<PAGE>
GNA VARIABLE INVESTMENT ACCOUNT
FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
<PAGE>
GNA VARIABLE INVESTMENT ACCOUNT
TABLE OF CONTENTS
(Unaudited)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Statements of Assets and Liabilities....................................... F-1
Statements of Operations................................................... F-2
Statements of Changes in Net Assets........................................ F-3
Notes to Financial Statements.............................................. F-4
</TABLE>
<PAGE>
GNA VARIABLE INVESTMENT ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
(Unaudited)
June 30, 2000
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
--------------------------------------------------------------------
Premier Mid-Cap
Growth Value U.S. Money
Equity Equity International Equity Market
Income Fund Fund Fund Equity Fund Fund Fund
----------- ---------- ---------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in GE
Investments Funds,
Inc., at fair value:
Income Fund (1,717,003
shares, cost
$23,489,102).......... $20,432,336 -- -- -- -- --
Premier Growth Equity
Fund (269,123 shares,
cost $19,756,797)..... -- 23,731,266 -- -- -- --
Mid-Cap Value Equity
(880,763 shares, cost
$13,266,701).......... -- -- 13,308,329 -- -- --
International Equity
Fund (848,620 shares,
cost $12,071,266)..... -- -- -- 12,559,576 -- --
U. S. Equity Fund
(813,118 shares, cost
$28,033,449).......... -- -- -- -- 30,890,353 --
Money Market Fund
(5,030,670 shares,
cost $5,030,670)...... -- -- -- -- -- 5,030,670
----------- ---------- ---------- ---------- ---------- ---------
Total assets........... $20,432,336 23,731,266 13,308,329 12,559,576 30,890,353 5,030,670
=========== ========== ========== ========== ========== =========
Net assets:
Attributable to General
Electric Capital
Assurance Company..... 17,132,138 12,429,906 5,865,807 10,295,642 18,136,874 3,404,185
For deferred variable
annuity
contractholders....... 3,300,198 11,301,360 7,442,522 2,263,934 12,753,479 1,626,485
----------- ---------- ---------- ---------- ---------- ---------
$20,432,336 23,731,266 13,308,329 12,559,576 30,890,353 5,030,670
=========== ========== ========== ========== ========== =========
Outstanding units held
by contractholders..... 311,046 612,208 629,655 146,818 872,331 147,728
=========== ========== ========== ========== ========== =========
Net asset value per
unit.................. $ 10.61 18.46 11.82 15.42 14.62 11.01
=========== ========== ========== ========== ========== =========
</TABLE>
See accompanying notes to unaudited financial statements.
F-1
<PAGE>
GNA VARIABLE INVESTMENT ACCOUNT
STATEMENTS OF OPERATIONS
(Unaudited)
June 30, 2000
<TABLE>
<CAPTION>
GE Investments Funds, Inc.
-----------------------------------------------------------------
Premier Mid-Cap
Growth Value U. S. Money
Income Equity Equity International Equity Market
Fund Fund Fund Equity Fund Fund Fund
-------- ---------- -------- ------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Ordinary
dividends............. $ -- -- -- -- -- 133,214
Expenses:
Mortality and expense
risk charges (note
3).................... 25,884 88,339 57,401 15,844 98,076 13,501
-------- ---------- -------- ------- ---------- -------
Net investment income
(loss)................. (25,884) (88,339) (57,401) (15,844) (98,076) 119,713
-------- ---------- -------- ------- ---------- -------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss)................ (71,779) 1,445,763 47,031 340,908 1,229,434 --
Unrealized appreciation
(depreciation) on
investments........... 749,099 (1,578,175) (673,232) (59,143) (1,139,870) --
-------- ---------- -------- ------- ---------- -------
Net realized and
unrealized gain (loss)
on investments......... 677,320 (132,412) (626,201) 281,765 89,564 --
-------- ---------- -------- ------- ---------- -------
Increase (decrease) in
net assets from
operations............. $651,436 (220,751) (683,602) 265,921 (8,512) 119,713
======== ========== ======== ======= ========== =======
</TABLE>
See accompanying notes to unaudited financial statements.
F-2
<PAGE>
GNA VARIABLE INVESTMENT ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
June 30, 2000
<TABLE>
<CAPTION>
GE Investments Fund, Inc.
-------------------------------------------------------------------------
Premier Mid-Cap
Growth Value U. S. Money
Equity Equity International Equity Market
Income Fund Fund Fund Equity Fund Fund Fund
----------- ---------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase in net assets
From operations:
Net investment income
(loss)................ $ (25,884) (88,339) (57,401) (15,844) (98,076) 119,713
Net realized gain
(loss)................ (71,779) 1,445,763 47,031 340,908 1,229,434 --
Unrealized appreciation
(depreciation) on
investments........... 749,099 (1,578,175) (673,232) (59,143) (1,139,870) --
----------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets from
operations........... 651,436 (220,751) (683,602) 265,921 (8,512) 119,713
----------- ---------- ---------- ---------- ---------- ----------
From capital
transactions:
Net effect of
transactions by
General Electric
Capital Assurance
Company............... 25,884 (127,861) 57,401 (30,658) (602,274) 13,500
Net contract purchase
payments.............. 3,102 39,187 11,388 26,025 16,378 2,893
Transfers to the
general account of
General Electric
Capital Assurance
Company:
Surrender Benefits..... (460,883) (1,490,505) (740,793) (152,593) (1,446,495) (1,812,223)
Transfers from (to) the
Fixed Guarantee Period
Account (note 1)...... (89,262) 36,401 48,432 8,348 20,623 1,255,642
Interfund transfers.... (66,663) (301,226) (37,337) 188,903 (75,662) 291,985
----------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets from
capital
transactions......... (587,822) (1,844,004) (660,909) 40,025 (2,087,430) (248,203)
----------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in
net assets........... 63,614 (2,064,755) (1,344,511) 305,946 (2,095,942) (128,490)
Net assets at beginning
of period.............. 20,368,722 25,796,021 14,652,840 12,253,630 32,986,295 5,159,160
----------- ---------- ---------- ---------- ---------- ----------
Net assets at end of
period................. $20,432,336 23,731,266 13,308,329 12,559,576 30,890,353 5,030,670
=========== ========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to unaudited financial statements.
F-3
<PAGE>
GNA VARIABLE INVESTMENT ACCOUNT
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
(1) Description of Entity
GNA Variable Investment Account (the Account) is a separate investment
account established in 1981 by Great Northern Insured Annuity Corporation
(GNA) under laws of the State of Washington. The Account is registered with
the Securities and Exchange Commission under the Investment Company Act of
1940, as amended, as a unit investment trust. Effective January 1, 1999, GNA
merged with and into General Electric Capital Assurance Company (GECA), its
parent company. GECA is an indirect wholly-owned subsidiary of GNA
Corporation, General Electric Capital Corporation (GECC) and General Electric
Company (GE Company). The merger has no impact on net assets or unit values of
the Account.
The Account holds certain benefits for group deferred variable annuity
policies issued by GNA. No new contracts are issued in the Account; however,
existing contractholders can continue to add premiums to the Account.
Participants may transfer amounts among the Account's portfolios and the
Fixed Guarantee Period Account that is part of the general account of GECA.
The net assets related to deferred variable annuity policies are the property
of GECA and cannot be used to settle liabilities arising out of any other
business of GECA.
(2) Summary of Significant Accounting Policies
(a) Investments
Investments in shares of the portfolios are recorded at their net asset
value. The net asset value is based upon the underlying assets of the mutual
funds as determined by quoted market prices. Purchases and sales of
investments are recorded on the trade date. Realized gains and losses on
investments are determined on an average-cost basis. Dividend income is
recorded on the ex-dividend date.
The aggregate cost of investments acquired and the aggregate proceeds of
investments sold, for the six months ended June 30, 2000, were:
<TABLE>
<CAPTION>
Proceeds
Cost of from
shares shares
acquired sold
----------- ----------
<S> <C> <C>
GE Investments Funds, Inc.:
Income Fund............................................. $ 79,528 693,234
Premier Growth Equity Fund.............................. 25,617,904 27,550,248
Mid-Cap Value Equity Fund............................... 227,442 945,752
International Equity Fund............................... 10,555,246 10,531,065
U.S. Equity Fund........................................ 37,654,941 39,840,447
Money Market Fund....................................... 1,823,075 1,951,564
</TABLE>
(b) Unit Activity
The increase (decrease) in outstanding units from capital transactions for
the six months ended June 30, 2000 are as follows:
<TABLE>
<CAPTION>
Premier Mid-Cap Money
Income Growth Value International U.S. Market
Fund Equity Equity Equity Fund Equity Fund
------- ------- ------- ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding,
12/31/99............... 369,944 705,016 689,852 142,084 973,745 171,718
Units purchased......... 5,148 7,007 14,250 16,034 10,712 153,693
Units redeemed.......... (64,046) (99,815) (74,447) (11,300) (112,126) (177,683)
------- ------- ------- ------- -------- --------
Units outstanding,
6/30/00................ 311,046 612,208 629,655 146,818 872,331 147,728
======= ======= ======= ======= ======== ========
</TABLE>
F-4
<PAGE>
GNA VARIABLE INVESTMENT ACCOUNT
NOTES TO FINANCIAL STATEMENTS -- Continued
June 30, 2000
(2) Summary of Significant Accounting Policies -- Continued
(c) Distributions
The net investment income (loss) and realized capital gains of the Account
are retained and reinvested within the Account.
(d) Federal Income Taxes
The operations of the Account are a part of, and are taxed with, the
operations of GECA. Therefore, the Account is not separately taxed as a
regulated investment company under Subchapter M of the Internal Revenue Code.
Under existing federal income tax laws, investment income and capital gains of
the Account are not taxed. Accordingly, the Account paid no federal income
taxes and no federal income tax provision was required. GECA is taxed as a
life insurance company under the Internal Revenue Code.
(e) Use of Estimates
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions
that affect amounts and disclosures reported therein. Actual results could
differ from those estimates.
(3) Related Party Transactions and Contract Charges
Net contract purchase payments transferred from GECA to the Account
represent gross purchase payments recorded by GECA on its group deferred
variable annuity products, less deductions for premium taxes in certain
states. Withdrawals charge (contingent deferred sales charge) may be assessed
against certain amounts withdrawn within five years of any purchase payment.
Subject to certain limitations, this charge equals 5% (or less) of the
purchase payment surrendered, depending on the time between purchase payment
and surrender.
Each year GECA will deduct a certificate maintenance charge of $40 plus an
administration charge at an annual rate of .15% of average daily net assets as
partial compensation for certain administrative services. GECA will waive the
certificate maintenance charge if at the time of the assessment the account
value is $40,000 or greater. In addition, GECA charges the Account at an
annual rate of 1.25% of average daily net assets for the mortality and expense
risk that GECA assumes. Administrative expenses as well as mortality and risk
charges are deducted daily and reflect the effective annual rates.
Units are not assigned to purchases made by GECA and no contract charges
are assessed against GECA's net assets.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE Company, currently serves as investment advisor to GE
Investments Funds, Inc. As compensation for its services, the Investment
Advisor is paid an investment advisory fee by the Fund based on average daily
net assets at an effective rate of .50% for the Money Market and Income Funds,
.55% for the U.S. Equity Fund, .65% for the Mid-Cap Value Equity and Premier
Growth Equity Funds, and 1.00% for the International Equity Fund.
F-5
