,780 29,700
-------- ------- -------
From capital transactions:
Net premiums................... 514,343 576,159 106,047
Transfer (to) from the general
account of GE Capital Life:
Surrenders.................... (8,408) (5,067) --
Transfer gains (loss) and
transfer fees (note 3)....... (1,528) 1,736 (111)
Transfers (to) from the Guaran-
tee Account................... 8,767 15,479 --
Interfund transfers............ 1,314 19,310 --
-------- ------- -------
Increase (decrease) in net
assets from capital transac-
tions....................... 514,488 607,617 105,936
-------- ------- -------
Increase (decrease) in net as-
sets........................... 509,724 706,397 135,636
Net assets at beginning of peri-
od............................. -- -- --
-------- ------- -------
Net assets at end of year....... $509,724 706,397 135,636
======== ======= =======
</TABLE>
F-14
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance
Products Fund II Products Fund III
------------------------------ ---------------------------------
Growth
Asset Manager Contrafund Growth & Income Opportunities
Portfolio Portfolio Portfolio Portfolio
--------------- -------------- ----------------- ---------------
Period from Period from Period from
June 7, 1999 to May 6, 1999 to Period from May 11, 1999 to
December 31, December 31, April 12, 1999 to December 31,
1999 1999 December 31, 1999 1999
--------------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ (545) (4,439) (795) (2,161)
Net realized gain
(loss)............... 358 22,338 649 (1,607)
Unrealized apprecia-
tion (depreciation)
on investments....... 6,464 114,054 6,182 15,807
Capital gain distribu-
tion................. -- -- -- --
-------- --------- ------- -------
Increase (decrease)
in net assets from
operations......... 6,277 131,953 6,036 12,039
-------- --------- ------- -------
From capital transac-
tions:
Net premiums.......... 114,263 1,104,259 162,340 481,850
Transfer (to) from the
general account of GE
Capital Life:
Surrenders........... -- (11,919) (7,583) (4,423)
Transfer gains (loss)
and transfer fees
(note 3)............ 15 220 (143) (4,683)
Transfers (to) from
the Guarantee Ac-
count................ -- 35,713 13,141 6,866
Interfund transfers... -- 32,493 (21,570) (19,575)
-------- --------- ------- -------
Increase (decrease)
in net assets from
capital transac-
tions.............. 114,278 1,160,766 146,185 460,035
-------- --------- ------- -------
Increase (decrease) in
net assets............ 120,555 1,292,719 152,221 472,074
Net assets at beginning
of period............. -- -- -- --
-------- --------- ------- -------
Net assets at end of
year.................. $120,555 1,292,719 152,221 472,074
======== ========= ======= =======
</TABLE>
F-15
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds
-------------------------------------------------------------------------------
Capital Multiple
High Aggressive Appreciation Strategies
Income Fund/VA Bond Fund/VA Growth Fund/VA Fund/VA Fund/VA
--------------- -------------- -------------- ----------------- ---------------
Period from Period from Period from Period from
May 21, 1999 to May 6, 1999 to May 5, 1999 to Period from May 14, 1999 to
December 31, December 31, December 31, April 23, 1999 to December 31,
1999 1999 1999 December 31, 1999 1999
--------------- -------------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
From operations:
Net investment income
(expense)............ $ (698) (1,470) (513) (477) (220)
Net realized gain
(loss)............... 1,328 183 7,258 265 281
Unrealized apprecia-
tion (depreciation)
on investments....... 1,216 1,010 39,274 18,271 2,132
Capital gain distribu-
tion................. -- -- -- -- --
-------- ------- ------- ------- ------
Increase (decrease)
in net assets from
operations......... 1,846 (277) 46,019 18,059 2,193
-------- ------- ------- ------- ------
From capital transac-
tions:
Net premiums.......... 155,654 397,881 113,307 82,368 48,280
Transfer (to) from the
general account of GE
Capital Life:
Surrenders........... (204) (204) -- -- (1,047)
Transfer gains (loss)
and transfer fees
(note 3)............ (15) 142 1,053 (390) 59
Transfers (to) from
the Guarantee
Account.............. 7,348 25,543 2,988 208 1,488
Interfund transfers... 12,305 5,185 (14,376) -- --
-------- ------- ------- ------- ------
Increase (decrease)
in net assets from
capital transac-
tions.............. 175,088 428,547 102,972 82,186 48,780
-------- ------- ------- ------- ------
Increase (decrease) in
net assets............ 176,934 428,270 148,991 100,245 50,973
Net assets at beginning
of period............. -- -- -- -- --
-------- ------- ------- ------- ------
Net assets at end of
year.................. $176,934 428,270 148,991 100,245 50,973
======== ======= ======= ======= ======
</TABLE>
F-16
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Federated Insurance Series
-------------------------------------------------
High
American Leaders Income Bond
Fund II Fund II Utility Fund II
----------------- --------------- ---------------
Period from Period from
Period from May 11, 1999 to July 8, 1999 to
April 23, 1999 to December 31, December 31,
December 31, 1999 1999 1999
----------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net
assets
From operations:
Net investment income (ex-
pense)..................... $ (1,030) (792) (1,059)
Net realized gain (loss).... (2,562) (137) (314)
Unrealized appreciation (de-
preciation) on invest-
ments...................... 3,572 1,251 356
Capital gain distribution... -- -- --
-------- ------- -------
Increase (decrease) in net
assets from operations... (20) 322 (1,017)
-------- ------- -------
From capital transactions:
Net premiums................ 203,647 190,800 236,827
Transfer (to) from the gen-
eral account of GE Capital
Life:
Surrenders................. -- -- --
Transfer gains (loss) and
transfer fees (note 3).... (97) (67) 586
Transfers (to) from the
Guarantee Account.......... 2,977 4,096 4,773
Interfund transfers......... 19,610 -- --
-------- ------- -------
Increase (decrease) in net
assets from capital
transactions............. 226,137 194,829 242,186
-------- ------- -------
Increase (decrease) in net
assets...................... 226,117 195,151 241,169
Net assets at beginning of
period...................... -- -- --
-------- ------- -------
Net assets at end of year.... $226,117 195,151 241,169
======== ======= =======
</TABLE>
F-17
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Janus Aspen Series
-----------------------------------------------------------------------------------------------------
Flexible International
Balanced Aggressive Growth Growth Worldwide Growth Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------------- ----------------- --------------- ----------------- --------------- ---------------
Period from Period from Period from
Period from Period from May 11, 1999 to Period from May 21, 1999 to May 26, 1999 to
April 12, 1999 to April 23, 1999 to December 31, April 23, 1999 to December 31, December 31,
December 31, 1999 December 31, 1999 1999 December 31, 1999 1999 1999
----------------- ----------------- --------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase
(decrease) in net
assets
From operations:
Net investment
income
(expense)....... $ 19,928 (8,000) (2,372) (3,776) 2,773 (831)
Net realized gain
(loss).......... 33,494 130,943 21,250 26,067 70 14,943
Unrealized
appreciation
(depreciation)
on investments.. 207,622 881,865 159,025 310,611 (2,145) 82,593
Capital gain
distribution.... -- 1,024 193 -- 98 --
---------- --------- --------- --------- ------ -------
Increase
(decrease) in
net assets from
operations..... 261,044 1,005,832 178,096 332,902 796 96,705
---------- --------- --------- --------- ------ -------
From capital
transactions:
Net premiums..... 2,220,553 2,262,136 1,009,031 1,233,902 64,850 219,408
Transfer (to)
from the general
account of GE
Capital Life:
Surrenders....... (14,752) (6,944) (228) (2,435) (205) (248)
Transfer gains
(loss) and
transfer fees
(note 3)........ (272) (1,889) 2,240 (19) 6 (18)
Transfers (to)
from the
guarantee
account......... 131,476 7,412 31,422 16,024 4,773 --
Interfund
transfers....... 6,877 (158,267) 72,918 43,042 -- 7,774
---------- --------- --------- --------- ------ -------
Increase
(decrease) in
net assets from
capital
transactions... 2,343,882 2,102,448 1,115,383 1,290,514 69,424 226,916
---------- --------- --------- --------- ------ -------
Increase
(decrease) in net
assets........... 2,604,926 3,108,280 1,293,479 1,623,416 70,220 323,621
Net assets at
beginning of
period........... -- -- -- -- -- --
---------- --------- --------- --------- ------ -------
Net assets at end
of year.......... $2,604,926 3,108,280 1,293,479 1,623,416 70,220 323,621
========== ========= ========= ========= ====== =======
<CAPTION>
Capital
Appreciation
Portfolio
-----------------
Period from
April 29, 1999 to
December 31, 1999
-----------------
<S> <C>
Increase
(decrease) in net
assets
From operations:
Net investment
income
(expense)....... (9,366)
Net realized gain
(loss).......... 48,923
Unrealized
appreciation
(depreciation)
on investments.. 686,260
Capital gain
distribution.... 5,942
-----------------
Increase
(decrease) in
net assets from
operations..... 731,759
-----------------
From capital
transactions:
Net premiums..... 2,582,488
Transfer (to)
from the general
account of GE
Capital Life:
Surrenders....... (37,429)
Transfer gains
(loss) and
transfer fees
(note 3)........ (2,697)
Transfers (to)
from the
guarantee
account......... 43,093
Interfund
transfers....... 71,513
-----------------
Increase
(decrease) in
net assets from
capital
transactions... 2,656,968
-----------------
Increase
(decrease) in net
assets........... 3,388,727
Net assets at
beginning of
period........... --
-----------------
Net assets at end
of year.......... 3,388,727
=================
</TABLE>
F-18
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
PBHG Insurance Series Goldman Sachs Variable
Alger American Fund Fund, Inc. Insurance Trust
-------------------------------- ------------------------------------- -------------------------------
PBHG
Small Large Cap Mid Cap
Capitalization Growth PBHG Growth II Growth and Value
Portfolio Growth Portfolio Portfolio Portfolio Income Fund Fund
-------------- ----------------- --------------------- --------------- --------------- ---------------
Period from Period from Period from Period from
May 6, 1999 to Period from Period from July 2, 1999 to May 14, 1999 to May 14, 1999 to
December 31, April 29, 1999 to September 21, 1999 to December 31, December 31, December 31,
1999 December 31, 1999 December 31, 1999 1999 1999 1999
-------------- ----------------- --------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets
From operations:
Net investment
income
(expense)........ $ (1,488) (3,146) $ (127) (481) 336 976
Net realized gain
(loss)........... 14,121 (1,623) 1,640 139 (951) (5,954)
Unrealized
appreciation
(depreciation) on
investments...... 75,993 102,963 15,224 45,866 2,324 (13,066)
Capital gain
distribution..... 124 2,305 -- -- -- --
-------- -------- ------------ -------- --------- --------
Increase
(decrease) in
net assets from
operations...... 88,750 100,499 16,737 45,524 1,709 (18,044)
-------- -------- ------------ -------- --------- --------
From capital
transactions:
Net premiums...... 342,557 596,768 38,573 81,571 64,621 278,409
Transfer (to) from
the general
account of
GE Capital Life:
Death Benefits.... -- -- -- -- -- --
Surrenders........ (2,574) (25,065) -- -- -- --
Transfer gains
(loss) and
transfer fees
(note 3)......... (510) (564) 19 (12) 265 680
Transfers (to)
from the
guarantee
account.......... 900 2,000 5,673 100 1,488 15,173
Interfund
transfers........ (45,000) 18,593 1,017 13,084 (7,962) (11,233)
-------- -------- ------------ -------- --------- --------
Increase
(decrease) in
net assets from
capital
transactions.... 295,373 591,732 45,282 94,743 58,412 283,029
-------- -------- ------------ -------- --------- --------
Increase (decrease)
in net assets..... 384,123 692,231 62,019 140,267 60,121 264,985
Net assets at
beginning of
period............ -- -- -- -- -- --
-------- -------- ------------ -------- --------- --------
Net assets at end
of year........... $384,123 692,231 $ 62,019 140,267 60,121 264,985
======== ======== ============ ======== ========= ========
</TABLE>
See accompanying notes to financial statements.
F-19
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Notes to Financial Statements
December 31, 1999
(1) Description of Entity
GE Capital Life Separate Account II (the Account) is a separate investment
account established in 1996 by GE Capital Life Assurance Company of New York
(GE Capital Life) and is incorporated in New York. The Account operates as a
unit investment trust under the Investment Company Act of 1940. The Account
began selling flexible premium variable deferred annuities in 1999 and is used
to fund certain benefits for flexible premium variable deferred annuity life
insurance policies issued by GE Capital Life. GE Capital Life is a stock life
insurance company incorporated in New York on February 23, 1988. GE Capital
Life is a wholly-owned subsidiary by General Electric Capital Assurance
Company. General Electric Capital Assurance Company is an indirect, wholly-
owned subsidiary of General Electric Capital Corporation (GE Capital). GE
Capital, a diversified financial services company, is a wholly-owned
subsidiary of General Electric Company (GE), a New York corporation.
There are currently 37 investment subdivisions available in the Account as
listed in the statements of assets and liabilities. All designated portfolios
included in the Account are series type mutual funds.
(2) Summary of Significant Accounting Policies
(a) Investments
Investments are stated at fair value, which is based on the underlying net
asset value per share of the respective portfolios or funds. Purchases and
sales of investments are recorded on the trade date and income distributions
are recorded on the ex-dividend date. Realized gains and losses on investments
are determined on the average cost basis. The units and unit values are
disclosed as of the last business day in the applicable year.
The aggregate cost of the investments acquired and the aggregate proceeds of
investments sold, for the period ended December 31, 1999 were:
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- ---------- -----------
<S> <C> <C>
GE Investment Funds, Inc.:
S&P 500 Index Fund................................... $2,492,470 438,210
Money Market Fund.................................... 3,264,197 1,561,038
Total Return Fund.................................... 114,985 26,944
International Equity Fund............................ 33,084 8,166
Real Estate Securities Fund.......................... 2,107 11
Global Income Fund................................... 87,076 22,175
Value Equity Fund.................................... 144,725 26,377
Income Fund.......................................... 198,503 29,676
U.S. Equity Fund..................................... 486,289 160,418
Oppenheimer Variable Account Funds:
Bond Fund/VA......................................... 506,950 79,665
Aggressive Growth Fund/VA............................ 142,943 40,408
Capital Appreciation Fund/VA......................... 87,405 5,644
High Income Fund/VA.................................. 214,401 39,915
Multiple Strategies Fund/VA.......................... 74,970 26,382
Variable Insurance Products Fund:
Equity-Income Portfolio.............................. 594,362 80,514
Growth Portfolio..................................... 722,654 116,970
Overseas Portfolio................................... 110,342 5,071
Variable Insurance Products Fund II:
Asset Manager Portfolio.............................. 120,654 6,863
Contrafund Portfolio................................. 1,536,802 379,823
</TABLE>
F-20
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- -------------- --------- -----------
<S> <C> <C>
Variable Insurance Products Fund III:
Growth & Income Portfolio............................. $ 195,927 50,455
Growth Opportunities Portfolio........................ 581,671 123,529
Goldman Sachs Variable Insurance Trust:
Growth and Income Fund................................ 100,860 42,078
Mid Cap Value Fund.................................... 347,874 63,722
Janus Aspen Series:
Aggressive Growth Portfolio........................... 2,758,145 658,214
Growth Portfolio...................................... 1,391,386 277,525
Worldwide Growth Portfolio............................ 1,495,571 205,352
Balanced Portfolio.................................... 2,879,110 511,374
Flexible Income Portfolio............................. 78,383 6,050
International Growth Portfolio........................ 308,118 81,877
Capital Appreciation Portfolio........................ 3,113,347 455,354
Federated Insurance Series:
Utility Fund II....................................... 280,273 39,015
High Income Bond Fund II.............................. 204,066 9,924
American Leaders Fund II.............................. 286,013 60,786
Alger American Fund:
Small Capitalization Portfolio........................ 390,194 95,986
Growth Portfolio...................................... 718,126 126,864
PBHG Insurance Series Fund, Inc.:
PBHG Large Cap Growth Portfolio....................... 51,508 6,322
PBHG Growth II Portfolio.............................. 95,342 1,007
</TABLE>
(b) Capital Transactions
The increase (decrease) in outstanding units from capital transactions for
the period ended December 31, 1999 are as follows:
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
----------------------------------------------------------------------------------
S&P 500 Money Total International Real Estate Global Value U.S.
Index Market Return Equity Securities Income Equity Income Equity
Fund Fund Fund Fund Fund Fund Fund Fund Fund
------- ------- ------ ------------- ----------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- -- -- --
------- ------- ----- ------- ------ ------ ------ ------ ------
From capital
transactions:
Net premiums........... 163,108 180,071 7,072 2,208 209 6,443 11,804 15,562 17,576
Transfers (to) from the
general account of GE
Capital Life:
Surrenders............. (370) (20) (19) -- -- (20) -- -- (132)
Transfers (to) from the
Guarantee Account..... 9,068 (4,950) 487 -- -- -- -- 1,714 (335)
Interfund transfers.... 548 (13,111) 92 -- -- -- (1,179) (1,198) 9,118
------- ------- ----- ------- ------ ------ ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 172,354 161,990 7,632 2,208 209 6,423 10,625 16,078 26,227
------- ------- ----- ------- ------ ------ ------ ------ ------
Units outstanding at
December 31, 1999...... 172,354 161,990 7,632 2,208 209 6,423 10,625 16,078 26,227
======= ======= ===== ======= ====== ====== ====== ====== ======
</TABLE>
F-21
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Variable Insurance Variable Insurance Variable Insurance
Products Fund Products Fund II Products Fund III
----------------------------- -------------------- -----------------------
Equity- Asset Growth & Growth
Income Growth Overseas Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
From capital
transactions:
Net premiums........... 47,976 44,397 10,084 10,584 92,901 14,434 43,432
Transfers (to) from the
general account of GE
Capital Life:
Surrenders............. (784) (390) -- -- (1,003) (674) (399)
Transfers (to) from the
Guarantee Account..... 818 1,193 -- -- 3,005 1,168 619
Interfund transfers.... 123 1,488 -- -- 2,734 (1,918) (1,764)
------ ------ ------ ------ ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 48,133 46,688 10,084 10,584 97,637 13,010 41,888
------ ------ ------ ------ ------ ------ ------
Units outstanding at
December 31, 1999...... 48,133 46,688 10,084 10,584 97,637 13,010 41,888
====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Variable Account Funds Federated Insurance Series
---------------------------------------------------- ----------------------------
High Aggressive Capital Multiple American High
Income Bond Growth Appreciation Strategies Leaders Income Bond Utility
Fund/VA Fund/VA Fund/VA Fund/VA Fund/VA Fund II Fund II Fund II
------- ------- ---------- ------------ ---------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at
December 31, 1998...... -- -- -- -- -- -- -- --
------ ------ ------ ----- ----- ------ ------ ------
From capital
transactions:
Net premiums........... 16,215 40,178 9,290 6,840 4,613 18,504 19,575 21,569
Transfers (to) from the
general account of GE
Capital Life:
Surrenders............. (21) (21) -- -- (100) -- -- --
Transfers (to) from the
Guarantee Account..... 765 2,579 245 17 142 270 420 435
Interfund transfers.... 1,282 524 (1,179) -- -- 1,782 -- --
------ ------ ------ ----- ----- ------ ------ ------
Net increase (decrease)
in units from capital
transactions........... 18,241 43,260 8,356 6,857 4,655 20,556 19,995 22,004
------ ------ ------ ----- ----- ------ ------ ------
Units outstanding at
December 31, 1999...... 18,241 43,260 8,356 6,857 4,655 20,556 19,995 22,004
====== ====== ====== ===== ===== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Janus Aspen Series Alger American Fund
----------------------------------------------------------------------------- ------------------------
Aggressive Worldwide Flexible International Capital Small
Balanced Growth Growth Growth Income Growth Appreciation Capitalization Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- ---------- --------- --------- --------- ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding
at December 31,
1998............ -- -- -- -- -- -- -- -- --
------- ------- ------ ------- ----- ------ ------- ------ ------
From capital
transactions:
Net premiums.... 176,382 130,319 73,975 96,528 6,400 18,725 174,188 30,419 47,771
Transfers (to)
from the
general account
of GE Capital
Life:
Surrenders...... (1,172) (400) (17) (190) (20) (21) (2,525) (229) (2,006)
Transfers (to)
from the
Guarantee
Account........ 10,443 427 2,304 1,254 471 -- 2,907 80 160
Interfund
transfers...... 546 (9,118) 5,346 3,367 -- 663 4,823 (3,996) 1,488
------- ------- ------ ------- ----- ------ ------- ------ ------
Net increase
(decrease) in
units from
capital
transactions.... 186,199 121,228 81,608 100,959 6,851 19,367 179,393 26,274 47,413
------- ------- ------ ------- ----- ------ ------- ------ ------
Units outstanding
at December 31,
1999............ 186,199 121,228 81,608 100,959 6,851 19,367 179,393 26,274 47,413
======= ======= ====== ======= ===== ====== ======= ====== ======
</TABLE>
F-22
<PAGE>
GE CAPITAL LIFE SEPARATE ACCOUNT II
Notes to Financial Statements -- Continued
December 31, 1999
(2) Summary of Significant Accounting Policies -- Continued
<TABLE>
<CAPTION>
Goldman Sachs
PBHG Insurance Variable Insurance
Series Fund, Inc. Trust
-------------------- ------------------
PBHG Large PBHG Growth and Mid Cap
Cap Growth Growth II Income Value
Portfolio Portfolio Fund Fund
---------- --------- ---------- -------
<S> <C> <C> <C> <C>
Units outstanding at December 31,
1998................................. -- -- -- --
----- ----- ----- ------
From capital transactions:
Net premiums......................... 3,049 6,071 6,743 27,796
Transfers (to) from the general
account of GE Capital Life:
Surrenders........................... -- -- -- --
Transfers (to) from the Guarantee
Account............................. 448 7 155 1,515
Interfund transfers.................. 80 974 (831) (1,121)
----- ----- ----- ------
Net increase (decrease) in units from
capital transactions................. 3,577 7,052 6,067 28,190
----- ----- ----- ------
Units outstanding at December 31,
1999................................. 3,577 7,052 6,067 28,190
===== ===== ===== ======
</TABLE>
(c) Federal Income Taxes
The Account is not taxed separately because the operations of the Account
are part of the total operations of GE Capital Life. GE Capital Life is taxed
as a life insurance company under the Internal Revenue Code (the Code). GE
Capital Life is included in the General Electric Capital Assurance Company
consolidated federal income tax return. Under existing federal income tax law,
no taxes are payable on the investment income or on the capital gains of the
Account.
(d) Use of Estimates
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions
that affect amounts and disclosures reported therein. Actual results could
differ from those estimates.
(3) Related Party Transactions
The premiums transferred from GE Capital Life to the Account represent gross
premiums recorded by GE Capital Life on its flexible variable deferred annuity
products. If a policy is surrendered or lapses during the first six years, a
charge is made by GE Capital Life to cover the expenses of issuing the policy.
In addition, surrender charges are assessed against payments made upon the
maturity date if the maturity date occurs before all of the premium payments
have been in the policy for seven years. Subject to certain limitations, the
charge generally equals 6% of the premium withdrawn in the first four years,
and this charge decreases 2% per year for every year thereafter.
GE Capital Life will deduct a charge of $25 plus .15% per year from the
Account for certain administrative charges. In addition, GE Capital Life
charges the Account 1.25% for the mortality and expense (M&E) risk that GE
Capital Life assumes. The administrative expenses as well as the M&E charges
are deducted daily and reflect the effective annual rates.
GE Investments Funds, Inc. (the Fund) is an open-end diversified management
investment company.
Capital Brokerage Corporation, an affiliate of GE Capital Life, is a
Washington Corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation serves
as principal underwriter for variable life insurance policies and variable
annuities issued by GE Capital Life.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE, currently serves as investment advisor to GE Investments
Funds, Inc. As compensation for its services, the Investment Advisor is paid
an investment advisory fee by the Fund based on the average daily net assets
at an effective annual rate of .35% for the S&P 500 Index Fund, .50% for the
Money Market, Income, and Total Return Funds, .60% for the Global Income Fund,
.55% for the U.S. Equity Fund, .65% for the Value Equity Fund, .85% for the
Real Estate Securities Fund, and 1.00% for the International Equity Fund.
Certain officers and directors of GE Capital Life are also officers and
directors of Capital Brokerage Corporation.
F-23
