[GE LOGO OMITTED]
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GE Investments Funds, Inc.
SEMI-ANNUAL REPORT
JUNE 30, 1999
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GE INVESTMENTS FUNDS, INC.
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UNDERSTANDING YOUR REPORT
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A LETTER FROM THE CHAIRMAN ................................................ 1
REVIEW OF PERFORMANCE AND SCHEDULES OF INVESTMENTS
Portfolio Managers discuss your Funds and what we invested in and why
U.S. EQUITY FUND ..................................................... 3
S&P 500 INDEX FUND ................................................... 7
PREMIER GROWTH EQUITY FUND ...........................................14
VALUE EQUITY FUND ....................................................17
INTERNATIONAL EQUITY FUND ............................................20
INCOME FUND ..........................................................25
GLOBAL INCOME FUND ...................................................32
TOTAL RETURN FUND ....................................................36
MONEY MARKET FUND ....................................................44
REAL ESTATE SECURITIES FUND ..........................................46
NOTES TO PERFORMANCE AND NOTES TO SCHEDULES OF INVESTMENTS ...........49
FINANCIAL STATEMENTS
Financial Highlights .................................................50
Notes to the Financial Highlights ....................................55
Statements of Assets and Liabilities, Operations,
and Changes in Net Assets .........................................56
NOTES TO THE FINANCIAL STATEMENTS .........................................62
GE INVESTMENTS FUNDS' INVESTMENT TEAM ......................INSIDE BACK COVER
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A LETTER FROM THE CHAIRMAN
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Dear Shareholder:
We are pleased to provide you with the GE Investment Funds, Inc. semi-annual
report for 1999.
Second-quarter returns for world equity markets were robust. Economic growth in
the United States continues to surprise everyone on the upside, which triggered
the Federal Reserve's interest rate increase at the end of June.
Following the rate increase, the U.S. central bank signaled that further rate
hikes were not a foregone conclusion, another positive for the markets. The
raise in interest rates did adversely affect fixed income markets but inflation
clearly is under control in the U.S. and other regions of the world. We see
modest growth in Europe; recovery in emerging markets with prospects for
economic growth appearing bright; and continued rally in the Japanese market as
the government takes some fiscal steps to stimulate the economy.
PERFORMANCE HIGHLIGHTS
Overall, GE Investment Funds performed well during the first six months of 1999.
All our domestic equity funds posted double-digit returns -- the Premier Growth
Equity Fund and the Value Equity Fund turned in exceptional performances for the
six-month period and beat their benchmarks (both S&P 500 and the average of
their Lipper peers) by over 7% and 10%, respectively. We also saw resurgence in
the real estate market as the Wilshire Real Estate Securities Index posted its
first positive quarterly return since September 1997 -- the Real Estate
Securities Fund benefited from this upward movement posting an above index
return.
MARKET OVERVIEW
In 1998, performance of a handful of large stocks led the U.S. stock market. By
the second quarter of 1999, the market had broadened. A comparison of the
leading indices clearly shows the change. The S&P 500, which tracks large-cap
issues, gained approximately 7% in the second quarter. For the same period, the
small-cap Russell 2000 Index rose 15.6% and the S&P 400, a mid-cap index,
returned 14.4%. Value stocks also outperformed growth stocks in the second
quarter.
The stock market's sustained growth continues to be driven by technology stocks
- -- with this sector gaining 25% during the first half of 1999. One area of
concern, how-ever, is internet stocks which appear to have excessive valuations,
in many cases, with little prospect for sustainable earnings in the foreseeable
future.
Despite recent pullbacks, the internet index is still up threefold over the past
year. The issue is whether a sharp correction in these stocks would affect the
overall market.
For the rest of the market, earnings have been a bit better than expected at the
beginning of the year and valuations, while very high in historical terms, can
probably be sustained assuming inflation remains low.
Another critical question is how long the United States can remain the primary
source for global economic growth -- the world's buyer of last resort. Led by
emerging markets, up 39% in the first half, international markets have rebounded
from last August's currency crisis. But markets in developed countries gained
just 4%. It should be noted that valuations in international markets are very
attractive.
OUTLOOK
For the world's equity markets to maintain economic health, we believe the
emerging markets must continue to recover and Europe must generate earnings and
cashflow growth. With the Fed poised to act "promptly and forcefully" to
forestall inflation we believe a neutral duration posture is appropriate despite
the current high real yields. Sector allocation and security selection offer
better opportunities to add value than interest rate anticipation.
One other uncertainty affects world markets -- fears generated by anticipation
of Year 2000 (Y2K) problems. We believe that the developed nations will deal
successfully with the Y2K computer situation and that the financial markets will
not be significantly affected in the long term. Y2K may cause a blip in world
financial markets, in the shorter term, but we do not think it will alter the
state of the global economy.
1
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A LETTER FROM THE CHAIRMAN (CONTINUED)
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The economic fundamentals remain positive. Inflation is low. The global economy
is growing. Companies are cost-competitive. Countries are beginning to realize
that monetary policy is an ineffective mechanism for growth, which must instead
be generated through public and fiscal policy. To cite just one example, Japan
recently lowered taxes and developed programs to stimulate economic development.
We remain fully invested in both U.S. and international equity markets. We
believe that these markets will reward good stock selection and we continue to
focus on bottom up, fundamental analysis -- constructing portfolios on a
stock-by-stock basis. In this environment, diversification is a prudent
investment strategy. We recommend that people examine their portfolios and
assure that they contain a broad variety of assets.
YEAR 2000
As the Year 2000 draws nearer, be assured that the GE Investments Funds'
adviser, GE Investment Management Incorporated (GEIM) has incorporated Y2K
readiness capability into the analysis processes for the investment portfolios.
In addition, it has been engaged in a multi-year effort to address Y2K
date-related issues in a broad range of areas including applications,
process-enabling systems and facilities. GEIM also benefits from the Y2K efforts
of its parent, General Electric Company, which systematically monitors the
implementation of the Y2K programs of all GE businesses, and facilitates the
sharing of best practices. With respect to third-party systems, GEIM, like many
similar companies, must largely rely on the efforts and affirmations of others.
However, it will continue to work with our most critical vendors, State Street
Bank and Trust Company, the funds' custodian, and National Financial Data
Services Inc., the funds' transfer agent. Although the interaction of various
software and hardware elements is highly complex -- and the possibility of Y2K
related problems cannot be eliminated totally - GEIM believes it is taking the
appropriate steps.
Thank you for your trust in us.
Sincerely,
/S/ SIGNATURE
Michael J. Cosgrove
CHAIRMAN, GE INVESTMENTS FUNDS, INC.
Mike Cosgrove is the president of the Investment Services Group of GE Financial
Assurance Holdings, Inc., and of GE Investment Distributors Inc., the funds'
distributor, and serves as a trustee of the GE Pension Trust and GE's employee
savings program. Previously Chief Financial Officer of GE Investments and
Assistant Treasurer-GE Company, Mike joined GE in 1970 and held a number of
managerial positions in finance and sales in International Operations and in GE
Trading Company. He has an B.S. in economics from Fordham University and an
M.B.A. from St. John's University.
2
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U.S. EQUITY FUND
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Q&A
GENE BOLTON IS RESPONSIBLE FOR THE OVERALL MANAGEMENT OF THE U.S. EQUITY
OPERATION AT GE INVESTMENTS WITH TOTAL ASSETS OF OVER $35 BILLION. GENE JOINED
GE IN 1964. AFTER COMPLETING GE'S FINANCIAL MANAGEMENT PROGRAM, HE HELD A NUMBER
OF FINANCIAL AND STRATEGIC PLANNING POSITIONS IN THE U.S. AND EUROPE. JOINING GE
INVESTMENTS IN 1984 AS CHIEF FINANCIAL OFFICER, HE MOVED TO EQUITIES AS A
PORTFOLIO MANAGER IN 1986 AND WAS NAMED TO HIS PRESENT POSITION IN 1991. GENE IS
A TRUSTEE OF THE GE PENSION TRUST AND GE'S EMPLOYEE SAVINGS PROGRAM, AS WELL AS
CHAIRMAN OF THE ASSET ALLOCATION COMMITTEE OF GE INVESTMENTS. HE ALSO SERVES AS
A TRUSTEE OF THE INVESTMENT MANAGEMENT WORKSHOP, SPONSORED BY THE ASSOCIATION
FOR INVESTMENT MANAGEMENT AND RESEARCH. GENE IS A GRADUATE OF MUNDELEIN COLLEGE
WITH A B.A. IN BUSINESS MANAGEMENT.
Q. HOW DID THE U.S. EQUITY FUND PERFORM COMPARED TO ITS BENCHMARK AND LIPPER
PEER GROUP FOR THE SIX-MONTHS ENDED JUNE 30, 1999?
A. The U.S. Equity Fund gained 14.12% for the six-months period ended June 30,
1999. This compares with a 12.26% return for the S&P 500 Index. For the same
period, the Lipper peer group of 185 Growth and Income annuity funds returned
11.70%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. A healthy economy and a broadening stock market helped the fund's performance
for the first half of 1999. In the first several months of the year, the
market consolidated gains made during the strong fourth-quarter recovery of
1998. Anticipation of good corporate earnings led to a rally in March.
Last year, a few stocks accounted for most of the market's gain. In contrast
the market broadened in April. Small- and mid-cap stocks outperformed
large-caps in the second quarter and value stocks did better than growth
stocks. While small- and mid-cap stocks still lagged the S&P 500 through the
first half of the year, value stocks have outperformed the index
year-to-date. Good stock selection allowed the fund to outperform the S&P 500
in the first quarter, before the stock market began to broaden, and during
the second quarter, following the change in market leadership.
Q. DID THE FEDERAL RESERVE'S INTEREST RATE ADJUSTMENT AFFECT PERFORMANCE?
A. The stock market was volatile for much of the second quarter because of fears
that the Federal Reserve Board would raise interest rates to rein in
above-trend-line economic growth. However, when the central bank finally
acted at the end of June by increasing interest rates 25 basis points
(0.25%), the markets had already discounted the move and rallied on the news.
Q. WHICH INVESTMENTS STAND OUT?
A. Our valuation discipline paid off this year as our technology holdings made
major contributions to the fund's performance. Technology stocks that we
consider good values did better this year than many of the very high
price/earnings ratio stocks that led the market in 1998. Among the top
performers were Analog Devices, which manufactures electronic components;
computer maker Sun Microsystems; First Data, a database processing company;
and EMC, which manufactures data storage equipment.
Also turning in strong performances were energy holdings and consumer
cyclical stocks. Energy stocks benefited from the recovery of oil prices
after the Organization of Petroleum Exporting Countries (OPEC) nations
reduced output. Energy stocks with strong first-half performances included
Unocal, an oil producer, and Halliburton and Schlumberger, both oil service
companies. Among the standouts in the consumer cyclical sector were Comcast
and United Kingdom-based NTL, both cable television companies; and in the
retail trade sector, Dayton Hudson department stores.
On the downside, the fund was hurt by an underweighting in Basic Materials
stocks, a depressed sector that showed some recovery during the second
quarter. In Capital Goods, Dover Corp., a conglomerate, and Martin Marietta
Materials, which is in the road aggregates business, turned in weak
performances for reasons specific to each company.
Q. HAVE YOU MADE ANY CHANGES IN THE FUND?
A. While we have made some trades over the quarter,
selling stocks that we believe have become overvalued and buying stocks that
we believe have good fundamental outlooks and positive valuations, we have
not significantly changed our sector weightings over the first six months of
the year.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. The U.S. stock market continues to do well despite the fact that valuations
are very high when viewed in a historical context. U.S. economic growth is
strong, corporate profits are good and unemployment remains low. At the same
time, intense global competition, rapidly changing technology and worker
insecurity in the face of layoffs, mergers and restructuring combine to keep
inflation low. Looking ahead, we believe that the economic picture remains
bright. However, current market valuations already reflect this unusually
good environment and periodic concerns about higher interest rates probably
will result in above-average stock market volatility. Our view is that future
market returns most likely will be limited to growth in corporate earnings
and dividends. Combined, they are expected to increase in the
high-single-digit range over the next several years.
3
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U.S. EQUITY FUND
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COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
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[LINE GRAPH OMITTED]
U.S. EQUITY FUND S&P 500
1/3/95 $10000 $10000
3/95 10940 10974
6/95 11973 12019
9/95 12873 12977
12/95 13558 13749
3/96 14353 14497
6/96 14888 15151
9/96 15218 15616
12/96 16502 16927
3/97 16854 17369
6/97 19598 20404
9/97 21255 21938
12/97 21805 22563
3/98 24394 25713
6/98 24989 26566
9/98 22447 23937
12/98 26910 29038
3/99 28396 30477
6/99 30710 32598
U.S. Equity Fund (ending value $30,710)
S&P 500 Index (ending value $32,598)
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AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
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SIX ONE THREE SINCE
MONTHS YEAR YEAR COMMENCEMENT
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U.S. Equity Fund 14.12% 22.90% 27.30% 28.39%
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S&P 500 Index 12.26% 22.71% 29.10% 30.04%
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Lipper peer group average* 11.70% 15.78% 22.14% N/A
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Commencement date 1/3/95
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INVESTMENT PROFILE
A mutual fund designed for
investors who seek long-term growth
of capital by investing
primarily in equity securities of U.S. companies.
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TOP TEN LARGEST HOLDINGS AT JUNE 30, 1999
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Citigroup Inc. ..................................... 3.14%
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International Business Machines Corp. .............. 2.39%
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Merck & Co. Inc. ................................... 2.31%
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Bristol-Myers Squibb Co. ........................... 2.21%
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Cisco Systems Inc. ................................. 1.89%
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AlliedSignal Inc. .................................. 1.80%
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Cardinal Health Inc. ............................... 1.71%
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First Data Corp. ................................... 1.65%
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SBC Communications Inc. ............................ 1.64%
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Microsoft Corp. .................................... 1.58%
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PORTFOLIO COMPOSITION
AS OF JUNE 30, 1999
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[PIE GRAPH OMITTED]
NET ASSETS OF $43,828 (IN THOUSANDS)
TECHNOLOGY 18.4%
FINANCIAL SERVICES 15.5%
CONSUMER 14.2%
HEALTHCARE 13.0%
CAPITAL GOODS 8.6%
UTILITIES 8.5%
ENERGY 7.0%
CASH & OTHER 6.2%*
RETAIL TRADE 5.3%
BASIC MATERIALS 1.8%
TRANSPORTATION 1.5%
*INCLUDES CASH EQUALIZED BY FUTURES OF 3.9%.
* LIPPER PERFORMANCE COMPARISONS ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED IN THE GROWTH AND INCOME PEER GROUP CONSISTING OF
185,179 AND 98 UNDERLYING ANNUITY FUNDS, RESPECTIVELY.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
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SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
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U.S. EQUITY FUND
NUMBER
OF SHARES VALUE
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COMMON STOCK -- 93.3%
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BASIC MATERIALS -- 1.8%
Air Products & Chemicals Inc. ........ 2,576 $ 103,684
Airgas Inc. .......................... 2,020 24,745(a)
Barrick Gold Corp. ................... 4,683 90,733
Du Pont de Nemours (E.I.) & Co. ...... 3,278 223,929
Great Lakes Chemical Corp. ........... 2,656 122,342
Mead Corp. ........................... 1,703 71,100
Newmont Mining Corp. ................. 3,345 66,482
Rayonier Inc. ........................ 1,673 83,336
Rohm & Hass Co. ...................... 49 2,087
788,438
CAPITAL GOODS -- 8.6%
AlliedSignal Inc. ....................12,502 787,626
Deere & Co. .......................... 1,806 71,563
Dover Corp. ..........................13,514 472,990(h)
Emerson Electric Co. ................. 4,904 308,339
Gulfstream Aerospace Corp. ........... 883 59,658(a)
Hubbell Inc. (Class B) ............... 8,364 379,516
Lockheed Martin Corp. ................ 1,405 52,336
Martin Marietta Materials Inc. ....... 3,836 226,324
Masco Corp. .......................... 3,077 88,848
Molex Inc. (Class A) ................. 5,385 169,628
Textron Inc. ......................... 4,429 364,562
United Technologies Corp. ............ 3,131 224,454
Waste Management Inc. ................10,235 550,131
3,755,975
CONSUMER - CYCLICAL -- 8.7%
AT&T Corp. - Liberty Media
Group (Class A) ................... 8,697 319,615(a)
Carnival Corp. ....................... 2,275 110,337
Catalina Marketing Corp. ............. 2,054 188,968(a)
Comcast Corp. (Class A) ..............10,450 401,672
Ford Motor Co. ....................... 2,408 135,901
Gannett Inc. ......................... 5,747 410,192
Harman International Industries Inc. . 803 35,332
Interpublic Group Cos. Inc. .......... 4,910 425,329
Knight-Ridder Inc. ................... 2,877 158,055
McDonald's Corp. ..................... 6,422 265,309
MediaOne Group Inc. .................. 1,204 89,548(a)
NTL Inc. ............................. 4,484 386,465(a)
The Stanley Works .................... 769 24,752
Time Warner Inc. ..................... 2,328 171,108
Walt Disney Co. ...................... 6,836 210,634
Xerox Corp. .......................... 7,874 465,058
3,798,275
CONSUMER - STABLE -- 5.5%
Anheuser Busch Cos. Inc. ............. 4,543 322,269
Avon Products Inc. ................... 4,931 273,671
Bestfoods ............................ 1,806 89,397
Colgate-Palmolive Co. ................ 428 42,265
General Mills Inc. ................... 1,358 109,149
NUMBER
OF SHARES VALUE
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Gillette Co. ......................... 1,004 $ 41,164
Heinz (H.J.) Co. ..................... 2,007 100,601
Pepsico Inc. ......................... 8,503 328,960
Philip Morris Cos. Inc. .............. 6,837 274,762(h)
Procter & Gamble Co. ................. 4,081 364,229
Ralston Purina Co. ................... 6,917 210,536
Sara Lee Corp. .......................10,637 241,327
2,398,330
ENERGY -- 7.0%
Anadarko Petroleum Corp. ............. 1,693 62,324
Baker Hughes Inc. .................... 3,191 106,899
BP Amoco PLC ADR ..................... 736 79,856
Burlington Resources Inc. ............ 4,676 202,237
Chevron Corp. ........................ 1,004 95,568
Exxon Corp. .......................... 8,644 666,668(h)
Halliburton Co. ...................... 5,218 236,114
Mobil Corp. .......................... 3,077 304,623
Nabors Industries Inc. ............... 1,559 38,098(a)
Royal Dutch Petroleum Co. ADR ........ 6,075 366,019
Schlumberger Ltd. .................... 4,844 308,502
Texaco Inc. .......................... 1,606 100,375
Total S.A. ADR ....................... 2,040 131,452
Unocal Corp. ......................... 7,192 284,983
USX-Marathon Group ................... 2,275 74,080
3,057,798
FINANCIAL -- 11.1%
American Express Co. ................. 5,064 658,953(h)
Associates First Capital
Corp. (Class A) .................... 7,158 317,189
Bank of America Corp. ................ 4,477 328,220
Bank of New York Inc. ................ 2,609 95,718
BankBoston Corp. ..................... 1,472 75,256
Chase Manhattan Corp. ................ 3,044 263,687
Citigroup Inc. .......................28,988 1,376,930
Countrywide Credit Industries Inc. ... 609 26,035
Federal National Mortgage Assoc. ..... 9,065 619,819
First Union Corp. .................... 1,003 47,141
Fleet Financial Group Inc. ........... 1,433 63,589
Goldman Sachs Group Inc. ............. 1,141 82,437(a)
Morgan Stanley Dean Witter & Co. ..... 3,240 332,100
National City Corp. .................. 1,472 96,416
State Street Corp. ................... 1,854 158,285(i)
United States Bancorp. ............... 3,512 119,408
Wells Fargo & Co. .................... 4,931 210,800
4,871,983
HEALTHCARE -- 13.0%
Abbott Laboratories ..................10,102 459,641(h)
Allergan Inc. ........................ 2,144 237,984
Alza Corp. ........................... 335 17,043(a)
American Home Products Corp. ......... 3,954 227,355
AmeriSource Health Corp. (Class A) ... 502 12,801(a)
Amgen Inc. ........................... 2,944 179,216(a)
Bristol-Myers Squibb Co. .............13,735 967,459
Cardinal Health Inc. .................11,667 748,146
Dentsply International Inc. .......... 1,873 52,444
Henry Schein Inc. .................... 3,044 96,457(a)
Johnson & Johnson .................... 5,693 557,914
Lincare Holdings Inc. ................ 3,011 75,275(a)
Merck & Co. Inc. .....................13,681 1,012,394
Omnicare Inc. ........................ 1,404 17,726
Pfizer Inc. .......................... 1,311 143,882
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See Notes to Schedule of Investments and Notes to Financial Statements.
5
<PAGE>
U.S. EQUITY FUND
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NUMBER
OF SHARES VALUE
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Pharmacia & Upjohn Inc. .............. 4,750 $ 269,859
Schering Plough Corp. ................ 3,880 205,640
Shire Pharmaceuticals Group PLC ADR .. 870 22,620(a)
Sybron International Corp. ........... 4,449 122,626(a)
Warner-Lambert Co. ................... 1,004 69,652
Watson Pharmaceuticals Inc. .......... 5,753 201,715(a)
5,697,849
INSURANCE -- 4.4%
American International Group Inc. .... 3,171 371,205
Berkshire Hathaway Inc. (Class B) .... 167 374,080(a)
Chicago Title Corp. .................. 18 642
Chubb Corp. .......................... 836 58,102
Hartford Financial Services Group Inc. 1,472 85,836
Lincoln National Corp. ............... 3,612 188,953
Loews Corp. .......................... 2,408 190,533
Marsh & McLennan Cos. Inc. ........... 1,793 135,372
Provident Cos. Inc. .................. 8,330 333,200
Reliastar Financial Corp. ............ 3,345 146,344
St. Paul Cos. Inc. ................... 1,472 46,828
UNUM Corp. ........................... 435 23,816
1,954,911
RETAIL TRADE -- 5.3%
Costco Cos. Inc. ..................... 1,673 133,944(a)
CVS Corp. ............................ 2,797 141,948
Dayton Hudson Corp. .................. 9,834 639,210
Federated Department Stores Inc. ..... 2,031 107,516(a)
Home Depot Inc. ...................... 5,145 331,531
Lowes Cos. Inc. ...................... 5,319 301,521
Office Depot Inc. .................... 3,145 69,387(a)
Sears Roebuck & Co. .................. 1,689 75,266
Wal-Mart Stores Inc. .................10,704 516,468
2,316,791
TECHNOLOGY - ELECTRONICS & EQUIPMENT -- 10.6%
Analog Devices Inc. .................. 6,255 313,923(a)
Applied Materials Inc. ............... 4,215 311,383(a,h)
Cisco Systems Inc. ...................12,913 830,467(a)
Gateway Inc. ......................... 1,672 98,648(a)
Hewlett Packard Co. .................. 1,538 154,569
Intel Corp. .......................... 9,098 541,331
International Business Machines Corp. 8,095 1,046,279
Nortel Networks Corp. ................ 6,824 592,409
Pitney Bowes Inc. .................... 2,964 190,437
Sun Microsystems Inc. ................ 6,623 456,159(a)
Texas Instruments Inc. ............... 937 135,865
4,671,470
TECHNOLOGY - SOFTWARE & SERVICES -- 7.3%
Automatic Data Processing Inc. ....... 8,409 369,996
Computer Sciences Corp. .............. 2,275 157,402
EMC Corp. ............................ 7,560 415,800(a)
Equifax Inc. .........................13,842 493,986
First Data Corp. .....................14,785 723,541
Microsoft Corp. ...................... 7,694 693,903(a)
Reuters Group PLC ADR ................ 1,266 102,625
Unisys Corp. ......................... 5,887 229,225(a)
3,186,478
NUMBER
OF SHARES VALUE
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TRANSPORTATION -- 1.5%
Burlington Northern Santa Fe Corp. ... 7,961 $ 246,791
Canadian Pacific Ltd. ................ 4,148 98,774
Continental Airlines Inc. (Class B) .. 4,502 169,388(a)
Delta Air Lines Inc. ................. 2,542 146,483
661,436
UTILITIES -- 8.5%
American Telephone & Telegraph Corp. . 4,850 270,691(h)
Bell Atlantic Corp. .................. 3,211 209,919
CMS Energy Corp. ..................... 5,286 221,351(h)
Duke Energy Corp. .................... 2,676 145,508
Edison International ................. 4,148 110,959
El Paso Energy Corp. ................. 3,346 117,737
Florida Progress Corp. ............... 2,857 118,030
FPL Group Inc. ....................... 2,776 151,639
Frontier Corp. ....................... 2,007 118,413
GTE Corp. ............................ 6,336 479,952
MCI WorldCom Inc. .................... 2,656 228,582(a)
New Century Energies Inc. ............ 4,215 163,595
SBC Communications Inc. ..............12,417 720,186
Sonat Inc. ........................... 669 22,161
Sprint Corp. ......................... 2,275 120,148
Texas Utilities Co. .................. 1,873 77,261
U.S. WEST Inc. ....................... 4,014 235,822
Vodafone Air Touch PLC ADR ........... 1,138 224,088
3,736,042
TOTAL COMMON STOCK
(COST $32,472,107) ................. 40,895,776
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PREFERRED STOCK -- 0.5%
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Microsoft Corp. (Series A), 2.75%
(COST $184,707) .................. 1,960 195,877
TOTAL INVESTMENTS IN SECURITIES
(COST $32,656,814) ................. 41,091,653
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SHORT-TERM INVESTMENTS -- 5.9%
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GEI Short Term Investment Fund
(COST $2,604,831) ............ 2,604,831 2,604,831
OTHER ASSETS AND LIABILITIES,
NET 0.3% ...................... 131,849
-----------
NET ASSETS-- 100% $43,828,333
===========
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OTHER INFORMATION
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THE U.S. EQUITY FUND HAD THE FOLLOWING LONG FUTURES CONTRACTS OPEN AT JUNE 30,
1999:
NUMBER
EXPIRATION OF UNDERLYING UNREALIZED
DESCRIPTION DATE CONTRACTS FACE VALUE GAIN
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S&P 500 Sept. 1999 5 $1,727,125 $72,400
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See Notes to Schedule of Investments and Notes to Financial Statements.
6
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S&P 500 INDEX FUND
- --------------------------------------------------------------------------------
Q&A
JAMES B. MAY LEADS A TEAM OF PORTFOLIO MANAGERS AT STATE STREET GLOBAL ADVISORS,
THE SUB-ADVISER FOR THE S&P 500 INDEX FUND. SINCE 1994, JAMES HAS BEEN AN
INVESTMENT OFFICER AND PORTFOLIO MANAGER IN THE U.S. STRUCTURED PRODUCTS GROUP
AT STATE STREET BANK AND TRUST COMPANY WHICH HAS TOTAL ASSETS UNDER MANAGEMENT
$533 BILLION. FROM 1991 TO 1993, JAMES SERVED AS AN INVESTMENT SUPPORT ANALYST
IN THE U.S. PASSIVE SERVICES GROUP AT STATE STREET. JAMES HOLDS A B.S. IN
FINANCE FROM BENTLEY COLLEGE AND AN M.B.A. FROM BOSTON COLLEGE.
Q. HOW DID THE S&P 500 INDEX FUND PERFORM COMPARED TO ITS BENCHMARK AND LIPPER
PEER GROUP FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999?
A. The S&P 500 Index Fund posted a return of 12.06% for the six-month period
ended June 30, 1999. This compares with a 12.26% return for the S&P 500
Index. For the same period, the Lipper peer group of 34 S&P 500 Objective
annuity funds returned 12.10%.
Q. WHY DID THE FUND UNDERPERFORM ITS BENCHMARK?
A. The S&P 500 Index Fund is an unmanaged index and does not reflect the actual
cost of investing in the instruments that comprise the index or expenses
rated to managing a mutual fund. If these expenses (an annualized rate of
0.41% at June 30, 1999) were taken into account, the fund's performance would
track that of the S&P 500 Index.
Q. WHAT DROVE THE MARKET DURING THE PERIOD?
A. The market was mainly driven by events occurring in the second quarter. The
second quarter of 1999 witnessed a number of trend reversals within the U.S.
marketplace that investors had not seen in quite some time. First, during the
last week of the quarter, the Federal Reserve (Fed) raised the federal funds
rate by 0.25%, the first increase in over two years. The markets reacted
positively after the action, as the Fed indicated that it may not raise rates
again for some time.
Secondly, the second quarter also witnessed small-cap stocks outperforming
large-cap stocks for the first time in nearly two years. The Russell 2000
Index posted a return of 15.55% for the quarter, which was 8.59% higher than
the S&P 500 Index (6.96%) for the same period. However, the rebound within
the small-cap universe was not widespread. Value issues and the larger
small-cap stocks produced the lion share of the gain.
Third, large-cap value stocks also enjoyed a day in the sun as they
outperformed growth stocks for the first time in over a year and a half. The
S&P/BARRA Value Index outperformed the S&P/BARRA Growth Index by nearly 7%
during the second quarter. The market's tilt towards value stocks may be a
result of a more optimistic global economic picture.
Q. WHICH SECTORS AND INVESTMENTS STAND OUT?
A. For the six months ended June 30, 1999, there were few surprises in sector
universe returns, as technology continued to dominate. The technology sector
of the S&P 500 posted a return just shy of 25% through the six-month period
ended June 30, 1999, the best among the index's 11 industry groups. The three
technology performance leaders in 1999 have been Microsoft, Cisco Systems and
International Business Machines. Despite technology's continued rise, the
darlings of the past three months -- internet stocks -- pulled back during
the second quarter of 1999 and finished near the bottom of the market in
terms of performance.
Q. WHAT HAS YOUR INVESTMENT STRATEGY BEEN?
A. We continue to utilize a full replication strategy to manage the S&P 500
Index Fund. With this strategy, all 500 constituents of the S&P 500 Index are
owned by the fund in the approximate capitalization weight of the index. This
methodology has provided consistent tracking.
Q. WHAT IS THE OUTLOOK FOR THE FUND AND HOW HAVE YOU POSITIONED THE FUND GOING
FORWARD?
A. Due to the passive investment style of the fund, it will remain fully
invested to the S&P 500 to provide as close tracking as possible to the S&P
500 Index.
7
<PAGE>
S&P 500 INDEX FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
S&P 500 INDEX FUND S&P 500
12/88 $10000 $10000
12/89 12548 13154
12/90 11264 12738
12/91 15136 16633
12/92 16405 17918
12/93 18766 19712
12/94 18752 19968
12/95 25529 27454
12/96 31786 33800
12/97 41426 45053
12/98 53125 57982
6/99 59532 65090
S&P 500 Index Fund (ending value $59,532)
S&P 500 Index (ending value $65,090)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE FIVE TEN
MONTHS YEAR YEAR YEAR
- --------------------------------------------------------------------------------
S&P 500 Index Fund 12.06% 22.28% 26.96% 18.03%
- --------------------------------------------------------------------------------
S&P 500 Index 12.26% 22.71% 27.87% 18.77%
- --------------------------------------------------------------------------------
Lipper peer group average* 12.10% 22.48% 27.37% 18.27%
- --------------------------------------------------------------------------------
Commencement date 4/14/85
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A fund designed for investors who seek growth of capital and accumulation of
income that corresponds to the investment return of the Standard & Poor's 500
Composite Stock Price Index by investing primarily in equity securities of
companies contained in the S&P 500 Index.
- --------------------------------------------------------------------------------
TOP TEN LARGEST HOLDINGS AT JUNE 30, 1999
- --------------------------------------------------------------------------------
Microsoft Corp. .................................... 4.04%
- --------------------------------------------------------------------------------
General Electric Co. ............................... 3.24%
- --------------------------------------------------------------------------------
International Business Machines Corp. .............. 2.06%
- --------------------------------------------------------------------------------
Wal-Mart Stores Inc. ............................... 1.88%
- --------------------------------------------------------------------------------
Cisco Systems Inc. ................................. 1.80%
- --------------------------------------------------------------------------------
Lucent Technologies Inc. ........................... 1.80%
- --------------------------------------------------------------------------------
Intel Corp. ........................................ 1.73%
- --------------------------------------------------------------------------------
Exxon Corp. ........................................ 1.64%
- --------------------------------------------------------------------------------
American Telephone & Telegraph Corp. ............... 1.56%
- --------------------------------------------------------------------------------
Merck & Co. Inc. ................................... 1.53%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
NET ASSETS OF $479,529 (IN THOUSANDS)
[PIE CHART OMITTED]
TECHNOLOGY 20.7%
CONSUMER 15.6%
FINANCIAL SERVICES 15.6%
HEALTHCARE 10.9%
UTILITIES 10.9%
CAPITAL GOODS 8.2%
RETAIL TRADE 6.3%
ENERGY 5.9%
BASIC MATERIALS 3.3%
CASH & OTHER 1.6%*
TRANSPORTATION 1.0%
*INCLUDES CASH EQUALIZED BY FUTURES OF 1.7%.
* LIPPER PERFORMANCE COMPARISON ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED IN THE S&P 500 INDEX OBJECTIVE PEER GROUP CONSISTING OF
34, 32, 18 AND 7 UNDERLYING ANNUITY FUNDS, RESPECTIVELY.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
8
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
S&P 500 INDEX FUND
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
COMMON STOCK -- 98.4%
BASIC MATERIALS -- 3.3%
Air Products & Chemicals Inc. ....... 9,832 $ 395,738(h)
Alcan Aluminum Ltd. ................. 9,577 305,865(h)
Alcoa Inc. .......................... 15,576 963,765
Allegheny Teldyne Inc. .............. 7,602 171,995(h)
Asarco Inc. ......................... 1,638 30,815
Avery Dennison Corp. ................ 4,755 287,083
Barrick Gold Corp. .................. 17,333 335,827
Battle Mountain Gold Co. ............ 5,453 13,292
Bethlehem Steel Corp. ............... 4,966 38,176(a)
Boise Cascade Corp. ................. 2,223 95,311
Champion International Corp. ........ 3,925 187,909
Cyprus Amax Minerals Co. ............ 3,691 56,057
Dow Chemical Co. .................... 9,220 1,169,787
Du Pont de Nemours (E.I.) & Co. ..... 47,311 3,231,933
Eastman Chemical Co. ................ 3,259 168,653
Ecolab Inc. ......................... 5,226 227,984
Engelhard Corp. ..................... 5,146 116,428
FMC Corp. ........................... 1,253 85,596(a)
Fort James Corp. .................... 8,984 340,269
Freeport McMoran Copper &
Gold Inc. (Class B) ............. 6,284 112,719
Georgia Pacific Corp. ............... 7,128 337,689
Goodrich (B.F.) Co. ................. 3,001 127,543
Great Lakes Chemical Corp. .......... 2,297 105,806
Hercules Inc. ....................... 4,128 162,282
Homestake Mining Co. ................ 10,589 86,697
Inco Ltd. ........................... 7,312 131,616
International Paper Co. ............. 17,397 878,548
Louisiana Pacific Corp. ............. 4,222 100,273
Mead Corp. .......................... 4,558 190,297
Millipore Corp. ..................... 1,745 70,782
Monsanto Co. ........................ 26,679 1,052,153
Nalco Chemical Co. .................. 2,505 129,947
Newmont Mining Corp. ................ 6,828 135,707
Nucor Corp. ......................... 3,809 180,689
Pall Corp. .......................... 5,078 112,668
Phelps Dodge Corp. .................. 2,567 158,994
Placer Dome Inc. .................... 14,874 175,699
Potlatch Corp. ...................... 1,030 45,256
PPG Industries Inc. ................. 7,237 427,435
Praxair Inc. ........................ 6,635 324,700
Reynolds Metals Co. ................. 2,685 158,415
Rohm & Haas Co. ..................... 8,914 382,203
Sealed Air Corp. .................... 3,657 237,248(a)
Sigma-Aldrich Corp. ................. 4,491 154,659
Union Carbide Corp. ................. 5,401 263,299
USX-US Steel Group Inc. ............. 3,265 88,155
Vulcan Materials Co. ................ 4,100 197,825
W.R. Grace & Co. .................... 2,987 54,886(a)
Westvaco Corp. ...................... 4,120 119,480
Weyerhaeuser Co. .................... 8,560 588,500
Willamette Industries Inc. .......... 4,550 209,584
Worthington Industries Inc. ......... 3,141 51,630
15,775,867
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
CAPITAL GOODS -- 8.2%
AlliedSignal Inc. ................... 23,444 $ 1,476,972
Armstrong World Industries Inc. ..... 1,615 93,367
Boeing Co. .......................... 40,816 1,803,557
Briggs & Stratton Corp. ............. 934 53,939
Browning-Ferris Industries Inc. ..... 6,380 274,340
Case Corp. .......................... 3,295 158,572
Caterpillar Inc. .................... 15,016 900,960
Centex Corp. ........................ 2,460 92,404
Cooper Industries Inc. .............. 3,871 201,292
Corning Inc. ........................ 10,413 730,212
Crane Co. ........................... 2,427 76,299
Cummins Engine Co. Inc. ............. 1,689 96,484
Danaher Corp. ....................... 5,500 319,687
Deere & Co. ......................... 9,920 393,080
Dover Corp. ......................... 9,058 317,030
Eaton Corp. ......................... 3,150 289,800
Emerson Electric Co. ................ 18,374 1,155,265
Fleetwood Enterprises Inc. .......... 1,230 32,518
Fluor Corp. ......................... 3,052 123,606
Foster Wheeler Corp. ................ 1,006 14,210
General Dynamics Corp. .............. 5,182 354,967
General Electric Co. ................137,565 15,544,845
Grainger (W.W.) Inc. ................ 3,882 208,900
Honeywell Inc. ...................... 5,292 613,210
Illinois Tool Works Inc. ............ 10,597 868,954
Ingersoll Rand Co. .................. 7,099 458,773
Johnson Controls Inc. ............... 3,441 238,504
Kaufman & Broad Home Corp. .......... 2,080 51,740
Lockheed Martin Corp. ............... 16,752 624,012
Masco Corp. ......................... 14,090 406,849
McDermott International Inc. ........ 2,119 59,862
Milacron Inc. ....................... 1,994 36,889
Minnesota Mining & Manufacturing Co. 16,940 1,472,721
Nacco Industries Inc. ............... 222 16,317
National Service Industries Inc. .... 1,676 60,336
Navistar International Corp. Inc. ... 2,695 134,750(a)
Northrop Grumman Corp. .............. 2,861 189,720
Owens Corning ....................... 2,076 71,363
PACCAR Inc. ......................... 3,460 184,677
Parker Hannifin Corp. ............... 4,715 215,711
Pulte Corp. ......................... 1,322 30,489
Raychem Corp. ....................... 3,632 134,384
Raytheon Co. (Class B) .............. 14,224 1,001,014
Rockwell International Corp. ........ 8,168 496,206
Sherwin-Williams Co. ................ 6,863 190,448
Tenneco Inc. ........................ 7,548 180,208
Textron Inc. ........................ 6,468 532,397
Thermo Electron Corp. ............... 6,728 134,981(a)
Thomas & Betts Corp. ................ 2,393 113,069
Timken Co. .......................... 2,031 39,605
Tyco International Ltd. ............. 34,445 3,263,664
United Technologies Corp. ........... 20,286 1,454,253
Waste Management Inc. ............... 25,612 1,376,645
39,364,057
CONSUMER - CYCLICAL -- 7.8%
American Greetings Corp. (Class A) .. 3,217 96,912(h)
Black & Decker Corp. ................ 3,707 234,004
Block H & R Inc. .................... 4,252 212,600
Brunswick Corp. ..................... 4,168 116,183
- --------
See Notes to Schedule of Investments and Notes to Financial Statements.
9
<PAGE>
S&P 500 INDEX FUND
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Carnival Corp. ...................... 25,900 $ 1,256,150
CBS Corp. ........................... 29,770 1,293,134
Cendant Corp. ....................... 32,607 668,443(a)
Clear Channel Communications Inc. ... 14,000 965,125(a)
Comcast Corp. (Class A) ............. 31,244 1,200,941
Cooper Tire & Rubber Co. ............ 3,023 71,418
Dana Corp. .......................... 6,941 319,720
Darden Restaurants Inc. ............. 5,586 121,845
Delphi Automotive Systems Corp. ..... 22,958 426,164
Deluxe Corp. ........................ 3,229 125,729
Donnelley (R.R.) & Sons Co. ......... 5,852 216,890
Dow Jones & Co. Inc. ................ 4,042 214,479
Dun & Bradstreet Corp. .............. 7,142 253,095
Eastman Kodak Co. ................... 13,375 906,156
Ford Motor Co. ...................... 50,600 2,855,737
Fortune Brands Inc. ................. 6,741 278,909
Gannett Inc. ........................ 11,608 828,521
General Motors Corp. ................ 27,294 1,801,404
Genuine Parts Co. ................... 7,296 255,360
Goodyear Tire & Rubber Co. .......... 6,319 371,636
Harrahs Entertainment Inc. .......... 5,735 126,170(a)
Hasbro Inc. ......................... 7,996 223,388
Hilton Hotels Corp. ................. 10,588 150,217
Interpublic Group Cos. Inc. ......... 6,015 521,049
ITT Industries Inc. ................. 3,563 135,839
Jostens Inc. ........................ 1,176 24,770
King World Productions Inc. ......... 2,914 101,444(a)
Knight-Ridder Inc. .................. 3,500 192,281
Laidlaw Enviromental Services Inc. .. 15,988 117,912
Liz Claiborne Inc. .................. 2,365 86,323
Marriott International Inc.(Class A) 10,722 400,735
Mattel Inc. ......................... 17,251 456,073
Maytag Corp. ........................ 3,595 250,527
McDonald's Corp. .................... 57,334 2,368,611
McGraw Hill Cos. Inc. ............... 8,270 446,063
MediaOne Group Inc. ................. 25,626 1,905,934(a)
Meredith Corp. ...................... 2,098 72,643
Mirage Resorts Inc. ................. 8,600 144,050(a)
New York Times Co. .................. 7,788 286,696
Newell Rubbermaid Inc. .............. 11,956 555,954
Nike Inc. (Class B) ................. 11,604 734,678
Omnicom Group Inc. .................. 7,700 616,000
Polaroid Corp. ...................... 1,478 40,830
Reebok International Ltd. ........... 1,930 35,946(a)
Russell Corp. ....................... 1,270 24,765
Seagram Ltd. ........................ 17,735 893,401
Service Corp. International ......... 11,018 212,096
Snap-On Inc. ........................ 2,909 105,269
Springs Industries Inc. ............. 700 30,538
The Stanley Works ................... 3,626 116,712
Time Warner Inc. .................... 50,076 3,680,586
Times Mirror Co. .................... 2,795 165,604
Tribune Co. ......................... 4,938 430,223
Tricon Global Restaurants Inc. ...... 6,211 336,170(a)
TRW Inc. ............................ 4,795 263,126
Tupperware Corp. .................... 2,028 51,714
VF Corp. ............................ 4,902 209,561
Viacom Inc. (Class B) ............... 29,064 1,278,816(a)
Walt Disney Co. ..................... 86,037 2,651,015
Wendy's International Inc. .......... 5,031 142,440
Whirlpool Corp. ..................... 3,109 230,066
Xerox Corp. ......................... 27,590 1,629,534
37,536,324
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER - STABLE -- 7.8%
Adolph Coors Co. .................... 1,465 $ 72,518
Alberto-Culver Co. (Class B) ........ 2,133 56,791
Anheuser Busch Cos. Inc. ............ 20,054 1,422,581(h)
Archer-Daniels Midland Co. .......... 24,021 370,824
Avon Products Inc. .................. 11,164 619,602
Ball Corp. .......................... 1,154 48,757
Bemis Inc. .......................... 2,081 82,720
Bestfoods ........................... 11,490 568,755
Brown-Forman Corp. .................. 2,829 184,415
Campbell Soup Co. ................... 18,076 838,274
Clorox Co. .......................... 5,042 538,549
Coca Cola Co. .......................103,451 6,465,687(h)
Coca Cola Enterprises Inc. .......... 18,100 538,475
Colgate-Palmolive Co. ............... 12,286 1,213,242
Conagra Inc. ........................ 20,368 542,298
Crown Cork & Seal Inc. .............. 4,714 134,349
General Mills Inc. .................. 6,511 523,322
Gillette Co. ........................ 46,466 1,905,106
Heinz (H.J.) Co. .................... 15,197 761,750
Hershey Foods Corp. ................. 5,792 343,900
International Flavours .............. 4,147 184,023
Kellogg Co. ......................... 17,190 567,270
Kimberly Clark Corp. ................ 22,436 1,278,852
Nabisco Group Holdings Corp. ........ 13,500 264,094
Owens-Illinois Inc. ................. 6,800 222,275(a)
Pepsico Inc. ........................ 62,110 2,402,881
Philip Morris Cos. Inc. .............101,179 4,066,131
Pioneer Hi-Bred International Inc. .. 9,700 377,694
Procter & Gamble Co. ................ 55,688 4,970,154
Quaker Oats Co. ..................... 5,528 366,921
Ralston Purina Co. .................. 13,658 415,715
Safeway Inc. ........................ 20,900 1,034,550(a)
Sara Lee Corp. ...................... 38,262 868,069
Supervalu Inc. ...................... 4,900 125,869
Sysco Corp. ......................... 13,472 401,634
Temple Inland Inc. .................. 2,426 165,574
Unilever N V ........................ 24,034 1,676,391
UST Inc. ............................ 7,579 221,686
Wrigley (W.M.) Junior Co. ........... 4,734 426,060
37,267,758
ENERGY -- 5.9%
Amerada Hess Corp. .................. 3,890 231,455(h)
Anadarko Petroleum Corp. ............ 5,300 195,106
Apache Corp. ........................ 5,000 195,000
Ashland Oil Inc. .................... 3,007 120,656
Atlantic Richfield Co. .............. 13,409 1,120,490(h)
Baker Hughes Inc. ................... 14,150 474,025
Burlington Resources Inc. ........... 7,241 313,173
Chevron Corp. ....................... 27,541 2,621,559
Exxon Corp. .........................101,789 7,850,477
Halliburton Co. ..................... 18,760 848,890
Helmerich & Payne Inc. .............. 1,742 41,481
Kerr-McGee Corp. .................... 3,901 195,782
Mobil Corp. ......................... 32,862 3,253,338
Occidental Petroleum Corp. .......... 14,610 308,636
ONEOK Inc. .......................... 1,307 41,497
Phillips Petroleum Co. .............. 10,429 524,709
Reliant Energy Inc. ................. 12,818 354,097
Rowan Cos. Inc. ..................... 2,977 54,888(a)
Royal Dutch Petroleum Co. ADR ....... 89,916 5,417,439
Schlumberger Ltd. ................... 22,954 1,461,883
Sempra Energy ....................... 10,461 236,680
Sunoco Inc. ......................... 3,788 114,350
- ----------
See Notes to Schedule of Investments and Notes to Financial Statements.
10
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -------------------------------------------------------------------------------
Texaco Inc. ......................... 22,496 $ 1,406,000
Union Pacific Resources Group Inc. .. 10,229 166,861
Unocal Corp. ........................ 10,038 397,756
USX-Marathon Group .................. 12,892 419,796
28,366,024
FINANCIAL -- 12.6%
American Express Co. ................ 18,874 2,455,979(h)
American General Corp. .............. 10,403 784,126(h)
AmSouth Bancorp. .................... 7,750 179,703
Associates First Capital
Corp. (Class A) .................. 30,752 1,362,698
Bank of America Corp. ............... 73,140 5,362,076
Bank of New York Inc. ............... 32,210 1,181,704(h)
Bank One Corp. ...................... 49,627 2,955,908(h)
BankBoston Corp. .................... 12,566 642,437
BB&T Corp. .......................... 12,900 473,269
Bear Stearns Cos. Inc. .............. 5,080 237,490
Capital One Financial Corp. ......... 8,200 456,638
Charles Schwab Corp. ................ 17,287 1,899,409
Chase Manhattan Corp. ............... 35,654 3,088,528
Citigroup Inc. ......................141,652 6,728,470
Comerica Inc. ....................... 6,556 389,672
Countrywide Credit Industries Inc. .. 4,600 196,650
Federal Home Loan Mortgage Corp. .... 29,065 1,685,770
Federal National Mortgage Assoc. .... 43,076 2,945,321
Fifth Third Bancorp ................. 11,356 755,884
First Union Corp. ................... 40,448 1,901,056
Firstar Corp. ....................... 28,000 784,000
Fleet Financial Group Inc. .......... 24,132 1,070,857
Franklin Resources Inc. ............. 10,600 430,625
Golden West Financial Corp. ......... 2,355 230,790
Household International Inc. ........ 20,411 966,971
Huntington Bancshares Inc. .......... 9,020 315,700
KeyCorp ............................. 18,428 592,000
Lehman Brothers Holdings Inc. ....... 4,800 298,800
MBIA Inc. ........................... 4,190 271,303
MBNA Corp. .......................... 33,874 1,037,391
Mellon Bank Corp. ................... 21,628 786,718
Mercantile Bancorp. Inc. ............ 6,600 377,025
Merrill Lynch & Co. Inc. ............ 18,717 1,496,190
MGIC Investment Corp. ............... 4,459 216,819
Morgan (J.P.) & Co. Inc. ............ 7,464 1,048,692
Morgan Stanley Dean Witter & Co. .... 23,998 2,459,795
National City Corp. ................. 13,332 873,246
Northern Trust Corp. ................ 4,800 465,600
Paychex Inc. ........................ 9,950 317,156
PNC Bank Corp. ...................... 12,908 743,823
Providian Financial Corp. ........... 6,047 565,395
Regions Financial Corp. ............. 9,600 369,000
Republic of New York Corp. .......... 4,346 296,343
SLM Holding Corp. ................... 7,000 320,688
SouthTrust Corp. .................... 7,200 276,300
State Street Corp. .................. 6,900 589,088(i)
Summit Bancorp. ..................... 7,300 305,231
Suntrust Banks Inc. ................. 13,629 946,364
Synovus Financial Corp. ............. 10,750 213,656
Transamerica Corp. .................. 5,076 380,700
Union Planters Corp. ................ 6,200 277,063
United States Bancorp. .............. 30,527 1,037,918
Wachovia Corp. ...................... 8,566 732,928
Washington Mutual Inc. .............. 25,018 885,012
Wells Fargo & Co. ................... 69,418 2,967,619
60,629,594
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------
HEALTHCARE -- 10.9%
Abbott Laboratories ................ 63,796 $ 2,902,718
Aetna Inc. ......................... 6,052 541,276
Allergan Inc. ...................... 2,676 297,036
Alza Corp. ......................... 4,361 221,866(a,h)
American Home Products Corp. ....... 54,954 3,159,855(h)
Amgen Inc. ......................... 21,596 1,314,656(a)
Bard (C.R.) Inc. ................... 2,551 121,970
Bausch & Lomb Inc. ................. 2,328 178,092
Baxter International Inc. .......... 12,374 750,174
Becton Dickinson & Co. ............. 10,270 308,100
Biomet Inc. ........................ 4,607 183,128
Boston Scientific Corp. ............ 16,788 737,623(a)
Bristol-Myers Squibb Co. ........... 83,208 5,860,963(h)
Cardinal Health Inc. ............... 11,601 743,914
Columbia/HCA Healthcare Corp. ...... 24,323 554,868
Eli Lilly & Co. .................... 46,216 3,310,221
Guidant Corp. ...................... 12,424 639,060
HCR Manor Care Inc. ................ 4,537 109,739(a)
Healthsouth Corp. .................. 17,036 254,475(a)
Humana Inc. ........................ 6,827 88,324(a)
IMS Health Inc. .................... 13,584 424,500
Johnson & Johnson .................. 56,383 5,525,534
Mallinckrodt Inc. .................. 3,404 123,821
McKesson HBOC Inc. ................. 11,361 364,972
Medtronic Inc. ..................... 24,366 1,897,502
Merck & Co. Inc. ................... 98,950 7,322,300
PE Corp. - PE Biosystems Group ..... 2,250 258,188
Pfizer Inc. ........................ 54,248 5,953,718
Pharmacia & Upjohn Inc. ............ 21,385 1,214,935
Schering Plough Corp. .............. 61,758 3,273,174
St. Jude Medical Inc. .............. 3,423 121,944(a)
Tenet Healthcare Corp. ............. 12,997 241,257(a)
United Healthcare Corp. ............ 7,547 472,631
Warner-Lambert Co. ................. 35,947 2,493,823
Watson Pharmaceuticals Inc. ........ 3,900 136,744(a)
Wellpoint Health Networks
Inc. (Class A) ................... 3,000 254,625(a)
52,357,726
INSURANCE -- 3.0%
AFLAC Inc. ......................... 11,300 540,987
Allstate Corp. ..................... 34,076 1,222,476(h)
American International Group Inc. .. 51,921 6,078,002(h)
Aon Corp. .......................... 10,936 451,110
Chubb Corp. ........................ 6,897 479,341
CIGNA Corp. ........................ 8,463 753,207
Cincinnati Financial Corp. ......... 7,100 266,694
Conseco Inc. ....................... 13,984 425,638
Hartford Financial Services
Group Inc. ...................... 9,504 554,202
Jefferson-Pilot Corp. .............. 4,282 283,415
Lincoln National Corp. ............. 8,312 434,821
Loews Corp. ........................ 4,516 357,329
Marsh & McLennan Cos. Inc. ......... 11,154 842,127
Progressive Corp. .................. 3,000 435,000
Provident Cos. Inc. ................ 5,900 236,000
Safeco Corp. ....................... 5,481 241,849
St. Paul Cos. Inc. ................. 9,980 317,489
Torchmark Corp. .................... 5,500 187,688
UNUM Corp. ......................... 5,782 316,565
14,423,940
- ---------
See Notes to Schedule of Investments and Notes to Financial Statements.
11
<PAGE>
S&P 500 INDEX FUND
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
RETAIL TRADE -- 6.3%
Albertsons Inc. ..................... 17,861 $ 920,958(h)
Autozone Inc. ....................... 6,544 197,138(a)
Best Buy Co. Inc. ................... 8,600 580,500(a)
Circuit City Stores Inc. ............ 4,063 377,859
Consolidated Stores Corp. ........... 4,500 121,500(a)
Costco Cos. Inc. .................... 9,233 739,217(a)
CVS Corp. ........................... 16,656 845,292
Dayton Hudson Corp. ................. 18,676 1,213,940
Dillards Inc. ....................... 4,495 157,887
Dollar General Corp. ................ 9,393 272,397
Federated Department Stores Inc. .... 8,704 460,768(a)
Fruit of the Loom Inc. .............. 3,047 29,708(a)
Gap Inc. ............................ 35,919 1,809,394
Great Atlantic & Pacific Tea Co. Inc. 1,470 49,704
Harcourt General Inc. ............... 3,161 162,989
Home Depot Inc. ..................... 62,212 4,008,786
J.C. Penney Co. Inc. ................ 10,987 533,556
K Mart Corp. ........................ 20,731 340,766(a)
Kohl's Corp. ........................ 7,000 540,313(a)
Kroger Co. .......................... 34,730 970,269(a)
Limited Inc. ........................ 8,968 406,923
Longs Drug Stores Corp. ............. 1,582 54,678
Lowes Cos. Inc. ..................... 15,664 887,953
May Department Stores Co. ........... 14,084 575,684
Nordstrom Inc. ...................... 6,292 210,782
Office Depot Inc. ................... 15,600 344,175(a)
Pep Boys Manny Moe & Jack ........... 1,608 34,773
Rite Aid Corp. ...................... 10,958 269,841
Sears Roebuck & Co. ................. 15,845 706,093
Staples Inc. ........................ 19,800 612,562(a)
Tandy Corp. ......................... 8,056 393,737
TJX Cos. Inc. ....................... 13,140 437,726
Toys `R Us Inc. ..................... 10,835 224,149(a)
Wal-Mart Stores Inc. ................187,124 9,028,733
Walgreen Co. ........................ 42,200 1,239,625
Winn Dixie Stores Inc. .............. 6,340 234,184
29,994,559
TECHNOLOGY - ELECTRONICS & EQUIPMENT -- 13.0%
3Com Corp. .......................... 15,454 412,429(a)
Advanced Micro Devices Inc. ......... 5,837 105,431(a,h)
Andrew Corp. ........................ 3,256 61,661(a)
Apple Computer ...................... 6,460 299,179(a)
Applied Materials Inc. .............. 15,700 1,159,838(a)
Cabletron Systems Inc. .............. 7,026 91,338(a)
Cisco Systems Inc. ..................134,402 8,643,729(a)
Compaq Computer Corp. ............... 71,405 1,691,406
Data General Corp. .................. 2,195 31,965(a)
Dell Computer Corp. .................106,448 3,938,576(a)
EG & G Inc. ......................... 1,605 57,178
Gateway Inc. ........................ 6,700 395,300(a)
General Instrument Corp. ............ 7,443 316,328(a)
Harris Corp. ........................ 3,362 131,748
Hewlett Packard Co. ................. 42,541 4,275,370
Ikon Office Solutions Inc. .......... 5,610 84,150
Intel Corp. .........................139,604 8,306,438
International Business Machines Corp. 76,330 9,865,652
KLA-Tencor Corp. .................... 3,700 240,038(a)
LSI Logic Corp. ..................... 6,296 290,403(a)
Lucent Technologies Inc. ............127,818 8,619,726
Micron Technology Inc. .............. 10,327 416,307(a)
Motorola Inc. ....................... 25,351 2,402,007
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
National Semiconductor Corp. ........ 6,483 $ 164,101(a)
Nortel Networks Corp. ............... 27,781 2,411,738
Pitney Bowes Inc. ................... 11,432 734,506
Scientific-Atlanta Inc. ............. 2,853 102,708
Seagate Technology .................. 9,890 253,431(a)
Silicon Graphics Inc. ............... 7,633 124,990(a)
Solectron Corp. ..................... 10,700 713,556(a)
Sun Microsystems Inc. ............... 32,290 2,223,974(a)
Tektronix Inc. ...................... 1,938 58,503
Tellabs Inc. ........................ 16,452 1,111,538(a)
Texas Instruments Inc. .............. 16,384 2,375,680
62,110,922
TECHNOLOGY - SOFTWARE & SERVICES -- 7.7%
Adobe Systems Inc. .................. 2,498 205,226(h)
America Online Inc. ................. 45,600 5,038,800(a)
Autodesk Inc. ....................... 2,512 74,261
Automatic Data Processing Inc. ...... 26,218 1,153,592
BMC Software Inc. ................... 9,700 523,800(a)
Ceridian Corp. ...................... 5,808 189,849(a)
Computer Associates
International Inc. ............... 22,581 1,241,955
Computer Sciences Corp. ............. 6,482 448,473
Compuware Corp. ..................... 15,400 489,913(a)
Electronic Data Systems Corp. ....... 20,600 1,165,188
EMC Corp. ........................... 42,572 2,341,460(a)
Equifax Inc. ........................ 5,900 210,556
First Data Corp. .................... 18,281 894,627
Microsoft Corp. .....................214,556 19,350,269(a)
Network Appliance Inc. .............. 3,000 167,625(a)
Novell Inc. ......................... 14,466 383,349(a)
Oracle Systems Corp. ................ 60,758 2,255,641(a)
Parametric Technology Corp. ......... 10,406 144,383(a)
PeopleSoft Inc. ..................... 10,700 184,575(a)
Shared Medical System Corp. ......... 1,053 68,708
Unisys Corp. ........................ 11,509 448,132(a)
36,980,382
TRANSPORTATION -- 1.0%
AMR Corp. ........................... 6,314 430,931(a,h)
Burlington Northern Santa Fe Corp. .. 20,149 624,619
CSX Corp. ........................... 9,038 409,534
Delta Air Lines Inc. ................ 5,782 333,188
FDX Corp. ........................... 12,660 686,805(a)
Kansas City Southern Industries Inc. 4,800 306,300
Norfolk Southern Corp. .............. 15,801 476,005
Ryder System Inc. ................... 2,831 73,606
Southwest Airlines Co. .............. 14,444 449,570
U.S. Airways Group Inc. ............. 3,807 165,842(a)
Union Pacific Corp. N.V. ............ 10,554 615,430
4,571,830
UTILITIES -- 10.9%
AES Corp. .......................... 8,100 470,812(a)
Alltel Corp. ....................... 11,894 850,421
Ameren Corp. ....................... 5,542 212,674
American Electric Power Inc. ....... 8,297 311,656(h)
American Telephone & Telegraph Corp. 133,874 7,471,843
Ameritech Corp. 46,104 3,388,644(h)
- ----------
See Notes to Schedule of Investments and Notes to Financial Statements.
12
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Bell Atlantic Corp. ................. 65,168 $ 4,260,358
Bellsouth Corp. ..................... 79,498 3,726,469(h)
Carolina Power & Light Co. .......... 6,060 259,444
Central & South West Corp. .......... 9,248 216,172
CenturyTel Inc. ..................... 5,950 236,512
CINergy Corp. ....................... 6,953 222,496
CMS Energy Corp. .................... 5,100 213,562
Coastal Corp. ....................... 9,142 365,680
Columbia Gas Systems Inc. ........... 3,284 205,866
Consolidated Edison Inc. ............ 9,707 439,242
Consolidated Natural Gas Co. ........ 3,915 237,836
Constellation Energy Group .......... 6,503 192,651
Dominion Resources Inc. ............. 7,889 341,692
DTE Energy Co. ...................... 6,166 246,640
Duke Energy Corp. ................... 15,466 840,964
Eastern Enterprises ................. 802 31,880
Edison International ................ 14,642 391,673
Enron Corp. ......................... 14,800 1,209,900
Entergy Corp. ....................... 10,047 313,969
FirstEnergy Corp. ................... 9,977 309,287
Florida Progress Corp. .............. 4,000 165,250
FPL Group Inc. ...................... 7,531 411,381
Frontier Corp. ...................... 7,443 439,137
GPU Inc. ............................ 5,300 223,594
GTE Corp. ........................... 40,761 3,087,646
MCI WorldCom Inc. ................... 78,255 6,734,821(a)
New Century Energies Inc. ........... 4,700 182,419
Nextel Communications Inc. .......... 12,700 637,381(a)
Niagara Mohawk Holdings Inc. ........ 8,354 134,186(a)
Nicor Inc. .......................... 1,943 73,955
Northern States Power Co. ........... 6,660 161,089
Pacificorp .......................... 12,899 237,019
Peco Energy Co. ..................... 7,822 327,546
Peoples Energy Corp. ................ 1,721 64,860
PG&E Corp. .......................... 16,354 531,505
PP&L Resources Inc. ................. 6,422 197,477
Public Service Enterprise Group ..... 9,459 386,637
SBC Communications Inc. ............. 82,380 4,778,040
Sonat Inc. .......................... 4,587 151,944
Southern Co. ........................ 29,458 780,637
Sprint Corp. ........................ 36,252 1,914,559
Sprint Corp. ........................ 18,463 1,054,699(a)
Texas Utilities Co. ................. 11,686 482,047
U.S. WEST Inc. ...................... 21,188 1,244,795
Unicom Corp. ........................ 9,319 359,364
Williams Cos. Inc. .................. 18,186 774,042
52,504,373
TOTAL INVESTMENTS IN SECURITIES
(COST $356,841,482) ............... 471,883,356
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
SHORT-TERM INVESTMENTS -- 2.5%
GEI Short Term Investment Fund ... 911,577 $ 911,577
Money Market Obligations Trust ... 380,026 380,026
Short Term Investment Fund ....... 9,920,629 9,920,629
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
U.S. GOVERNMENT -- 0.2%
United States Treasury Bill
4.60% 09/02/99 ............ $ 700,000 694,451
TOTAL SHORT-TERM INVESTMENTS
(COST $11,906,683) ............ 11,906,683
OTHER ASSETS AND LIABILITIES,
NET (0.9)% .................. (4,261,350)
-------------
NET ASSETS-- 100% $479,528,689
=============
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
THE S&P 500 INDEX FUND HAD THE FOLLOWING LONG FUTURES CONTRACTS OPEN AT JUNE 30,
1999:
NUMBER
EXPIRATION OF UNDERLYING UNREALIZED
DESCRIPTION DATE CONTRACTS FACE VALUE GAIN
- --------------------------------------------------------------------------------
S&P 500 Sept. 1999 23 $7,944,775 $229,750
- ----------
See Notes to Schedule of Investments and Notes to Financial Statements.
13
<PAGE>
PREMIER GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
Q&A
DAVID CARLSON MANAGES PENSION AND MUTUAL FUND PORTFOLIOS WITH TOTAL ASSETS
EXCEEDING $6 BILLION. DAVE JOINED GE IN 1980 WITH THE GE FINANCIAL MANAGEMENT
PROGRAM. IN 1982, HE JOINED GE INVESTMENTS AS A SECURITY ANALYST RESPONSIBLE FOR
SEVERAL CONSUMER INDUSTRIES. IN 1988, DAVE ASSUMED RESPONSIBILITY FOR MANAGING
ELFUN TRUSTS. HE IS A TRUSTEE FOR THE GE CANADA PENSION TRUST, A CHARTERED
FINANCIAL ANALYST AND A MEMBER OF THE NEW YORK SOCIETY OF SECURITY ANALYSTS.
DAVE IS A GRADUATE OF INDIANA UNIVERSITY WITH A B.S. IN BUSINESS.
Q. HOW DID THE PREMIER GROWTH EQUITY FUND PERFORM COMPARED TO ITS BENCHMARK AND
LIPPER PEER GROUP FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999?
A. The Premier Growth Equity Fund returned 20.13% for the six-month period ended
June 30, 1999. For the same period, the fund's benchmark, the S&P 500, gained
12.26% and our Lipper peer group of 186 Growth annuity funds returned 12.62%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. Impressive returns from oil service and technology stocks helped performance.
Over the past six months, the recovery in crude oil prices has been much
greater than expected. Oil was selling around $12 per barrel at the beginning
of the year and about $20 per barrel by the end of June. Of the portfolio's
two energy stocks, Baker Hughes gained 90% and Schlumberger returned 37%.
The technology sector continues to be a market leader, as it was in 1998.
Four of the fund's technology stocks performed well above market averages
during the first half of the year: Applied Materials, a manufacturer of
semiconductor equipment, gained 73%; Cisco Systems, which makes networking
equipment, earned 39%; Microsoft was up 30%; and EMC, a storage equipment
manufacturer, returned 29%.
Two other stocks in the portfolio also had noteworthy performances.
AT&T-Liberty Media, the cable programmer, gained 60% and Citigroup, the
financial services company, was up 43%.
Q. HAVE YOU MADE ANY CHANGES IN THE FUND?
A. AlliedSignal appreciated sharply after it announced a merger with Honeywell.
Because the stock price rose above our valuation levels, we sold our position
and used the proceeds to purchase stock in Merck, the pharmaceuticals
company. When another holding, Airtouch Communications, a U.S.
telecommunications company, was acquired by Vodaphone, we retained a position
in Vodaphone.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. Stock prices continue to surge at rates greater than the underlying growth in
the economy and corporate profits. Clearly, this is not sustainable however
when this trend might end is unpredictable. The fund will remain essentially
fully invested in high-quality growth companies and, over the long term, we
believe the superior growth rate should allow returns to exceed those of the
broad market averages. As we have stated in the past, we believe equity
returns in the future will be at much more modest levels than those we have
witnessed in the last few years.
14
<PAGE>
PREMIER GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
PREMIER GROWTH EQUITY FUND S&P 500
12/12/97 $10000 $10000
12/97 10346 10182
3/98 11712 11604
6/98 12193 11988
9/98 11395 10802
12/98 14125 13104
3/99 15399 13753
6/99 16968 14710
Premier Growth Equity Fund (ending value $16,968)
S&P 500 Index (ending value $14,710)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE SINCE
MONTHS YEAR COMMENCEMENT
- --------------------------------------------------------------------------------
Premier Growth Equity Fund 20.13% 39.17% 40.63%
- --------------------------------------------------------------------------------
S&P 500 Index 12.26% 22.71% 28.26%
- --------------------------------------------------------------------------------
Lipper peer group average* 12.62% 20.49% N/A
- --------------------------------------------------------------------------------
Commencement date 12/12/97
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A fund designed for investors who seek long-term growth of capital and
future income by investing primarily in a more concentrated portfolio of
equity securities of large- and medium-sized companies with average growth
histories and/or growth potential.
- --------------------------------------------------------------------------------
TOP TEN LARGEST HOLDINGS AT JUNE 30, 1999
- --------------------------------------------------------------------------------
AT&T Corp. - Liberty Media Group .................. 4.05%
- --------------------------------------------------------------------------------
First Data Corp. .................................. 4.04%
- --------------------------------------------------------------------------------
Catalina Marketing Corp. .......................... 3.80%
- --------------------------------------------------------------------------------
Cisco Systems Inc. ................................ 3.54%
- --------------------------------------------------------------------------------
Microsoft Corp. ................................... 3.52%
- --------------------------------------------------------------------------------
Baker Hughes Inc. ................................. 3.46%
- --------------------------------------------------------------------------------
Interpublic Group Cos. Inc. ....................... 3.38%
- --------------------------------------------------------------------------------
MCI WorldCom Inc. ................................. 3.36%
- --------------------------------------------------------------------------------
Waste Management Inc. ............................. 3.33%
- --------------------------------------------------------------------------------
NTL Inc. .......................................... 3.30%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
NET ASSETS OF $24,257 (IN THOUSANDS)
[PIE CHART OMITTED]
TECHNOLOGY 25.0%
CONSUMER 21.9%
HEALTHCARE 18.5%
CAPITAL GOODS 8.9%
CASH & OTHER 8.2%*
UTILITIES 5.7%
ENERGY 5.5%
FINANCIAL SERVICES 3.3%
RETAIL TRADE 3.0%
*INCLUDES CASH EQUALIZED BY FUTURES OF 2.8%.
* LIPPER PERFORMANCE COMPARISON ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIOD INDICATED IN THE GROWTH PEER GROUP CONSISTING OF 186 AND 178
UNDERLYING ANNUITY FUNDS.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
15
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PREMIER GROWTH EQUITY FUND
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK -- 91.8%
CAPITAL GOODS -- 8.9%
Dover Corp. ........................ 17,265 $ 604,275
Molex Inc. (Class A) ............... 23,949 754,394
Waste Management Inc. .............. 15,038 808,292
2,166,961
CONSUMER - CYCLICAL -- 19.5%
AT&T Corp. - Liberty Media
Group (Class A) .................. 26,734 982,474(a)
Carnival Corp. ..................... 12,253 594,271
Catalina Marketing Corp. ........... 10,025 922,300(a)
Comcast Corp. (Class A) ............ 15,594 599,394
Interpublic Group Cos. Inc. ........ 9,468 820,166
NTL Inc. ........................... 9,301 801,630(a)
4,720,235
CONSUMER - STABLE -- 2.4%
Avon Products Inc. ................. 10,582 587,301
ENERGY -- 5.5%
Baker Hughes Inc. .................. 25,063 839,611
Schlumberger Ltd. .................. 7,797 496,571
1,336,182
FINANCIAL -- 3.3%
Citigroup Inc. ..................... 16,708 793,630
HEALTHCARE -- 18.5%
Cardinal Health Inc. ............... 11,732 752,314
Dentsply International Inc. ........ 17,266 483,448
Henry Schein Inc. .................. 23,392 741,234(a)
Johnson & Johnson .................. 6,182 605,836
Lincare Holdings Inc. .............. 20,607 515,175(a)
Merck & Co. Inc. ................... 9,469 700,706
Sybron International Corp. ......... 25,063 690,799(a)
4,489,512
RETAIL TRADE -- 3.0%
Home Depot Inc. .................... 11,139 717,769
TECHNOLOGY - ELECTRONICS & EQUIPMENT -- 9.0%
Applied Materials Inc. ............. 9,468 699,448(a)
Cisco Systems Inc. ................. 13,366 859,601(a,h)
Intel Corp. ........................ 10,582 629,629
2,188,678
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
TECHNOLOGY - SOFTWARE & SERVICES -- 16.0%
Automatic Data Processing Inc. ..... 14,035 $ 617,540
EMC Corp. .......................... 12,810 704,550(a)
Equifax Inc. ....................... 20,050 715,535
First Data Corp. ................... 20,050 981,197
Microsoft Corp. .................... 9,468 853,895(a)
3,872,717
UTILITIES -- 5.7%
MCI WorldCom Inc. .................. 9,468 814,840(a)
Vodafone AirTouch PLC (ADR) ........ 2,924 576,028
1,390,868
TOTAL INVESTMENTS IN SECURITIES
(COST $14,355,752) ............... 22,263,853
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 8.2%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund
(COST $1,992,781) ...............1,992,781 1,992,781
OTHER ASSETS AND LIABILITIES,
NET 0.0% ........................ 536
-----------
NET ASSETS-- 100% $24,257,170
===========
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
THE PREMIER GROWTH EQUITY FUND HAD THE FOLLOWING LONG FUTURES CONTRACTS OPEN AT
JUNE 30, 1999:
NUMBER
EXPIRATION OF UNDERLYING UNREALIZED
DESCRIPTION DATE CONTRACTS FACE VALUE GAIN
- --------------------------------------------------------------------------------
S&P 500 Sept. 1999 2 $690,850 $17,575
- -----------
See Notes to Schedule of Investments and Notes to Financial Statements.
16
<PAGE>
VALUE EQUITY FUND
- --------------------------------------------------------------------------------
Q&A
JON D. BOSSE OF NWQ INVESTMENT MANAGEMENT COMPANY (NWQ) IS THE PORTFOLIO MANAGER
OF THE VALUE EQUITY FUND. NWQ IS THE FUND'S SUB-ADVISER AND HAS TOTAL ASSETS
UNDER MANAGEMENT EXCEEDING $7 BILLION. PRIOR TO JOINING NWQ IN 1996, JON SPENT
TEN YEARS WITH ARCO INVESTMENT MANAGEMENT COMPANY WHERE HE WAS DIRECTOR OF
EQUITY RESEARCH AND MANAGED A VALUE-ORIENTED FUND. PREVIOUS TO THIS, HE SPENT
FOUR YEARS IN THE CORPORATE FINANCE DEPARTMENT OF ARCO. JON RECEIVED HIS B.A.
(SUMMA CUM LAUDE) IN ECONOMICS FROM WASHINGTON UNIVERSITY IN ST. LOUIS WHERE HE
RECEIVED THE JOHN M. OLIN AWARD FOR EXCELLENCE IN ECONOMICS. HE RECEIVED HIS
M.B.A. FROM THE WHARTON SCHOOL AT THE UNIVERSITY OF PENNSYLVANIA. JON IS ALSO A
CHARTERED FINANCIAL ANALYST AND A MEMBER OF THE ASSOCIATION FOR INVESTMENT
MANAGEMENT AND RESEARCH AND THE LOS ANGELES SOCIETY OF FINANCIAL ANALYSTS.
Q. HOW DID THE VALUE EQUITY FUND PERFORM COMPARED TO ITS BENCHMARK AND LIPPER
PEER GROUP FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999?
A. The Value Equity Fund posted a return of 22.99% for the six-month period
ended June 30, 1999. This compares with a 12.26% return for the S&P 500
Index. For the same period, the Lipper peer group of 185 Growth and Income
annuity funds returned 11.70%.
Q. WHY DID THE FUND OUTPERFORM ITS BENCHMARK?
A. A number of significant factors have attributed to the superior performance
of the Value Equity Fund as compared to its index and peer group; in
particular, takeovers, individual stock selection, and general strong
performance of value stocks.
Anecdotal evidence over the last six months showing a strengthening global
economy has lifted the earnings expectations of many cyclical companies,
returning value-oriented stocks back to favor.
Maintaining our value discipline, while resisting the short-term temptations
of chasing the market momentum, has positioned the fund to benefit from this
shift in the market.
Q. WHICH INVESTMENTS STAND OUT?
A. During the last six months, the fund held positions in six companies that
received takeover proposals. These companies include Cellular Communications
International, MediaOne Group, Cellular Communications of Puerto Rico,
@Entertainment, First Security, and Case. Since the beginning of the year,
these companies have appreciated an average of 78% in the fund. Our
investments in telecommunication and media companies such as Telephone & Data
Systems, CoreComm, and AT&T-Liberty Media also helped drive performance, as
well as a rebound in our energy investments, including BJ Services and Ocean
Energy.
Q. HOW DO YOU PICK STOCKS?
A. Our investment philosophy is to identify undervalued companies with catalysts
present to improve profitability and unlock value. Catalysts may include new
management, industry consolidation, restructuring, and a positive turn in the
fundamentals. We are value-oriented and invest in attractive risk/reward
opportunities. We are not chasing the current market mania for internet,
technology, and other growth stocks where we find risk/reward and valuation
parameters extremely unattractive.
Q. WHAT IS THE OUTLOOK FOR THE FUND AND HOW HAVE YOU POSITIONED THE FUND GOING
FORWARD?
A. We continue to find attractive investment opportunities in the current market
environment. Recent purchases have included Lyondell Chemical, Galileo
International, York International and Tenneco. We expect the fund to continue
to benefit from the shift of the market to value-oriented companies, and see
many more investment opportunities in this area.
17
<PAGE>
VALUE EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
VALUE EQUITY FUND S&P 500
5/1/97 $10000 $10000
6/97 11450 11086
9/97 13320 11920
12/97 13256 12259
3/98 15055 13971
6/98 14975 14434
9/98 12406 13006
12/98 14142 15777
3/99 15007 16559
6/99 17393 17711
Value Equity Fund (ending value $17,393)
S&P 500 Index (ending value $17,711)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE SINCE
MONTHS YEAR COMMENCEMENT
- --------------------------------------------------------------------------------
Value Equity Fund 22.99% 16.15% 29.10%
- --------------------------------------------------------------------------------
S&P 500 Index 12.26% 22.71% 30.18%
- --------------------------------------------------------------------------------
Lipper peer group average* 11.70% 15.78% N/A
- --------------------------------------------------------------------------------
Commencement date 5/1/97
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A fund designed for investors who seek long-term growth of capital and future
income by investing primarily in equity securities of mid-cap U.S. companies
that the portfolio manager believes are undervalued by the market and have
above-average growth potential.
- --------------------------------------------------------------------------------
TOP TEN LARGEST HOLDINGS AT JUNE 30, 1999
- --------------------------------------------------------------------------------
AT&T Corp. - Liberty Media Group 4.20%
- --------------------------------------------------------------------------------
CoreComm Ltd. 4.01%
- --------------------------------------------------------------------------------
NTL Inc. 3.42%
- --------------------------------------------------------------------------------
MediaOne Group Inc. 3.14%
- --------------------------------------------------------------------------------
Loews Corp. 2.83%
- --------------------------------------------------------------------------------
Telephone & Data Systems Inc. 2.62%
- --------------------------------------------------------------------------------
First Union Corp. 2.54%
- --------------------------------------------------------------------------------
The E.W. Scripps Co. Inc. 2.53%
- --------------------------------------------------------------------------------
Alltel Corp. 2.51%
- --------------------------------------------------------------------------------
Waste Management Inc. 2.48%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
NET ASSETS OF $78,140 (IN THOUSANDS)
[PIE CHART OMTITED]
CONSUMER 28.5%
FINANCIAL SERVICES 25.7%
UTILITIES 11.5%
CAPITAL GOODS 7.2%
ENERGY 6.6%
CASH & OTHER 6.0%*
BASIC MATERIALS 4.2%
HEALTHCARE 3.6%
TECHNOLOGY 3.0%
TRANSPORTATION 2.3%
REAL ESTATE INVESTMENT TRUST 1.4%
* LIPPER PERFORMANCE COMPARISON ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIOD INDICATED IN THE GROWTH & INCOME PEER GROUP CONSISTING OF 185 AND
179 UNDERLYING ANNUITY FUNDS.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
18
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
VALUE EQUITY FUND
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK -- 94.0%
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 4.2%
Lyondell Chemical Co. .............. 70,000 $ 1,443,750
Praxair Inc. ....................... 37,000 1,810,687
3,254,437
CAPITAL GOODS -- 7.2%
Atchison Casting Corp. ............. 10,500 108,281(a)
Case Corp. ......................... 22,500 1,082,813
Tenneco Inc. ....................... 56,000 1,337,000
Waste Management Inc. .............. 36,000 1,935,000
York International Corp. ........... 28,000 1,198,750
5,661,844
CONSUMER - CYCLICAL -- 25.6%
@ Entertainment Inc. ............... 47,900 898,125(a)
AT&T Corp. - Liberty Media
Group (Class A) .................. 89,340 3,283,245(a)
Cox Communications Inc. ............ 40,000 1,472,500(a)
Darden Restaurants Inc. ............ 30,000 654,375
Federal-Mogul Corp. ................ 29,500 1,534,000
Ford Motor Co. ..................... 28,800 1,625,400
Hasbro Inc. ........................ 53,050 1,482,084
Hayes Lemmerz International Inc. ... 28,700 843,063(a)
Lear Corp. ......................... 6,500 323,375(a)
Mandalay Resort Group .............. 36,000 760,500(a)
MediaOne Group Inc. ................ 33,000 2,454,375(a)
NTL Inc. ........................... 31,000 2,671,812(a)
The E.W. Scripps Co. Inc. .......... 41,600 1,978,600
19,981,454
CONSUMER - STABLE -- 2.9%
Alberto-Culver Co. (Class B) ....... 32,000 730,000
Philip Morris Cos. Inc. ............ 38,000 1,527,125
2,257,125
ENERGY -- 6.6%
BJ Services Co. .................... 48,000 1,413,000(a)
Noble Affiliates Inc. .............. 27,000 761,063
Ocean Energy Inc. .................. 89,050 857,106(a)
Tosco Corp. ........................ 55,000 1,426,562
Transocean Offshore Inc. ........... 27,000 708,750
5,166,481
FINANCIAL -- 17.0%
Bank of America Corp. .............. 22,031 1,615,148
Bank One Corp. ..................... 31,000 1,846,437
Chase Manhattan Corp. .............. 18,100 1,567,912
First Security Corp. ............... 50,000 1,362,500
First Union Corp. .................. 42,300 1,988,100
Heller Financial Inc. .............. 55,000 1,529,688
MGIC Investment Corp. .............. 12,500 607,813
UnionBanCal Corp. .................. 38,000 1,372,750
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Waddell & Reed Financial Inc.
(Class A) ........................ 43,433 $ 1,191,693
Waddell & Reed Financial Inc.
(Class B) ........................ 6,171 166,617
13,248,658
HEALTHCARE -- 3.6%
Aetna Inc. ......................... 19,500 1,744,031
Pharmacia & Upjohn Inc. ............ 19,000 1,079,438
2,823,469
INSURANCE -- 8.7%
Hartford Financial Services
Group Inc. ...................... 26,000 1,516,125
Loews Corp. ........................ 27,900 2,207,587
Provident Cos. Inc. ................ 44,800 1,792,000
Torchmark Corp. .................... 37,200 1,269,450
6,785,162
REAL ESTATE INVESTMENT TRUST -- 1.4%
Indymac Mortgage Holdings Inc. ..... 70,000 1,120,000
TECHNOLOGY - ELECTRONICS & EQUIPMENT -- 3.0%
Allen Telecomm Inc. ................ 40,000 430,000(a)
Quantum Corp. ...................... 53,000 1,278,625(a)
Storage Technology Corp. ........... 29,000 659,750(a)
2,368,375
TRANSPORTATION -- 2.3%
Galileo International Inc. ......... 33,300 1,779,469
UTILITIES -- 11.5%
Alltel Corp. ....................... 27,380 1,957,670
Cellular Communications of
Puerto Rico ...................... 65,000 1,852,500(a)
CoreComm Ltd. ...................... 65,000 3,136,250(a)
Telephone & Data Systems Inc. ...... 28,000 2,045,750
8,992,170
TOTAL INVESTMENTS IN SECURITIES
(COST $56,996,024) ............... 73,438,644
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 5.9%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund
(COST $4,660,021) ...............4,660,021 4,660,021
OTHER ASSETS AND LIABILITIES,
NET 0.1% ...................... 41,020
------------
NET ASSETS-- 100% $78,139,685
============
- ------------
See Notes to Schedule of Investments and Notes to Financial Statements.
19
<PAGE>
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Q&A
RALPH R. LAYMAN MANAGES THE INTERNATIONAL EQUITY PROCESS AT GE INVESTMENTS.
TOTAL ASSETS UNDER HIS MANAGEMENT EXCEEDS $10 BILLION. PRIOR TO JOINING GE
INVESTMENTS IN 1991, RALPH WAS EXECUTIVE VICE PRESIDENT, PARTNER AND PORTFOLIO
MANAGER OF THE INTERNATIONAL EQUITY OPERATIONS AT NORTHERN CAPITAL MANAGEMENT.
PREVIOUSLY, HE WAS A VICE PRESIDENT AND PORTFOLIO MANAGER AT TEMPLETON
INVESTMENT COUNSEL, INC. HE WAS INSTRUMENTAL IN FORMING TEMPLETON'S EMERGING
MARKETS EQUITY FUND IN THE U.S. RALPH IS A TRUSTEE OF THE GE PENSION TRUST, AND
GE'S EMPLOYEE SAVINGS PROGRAM, AND SERVES ON THE GE INVESTMENTS' ASSET
ALLOCATION COMMITTEE. HE IS A CHARTERED FINANCIAL ANALYST, A CHARTER MEMBER OF
THE INTERNATIONAL SOCIETY OF SECURITY ANALYSTS AND A MEMBER OF THE NEW YORK
SOCIETY OF SECURITY ANALYSTS. RALPH IS A GRADUATE OF THE UNIVERSITY OF WISCONSIN
WITH A B.S. IN ECONOMICS AND A M.S. IN FINANCE.
Q. HOW DID THE INTERNATIONAL EQUITY FUND PERFORM COMPARED TO ITS BENCHMARK AND
LIPPER PEER GROUP FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999?
A. The International Equity Fund posted a return of 5.97% for the six-month
period ended June 30, 1999. This compares with a return of 3.97% for the MSCI
EAFE Index. During the same period, the fund's Lipper peer group of 127
International annuity funds returned 8.10%
Q. WHAT FACTORS CONTRIBUTED TO THE FUND OUT-PERFORMING ITS BENCHMARK?
A. Compared to the market benchmark, the fund was overweight in European stocks
and underweight in Japanese and Asian holdings, which affected performance.
However, good stock selection in Europe and Asia helped offset the effects of
market allocation.
Asia has been the headline economic success story of the quarter. Investors
started to return to Japan as the government began bank restructuring and as
more companies announced their own restructuring plans. Japan's Gross
Domestic Product gained 1.9% for the first quarter of 1999, stopping a 5
month slide. Investment money also began to flow back into other Asian
markets, which are reorganizing their economies, too. Market indexes are up
sharply for South Korea, Thailand and Indonesia. These markets all are
volatile and much thinner than they were three years ago, before the currency
crisis.
In contrast, Europe's economic indicators, although positive, were weak in
the first half of 1999, reflecting the disappointing performance of the Euro.
However, the Central European Bank cut interest rates in April, which kept
the second quarter flat. Inflation remains low and the weak currency should
spur exports.
Also noteworthy was a recovery in commodity and metal-related issues during
the first half of 1999. Raw materials, including oil and metals, were weak
during the Asian economic collapse due to reduced demand. When Asia triggered
a small improvement in demand, commodities reacted positively, which was
reflected in higher share prices.
Q. WHICH INVESTMENTS STAND OUT?
A. Technology companies were among the fund's top performers. Taiwan
Semiconductor was one of the performance leaders during the first half of
1999. Also turning in strong results were Mannesmann of Germany in
telecommunications, and Invensys of the United Kingdom, a process control
company that had a strong first quarter. However, many European financial
companies held in the fund took a beating during the first half, reflecting
the region's weak currency and anemic economic performance.
Q. HAVE YOU MADE ANY CHANGES IN THE FUND?
A. As we became more confident that some Japanese corporate management teams
were more serious in their plans to restructure, we bought Mazda Motor, the
car manufacturer, and Sumitomo Electric, the cable and optical fiber
manufacturer. We also acquired holdings in Lagardere and Aerospatiale, two
French aerospace companies, the latter being a recent French government
privatization. Key sells included Assicurazioni Generali, the Italian
insurance company, whose stock rose above fair value, and Barlow, a South
African conglomerate where the country's economy may be less robust than
previously expected.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. During the first half of 1999, we increased the fund's exposure in the
Japanese market from 5% to 8%. Although we remain cautious about investments
in Japan, we are actively seeking out more opportunities among companies that
show potential and fit our valuation discipline. We also are searching out
sound investments in Asia such as South Korea's Kookmin Bank, which performed
very well. We continue to have faith in European stocks. We believe the
region is taking a breather but will return to profitability over the long
term. In an environment of low interest rates and benign inflation, along
with stability in Asia, we believe equity markets should show positive
performance. We continue to seek companies that will benefit from -- and
compete successfully within -- the current global growth environment.
20
<PAGE>
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
[LINE GRAPH OMITTED]
INTERNATIONAL EQUITY FUND MSCI EAFE
5/1/95 $10000 $10000
6/95 10010 9707
9/95 10350 10112
12/95 10670 10522
3/96 11323 10826
6/96 11628 10997
9/96 11455 10983
12/96 11728 11158
3/97 12346 10983
6/97 13786 12408
9/97 13927 12320
12/97 12921 11356
3/98 15135 13026
6/98 15510 13164
9/98 12788 11293
12/98 15175 13626
3/99 15673 13816
6/99 16082 14167
International Equity Fund (ending value $16,082)
MSCI EAFE (ending value $14,167)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE THREE SINCE
MONTHS YEAR YEAR COMMENCEMENT
- --------------------------------------------------------------------------------
International Equity Fund 5.97% 3.68% 11.41% 12.08%
- --------------------------------------------------------------------------------
MSCI EAFE 3.97% 7.62% 8.81% 8.71%
- --------------------------------------------------------------------------------
Lipper peer group average* 8.10% 5.43% 9.82% N/A
- --------------------------------------------------------------------------------
Commencement date 5/1/95
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A fund designed for investors who seek long-term
growth of capital by investing primarily in
equity securities of companies located in
developed and developing countries, other then
the United States.
- --------------------------------------------------------------------------------
TOP TEN LARGEST HOLDINGS AT JUNE 30, 1999
- --------------------------------------------------------------------------------
Mannesmann AG ...................................... 3.02%
- --------------------------------------------------------------------------------
Preussag AG ........................................ 2.90%
- --------------------------------------------------------------------------------
AXA-UAP ............................................ 2.49%
- --------------------------------------------------------------------------------
Total S.A. ......................................... 2.29%
- --------------------------------------------------------------------------------
ING Groep N.V. ..................................... 2.23%
- --------------------------------------------------------------------------------
Invensys PLC ....................................... 2.15%
- --------------------------------------------------------------------------------
Airtours PLC ....................................... 1.87%
- --------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. ............. 1.77%
- --------------------------------------------------------------------------------
Cap Gemini S.A. .................................... 1.74%
- --------------------------------------------------------------------------------
Alstom ............................................. 1.60%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
NET ASSETS OF $41,052 (IN THOUSANDS)
[PIE GRAPH OMITTED]
EUROPE 71.9%
JAPAN 8.40%
OTHER 7.80%
PACIFIC RIM 6.20%
CASH & OTHER 5.70%
* LIPPER PERFORMANCE COMPARISONS ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED IN THE INTERNATIONAL PEER GROUP CONSISTING OF 127, 123
AND 83 UNDERLYING ANNUITY FUNDS, RESPECTIVELY.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
21
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK -- 94.2%
AUSTRALIA -- 1.4%
Brambles Industries Ltd. ........... 22,373 $ 588,629
AUSTRIA -- 0.3%
VA Technologie AG .................. 1,461 132,308
BRAZIL -- 0.5%
Uniao de Bancos Brasilieros
S.A. GDR .......................... 8,424 202,702
CANADA -- 1.8%
Celestica Inc. ...................... 3,935 170,261(a)
CGI Group Inc. (Class A) ............ 11,359 239,137(a)
Newcourt Credit Group Inc. .......... 2,933 38,144
Nortel Networks Corp. ............... 3,324 288,564
736,106
DENMARK -- 1.0%
Novo-Nordisk AS (Series B) .......... 3,969 427,597
FINLAND -- 3.4%
Helsingin Puhelin Oyj ............... 1,066 50,549
Merita PLC (Series A) ............... 60,390 343,014
Nokia Oyj (Series A) ................ 6,105 534,934
Pohjola Group Insurance Corp.
(Series B) ........................ 1,995 102,313
Sampo Insurance Co. Ltd.
(Series A) ........................ 12,339 357,423
1,388,233
FRANCE -- 18.5%
Aerospatiale Matra (Regd.) .......... 9,691 223,276(a)
Alstom .............................. 20,862 655,921
AXA-UAP ............................. 8,390 1,023,157
Cap Gemini S.A. ..................... 4,549 714,655
Carrefour S.A. ...................... 3,386 497,390
Coflexip S.A. ADR ................... 6,082 264,567
Elf Aquitaine S.A. .................. 2,350 344,722
Lagardere S.C.A. .................... 12,616 469,488
Lyonnaise Des Eaux S.A. ............. 2,040 367,803
Michelin CGDE (Regd.) (Class B) ..... 11,799 482,506
Rhone-Poulenc S.A. (Class A) ........ 13,825 631,484
Schneider S.A. ...................... 8,951 502,418
Societe Generale .................... 2,665 469,499
Total S.A. (Class B) ................ 7,281 938,953
7,585,839
GERMANY -- 13.3%
Bayerische Vereinsbank AG ........... 9,414 611,379
DaimlerChrysler AG .................. 6,298 545,353
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Deutsche Bank AG ................... 1,818 $ 111,292
Fresenius Medical Care AG ........... 8,555 510,616
Mannesmann AG ....................... 8,308 1,239,255
Muenchener Rueckverischerungs-
Gesellschaft AG (Regd.) .......... 1,112 205,762
Muenchener Rueckversicherungs-
Gesellschaft AG (Regd.) .......... 1,158 211,289(a)
Preussag AG ......................... 22,159 1,190,100
Veba AG ............................. 9,393 551,918
Viag AG ............................. 342 161,468
Volkswagen AG ....................... 1,791 114,652
5,453,084
GREECE -- 1.0%
Alpha Credit Bank (Regd.) ........... 748 48,147
Alpha Credit Bank ................... 93 5,986(a)
Hellenic Telecommunication
Organization S.A. ADR ............. 15,303 169,289
Hellenic Telecommunication
Organization S.A. ................. 9,400 201,186
424,608
HONG KONG -- 1.2%
Cosco Pacific Ltd. .................. 36,000 29,928
Giordano International Ltd. .........186,000 131,854
Johnson Electric Holdings Ltd. ...... 81,300 335,318
497,100
IRELAND -- 1.4%
Bank of Ireland ..................... 18,462 311,518
CRH PLC ............................. 14,270 252,784
564,302
ISRAEL -- 3.4%
Comverse Technology Inc. ............ 6,511 491,580(a)
ECI Telecommunications Ltd. ......... 17,136 568,701
Teva Pharmaceutical Industries
Ltd. ADR .......................... 6,857 335,993
1,396,274
ITALY -- 3.5%
Banca Intesa S.p.A. ................. 82,769 397,603
Montedison S.p.A. ...................163,410 266,153(a)
Saipem .............................. 75,333 300,533
Telecom Italia Mobile S.p.A. ........ 33,365 199,143
Telecom Italia S.p.A ................ 62 336(k)
Telecom Italia S.p.A ................ 25,969 269,843
Unicredito Italiano S.p.A. .......... 489 2,147
1,435,758
JAPAN -- 8.4%
Canon Inc. .......................... 17,000 489,047
Honda Motor Co. ..................... 2,000 84,815
Mazda Motor Corp. ................... 75,000 430,892
Minebea Co. Ltd. .................... 42,000 468,711
Shin-Etsu Chemical Co. .............. 13,000 435,232
Sony Corp. .......................... 5,900 636,480
Sumitomo Electric Industries ........ 31,000 352,616
Toshiba Corp. ....................... 78,000 556,452
3,454,245
- ----------------
See Notes to Schedule of Investments and Notes to Financial Statements.
22
<PAGE>
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
LUXEMBOURG -- 0.0%
Societe Europeenne de
Communication S.A. ADR (Class A) ..... 40 $ 515(a)
Societe Europeenne de
Communication S.A. ADR (Class B) ..... 171 2,298(a)
2,813
MEXICO -- 1.9%
Desc S.A. de C.V. (Series B) ........ 44,594 48,703
Desc S.A. de C.V. ADR (Class C) ..... 6,704 151,678
Gruma S.A. de C.V. (Series B) ....... 13,812 23,140
Grupo Carso S.A. de C.V. ADR ........ 27,167 247,899
Grupo Financiero Banamex Accival
S.A. de C.V. (Class B) ...........114,872 292,326(a)
Grupo Televisa S.A. GDR ............. 819 36,701(a)
800,447
NETHERLANDS -- 6.2%
IHC Caland N.V. ..................... 8,192 320,900
ING Groep N.V. ...................... 16,901 914,676
Ispat International N.V. (Regd.)
(Class A) ........................ 8,697 96,211
Koninklijke Ahold N.V. .............. 13,424 462,201
Philips Electronics N.V. ............ 5,786 570,492
Vendex KBB N.V. ..................... 7,192 192,022
2,556,502
PANAMA -- 0.1%
Panamerican Beverages Inc. (Class A) 1,380 32,861
PHILIPPINES -- 0.3%
San Miguel Corp. S.A. ................51,238 111,768
POLAND -- 0.7%
Telekomunikacja Polska S.A.
GDR (Series A) ....................38,115 266,805(a,b)
PORTUGAL -- 0.7%
Banco Comercial Portugues (Regd.) .... 6,828 176,881
Jeronimo Martins, SGPS, S.A. ......... 3,258 107,573
284,454
SOUTH KOREA -- 1.5%
Kookmin Bank GDR ..................... 6,156 123,120(b)
Korea Telecom Corp. ADR .............. 5,413 216,520(a)
Pohang Iron & Steel Co. Ltd. ADR .... 7,602 255,617
595,257
SPAIN -- 2.8%
Argentaria, Caja Postal y Banco
Hipotecario de Espana, S.A. ....... 16,915 385,180
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Repsol S.A. ......................... 6,011 $ 122,689
Telefonica S.A. ..................... 12,939 623,026
1,130,895
SWEDEN -- 4.0%
Autoliv Inc. SDR .................... 18,093 552,019
Ericsson LM Telephone (Series B) .... 15,303 491,232
Investor AB (Series B) .............. 4,900 54,836
Invik & Co. AB ...................... 1,056 62,136
Kinnevik AB (Series B) .............. 2,028 38,223
NetCom Systems AB (Series B) ........ 4,443 149,688(a)
Pharmacia & Upjohn Inc. ............. 5,316 302,015
1,650,149
SWITZERLAND -- 2.6%
ABB AG .............................. 178 263,263
Credit Suisse Group ................. 1,699 293,892
Novartis AG (Regd.) ................. 227 331,355
Zurich Allied AG (Regd.) ............ 328 186,452
1,074,962
TAIWAN -- 1.8%
Taiwan Semiconductor
Manufacturing Co. ................190,342 727,778
UNITED KINGDOM -- 12.5%
Airtours PLC ........................ 96,197 767,250
Billiton PLC ........................ 13,531 47,349
British Steel PLC ................... 57,206 148,106
Cable & Wireless Communication PLC . 43,495 418,210(a)
Commercial Union PLC ................ 11,124 160,175
FKI PLC .............................106,837 331,853
Granada Group PLC ................... 33,594 622,192
Invensys PLC ........................186,369 881,292
Johnson Matthey PLC ................. 8,256 80,684
Nycomed Amersham PLC ................ 47,181 330,013
Railtrack Group PLC ................. 4,472 91,425
Reed International PLC .............. 23,845 158,612
Royal & Sun Alliance
Insurance Group PLC .............. 51,244 459,201
Saatchi & Saatchi PLC ............... 14,563 49,261
SEMA Group PLC ...................... 6,990 67,265
Somerfield PLC ...................... 40,498 189,909
The Great Universal Stores PLC ...... 8,014 89,372
Vodafone Group PLC .................. 10,168 200,021
Williams PLC ........................ 7,710 50,921
5,143,111
TOTAL COMMON STOCK
(COST $33,887,376) ................ 38,664,587
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 0.1%
- --------------------------------------------------------------------------------
Fresenius Medical Care AG .......... 483 16,928
Telecomunicacoes de Sao Paulo
S.A.-Telesp ..................... 380,000 45,072
TOTAL PREFERRED STOCK
(COST $73,904) ................... 62,000
- -----------
See Notes to Schedule of Investments and Notes to Financial Statements.
23
<PAGE>
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WARRANTS -- 0.0%
- --------------------------------------------------------------------------------
Muenchener Rueckverischerungs-
Gesellschaft AG (Regd.) 06/03/02
(COST $ 0) .......................... 48 $ 1,435(a)
TOTAL INVESTMENTS IN SECURITIES
(COST $33,961,280) .................. 38,728,022
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 4.9%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund
(COST $2,008,213) ............. 2,008,213 2,008,213
OTHER ASSETS AND LIABILITIES,
NET 0.8% ...................... 315,307
---------
NET ASSETS-- 100% $41,051,542
===========
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
The International Equity Fund invested in the following sectors at June 30,
1999:
PERCENTAGE (BASED ON
SECTOR TOTAL NET ASSETS)
- --------------------------------------------------------------------------------
Capital Equipment 23.36%
Finance 18.26%
Services 22.38%
Consumer Goods 14.59%
Energy 6.54%
Materials 3.01%
Multi Industry 6.21%
Cash and Other 5.65%
---------
100.00%
---------
---------
- -----------
See Notes to Schedule of Investments and Notes to Financial Statements.
24
<PAGE>
INCOME FUND
- --------------------------------------------------------------------------------
Q&A
ROBERT MACDOUGALL LEADS THE FIXED INCOME TEAM AT GE INVESTMENTS. TOTAL ASSETS
UNDER HIS MANAGEMENT EXCEEDS $28 BILLION. BOB JOINED GE INVESTMENTS IN 1986 AS A
MUTUAL FUND PORTFOLIO MANAGER AND WAS APPOINTED TO HEAD THE TAXABLE FIXED INCOME
TEAM IN 1992, AND THE TAX-EXEMPT FIXED INCOME TEAM IN 1998. PREVIOUSLY HE WAS
WITH GE'S CORPORATE TREASURY OPERATION MANAGING THE COMPANY'S $2 BILLION
PORTFOLIO OF MARKETABLE SECURITIES AND SUPPORTING THE TREASURER IN THE AREAS OF
DEBT MANAGEMENT AND CAPITAL STRUCTURE PLANNING. PRIOR TO THAT, BOB HELD VARIOUS
FINANCIAL MANAGEMENT POSITIONS SINCE JOINING GE IN 1973. HE HOLDS BACHELOR'S AND
MASTER'S DEGREES IN BUSINESS ADMINISTRATION FROM THE UNIVERSITY OF
MASSACHUSETTS.
Q. DESCRIBE THE PERFORMANCE OF THE FIXED INCOME MARKETS DURING THE FIRST HALF OF
1999.
A. The bond market was buffeted by continued stronger than expected economic
growth and the resultant concern that the benign inflation environment would
deteriorate. The yield of the benchmark 30-year U.S. Treasury Bond, which
ended last year at 5.10%, increased steadily, reaching a nineteen-month high
of 6.16% in June before ending the month at 5.96%. Shorter maturities fared
even worse with yields rising over 100 basis points (1.00%).
As we entered the year, the consensus forecast was for a gradually slowing
economy, continued mild inflation and stable to lower interest rates. But the
fourth quarter report on Gross Domestic Product (GDP) released in January
showed that the economy had entered the year with tremendous momentum,
growing 6%. Various economic reports indicated that this strength carried
over into the first half of 1999. The "wealth effect" of rising stock prices
and robust appreciation in home values boosted consumer confidence and
consumer spending. Housing activity was strong, auto sales were on track for
a record year and the unemployment rate hovered around a level not seen since
the early 1970's.
In the fall of 1998, the Federal Reserve eased monetary policy three times
"to cushion the domestic economy from the impact of the increasing weakness
in foreign economies and the less accommodative conditions in U.S. financial
markets". In February 1999, Federal Reserve (Fed) Chairman Greenspan
indicated that the Fed was re-evaluating the appropriateness of those easings
as conditions returned to normal. In May the markets were rocked by a 0.7%
increase in the Consumer Price Index. While the surge in energy prices was
anticipated, the 0.4% increase in the "core" (excluding food and energy) rate
of inflation was both surprising and troubling to the market. It was the
largest one-month rise since January 1995. The Fed subsequently signaled a
tightening of monetary policy "to preempt forces of imbalance before they
threaten economic stability". As the first half came to a close, the Federal
Open Market Committee did in fact raise the Federal funds target 25 basis
points (0.25%) to 5.00% but at the same time changed their bias to neutral.
This signaled to investors that further rate hikes were not a foregone
conclusion but rather depend on how the economy performs going forward.
Q. HOW DID THE VARIOUS SECTORS OF THE MARKET PERFORM?
A. Corporate bonds outperformed equal duration Treasuries by about 100 basis
points (1.00%) as spreads partially reversed their 1998 widening. Mortgage
backed securities did better also, but by less than their yield advantage --
indicating some spread volatility.
Q. WHAT IS YOUR OUTLOOK FOR THE SECOND HALF OF 1999?
A. As we enter the second half of the year, interest rates are about 100 basis
points (1.00%) higher than at the beginning of the year while inflation
remains about the same. If the economy slows sufficiently to assuage
inflation worries, current yield levels will prove to be attractive. On the
other hand, if additional moves by the Fed are required, we could see rates
continue to climb. In such an uncertain environment we are keeping the
duration of the portfolio neutral to the market.
INCOME FUND
Q. HOW DID THE INCOME FUND PERFORM COMPARED TO ITS BENCHMARK AND LIPPER PEER
GROUP FOR THE SIX-MONTHS ENDED JUNE 30,1999?
A. The Income Fund posted a return of -1.86% while the Lehman Brothers Aggregate
Bond Index returned -1.38% and our Lipper peer group of 21 Intermediate
Investment Grade Debt annuity funds returned -1.22%.
Q. WHAT WERE THE KEY DRIVERS OF FUND PERFORMANCE?
A. The fund's performance compared to the market index was driven primarily by
expenses and, to a lesser degree, by longer duration in a rising rate
environment, while our performance versus peers was driven by our higher
allocation to U.S. Government bonds and longer duration.
25
<PAGE>
INCOME FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
INCOME FUND LB AGGREGATE
1/3/95 $10000 $10000
3/95 10453 10504
6/95 11016 11144
9/95 11210 11363
12/95 11683 11847
3/96 11445 11636
6/96 11463 11702
9/96 11674 11918
12/96 12024 12275
3/97 11953 12207
6/97 12378 12657
9/97 12770 13079
12/97 13106 13464
3/98 13312 13672
6/98 13626 13991
9/98 14102 14583
12/98 14148 14632
3/99 14056 14558
6/99 13884 14429
Income Fund (ending value $13,884)
LB Aggregate (ending value $14,429)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE THREE SINCE
MONTHS YEAR YEAR COMMENCEMENT
- --------------------------------------------------------------------------------
Income Fund (1.86%) 1.90% 6.60% 7.58%
- --------------------------------------------------------------------------------
LB Aggregate (1.38%) 3.13% 7.23% 8.49%
- --------------------------------------------------------------------------------
Lipper peer group average* (1.22%) 2.35% 6.59% N/A
- --------------------------------------------------------------------------------
Commencement date 1/3/95
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A fund designed for investors who seek to maximize
income consistent with prudent investment
management and preservation of capital by
investing primarily in income-bearing debt
securities and instruments.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
[PIE GRAPH OMITTED]
NET ASSETS OF $62,323 (IN THOUSANDS)
MORTGAGE BACKED 32.3%
U.S. TREASURIES 19.9%
FEDERAL AGENCIES 18.2%
CORPORATE NOTES 20.9%
CASH & OTHER 7.7%
- --------------------------------------------------------------------------------
QUALITY RATINGS AT JUNE 30, 1999
- --------------------------------------------------------------------------------
MOODY'S / S&P PERCENTAGE OF
RATINGS NET ASSETS
- --------------------------------------------------------------------------------
Aaa / AAA 77.91%
- --------------------------------------------------------------------------------
Aa / AA 3.52%
- --------------------------------------------------------------------------------
A / A 8.06%
- --------------------------------------------------------------------------------
Baa / BBB 7.71%
- --------------------------------------------------------------------------------
Ba / BB 0.46%
- --------------------------------------------------------------------------------
Other 2.34%
- --------------------------------------------------------------------------------
* LIPPER PERFORMANCE COMPARISONS ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED IN THE INTERMEDIATE U.S. BOND PEER GROUP CONSISTING OF
21, 20 AND 15 UNDERLYING ANNUITY FUNDS, RESPECTIVELY.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
26
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INCOME FUND
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
BONDS AND NOTES -- 97.4%
U.S. TREASURIES -- 19.9%
U.S. Treasury Bonds
8.125% 08/15/19 ........... $ 659,000 $ 795,947(h)
8.125% 05/15/21 ........... 1,118,000 1,361,512(h)
5.25% 11/15/28 ........... 80,000 70,913(h)
5.25% 02/15/29 ........... 2,330,000 2,093,365(h)
4,321,737
U.S. Treasury Notes
5.00% 04/30/01 ........... 1,204,000 1,193,838(h)
5.25% 05/31/01 ........... 2,564,000 2,551,975(h)
6.50% 08/31/01 ........... 165,000 168,094(h)
5.25% 08/15/03 ........... 449,000 441,354(h)
5.25% 05/15/04 ........... 2,340,000 2,299,424(h)
5.50% 05/15/09 ........... 512,000 500,157(h)
7,154,842
U.S. Treasury STRIPS
6.29% 08/15/11 ........... 375,000 176,981(d,h)
6.31% 02/15/12 ........... 560,000 255,763(d,h)
6.43% 02/15/19 ........... 1,750,000 505,908(d,h)
938,652
TOTAL U.S. TREASURIES
(COST $12,748,682) ........... 12,415,231
FEDERAL AGENCIES -- 19.2%
Federal Farm Credit Bank
9.15% 02/14/05 ........... 100,000 113,047
8.60% 05/30/06 ........... 400,000 416,812
529,859
Federal Home Loan Bank
5.625% 03/19/01 ........... 390,000 389,088
5.25% 04/25/02 ........... 440,000 434,157
6.22% 03/18/08 ........... 395,000 381,732
5.75% 04/15/08 ........... 290,000 276,271
1,481,248
Federal Home Loan Mortgage Corp.
8.00% 04/01/00 ........... 5,904 5,929
5.75% 06/15/01 ........... 790,000 789,502
5.125% 10/15/08 ........... 425,000 380,838
8.25% 06/01/26 ........... 60,000 68,682
1,244,951
Federal National Mortgage Assoc.
5.38% 01/16/01 ........... 70,000 69,595
5.125% 02/13/04 ........... 1,826,000 1,750,677
7.70% 08/10/04 ........... 100,000 100,187
6.99% 07/09/07 ........... 50,000 50,015
5.64% 12/10/08 ........... 485,000 452,190
6.04% 02/25/09 ........... 905,000 856,637
7.50% 12/01/09 ........... 452,386 460,443
7.00% 08/01/13 ........... 73,765 74,052
7.50% 02/01/14 ........... 421,813 429,325
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
9.00% 04/01/16 ............ $ 104,269 $ 111,177
9.50% 11/01/17 ............ 141,624 153,176
8.00% 12/01/17 ............ 179,639 185,420
9.00% 12/01/17 ............ 139,213 147,369
7.50% 12/01/18 ............ 91,813 93,158
9.50% 08/01/22 ............ 255,823 276,529
9.00% 12/01/22 ............ 157,457 166,757
7.50% 12/01/23 ............ 373,370 377,451
6.50% 01/01/29 - 07/01/29 . 1,350,449 1,302,751
8.00% TBA ................. 1,220,000 1,253,172(c)
8,310,081
Small Business Administration
6.125% 01/01/18 ............ 260,756 250,285
Tennessee Valley Authority
6.125% 07/15/03 ............ 133,000 131,711
TOTAL FEDERAL AGENCIES
(COST $12,254,473) ............ 11,948,135
AGENCY MORTGAGE BACKED -- 27.7%
Federal Home Loan Mortgage Corp.
8.00% 01/01/00 ............ 9,086 9,125
6.75% 10/01/08 ............ 69,549 68,697(b)
8.00% 09/01/09 ............ 112,220 114,773
7.50% 11/01/09 ............ 85,327 86,946
7.50% 06/01/10 ............ 32,448 33,064
8.50% 07/01/10 ............ 106,986 110,867
7.50% 09/01/12 ............ 173,742 176,782
9.00% 02/01/17 ............ 33,404 35,275
8.00% 04/01/17 ............ 107,892 111,492
8.00% 08/01/24 ............ 32,832 33,745
8.00% 10/01/25 ............ 16,554 17,010
8.00% 11/01/26 ............ 22,616 23,238
8.00% 02/01/28 ............ 25,517 26,219
6.00% 01/01/29 ............ 253,181 79,594(g)
6.50% 02/01/29 ............ 11,022 10,639
7.00% TBA ................. 4,590,760 4,542,006(c)
7.50% TBA ................. 2,700,000 2,725,326(c)
8,204,798
Federal National Mortgage Assoc.
5.10% 09/25/00 ............ 292,000 290,128
7.50% 07/01/02 ............ 18,649 18,739
6.50% 01/01/04 ............ 1,122 1,116
7.50% 12/01/09 ............ 241,503 245,805
6.50% 12/01/10 ............ 413,207 409,204
6.50% 04/01/13 ............ 253,951 250,220
7.84% 07/01/19 ............ 94,119 94,215(e)
7.00% 06/18/20 ............ 6,534 6,526(b)
6.424% 12/25/23 ............ 1,050,000 1,003,734
7.00% 10/01/27 - 11/01/27 . 949,818 941,628
7.00% 07/01/28 ............ 188,611 186,429
6.16% 08/07/28 ............ 630,000 589,245
4,036,989
Government National Mortgage Assoc.
7.00% 03/15/12 ............ 464,685 468,458
9.00% 11/15/16 ............ 404,269 430,542
9.00% 01/15/17 ............ 119,992 127,790
8.50% 10/15/17 ............ 301,268 317,120
9.00% 11/15/17 ............ 185,157 197,189
- -------------
See Notes to Schedule of Investments and Notes to Financial Statements.
27
<PAGE>
INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
9.50% 12/15/17 .............. $267,687 $ 289,422
9.00% 12/15/21 .............. 30,309 32,308
6.125% 11/20/22 .............. 42,569 43,049
6.375% 02/20/23 .............. 96,650 97,919(e)
6.50% 02/15/24 - 03/15/24 ... 442,307 427,790
6.125% 12/20/24 .............. 63,100 64,017 (e)
6.375% 02/20/26 .............. 23,952 24,274
6.375% 02/20/26 .............. 30,683 30,970(e)
6.50% 04/15/28 .............. 865,298 832,036
7.00% 04/15/28 - 10/15/28 ...1,652,468 1,630,259
5,013,143
TOTAL AGENCY MORTGAGE BACKED
(COST $17,507,915) .............. 17,254,930
AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS -- 2.3%
Federal Home Loan Bank
6.247% 03/17/21 .............. 196,000 185,649
Federal Home Loan Mortgage Corp.
6.50% 02/15/21 .............. 60,648 60,212
5.75% 06/15/23 .............. 129,000 123,719(g)
183,931
Federal Home Loan Mortgage PC
5.85% 02/15/08 .............. 110,000 109,106(g)
6.50% 07/15/08 .............. 50,000 48,766(g)
7.00% 02/15/21 .............. 50,000 50,312(g)
208,184
Federal National Mortgage Assoc.
6.00% 03/25/19 .............. 361,920 342,467
8.00% 10/25/20 .............. 49,427 50,507
9.00% 05/25/22 .............. 6,669 1,723(g)
8.50% 07/25/22 .............. 10,535 2,660(g)
397,357
Federal National Mortgage Assoc. REMIC
6.00% 06/25/01 .............. 33,708 33,445
7.623% 12/17/04 .............. 11,742 12,039
6.181% 05/25/14 .............. 314,532 310,502
7.21% 05/25/18 .............. 11,000 10,553(d)
6.00% 03/25/19 .............. 86,400 86,129(g)
5.66% 07/25/20 .............. 288 287(d,f)
7.00% 09/25/20 .............. 16,238 16,288
5.66% 12/25/22 .............. 6,577 5,123(d,f)
474,366
TOTAL AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS
(COST $1,484,336) ............... 1,449,487
ASSET BACKED -- 2.0%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 .............. 3,132 3,109
Capital One Master Trust
5.43% 01/15/07 .............. 105,000 101,046
Chase Credit Card Master Trust
6.00% 08/15/05 .............. 111,000 109,716
Citibank Credit Card Master Trust I
5.75% 01/15/03 .............. 18,000 17,927
5.50% 02/01/06 .............. 114,000 109,546
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Discover Card Master Trust I
5.75% 10/16/03 ..............$ 84,000$ 83,291
5.30% 08/15/04 .............. 69,000 67,340
5.60% 05/15/06 .............. 319,000 308,134
First USA Credit Card Master Trust
5.28% 09/18/06 .............. 181,000 172,911
Ford Credit Auto Loan Master Trust
5.50% 02/15/03 .............. 45,000 44,623
Ford Credit Auto Owner Trust
5.90% 06/15/02 .............. 28,000 27,921
Green Tree Financial Corp.
6.90% 04/15/18 .............. 65,787 66,095
Peco Energy Transport Trust
5.80% 03/01/07 .............. 56,000 54,180
6.05% 03/01/09 .............. 56,000 53,637
TOTAL ASSET BACKED
(COST $1,256,128) ............... 1,219,476
CORPORATE NOTES -- 20.9%
Abbey National PLC
6.70% 06/29/49 .............. 15,000 14,247
7.48% 10/29/49 .............. 131,000 127,645(d)
Aetna Services Inc.
6.97% 08/15/36 .............. 135,000 135,583
Arizona Public Service Co.
6.25% 01/15/05 .............. 65,000 63,756
Armstrong World Industries Inc.
7.45% 05/15/29 .............. 100,000 97,246
Associates Corporation of North America
6.375% 10/15/02 .............. 300,000 300,117
5.75% 11/01/03 .............. 100,000 97,268
AT&T Corp.
6.50% 03/15/29 .............. 60,000 54,146
Atlantic City Electric Co.
6.19% 01/17/06 .............. 160,000 153,451
Bank of Scotland
7.00% 11/29/49 .............. 110,000 105,325(b)
Beckman Instruments Inc.
7.10% 03/04/03 .............. 40,000 38,828
Bell Telephone Co. - Pennsylvania
8.35% 12/15/30 .............. 243,000 274,855
Bellsouth Telecomm Inc.
6.375% 06/01/28 .............. 75,000 66,548
Bertelsmann US Finance
5.375% 01/28/04 .............. 130,000 122,688
Boston University
7.625% 07/15/97 .............. 100,000 99,000
Brascan Ltd.
7.375% 10/01/02 .............. 60,000 59,961
Burlington Northern Railroad Corp.
6.23% 07/02/18 .............. 105,000 99,173
Carnival Corp.
5.65% 10/15/00 .............. 100,000 99,374
Champion International Corp.
6.40% 02/15/26 .............. 45,000 43,411
Cleveland Electric Co. Toledo Edison
7.19% 07/01/00 .............. 5,000 5,016
Coastal Corp.
6.375% 02/01/09 .............. 80,000 75,173
- ----------
See Notes to Schedule of Investments and Notes to Financial Statements.
28
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Coca-Cola Enterprises Inc.
7.00% 10/01/26 ........... $ 75,000 $ 76,319
Columbia University Trustees New York
6.83% 12/15/20 ........... 5,000 4,890
Conoco Inc.
6.95% 04/15/29 ........... 45,000 42,130
Conseco Inc.
6.40% 06/15/01 ........... 149,000 145,971
6.80% 06/15/05 ........... 90,000 84,998
8.70% 11/15/26 ........... 52,000 46,863
Continental Cablevision Inc.
8.50% 09/15/01 ........... 160,000 166,622
Corporacion Andina De Fomento
6.75% 03/15/05 ........... 130,000 121,193
Crown Cork & Seal Inc.
8.00% 04/15/23 ........... 75,000 73,125
CSX Corp.
6.25% 10/15/08 ........... 175,000 163,595
Delphi Auto Systems Corp.
6.125% 05/01/04 ........... 75,000 72,935
Diageo Capital PLC
6.625% 06/24/04 ........... 230,000 228,413
Dow Chemical Co.
8.55% 10/15/09 ........... 65,000 72,668
Dresdner Funding Trust I
8.151% 06/30/31 ........... 150,000 144,744(b)
Duke Energy Corp.
5.375% 01/01/09 ........... 80,000 70,842
Duquesne Light Co.
8.70% 06/01/16 ........... 56,101 59,714
EOP Operating LP
6.50% 01/15/04 ........... 30,000 29,224
Federated Department Stores Inc.
6.125% 09/01/01 ........... 80,000 79,678
Ford Motor Credit Co.
5.80% 01/12/09 ........... 80,000 73,112
General Motors Acceptance Corp.
5.75% 11/10/03 ........... 50,000 48,377
6.15% 04/05/07 ........... 140,000 133,312
Goldman Sachs Group
6.65% 05/15/09 ........... 100,000 96,427
Guangdong International Trust & Investment Corp.
8.75% 10/24/16 ........... 10,000 1,100(b,j)
Heritage Media Corp.
8.75% 02/15/06 ........... 95,000 100,819
Household Finance Corp.
6.125% 07/15/02 ........... 30,000 29,741
Hydro-Quebec
8.05% 07/07/24 ........... 260,000 281,770
Israel Electric Corp. Ltd.
7.125% 07/15/05 ........... 40,000 38,960(b)
J.P. Morgan & Co.
6.00% 01/15/09 ........... 55,000 50,885
Korea Development Bank
6.625% 11/21/03 ........... 5,000 4,741
Kroger Co.
6.34% 06/01/01 ........... 149,000 149,063
7.375% 03/01/05 ........... 100,000 101,373
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Landesbank Baden-Wuerttember
7.875% 04/15/04 ........... $218,000 $ 228,954
LCI International Inc.
7.25% 06/15/07 ........... 78,000 76,589
Lehman Brothers Holdings Inc.
6.90% 03/30/01 ........... 75,000 75,264
8.50% 08/01/15 ........... 160,000 169,285
7.50% 08/01/26 ........... 100,000 101,250
LG&E Capital Corp.
5.75% 11/01/01 ........... 95,000 93,708(b)
Liberty Media Group
7.875% 07/15/09 ........... 95,000 94,434
Liberty Property Ltd. Partnership
7.50% 01/15/18 ........... 65,000 57,132
Lubermens Mutual Casualty
8.30% 12/01/37 ........... 40,000 38,723(b)
Manor Care Inc.
7.50% 06/15/06 ........... 65,000 62,973
MBNA Corp.
6.31% 04/22/03 ........... 100,000 97,313
MCI Communications Corp.
6.125% 04/15/02 ........... 225,000 223,506
MCI WorldCom Inc.
6.40% 08/15/05 ........... 75,000 73,373
8.875% 01/15/06 ........... 100,000 106,462
Merita Bank Ltd.
7.15% 12/29/49 ........... 250,000 248,385(b)
Merrill Lynch & Co.
5.71% 01/15/02 ........... 145,000 143,012
Monsanto Co.
5.75% 12/01/05 ........... 75,000 70,700
6.60% 12/01/28 ........... 75,000 66,651(b)
Morgan Stanley Dean Witter & Co.
5.625% 01/20/04 ........... 55,000 53,011
Natexis AMBS Co. LLC
8.44% 12/29/49 ........... 65,000 63,050(b)
National Rural Utilities Cooperative
6.046% 04/15/03 ........... 100,000 98,250
5.50% 01/15/05 ........... 45,000 43,005
National Westminster Bank PLC
7.75% 04/29/49 ........... 185,000 183,759
New Jersey Economic Development Authority
7.425% 02/15/29 ........... 10,000 10,437
Newell Co.
6.35% 07/15/08 ........... 85,000 81,875
News America Holdings Inc.
8.15% 10/17/36 ........... 279,000 277,800
Noram Energy Corp.
6.375% 11/01/03 ........... 65,000 63,674
Norfolk Southern Corp.
7.90% 05/15/97 ........... 92,000 94,068
North Atlantic Energy Corp.
9.05% 06/01/02 ........... 9,000 9,253
Northrop-Grumman Corp.
8.625% 10/15/04 ........... 65,000 69,181
Occidental Petroleum Corp.
7.375% 11/15/08 ........... 90,000 88,497
Pepsi Bottling Holdings Inc.
5.375% 02/17/04 ........... 110,000 104,767(b)
5.625% 02/17/09 ........... 60,000 55,374(b)
- -------------
See Notes to Schedule of Investments and Notes to Financial Statements.
29
<PAGE>
INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Philip Morris Cos. Inc.
7.25% 09/15/01 ............ $ 60,000 $ 61,010
6.95% 06/01/06 ............ 45,000 45,472
Phillips Petroleum Co.
6.375% 03/30/09 ............ 85,000 81,308
Pitney Bowes Credit
9.25% 06/15/08 ............ 200,000 231,602
Quebec Province of Canada
5.67% 02/27/26 ............ 500,000 481,860
Raytheon Co.
6.75% 08/15/07 ............ 85,000 84,135
RJR Nabisco Inc.
7.375% 05/15/03 ............ 100,000 97,979(b)
6.125% 02/01/33 ............ 75,000 72,894
Rohm & Haas Co.
6.95% 07/15/04 ............ 55,000 54,897
Safeway Inc.
5.75% 11/15/00 ............ 60,000 59,663
Sprint Capital Corp.
5.70% 11/15/03 ............ 60,000 57,502
6.125% 11/15/08 ............ 55,000 50,759
6.875% 11/15/28 ............ 75,000 67,997
Stop & Shop Cos. Inc.
9.75% 02/01/02 ............ 40,000 42,650
Sun Life Canada Capital Trust
8.526% 05/29/49 ............ 129,000 130,454(b)
SunAmerica Inc.
5.60% 07/31/97 ............ 295,000 225,486
Suntrust Bank Inc.
6.00% 01/15/28 ............ 60,000 56,190
Tele-Communications Inc.
9.80% 02/01/12 ............ 65,000 79,418
7.875% 08/01/13 ............ 70,000 73,803
Tenet Healthcare Corp.
8.00% 01/15/05 ............ 10,000 9,700
Texas Utilities Co.
5.94% 10/15/01 ............ 225,000 222,662
Time Warner Entertainment Co. L.P.
10.15% 05/01/12 ............ 224,000 275,471
Time Warner Pass-Through Asset Trust
6.10% 12/30/01 ............ 95,000 94,600(b)
Tosco Corp.
7.625% 05/15/06 ............ 45,000 45,828
Turner Broadcasting Systems Inc.
8.38% 07/01/13 ............ 80,000 86,682
TXU Eastern Funding
6.45% 05/15/05 ............ 160,000 154,563(b)
6.75% 05/15/09 ............ 80,000 76,400(b)
Tyco International Group S.A.
6.25% 06/15/03 ............ 10,000 9,840
6.125% 11/01/08 ............ 65,000 60,269
7.00% 06/15/28 ............ 95,000 88,214
U.S. West Capital Funding Inc.
6.125% 07/15/02 ............ 30,000 29,599
6.875% 07/15/28 ............ 40,000 36,556
Ultramar Diamond Shamrock Corp.
7.65% 07/01/26 ............ 65,000 65,058
Union Oil Co. of California
7.35% 06/15/09 ............ 60,000 60,529
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Union Pacific Corp.
6.79% 11/09/07 ............ $110,000 $ 106,273
7.00% 02/01/16 ............ 200,000 189,314
United Illuminating Co.
6.25% 12/15/02 ............ 25,000 24,489
United Parcel Service Inc.
8.375% 04/01/30 ............ 95,000 104,036
USA Waste Services Inc.
6.125% 07/15/01 ............ 75,000 74,551(d)
USX Marathon Group
9.80% 07/01/01 ............ 60,000 63,527
Viacom Inc.
7.75% 06/01/05 ............ 218,000 223,284
Waste Management Inc.
6.65% 05/15/05 ............ 80,000 80,433
Westdeutsche Landesbank
6.75% 06/15/05 ............ 100,000 98,625
Westinghouse Electric Corp.
8.875% 06/01/01 ............ 35,000 36,346
Williams Cos. Inc.
6.125% 02/15/02 ............ 120,000 119,003
Yale University
7.375% 04/15/96 ............ 305,000 309,575
TOTAL CORPORATE NOTES
(COST $13,629,538) ............ 13,050,636
NON-AGENCY MORTGAGE BACKED SECURITIES -- 4.6%
Chase Commercial Mortgage Securities Corp.
6.39% 11/18/08 ............ 148,000 144,763
Commercial Mortgage Acceptance Corp.
6.49% 05/15/08 ............ 110,000 106,923
Credit Suisse First Boston Mortgage Securities Corp.
6.30% 11/15/08 ............ 108,000 103,359
DDR Pass-Through Asset Trust
7.13% 03/15/02 ............ 35,000 34,213(b)
DLJ Commercial Mortgage Corp.
6.14% 10/15/06 ............ 28,302 27,798
First Union-Lehman Brothers - Bank of America
6.56% 11/18/08 ............ 378,000 369,377
GMAC Commercial Mortgage Securities Inc.
9.80% 08/15/23 ............ 1,884,320 77,139(d)
GS Mortgage Securities Corp.
6.86% 07/13/30 ............ 219,000 220,916
Lehman Large Loan
6.79% 06/12/04 ............ 9,617 9,677
Merrill Lynch Mortgage Investors Inc.
6.39% 02/15/30 ............ 100,000 98,144
Mid-State Trust
8.23% 07/01/35 ............ 6,546 6,350
Morgan Stanley Capital I
6.86% 05/15/06 ............ 213,889 215,293(b)
6.52% 01/15/08 ............ 86,000 84,065
6.21% 09/15/08 ............ 98,000 93,605
9.71% 04/15/23 ............ 926,980 39,107(d)
- ----------
See Notes to Schedule of Investments and Notes to Financial Statements.
30
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
6.59% 10/03/30 ............ $ 9,521 $ 9,522
6.01% 11/15/30 ............ 126,860 123,668
6.48% 11/15/30 ............ 170,000 165,272
9.90% 11/15/31 ............ 1,446,497 72,099(b,d)
Nationslink Funding Corp.
6.001% 11/20/07 ............ 72,327 70,338
Sawgrass Finance REMIC Trust
6.45% 01/20/06 ............ 272,000 272,340
Vornado Finance Corp.
6.36% 12/01/00 ............ 521,000 523,849(b)
TOTAL NON-AGENCY MORTGAGE BACKED SECURITIES
(COST $2,932,567) ............. 2,867,817
NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.8%
Salomon Brothers Mortgage Securities Inc.
7.00% 07/25/24
(COST $514,392) ............... 525,075 485,148
TOTAL BONDS AND NOTES
(COST $62,328,031) ............ 60,690,860
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 0.3%
- --------------------------------------------------------------------------------
CORPORATE PREFERRED -- 0.3%
Centaur Funding Corp.
(Series B), 9.08% ................. 105 112,170(b)
TCI Communications Inc., 10.00% ...... 2,400 63,900
TOTAL PREFERRED STOCK
(COST $170,250) .................... 176,070
TOTAL INVESTMENTS IN SECURITIES
(COST $62,498,281) ................. 60,866,930
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 15.2%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund ....7,498,473 7,498,473
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 3.2%
Federal Home Loan Mortgage Corp.
4.60% 07/01/99 ............ $2,000,000 2,000,000
TOTAL SHORT-TERM INVESTMENTS
(COST $9,498,473) ............. 9,498,473
OTHER ASSETS AND LIABILITIES,
NET (12.9)% ................. (8,042,164)
-----------
NET ASSETS-- 100% ............... $62,323,239
===========
- -----------
See Notes to Schedule of Investments and Notes to Financial Statements.
31
<PAGE>
GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
Q&A
WILLIAM R. WRIGHT, PORTFOLIO MANAGER OF THE GLOBAL INCOME FUND, JOINED GEIM IN
1993 AND ASSUMED RESPONSIBILITY FOR GE INVESTMENTS (US) LIMITED (GEIUS) AT ITS
INCEPTION IN 1995. GEIUS HAS TOTAL ASSETS UNDER HIS MANAGEMENT EXCEEDING
$742MILLION. HE IS ALSO A VICE PRESIDENT OF GEIM. PRIOR TO JOINING GEIM, BILL
WORKED FOR CONTINENTAL ASSET MANAGEMENT CORP. WHERE HE WAS A PORTFOLIO MANAGER
OF ITS U.K. SUBSIDIARY. AFTER SERVING AS A LANGUAGE SPECIALIST IN THE U.S. ARMY
SECURITY AGENCY, HE BEGAN HIS CAREER IN 1979 WITH COOPERS & LYBRAND, AND JOINED
BANKERS TRUST COMPANY IN 1980. BILL RECEIVED HIS B.A. IN POLITICAL SCIENCE/ASIAN
STUDIES FROM WITTENBERG UNIVERSITY AND AN MBA IN FINANCE FROM NEW YORK
UNIVERSITY. HE IS A MEMBER OF THE ASSOCIATION FOR INVESTMENT MANAGEMENT AND
RESEARCH AND THE NEW YORK SOCIETY OF SECURITY ANALYSTS.
Q. HOW DID THE GLOBAL INCOME FUND PERFORM COMPARED TO ITS BENCHMARK AND LIPPER
PEER GROUP FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999?
A. The Global Income Fund posted a -7.22% for the six-month period ended June
30, 1999. The JP Morgan Global Bond Index returned -7.19% and the Lipper peer
group of 38 Global Income annuity funds returned -2.77% for the same period.
Q. WHY DID THE FUND UNDERPERFORM ITS BENCHMARK?
A. The marginal underperformance of the fund against its index mainly reflects
the U.S. dollar's strength over the period. The dollar did particularly well
against the Euro, appreciating by 13% between January and June. However, the
fund's Euro assets were only partially hedged and the fund had a relatively
high weighting in Europe. A second factor negatively impacting performance
was an underweight position in Japan, where the market rose sharply. Finally,
the development of a bear market in bonds worldwide also had a negative
impact on returns. To help counter the latter, measures were taken to shorten
the duration of the bond holdings.
Q. WHAT HAS YOUR INVESTMENT STRATEGY BEEN?
A. The fund continues to look for value in different bond markets. The strategy
is to take advantage of relatively favorable economic performance variances
between different countries or economic zones. In theory, an economy with
relatively better inflation prospects should be rewarded with lower bond
yields and therefore higher bond prices. In practice, we assess market
projections for growth and inflation and compare them to our own estimation
in order to help determine which bond markets are likely to outperform. We
also look at the prospects of changing monetary and fiscal policies, and
overall political situation quite closely. This analysis has led us to be
heavily invested in the European markets, with the dollar bloc markets coming
second.
Q. WHAT WORLD EVENTS HAD A MAJOR IMPACT ON THE FINANCIAL MARKETS?
A. The implementation of European Economic and Monetary Union (EMU) and the
launch of the Euro -- the European continent's new currency -- has dominated
the first half of this year. The Euro, has on the whole had a very difficult
start and as noted above, declined quite dramatically against the U.S. dollar
in its first six months. The main reason for this has been a sluggish
European economy coinciding with a relatively dynamic U.S. economy. This has
attracted capital towards the U.S. dollar, helping to weaken the Euro.
Domestic problems have also accentuated the Euro's weakness. Most damaging
have been disputes about fiscal policy, and notably Italy's attempt to seek
more flexibility with regards to its budget deficit. In addition, the
European authorities seem to be finding it difficult to adapt to the new
situation. For example, numerous officials have spoken out about the Euro,
but not all in the same vein. Some have even given the impression the Euro's
decline is a matter of indifference.
Q. HOW HAVE YOU POSITIONED THE FUND GOING FORWARD?
A. We anticipate the Euro will do better against the U.S. dollar going forward.
European assets now look significantly undervalued at U.S. dollar/Euro
exchange level of 1.035 - 1.04 (the exchange rate prevailing at end of June
was 1.035) and we believe that the U.S. economy cannot continue to outperform
European markets in such a pronounced way. Our overweight stance in Europe is
thus to be maintained. More generally, further yield curve steepening and
declines in world bond prices cannot be ruled out. This means a cautious
stance on duration will be maintained while the risk of higher yields is
thought to remain high.
32
<PAGE>
GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
GLOBAL INCOME FUND JPM GLOBAL BOND
5/1/97 $10000 $10000
6/97 10190 10352
9/97 10320 10427
12/97 10341 10509
3/98 10540 10613
6/98 10729 10853
9/98 11517 11767
12/98 11720 12118
3/99 11219 11646
6/99 10874 11247
Global Income Fund (ending value $10,874)
JPM Global Bond (ending value $11,247)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE SINCE
MONTHS YEAR COMMENCEMENT
- --------------------------------------------------------------------------------
Global Income Fund (7.22%) 1.35% 3.94%
- --------------------------------------------------------------------------------
JPM Global Bond (7.19%) 3.63% 5.57%
- --------------------------------------------------------------------------------
Lipper peer group average* (2.77%) 0.49% N/A
- --------------------------------------------------------------------------------
Commencement date 5/1/97
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A fund designed for investors who seek high return,
emphasizing current income and, to a lesser
extent, capital appreciation by investing
primarily in foreign and domestic income-bearing
debt securities.
- --------------------------------------------------------------------------------
CURRENCY EXPOSURE AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
[PIE CHART OMITTED]
U.S. DOLLARS 51.1%
EURO 31.2%
OTHER 7.7%
BRITISH POUND 5.2%
CANADIAN DOLLARS 4.8%
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
NET ASSETS OF $10,829 (IN THOUSANDS)
[PIE CHART OMITTED]
EUROPE 49.2%
CASH & OTHERS 20.1%
UNITED STATES 14.8%
JAPAN 6.9%
OTHER REGIONS 5.3%
PACIFIC RIM 3.7%
* LIPPER PERFORMANCE COMPARISONS ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED IN THE GLOBAL INCOME PEER GROUP CONSISTING OF 38 AND 38
UNDERLYING ANNUITY FUNDS.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
33
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
GLOBAL INCOME FUND
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
BONDS AND NOTES -- 79.9%
AUSTRALIA -- 0.7%
Queensland Treasury Corp.
8.00% 08/14/01 ......... AUD $ 61,000 $ 42,304
6.00% 07/14/09 ......... AUD 47,000 29,893
72,197
AUSTRIA -- 1.4%
Republic of Austria
6.25% 10/16/03 ......... JPY 10,000,000 101,066
4.00% 07/15/09 ......... EUR 49,000 47,582
148,648
CANADA -- 5.3%
Government of Canada
7.50% 03/01/01 ......... CAD 115,000 80,804
7.00% 12/01/06 ......... CAD 170,000 125,772
6.00% 06/01/08 ......... CAD 410,000 288,184
1.90% 03/23/09 ......... JPY 10,000,000 82,541
577,301
FRANCE -- 4.0%
Government of France
3.00% 07/12/01 ......... EUR 130,000 133,365
Reseau Ferre De France
5.25% 04/14/10 ......... EUR 285,000 301,005
434,370
GERMANY -- 18.8%
Allgemeine Hypobank AG
4.00% 01/12/09 ......... EUR 300,000 289,803
Bayerische Vereinsbank
4.50% 06/24/02 ......... EUR 209,629 221,261
Depfa Pfandbreifbank
4.75% 01/28/02 ......... EUR 98,000 103,892
Deutsche Bundesrepublik
6.50% 07/04/27 ......... EUR 50,000 59,660
Federal Republic of Germany
5.25% 02/21/01 ......... EUR 167,000 177,809
6.00% 07/04/07 ......... EUR 135,000 153,053
3.75% 01/04/09 ......... EUR 50,000 48,610
3.75% 07/15/09 ......... EUR 50,000 47,703
Hypothekenbank AG
3.00% 02/03/03 ......... EUR 150,000 150,572
Kredit Fuer Wiederaufbau
5.00% 01/04/09 ......... EUR 242,863 254,812
Treuhandanstalt
6.00% 11/12/03 ......... EUR 220,000 245,702
6.75% 05/13/04 ......... EUR 240,000 277,142
2,030,019
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
GREECE -- 1.9%
Hellinic Republic
7.60% 1/22/02 .......... GRD $65,100,000 $ 209,563
ITALY -- 11.2%
Republic of Italy
4.50% 04/15/01 ......... EUR 205,000 215,783
4.75% 05/01/03 ......... EUR 225,000 239,108
8.50% 08/01/04 ......... EUR 56,810 69,946
3.75% 06/08/05 ......... JPY 14,000,000 132,229
6.75% 02/01/07 ......... EUR 195,000 226,806
5.00% 05/01/08 ......... EUR 220,000 230,779
6.50% 11/01/27 ......... EUR 82,000 95,223
1,209,874
JAPAN -- 6.9%
Government of Japan
1.03% 09/22/03 ......... JPY 36,000,000 304,496
1.84% 06/22/09 ......... JPY 35,000,000 280,370
International Bank for Reconstruction & Development
4.50% 03/20/03 ......... JPY 16,900,000 158,851
743,717
NEW ZEALAND -- 3.0%
Government of New Zealand
10.00% 03/15/02 ......... NZD 150,000 87,997
8.00% 04/15/04 ......... NZD 350,000 199,231
7.00% 07/15/09 ......... NZD 70,000 38,273
325,501
SPAIN -- 4.0%
Government of Spain
10.00% 02/28/05 ......... EUR 105,000 139,058
Kingdom of Spain
4.50% 07/30/04 ......... EUR 240,000 251,780
3.10% 09/20/06 ......... JPY 5,000,000 45,596
436,434
SWEDEN -- 1.8%
Kingdom of Sweden
5.50% 04/12/02 ......... SEK 500,000 61,317
6.00% 02/09/05 ......... SEK 1,100,000 137,849
199,166
UNITED KINGDOM -- 6.1%
European Investment Bank
7.63% 12/07/06 ......... GBP 99,000 170,702
6.25% 12/07/08 ......... GBP 100,000 161,967
Treasury
7.00% 11/06/01 ......... GBP 45,000 73,308
6.75% 11/26/04 ......... GBP 80,000 134,107
8.00% 06/07/21 ......... GBP 55,000 124,492
664,576
- -----------
See Notes to Schedule of Investments and Notes to Financial Statements.
34
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
UNITED STATES -- 14.8%
U.S. Treasury Notes
5.50% 02/15/08 ......... USD $1,650,000 $ 1,605,400
TOTAL INVESTMENTS IN SECURITIES
(COST $9,348,865) ............. 8,656,766
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 13.6%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund
(COST $1,469,620) .............. 1,469,620 1,469,620
OTHER ASSETS AND LIABILITIES,
NET 6.5% ...................... 702,290
-----------
NET ASSETS-- 100% ................ $10,828,676
===========
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
At June 30, 1999, the outstanding forward foreign currency contracts, which
obligate the Global Income Fund to deliver currencies at a specified date, were
as follows:
U.S. $
SETTLEMENT CURRENT UNREALIZED
FOREIGN CURRENCY EXCHANGED FOR DATE VALUE APPRECIATION
- --------------------------------------------------------------------------------
SALES
EUR 880,000 USD $ 919,886 07/26/99 $ 908,857 $11,029
GBP 90,000 USD 142,095 07/26/99 141,884 211
JPY133,800,000 USD 1,136,528 08/06/99 1,111,911 24,617
---------- --------
$2,162,652 $35,857
========== ========
- ------------
See Notes to Schedule of Investments and Notes to Financial Statements.
35
<PAGE>
TOTAL RETURN FUND
- --------------------------------------------------------------------------------
Q&A
DAVID CARLSON, RALPH LAYMAN AND ROBERT MACDOUGALL SHARE PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE TOTAL RETURN FUND. DAVE CARLSON MANAGES THE DOMESTIC
EQUITY PORTION, RALPH LAYMAN MANAGES THE INTERNATIONAL EQUITY PORTION AND BOB
MACDOUGALL MANAGES THE FIXED INCOME PORTION OF THE FUND. PLEASE REFER TO PAGE 20
FOR RALPH'S BIOGRAPHICAL DETAILS, PAGE 14 FOR DAVE'S BIOGRAPHICAL DETAILS, AND
PAGE 25FOR BOB'S BIOGRAPHICAL DETAILS.
Q. HOW DID THE TOTAL RETURN FUND PERFORM COMPARED TO ITS BENCHMARKS AND LIPPER
PEER GROUP FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999?
A. The Total Return Fund posted a return of 6.75% for the six-month period
ending June 30, 1999. The fund allocates investments among several asset
classes: 44% to U.S. equities; 15% to international equities; 41% to fixed
income securities and the balance to cash. Results of the fund should be
compared to several benchmarks: the S&P 500 Index returned 12.26%; the MSCI
EAFE Index gained 3.97%; and the Lehman Brothers Aggregate Bond Index posted
a return of -1.38%. For the same period, our Lipper peer group of 92 Flexible
annuity funds returned 5.89%.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The largest component, U.S. equities, benefited from the healthy U.S.
economy. A broadening of the stock market in the second quarter also helped
performance. This was in contrast to 1998, when a few large-cap stocks
accounted for most of the market's gain. Impressive returns from oil, oil
service and technology stocks contributed to outperformance in U.S. equities.
Energy prices surged during the first half of 1999 and the technology sector
continues to be a market leader, as it was in 1998.
Technology stocks also were leaders in the international component. Superior
stock selection helped international stock performance despite a different
country allocation compared to the MSCI EAFE Index -- the fund was
underweight in stocks from Japan and Asia, where markets rose sharply, and
overweight in stocks from Europe, whose indicators were weak, reflecting a
disappointing performance from the Euro.
The fund's fixed income securities underperformed because of a higher
allocation of U.S. government bonds and longer duration in a rising rate
environment. Strong economic growth buffeted bond markets in the first half
of 1999 as inflation concerns grew. The yield for the benchmark 30-year U.S.
Treasury Bond reached a 19-month high of 6.16% in June before ending the
month at 5.96%. Yields for shorter maturities rose more than 100 basis points
(1.00%). At the end of June, the Federal Reserve Bank raised interest rates
by 25 basis points (0.25%) and signaled that further rate hikes would depend
on future economic performance.
Q. DO YOU ANTICIPATE ANY CHANGES IN THE FUND'S ASSET ALLOCATIONS?
A. Stocks, international and U.S. together, represent 59% of the fund. Bonds and
cash make up the remaining 41%. At present, there are no planned changes to
the mix but we monitor our investment climate cautiously. We will make asset
allocation changes when valuations change, making one asset class more
attractive than another.
Q. WHAT IS YOUR OUTLOOK FOR THE MARKETS?
A. We are in a global environment of low interest rates, benign inflation and
stability in Asia. In this environment, world equity markets, including
emerging markets, should show positive performance. However, current market
valuations in the U.S. already reflect the unusually good economic
conditions, and periodic concerns about higher interest rates probably will
result in above-average volatility in both the stock and bond markets. We
believe that future market returns in the U.S. most likely will be limited to
growth in corporate earnings and dividends. Future global growth depends on
whether sustained economic growth extends outside U.S. borders.
36
<PAGE>
TOTAL RETURN FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
TOTAL RETURN FUND S&P 500 LB AGGREGATE
12/88 $10000 $10000 $10000
12/89 11521 13154 11453
12/90 11477 12738 12477
12/91 14616 16633 14474
12/92 15710 17918 15545
12/93 17839 19712 17061
12/94 18290 19968 16563
12/95 23424 27454 19622
12/96 25906 33800 20332
12/97 30566 45053 22301
12/98 35793 57982 24235
6/99 38209 65090 23899
Total Return Fund (ending value $38,209)
S&P 500 Index (ending value $65,090)
LB Aggregate (ending value $23,899)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE FIVE TEN
MONTHS YEAR YEAR YEAR
- --------------------------------------------------------------------------------
Total Return Fund 6.75% 12.64% 16.84% 13.16%
- --------------------------------------------------------------------------------
S&P 500 Index 12.26% 22.71% 27.87% 18.77%
- --------------------------------------------------------------------------------
LB Aggregate (1.38%) 3.13% 7.82% 8.15%
- --------------------------------------------------------------------------------
Lipper peer group average* 5.89% 9.34% 15.96% 13.19%
- --------------------------------------------------------------------------------
Commencement date 6/30/85
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A fund designed for investors who seek the highest total
return, composed of current income and capital
appreciation, as is consistent with prudent investment
risk by investing in both equity and debt securities.
- --------------------------------------------------------------------------------
TOP TEN LARGEST HOLDINGS AT JUNE 30, 1999
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 7.00% TBA ........ 3.66%
- --------------------------------------------------------------------------------
Citigroup Inc. ..................................... 2.21%
- --------------------------------------------------------------------------------
U.S. Treasury Notes 5.25% 5/31/01 ................. 2.13%
- --------------------------------------------------------------------------------
First Data Corp. ................................... 1.74%
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 7.50% TBA ........ 1.74%
- --------------------------------------------------------------------------------
NTL Inc. ........................................... 1.65%
- --------------------------------------------------------------------------------
Waste Management Inc. .............................. 1.54%
- --------------------------------------------------------------------------------
U.S. Treasury Notes 5.00% 4/30/01 ................. 1.40%
- --------------------------------------------------------------------------------
AT&T Corp. - Liberty Media Group ................... 1.37%
- --------------------------------------------------------------------------------
Cardinal Health Inc. ............................... 1.37%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
NET ASSETS OF $90,084 (IN THOUSANDS)
[PIE CHART OMITTED]
DOMESTIC EQUITY 43.6%
BONDS AND NOTES 34.9%
FOREIGN EQUITY 15.2%
CASH & OTHER 6.3%
* LIPPER PERFORMANCE COMPARISONS ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED IN THE FLEXIBLE PEER GROUP CONSISTING OF 92, 92, 60 AND
38 UNDERLYING ANNUITY FUNDS, RESPECTIVELY.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
37
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
TOTAL RETURN FUND
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
DOMESTIC EQUITY -- 43.4%
BASIC MATERIALS -- 0.3%
Air Products & Chemicals Inc. ....... 1,935 $ 77,884
Airgas Inc. ......................... 7,788 95,403(a)
Great Lakes Chemical Corp. .......... 1,471 67,758
241,045
CAPITAL GOODS -- 5.7%
Alleghany Corp. ..................... 307 56,795
AlliedSignal Inc. ................... 18,630 1,173,690
Dover Corp. ......................... 29,061 1,017,135
Emerson Electric Co. ................ 1,923 120,909
Hubbell Inc. (Class B) .............. 9,804 444,857(h)
Molex Inc. (Class A) ................ 20,769 654,223
Textron Inc. ........................ 1,595 131,288
United Technologies Corp. ........... 2,196 157,426
Waste Management Inc. ............... 25,800 1,386,750
5,143,073
CONSUMER - CYCLICAL -- 7.3%
AT&T Corp. - Liberty
Media Group (Class A) ............ 33,540 1,232,595(a)
Carnival Corp. ...................... 8,772 425,442
Catalina Marketing Corp. ............ 7,921 728,732(a)
Comcast Corp. (Class A) ............. 22,756 874,684
Gannett Inc. ........................ 4,618 329,610
Harman International Industries Inc. 3,096 136,224
Interpublic Group Cos. Inc. ......... 6,424 556,479
NTL Inc. ............................ 17,291 1,490,268(a)
The Stanley Works ................... 2,967 95,500
Time Warner Inc. .................... 4,850 356,475
Walt Disney Co. ..................... 12,453 383,708
6,609,717
CONSUMER - STABLE -- 2.1%
Anheuser Busch Cos. Inc. ............ 2,941 208,627(h)
Avon Products Inc. .................. 8,437 468,254
Colgate-Palmolive Co. ............... 1,651 163,036
Gillette Co. ........................ 3,870 158,670
Pepsico Inc. ........................ 11,378 440,186
Philip Morris Cos. Inc. ............. 10,372 416,825
1,855,598
ENERGY -- 3.2%
Anadarko Petroleum Corp. ............ 6,527 240,275
Baker Hughes Inc. ................... 12,307 412,285
Burlington Resources Inc. ........... 3,844 166,253
Exxon Corp. ......................... 4,309 332,332
Nabors Industries Inc. .............. 6,011 146,894(a)
Royal Dutch Petroleum Co. ADR ....... 10,526 634,191
Schlumberger Ltd. ................... 12,229 778,834
Unocal Corp. ........................ 4,515 178,907
2,889,971
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
FINANCIAL -- 5.2%
American Express Co. ................ 3,354 $ 436,439
Citigroup Inc. ...................... 42,007 1,995,332
Countrywide Credit Industries Inc. .. 2,348 100,377
Federal National Mortgage Assoc. .... 16,118 1,102,068
State Street Corp. .................. 7,152 610,602(i)
Wells Fargo & Co. ................... 9,598 410,315
4,655,133
HEALTHCARE -- 8.6%
Abbott Laboratories ................. 19,608 892,164
American Home Products Corp. ........ 8,540 491,050
Bristol-Myers Squibb Co. ............ 11,610 817,779
Cardinal Health Inc. ................ 19,221 1,232,547
Dentsply International Inc. ......... 7,224 202,272
Henry Schein Inc. ................... 11,739 371,979(a)
Johnson & Johnson ................... 10,604 1,039,192(h)
Lincare Holdings Inc. ............... 11,610 290,250(a,h)
Merck & Co. Inc. .................... 12,900 954,600
Omnicare Inc. ....................... 5,418 68,402
Pfizer Inc. ......................... 5,057 555,006
Pharmacia & Upjohn Inc. ............. 1,831 104,024
Sybron International Corp. .......... 17,157 472,890(a)
Watson Pharmaceuticals Inc. ......... 7,611 266,861(a)
7,759,016
INSURANCE -- 2.3%
American International Group Inc. ... 5,742 672,173
Berkshire Hathaway Inc. (Class B) ... 203 454,720(a)
Chicago Title Corp. ................. 903 32,226
Loews Corp. ......................... 3,999 316,421
Marsh & McLennan Cos. Inc. .......... 6,914 522,007
UNUM Corp. .......................... 1,677 91,815
2,089,362
MISCELLANEOUS -- 0.1%
SPDR Trust .......................... 773 105,901
RETAIL TRADE -- 0.7%
CVS Corp. ........................... 2,838 144,028
Home Depot Inc. ..................... 7,198 463,821
607,849
TECHNOLOGY - ELECTRONICS & EQUIPMENT -- 1.8%
Applied Materials Inc. .............. 4,386 324,016(a)
Cisco Systems Inc. .................. 9,288 597,334(a)
Intel Corp. ......................... 11,094 660,093
Pitney Bowes Inc. ................... 1,367 87,830
1,669,273
TECHNOLOGY - SOFTWARE & SERVICES -- 5.2%
Automatic Data Processing Inc. ...... 17,854 785,576
EMC Corp. ........................... 5,418 297,990(a)
Equifax Inc. ........................ 29,283 1,045,037
First Data Corp. .................... 31,992 1,565,609
Microsoft Corp. ..................... 6,450 581,709(a)
Reuters Group PLC ADR ............... 4,884 395,909
4,671,830
- --------------
See Notes to Schedule of Investments and Notes to Financial Statements.
38
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
UTILITIES -- 0.9%
MCI WorldCom Inc. .................... 5,599 $ 481,864(a)
SBC Communications Inc. .............. 5,573 323,234
805,098
TOTAL DOMESTIC EQUITY
(COST $26,420,438) ................. 39,102,866
- --------------------------------------------------------------------------------
FOREIGN EQUITY -- 15.2%
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 0.5%
Billiton PLC ......................... 4,172 14,599
British Steel PLC ....................19,634 50,832
Ispat International N.V. (Regd.)
(Class A) ......................... 2,517 27,844
Johnson Matthey PLC .................. 2,372 23,181
Montedison S.p.A. ....................56,147 91,449(a)
Pohang Iron & Steel Co. Ltd. ADR ..... 2,732 91,864
Shin-Etsu Chemical Co. ............... 4,000 133,918
433,687
CAPITAL GOODS -- 2.4%
ABB AG ............................... 60 88,740
Alstom ............................... 7,169 225,400(a)
Celestica Inc. ....................... 1,290 55,817(a)
CRH PLC .............................. 4,904 86,871
Desc S.A. de C.V. (Series B) .........12,655 13,821
Desc S.A. de C.V. ADR (Class C) ...... 2,017 45,635
FKI PLC ..............................36,717 114,049
Grupo Carso S.A. de C.V. ADR ......... 9,155 83,540
Invensys PLC .........................64,045 302,853
Lyonnaise Des Eaux S.A. .............. 723 130,354
Mannesmann AG ........................ 2,855 425,863
Minebea Co. Ltd. .....................14,000 156,237
Preussag AG .......................... 7,471 401,247
VA Technologie AG .................... 493 44,646
2,175,073
CONSUMER - CYCLICAL -- 2.3%
Airtours PLC .........................33,059 263,673
Autoliv Inc. SDR ..................... 6,218 189,712
Canon Inc. ........................... 6,000 172,605
DaimlerChrysler AG ................... 2,165 187,470
Granada Group PLC ....................11,545 213,824
Grupo Televisa S.A. GDR .............. 246 11,024(a)
Honda Motor Co. ...................... 1,000 42,407
Johnson Electric Holdings Ltd. .......27,500 113,423
Kinnevik AB (Series B) ............... 582 10,969
Mazda Motor Corp. ....................26,000 149,376
Michelin CGDE (Regd.) (Class B) ...... 4,055 165,824
Philips Electronics N.V. ............. 1,989 196,101
Reed International PLC ............... 7,496 49,862
Saatchi & Saatchi PLC ................ 4,388 14,843
SEMA Group PLC ....................... 2,129 20,487
Societe Europeenne de Communication
S.A. ADR (Class A) ................ 9 116(a)
Societe Europeenne de Communication
S.A. ADR (Class B) ................ 39 524(a)
Sony Corp. ........................... 2,000 215,756
Volkswagen AG ........................ 573 36,681
Williams PLC ......................... 2,441 16,122
2,070,799
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER - STABLE -- 0.0%
Gruma S.A. de C.V. (Series B) ........ 3,895 $ 6,525(a)
Panamerican Beverages Inc. (Class A) . 366 8,715
San Miguel Corp. S.A. ................15,433 33,665
48,905
DIVERSIFIED -- 0.2%
Lagardere S.C.A. ..................... 4,181 155,590
ENERGY -- 1.0%
Coflexip S.A. ADR .................... 2,066 89,871
Elf Aquitaine S.A. ................... 808 118,526
Repsol S.A. .......................... 1,778 36,290
Saipem ...............................25,888 103,277
Total S.A. (Class B) ................. 2,502 322,656
Veba AG .............................. 3,225 189,496
Viag AG .............................. 106 50,046
910,162
FINANCIAL -- 1.9%
Alpha Credit Bank (Regd.) ............ 212 13,646
Alpha Credit Bank .................... 26 1,673(a)
Argentaria, Caja Postal y Banco
Hipotecario de Espana, S.A. ....... 5,814 132,393
Banca Intesa S.p.A. ..................28,444 136,638
Banco Comercial Portugues (Regd.) .... 2,302 59,634
Bank of Ireland ...................... 6,612 111,567
Bayerische Vereinsbank AG ............ 3,235 210,093
Cosco Pacific Ltd. ...................10,000 8,313
Credit Suisse Group .................. 584 101,020
Deutsche Bank AG ..................... 624 38,199
Grupo Financiero Banamex Accival
S.A. de C.V. (Class B) ............39,477 100,461(a)
ING Groep N.V. ....................... 5,808 314,327
Investor AB (Series B) ............... 1,392 15,578
Invik & Co. AB ....................... 317 18,653
Merita PLC (Series A) ................20,576 116,871
Newcourt Credit Group Inc. ........... 823 10,703
Societe Generale ..................... 915 161,198
Uniao de Bancos Brasilieros S.A. GDR 2,839 68,314
Zurich Allied AG ..................... 100 56,845(a)
1,676,126
HEALTHCARE -- 1.1%
Fresenius Medical Care AG ............ 2,762 164,854
Novartis AG (Regd.) .................. 78 113,858
Novo-Nordisk AS (Series B) ........... 1,364 146,949
Nycomed Amersham PLC .................15,988 111,830
Rhone-Poulenc S.A. (Class A) ......... 4,751 217,011
Shire Pharmaceuticals Group PLC ADR .. 3,355 87,230(a)
Teva Pharmaceutical Industries
Ltd. ADR .......................... 2,356 115,444
957,176
- ------------
See Notes to Schedule of Investments and Notes to Financial Statements.
39
<PAGE>
TOTAL RETURN FUND
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
INSURANCE -- 0.9%
AXA-UAP .............................. 2,827 $ 344,751
Commercial Union PLC ................. 3,347 48,194
Muenchener Rueckverischerungs-
Gesellschaft AG ................... 390 72,165
Muenchener Rueckverischerungs-
Gesellschaft AG ................... 390 71,159(a)
Pohjola Group Insurance Corp.
(Series B) ........................ 606 31,079
Royal & Sun Alliance Insurance
Group PLC .........................17,608 157,785
Sampo Insurance Co. Ltd. (Series A) .. 4,240 122,820
847,953
RETAIL TRADE -- 0.6%
Carrefour S.A. ....................... 1,139 167,315
Giordano International Ltd. ..........54,000 38,280
Jeronimo Martins, SGPS, S.A. ......... 967 31,929
Koninklijke Ahold N.V. ............... 4,608 158,667
Somerfield PLC .......................13,937 65,355
The Great Universal Stores PLC ....... 2,521 28,114
Vendex KBB N.V. ...................... 2,321 61,971
551,631
TECHNOLOGY - ELECTRONICS & EQUIPMENT -- 2.2%
Brambles Industries Ltd. ............. 7,689 202,296
Cable & Wireless Communication PLC ...14,947 143,717(a)
Comverse Technology Inc. ............. 2,238 168,969(a)
ECI Telecommunications Ltd. .......... 5,889 195,441
Ericsson LM Telephone (Series B) ..... 5,259 168,816
NetCom Systems AB (Series B) ......... 1,337 45,045(a)
Nokia Oyj (Series A) ................. 2,098 183,832
Nortel Networks Corp. ................ 1,142 99,140
Schneider S.A. ....................... 3,076 172,655
Sumitomo Electric Industries .........13,000 147,871
Taiwan Semiconductor
Manufacturing Co. .................64,083 245,023(a)
Toshiba Corp. ........................27,000 192,618
1,965,423
TECHNOLOGY - SOFTWARE & SERVICES -- 0.4%
Cap Gemini S.A. ...................... 1,563 245,550
CGI Group Inc. (Class A) ............. 3,827 80,568(a)
326,118
TRANSPORTATION -- 0.1%
IHC Caland N.V. ...................... 2,820 110,466
Railtrack Group PLC .................. 1,346 27,517
137,983
UTILITIES -- 1.6%
Hellenic Telecommunication
Organization S.A. ADR ............. 4,689 51,872
Hellenic Telecommunication
Organization S.A. ................. 3,160 67,633
Korea Telecom Corp. ADR .............. 1,116 44,640(a)
Telecom Italia Mobile S.p.A. .........10,736 64,079
Telecom Italia S.p.A ................. 6,964 72,363
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Telefonica S.A. ..................... 4,410 $ 212,346
Vodafone AirTouch PLC ADR ........... 4,386 864,042
Vodafone Group PLC .................. 3,601 70,837
1,447,812
TOTAL FOREIGN EQUITY
(COST $11,684,786) ................ 13,704,438
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
BONDS AND NOTES -- 34.9%
- --------------------------------------------------------------------------------
U.S. TREASURIES -- 8.7%
U.S. Treasury Bonds
10.625% 08/15/15 ............... 166,000 238,806(h)
8.125% 08/15/19 ............... 647,000 781,453(h)
8.125% 05/15/21 ............... 495,000 602,816(h)
5.25% 11/15/28 ............... 20,000 17,728(h)
5.25% 02/15/29 ..............1,301,000 1,168,871(h)
2,809,674
U.S. Treasury Notes
5.00% 04/30/01 ..............1,272,000 1,261,264(h)
5.25% 05/31/01 ..............1,926,000 1,916,967(h)
6.50% 08/31/01 ............... 234,000 238,388(h)
5.25% 05/15/04 ............... 809,000 794,972(h)
5.50% 05/15/09 ............... 312,000 304,783(h)
4,516,374
U.S. Treasury STRIPS
6.29% 08/15/11 ............... 568,000 268,067(d,h)
6.31% 02/15/12 ............... 505,000 230,644(d,h)
498,711
TOTAL U.S. TREASURIES
(COST $7,989,193) ................ 7,824,759
FEDERAL AGENCIES -- 5.8%
Federal Home Loan Bank
5.625% 03/19/01 ............... 230,000 229,462
5.25% 04/25/02 ............... 260,000 256,547
6.22% 03/18/08 ............... 215,000 207,778
5.75% 04/15/08 ............... 65,000 61,923
755,710
Federal Home Loan Mortgage Corp.
5.125% 10/15/08 ............... 270,000 241,944
Federal National Mortgage Assoc.
5.10% 09/25/00 ............... 43,000 42,724
5.38% 01/16/01 ............... 250,000 248,555
5.125% 02/13/04 ............... 763,000 731,526
6.99% 07/09/07 ............... 80,000 80,025
6.04% 02/25/09 ............... 385,000 364,426
9.00% 06/01/09 ............... 176,815 188,915
7.50% 12/01/09 ............... 441,323 449,183
7.00% 08/01/13 ............... 29,142 29,255
7.50% 02/01/14 ............... 168,725 171,730
9.00% 04/01/16 ............... 90,669 96,676
9.50% 11/01/17 ............... 66,647 72,083
8.00% 12/01/17 ............... 72,043 74,361
9.00% 12/01/17 ............... 65,512 69,350
7.50% 12/01/18 ............... 43,402 44,038
9.50% 08/01/22 ............... 123,785 133,804
9.00% 12/01/22 ............... 74,584 78,989
7.50% 12/01/23 ............... 355,591 359,478
6.16% 08/07/28 ............... 360,000 336,712
- ------------
See Notes to Schedule of Investments and Notes to Financial Statements.
40
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
6.50% 01/01/29 - 06/01/29 ..$ 494,925 $ 477,445
8.00% TBA .................... 80,000 82,175(c)
4,131,450
Small Business Administration
6.55% 10/01/17 - 12/01/17 .... 65,350 64,320
TOTAL FEDERAL AGENCIES
(COST $5,331,837) ................ 5,193,424
AGENCY MORTGAGE BACKED -- 10.5%
Federal Home Loan Mortgage Corp.
5.75% 06/15/01 ............... 495,000 494,688
7.50% 11/01/09 ............... 170,653 173,892
7.50% 06/01/10 ............... 108,161 110,214
8.00% 08/01/24 ............... 7,969 8,191
8.00% 10/01/25 ............... 7,397 7,600
9.00% 10/01/25 ............... 17,620 18,595
8.00% 11/01/26 ............... 10,519 10,808
8.00% 02/01/28 ............... 11,599 11,918
6.00% 01/01/29 ............... 99,499 31,280
6.50% 07/01/29 ............... 252,079 243,334
7.00% TBA ...................3,331,600 3,296,218(c)
7.50% TBA ...................1,550,000 1,564,539(c)
5,971,277
Federal National Mortgage Assoc.
6.65% 08/25/07 .............. 70,000 70,044
5.64% 12/10/08 .............. 255,000 237,749
6.50% 04/01/13 .............. 288,850 284,607
7.00% 08/01/25 - 12/01/25 ... 414,602 409,810
7.00% 08/01/27 - 11/01/27 ... 414,819 411,234
7.00% 07/01/28 .............. 528,449 522,335
1,935,779
Government National Mortgage Assoc.
7.00% 03/15/12 .............. 556,949 561,471
9.00% 11/15/16 .............. 133,098 141,748
9.00% 01/15/17 - 11/15/17 ... 123,045 131,041
9.50% 12/15/17 .............. 129,737 140,271
9.00% 12/15/21 .............. 15,155 16,154
6.50% 04/15/24 .............. 163,961 158,579
7.50% 01/15/28 .............. 91,835 92,782
6.50% 04/15/28 .............. 372,362 358,048
1,600,094
TOTAL AGENCY MORTGAGE BACKED
(COST $9,587,098) ............... 9,507,150
AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.2%
Federal Home Loan Mortgage Corp.
5.75% 06/15/23 .............. 60,000 57,544(g)
Federal National Mortgage Assoc.
6.00% 03/25/19 .............. 139,200 131,718
8.00% 10/25/20 .............. 20,137 20,577
152,295
TOTAL AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS
(COST $215,858) ................. 209,839
ASSET BACKED -- 0.6%
Burlington North Santa Fe Corp.
6.23% 07/02/18 .............. 55,000 51,947
Capital One Master Trust
5.43% 01/15/07 .............. 30,000 28,870
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Chase Credit Card Master Trust
6.00% 08/15/05 .............$ 46,000 $ 45,468
Citibank Credit Card Master Trust I
5.75% 01/15/03 ............. 8,000 7,968
5.50% 02/15/06 ............. 53,000 50,929
Discover Card Master Trust I
5.75% 10/16/03 ............. 39,000 38,671
5.30% 08/15/04 ............. 32,000 31,230
5.60% 05/15/06 ............. 83,000 80,173
First USA Credit Card Master Trust
5.28% 09/18/06 ............. 84,000 80,246
Ford Credit Auto Loan Master Trust
5.50% 02/15/03 ............. 19,000 18,841
Ford Credit Auto Owner Trust
5.90% 06/15/02 ............. 37,000 36,896
Green Tree Financial Corp.
6.90% 04/15/18 ............. 24,670 24,786
Peco Energy Transport Trust
5.80% 03/01/07 ............. 27,000 26,122
6.05% 03/01/09 ............. 27,000 25,861
TOTAL ASSET BACKED
(COST $562,752) ................ 548,008
CORPORATE NOTES -- 6.9%
Abbey National PLC
6.70% 06/29/49 ............. 105,000 99,727
Aetna Services Inc.
6.97% 08/15/36 ............. 100,000 100,432
Airtouch Communications Inc.
7.00% 10/01/03 ............. 212,000 215,903
Armstrong World Industries Inc.
7.45% 05/15/29 ............. 100,000 97,246
Associates Corporation of North America
6.375% 10/15/02 ............. 100,000 100,039
AT&T Corp.
6.50% 03/15/29 ............. 30,000 27,073
Bellsouth Telecomm Inc.
6.375% 06/01/28 ............. 50,000 44,365
Bertelsmann US Finance
5.375% 01/28/04 ............. 65,000 61,344
Boston University
7.625% 07/15/97 ............. 80,000 79,200
Brascan Ltd.
7.375% 10/01/02 ............. 25,000 24,984
Carnival Corp.
5.65% 10/15/00 ............. 50,000 49,687
Champion International Corp.
6.40% 02/15/26 ............. 25,000 24,117
Chrysler Financial Corp.
6.95% 03/25/02 ............. 250,000 253,472
Coastal Corp.
6.375% 02/01/09 ............. 75,000 70,475
Coca-Cola Enterprises Inc.
7.00% 10/01/26 ............. 30,000 30,528
Columbia University Trustees New York
6.83% 12/15/20 ............. 25,000 24,450
Conoco Inc.
6.95% 04/15/29 ............. 20,000 18,724
Conseco Inc.
6.40% 06/15/01 ............. 50,000 48,983
6.80% 06/15/05 ............. 35,000 33,055
Corporacion Andina De Fomento
6.75% 03/15/05 ............. 130,000 121,192
Crown Cork & Seal Inc.
8.00% 04/15/23 ............. 50,000 48,750
CSX Corp.
6.25% 10/15/08 ............. 100,000 93,483
- ------------
See Notes to Schedule of Investments and Notes to Financial Statements.
41
<PAGE>
TOTAL RETURN FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Delphi Auto Systems Corp.
6.125% 05/01/04 .............$ 20,000 $ 19,449
Diageo Capital PLC
6.625% 06/24/04 ............. 150,000 148,965
Duke Energy Corp.
5.375% 01/01/09 ............. 200,000 177,106
Duquesne Light Co.
8.70% 06/01/16 ............. 26,574 28,286
Federated Department Stores Inc.
6.125% 09/01/01 ............. 35,000 34,859
Ford Motor Credit Co.
5.80% 01/12/09 ............. 40,000 36,556
General Motors Acceptance Corp.
5.75% 11/10/03 ............. 20,000 19,351
6.15% 04/05/07 ............. 100,000 95,223
Goldman Sachs Group
6.65% 05/15/09 ............. 100,000 96,427
Heritage Media Corp.
8.75% 02/15/06 ............. 40,000 42,450
Household Finance Corp.
6.125% 07/15/02 ............. 15,000 14,871
Hydro-Quebec
8.25% 04/15/26 ............. 125,000 137,902
Korea Development Bank
6.625% 11/21/03 ............. 20,000 18,962
Kroger Co.
7.375% 03/01/05 ............. 100,000 101,373
LCI International Inc.
7.25% 06/15/07 ............. 25,000 24,548
Lehman Brothers Holdings Inc.
7.50% 08/01/26 ............. 45,000 45,563
Liberty Property Ltd. Partnership
7.50% 01/15/18 ............. 30,000 26,369
Manor Care Inc.
7.50% 06/15/06 ............. 30,000 29,064
MCI Communications Corp.
6.125% 04/15/02 ............. 125,000 124,170
MCI WorldCom Inc.
6.40% 08/15/05 ............. 35,000 34,240
8.875% 01/15/06 ............. 35,000 37,262
Merrill Lynch & Co. Inc.
5.71% 01/15/02 ............. 100,000 98,629
7.00% 01/15/07 ............. 250,000 252,487
Morgan Stanley Dean Witter & Co.
5.625% 01/20/04 ............. 50,000 48,192
National Rural Utilities Cooperative
6.046% 04/15/03 ............. 25,000 24,563
5.50% 01/15/05 ............. 40,000 38,226
NationsBank Corp.
7.50% 09/15/06 ............. 224,000 232,530
New Jersey Economic Development Authority
7.425% 02/15/29 ............. 25,000 26,092
Newell Co.
6.35% 07/15/08 ............. 40,000 38,530
Noram Energy Corp.
6.375% 11/01/03 ............. 30,000 29,388
Norfolk Southern Corp.
7.90% 05/15/97 ............. 55,000 56,236
7.05% 05/01/37 ............. 10,000 10,162
Northrop-Grumman Corp.
8.625% 10/15/04 ............. 30,000 31,930
Occidental Petroleum Corp.
7.375% 11/15/08 ............. 30,000 29,499
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Paramount Communications Inc.
7.50% 01/15/02 .............$ 75,000 $ 76,645
Philip Morris Cos. Inc.
7.25% 09/15/01 ............. 25,000 25,421
6.95% 06/01/06 ............. 20,000 20,210
7.65% 07/01/08 ............. 125,000 128,562
Phillips Petroleum Co.
6.375% 03/30/09 ............. 100,000 95,656
Pitney Bowes Credit
9.25% 06/15/08 ............. 150,000 173,701
Raytheon Co.
6.75% 08/15/07 ............. 100,000 98,982
RJR Nabisco Inc.
6.125% 02/01/33 ............. 30,000 29,158
Safeway Inc.
5.75% 11/15/00 ............. 25,000 24,860
Sprint Capital Corp.
5.70% 11/15/03 ............. 25,000 23,960
6.125% 11/15/08 ............. 25,000 23,072
6.875% 11/15/28 ............. 160,000 145,059
Stop & Shop Cos. Inc.
9.75% 02/01/02 ............. 20,000 21,325
Suntrust Bank Inc.
6.00% 01/15/28 ............. 25,000 23,413
Tele-Communications Inc.
9.80% 02/01/12 ............. 30,000 36,655
7.875% 08/01/13 ............. 35,000 36,901
Time Warner Inc.
7.25% 10/15/17 ............. 125,000 120,334
Tosco Corp.
7.625% 05/15/06 ............. 20,000 20,368
Tribune Co.
6.875% 11/01/06 ............. 200,000 197,562
Turner Broadcasting Systems Inc.
8.375% 07/01/13 ............. 35,000 37,923
Tyco International Group S.A.
6.25% 06/15/03 ............. 50,000 49,200
7.00% 06/15/28 ............. 130,000 120,714
U.S. West Capital Funding Inc.
6.125% 07/15/02 ............. 15,000 14,799
6.875% 07/15/28 ............. 20,000 18,278
Ultramar Diamond Shamrock Corp.
7.65% 07/01/26 ............. 100,000 100,089
Union Oil Co. of California
7.35% 06/15/09 ............. 100,000 100,882
Union Pacific Corp.
6.79% 11/09/07 ............. 45,000 43,475
7.00% 02/01/16 ............. 150,000 141,986
United Illuminating Co.
6.25% 12/15/02 ............. 10,000 9,795
United Parcel Service Inc.
8.375% 04/01/30 ............. 45,000 49,280
USA Waste Services Inc.
6.44% 07/15/01 ............. 115,000 114,311(d)
USX Marathon Group
9.80% 07/01/01 ............. 25,000 26,470
Westdeutsche Landesbank
6.75% 06/15/05 ............. 100,000 98,625
Westinghouse Electric Corp.
8.875% 06/01/01 ............. 15,000 15,577
Williams Cos. Inc.
6.125% 02/15/02 ............. 50,000 49,584
TOTAL CORPORATE NOTES
(COST $6,388,803) .............. 6,189,521
- --------------
See Notes to Schedule of Investments and Notes to Financial Statements.
42
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
NON-AGENCY MORTGAGE BACKED SECURITIES -- 2.1%
Chase Commercial Mortgage Securities Corp.
6.39% 11/18/08 ............ $146,000 $ 142,806
Commercial Mortgage Acceptance Corp.
6.49% 05/15/08 ............ 72,000 69,986
Credit Suisse First Boston Mortgage Securities Corp.
6.30% 11/15/08 ............ 163,000 155,996
DLJ Mortgage Acceptance Corp.
6.24% 11/12/31 ............ 325,000 309,664
First Union Lehman Brothers
6.28% 06/18/07 ............ 121,827 117,602
GMAC Commercial Mortgage Securities Inc.
6.42% 08/15/08 ............ 44,000 42,584
9.80% 08/15/23 ............ 882,655 36,133(d)
Lehman Large Loan
6.79% 06/12/04 ............ 26,928 27,096
Merrill Lynch Mortgage Investors Inc.
6.39% 02/15/30 ............ 160,000 157,030
Mid-State Trust
7.54% 07/01/35 ............ 13,092 12,700(d)
Morgan Stanley Capital I
6.52% 01/15/08 ............ 84,000 82,110
6.54% 07/15/30 ............ 135,000 132,005
6.21% 09/15/08 ............ 159,000 151,870
9.71% 04/15/23 ............ 430,828 18,175
6.59% 10/03/30 ............ 18,089 18,092
6.01% 11/15/30 ............ 50,936 49,655
6.48% 11/15/30 ............ 88,000 85,552
Mortgage Capital Funding Inc.
6.423% 05/18/08 ............ 150,000 144,539
Nationslink Funding Corp.
6.001% 11/20/07 ............ 28,931 28,135
6.476% 07/20/08 ............ 89,000 86,497
TOTAL NON-AGENCY MORTGAGE BACKED SECURITIES
(COST $1,953,012) ............. 1,868,227
NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.1%
Salomon Brothers Mortgage Securities Inc.
7.00% 7/25/24
(COST $81,718) ............... 82,958 77,443
TOTAL BONDS AND NOTES
(COST $32,110,271) ............ 31,418,371
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 0.2%
- --------------------------------------------------------------------------------
DOMESTIC PREFERRED -- 0.2%
Microsoft Corp. (Series A), 2.75% 1,625 162,399
TCI Communications Inc., 10.00% . 1,200 31,950
194,349
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
INTERNATIONAL PREFERRED -- 0.0%
Fresenius Medical Care AG ....... 125 $ 4,381
Telecomunicacoes de Sao
Paulo S.A.-Telesp ............ 120,000 14,233
18,614
TOTAL PREFERRED STOCK
(COST $201,947) ............... 212,963
- --------------------------------------------------------------------------------
WARRANTS -- 0.0%
- --------------------------------------------------------------------------------
Muenchener Rueckverischerungs-
Gesellschaft AG (Regd.), 06/03/02
(COST $0) ..................... 11 329(a)
TOTAL INVESTMENTS IN SECURITIES
(COST $70,417,442) ............ 84,438,967
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 11.2%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund
(COST $10,056,280) ............ 10,056,280 10,056,280
OTHER ASSETS AND LIABILITIES,
NET (4.9)% ................... (4,410,805)
-----------
NET ASSETS-- 100% ............... $90,084,442
===========
- --------------
See Notes to Schedule of Investments and Notes to Financial Statements.
43
<PAGE>
MONEY MARKET FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
MONEY MARKET FUND 90-DAY T-BILL
12/88 $10000 $10000
12/89 10866 10839
12/90 11642 11678
12/91 12258 12325
12/92 12628 12758
12/93 12925 13149
12/94 13407 13723
12/95 14199 14500
12/96 14966 15246
12/97 15776 16039
12/98 16605 16822
6/99 16974 17205
Money Market Fund (ending value $16,974)
90-Day T-Bill (ending value $17,205)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE FIVE TEN
MONTHS YEAR YEAR YEAR
- --------------------------------------------------------------------------------
Money Market Fund 2.32% 4.95% 5.33% 5.00%
- --------------------------------------------------------------------------------
90 Day T-Bill 2.28% 4.62% 5.14% 5.13%
- --------------------------------------------------------------------------------
Lipper peer group average* 2.21% 4.77% 5.06% 5.01%
- --------------------------------------------------------------------------------
Commencement date 6/30/85
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FUND YIELD AT JUNE 30, 1999
- --------------------------------------------------------------------------------
FUND IBC MONEY FUND
---- -------------
7 day current 4.63%+ 4.35%
7 day effective 4.74% 4.44%
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A fund designed for investors who seek a high level of current income
consistent with the preservation of capital and maintenance of
liquidity by investing primarily in short-term, U.S.
dollar-denominated money market instruments.
CURRENT YIELD REPRESENTS INCOME EARNED ON AN INVESTMENT IN THE MONEY MARKET FUND
FOR A SEVEN DAY PERIOD AND THEN ANNUALIZED.
EFFECTIVE YIELD IS CALCULATED SIMILARLY BUT IS SLIGHTLY HIGHER BECAUSE IT
REFLECTS THE COMPOUNDING EFFECT OF EARNINGS ON REINVESTED DIVIDENDS.
AN INVESTMENT IN THE MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH
THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
* LIPPER PERFORMANCE COMPARISONS ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED IN THE MONEY MARKET PEER GROUP CONSISTING OF 110, 106,
82 AND 58 UNDERLYING ANNUITY FUNDS, RESPECTIVELY.
+ THE SEVEN DAY CURRENT YIELD, RATHER THAN THE TOTAL RETURN, MORE CLOSELY
REFLECTS THE CURRENT EARNINGS OF THE MONEY MARKET FUND AT JUNE 30, 1999.
Q&A
ROBERT MACDOUGALL LEADS A TEAM OF MANAGERS FOR THE MONEY MARKET FUND (PLEASE
REFER TO PAGE 25 FOR BOB'S BIOGRAPHICAL DETAILS AND AN ANALYSIS OF THE FIXED
INCOME MARKETS.
Q. HOW DID THE MONEY MARKET FUND PERFORM COMPARED TO ITS BENCHMARK AND LIPPER
PEER GROUP FOR THE SIX-MONTH PERIOD ENDED JUNE 30,1999?
A. The Money Market Fund posted a return of 2.32% for the six-month period ended
June 30, 1999. For the same period, the 90-day U.S. Treasury Bills returned
2.28% and our Lipper peer group of 110 Money Market annuity funds returned
2.21%.
Q. WHAT WERE THE KEY DRIVERS OF FUND PERFORMANCE?
A. In the early part of the year we maintained a relatively short average
maturity in the portfolio. This gave us the flexibility to capture higher
yields when the market moved in reaction to the Fed tightening.
SEE NOTES TO PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
44
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
[PIE CHART OMITTED]
NET ASSETS OF $290,842 (IN THOUSANDS)
COMMERICAL PAPER 53.0%
U.S. GOVERNMENTS 29.4%
CERTIFICATES OF DEPOSITS & OTHER 17.6%
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 102.4%
U.S. GOVERNMENTS (D) -- 29.4%
Federal Home Loan Bank
4.79% 07/09/99 ............ $9,520,000 $ 9,510,152
Federal Home Loan Mortgage Corp.
4.81% 07/06/99 - 07/09/99 . 16,660,000 16,647,185
4.91% 08/19/99 ............ 11,500,000 11,425,148
4.89% 10/18/99 ............ 3,000,000 2,957,263
31,029,596
Federal National Mortgage Assoc.
4.81% 07/07/99 ............ 5,000,000 4,996,042
4.80% 07/13/99 ............ 4,000,000 3,993,740
5.06% 09/03/99 ............ 4,840,000 4,797,967
4.87% 09/13/99 ............ 14,000,000 13,864,457
5.04% 10/12/99 ............ 7,260,000 7,160,296
4.89% 10/15/99 ............ 10,400,000 10,256,076
45,068,578
TOTAL U.S. GOVERNMENTS (D)
(COST $85,608,326) ............ 85,608,326
COMMERICAL PAPER -- 53.0%
Abbey National PLC
4.895% 09/09/99 ............ 12,900,000 12,777,217
Bank Of America
4.80% 07/29/99 ............ 12,500,000 12,453,333
Bank of Nova Scotia
4.95% 09/01/99 ............ 11,500,000 11,401,963
Citibank
4.82% 07/08/99 ............ 11,500,000 11,489,222
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Credit Suisse
4.82% 07/15/99 ............$10,400,000 $ 10,380,506
4.83% 07/15/99 ............ 2,000,000 1,996,243
Deutsche Bank AG
5.07% 09/20/99 ............ 11,500,000 11,368,814
First Union Corp.
4.78% 08/09/99 ............ 11,900,000 11,838,378
Merrill Lynch & Co. Inc.
4.79% 07/19/99 ............ 12,700,000 12,669,583
Morgan (J.P.) & Co. Inc.
4.81% 07/02/99 ............ 12,000,000 11,998,397
Morgan Stanley Group Inc.
5.01% 08/16/99 ............ 12,000,000 11,923,180
Republic National Bank of New York
5.02% 08/19/99 ............ 12,000,000 11,918,007
UBS Finance Delaware Inc.
4.81% 07/19/99 ............ 11,500,000 11,472,342
Wells Fargo Co.
4.80% 07/23/99 ............ 10,650,000 10,618,760
TOTAL COMMERICAL PAPER
(COST $154,305,945) ........... 154,305,945
CERTIFICATES OF DEPOSIT -- 7.6%
Canadian Imperial Bank of Commerce
5.14% 07/28/99 ............ 12,000,000 12,000,000
Dresdner Bank AG
4.87% 07/12/99 ............ 10,000,000 10,000,000
TOTAL CERTIFICATES OF DEPOSIT
(COST $22,000,000) ............ 22,000,000
YANKEE CERTIFICATES OF DEPOSIT -- 12.4%
Bank of Montreal
4.85% 08/02/99 ............ 6,000,000 6,000,000
4.87% 08/02/99 ............ 6,000,000 6,000,000
Societe Generale
4.85% 08/03/99 ............ 6,000,000 6,000,000
4.86% 08/03/99 ............ 6,000,000 6,000,000
Toronto-Dominion Bank
5.08% 09/15/99 ............ 12,000,000 11,998,601
TOTAL YANKEE CERTIFICATES OF DEPOSIT
(COST $35,998,601) ............ 35,998,601
TOTAL SHORT-TERM INVESTMENTS
(COST $297,912,872) ........... 297,912,872
OTHER ASSETS AND LIABILITIES,
NET (2.4)% ................... (7,071,019)
------------
NET ASSETS-- 100% ............... $290,841,853
============
- ------------
See Notes to Schedule of Investments and Notes to Financial Statements.
45
<PAGE>
REAL ESTATE SECURITIES FUND
- --------------------------------------------------------------------------------
Q&A
DAVID A. SHAPIRO, OF SENECA CAPITAL MANAGEMENT (SENECA), THE FUND'S SUB-ADVISER,
WITH TOTAL ASSETS UNDER MANAGEMENT OF OVER $6.5 BILLION, IS THE PORTFOLIO
MANAGER OF THE REAL ESTATE SECURITIES FUND, DAVID JOINED SENECA IN 1995. IN 1992
DAVID BECAME A PRINCIPAL OF ASSET HOLDINGS GROUP (HE HAS REMAINED A PRINCIPAL OF
ASSET HOLDINGS GROUP). FROM 1982 TO 1992, HE WAS A MANAGING DIRECTOR OF THE ADCO
GROUP, A REAL ESTATE DEVELOPMENT AND FINANCE COMPANY. DAVID RECEIVED A B.A. FROM
COLUMBIA UNIVERSITY AND A J.D. FROM THE UNIVERSITY OF ARIZONA.
Q. HOW DID THE REAL ESTATE SECURITIES FUND PERFORM COMPARED TO ITS BENCHMARK AND
LIPPER PEER GROUP FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999?
A. The Real Estate Securities Fund posted a return of 8.80% for the six-month
period ended June 30, 1999. The Wilshire Real Estate Securities Index
returned 6.78% and the Lipper peer group of 17 Real Estate annuity funds
returned 5.98% for the same period.
Q. WHY DID THE FUND OVERPERFORM ITS BENCHMARK?
A. The fund's concentration in core holdings in the Apartments sector (Equity
Residential Property Trust, Archstone Communities Trust and Essex Property
Trust) and in the Office/Industrial sector (Equity Office Properties Trust
and Spieker Properties Trust) contributed to the fund's outperformance of the
index and peer group. These are companies and sectors which we believe will
have superior sustainable cash flow rates.
Q. WHAT HAS YOUR INVESTMENT STRATEGY BEEN?
A. With a strong underlying economy, we look for the fundamentals in the real
estate industry to remain positive. Our investment strategy is a two-pronged
approach. Instead of focusing on the various real estate sectors to maximize
returns, we seek to own companies with strong management and dominant market
positions. As well, we look for value stocks such as Pacific Gulf Properties
and Macerich, companies with solid market niches and savvy management.
Q. WHAT IS THE OUTLOOK FOR THE FUND AND HOW HAVE YOU POSITIONED THE FUND GOING
FORWARD?
A. Overall real estate industry fundamentals remain healthy. The public capital
markets, debt and equity, have played a major role in maintaining equilibrium
of supply and demand for the real estate sector. A continued economic
expansion with limitations on the supply of new real estate will allow rental
growth to remain positive.
The fund will position itself by focusing on core real estate companies and
value niche companies with strong management.
46
<PAGE>
REAL ESTATE SECURITIES FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGES IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
REAL ESTATE SECURITIES FUND WILSHIRE REIT
5/1/95 $10000 $10000
6/95 10570 10511
9/95 11060 11009
12/95 11700 11404
3/96 12102 11886
6/96 12515 12450
9/96 13384 13185
12/96 15941 15609
3/97 16607 15896
6/97 17308 16626
9/97 19160 18727
12/97 19048 18699
3/98 18948 18558
6/98 18013 17707
9/98 16181 15589
12/98 15679 15441
3/99 15206 14906
6/99 17059 16488
Real Estate Securities Fund (ending value $17,059)
Wilshire RES (ending value $16,488)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
SIX ONE THREE SINCE
MONTHS YEAR YEAR COMMENCEMENT
- --------------------------------------------------------------------------------
Real Estate Securities Fund 8.80% (5.30%) 10.88% 13.68%
- --------------------------------------------------------------------------------
Wilshire RES 6.78% (6.88%) 9.82% 12.74%
- --------------------------------------------------------------------------------
Lipper peer group average* 5.98% (5.79%) 9.95% N/A
- --------------------------------------------------------------------------------
Commencement date 5/1/95
- --------------------------------------------------------------------------------
INVESTMENT PROFILE
A mutual fund designed for investors who seek to maximize total returns
through current income and capital appreciation by investing primarily in
equity and debt securities of U.S. issuers that are principally engaged in
or related to the real estate industry.
- --------------------------------------------------------------------------------
TOP TEN LARGEST HOLDINGS AT JUNE 30, 1999
- --------------------------------------------------------------------------------
Essex Property Trust Inc. .......................... 5.55%
- --------------------------------------------------------------------------------
Spieker Properties Inc. ............................ 4.87%
- --------------------------------------------------------------------------------
Equity Residential Properties Trust ................ 4.42%
- --------------------------------------------------------------------------------
Archstone Communities Trust ........................ 4.41%
- --------------------------------------------------------------------------------
Equity Office Properties Trust ..................... 4.22%
- --------------------------------------------------------------------------------
Manufactured Home Communities Inc. ................. 4.02%
- --------------------------------------------------------------------------------
Cornerstone Properties Inc. ........................ 3.64%
- --------------------------------------------------------------------------------
Macerich Co. ....................................... 3.51%
- --------------------------------------------------------------------------------
Urban Shopping Centers Inc. ........................ 3.51%
- --------------------------------------------------------------------------------
Simon Property Group Inc. .......................... 3.48%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------
NET ASSETS OF $47,526 (IN THOUSANDS)
[PIE CHART OMITTED]
OFFICE/INDUSTRIAL 35.2%
APARTMENTS 19.1%
REGIONAL MALLS/SHOPPING CENTER 13.1%
HOTEL 8.5%
CASH & OTHER 8.1%
MANUFACTURED HOME 6.9%
DIVERSIFIED 6.5%
NET LEASE/MORTGAGE 2.6%
* LIPPER PERFORMANCE COMPARISON ARE BASED ON AVERAGE ANNUAL TOTAL RETURNS FOR
THE PERIODS INDICATED IN THE REAL ESTATE PEER GROUP CONSISTING OF 17, 16 AND
7 UNDERLYING ANNUITY FUNDS, RESPECTIVELY.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
47
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK -- 87.9%
APARTMENTS -- 19.1%
Archstone Communities Trust ......... 95,597 $ 2,097,159
Avalon Bay Communities Inc. ......... 44,260 1,637,620
Berkshire Realty Company Inc. ....... 50,600 585,063
Equity Residential Properties Trust . 46,600 2,099,912
Essex Property Trust Inc. ........... 74,550 2,637,206
9,056,960
DIVERSIFIED -- 4.1%
Entertainment Properties Trust ...... 24,000 423,000
Northstar Capital Investment Corp. .. 30,000 476,250(a,b)
Pacific Gulf Properties Inc. ........ 47,380 1,071,972
1,971,222
HOTEL -- 8.5%
FelCor Lodging Trust ................ 28,700 595,525
Interstate Hotels Corp. ............. 2,791 11,513(a)
MeriStar Hospitality Corp. .......... 37,713 846,185
Starwood Hotels & Resorts ........... 49,200 1,503,675
Sunstone Hotel Investors Inc. ....... 81,540 693,090
Wyndham International Inc. (Class A) 83,741 376,835(a)
4,026,823
MANUFACTURED HOME -- 6.9%
Chateau Communities Inc. ............ 46,500 1,392,094
Manufactured Home Communities Inc. .. 73,500 1,911,000
3,303,094
MORTGAGE -- 0.5%
Capital Trust (Class A) ............. 55,200 248,400(a)
NET LEASE -- 2.1%
TriNet Corporation Realty Trust Inc. 36,000 996,750
OFFICE/INDUSTRIAL -- 33.6%
Arden Realty Inc. ................... 31,000 763,375
Bedford Property Investors Inc. ..... 68,500 1,224,438
Catellus Development Corp. .......... 32,000 496,000(a)
Cornerstone Properties Inc. .........109,000 1,730,375
Crescent Real Estate Equities Co. ... 60,700 1,441,625
Duke Realty Investments Inc. ........ 70,000 1,579,375
Equity Office Properties Trust ...... 78,200 2,003,875
First Industrial Realty Trust Inc. .. 47,600 1,306,025
Mack-Cali Realty Corp. .............. 51,600 1,596,375
Prentiss Properties Trust ........... 64,000 1,504,000
Spieker Properties Inc. ............. 59,500 2,313,062
15,958,525
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
REGIONAL MALLS -- 10.5%
Macerich Co. ........................ 63,500 $ 1,666,875
Simon Property Group Inc. ........... 65,200 1,654,450
Urban Shopping Centers Inc. ......... 52,900 1,666,350
4,987,675
SHOPPING CENTER -- 2.6%
Developers Diversified Realty Corp. . 74,300 1,235,238
TOTAL COMMON STOCK
(COST $45,216,518) ................ 41,784,687
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 4.0%
- --------------------------------------------------------------------------------
Glenborough Realty Trust Inc. ....... 60,550 1,150,450
Reckson Associates RealtyCorp. ...... 33,500 764,219
TOTAL PREFERRED STOCK
(COST $2,211,221) ................. 1,914,669
TOTAL INVESTMENTS IN SECURITIES
(COST $47,427,739) ................ 43,699,356
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 7.8%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund
(COST $3,693,174) ..............3,693,174 3,693,174
OTHER ASSETS AND LIABILITIES,
NET 0.3% ....................... 133,826
-----------
NET ASSETS-- 100% ................. $47,526,356
===========
- ------------
See Notes to Schedule of Investments and Notes to Financial Statements.
48
<PAGE>
NOTES TO PERFORMANCE JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
Total returns take into account changes in share price and assume reinvestment
of dividends and capital gains, if any. Investment returns and net asset value
on an investment will fluctuate and you may have a gain or loss when you sell
your shares. Periods less than one year are not annualized. The performance data
related to the shares of the U.S. Equity Fund and the Income Fund, for the
periods through December 12, 1997, reflect the prior performance and expense
ratios of the Variable Investment Trust GE U.S. Equity Portfolio and GE Fixed
Income Portfolio, the assets of which were transferred to corresponding GE
Investments Funds, Inc. pursuant to an exemptive order granted by the Securities
and Exchange Commission permitting a substitution of funds that occurred on
December 12, 1997.
Certain fees and fund expenses have been waived and/ or borne by the funds'
prior investment advisers. GEIM currently waives certain fees and expenses for
the Money Market Fund and the Premier Growth Equity Fund. Had these fees and
expenses not been absorbed, the returns (and/or yields) would have been lower.
The Standard & Poor's ("S&P") 500 Composite Price Index of stocks (S&P
500 Index), 90 Day U.S. Treasury Index (90 Day T-Bill), Lehman Brothers
Aggregate Bond Index (LB Aggregate), Morgan Stanley Capital International EAFE
Index (MSCI EAFE), Wilshire Real Estate Securities Index, (Wilshire RES) and JP
Morgan Global Government Bond Index (JPM Global Bond) are unmanaged indices and
do not reflect the actual cost of investing in the instruments that comprise
each index. The S&P 500 Index is a composite of the prices of 500 widely held
stocks recognized by investors to be representative of the stock market in
general. The 90 Day U.S. T-Bill is the average return on three month U.S.
Treasury Bills. The LB Aggregate is a composite index of short-, medium-, and
long-term bond performance and is widely recognized as a barometer of the bond
market in general. MSCI EAFE is a composite of more than 1,007 stocks of
companies from 20 countries representing stock markets of Europe, Australasia,
New Zealand and the Far East. The Wilshire RES is a market
capitalization-weighted index comprised of publicly traded real estate
investment trusts (REITs), real estate operating companies(REOCs) and
partnerships. The JPM Global Bond is an unhedged index comprised of government
bonds from several countries including the U.S. The IBC Money Fund Report yields
represent the average yields of 931 taxable money market funds. The results
shown for the foregoing indices assume reinvestment of net dividends or
interest.
The peer universe of the underlying annuity funds used in our peer ranking
calculation is based on the average returns of Lipper peer categories, as shown.
Lipper is an independent mutual fund rating service.
The views expressed in this document reflect our judgment as of the publication
date and are subject to change at any time without notice. The securities cited
may not represent future holdings and should not be considered as a
recommendation to purchase or sell a particular security. See the prospectus for
complete descriptions of investment objectives, policies, risks and permissible
investments.
Standard & Poor's, S&P, and S&P 500 are trademarks of The McGraw-Hill Companies
Inc. and have been licensed for use. The S&P 500 Index Fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's, and Standard & Poor's makes no
representation or warranty, express or implied, to the investors of the fund or
any member of the public regarding the advisability of investing in the
securities generally or in this fund particularly or the ability of the S&P 500
Index Fund to track general stock market performance.
NOTES TO SCHEDULES OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Pursuant to Rule 144A of the Securities Act of 1933, these securities may be
only resold in transactions exempt from registration, normally to qualified
institutional buyers. At June 30, 1999, these securities amounted to
$389,925, $2,547,630 and $476,250 or 0.95%, 4.09% and 1.00% of net assets
for the International Equity, Income and Real Estate Securities Funds,
respectively. (c) Settlement is on a delayed delivery or when-issued basis
with final maturity to be announced (TBA) in the future.
(d) Coupon amount represents effective yield.
(e) Adjustable rate mortgage coupon. The stated rate represents the rate at June
30, 1999.
(f) Principal only securities represent the right to receive the monthly
principal payments on an underlying pool of mortgages. No payments of
interest on the pool are passed through to the "principal only" holder.
(g) Interest only securities represent the right to receive the monthly interest
payments on an underlying pool of mortgages. Payments of principal on the
pool reduce the value of the interest only holding.
(h) At June 30, 1999, all or a portion of this security was pledged to cover
collateral requirements for futures, options or TBA's.
(i) State Street Corp. is the parent company of State Street Bank & Trust Co.,
the fund's custodian.
(j) At June 30, 1999, the security is in default. GEIM has determined that the
security is illiquid as it may be difficult to resell within seven days in
the ordinary course of business at approximately the price it is valued.
(k) Non-convertible saving shares without voting rights.
ABBREVIATIONS:
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
Regd. -- Registered
REMIC -- Real Estate Mortgage Investment
Conduit
SDR -- Special Drawing Rights
STRIPS -- Separate Trading of Registered
Interest and Principal of Securities
CURRENCY TERMS:
AUD -- Australian Dollar
CAD -- Canadian Dollar
EUR -- European Currency Unit (ECU)
GBP -- Pound Sterling
GRD -- Greek Drachma
JPY -- Japanese Yen
NZD -- New Zealand Dollar
SEK -- Swedish Krona
USD -- United States Dollar
49
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD(S) INDICATED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. EQUITY FUND
6/30/99+ 12/31/98 12/31/97 12/31/96 12/31/95
- --------------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- 1/3/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $33.50 $27.88 $21.11 $19.27 $15.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................... 0.13 0.28 0.24 0.34 0.46
Net realized and unrealized
gains on investments ................... 4.59 6.23 6.54 3.90 4.87
- --------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS ...... 4.72 6.51 6.78 4.24 5.33
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ..................... 0.00 0.28 0.00 0.35 0.47
Net realized gains ........................ 0.00 0.61 0.01 2.05 0.59
- --------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS .......................... 0.00 0.89 0.01 2.40 1.06
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ............... $38.22 $33.50 $27.88 $21.11 $19.27
- --------------------------------------------------------------------------------------------------
TOTAL RETURN (A) ............................. 14.12% 23.41% 32.13% 21.72% 35.58%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .. $43,828 $31,160 $23,917 $18,027 $9,071
Ratios to average net assets:
Net investment income* ................. 0.81% 0.95% 0.94% 1.80% 2.10%
Net expenses* .......................... 0.63% 0.69% 0.80% 0.80% 0.80%
Gross expenses* ........................ 0.63% 0.69% 0.86% 0.88% 1.03%
Portfolio turnover rate ................... 16% 41% 33% 35% 71%
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
S&P 500 INDEX FUND
6/30/99+ 12/31/98 12/31/97(B,D) 12/30/96 12/31/95 12/31/94
- -----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- -- 4/14/85
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................ $23.71 $19.23 $15.14 $20.99 $15.72 $15.99
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.11 0.21 0.23 0.78 0.27 0.22
Net realized and unrealized
gains (losses) on investments ................. 2.75 5.20 4.36 4.36 5.41 (0.23)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS ...... 2.86 5.41 4.59 5.14 5.68 (0.01)
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ............................ 0.00 0.21 0.23 0.77 0.27 0.22
Net realized gains ............................... 0.00 0.72 0.27 10.22 0.14 0.04
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ................................. 0.00 0.93 0.50 10.99 0.41 0.26
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ...................... $26.57 $23.71 $19.23 $15.14 $20.99 $15.72
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (A) .................................... 12.06% 28.24% 30.33% 24.51% 36.14% (0.06%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .........$479,529 $326,961 $164,294 $35,522 $66,017 $23,930
Ratios to average net assets:
Net investment income*. ....................... 1.04% 1.20% 1.70% 1.91% 1.98% 2.22%
Net expenses* ................................. 0.41% 0.45% 0.46% 0.48% 0.66% 0.75%
Gross expenses* ............................... 0.41% 0.45% 0.46% 0.48% 0.66% 1.10%
Portfolio turnover rate .......................... 1% 13% 6% 63% 15% 4%
</TABLE>
- -------------
See Notes to Financial Highlights and Notes to Financial Statements.
50
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD(S) INDICATED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREMIER GROWTH EQUITY FUND
6/30/99+ 12/31/98 12/31/97
- ---------------------------------------------------------------------------------------
INCEPTION DATE -- -- 12/12/97
<S> <C> <C> <C>
Net asset value, beginning of period ............... $67.22 $51.48 $49.79
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................... (0.03) 0.25 0.03
Net realized and unrealized
gains on investments ......................... 13.56 18.43 1.69
- ---------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS ..... 13.53 18.68 1.72
- ---------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ........................... 0.00 0.24 0.03
Net realized gains .............................. 0.00 2.70 0.00
- ---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ................................ 0.00 2.94 0.03
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ..................... $80.75 $67.22 $51.48
- ---------------------------------------------------------------------------------------
TOTAL RETURN (A) ................................... 20.13% 36.53% 3.46%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ........ $24,257 $19,879 $16,237
Ratios to average net assets:
Net investment income* ....................... (0.09%) 0.41% 1.04%
Net Expenses* ................................ 0.72% 0.82% 0.69%
Gross expenses* .............................. 0.75% 0.82% 0.69%
Portfolio turnover rate ......................... 19% 34% 3%
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE EQUITY FUND
6/30/99+ 12/31/98 12/31/97
- ---------------------------------------------------------------------------------
INCEPTION DATE -- -- 5/1/97
<S> <C> <C> <C>
Net asset value, beginning of period .......... $13.57 $13.11 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................... 0.05 0.07 0.02
Net realized and unrealized
gains on investments .................... 3.07 0.79 3.23
- ---------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS ....... 3.12 0.86 3.25
- ---------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ...................... 0.00 0.07 0.02
Net realized gains ......................... 0.00 0.33 0.12
- ---------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ........................... 0.00 0.40 0.14
- ---------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ................ $16.69 $13.57 $13.11
- ---------------------------------------------------------------------------------
TOTAL RETURN (A) .............................. 22.99% 6.69% 32.56%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $78,140 $53,643 $30,856
Ratios to average net assets:
Net investment income* .................. 0.70% 0.59% 0.38%
Expenses* ............................... 0.73% 0.75% 0.69%
Portfolio turnover rate .................... 11% 14% 18%
</TABLE>
- -------------
See Notes to Financial Highlights and Notes to Financial Statements.
51
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD(S) INDICATED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
6/30/99+ 12/31/98 12/31/97 12/30/96 12/31/95
- ------------------------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- 5/1/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $11.89 $10.68 $10.83 $10.47 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.08 0.08 0.02 0.03 0.20
Net realized and unrealized
gains on investments ................ 0.63 1.77 1.10 1.01 0.47
- ------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS ... 0.71 1.85 1.12 1.04 0.67
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income .................. 0.00 0.07 0.08 0.03 0.20
Net realized gains ..................... 0.00 0.57 1.19 0.65 0.00
- ------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ....................... 0.00 0.64 1.27 0.68 0.20
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ............ $12.60 $11.89 $10.68 $10.83 $10.47
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN (A) .......................... 5.97% 17.45% 10.17% 9.91% 6.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $41,052 $36,952 $31,931 $17,644 $15,348
Ratios to average net assets:
Net investment income* .............. 1.32% 0.65% 0.14% 0.23% 0.44%
Net expenses* ....................... 1.09% 1.15% 1.34% 1.50% 1.54%
Gross expenses* ..................... 1.09% 1.15% 1.43% 1.56% 2.17%
Portfolio turnover rate ................ 29% 60% 166% 150% 58%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INCOME FUND
6/30/99+ 12/31/98 12/31/97 12/31/96 12/31/95
- -----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- 1/3/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $12.34 $12.11 $11.84 $12.53 $12.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ...................... 0.33 0.62 0.76 0.76 0.82
Net realized and unrealized
gains (losses) on investments ........... (0.56) 0.34 0.27 (0.43) 1.13
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS (0.23) 0.96 1.03 0.33 1.95
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ...................... 0.00 0.62 0.76 0.76 0.84
Net realized gains ......................... 0.00 0.11 0.00 0.26 0.58
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ........................... 0.00 0.73 0.76 1.02 1.42
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ................ $12.11 $12.34 $12.11 $11.84 $12.53
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (A) .............................. (1.86%) 7.95% 9.00% 2.92% 16.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ... $62,323 $59,077 $45,555 $5,388 $3,271
Ratios to average net assets:
Net investment income* .................. 5.64% 5.54% 5.11% 6.37% 6.52%
Net expenses* ........................... 0.59% 0.64% 0.59% 0.75% 0.75%
Gross expenses* ......................... 0.59% 0.64% 0.77% 1.03% 1.15%
Portfolio turnover rate .................... 121% 217% 356% 222% 253%
</TABLE>
- ------------
See Notes to Financial Highlights and Notes to Financial Statements.
52
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD(S) INDICATED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL INCOME FUND
6/30/99+ 12/31/98 12/31/97
- -----------------------------------------------------------------------------------------
INCEPTION DATE -- -- 5/1/97
<S> <C> <C> <C>
Net asset value, beginning of period ............. $10.53 $9.85 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.23 0.44 0.35
Net realized and unrealized
gains (losses) on investments .............. (0.99) 0.87 (0.01)
- -----------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS ... (0.76) 1.31 0.34
- -----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ......................... 0.00 0.61 0.45
Net realized gains ............................ 0.00 0.02 0.04
- -----------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS .............................. 0.00 0.63 0.49
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ................... $9.77 $10.53 $9.85
- -----------------------------------------------------------------------------------------
TOTAL RETURN (A) ................................. (7.22%) 13.33% 3.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ...... $10,829 $9,739 $5,851
Ratios to average net assets:
Net investment income* ..................... 4.28% 4.73% 5.54%
Expenses* .................................. 0.74% 0.82% 0.84%
Portfolio turnover rate ....................... 65% 64% 119%
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN FUND
6/30/99+ 12/31/98 12/31/97(D) 12/30/96 12/31/95 12/31/94
- ---------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- -- 6/30/85
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................ $14.66 $13.21 $12.73 $15.93 $13.40 $13.59
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.18 0.34 0.34 1.02 0.41 0.35
Net realized and unrealized
gains (losses) on investments ................. 0.81 1.90 1.95 0.67 3.34 (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS ...... 0.99 2.24 2.29 1.69 3.75 0.34
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ............................ 0.00 0.34 0.34 1.02 0.42 0.35
Net realized gains ............................... 0.00 0.45 1.47 3.87 0.80 0.18
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ................................. 0.00 0.79 1.81 4.89 1.22 0.53
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ...................... $15.65 $14.66 $13.21 $12.73 $15.93 $13.40
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (A) .................................... 6.75% 17.10% 17.99% 10.60% 28.07% 2.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ......... $90,084 $72,632 $50,007 $27,814 $70,507 $34,708
Ratios to average net assets:
Net investment income* ........................ 2.57% 2.69% 2.56% 2.73% 3.42% 4.00%
Expenses* ..................................... 0.58% 0.63% 0.65% 0.60% 0.65% 0.77%
Portfolio turnover rate .......................... 55% 124% 135% 144% 106% 67%
</TABLE>
- -------------
See Notes to Financial Highlights and Notes to Financial Statements.
53
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD(S) INDICATED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET FUND
6/30/99+ 12/31/98 12/31/97(C,D) 12/30/96 12/31/95 12/31/94
- ----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- -- 6/30/85
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $1.00 $1.00 $1.00 $1.00 $0.98 $0.97
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.02 0.05 0.05 0.05 0.06 0.03
Net realized and unrealized
gains on investments ....................... 0.00 0.00 0.00 0.00 0.00 0.01
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS .......... 0.02 0.05 0.05 0.05 0.06 0.04
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ......................... 0.02 0.05 0.05 0.05 0.04 0.03
Net realized gains ............................ 0.00 0.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS .............................. 0.02 0.05 0.05 0.05 0.04 0.03
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ................... $1.00 $1.00 $1.00 $1.00 $1.00 $0.98
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (A) ................................. 2.32% 5.26% 5.41% 5.41% 5.90% 3.77%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ...... $290,842 $239,547 $144,815 $113,263 $63,083 $33,529
Ratios to average net assets:
Net investment income* ..................... 4.61% 5.14% 5.17% 5.29% 5.74% 4.04%
Net expenses* .............................. 0.32% 0.37% 0.32% 0.15% 0.23% 0.42%
Gross expenses* ............................ 0.52% 0.59% 0.48% 0.55% 0.63% 0.70%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE SECURITIES FUND
6/30/99+ 12/31/98 12/31/97(D) 12/30/96 12/31/95
- ----------------------------------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- 5/1/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $11.59 $15.28 $14.11 $11.05 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.37 0.73 0.74 0.64 0.46
Net realized and unrealized
gains (loss) on investments .................. 0.65 (3.46) 2.01 3.36 1.23
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS ..... 1.02 (2.73) 2.75 4.00 1.69
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ........................... 0.00 0.50 0.53 0.65 0.46
Net realized gains .............................. 0.00 0.46 1.05 0.29 0.18
- ----------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ................................ 0.00 0.96 1.58 0.94 0.64
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ..................... $12.61 $11.59 $15.28 $14.11 $11.05
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (A) ................................... 8.80% (17.68%) 19.49% 36.24% 17.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ........ $47,526 $47,756 $48,887 $24,533 $13,429
Ratios to average net assets:
Net investment income* ....................... 5.85% 5.43% 4.83% 5.90% 6.85%
Net expenses* ................................ 0.94% 0.99% 0.95% 1.07% 1.31%
Gross expenses* .............................. 0.94% 0.99% 0.95% 1.07% 1.61%
Portfolio turnover rate ......................... 3% 29% 58% 30% 54%
</TABLE>
- ---------------
See Notes to Financial Highlights and Notes to Financial Statements.
54
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(a) Total returns are historical and assume changes in share price and
reinvestment of dividends and capital gains. Had the adviser not absorbed a
portion of expenses, total returns would have been lower. Periods less than
one year are not annualized.
(b) As of April 30, 1997, the fund's name was changed to S&P 500 Index Fund from
Common Stock Index Portfolio.
(c) Effective May 5, 1997, the fund's primary investment policy was amended to
comply with Rule 2a-7 of the Investment Company Act of 1940 governing money
market funds. The Fund's investment objective, however, remains to seek a
high level of current income consistent with high liquidity and safety of
principal. Per share information prior to January 1, 1997 have been restated
to reflect the 10.41 to 1 stock split.
(d) GEIM assumed management responsibilities for the Funds effective May 1,
1997. See Note 3 in the Notes to Financial Statements for further
information.
* Annualized for periods less than one year.
+ Unaudited.
55
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PREMIER
U.S. S&P GROWTH VALUE
EQUITY 500 INDEX EQUITY EQUITY
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at market
(cost $32,656,814; $356,841,482; $14,355,752;
$56,996,024; $33,961,280; $62,498,281; $9,348,865;
$70,417,442; $0; and $47,427,739, respectively) .......... $ 41,091,653 $ 471,883,356 $ 22,263,853 $ 73,438,644
Short term investments (at amortized cost) .................. 2,604,831 11,906,683 1,992,781 4,660,021
Foreign currency (cost $0; $0; $0; $0; $85,751; $0;
$269,171; $35,304; $0; and $0, respectively) ............. -- -- -- --
Receivable for investments sold ............................. 92,853 2,573,147 -- --
Income receivables .......................................... 45,232 428,401 13,162 74,409
Receivable for fund shares sold ............................. 40,114 7,209 50,616 95,832
Receivable on forward foreign currency contract ............. -- -- -- --
Variation margin receivable ................................. 31,250 143,750 12,500 --
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS ............................................. 43,905,933 486,942,546 24,332,912 78,268,906
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable to shareholders ....................... 1,294 -- -- --
Payable for investments purchased ........................... 54,666 7,264,632 -- 67,269
Payable for fund shares redeemed ............................ -- -- 65,260 19,039
Payable to GEIM ............................................. 21,640 149,225 10,482 42,913
Payable to custodian ........................................ -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES ........................................ 77,600 7,413,857 75,742 129,221
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................... $43,828,333 $479,528,689 $24,257,170 $78,139,685
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital paid in ............................................. $33,509,073 $356,728,691 $15,030,509 $62,892,706
Undistributed (overdistributed) net investment income ....... 145,204 2,102,599 (9,106) 219,681
Accumulated net realized gain (loss) ........................ 1,666,824 5,425,775 1,310,091 (1,415,322)
Net unrealized appreciation / (depreciation) on:
Investments .............................................. 8,434,839 115,041,874 7,908,101 16,442,620
Futures .................................................. 72,400 229,750 17,575 --
Foreign currency related transactions .................... (7) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................... $43,828,333 $479,528,689 $24,257,170 $78,139,685
- -----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding ($.01 par value) ............................ 1,146,602 18,050,374 300,407 4,682,293
Net asset value, offering and redemption price per share ....... $ 38.22 $ 26.57 $ 80.75 $ 16.69
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL GLOBAL
EQUITY INCOME INCOME
FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market
(cost $32,656,814; $356,841,482; $14,355,752;
$56,996,024; $33,961,280; $62,498,281; $9,348,865;
$70,417,442; $0; and $47,427,739, respectively) .......... $ 38,728,022 $ 60,866,930 $ 8,656,766
Short term investments (at amortized cost) .................. 2,008,213 9,498,473 1,469,620
Foreign currency (cost $0; $0; $0; $0; $85,751; $0;
$269,171; $35,304; $0; and $0, respectively) ............. 85,673 -- 266,800
Receivable for investments sold ............................. 654,534 1,502,318 201,264
Income receivables .......................................... 121,560 664,373 159,869
Receivable for fund shares sold ............................. 64,985 -- 93,636
Receivable on forward foreign currency contract ............. -- -- 35,857
Variation margin receivable ................................. -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS ............................................. 41,662,987 72,532,094 10,883,812
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable to shareholders ....................... -- -- --
Payable for investments purchased ........................... 485,693 10,029,064 48,326
Payable for fund shares redeemed ............................ -- 142,353 --
Payable to GEIM ............................................. 125,752 37,438 6,810
Payable to custodian ........................................ -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES ........................................ 611,445 10,208,855 55,136
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................... $41,051,542 $62,323,239 $10,828,676
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital paid in ............................................. $33,720,491 $62,966,147 $11,403,523
Undistributed (overdistributed) net investment income ....... 234,218 1,700,570 156,126
Accumulated net realized gain (loss) ........................ 2,333,270 (712,127) (66,727)
Net unrealized appreciation / (depreciation) on:
Investments .............................................. 4,766,742 (1,631,351) (692,099)
Futures .................................................. -- -- --
Foreign currency related transactions .................... (3,179) -- 27,853
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................... $41,051,542 $62,323,239 $10,828,676
- -----------------------------------------------------------------------------------------------------------------------------
Shares outstanding ($.01 par value) ............................ 3,257,029 5,145,607 1,108,333
Net asset value, offering and redemption price per share ....... $ 12.60 $ 12.11 $ 9.77
</TABLE>
<TABLE>
<CAPTION>
TOTAL MONEY REAL ESTATE
RETURN MARKET SECURITIES
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market
(cost $32,656,814; $356,841,482; $14,355,752;
$56,996,024; $33,961,280; $62,498,281; $9,348,865;
$70,417,442; $0; and $47,427,739, respectively) .......... $ 84,438,967 $ -- $ 43,699,356
Short term investments (at amortized cost) .................. 10,056,280 297,912,872 3,693,174
Foreign currency (cost $0; $0; $0; $0; $85,751; $0;
$269,171; $35,304; $0; and $0, respectively) ............. 35,381 -- --
Receivable for investments sold ............................. 906,775 -- 121,902
Income receivables .......................................... 425,030 325,350 441,818
Receivable for fund shares sold ............................. 98,979 38,909 --
Receivable on forward foreign currency contract ............. -- -- --
Variation margin receivable ................................. -- -- --
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS ............................................. 95,961,412 298,277,131 47,956,250
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable to shareholders ....................... -- 114,873 --
Payable for investments purchased ........................... 5,835,196 -- 259,350
Payable for fund shares redeemed ............................ -- 1,866,680 133,715
Payable to GEIM ............................................. 41,774 81,724 36,829
Payable to custodian ........................................ -- 5,372,001 --
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES ........................................ 5,876,970 7,435,278 429,894
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................... $90,084,442 $290,841,853 $47,526,356
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital paid in ............................................. $73,190,964 $290,840,306 $49,680,313
Undistributed (overdistributed) net investment income ....... 1,023,582 -- 2,075,406
Accumulated net realized gain (loss) ........................ 1,849,129 1,547 (500,980)
Net unrealized appreciation / (depreciation) on:
Investments .............................................. 14,021,525 -- (3,728,383)
Futures .................................................. -- -- --
Foreign currency related transactions .................... (758) -- --
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................... $90,084,442 $290,841,853 $47,526,356
- ------------------------------------------------------------------------------------------------------------------------
Shares outstanding ($.01 par value) ............................ 5,755,249 290,839,323 3,769,160
Net asset value, offering and redemption price per share ....... $ 15.65 $ 1.00 $ 12.61
</TABLE>
- -------------
See Notes to Financial Statements.
56 & 57
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PREMIER
U.S. S&P 500 GROWTH VALUE INTERNATIONAL
EQUITY INDEX EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends ....................................... $ 203,958 $ 2,587,938 $ 44,783 $ 364,251 $ 495,592
Interest ........................................ 54,755 253,953 22,554 70,625 37,545
Less: Foreign taxes withheld .................... (1,370) (41,389) -- -- (68,046)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME ....................................... 257,343 2,800,502 67,337 434,876 465,091
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory and administration fees ................ 98,231 675,709 69,350 197,654 193,183
Transfer agent .................................. 3,968 3,968 3,968 3,968 3,968
Trustees' fees .................................. 762 7,964 478 1,303 945
Custody and accounting expenses ................. 4,570 47,788 2,862 7,825 5,672
Professional fees ............................... 5,416 56,636 3,392 9,273 6,724
Other expenses .................................. 338 4,372 212 579 420
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES BEFORE WAIVER ....................... 113,285 796,437 80,262 220,602 210,912
Less: Expenses waived or borne by
the adviser .................................. -- -- (3,677) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses .................................... 113,285 796,437 76,585 220,602 210,912
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) ....................... 144,058 2,004,065 (9,248) 214,274 254,179
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
REALIZED GAIN (LOSS) ON:
Investments .................................. 1,387,406 2,044,527 934,729 1,536,211 2,140,259
Futures ...................................... 127,438 915,640 (12,700) -- --
Written options .............................. -- -- -- -- --
Foreign currency related transactions ........ (110) 9 -- -- (42,320)
INCREASE (DECREASE) IN UNREALIZED APPRECIATION/
DEPRECIATION ON:
Investments .................................. 3,157,144 40,233,317 3,053,174 11,023,741 135,312
Futures ...................................... 38,812 (227,450) 17,575 -- --
Written options .............................. -- -- -- -- --
Foreign currency related transactions ........ (33) -- -- -- (7,760)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments ........................ 4,710,657 42,966,043 3,992,778 12,559,952 2,225,491
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $ 4,854,715 $ 44,970,108 $ 3,983,530 $ 12,774,226 $ 2,479,670
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GLOBAL TOTAL MONEY REAL ESTATE
INCOME INCOME RETURN MARKET SECURITIES
FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends ....................................... $ 16,452 -- $ 326,053 $ -- $ 1,479,256
Interest ........................................ 1,860,410 279,946 950,908 6,767,253 73,816
Less: Foreign taxes withheld .................... -- (4,117) (22,592) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME ....................................... 1,876,862 275,829 1,254,369 6,767,253 1,553,072
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory and administration fees ................ 150,624 32,940 198,983 622,609 194,180
Transfer agent .................................. 3,968 3,968 3,968 3,968 3,968
Trustees' fees .................................. 1,520 253 1,783 6,099 1,207
Custody and accounting expenses ................. 9,117 1,526 10,701 36,587 7,242
Professional fees ............................... 10,806 1,808 12,684 43,362 8,581
Other expenses .................................. 675 112 1,612 3,543 535
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES BEFORE WAIVER ....................... 176,710 40,607 229,731 716,168 215,713
Less: Expenses waived or borne by
the adviser .................................. -- -- -- (279,645) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net expenses .................................... 176,710 40,607 229,731 436,523 215,713
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) ....................... 1,700,152 235,222 1,024,638 6,330,730 1,337,359
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
REALIZED GAIN (LOSS) ON:
Investments .................................. (839,439) (20,507) 1,490,745 802 (442,770)
Futures ...................................... -- -- -- --
Written options .............................. 45,849 -- -- -- --
Foreign currency related transactions ........ -- (56,627) (16,487) -- --
INCREASE (DECREASE) IN UNREALIZED APPRECIATION/
DEPRECIATION ON:
Investments .................................. (2,046,351) (1,105,204) 2,750,542 -- 2,898,698
Futures ...................................... -- -- -- -- --
Written options .............................. (763) -- (330) -- --
Foreign currency related transactions ........ -- 44,803 (1,568) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments ........................ (2,840,704) (1,137,535) 4,222,902 802 2,455,928
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $ (1,140,552) $ (902,313) $ 5,247,540 $ 6,331,532 $ 3,793,287
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
See Notes to Financial Statements.
58 & 59
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREMIER
U.S. S&P 500 GROWTH
EQUITY INDEX EQUITY
FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1999+ 1998 1999+ 1998 1999+ 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) ....$ 144,058 $ 251,995 $ 2,004,065 $ 2,791,335 $ (9,248) $ 70,190
Net realized gain (loss) on
investments, futures, written
options, and foreign currency
related transactions .......... 1,514,734 720,210 2,960,176 11,920,795 922,029 1,153,279
Net increase (decrease) in
unrealized appreciation/
depreciation .................. 3,195,923 4,761,858 40,005,867 44,705,175 3,070,749 4,313,223
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
operations .................... 4,854,715 5,734,063 44,970,108 59,417,305 3,983,530 5,536,692
- --------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........... -- (250,555) -- (2,699,390) -- (68,908)
Net realized gains .............. -- (546,305) -- (9,401,821) -- (760,447)
- --------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ............... -- (796,860) -- (12,101,211) -- (829,355)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations and
distributions ................... 4,854,715 4,937,203 44,970,108 47,316,094 3,983,530 4,707,337
- --------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares .... 25,302,258 16,925,055 115,317,568 130,960,266 11,212,383 8,647,997
Value of distributions
reinvested .................... -- 808,489 -- 12,101,211 -- 839,275
Cost of shares redeemed .........(17,488,697) (15,427,494) (7,720,224) (27,710,415)(10,818,116) (10,552,145)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions ............ 7,813,561 2,306,050 107,597,344 115,351,062 394,267 (1,064,873)
- --------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ...................... 12,668,276 7,243,253 152,567,452 162,667,156 4,377,797 3,642,464
NET ASSETS
Beginning of period ............... 31,160,057 23,916,804 326,961,237 164,294,081 19,879,373 16,236,909
- --------------------------------------------------------------------------------------------------------------------
End of period .....................$43,828,333 $ 31,160,057 $479,528,689 $326,961,237 $24,257,170 $19,879,373
- --------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME, END
OF PERIOD .........................$ 145,204 $ 1,146 $ 2,102,599 $ 98,534 $ (9,106) $ 142
- --------------------------------------------------------------------------------------------------------------------
CHANGES IN PORTFOLIO SHARES:
Shares sold by subscription ..... 704,504 532,917 4,567,918 6,047,885 148,648 140,302
Issued for distributions reinvested -- 24,815 -- 521,604 -- 13,063
Shares redeemed ................. (488,040) (485,538) (309,118) (1,321,302) (143,956) (173,026)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in fund shares ................ 216,464 72,194 4,258,800 5,248,187 4,692 (19,661)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VALUE INTERNATIONAL
EQUITY EQUITY INCOME
FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1999+ 1998 1999+ 1998 1999+ 1998
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) .... $ 214,274 $ 266,967 $ 254,179 $ 231,035 $ 1,700,152 $ 2,792,312
Net realized gain (loss) on
investments, futures, written
options, and foreign currency
related transactions .......... 1,536,211 (1,750,273) 2,097,939 2,197,939 (793,590) 600,594
Net increase (decrease) in
unrealized appreciation/
depreciation .................. 11,023,741 3,907,480 127,552 3,294,109 (2,047,114) 418,790
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
operations .................... 12,774,226 2,424,174 2,479,670 5,723,083 (1,140,552) 3,811,696
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........... -- (268,273) -- (171,596) -- (2,792,417)
Net realized gains .............. -- (1,266,070) -- (1,790,431) -- (486,762)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ............... -- (1,534,343) -- (1,962,027) -- (3,279,179)
Increase (decrease) in net assets
from operations and
distributions ................... 12,774,226 889,831 2,479,670 3,761,056 (1,140,552) 532,517
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares .... 26,602,675 31,179,749 54,772,176 19,148,022 7,847,244 31,877,838
Value of distributions
reinvested .................... -- 1,534,344 -- 1,962,027 -- 3,397,795
Cost of shares redeemed ......... (14,879,833) (10,816,957)(53,152,545) (19,849,462) (3,459,998) (22,284,896)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions ............ 11,722,842 21,897,136 1,619,631 1,260,587 4,387,246 12,990,737
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ...................... 24,497,068 22,786,967 4,099,301 5,021,643 3,246,694 13,523,254
NET ASSETS
Beginning of period ............... 53,642,617 30,855,650 36,952,241 31,930,598 59,076,545 45,553,291
- ---------------------------------------------------------------------------------------------------------------------
End of period ..................... $78,139,685 $ 53,642,617 $41,051,542 $ 36,952,241 $62,323,239 $ 59,076,545
- ---------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME, END
OF PERIOD ......................... $ 219,681 $ 5,407 $ 234,218 $ (19,961) $ 1,700,570 $ 418
- ---------------------------------------------------------------------------------------------------------------------
CHANGES IN PORTFOLIO SHARES:
Shares sold by subscription ..... 1,685,838 2,271,852 4,473,380 1,623,481 641,076 2,490,175
Issued for distributions reinvest -- 117,215 -- 168,414 -- 276,612
Shares redeemed ................. (956,976) (789,260) (4,325,354) (1,673,171) (282,823) (1,740,167)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in fund shares ................ 728,862 1,599,807 148,026 118,724 358,253 1,026,620
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
GLOBAL TOTAL MONEY
INCOME RETURN MARKET
FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1999+ 1998 1999+ 1998 1999+ 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) .... $ 235,222 $ 363,926 $ 1,024,638 $ 1,590,250 $ 6,330,730 $ 10,312,511
Net realized gain (loss) on
investments, futures, written
options, and foreign currency
related transactions .......... (77,134) 161,603 1,474,258 2,471,228 802 2,034
Net increase (decrease) in
unrealized appreciation/
depreciation .................. (1,060,401) 470,056 2,748,644 5,485,019 -- --
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
operations .................... (902,313) 995,585 5,247,540 9,546,497 6,331,532 10,314,545
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........... -- (513,299) -- (1,584,895) (6,330,730) (10,312,511)
Net realized gains .............. -- (45,764) -- (2,103,414) -- --
- -----------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ............... -- (559,063) -- (3,688,309) (6,330,730) (10,312,511)
Increase (decrease) in net assets
from operations and
distributions ................... (902,313) 436,522 5,247,540 5,858,188 802 2,034
- -----------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares .... 8,242,935 4,092,914 14,336,538 14,948,135 836,749,255 1,128,113,014
Value of distributions
reinvested .................... -- 846,310 -- 3,688,309 6,335,935 10,332,839
Cost of shares redeemed ......... (6,250,674) (1,488,358) (2,131,586) (1,869,877)(791,791,008)(1,043,716,505)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions ............ 1,992,261 3,450,866 12,204,952 16,766,567 51,294,182 94,729,348
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ...................... 1,089,948 3,887,388 17,452,492 22,624,755 51,294,984 94,731,382
NET ASSETS
Beginning of period ............... 9,738,728 5,851,340 72,631,950 50,007,195 239,546,869 144,815,487
- -----------------------------------------------------------------------------------------------------------------------
End of period .....................$10,828,676 $ 9,738,728 $90,084,442 $ 72,631,950 $290,841,853 $ 239,546,869
- -----------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME, END
OF PERIOD .........................$ 156,126 $ (79,096) $ 1,023,582 $ (1,056)$ -- $ --
- -----------------------------------------------------------------------------------------------------------------------
CHANGES IN PORTFOLIO SHARES:
Shares sold by subscription ..... 807,460 386,376 940,400 1,045,168 836,749,256 1,128,113,014
Issued for distributions reinvest -- 82,508 -- 256,667 6,335,934 10,332,839
Shares redeemed ................. (624,397) (137,734) (140,929) (132,272)(791,791,008)(1,043,716,505)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in fund shares ................ 183,063 331,150 799,471 1,169,563 51,294,182 94,729,348
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
REAL ESTATE
SECURITIES
FUND
- -----------------------------------------------------------------
PERIOD ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1999+ 1998
- -----------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) ....$ 1,337,359 $2,865,319
Net realized gain (loss) on
investments, futures, written
options, and foreign currency
related transactions .......... (442,770) 1,997,722
Net increase (decrease) in
unrealized appreciation/
depreciation .................. 2,898,698 (15,269,814)
- -----------------------------------------------------------------
Net increase (decrease) from
operations .................... 3,793,287 (10,406,773)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........... -- (1,919,406)
Net realized gains .............. -- (1,766,106)
- -----------------------------------------------------------------
TOTAL DISTRIBUTIONS ............... -- (3,685,512)
Increase (decrease) in net assets
from operations and
distributions ................... 3,793,287 (14,092,285)
- -----------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares .... 18,896,015 10,749,483
Value of distributions
reinvested .................... -- 8,751,903
Cost of shares redeemed ......... (22,918,918) (6,539,651)
- -----------------------------------------------------------------
Net increase (decrease) from
share transactions ............ (4,022,903) 12,961,735
- -----------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ...................... (229,616) (1,130,550)
NET ASSETS
Beginning of period ............... 47,755,972 48,886,522
- -----------------------------------------------------------------
End of period ..................... $47,526,356 $ 47,755,972
- -----------------------------------------------------------------
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME, END
OF PERIOD ......................... $ 2,075,406 $ 738,047
- -----------------------------------------------------------------
CHANGES IN PORTFOLIO SHARES:
Shares sold by subscription ..... 1,496,014 752,372
Issued for distributions reinvest -- 656,571
Shares redeemed ................. (1,846,397) (489,779)
- -----------------------------------------------------------------
Net increase (decrease)
in fund shares ................ (350,383) 919,164
- -----------------------------------------------------------------
<FN>
+ Unaudited.
</FN>
</TABLE>
- -------------
See Notes to Financial Statements.
60 & 61
<PAGE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION OF THE FUNDS
GE Investments Funds, Inc. (the "Company") was incorporated under the laws of
the Commonwealth of Virginia on May 14, 1984 and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company. The Company is comprised of eleven investment
funds (each a "Fund" and collectively the "Funds"), only ten of which are
currently being offered, as follows: U.S. Equity Fund, S&P 500 Index Fund,
Premier Growth Equity Fund, Value Equity Fund, International Equity Fund, Income
Fund, Global Income Fund, Total Return Fund, Money Market Fund and Real Estate
Securities Fund.
Effective May 1, 1997, the Common Stock Index Portfolio changed its name to S&P
500 Index Fund. On May 5, 1997, the Money Market Fund's investment policy was
changed to maintain a constant net asset value in accordance with Rule 2a-7 of
the 1940 Act, as amended, governing money market funds. To effect this change
the Money Market Fund declared a stock split in the ratio of 10.41 to 1. As a
result of the stock split, the Money Market Fund began maintaining a constant
net asset value per share of $1.00. The financial highlights of the Money Market
Fund have been restated to reflect this stock split.
Shares of the Company are offered only to insurance company separate accounts
that fund certain variable life insurance contracts and variable annuity
contracts. These insurance companies may include insurance companies affiliated
with GE Investment Management Incorporated ("GEIM"), the investment adviser and
administrator of each Fund
As of June 30, 1999, GE Life and Annuity Assurance Company ("GE Life") and
General Electric Capital Assurance Company, each an affiliated insurance
company, controlled the Funds by ownership, through separate accounts, of
virtually all of the Funds' shares of beneficial interest.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in conformity with generally
accepted accounting principles which requires management to make certain
estimates and assumptions at the date of the financial statements. Actual
results may differ from those estimates, but are expected to be immaterial.
The following summarizes the significant accounting policies of the Company:
SECURITY VALUATION AND TRANSACTIONS
Securities for which exchange quotations are readily available are valued at the
last sale price, or if no sales occurred on that day, at the last quoted bid
price. Certain fixed income securities are valued by a dealer or by a pricing
service based upon a matrix system, which considers market transactions and
dealer supplied valuations. Futures contracts are valued at the settlement price
established each day by the board of trade or exchange on which they are
principally traded. Options are valued at the last sale price, or if no sales
occurred on that day, at the last quoted bid price. Forward foreign currency
contracts are valued at the mean between the bid and the offered forward rates
as last quoted by a recognized dealer. Short-term investments maturing within 60
days are valued at amortized cost or original cost plus accrued interest, both
of which approximate current value. Fund positions which cannot be valued as set
forth above are valued at fair value determined under procedures approved by the
Board of Directors of the Funds.
In accordance with Rule 2a-7 of the 1940 Act, the Money Market Fund values its
securities initially at cost and, thereafter, securities are assumed to have a
constant amortization to maturity of any discount or premium. Amortized cost
approximates fair value.
Transactions are accounted for as of the trade date. Realized gains and losses
on investments sold are recorded on the basis of specific identified cost for
both financial statement and federal tax purposes.
FOREIGN CURRENCY
Accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
are translated to U.S. dollars at the prevailing rates of exchange at period
end. Purchases and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the respective
dates of the transactions.
The Funds do not isolate the portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in their market prices. Such fluctuations are included in net
realized or unrealized gain or loss from investments. Reported net realized
exchange gains or losses from foreign currency transactions represent gains or
losses on sales of foreign currencies, currency gains or losses between the
trade date and the settlement date on securities transactions, net realized
gains and losses on sales and maturities of forward foreign currency contracts,
and the difference between the amounts of foreign investment income and
withholding taxes accrued on the Funds' books and the U.S. dollar equivalent of
the amounts actu-
62
<PAGE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ally received or paid. Net unrealized foreign exchange gains and losses arising
from changes in the value of other assets and liabilities as a result of changes
in foreign exchange rates are included as increases or decreases in unrealized
appreciation/depreciation on foreign currency related transactions.
INCOME TAXES
The Funds intend to comply with all sections of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of their
taxable income and realized gains to their shareholders and, therefore, no
provision for federal income tax has been made. Each Fund is treated as a
separate taxpayer for federal income tax purposes. Any net capital and currency
losses incurred after October 31, within each Fund's tax year, are deemed to
arise on the first day of the Fund's next tax year if the Fund so elects to
defer such losses.
The Funds incurred and elected to defer losses at October 31, 1998 as follows:
FUND CURRENCY CAPITAL
- ------------------------------------------------------------
U.S Equity Fund $ 249 $ --
Value Equity Fund -- 2,951,556
International Equity Fund 19,961 --
Income Fund -- 527
Total Return Fund 1,056 --
Real Estate Securities Fund -- 182,488
INVESTMENT INCOME
Corporate actions (including cash dividends) are recorded net of non-reclaimable
tax withholdings on the ex-dividend date, except for certain foreign securities
for which corporate actions are recorded as soon after ex-dividend date as such
information is available. Interest income is recorded on the accrual basis. All
discounts on taxable bonds are accreted or amortized to call or maturity date,
whichever is shorter, using the effective yield method. Premiums on taxable
bonds are not amortized.
EXPENSES
Expenses of the Company which are directly identifiable to a specific Fund are
allocated to that Fund. Expenses which are not directly identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds. All expenses of the Funds are paid by GEIM, investment adviser to the
Funds, and reimbursed by the Funds.
DISTRIBUTIONS TO SHAREHOLDERS
The Money Market Fund declares investment income dividends daily and pays them
monthly. All other Funds declare and pay dividends from investment income
annually. All Funds declare and pay net realized capital gains distributions
annually. The character of income and gains to be distributed is determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences include treatment of realized and
unrealized gains and losses on forward foreign currency contracts, paydown gains
and losses on mortgage-backed securities, losses deferred due to wash sale
transactions, and deferred organization expenses. Reclassifications are made to
the Funds' capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. These reclassifications have no impact on net investment income,
realized gains or losses, or net asset value of the Funds. The calculation of
net investment income per share in the Financial Highlights table excludes these
adjustments. During any particular year, net realized gains from investment
transactions in excess of any applicable capital loss carryforwards would be
taxable to the Funds if not distributed and, therefore, will be declared and
paid to their shareholders annually.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The Funds may purchase or sell securities on a when-issued or forward commitment
basis. These transactions are arrangements in which the Funds purchase and sell
securities with payment and delivery scheduled for a future time. Settlement
dates may be a month or more after entering into these transactions, and the
purchase of securities on a when-issued or forward commitment basis involves a
risk of loss if the value of the underlying security declines prior to the
settlement date. The price of the underlying securities and the date when these
securities will be delivered and paid for are fixed at the time the transaction
is negotiated. This may increase the risk if the other party involved in the
transaction fails to deliver and causes the Funds to subsequently invest at less
advantageous prices and yields. In connection with such purchases, the Funds
maintain cash or liquid assets in an amount equal to purchase commitments for
such underlying securities until settlement date and for sales commitments the
Funds maintain equivalent deliverable securities as "cover" for the transaction.
Unsettled commitments are valued at current market value of the underlying
security. Daily fluctuations in the value of such contracts are recorded as
unrealized gains or losses. The funds will not enter into such agreements for
the purpose of investment leverage.
FOREIGN SECURITIES
All Funds may invest in foreign securities, subject to certain limitations.
There are certain additional risks involved when investing in foreign securities
(including those denominated in foreign currencies) that are not inherent
63
<PAGE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
in domestic securities. These risks may involve foreign currency exchange rate
fluctuations; changes in foreign exchange control regulations: application of
foreign tax laws, including withholding taxes: lack of uniform accounting,
auditing and financial reporting standards; and increase uncertainty about
changes in governmental administration or economic or monetary policy (in the
United States or abroad). The Funds may be subject to restrictions on the
repatriation or foreign currencies and may be limited on the use or removal of
its assets.
FORWARD FOREIGN CURRENCY CONTRACTS
Certain Funds may enter into forward foreign currency contracts to facilitate
transactions in foreign denominated securities and to manage the Fund's currency
exposure. A forward foreign currency contract is an agreement between two
parties to buy or sell currency at a set price on a future date. Contracts to
sell are generally used to hedge the Fund's investment against currency
fluctuations or to offset a previous contract to buy. Contracts to buy are
generally used to hedge exposure to foreign currencies or to offset a previous
contract to sell. Currency exposure exists during the period that a foreign
denominated investment is held or during a period between the trade date and
settlement date of an investment which is purchased or sold. These contracts
involve market risk in excess of the unrealized gain or loss reflected in the
fund's Statement of Assets and Liabilities. This amount represents the aggregate
exposure to each currency the Fund has acquired or hedge through currency
contracts at year end. Losses may arise from changes in the value of foreign
currency or if the counterparties do not perform under the contracts' terms. An
open contract is marked-to-market daily and the change in the market value is
recorded by the Fund as an unrealized gain or loss. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value at the time it was opened and the value at the time it was closed. Certain
Funds may utilized forward currency contracts for speculative purposes. When a
Fund enters into a forward foreign currency exchange contract for speculative
purposes, it is required to segregate cash or liquid securities with its
custodian in an amount equal to the value of the Fund's total asset committed to
the consummation of the forward contract. If the value of the segregated
securities declines, additional cash or securities is segregated so that the
value of the account will equal the amount of the Fund's commitment with respect
to the contract.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements. The Funds' custodian
takes possession of the collateral pledged for investments in repurchase
agreements on behalf of the Funds. The Funds value the underlying collateral
daily on a mark-to-market basis to determine that the value, including accrued
interest, is at least equal to 102% of the repurchase price. In the event of
default of the obligation to repurchase, the Funds have the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. There
is the risk that the collateral may be insufficient to meet the obligation in
the event of default.
FINANCIAL FUTURES CONTRACTS AND OPTIONS
Each fund, other than the Money Market Fund, may invest in financial future
contracts and purchase and write options, subject to certain limitations. The
Funds may invest in futures and options contracts for the following reasons: (1)
for the purpose of hedging against the effects of changes in the value of
portfolio securities or other investments due to anticipated changes in interest
rates, stock market conditions and currency market conditions, (2) to gain
stock, bond, or currency market exposure for accumulating and residual cash
positions, (3) for duration management, (4) when such transactions are an
economically appropriate way to reduce risks inherent in the management of a
Fund, and (5) for non-hedging purposes such as seeking additional income or
otherwise seeking to increase total return. Buying futures, writing puts and
buying calls tend to increase a Fund's exposure to the underlying instrument.
Selling futures, buying puts and writing calls tend to decrease a Fund's
exposure to the underlying instrument, or hedge other fund investments.
These investments involve, to varying degrees, elements of market risk and risks
in excess of the amount recognized in the Statement of Assets and Liabilities.
The face or contract amounts, shown in the Schedule of Investments under the
captions "Other Information, "Call Options" and "Put Options" reflect the extent
of the involvement the Funds have in the particular classes of these
instruments. Losses may be caused by an imperfect correlation between movements
in the price of the instruments and the price of the underlying securities and
interest rates and currency. Losses also may arise if there is an illiquid
secondary market for the instruments, or an inability of counterparties to
perform.
Upon entering into a financial futures contract, the Funds are required to
deposit with the Funds' custodian in a segregated account, either cash or
securities in an amount (initial margin) equal to a certain percentage of the
contract value. Subsequent payments (variation margin) are made or received by
the Funds each day. The variation margin payments are equal to the daily change
in the contract value and are recorded as unrealized gains and losses. The Funds
recognize a realized gain or loss when the futures contract is closed. The Funds
will realize a gain or loss upon the expiration or closing of an option
transaction. When an option is exercised, the proceeds on the sale
64
<PAGE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
of a security as a result of exercising a written option, the purchase cost of a
security acquired from exercising a written put option, or the proceeds on the
sale of the security from exercising a purchased put option or cost of the
security acquired from exercising a purchased call option is adjusted by the
amount of original premium received or paid.
SECURITY LENDING
The Funds may loan securities to brokers, dealers, and financial institutions
determined by GEIM to be creditworthy, subject to certain limitations. The loans
of securities will be secured by collateral in the form of cash or other liquid
assets, which will be segregated and maintained with the custodian in an amount
at least equal to 102% of the current market value of the loaned securities. The
Funds receive a lender fee in addition to the interest and dividends on the
loaned securities during the term of the loan. The Funds will receive any gain
or loss in the market value of its loaned securities and of securities in which
cash collateral is invested net of any rebate during the term of the loan. In
the event the counterparty (borrower) does not meet its contracted obligation to
return the securities, the Fund may be exposed to the risk of loss of
reacquiring the loaned securities at prevailing market prices using the proceeds
of the sale of the collateral.
3. FEES AND COMPENSATION PAID TO AFFILIATES
ADVISORY AND ADMINISTRATION FEES
GEIM, a registered investment adviser, was retained by the Company's Board of
Directors effective May 1, 1997 to act as investment adviser and administrator
of the Funds.
Compensation of GEIM, a wholly-owned subsidiary of General Electric Company, for
investment advisory and administrative services, is paid monthly based on the
average daily net assets of each Fund. The advisory and administrative fee is
stated in the following schedule:
ANNUALIZED BASED ON AVERAGE DAILY NET ASSETS
AVERAGE DAILY ADVISORY AND
NET ASSETS OF FUND ADMINISTRATION FEES
- -------------------------------------------------------------------
U.S Equity Fund All assets .55%
S&P 500 Index Fund All assets .35%
Premier Growth Equity Fund All assets .65%
Value Equity Fund All assets .65%
International Equity Fund First $100 million 1.00%
Next $100 million .95%
Over $200 million .90%
Income Fund First $100 million .50%
Next $100 million .45%
Next $100 million .40%
Next $100 million .35%
Over $400 million .30%
Global Income Fund All assets .60%
Total Return Fund First $100 million .50%
Next $100 million .45%
Next $100 million .40%
Next $100 million .35%
Over $400 million .30%
Money Market Fund* First $100 million .50%
Next $100 million .45%
Next $100 million .40%
Next $100 million .35%
Over $400 million .30%
Real Estate Securities FundFirst $100 million .85%
Next $100 million .80%
Over $200 million .75%
* THE ADVISER HAS VOLUNTARILY AGREED TO WAIVE A PORTION OF THE FEE PAYABLE BY
THE MONEY MARKET FUND SO THAT THE FEE PAID BY THE MONEY MARKET FUND IS EQUAL
TO .25%.
From time to time, GEIM may waive or reimburse advisory or administrative fees
paid by a Fund.
DIRECTORS' COMPENSATION
The Funds pay no compensation to their Directors who are officers or employees
of GE Life or GEIM. Directors who are not officers or employees receive an
annual fee of $6,000 and an additional fee of $500 per Directors' meeting
attended in person and an additional fee of $250 for each Directors' conference
call meeting attended. These fees are allocated proportionally among the funds
based upon the relative net assets of each fund.
65
<PAGE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
4. SUB-ADVISORY FEES
Pursuant to an investment sub-advisory agreement with GEIM, effective July 23,
1997, Seneca Capital Management, L.L.C. ("Seneca") is the sub-adviser to the
Real Estate Securities Fund, and pursuant to investment sub-advisory agreements
with GEIM, effective May 1, 1997, GE Investments (US) Limited ("GEIUS") is the
sub-adviser to the Global Income Fund and NWQ Investment Management Company
("NWQ") is the sub-adviser to the Value Equity Fund. Pursuant to an investment
sub-advisory agreement with GEIM, effective July 24, 1997, State Street Global
Advisors ("SSgA"), a division of State Street Bank and Trust Company, is the
sub-adviser to the S&P 500 Index Fund.
For their services GEIM pays Seneca, GEIUS, NWQ and SSgA monthly compensation in
the form of a sub-advisory fee. Seneca, GEIUS, NWQ and SSgA are responsible for
the day-to-day portfolio management of their respective funds, including the
responsibility for making decisions and placing orders to buy, sell or hold a
particular security, under the general supervision of GEIM and the Board.
5. AGGREGATE UNREALIZED
APPRECIATION AND DEPRECIATION
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at June 30, 1999, were as follows:
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION DEPRECIATION (DEPRECIATION)
- --------------------------------------------------------------------------------
U.S. Equity Fund $8,811,206 $376,367 $8,434,839
S&P 500 Index Fund 120,969,988 5,928,114 115,041,874
Premier Growth Equity Fund 8,090,137 182,036 7,908,101
Value Equity Fund 19,410,358 2,967,738 16,442,620
International Equity Fund 6,665,151 1,898,409 4,766,742
Income Fund 69,404 1,700,755 (1,631,351)
Global Income Fund 12,257 704,356 (692,099)
Total Return Fund 15,447,052 1,425,527 14,021,525
Real Estate Securities Fund 1,834,986 5,563,369 (3,728,383)
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at June 30, 1999.
6. OPTIONS
During the six-month period ended June 30, 1999, the following option contracts
were written:
TOTAL RETURN FUND INCOME FUND
- --------------------------------------------------------------------------------
NUMBER NUMBER
OF CONTRACTS PREMIUM OF CONTRACTS PREMIUM
- --------------------------------------------------------------------------------
Balance as of
December
31, 1998 1,710 $ 7,095 760 $ 3,148
Written 2,237,776 60,702 1,138,544 29,208
Closed and
Expired (1,125,666) (51,659) (572,479) (24,569)
Exercised (1,113,820) (16,138) (566,825) (7,787)
- --------------------------------------------------------------------------------
Balance as of
June 30, 1999 - $ - - $ -
- --------------------------------------------------------------------------------
7. INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of investments, other than
U.S. Government securities, short-term securities and options, for the six-month
period ended June 30, 1999, were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
U.S. Equity Fund $12,028,621 $5,407,531
S&P 500 Index Fund 117,704,586 5,017,667
Premier Growth Equity Fund 3,866,565 4,453,398
Value Equity Fund 16,525,095 6,388,946
International Equity Fund 11,148,516 10,711,569
Income Fund 80,553,020 70,553,801
Global Income Fund 7,251,983 6,137,728
Total Return Fund 53,528,359 41,537,862
Real Estate Securities Fund 1,199,527 3,244,274
66
<PAGE>
GE INVESTMENTS FUNDS INVESTMENT TEAM
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
U.S. EQUITY FUND
Team led by Eugene K. Bolton, GEIM
S&P 500 INDEX FUND
Team led by James B. May, SSGA
PREMIER GROWTH EQUITY FUND
David B. Carlson, GEIM
VALUE EQUITY FUND
Jon D. Bosse, NWQ
INTERNATIONAL EQUITY FUND
Team led by Ralph R. Layman, GEIM
INCOME FUND MONEY MARKET FUND
Team led by Robert A. MacDougall, GEIM
GLOBAL INCOME FUND
William R. Wright, GEIUS
TOTAL RETURN FUND
David B. Carlson, GEIM
Ralph R. Layman, GEIM
Robert A. MacDougall, GEIM
REAL ESTATE SECURITIES FUND
David A. Shapiro, Seneca
INVESTMENT ADVISER AND ADMINISTRATOR
GE Investment Management Incorporated
BOARD OF DIRECTORS
Michael J.Cosgrove, CHAIRMAN
John R. Costantino
William J. Lucas
Robert P. Martin, Jr.
J. Clifford Miller, III
J. Garnett Nelson
Lee A. Putney
Robert P. Quinn
SECRETARY
Matthew J. Simpson
TREASURER
Michael J. Tansley
ASSISTANT TREASURER
Michael M. D'Ambrosio
DISTRIBUTOR
GE Investment Distributors, Inc.
Member NASD and SIPC
COUNSEL
Sutherland, Asbill & Brennan, L.L.P.
CUSTODIAN
State Street Bank & Trust Company
INDEPENDENT ACCOUNTANTS
KPMG LLP
OFFICERS OF THE INVESTMENT ADVISER
John H. Myers, CHAIRMAN OF THE BOARD AND PRESIDENT
Eugene K. Bolton, EVP, DOMESTIC EQUITIES
Michael J. Cosgrove, EVP, MUTUAL FUNDS
Ralph R. Layman, EVP, INTERNATIONAL EQUITIES
Alan M. Lewis, EVP, GENERAL COUNSEL AND SECRETARY
Robert A. MacDougall, EVP, FIXED INCOME
Geoffrey R. Norman, EVP, INSTITUTIONAL MARKETING
John J. Walker, EVP, CHIEF FINANCIAL OFFICER
Don W. Torey, EVP, ALTERNATIVE INVESTMENTS AND REAL ESTATE
<PAGE>
[GE LOGO OMITTED]
- --------------------------------------------------------------------------------
FOR ADDITIONAL INFORMATION PLEASE WRITE OR CALL YOUR FINANCIAL REPRESENTATIVE.
Distributed by GE Investment Distributors, Inc., member NASD and SIPC
