[GE LOGO]
GE LifeStyle Funds
- --------------------------------------------------------------------------------
GE LifeStyle Funds
Semi-Annual Report
March 31, 1998
GE Conservative Strategy Fund
GE Moderate Strategy Fund
GE Aggressive Strategy Fund
<PAGE>
GE LifeStyle Funds
- --------------------------------------------------------------------------------
Understanding Your Report
A Letter from the President ............................. 2
Portfolio Manager's Review .............................. 4
Performance Summary
GE Conservative Strategy Fund .................. 5
GE Moderate Strategy Fund ...................... 6
GE Aggressive Strategy Fund .................... 7
Notes to Performance .................................... 8
Financial Statements .................................... 9
Financial Highlights and Statements of Net Assets,
Operations, and Changes in Net Assets
Notes to the Financial Statements ....................... 15
GE LifeStyle Funds'
Investment Team ................................. inside back cover
This report has been prepared for the shareholders GE LifeStyle Funds. It is not
authorized for use as an offer of sale or a solicitation of an offer to buy the
GE LifeStyle Funds unless accompanied or preceded by the current prospectus of
the GE LifeStyle Funds and the current prospectus of the underlying GE Funds.
1
<PAGE>
A Letter from the President
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide you with the first shareholder report for the GE
LifeStyle Funds.
Since the funds started on January 5, 1998, each GE LifeStyle Fund recorded
significant gains in net asset value. As might be expected, in a rising stock
market, the GE Aggressive Strategy, which invests primarily in equities,
delivered the best results, followed by the GE Moderate Strategy, which
portfolio is split between equities and fixed income investments, and the GE
Conservative Strategy, which invests primarily in fixed income securities. It
should be noted, however, that 80% of diversified U.S. stock funds were beaten
by the S&P 500 Index during the quarter.
Each portfolio achieved its investment returns while maintaining a high level of
diversification within its respective investment discipline. While financial
professionals may differ on what makes a good investment, all would agree that
diversification should be the foundation of every investor's portfolio.
Diversification increases the number of investment opportunities in which an
investor can participate. But even more significant, diversification should help
reduce portfolio risk because, when assets are diversified, no single security
should have a substantially negative impact on one's overall investment results.
Few individual investors have the financial resources to create as diversified a
portfolio as can be found in the GE LifeStyle Funds. Unlike traditional funds
that invest in individual securities, GE LifeStyle Funds invest in mutual funds,
namely GE Funds. And each underlying GE fund is managed to achieve a specific
investment objective.
Since the concept of "fund of funds" investing is relatively new to most
investors, we realize you may have questions from time to time. Please feel free
to call us with those questions. We believe the more you understand about your
investment in the GE LifeStyle Funds, the happier you will be as a shareholder.
Market Overview
During the period, the stock market recorded solid investment results in an
environment of low inflation, falling interest rates and generally good
corporate earnings. At the start of this year, some market watchers wondered if
the stock market could maintain its torrid pace in 1998, given its strong
investment results over the past few years. In January, it appeared those
concerns were having an effect on stock market valuations. But those concerns
were short-lived. In February and March, stocks bounced back strongly, posting
double-digit gains for the quarter and fueling speculation on when the Dow Jones
Industrial Average might hit the 10,000 mark.
During the period, financial services stocks were among the better market
performers just as they have been over the last few years. These stocks
benefited from the sharp increase in the number of Americans saving and
investing to help secure their financial future.
Some of the other sectors that turned in solid gains included healthcare and
utilities stocks. Oil stocks fell, due in large part to a decline in oil prices.
Technology stocks turned in mixed investment results, as a number of major
companies in this sector announced earnings shortfalls due to the economic
problems in Asia.
European stocks also registered impressive investment results, thanks in large
part to a generally favorable economic environment on the Continent. Other
positive factors that helped bolster prices included the wave of restructurings
taking place in Europe and the fact that plans designed to lead to a single
currency by next year remain on schedule.
The Japanese stock market finished 1997 on a down note, but showed considerable
strength in January, driven largely by technical factors that suggested prices
might be bottoming. However, investors' negative reaction to government economic
reform proposals put pressure on
2
<PAGE>
equity prices in March, wiping out a large portion of their early-year gains.
While the Asian economic crisis had a substantial effect on the financial
markets in the last quarter of 1997, it had little bearing on global equity
prices during the first three months of this year. However, the underlying
problems in Asia remain a source of concern to investors.
Bonds also recorded solid performance, as long-term interest rates continued to
decline. Federal Reserve ("Fed") chairman Alan Greenspan helped the bond market
in January by suggesting disinflation may creep into the economy due to the
Asian economic crisis.
During the period, the Fed maintained its neutral monetary policy, meaning it
neither raised or lowered interest rates. The Fed has not raised short-term
interest rates since late March 1997 and has not lowered these rates since late
January 1996.
The bond market rally was not without some concerns along the way. For example,
interest rates trended higher in early February resulting from a
stronger-than-expected employment report released in early February.
Market Outlook
Looking ahead, we expect the U.S. economy to continue to grow at a steady pace.
While we do not expect the Asian financial crisis to have a significant impact
on the U.S. economy, we believe it may result in a slowdown in corporate
earnings growth. Given this scenario, we would not be surprised to see a Fed
rate cut in the coming months. Furthermore, we think stock market gains will
return to more modest levels. In this environment, stock selection will be
critically important in achieving investment success.
Sincerely,
[GRAPHIC OMITTED]
Michael J. Cosgrove
Mike Cosgrove is the President of the Investment Services Group of GE Financial
Assurance Holdings, Inc. and GE Investment Distributors, Inc., the funds'
distributor. In this role, he is responsible for the marketing, product
development and sales for the funds. Mike is also a Trustee of the GE Pension
Trust and GE's employee savings program.
In Mike's previous position as Chief Financial Officer of GE Investments and
Assistant Treasurer-GE Company, he had financial responsibility for all assets
under GE Investments' management. Mike joined GE in 1970. After completing the
GE Financial Management Program he held a number of managerial positions in
finance and sales in International Operation, including serving as Vice
President and Treasurer and later as Vice-President - Countertrade and Barter
for GE Trading Company.
Mike graduated from Fordham University in 1970 with a B.S. degree in Economics
and received his M.B.A. degree from St. John's University in 1973.
3
<PAGE>
GE LifeStyle Funds Portfolio Manager's Review
- --------------------------------------------------------------------------------
Gene Bolton is responsible for the management of the GE LifeStyle Funds. As the
Chairman of the Asset Allocation Committee at GE Investments, Gene works closely
with the portfolio managers of the underlying GE Funds. He also has overall
management responsibility of the U.S. equity investment process at GE
Investments and manages total assets of over $30 billion, including
responsibility for overseeing the portfolio management of the GE U.S. Equity
Fund. 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. 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.
As this is the first report for the GE LifeStyle Funds, let me take the
opportunity to discuss how we have designed the performance discussions in this
report to assist you in understanding your portfolio.
The funds are managed so each portfolio can serve as a complete investment
program or as a core part of a larger portfolio. Each fund is invested in a
selected group of underlying GE Funds suited for the fund's particular
investment objective.
The GE LifeStyle Funds are designed to meet the needs of investors who prefer to
have their asset allocation decisions made by professional money managers, are
looking for an appropriate core investment portfolio and appreciate the
advantages of broad diversification.
In order to help you assess how the GE LifeStyle Funds have performed as
compared to the general market, we have grouped the underlying GE Funds into
three sectors: domestic equity; international equity and fixed income. We have
also provided three broad market indices which we believe to be most
representative for the underlying funds. These indices will provide you with
benchmarks as to how each major market fared and what sector of the market
generated the best returns.
In addition, we have calculated a Composite Index for each of the GE LifeStyle
Funds. This Composite Index is derived by applying each fund's target
allocations to the results of the benchmarks for the domestic equity,
international equity and fixed income markets. This index will help you evaluate
your holdings.
The following performance highlights pages provide you with each LifeStyle
Fund's target and actual asset allocation percentages as of March 31, 1998, the
fund`s performance as compared to its Composite Index and market benchmarks,
followed by a discussion of each fund's performance.
Going forward, we will continue to actively monitor the LifeStyle Funds' target
allocation mixes from a risk/return perspective. We believe that investors who
maintain a balanced portfolio of stock and bond funds will achieve good
long-term returns with modest overall volatility.
4
<PAGE>
Conservative Strategy Fund Performance Summary
- --------------------------------------------------------------------------------
Target and Actual Asset Allocations
As of March 31, 1998
Target
[GRAPHIC OMITTED]
Fixed Income funds 56.0%
Domestic Equity funds 26.0%
International Equity fund 18.0%
Actual
[GRAPHIC OMITTED]
Fixed Income funds 55.1%
Domestic Equity funds 26.2%
International Equity fund 18.7%
PORTFOLIO ALLOCATION TO FUNDS*
- --------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE Premier Growth Equity Fund 4.0% 4.1%
GE U.S. Equity Fund 10.0% 10.0%
GE Mid-Cap Growth Fund 3.0% 3.0%
GE Value Equity Fund 9.0% 9.1%
GE International Equity Fund 18.0% 18.7%
GE Fixed Income Fund 51.0% 46.2%
GE Short-Term Government Fund 5.0% 4.6%
GEI Short-Term Investment Fund** - 4.3%
- --------------------------------------------------------------------------
Total 100.0% 100.0%
- --------------------------------------------------------------------------
* As a percentage of net assets.
** Includes cash and cash equivalents.
AGGREGATE TOTAL RETURNS:
FROM JANUARY 5, 1998 (DATE OF INCEPTION) TO MARCH 31, 1998
- ------------------------------------------------------------------
CONSERVATIVE STRATEGY FUND 6.30%
Composite Index 6.92%
S&P 500 Index 13.21%
MSCI EAFE Index 14.53%
LB Int. Gov't/Corp Index 1.55%
- ------------------------------------------------------------------
The GE Conservative Strategy Fund targets 26% to domestic equity markets, 18% to
international equity markets, and 56% to fixed income markets. Performance
versus benchmarks was helped by strong returns in underlying equity funds. As
you would expect during a period when stocks were up strongly, bonds and
short-term investments, while providing solid returns, did not contribute
greatly to the overall return of the fund. The bond market rally during the
fourth quarter of 1997 brought the 30 year Treasury yield to a low of 5.7% in
early January. Since that time, the market has traded in a narrow range. The
underlying GE Fixed Income Fund and GE Short-Term Government Fund outperformed
their index. Even though a majority of the Conservative Strategy Fund's assets
were allocated to fixed income funds, the weighted returns from equity funds
dominated the overall fund's performance. The good performance of the
Conservative Strategy Fund is an example of how diversification of risk across
different market segments can reduce overall fund volatility.
See Notes to Performance.
Past performance is no guarantee of future results.
5
<PAGE>
Moderate Strategy Fund Performance Summary
- --------------------------------------------------------------------------------
Target and Actual Asset Allocations
As of March 31, 1998
Target
[GRAPHIC OMITTED]
Fixed Income funds 37.0%
Domestic Equity funds 38.0%
International Equity fund 25.0%
Actual
[GRAPHIC OMITTED]
Fixed Income funds 34.0%
Domestic Equity funds 39.3%
International Equity fund 26.7%
PORTFOLIO ALLOCATION TO FUNDS*
- ----------------------------------------------------------------------
TARGET ACTUAL
GE Premier Growth Equity Fund 8.0% 8.4%
GE U.S. Equity Fund 13.0% 13.4%
GE Mid-Cap Growth Fund 4.0% 4.1%
GE Value Equity Fund 13.0% 13.4%
GE International Equity Fund 25.0% 26.7%
GE Fixed Income Fund 32.0% 29.4%
GE Short-Term Government Fund 5.0% 4.6%
- ----------------------------------------------------------------------
Total 100.0% 100.0%
- ----------------------------------------------------------------------
* As a percentage of net assets.
AGGREGATE TOTAL RETURNS:
FROM JANUARY 5, 1998 (DATE OF INCEPTION) TO MARCH 31, 1998
- ----------------------------------------------------------------------
MODERATE STRATEGY FUND 8.80%
Composite Index 9.23%
S&P 500 Index 13.21%
MSCI EAFE Index 14.53%
LB Int. Gov't/Corp Index 1.55%
- ----------------------------------------------------------------------
The GE Moderate Strategy Fund targets 38% to domestic equity
markets, 25% to international equity markets, and 37% to fixed income markets.
Performance versus benchmarks was helped by large allocations and strong
performance in the underlying GE Premier Growth Equity Fund, GE Value Equity
Fund and the GE International Equity Fund. International stock markets, driven
by very strong performance in Europe, had a nice rebound after several sub-par
years. The underlying GE International Equity Fund provided better than index
performance for the period, helping to bolster the fund's overall returns. The
underlying GE U.S. Equity Fund was up strongly but underperformed the S&P 500
due to an underweighting in technology stocks and an overweighting in energy
stocks. The good performance of the Moderate Strategy Fund, despite the relative
underperformance of one of the underlying equity funds, shows the value of
diversified portfolio.
See Notes to Performance.
Past performance is no guarantee of future results.
6
<PAGE>
Aggressive Strategy Fund Performance Summary
- --------------------------------------------------------------------------------
Target and Actual Asset Allocations
As of March 31. 1998
Target
[GRAPHIC OMITTED]
Fixed Income funds 19.0%
Domestic Equity funds 49.0%
International Equity fund 32.0%
Actual
[GRAPHIC OMITTED]
Fixed Income funds 17.2%
Domestic Equity funds 49.8%
International Equity fund 33.0%
PORTFOLIO ALLOCATION TO FUNDS*
- ----------------------------------------------------------------------
TARGET ACTUAL
GE Premier Growth Equity Fund 10.0% 10.2%
GE U.S. Equity Fund 17.0% 17.0%
GE Mid-Cap Growth Fund 6.0% 6.0%
GE Value Equity Fund 16.0% 16.1%
GE International Equity Fund 32.0% 33.3%
GE Fixed Income Fund 14.0% 12.6%
GE Short-Term Government Fund 5.0% 4.5%
Other** - 0.3%
- ----------------------------------------------------------------------
Total 100.0% 100.0%
- ----------------------------------------------------------------------
* As a percentage of net assets.
** Includes cash and cash equivalent.
AGGREGATE TOTAL RETURNS:
FROM JANUARY 5, 1998 (DATE OF INCEPTION) TO MARCH 31, 1998
- -----------------------------------------------------------------------
AGGRESSIVE STRATEGY FUND 11.10%
Composite Index 11.42%
S&P 500 Index 13.21%
MSCI EAFE Index 14.53%
LB Int. Gov't/Corp Index 1.55%
- -----------------------------------------------------------------------
The GE Aggressive Strategy Fund targets 49% to domestic equity markets; 32% to
international equity markets, and 19% to fixed income markets. Performance
versus benchmarks was helped by large allocations and strong performance in the
underlying GE Premier Growth Equity Fund, GE Mid-Cap Growth Fund and GE Value
Equity Fund. Investments in the financial and retail trade sectors of the market
contributed to the performance of these underlying funds. The underlying GE U.S.
Equity Fund was up strongly but underperformed the S&P 500 due to an
underweighting in technology stocks and an overweighting in energy stocks.
International stock markets, driven by very strong performance in Europe, had a
nice rebound after several sub-par years. The most important factor driving the
European stock markets is the convergence of the economies in preparation for
the introduction of a common currency in January 1999. The underlying GE
International Equity Fund provided better than index performance for the period,
helping to bolster the fund's overall returns. The good performance of the
Aggressive Strategy Fund, despite the relative underperformance of one of the
underlying equity funds, demonstrates the importance of a diversified portfolio.
See Notes to Performance.
Past performance is no guarantee of future results.
7
<PAGE>
Notes to Performance (unaudited)
- --------------------------------------------------------------------------------
Total returns are historical and assume changes in share price, reinvestment of
dividends and capital gains, if any. Past performance is not indicative of
future results of the fund. Investment returns and net asset value on an
investment will fluctuate and you may have a gain or loss when you sell your
shares.
Total returns for the Composite Index are derived by applying the fund's target
allocations to the results of the benchmarks for the domestic equity market, the
S&P 500 Index; for the international equity market, the MSCI EAFE Index; and for
the fixed income bond market, the LB Int. Gov't/Corp Index.
Actual asset allocation and actual portfolio allocation to funds are as of March
31, 1998.
The LB Int. Gov't/Corp Bond Index is for the three-months ended March 31, 1998
as the broad market return was not available from the funds' commencement of
investment operations through March 31, 1998.
The Adviser has voluntarily agreed to waive and/or bear certain fees and fund
expenses. Without these provisions, the performance returns would have been
lower. These provisions may be terminated in the future.
The Standard & Poor's ("S&P") 500 Composite Stock Price Index (S&P 500 Index),
Morgan Stanley Capital International EAFE Index (MSCI EAFE Index) and the Lehman
Brothers Intermediate Government/Corporate Bond Index (LB Int. Gov't/Corp Index)
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 MSCI EAFE Index is a composite of 1,109 stocks
of companies from 21 countries representing stock markets of Europe,
Australasia, New Zealand and the Far East. The LB Int. Gov't/Corp Index is
comprised of the Government bonds and Corporate bonds portion of the Lehman
Brothers Aggregate Bond Index (LB Aggregate). 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. The results shown for
the foregoing indices assume reinvestment of net dividends or interest and are
unaudited.
8
<PAGE>
Financial Highlights (unaudited)
Selected data based on a share outstanding throughout the period indicated
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
STRATEGY STRATEGY STRATEGY
FUND FUND FUND
3/31/1998 (b) 3/31/1998 (b) 3/31/1998 (b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception date 1/5/98 1/5/98 1/5/98
Net asset value, beginning of period $10.00 $10.00 $10.00
Income (loss) from investment operations:
Net investment income 0.32 0.49 0.52
Net realized and unrealized
gains (losses) on investments 0.31 0.39 0.59
- -----------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 0.63 0.88 1.11
- -----------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.00 0.00 0.00
Net realized gains 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
Total distributions 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.63 $10.88 $11.11
=======================================================================================================================
TOTAL RETURN (a) 6.30% 8.80% 11.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 624 $28,323 $1,872
Ratios to average net assets:
Net investment income* 15.35% 19.61% 22.25%
Net expenses* 0.20% 0.20% 0.20%
Gross expenses* 7.45% 0.34% 2.46%
Portfolio turnover rate 47% 10% 23%
=======================================================================================================================
</TABLE>
Notes to Financial Highlights
- --------------------------------------------------------------------------------
(a) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains, and assume no sales charge.
Had the Adviser not absorbed a portion of expenses, total return would have
been lower. Periods less than one year are not annualized.
(b) Information is for the period January 5, 1998, inception of investment
operations, through March 31, 1998.
* Annualized for periods less than one year.
- ----------
See Notes to Financial Statements.
9
<PAGE>
Statement of Net Assets
- --------------------------------------------------------------------------------
Conservative Strategy Fund
March 31, 1998 (unaudited)
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Investments -- 101.9%
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund 1,207 $ 25,392
GE U.S. Equity Fund 2,035 62,508
GE Mid-Cap Growth Equity Fund 1,767 18,681
GE Value Equity Fund 5,252 56,617
GE International Equity Fund 6,473 116,642
GE Fixed Income Fund 23,649 288,049
GE Short-Term Government Fund 2,398 28,373
GEI Short-Term Investment Fund 38,964 38,964
Total Investments
(Cost $623,462) 635,226
- --------------------------------------------------------------------------------
Other Assets and Liabilities -- (1.9)%
- --------------------------------------------------------------------------------
Other Assets 49,935
Liabilities (61,656)
---------
Other Assets and Liabilities (11,721)
- --------------------------------------------------------------------------------
NET ASSETS $ 623,505
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital paid in $ 590,692
Undistributed net investment income 18,831
Accumulated net realized gain 2,218
Net unrealized appreciation on investments 11,764
- --------------------------------------------------------------------------------
NET ASSETS $ 623,505
================================================================================
Shares outstanding (par value $10.00) 58,643
Net asset value per share $ 10.63
Maximum offering price per share $ 11.28
- ----------
See Notes to Financial Statements.
10
<PAGE>
Statement of Net Assets
- --------------------------------------------------------------------------------
Moderate Strategy Fund
March 31, 1998 (unaudited)
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Investments -- 100.2%
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund 112,833 $ 2,372,872
GE U.S. Equity Fund 123,359 3,788,344
GE Mid-Cap Growth Equity Fund 109,866 1,161,279
GE Value Equity Fund 353,809 3,814,062
GE International Equity Fund 420,902 7,584,654
GE Fixed Income Fund 685,060 8,344,035
GE Short-Term Government Fund 110,837 1,311,198
Total Investments
(Cost $27,326,995) 28,376,444
- --------------------------------------------------------------------------------
Other Assets and Liabilities -- (0.2)%
- --------------------------------------------------------------------------------
Other Assets 854,384
Liabilities (907,470)
---------
Other Assets and Liabilities (53,086)
- --------------------------------------------------------------------------------
NET ASSETS $28,323,358
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital paid in $25,970,231
Undistributed net investment income 1,280,738
Accumulated net realized gain 22,940
Net unrealized appreciation on investments 1,049,449
- --------------------------------------------------------------------------------
NET ASSETS $28,323,358
================================================================================
Shares outstanding (par value $10.00) 2,603,627
Net asset value per share $ 10.88
Maximum offering price per share $ 11.54
- ----------
See Notes to Financial Statements.
11
<PAGE>
Statement of Net Assets
- --------------------------------------------------------------------------------
Aggressive Strategy Fund
March 31, 1998 (unaudited)
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Investments -- 99.5%
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund 9,043 $ 190,173
GE U.S. Equity Fund 10,348 317,792
GE Mid-Cap Growth Equity Fund 10,593 111,964
GE Value Equity Fund 27,926 301,039
GE International Equity Fund 34,557 622,717
GE Fixed Income Fund 19,293 234,988
GE Short-Term Government Fund 7,132 84,373
Total Investments
(Cost $1,772,269) 1,863,046
- --------------------------------------------------------------------------------
Other Assets and Liabilities -- 0.5%
- --------------------------------------------------------------------------------
Other Assets 76,489
Liabilities (67,514)
----------
Other Assets and Liabilities 8,975
- --------------------------------------------------------------------------------
NET ASSETS $1,872,021
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital paid in $1,686,377
Undistributed net investment income 87,562
Accumulated net realized gain 7,305
Net unrealized appreciation on investments 90,777
- -----------------------------------------------------------------------------
NET ASSETS $1,872,021
- -----------------------------------------------------------------------------
Shares outstanding (par value $10.00) 168,516
Net asset value per share $ 11.11
Maximum offering price per share $ 11.79
- ----------
See Notes to Financial Statements.
12
<PAGE>
Statements of Operations
For the period ended March 31, 1998* (unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
STRATEGY STRATEGY STRATEGY
FUND FUND FUND
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends $19,041 $1,289,484 $ 88,131
Interest 35 4,317 218
- ------------------------------------------------------------------------------------------------------
Total income 19,076 1,293,801 88,349
- ------------------------------------------------------------------------------------------------------
Expenses:
Transfer agent fees 7,993 7,993 7,993
Trustees' fees 906 906 906
Advisory fees 245 13,063 787
- ------------------------------------------------------------------------------------------------------
Total expenses before waiver 9,144 21,962 9,686
Less: Expenses waived or borne by the Adviser (8,899) (8,899) (8,899)
- ------------------------------------------------------------------------------------------------------
Net expenses 245 13,063 787
- ------------------------------------------------------------------------------------------------------
Net investment income 18,831 1,280,738 87,562
======================================================================================================
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain on investments 2,218 22,940 7,305
Increase in unrealized
appreciation on investments 11,764 1,049,449 90,777
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 13,982 1,072,389 98,082
- ------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $32,813 $2,353,127 $185,644
======================================================================================================
</TABLE>
*For the period January 5, 1998 (inception) through March 31, 1998.
- ----------
See Notes to Financial Statements.
13
<PAGE>
Statements of Changes in Net Assets
For the period ended March 31, 1998*(unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
STRATEGY STRATEGY STRATEGY
FUND FUND FUND
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $ 18,831 $ 1,280,738 $ 87,562
Net realized gain on investments 2,218 22,940 7,305
Net increase in unrealized appreciation 11,764 1,049,449 90,777
- -----------------------------------------------------------------------------------------------------
Net increase from operations 32,813 2,353,127 185,644
- -----------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income -- -- --
Net realized gains -- -- --
- -----------------------------------------------------------------------------------------------------
Total distributions -- -- --
- -----------------------------------------------------------------------------------------------------
Increase in net assets from
operations and distributions 32,813 2,353,127 185,644
- -----------------------------------------------------------------------------------------------------
Share transactions:
Proceeds from sale of shares 784,327 28,252,957 2,021,387
Value of distributions reinvested -- -- --
Cost of shares redeemed 193,635) (2,282,726) (335,010)
- -----------------------------------------------------------------------------------------------------
Net increase from share transactions 590,692 25,970,231 1,686,377
- -----------------------------------------------------------------------------------------------------
Total increase in net assets 623,505 28,323,358 1,872,021
NET ASSETS
Beginning of period -- -- --
- -----------------------------------------------------------------------------------------------------
End of period $623,505 $28,323,358 $1,872,021
=====================================================================================================
Undistributed net investment income, end of period $ 18,831 $ 1,280,738 $ 87,562
- -----------------------------------------------------------------------------------------------------
Changes in Fund Shares
Shares sold by subscription 77,720 2,822,894 200,995
Issued for distributions reinvested -- -- --
Shares redeemed (19,077) (219,267) (32,479)
- -----------------------------------------------------------------------------------------------------
Net increase in fund shares 58,643 2,603,627 168,516
=====================================================================================================
</TABLE>
*For the period January 5, 1998 (inception) through March 31, 1998.
- ----------
See Notes to Financial Statements.
14
<PAGE>
Notes to Financial Statements March 31, 1998 (unaudited)
- --------------------------------------------------------------------------------
1. Organization of the Funds
GE LifeStyle Funds ("LifeStyle Funds" or the "Trust") is registered under the
Investment Company Act of 1940 (as amended) (the "1940 Act") as an open-end
management investment company. The Trust was organized as a Massachusetts
business trust on June 21, 1996, and is authorized to issue an unlimited number
of shares. The Trust is comprised of six investment funds (each a "Fund" and
collectively the "Funds"), only three of which are currently being offered, as
follows: GE Conservative Strategy Fund, GE Moderate Strategy Fund, and GE
Aggressive Strategy Fund. Each Fund invests its assets in a select group of
underlying GE Funds ("Underlying Funds") suited to the Fund's particular
investment objective. The objectives of the Funds are as follows:
GE Conservative Strategy Fund's investment objective is income and long-term
growth of capital. The Fund seeks to achieve its objective through investment in
a mix of equity-oriented funds and fixed income-oriented funds, with a bias
towards equity-oriented or fixed income-oriented funds to be determined by then
current market forces.
GE Moderate Strategy Fund's investment objective is long-term growth of capital
with a moderate level of current income. The Fund seeks to achieve its objective
through investment in various equity-oriented funds and fixed income-oriented
funds, with the bias toward equity-oriented funds for enhanced growth potential.
GE Aggressive Strategy Fund's investment objective is capital appreciation. The
Fund seeks to achieve its objective through investment in a selection of
equity-oriented funds and fixed income-oriented funds, typically with a strong
bias under normal market conditions toward equity-oriented funds for substantial
growth potential.
The maximum sales load imposed on purchases of shares (as a percentage of
offering price) for the Funds is 5.75%. The maximum contingent deferred sales
load (as a percentage of redemption proceeds) is 1.00% and is imposed for shares
redeemed within one year of purchase that were subject to no front-end sales
load upon purchase by virtue of being part of a purchase of $1 million or more.
2. Summary of Significant Accounting Policies
The following summarizes the significant accounting policies of the Trust:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results may differ from those estimates, but are
expected to be immaterial.
Security Valuation and Transactions
Investments in the Underlying Funds are valued at the closing net asset value
per share of each Underlying Fund on the day of valuation. Short term
investments maturing within 60 days are valued at amortized cost.
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.
15
<PAGE>
Notes to Financial Statements March 31, 1998 (unaudited)
- --------------------------------------------------------------------------------
Income Taxes
The Funds intend to comply with all sections of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
of their taxable income and 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.
Investment Income
Income and capital gain distributions, if any, are recorded on the ex-dividend
date. Interest income is accrued on the accrual basis.
Expenses
All expenses of the Funds are paid by GE Investment Management Incorporated
("GEIM"), investment adviser to the Funds, and reimbursed by the Funds up to the
voluntary expense limitations. Expenses reported in these financial statements
reflect the expenses of each Fund and do not include any expenses associated
with the Underlying Funds.
Distributions to Shareholders
The Funds declare and pay dividends of net investment income and net capital
gains 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. 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.
3. Fees and Compensation Paid to Affiliates
Advisory and Administration Fees
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 administration fees
payable to GEIM for each Fund are calculated at the annual rate of 0.20%.
Other
The Funds pay no compensation to the Trustees who are employees of GEIM.
Trustees who are not GEIM employees receive an annual fee of $2,000 and an
additional fee of $500 for each Trustees' meeting attended.
16
<PAGE>
Notes to Financial Statements March 31, 1998 (unaudited)
- --------------------------------------------------------------------------------
4. Aggregate Unrealized Appreciation and Depreciation
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at March 31, 1998, were as follows:
<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation
Appreciation Depreciation (Depreciation)
------------ ------------ --------------
<S> <C> <C> <C>
GE Conservative Strategy Fund $ 14,682 $ 2,918 $ 11,764
GE Moderate Strategy Fund 1,183,839 134,390 1,049,449
GE Aggressive Strategy Fund 93,387 2,610 90,777
</TABLE>
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at March 31, 1998.
5. Investment Transactions
The cost of purchases and the proceeds from sales of the Underlying Funds,
excluding short term securities, for the period ended March 31, 1998, were:
Purchases Sales
--------- -----
GE Conservative Strategy Fund $ 771,951 $ 189,671
GE Moderate Strategy Fund 29,432,804 2,128,750
GE Aggressive Strategy Fund 2,063,001 298,038
6. Beneficial Interest
The schedule below shows the number of shareholders each owning 10% or more of a
fund and the total percentage of the fund held by such shareholders.
10% or Greater Shareholders
---------------------------
Number % of Fund Held
------ --------------
GE Conservative Strategy Fund 2 91%
GE Moderate Strategy Fund 1 91%
GE Aggressive Strategy Fund 3 100%
17
<PAGE>
GE LifeStyle Funds' Investment Team
- --------------------------------------------------------------------------------
Portfolio Manager Investment Adviser
GE LifeStyle Funds and Administrator
Eugene K. Bolton GE Investment Management Incorporated
Portfolio Managers of the Trustees
Underlying Funds Michael J. Cosgrove
John R. Costantino
GE International Equity Fund Alan M. Lewis
Team lead by William J. Lucas
Ralph R. Layman Robert P. Quinn
GE Premier Growth Equity Fund Secretary
David B. Carlson Matthew J. Simpson
GE Mid-Cap Growth Fund Treasurer
Elaine G. Harris Jeffrey A. Groh
GE Value Equity Fund Assistant Treasurer
Peter J. Hathaway Robert J. Zalucki
GE U.S. Equity Fund Distributor
Team led by GE Investment Distributors, Inc.
Eugene K. Bolton Member NASD and SIPC
GE Fixed Income Fund Counsel
GE Short-Term Government Fund Willkie Farr & Gallagher
GE Money Market Fund
Team led by Custodian
Robert A. MacDougall State Street Bank & Trust Company
Independent Accountants
Price Waterhouse 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
Thomas J. Szkutak, EVP, Chief Financial Officer
Don W. Torey, EVP, Alternative Investments and Real Estate
<PAGE>
INVESTMENT ADVISER
GE Investment Management Incorporated
3003 Summer Street
Stamford, CT 06905
DISTRIBUTOR
GE Investment Distributors, Inc.
Member NASD and SIPC
777 Long Ridge Road
Stamford, CT 06927
[GRAPHIC OMITTED]
GE LOGO
GE FINANCIAL ASSURANCE
- --------------------------------------------------------------------------------
We bring good things to life.
