<PAGE>
<PAGE>
SEMI-ANNUAL FINANCIAL STATEMENTS
--------------------------
THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
--------------------------
JUNE 30, 2000
(Unaudited)
GOLDENSELECT/R/ products are issued by Golden American Life Insurance
Company and
distributed by Directed Services, Inc., member NASD.
----
----- GOLDEN SELECT
-------- ------------------------
------ Issued By Golden American
---- Life Insurance Company
<PAGE>
<PAGE>
THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
===========================================================================
FINANCIAL STATEMENTS
JUNE 30, 2000
TABLE OF CONTENTS PAGE
----------------- ----
President's Letter 3
Management's Discussion and Analysis 4
Statement of Assets and Liabilities 5
Statement of Operations 6
Statement of Changes in Net Assets 7
Financial Highlights 8
Portfolio of Investments 9
Notes to Financial Statements 10
2
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August 15, 2000
Dear Shareholders of The Fund For Life Series of The GCG Trust,
We are pleased to provide you with your 2000 Semi-Annual Report (the
"Report") for The Fund For Life Series of The GCG Trust.
The first half of 2000 was a volatile period for U.S. equity markets.
The Fund For Life performance reflected these economic trends as is noted
in the portfolio manager's report.
In order to protect remaining shareholders from high expense ratios,
Directed Services, Inc., the Manager, agreed to absorb a portion of the
expenses while we are considering various options to address this
problem. In addition, the Manager is no longer taking a management fee.
If you have any questions or require any additional information, please
call our Customer Service area at
1-800-366-0066.
Sincerely,
/s/Barnett Chernow
Barnett Chernow
President
GOLDENSELECT/R/ products are issued by Golden American Life Insurance
Company and
distributed by Directed Services, Inc., member NASD
3
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<PAGE>
THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
===========================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
The investment objective of The Fund For Life Series (the "Fund") of The
GCG Trust is high total investment return (capital appreciation and
current income) consistent with prudent investment risk and a balanced
investment approach. The Fund seeks to achieve its objective by
investing in shares of other mutual funds using an allocation strategy
that emphasizes mutual funds that invest primarily in domestic equity
securities (approximately 60%), while also allocating a portion of the
Fund's assets to mutual funds that invest in international equity
securities (approximately 10%), and to mutual funds that invest primarily
in debt securities rated at least investment grade (approximately 30%).
Mixed performance in the equity market and debt market contributed to the
performance of the Fund during 2000. For the six months ended June 30,
2000, the Fund had a total return of 2.08%, compared to a blended return
of 0.34% of three indices, namely the Standard & Poor's 500, Morgan
Stanley/Capital International Pacific and Lehman Aggregate Bond indices.
This blend covers the same time period and is computed using the same
percentage allocation of investments held by the Fund. The following
total return of each index for the six months ended June 30, 2000 was S&P
500 Index - (0.43%), Morgan Stanley/Capital International Pacific Index -
(5.95%) and the Lehman Aggregate Bond Index - 3.99%.
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDING JUNE 30, 2000
1 Year 16.34%
5 Year 13.63%
Since Inception 11.73%
4
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<PAGE>
THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
===========================================================================
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
ASSETS
INVESTMENTS, AT VALUE (COST $194,202)(NOTES 1 AND 4) $282,463
CASH 1,435
DIVIDENDS RECEIVABLE 255
--------
TOTAL ASSETS 284,153
--------
LIABILITIES
ACCRUED EXPENSES 9,803
--------
TOTAL LIABILITIES 9,803
--------
NET ASSETS $274,350
========
NET ASSETS CONSIST OF
PAID-IN CAPITAL $171,200
ACCUMULATED NET REALIZED GAIN ON SECURITIES 15,907
NET UNREALIZED APPRECIATION OF INVESTMENTS 88,261
ACCUMULATED NET INVESTMENT LOSS (1,018)
--------
NET ASSETS $274,350
========
SHARES OF BENEFICIAL INTEREST OUTSTANDING, $.001 PAR VALUE 32,886
========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 8.34
========
See notes to financial statements.
5
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<PAGE>
THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
===========================================================================
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
INVESTMENT INCOME
DIVIDENDS $ 2,044
-------
EXPENSES
MANAGEMENT & ADMINISTRATIVE FEES (NOTE 2) 409
AUDITING FEES 1,682
FUND ACCOUNTING FEES (NOTE 2) 341
CUSTODY (NOTE 2) 970
TRUSTEES FEES AND EXPENSES (NOTE 2) 60
OTHER OPERATING EXPENSES 500
-------
TOTAL EXPENSES 3,962
FEES WAIVED AND EXPENSES REIMBURSED BY MANAGER (NOTE 2) (900)
-------
NET EXPENSES 3,062
-------
NET INVESTMENT LOSS (1,018)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
NET REALIZED GAIN ON INVESTMENT TRANSACTIONS 2,723
NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENTS 4,126
-------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 6,849
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,831
=======
See notes to financial statements.
6
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<PAGE>
THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
===========================================================================
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30,2000 ENDED
(UNAUDITED) DEC. 31, 1999
------------- -------------
FROM OPERATIONS
NET INVESTMENT (LOSS) $ (1,018) $ (972)
NET REALIZED GAIN ON INVESTMENTS AND
CAPITAL GAIN DISTRIBUTIONS 2,723 14,965
NET CHANGE IN UNREALIZED APPRECIATION
OF INVESTMENTS 4,126 34,951
-------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 5,831 48,944
-------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME ----- (1,003)
RETURN OF CAPITAL ----- (12,331)
NET REALIZED GAIN ON INVESTMENT AND
CAPITAL GAIN DISTRIBUTIONS ----- (12,622)
--------
----- (25,956)
FROM BENEFICIAL INTEREST TRANSACTIONS
PROCEEDS FROM SALES OF SHARES ----- -----
DISTRIBUTIONS REINVESTED ----- 25,951
COST OF SHARES REDEEMED (5,392) (2,401)
-------- --------
INCREASE/(DECREASE) IN NET ASSETS
DERIVED FROM BENEFICIAL
INTEREST TRANSACTIONS (5,392) 23,550
-------- --------
NET INCREASE IN NET ASSETS 439 46,538
NET ASSETS
BEGINNING OF YEAR 273,911 227,373
-------- --------
END OF YEAR $274,350 $273,911
======== ========
UNDISTRIBUTED NET INVESTMENT LOSS $ (1,018) $ --
======== ====
See notes to financial statements.
7
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<PAGE>
THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX FOR THE FOR THE FOR THE FOR THE FOR THE
MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
06/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(UNAUDITED)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
NET ASSET VALUE,
BEGINNING OF PERIOD $ 8.17 $ 7.45 $ 7.25 $ 7.61 $ 10.95 $ 9.23
------- ------- ------- ------- ------- -------
NET INVESTMENT INCOME
(LOSS)# (0.03) 0.00 0.03 0.03 0.01 (0.24)
NET GAIN (LOSS) ON
INVESTMENTS - REALIZED
AND UNREALIZED 0.20 1.56 0.88 1.09 0.88 1.98
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 0.17 1.56 0.91 1.12 0.89 1.74
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
DISTRIBUTIONS FROM NET
INVESTMENT INCOME 0.00 0.03 0.09 0.13 0.00 0.02
RETURN OF CAPITAL 0.00 0.39 0.00 0.00 0.00 0.00
DISTRIBUTIONS FROM NET
REALIZED CAPITAL GAINS 0.00 0.42 0.62 1.35 4.23 0.00
------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS 0.00 0.84 0.71 1.48 4.23 0.02
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END
OF PERIOD $ 8.34 $ 8.17 $ 7.45 $ 7.25 $ 7.61 $ 0.95
======= ======= ======= ======= ======= =======
TOTAL RETURN 2.08%* 21.82% 13.67% 14.58% 10.57% 18.79%
======= ======= ======= ======= ======= =======
RATIOS AND SUPPLEMENTAL DATA
TOTAL NET ASSETS, END OF
PERIOD (000'S OMITTED) $274 $274 $227 $202 $201 $333
RATIO OF EXPENSES TO
AVERAGE NET ASSETS 2.50%** 2.50% 2.50% 2.50% 2.56% 4.25%
DECREASE REFLECTED IN ABOVE
EXPENSE RATIO DUE TO
WAIVERS AND/OR
REIMBURSEMENTS 0.66%** 0.56% 3.27% 12.06% 9.45% 0.68%
RATIO OF NET INVESTMENT
INCOME (LOSS) TO
AVERAGE NET ASSETS (0.75%)** (0.41%) 0.40% 0.40% 0.10% (2.32%)
PORTFOLIO TURNOVER RATE 0.00% 2.08% 0.00% 8.94% 6.87% 5.68%
</TABLE>
* Unannualized
** Annualized
# Per share data numbers have been calculated using the average share
method.
See notes to financial statements.
8
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THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
===========================================================================
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
NUMBER OF
---------
INVESTMENT IN SHARES OF OPEN-END MUTUAL FUNDS SHARES VALUE (NOTE 1)
--------------------------------------------- ------ --------------
AIM CONSTELLATION FUND 921 $ 40,588
AIM WEINGARTEN FUND 1,000 31,806
THE GUARDIAN PARK AVENUE FUND 614 37,547
MERRILL LYNCH PACIFIC FUND, INC., CLASS A 1,128 32,723
DAVIS NEW YORK VENTURE FUND, INC. 1,072 33,078
SCUDDER INCOME FUND 1,954 23,777
UNITED INCOME FUND 3,921 35,643
VANGUARD INVESTMENT GRADE CORPORATE BOND FUND 2,887 23,267
VANGUARD FIXED INCOME GNMA FUND 2,423 24,034
--------
TOTAL INVESTMENTS (COST $194,202*) 103% 282,463
(NOTES 1 AND 4)
LIABILITIES IN EXCESS OF OTHER ASSETS (3)% (8,113)
------- --------
NET ASSETS 100% $274,350
======= ========
*Aggregate cost for Federal tax purposes.
See notes to financial statements.
9
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<PAGE>
THE FUND FOR LIFE SERIES
OF
THE GCG TRUST
===========================================================================
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The GCG Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
company. The Trust was organized as a Massachusetts business trust on
August 3, 1988 with an unlimited number of shares of beneficial
interest with a par value of $0.001 each. At June 30, 2000, the Trust
had twenty-five operational portfolios (the "Series"): The Fund For
Life Series (the "Fund"), Liquid Asset Series, Limited Maturity Bond
Series, Hard Assets Series, All-Cap Series, Investors Series, Large Cap
Value Series, Real Estate Series, Fully Managed Series, Equity Income
Series, Capital Appreciation Series, Rising Dividends Series, Managed
Global Series, Emerging Markets Series, Market Manager Series, Value
Equity Series, Strategic Equity Series, Small Cap Series, Developing
World Series, Mid-Cap Growth Series, Research Series, Total Return
Series, Growth Series, Capital Growth Series, and Global Fixed Income
Series. All of the Series, including the Fund, are diversified, except
for Hard Assets Series, Managed Global Series, Mid-Cap Growth Series,
and Market Manager Series. The information presented in these
financial statements pertains only to the Fund. The financial
information for the other Series of the Trust is presented under
separate cover. The Fund serves as an investment medium for variable
annuity contracts offered by Golden American Life Insurance Company
("Golden American"), a wholly owned subsidiary of the Equitable of Iowa
Companies, Inc. ("Equitable of Iowa"), an indirect wholly owned
subsidiary of ING Groep N.V. ("ING").
The preparation of these financial statements in accordance with
generally accepted accounting principles incorporates estimates made by
management in determining the reported amounts of assets, liabilities,
revenues and expenses of the Fund. Actual results could differ from
these estimates. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with accounting
principles generally accepted in the United States.
Federal Income Taxes: No provision for federal income taxes has
been made since the Fund has complied, and intends to continue to
comply, with the provisions of the Internal Revenue Code available to
regulated investment companies and to distribute its taxable income to
shareholders sufficiently to relieve it from substantially all Federal
income taxes.
Valuation: Investments in open-end mutual funds are valued at their
respective net asset value at the end of each day. Net asset values
for these investments are supplied by market quotation services. The
net asset values supplied by these market quotation services are
calculated in accordance with the Act. Among other things, the Act
requires that mutual funds value the securities they hold in their
portfolios at their current market value (generally the last reported
sales price of the security).
10
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Other investments of the Fund, if any, are valued at their current
market value as determined by market quotations. Securities having 60
days or less remaining to maturity are valued at their amortized cost.
Other: Investment transactions are recorded on trade date.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Estimated expenses are accrued daily.
Realized gains and losses from investment transactions are
recorded on an identified cost basis which is the same basis the Fund
uses for federal income tax purposes.
2. MANAGEMENT AND ADMINISTRATIVE FEES, AND OTHER TRANSACTIONS WITH AFFILIATES
In its capacity as Manager and Administrator, Directed Services,
Inc. ("DSI") provides investment advisory services and other services
reasonably necessary for the operation of the Fund. Management and
administrative fees are paid to DSI at annual rates of 0.10% and 0.20%,
respectively, of the value of the average daily net assets of the Fund.
For the six months ended June 30, 2000, the Fund waived $136 and $273
in compensation for management and administrative services,
respectively.
DSI also provides accounting services to the Fund. For fund
accounting services, the Fund pays to DSI an annual fee of 0.25% of the
value of the average daily net assets of the Fund. For the six months
ended June 30, 2000 such fees amounted to $341. Pursuant to a
custodian agreement, Bank of New York is custodian for the Fund.
During the six months ended June 30, 2000, DSI voluntarily waived
its fees and reimbursed the Fund $150 in operating expenses.
Investors in the Fund should recognize that an investment in the
Fund bears not only a proportionate share of the expenses of the Fund
(including operating costs and management fees) but also indirectly
similar expenses of the underlying mutual funds in which the Fund
invests. Investors also bear their proportionate share of any sales
charges incurred by the Fund related to the purchase of shares of the
mutual fund investments. In addition, shareholders of the Fund may
indirectly bear expenses paid by a mutual fund in which the Fund
invests related to the distribution of the mutual fund's shares.
Certain officers and trustees of the Trust are also officers and/or
directors of DSI, Golden American and other Equitable of Iowa companies.
11
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<PAGE>
3. SHARES OF BENEFICIAL INTEREST
The Fund has an unlimited number of $0.001 par value shares of
beneficial interest authorized. For the six months ended June 30, 2000
and the year ended December 31, 1999, the Fund had the following
transactions in shares of beneficial interest. Except for reinvested
distributions, the Trust no longer accepts investments in the Fund from
new investors.
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Sold -- $ -- $ -- --
Distributions Reinvested -- -- 3,350 25,951
Redeemed (645) (5,392) (311) (2,401)
------ ------ ------ ------
Net increase/(decrease) (645) $(5,392) 3,039 $23,550
====== ====== ====== ======
As of June 30, 2000, Golden American has an investment in the Fund
of 2,706 shares with a total net asset value of $22,568, representing
8.2% of the shares outstanding.
4. INVESTMENTS
At June 30, 2000, the gross unrealized appreciation and
depreciation for federal income tax purposes were as follows:
Gross Unrealized Appreciation $91,444
Gross Unrealized Depreciation (3,183)
------
Net Unrealized Appreciation $88,261
======
Purchases and Sales of Investments Were As Follows:
Cost of Purchases $--
Cost of Sales $6,766
12
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<PAGE>
5. PLAN OF SUBSTITUTION
During 1996, the Board of Trustees instructed management to file
with the Securities and Exchange Commission ("SEC"), an application for
an order ("Order") to accept the substitution of shares of the Fund for
shares of the Fully Managed Series, one of the series of the Trust.
The Trust plans to file the formal application in 2000. The
substitution will occur as soon as practicable after the Order is
issued by the SEC. Within five days after the substitution, Golden
American will send to owners of contracts written notice of the
substitution stating that shares of the Fund have been eliminated and
that the shares of Fully Managed Series have been substituted.
13
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