GE LIFESTYLE FUNDS
SEMI-ANNUAL REPORT
CONSERVATIVE STRATEGY FUND
MODERATE STRATEGY FUND
AGGRESSIVE STRATEGY FUND
[GE LOGO OMITTED]
March 31, 1999
[GE LOGO OMITTED]
WE BRING GOOD THINGS TO LIFE.
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GE LIFESTYLE FUNDS
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UNDERSTANDING YOUR REPORT
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A LETTER FROM THE PRESIDENT .............................................. 1
PERFORMANCE SUMMARY
CONSERVATIVE STRATEGY FUND .......................................... 3
MODERATE STRATEGY FUND .............................................. 4
AGGRESSIVE STRATEGY FUND ............................................ 5
PORTFOLIO MANAGER'S BIOGRAPHY ....................................... 6
NOTES TO PERFORMANCE ................................................ 6
FINANCIAL STATEMENTS
Financial Highlights ................................................ 7
Statements of Net Assets, Operations,
and Changes in Net Assets ....................................... 8
NOTES
Notes to Financial Statements ....................................... 13
GE LIFESTYLE FUNDS'
INVESTMENT TEAM ............................................INSIDE BACK COVER
This report has been prepared for the shareholders of the 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.
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A LETTER FROM THE PRESIDENT
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DEAR SHAREHOLDER:
Markets continue their roller-coaster ride. The closely-watched S&P 500 Index,
which lost almost 20% of its value during August's global currency crisis, ended
1998 more than 28% ahead, and gained another 5% in the first quarter of 1999.
As stock prices rise and fall, the best course is to invest for the long term
and diversify to minimize risk.
MARKET REVIEW
In 1998, U.S. equities returned more than 20% for the fourth consecutive year,
the first time this has ever happened. In fact, this is the best four year
period since 1932-1936 when the market was recovering from the 1929 crash. This
bull market shows no signs of letting up as we enter the second quarter of 1999.
An aging American population investing for retirement is one force propelling
the stock market higher. The U.S. economy, now in its ninth year of growth, is
another. Consumer spending is fueling the economic expansion, spurred by low
interest rates, strong job growth and low inflation. Strong economic growth
coupled with disinflation is very positive for the stock market.
MARKET OUTLOOK
Looking ahead, we believe the fundamentals that underpin market performance
remain sound. We will maintain our overweight position in European stocks in
underlying GE Funds. We expect corporate consolidations and the recent adoption
of a common currency to create European companies with strong earnings
potential. Parts of Asia appear to be improving and some investors have started
to put money back in Japan. However, we do not think the Japanese economy has
turned around yet. We wait cautiously for signs of change.
We expect the U.S. economy to slow to a more sustainable growth rate in the
second half of 1999. Additionally, with less difficult global economic
conditions, U.S. corporate profits are poised to resume a modest growth
trajectory. Since it is likely that inflation will remain low, we do not believe
the U.S. Federal Reserve will alter current interest rate policy.
During periods of volatility, it is critical to maintain a well-diversified
portfolio. Although we do not expect equity returns to be what they have been in
the past few years, equities are still the best long-term investment if you need
growth of capital. Stock selection will be a major factor as the market broadens
to embrace value stocks and small- and mid-cap stocks. Fixed income investments
can provide modest capital growth as well as current income, and should provide
balance to your overall investment portfolio.
As markets rise and fall, the best advice is still to know your tolerance for
risk and focus on long-term objectives rather than short-term market
fluctuations.
YEAR 2000
On a final note, many shareholders have inquired about the impact the year 2000
(Y2K) problem may have with respect to their financial investments and
recordkeeping. The GE LifeStyle Funds' adviser, GE Investment Management
Incorporated (GEIM) has incorporated Y2K readiness capability into its 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 closely in
partnership with our most critical vendors, State Street Bank and Trust Company,
the funds' Custodian and National Financial Data Services, Inc.,
1
<PAGE>
A LETTER FROM THE PRESIDENT (CONTINUED)
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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 totally eliminated -- GEIM believes it is taking the
appropriate steps.
Sincerely,
/S/SIGNATURE
Michael J. Cosgrove
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 THE INTERNATIONAL OPERATION AND IN
GE TRADING COMPANY. HE HAS A B.S. IN ECONOMICS FROM FORDHAM UNIVERSITY AND AN
M.B.A. FROM ST. JOHN'S UNIVERSITY.
2
<PAGE>
CONSERVATIVE STRATEGY FUND PERFORMANCE SUMMARY (UNAUDITED)
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
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[LINE GRAPH OMITTED]
CONSERVATIVE STRATEGY FUND COMPOSITE INDEX
1/5/98 $10000.00 $10000.00
10000.00 10185.11
10350.00 10488.51
3/98 10629.97 10705.33
10759.97 10779.40
5/98 10769.98 10765.37
10829.97 10932.35
7/98 10839.93 10943.57
10119.94 10385.01
9/98 10310.20 10647.64
10600.00 11065.35
11/98 10900.00 11341.05
11132.91 11618.60
1/99 11344.16 11773.17
11080.10 11530.62
3/99 11312.47 11786.12
PORTFOLIO ALLOCATION TO FUNDS AT 3/31/99*
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TARGET ACTUAL
------ ------
GE Premier Growth Equity Fund 4.0% 3.9%
GE U.S. Equity Fund 10.0% 9.7%
GE Mid-Cap Growth Fund 3.0% 2.9%
GE Value Equity Fund 9.0% 8.7%
GE International Equity Fund 18.0% 17.8%
GE Fixed Income Fund 51.0% 49.9%
GE Short-Term Government Fund 5.0% 4.9%
Other -- 2.2%
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Total 100.0% 100.0%
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* As a percentage of net assets
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AGGREGATE TOTAL RETURNS:
FROM JANUARY 5, 1998 (INCEPTION) THROUGH MARCH 31, 1999
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SIX ONE SINCE
MONTHS YEAR INCEPTION
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CONSERVATIVE STRATEGY FUND 9.62% 6.42% 10.50%
Composite Index** 10.69% 10.10% 14.09%
S&P 500 Index 27.32% 18.53% 27.28%
MSCI EAFE Index 22.34% 6.07% 17.04%
LB Int. Gov't/Corp. Index 0.10% 6.56% 6.54%
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** THE COMPOSITE INDEX IS DERIVED BY APPLYING EACH UNDERLYING FUND'S TARGET
ALLOCATIONS TO THE RESULTS OF THE BENCHMARKS FOR THE DOMESTIC EQUITY,
INTERNATIONAL EQUITY, AND FIXED INCOME MARKETS.
The GE Conservative Strategy Fund targets 56% to fixed income markets, 26% to
domestic equity markets and 18% to international equity markets. Because the
fund's long-term goal is preservation of capital, it has a high weighting in
fixed-income securities. The 44% exposure to equity markets also offers some
opportunity for capital appreciation. The fund will show its best relative
performance during times of economic uncertainty, as it did last summer when the
collapse of Russia's currency sent world markets into turmoil.
During the past six months, stock markets began to recover as investors started
to believe that the world would not fall into a deflationary recession.
Investors moved away from U.S. Treasuries when fears of an overheating economy
and a possible Federal Reserve move to raise interest rates replaced recession
fears. The fixed income portfolio had a slight loss as Treasury bond yields rose
as high as 5.7% by the end of the first quarter of 1999. The underlying GE Fixed
Income Fund slightly underperformed its benchmark during the six-month period.
This fund increased its exposure in the mortgage and corporate sectors, which
outperformed Treasuries. However, longer duration was a drag on performance as
interest rates rose.
Equity markets did better than fixed income markets over the last six months.
The GE Conservative Strategy Fund's component equity funds significantly
outperformed the fixed income component. Some of the underlying equity funds
also had higher returns than their benchmarks. The underlying GE Premier Growth
Equity Fund did extremely well, outpacing its benchmark with a 34.16% gain
driven by technology holdings. The underlying GE U.S. Equity Fund posted a
return of 26.32%, helped by consumer sector and financial sector stocks.
Although growth stocks continued to outshine value stocks, the underlying GE
Value Equity Fund returned 25.04%, helped by good stock selection in
pharmaceuticals and technology to outperform its benchmark. Smaller
capitalization stocks still lagged large market capitalization stocks. The
underlying GE Mid-Cap Growth Fund was no exception returning 18.74%, in-line
with its benchmark, because of strong first-quarter stock performance. The
underlying GE International Equity Fund posted a return of 20.39%. Returns on
stocks outside the U.S. market trail those for their U.S. counterparts but these
stocks currently sell at much lower valuation levels. We believe it is wise to
diversify by holding some international stocks. We also expect the valuation
discrepancy to close eventually.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
3
<PAGE>
MODERATE STRATEGY FUND PERFORMANCE SUMMARY (UNAUDITED)
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
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[LINE GRAPH OMITTED]
MODERATE STRATEGY FUND COMPOSITE INDEX
1/5/98 $10000.00 $10000.00
10010.00 10205.81
10489.98 10645.24
3/98 10880.00 10947.31
11040.04 11032.33
5/98 11000.08 10975.93
11080.05 11192.16
7/98 11100.10 11189.90
9990.09 10294.51
9/98 10220.06 10563.25
10650.00 11159.25
11/98 11070.00 11558.65
11416.37 11945.39
1/99 11685.11 12148.66
11394.87 11866.73
3/99 11717.36 12204.64
PORTFOLIO ALLOCATION TO FUNDS AT 3/31/99*
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TARGET ACTUAL
------ ------
GE Premier Growth Equity Fund 8.0% 7.9%
GE U.S. Equity Fund 13.0% 12.5%
GE Mid-Cap Growth Fund 4.0% 3.9%
GE Value Equity Fund 13.0% 12.5%
GE International Equity Fund 25.0% 24.4%
GE Fixed Income Fund 32.0% 30.7%
GE Short-Term Government Fund 5.0% 4.8%
Other -- 3.3%
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Total 100.0% 100.0%
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* As a percentage of net assets
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AGGREGATE TOTAL RETURNS:
FROM JANUARY 5, 1998 (INCEPTION) THROUGH MARCH 31, 1999
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SIX ONE SINCE
MONTHS YEAR INCEPTION
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MODERATE STRATEGY FUND 14.65% 7.70% 13.69%
Composite Index** 15.54% 11.48% 17.33%
S&P 500 Index 27.32% 18.53% 27.28%
MSCI EAFE Index 22.34% 6.07% 17.04%
LB Int. Gov't/Corp. Index 0.10% 6.56% 6.54%
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** THE COMPOSITE INDEX IS DERIVED BY APPLYING EACH UNDERLYING FUND'S TARGET
ALLOCATIONS TO THE RESULTS OF THE BENCHMARKS FOR THE DOMESTIC EQUITY,
INTERNATIONAL EQUITY, AND FIXED INCOME MARKETS.
The GE Moderate Strategy Fund targets 38% to domestic equity markets, 25% to
international equity markets and 37% to fixed income markets. The fund's
long-term goal is to preserve capital while participating in the potential
appreciation offered by equity investments. The fund should provide good
relative performance in both up and down markets, with the fixed income
components offering protection in down markets and the international component
providing diversification and the potential for superior long-term growth.
Equity markets did better than fixed income markets over the last six months.
The GE Moderate Strategy Fund's equity component significantly outperformed the
fixed income component. Some of the underlying equity funds also had higher
returns than their benchmarks. The underlying GE Premier Growth Equity Fund did
extremely well, outpacing its benchmark with a 34.16% gain driven by technology
holdings. The underlying GE U.S. Equity Fund posted a return of 26.32%, helped
by consumer sector and financial sector stocks. Although growth stocks continued
to outshine value stocks, the underlying GE Value Equity Fund returned 25.04%,
helped by good stock selection in pharmaceuticals and technology to outperform
its benchmark. Smaller capitalization stocks still lagged large market
capitalization stocks. The underlying GE Mid-Cap Growth Fund was no exception
returning 18.74%, in-line with its benchmark because of strong fourth-quarter
stock performance. The underlying GE International Equity Fund posted a return
of 20.39%. Returns on stocks outside the U.S. market continue to underperform
their U.S. counterparts but these stocks currently sell at much lower valuation
levels. We believe it is wise to diversify by holding some international stocks.
We also expect the valuation discrepancy to close eventually.
With stock markets recovering, investors moved away from U.S. Treasuries as
concerns about an overheating economy and a possible Federal Reserve move to
raise interest rates replaced recession fears. The fixed income portfolio had a
slight loss as Treasury bond yields rose as high as 5.7% by the end of the first
quarter of 1999. The underlying GE Fixed Income Fund slightly underperformed its
benchmark during the six-month period. This fund increased its exposure in the
mortgage and corporate sectors during the period, which outperformed Treasuries.
However, longer duration negatively impacted relative performance as interest
rates rose.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
<PAGE>
AGGRESSIVE STRATEGY FUND PERFORMANCE SUMMARY (UNAUDITED)
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
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[LINE GRAPH OMITTED]
AGGRESSIVE STRATEGY FUND COMPOSITE INDEX
1/5/98 $10000.00 $10000.00
10010.00 10226.69
10630.02 10795.28
3/98 11110.07 11179.57
11310.05 11275.28
5/98 11240.04 11177.45
11330.08 11440.65
7/98 11330.08 11425.90
9910.08 10198.82
9/98 10150.10 10469.37
10730.00 11231.49
11/98 11240.00 11748.80
11664.74 12241.10
1/99 11982.00 12490.46
11675.31 12170.11
3/99 12056.03 12589.57
PORTFOLIO ALLOCATION TO FUNDS AT 3/31/99*
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TARGET ACTUAL
------ ------
GE Premier Growth Equity Fund 10.0% 9.8%
GE U.S. Equity Fund 17.0% 16.2%
GE Mid-Cap Growth Fund 6.0% 5.8%
GE Value Equity Fund 16.0% 15.2%
GE International Equity Fund 32.0% 30.9%
GE Fixed Income Fund 14.0% 13.3%
GE Short-Term Government Fund 5.0% 4.8%
Other -- 4.0%
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Total 100.0% 100.0%
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* As a percentage of net assets
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURNS:
FROM JANUARY 5, 1998 (INCEPTION) THROUGH MARCH 31, 1999
- --------------------------------------------------------------------------------
SIX ONE SINCE
MONTHS YEAR INCEPTION
- --------------------------------------------------------------------------------
AGGRESSIVE STRATEGY FUND 18.78% 8.52% 16.34%
Composite Index** 20.25% 12.61% 20.29%
S&P 500 Index 27.32% 18.53% 27.28%
MSCI EAFE Index 22.34% 6.07% 17.04%
LB Int. Gov't/Corp. Index 0.10% 6.56% 6.54%
- --------------------------------------------------------------------------------
** THE COMPOSITE INDEX IS DERIVED BY APPLYING EACH UNDERLYING FUND'S TARGET
ALLOCATIONS TO THE RESULTS OF THE BENCHMARKS FOR THE DOMESTIC EQUITY,
INTERNATIONAL EQUITY, AND FIXED INCOME MARKETS.
The GE Aggressive Strategy Fund targets 49% to domestic equity markets, 32% to
international equity markets and 19% to fixed income markets. The fund has a
high weighting in equities because its long-term goal is appreciation of
capital. However, the fixed income component provides some downside protection
that can prove valuable in times of uncertainty such as last summer, when the
collapse of Russia's currency sent the world markets into turmoil. This fund
generally will underperform the GE Moderate and Conservative Strategy Funds
during such periods, but will generally outperform those funds when stock
markets around the world are strong, as they have been in the last two quarters.
Equity markets did better than fixed income markets over the last six months.
The GE Aggressive Strategy Fund's equity component significantly outperformed
fixed income funds. Most of the underlying equity funds also had higher returns
than their benchmarks. The underlying GE Premier Growth Equity Fund did
extremely well, outpacing its benchmark with a 34.16% gain driven by technology
and telecommunications holdings. The underlying GE U.S. Equity Fund posted a
return of 26.32%, helped by the consumer sector and financial sector stocks.
Although growth stocks continued to outperform value stocks, the underlying GE
Value Equity Fund returned 25.04%, helped by good stock selection in
pharmaceuticals and technology to outperform its benchmark. Smaller
capitalization stocks still lagged large market capitalization stocks. The
underlying GE Mid-Cap Growth Fund was no exception returning 18.74%, in-line
with its benchmark, because of strong fourth-quarter stock performance. The
underlying GE International Equity Fund posted a return of 20.39%. Returns on
stocks outside the U.S. continue to underperform their U.S. counterparts but
these stocks currently sell at much lower valuation levels. We believe it is
wise to diversify by holding some international stocks. We also expect the
valuation discrepancy to close eventually.
With stock markets recovering, investors moved away from U.S. Treasuries as
concerns about an overheating economy and a possible Federal Reserve move to
raise interest rates replaced recession fears. The fixed income portfolio had a
slight loss as Treasury bond yields rose as high as 5.7% by the end of the first
quarter of 1999. The underlying GE Fixed Income Fund slightly underperformed its
benchmark during the six-month period. The fund increased its exposure in the
mortgage and corporate sectors during the period, which outperformed Treasuries.
However, longer duration negatively impacted relative performance as interest
rates rose.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
5
<PAGE>
GE LIFESTYLE FUNDS PORTFOLIO MANAGER'S BIOGRAPHY
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PERFORMANCE SUMMARIES ON THE PRECEDING PAGES ARE PRESENTED BY EUGENE K. BOLTON,
EXECUTIVE VICE PRESIDENT, GE INVESTMENTS.
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 $35 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.
NOTES TO PERFORMANCE (UNAUDITED)
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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.
A number of the broad market index returns are not available for the funds'
commencement of investment operations through March 31, 1999. In instances where
the inception date was not at the beginning of the month, broad market index
returns are calculated from the month-end nearest to the funds' inception dates.
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 of stocks (S&P
500), Morgan Stanley Capital International Europe, Australasia, Far East Index
(MSCI EAFE ) and the Lehman Brothers Intermediate Government/Corporate Bond
Index (LB Int. Gov't/Corp) 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 is a
composite of foreign securities traded in 22 developed markets representing
Europe, Australasia and Far East. The LB Int. Gov't/Corp 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.
6
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD
INDICATED (MARCH 31, 1999 DATA IS UNAUDITED)
<TABLE>
<CAPTION>
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CONSERVATIVE MODERATE AGGRESSIVE
STRATEGY STRATEGY STRATEGY
FUND FUND FUND
3/31/99 9/30/98(a) 3/31/99 9/30/98(a) 3/31/99 9/30/98(a)
- ----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE -- 1/5/98 -- 1/5/98 -- 1/5/98
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $10.32 $10.00 $10.22 $10.00 $10.15 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income .................................... 0.23 0.31 0.11 0.61 0.16 0.34
Net realized and unrealized gains (losses) on investments 0.74 0.01(c) 1.34 (0.39) 1.69 (0.19)(c)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS ..................... 0.97 0.32 1.45 0.22 1.85 0.15
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income .................................... 0.36 0.00 0.40 0.00 0.31 0.00
Net realized gains ....................................... 0.22 0.00 0.37 0.00 0.29 0.00
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ......................................... 0.58 0.00 0.77 0.00 0.60 0.00
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD .............................. $10.71 $10.32 $10.90 $10.22 $11.40 $10.15
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) ............................................ 9.62% 3.20% 14.65% 2.20% 18.78% 1.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ................. $1,186 $979 $33,004 $25,148 $4,268 $2,939
Ratios to average net assets:
Net investment income* ................................ 4.26% 5.85% 4.05% 7.39% 3.73% 5.79%
Net expenses* ......................................... 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
Gross expenses* ....................................... 1.41% 5.65% 0.26% 0.33% 0.62% 1.80%
Portfolio turnover rate .................................. 46% 67% 37% 22% 20% 28%
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</TABLE>
NOTES TO FINANCIAL HIGHLIGHTS
- -----------------------------
(a) INFORMATION IS FOR THE PERIOD JANUARY 5, 1998, INCEPTION OF INVESTMENT
OPERATIONS, THROUGH SEPTEMBER 30, 1998.
(b) 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 RETURNS WOULD HAVE BEEN LOWER.
TOTAL RETURNS ARE NOT ANNUALIZED.
(c) AS A RESULT OF THE TIMING OF PURCHASES AND SALES OF FUND SHARES, PER SHARE
AMOUNTS DO NOT ACCORD WITH AGGREGATE AMOUNTS APPEARING IN THE STATEMENT OF
OPERATIONS.
* ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
- ------------
See Notes to Financial Statements.
7
<PAGE>
STATEMENT OF NET ASSETS
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CONSERVATIVE STRATEGY FUND
MARCH 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------
INVESTMENTS -- 99.9%
- ------------------------------------------------------------------------------
GE Premier Growth Equity Fund (Class A) ... 1,753 $ 46,569
GE U.S. Equity Fund (Class A) ............. 3,521 115,307
GE Mid-Cap Growth Fund (Class A) .......... 3,561 34,972
GE Value Equity Fund (Class A) ............ 8,674 103,744
GE International Equity Fund (Class A) .... 12,145 211,680
GE Fixed Income Fund (Class A) ............ 48,596 591,419
GE Short-Term Government Fund (Class A) ... 4,914 58,081
GEI Short-Term Investment Fund ............ 22,636 22,636
TOTAL INVESTMENTS
(COST $1,151,569) ...................... 1,184,408
- ------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.1%
- ------------------------------------------------------------------------------
Other Assets .............................. 2,799
Liabilities ............................... (1,090)
- ------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES .............. 1,709
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NET ASSETS-- 100% ......................... $1,186,117
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NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Capital paid in ........................... $1,130,483
Undistributed net investment income ....... 19,292
Accumulated net realized gain ............. 3,503
Net unrealized appreciation on investments 32,839
- ------------------------------------------------------------------------------
NET ASSETS ................................ $1,186,117
- ------------------------------------------------------------------------------
Shares outstanding (par value $.001) ...... 110,710
Net asset value per share ................. $ 10.71
Maximum offering price per share .......... $ 11.36
- -------------
See Notes to Financial Statements.
8
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
MODERATE STRATEGY FUND
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -------------------------------------------------------------------------------
INVESTMENTS -- 100.0%
- -------------------------------------------------------------------------------
GE Premier Growth Equity Fund (Class A) ... 97,573 $ 2,592,513
GE U.S. Equity Fund (Class A) ............. 126,450 4,141,251
GE Mid-Cap Growth Fund (Class A) .......... 132,171 1,297,921
GE Value Equity Fund (Class A) ............ 345,717 4,134,773
GE International Equity Fund (Class A) .... 461,201 8,038,735
GE Fixed Income Fund (Class A) 833,074 10,138,506
GE Short-Term Government Fund (Class A) ... 135,157 1,597,553
GEI Short-Term Investment Fund ............ 1,077,245 1,077,245
TOTAL INVESTMENTS
(COST $31,206,441) ................................ 33,018,497
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.0%
- -------------------------------------------------------------------------------
Other Assets ......................................... 28,143
Liabilities .......................................... (42,632)
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES ......................... (14,489)
- -------------------------------------------------------------------------------
NET ASSETS-- 100% .................................... $ 33,004,008
- -------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------
Capital paid in ...................................... $ 30,495,606
Undistributed net investment income .................. 977,539
Accumulated net realized (loss) ...................... (281,193)
Net unrealized appreciation on investments ........... 1,812,056
- -------------------------------------------------------------------------------
NET ASSETS ........................................... $ 33,004,008
- -------------------------------------------------------------------------------
Shares outstanding (par value $.001) ................. 3,029,032
Net asset value per share ............................ $ 10.90
Maximum offering price per share ..................... $ 11.56
- ----------
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
AGGRESSIVE STRATEGY FUND
MARCH 31, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------
INVESTMENTS -- 99.4%
- --------------------------------------------------------------------------
GE Premier Growth Equity Fund (Class A) ....... 15,663 $ 416,177
GE U.S. Equity Fund (Class A) ................. 21,160 692,994
GE Mid-Cap Growth Fund (Class A) .............. 25,274 248,195
GE Value Equity Fund (Class A) ................ 54,398 650,606
GE International Equity Fund (Class A) ........ 75,577 1,317,304
GE Fixed Income Fund (Class A) ................ 46,693 568,253
GE Short-Term Government Fund (Class A) ....... 17,211 203,438
GEI Short-Term Investment Fund ................ 147,249 147,249
TOTAL INVESTMENTS
(COST $4,022,483) .......................... 4,244,216
- --------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.6%
- --------------------------------------------------------------------------
Other Assets .................................. 24,913
Liabilities ................................... (707)
- --------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES .................. 24,206
- --------------------------------------------------------------------------
NET ASSETS-- 100% ............................. $ 4,268,422
- --------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------
Capital paid in ............................... $ 4,011,889
Undistributed net investment income ........... 69,425
Accumulated net realized (loss) ............... (34,624)
Net unrealized appreciation on investments .... 221,732
- --------------------------------------------------------------------------
NET ASSETS .................................... $ 4,268,422
- --------------------------------------------------------------------------
Shares outstanding (par value $.001) .......... 374,286
Net asset value per share ..................... $ 11.40
Maximum offering price per share .............. $ 12.10
- -------------
See Notes to Financial Statements.
10
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
STRATEGY STRATEGY STRATEGY
FUND FUND FUND
- --------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME:
<S> <C> <C> <C>
Dividends ........................... $ 9,485 $ 356,313 $ 49,656
Interest ............................ 16,872 283,642 18,477
- --------------------------------------------------------------------------------------------
TOTAL INCOME ........................... 26,357 639,955 68,133
- --------------------------------------------------------------------------------------------
EXPENSES:
Transfer agent fees ................. 7,074 7,074 7,074
Trustees' fees ...................... 97 2,579 286
Advisory fees ....................... 1,181 30,081 3,467
- --------------------------------------------------------------------------------------------
TOTAL EXPENSES BEFORE REIMBURSEMENT .... 8,352 39,734 10,827
Less: Expenses reimbursed by
the Adviser ...................... (7,171) (9,653) (7,360)
- --------------------------------------------------------------------------------------------
Net expenses ........................ 1,181 30,081 3,467
- --------------------------------------------------------------------------------------------
NET INVESTMENT INCOME .................. 25,176 609,874 64,666
- --------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain on investments ........ 19,418 644,269 41,358
Increase in unrealized
appreciation on investments ...... 58,428 2,699,370 437,610
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments ................... 77,846 3,343,639 478,968
- --------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........... $103,022 $3,953,513 $543,634
- --------------------------------------------------------------------------------------------
</TABLE>
- -------------
See Notes to Financial Statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE
STRATEGY STRATEGY
FUND FUND
PERIOD ENDED YEAR PERIOD ENDED YEAR
MARCH 31, 1999 ENDED MARCH 31, 1999 ENDED
(UNAUDITED) SEPTEMBER 30, 1998* (UNAUDITED) SEPTEMBER 30, 1998*
- ----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income $ 25,176 $ 28,991 $ 609,874 $ 1,496,553
Net realized gain on investments 19,418 4,805 644,269 115,426
Net increase (decrease) in unrealized
appreciation/depreciation 58,428 (25,589) 2,699,370 (887,314)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
from operations 103,022 8,207 3,953,513 724,665
- ----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (34,875) -- (1,128,888) --
Net realized gains (20,720) -- (1,040,888) --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (55,595) -- (2,169,776) --
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
operations and distributions 47,427 8,207 1,783,737 724,665
- ----------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares 967,459 1,407,890 7,764,451 30,007,903
Value of distributions reinvested 55,595 -- 2,169,776 --
Cost of shares redeemed (863,531) (436,930) (3,861,577) (5,584,947)
- ----------------------------------------------------------------------------------------------------------------------
Net increase from
share transactions 159,523 970,960 6,072,650 24,422,956
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 206,950 979,167 7,856,387 25,147,621
NET ASSETS
Beginning of period 979,167 -- 25,147,621 --
- ----------------------------------------------------------------------------------------------------------------------
End of period $1,186,117 $ 979,167 $33,004,008 $25,147,621
- ----------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME,
END OF PERIOD $ 19,292 $ 28,991 $ 977,539 $ 1,496,553
- ----------------------------------------------------------------------------------------------------------------------
CHANGES IN FUND SHARES
Shares sold by subscription 91,470 136,768 718,398 2,984,135
Issued for distributions reinvested 5,402 -- 211,685 --
Shares redeemed (81,063) (41,867) (362,705) (522,481)
- ----------------------------------------------------------------------------------------------------------------------
Net increase in fund shares 15,809 94,901 567,378 2,461,654
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AGGRESSIVE
STRATEGY
FUND
PERIOD ENDED YEAR
MARCH 31, 1999 ENDED
(UNAUDITED) SEPTEMBER 30, 1998*
- ------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
<S> <C> <C>
Net investment income $ 64,666 $ 97,572
Net realized gain on investments 41,358 10,185
Net increase (decrease) in unrealized
appreciation/depreciation 437,610 (215,878)
- ------------------------------------------------------------------------------------
Net increase (decrease)
from operations 543,634 (108,121)
- ------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (92,813) --
Net realized gains (86,167) --
- ------------------------------------------------------------------------------------
Total distributions (178,980) --
- ------------------------------------------------------------------------------------
Increase (decrease) in net assets from
operations and distributions 364,654 (108,121)
- ------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares 1,621,805 3,969,684
Value of distributions reinvested 178,980 --
Cost of shares redeemed (836,357) (922,223)
- ------------------------------------------------------------------------------------
Net increase from
share transactions 964,428 3,047,461
- ------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,329,082 2,939,340
NET ASSETS
Beginning of period 2,939,340 --
- ------------------------------------------------------------------------------------
End of period $4,268,422 $2,939,340
- ------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME,
END OF PERIOD $ 69,425 $ 97,572
- ------------------------------------------------------------------------------------
CHANGES IN FUND SHARES
Shares sold by subscription 146,761 377,801
Issued for distributions reinvested 16,981 --
Shares redeemed (79,174) (88,083)
- ------------------------------------------------------------------------------------
Net increase in fund shares 84,568 289,718
- ------------------------------------------------------------------------------------
<FN>
* FOR THE PERIOD JANUARY 5, 1998 (INCEPTION) THROUGH SEPTEMBER 30, 1998.
</FN>
</TABLE>
- ---------------
See Notes to Financial Statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 (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. It is currently comprised of six investment funds, three of which are
included in a separate semi-annual Report. Each GE LifeStyle Fund operates as a
"fund-of-funds" in that it makes investments in a select group of underlying GE
Funds ("Underlying Funds") and money market instruments suited to its particular
investment objective. These financial statements only represent the activities
of the GE LifeStyle Strategy series (each a "Fund" and collectively the
"Funds"). 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
toward 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.
The commencement date of the Funds was January 5, 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates, but are expected to be immaterial.
The following summarizes the significant accounting policies of the Trust:
SECURITY VALUATION AND TRANSACTIONS
Investments in the Underlying Funds are valued at the closing net asset value
per share of each Underlying Fund as reported on each business day. 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.
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 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.
INVESTMENT INCOME
Income and capital gain distributions, if any, are recorded on the ex-dividend
date. Interest income is recorded on accrual basis.
EXPENSES
The Funds pay an advisory and administration fee to GE Investment Management
Incorporated ("GEIM"). This fee includes any normal operating expenses payable
by
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
the Funds, except for brokerage fees and commissions, interest, taxes, fees paid
to the Trust's independent Trustees, transfer agent fees and extraordinary
expenses. Until further notice, GEIM has agreed to voluntarily reduce or
otherwise limit "other expenses".
DISTRIBUTIONS TO SHAREHOLDERS
The Funds declare and pay dividends of investment income and net realized
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.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements. 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 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.
3. FEES AND COMPENSATION PAID TO AFFILIATES
ADVISORY AND ADMINISTRATION FEES
GEIM, a registered investment adviser, was retained by the Trust's Board of
Trustees effective September 11, 1996 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 administration fees
payable to GEIM for each Fund are calculated at the annual rate of 0.20%.
TRUSTEES COMPENSATION
The Funds pay no compensation to their Trustees who are employees of GEIM.
Trustees who are not such officers or employees receive an annual fee of $2,000
and an additional fee of $500 for each Trustees' meeting attended in person.
These fees are allocated equally among the Funds.
OTHER
For the period ended March 31, 1999, the Trust was informed that GE Investment
Distributors, Inc., acting as underwriter, did not receive commissions from the
sale of shares.
4. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at March 31, 1999, were as follows:
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
- --------------------------------------------------------------------------------
GE Conservative
Strategy Fund $ 42,001 $ 9,162 $ 32,839
GE Moderate
Strategy Fund 2,031,888 219,832 1,812,056
GE Aggressive
Strategy Fund 227,677 5,945 221,732
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at March 31, 1999.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
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, 1999, were as
follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
GE Conservative
Strategy Fund $ 645,178 $ 528,224
GE Moderate
Strategy Fund 14,893,782 11,047,973
GE Aggressive
Strategy Fund 1,428,813 689,210
6. BENEFICIAL INTEREST
The schedule below shows the number of shareholders each owning 5% or more of a
fund and the total percentage of the fund held by such shareholders at March 31,
1999.
5% OR GREATER SHAREHOLDERS
-----------------------------
% OF
NUMBER FUND HELD
- --------------------------------------------------------------------------------
GE Conservative Strategy Fund 4 96%
GE Moderate Strategy Fund 2 96%
GE Aggressive Strategy Fund 4 96%
Investment activities of these shareholders could have a material impact on
these funds.
15
<PAGE>
GE LIFESTYLE FUNDS' INVESTMENT TEAM
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
GE LIFESTYLE FUNDS
Eugene K. Bolton
PORTFOLIO MANAGERS OF THE
UNDERLYING FUNDS
GE INTERNATIONAL EQUITY FUND
Team led by
Ralph R. Layman
GE PREMIER GROWTH EQUITY FUND
David B. Carlson
GE MID-CAP GROWTH FUND
Ralph E. Whitman, Jr.
GE VALUE EQUITY FUND
Peter J. Hathaway
GE U.S. EQUITY FUND
Team led by
Eugene K. Bolton
GE FIXED INCOME FUND
GE SHORT-TERM GOVERNMENT FUND
GE MONEY MARKET FUND
Team led by
Robert A. MacDougall
INVESTMENT ADVISER
AND ADMINISTRATOR
GE Investment Management Incorporated
TRUSTEES
Michael J. Cosgrove
John R. Costantino
Alan M. Lewis
William J. Lucas
Robert P. Quinn
SECRETARY
Matthew J. Simpson
TREASURER
Jeffrey A. Groh
ASSISTANT TREASURERS
Michael M. D'Ambrosio
Michael J. Tansley
DISTRIBUTOR
GE Investment Distributors, Inc.
Member NASD and SIPC
COUNSEL
Willkie Farr & Gallagher
CUSTODIAN
State Street Bank & Trust Company
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers 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
Jeffrey A. Groh, EVP, CHIEF FINANCIAL OFFICER
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
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
904178
<PAGE>
GE LIFESTYLE FUNDS
SEMI-ANNUAL REPORT
CONSERVATIVE ALLOCATION FUND
MODERATE ALLOCATION FUND
AGGRESSIVE ALLOCATION FUND
[GE LOGO OMITTED]
March 31, 1999
[GE LOGO OMITTED]
WE BRING GOOD THINGS TO LIFE.
- ------------
<PAGE>
GE LIFESTYLE FUNDS
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR REPORT
- --------------------------------------------------------------------------------
A LETTER FROM THE PRESIDENT ............................................ 1
PERFORMANCE SUMMARY
CONSERVATIVE ALLOCATION FUND ...................................... 3
MODERATE ALLOCATION FUND .......................................... 4
AGGRESSIVE ALLOCATION FUND ........................................ 5
PORTFOLIO MANAGER'S BIOGRAPHY ..................................... 6
NOTES TO PERFORMANCE .............................................. 6
FINANCIAL STATEMENTS
Financial Highlights .............................................. 7
Statements of Net Assets, Operations,
and Changes in Net Assets ...................................... 8
NOTES
Notes to Financial Statements ..................................... 13
GE LIFESTYLE FUNDS'
INVESTMENT TEAM ........................................... INSIDE BACK COVER
This report has been prepared for the shareholders of the 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.
<PAGE>
A LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
Markets continue their roller-coaster ride. The closely-watched S&P 500 Index,
which lost almost 20% of its value during August's global currency crisis, ended
1998 more than 28% ahead, and gained another 5% in the first quarter of 1999.
As stock prices rise and fall, the best course is to invest for the long term
and diversify to minimize risk.
MARKET REVIEW
In 1998, U.S. equities returned more than 20% for the fourth consecutive year,
the first time this has ever happened. In fact, this is the best four year
period since 1932-1936 when the market was recovering from the 1929 crash. This
bull market shows no signs of letting up as we enter the second quarter of 1999.
An aging American population investing for retirement is one force propelling
the stock market higher. The U.S. economy, now in its ninth year of growth, is
another. Consumer spending is fueling the economic expansion, spurred by low
interest rates, strong job growth and low inflation. Strong economic growth
coupled with disinflation is very positive for the stock market.
MARKET OUTLOOK
Looking ahead, we believe the fundamentals that underpin market performance
remain sound. We will maintain our overweight position in European stocks in the
underlying GE Funds. We expect corporate consolidations and the recent adoption
of a common currency to create European companies with strong earnings
potential. Parts of Asia appear to be improving and some investors have started
to put money back in Japan. However, we do not think the Japanese economy has
turned around yet. We wait cautiously for signs of change.
We expect the U.S. economy to slow to a more sustainable growth rate in the
second half of 1999. Additionally, with less difficult global economic
conditions, U.S. corporate profits are poised to resume a modest growth
trajectory. Since it is likely that inflation will remain low, we do not believe
the U.S. Federal Reserve will alter current interest rate policy.
During periods of volatility, it is critical to maintain a well-diversified
portfolio. Although we do not expect equity returns to be what they have been in
the past few years, equities are still the best long-term investment if you need
growth of capital. Stock selection will be a major factor as the market broadens
to embrace value stocks and small- and mid-cap stocks. Fixed income investments
can provide modest capital growth as well as current income, and should provide
balance to your overall investment portfolio.
As markets rise and fall, the best advice is still to know your tolerance for
risk and focus on long-term objectives rather than short-term market
fluctuations.
YEAR 2000
On a final note, many shareholders have inquired about the impact the year 2000
(Y2K) problem may have with respect to their financial investments and
recordkeeping. The GE LifeStyle Funds' adviser, GE Investment Management
Incorporated (GEIM) has incorporated Y2K readiness capability into its 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 closely in
partnership with our most critical vendors, State Street Bank and Trust Company,
the funds' Custodian and National Data Services, Inc.,
1
<PAGE>
A LETTER FROM THE PRESIDENT (CONTINUED)
- --------------------------------------------------------------------------------
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 totally eliminated -- GEIM believes it is taking the
appropriate steps.
Sincerely,
/S/SIGNATURE
Michael J. Cosgrove
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 THE INTERNATIONAL OPERATION AND IN
GE TRADING COMPANY. HE HAS A B.S. IN ECONOMICS FROM FORDHAM UNIVERSITY AND AN
M.B.A. FROM ST. JOHN'S UNIVERSITY.
2
<PAGE>
CONSERVATIVE ALLOCATION FUND PERFORMANCE SUMMARY (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE CHART OMITTED]
CONSERVATIVE ALLOCATION FUND COMPOSITE INDEX
12/31/98 $10000.00 $10000.00
1/99 10180.00 10133.04
2/99 9950.00 9924.28
3/99 10160.00 10144.18
PORTFOLIO ALLOCATION TO FUNDS AT 3/31/99*
- --------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE Premier Growth Equity Fund 4.0% 4.0%
GE U.S. Equity Fund 10.0% 9.7%
GE Mid-Cap Growth Fund 3.0% 2.9%
GE Value Equity Fund 9.0% 8.7%
GE International Equity Fund 18.0% 17.4%
GE Fixed Income Fund 51.0% 49.0%
GE Short-Term Government Fund 5.0% 4.8%
Other -- 3.5%
- --------------------------------------------------------------------------------
Total 100.0% 100.0%
- --------------------------------------------------------------------------------
* As a percentage of net assets
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURNS:
FROM DECEMBER 31, 1998 (INCEPTION) THROUGH MARCH 31, 1999
- --------------------------------------------------------------------------------
CONSERVATIVE STRATEGY FUND 1.60%
Composite Index** 1.44%
S&P 500 Index 4.95%
MSCI EAFE Index 1.39%
LB Int. Gov't/Corp. Index (0.19%)
- --------------------------------------------------------------------------------
** THE COMPOSITE INDEX IS DERIVED BY APPLYING EACH UNDERLYING FUND'S TARGET
ALLOCATIONS TO THE RESULTS OF THE BENCHMARKS FOR THE DOMESTIC EQUITY,
INTERNATIONAL EQUITY, AND FIXED INCOME MARKETS.
The GE Conservative Allocation Fund targets 56% to fixed income markets, 26% to
domestic equity markets and 18% to international equity markets. Because the
fund's long-term goal is preservation of capital, it has a high weighting in
fixed-income securities. The 44% exposure to equity markets also offers some
opportunity for capital appreciation. The fund will show its best relative
performance during times of economic uncertainty, as it did last summer when the
collapse of Russia's currency sent world markets into turmoil.
During the last quarter, stock markets began to recover as investors started to
believe that the world would not fall into a deflationary recession. Investors
moved away from U.S. Treasuries when fears of an overheating economy and a
possible Federal Reserve move to raise interest rates replaced recession fears.
The fixed income portfolio had a slight loss as Treasury bond yields rose as
high as 5.7% by the end of the first quarter of 1999. The underlying GE Fixed
Income Fund slightly underperformed its benchmark during the three-month period.
This fund increased its exposure in the mortgage and corporate sectors, which
outperformed Treasuries. However, longer duration was a drag on performance as
interest rates rose.
Equity markets did better than fixed income markets over the last three months.
The GE Conservative Allocation Fund's component equity funds outperformed the
fixed income component. Some of the underlying equity funds also had higher
returns than their benchmarks. The underlying GE Premier Growth Equity Fund did
extremely well, outpacing its benchmark with an 8.84% gain driven by technology
holdings. The underlying GE U.S. Equity Fund posted a return of 5.59%, helped by
consumer sector and financial sector stocks. Although growth stocks continued to
outshine value stocks, the underlying GE Value Equity Fund returned 4.44%,
helped by good stock selection in pharmaceuticals and technology to outperform
its benchmark. Smaller capitalization stocks continued to significantly lag
behind large market capitalization stocks, and the underlying GE Mid-Cap Growth
Fund was no exception. However, its slightly negative return was significantly
better than its benchmark. The underlying GE International Equity Fund posted a
return of 3.33%. Returns on stocks outside the U.S. market trail those for their
U.S. counterparts but these stocks currently sell at much lower valuation
levels. We believe it is wise to diversify by holding some international stocks.
We also expect the valuation discrepancy to close eventually.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
3
<PAGE>
MODERATE ALLOCATION FUND PERFORMANCE SUMMARY (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE CHART OMITTED]
MODERATE ALLOCATION FUND COMPOSITE INDEX
12/31/98 $10000.00 $10000.00
1/99 10230.00 10170.17
2/99 9980.00 9934.15
3/99 10240.00 10217.04
PORTFOLIO ALLOCATION TO FUNDS AT 3/31/99*
- --------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE Premier Growth Equity Fund 8.0% 7.7%
GE U.S. Equity Fund 13.0% 12.2%
GE Mid-Cap Growth Fund 4.0% 3.8%
GE Value Equity Fund 13.0% 12.2%
GE International Equity Fund 25.0% 24.1%
GE Fixed Income Fund 32.0% 31.6%
GE Short-Term Government Fund 5.0% 4.8%
Other -- 3.6%
- --------------------------------------------------------------------------------
Total 100.0% 100.0%
- --------------------------------------------------------------------------------
* As a percentage of net assets
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURNS:
FROM DECEMBER 31, 1998 (INCEPTION) THROUGH MARCH 31, 1999
- --------------------------------------------------------------------------------
MODERATE ALLOCATION FUND 2.40%
Composite Index** 2.17%
S&P 500 Index 4.95%
MSCI EAFE Index 1.39%
LB Int. Gov't/Corp. Index (0.19%)
- --------------------------------------------------------------------------------
** THE COMPOSITE INDEX IS DERIVED BY APPLYING EACH UNDERLYING FUND'S TARGET
ALLOCATIONS TO THE RESULTS OF THE BENCHMARKS FOR THE DOMESTIC EQUITY,
INTERNATIONAL EQUITY, AND FIXED INCOME MARKETS.
The GE Moderate Allocation Fund targets 38% to domestic equity markets, 25% to
international equity markets and 37% to fixed income markets. The fund's
long-term goal is to preserve capital while participating in the potential
appreciation that equity investments offer. The fund should provide good
relative performance in both up and down markets, with the fixed income
component offering protection in down markets and the international allocation
component providing diversification and the potential for superior long-term
growth.
Equity markets did better than fixed income markets over the last three months.
The GE Moderate Allocation Fund's equity component significantly outperformed
the fixed income component. Most of the underlying equity funds also had higher
returns than their benchmarks. The underlying GE Premier Growth Equity Fund did
extremely well, outpacing its benchmark with a 8.84% gain driven by technology
holdings. The underlying GE U.S. Equity Fund posted a return of 5.59%, helped by
consumer sector and financial sector stocks. Although growth stocks continued to
outshine value stocks, the underlying GE Value Equity Fund returned 4.44%,
helped by good stock selection in pharmaceuticals and technology to outperform
its benchmark. Smaller capitalization stocks continued to significantly lag
behind large market capitalization stocks, and the underlying GE Mid-Cap Growth
Fund was no exception. However, its slightly negative return was significantly
better than its benchmark. The underlying GE International Equity Fund posted a
return of 3.33%. Returns on stocks outside the U.S. market continue to
underperform their U.S. counterparts but the stocks currently sell at much lower
valuation levels. We believe it is wise to diversify by holding some
international stocks. We also expect the valuation discrepancy to close
eventually.
With stock markets recovering, investors moved away from U.S. Treasuries as
concerns about an overheating economy and a possible Federal Reserve move to
raise interest rates replaced recession fears. The fixed income portfolio had a
slight loss as Treasury bond yields rose as high as 5.7% by the end of the first
quarter of 1999. The underlying GE Fixed Income Fund slightly underperformed its
benchmark during the three-month period. This fund increased its exposure in the
mortgage and corporate sectors during the period, which outperformed Treasuries.
However, longer duration negatively impacted relative performance as interest
rates rose.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
<PAGE>
AGGRESSIVE ALLOCATION FUND PERFORMANCE SUMMARY (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE CHART OMITTED]
AGGRESSIVE ALLOCATION FUND COMPOSITE INDEX
12/31/98 $10000.00 $10000.00
1/99 10270.00 10203.71
2/99 10010.00 9942.01
3/99 10340.00 10284.68
PORTFOLIO ALLOCATION TO FUNDS AT 3/31/99*
- --------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE Premier Growth Equity Fund 10.0% 9.9%
GE U.S. Equity Fund 17.0% 16.3%
GE Mid-Cap Growth Fund 6.0% 5.8%
GE Value Equity Fund 16.0% 15.3%
GE International Equity Fund 32.0% 31.1%
GE Fixed Income Fund 14.0% 13.3%
GE Short-Term Government Fund 5.0% 4.8%
Other -- 3.5%
- --------------------------------------------------------------------------------
Total 100.0% 100.0%
- --------------------------------------------------------------------------------
* As a percentage of net assets
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURNS:
FROM DECEMBER 31, 1998 (INCEPTION) THROUGH MARCH 31, 1999
- --------------------------------------------------------------------------------
AGGRESSIVE ALLOCATION FUND 3.40%
Composite Index** 2.85%
S&P 500 Index 4.95%
MSCI EAFE Index 1.39%
LB Int. Gov't/Corp. Index (0.19%)
- --------------------------------------------------------------------------------
** THE COMPOSITE INDEX IS DERIVED BY APPLYING EACH UNDERLYING FUND'S TARGET
ALLOCATIONS TO THE RESULTS OF THE BENCHMARKS FOR THE DOMESTIC EQUITY,
INTERNATIONAL EQUITY, AND FIXED INCOME MARKETS.
The GE Aggressive Allocation Fund targets 49% to domestic equity markets, 32% to
international equity markets and 19% to fixed income markets. The fund has a
high weighting in equities because its long-term goal is appreciation of
capital. However, the fixed income component provides some downside protection
that can prove valuable in times of uncertainty such as last summer, when the
collapse of Russia's currency sent the world markets into turmoil. This fund
generally will underperform the GE Moderate and Conservative Funds during such
periods, but will generally outperform those funds when stock markets around the
world are doing well, as in the just-completed quarter.
Equity markets did better than fixed income markets over the last three months.
The GE Aggressive Allocation Fund's equity component significantly outperformed
the fixed income component. Some of the underlying equity funds also had higher
returns than their benchmarks. The underlying GE Premier Growth Equity Fund did
extremely well, outpacing its benchmark with a 8.84% gain driven by technology
holdings. The underlying GE U.S. Equity Fund posted a return of 5.59%, helped by
the consumer sector and financial sector stocks. Although growth stocks
continued to outperform value stocks, the underlying GE Value Equity Fund
returned 4.44%, helped by good stock selection in pharmaceuticals, technology
and telecommunications to outperform its benchmark. Smaller capitalization
stocks continued to significantly lag behind large market capitalization stocks,
and the underlying GE Mid-Cap Growth Fund was no exception. However, its
slightly negative return was significantly better than its benchmark. The
underlying GE International Equity Fund posted a return of 3.33%. Returns on
stocks outside the U.S. market continue to underperform those for their U.S.
counterparts but the stocks currently sell at much lower valuation levels. We
believe it is wise to diversify by holding some international stocks. We also
expect the valuation discrepancy to close eventually.
With stock markets recovering, investors moved away from U.S. Treasuries as
concerns about an overheating economy and a possible Federal Reserve move to
raise interest rates replaced recession fears. The fixed income portfolio had a
slight loss as Treasury bond yields rose as high as 5.7% by the end of the first
quarter of 1999. The underlying GE Fixed Income Fund slightly underperformed its
benchmark during the three-month period. This fund increased its exposure in the
mortgage and corporate sectors during the period, which outperformed Treasuries.
However, longer duration negatively impacted relative performance as interest
rates rose.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
5
<PAGE>
GE LIFESTYLE FUNDS PORTFOLIO MANAGER'S BIOGRAPHY
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARIES ON THE PRECEDING PAGES ARE PRESENTED BY EUGENE K. BOLTON,
EXECUTIVE VICE PRESIDENT, GE INVESTMENTS.
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 $35 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.
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.
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 of stocks (S&P
500), Morgan Stanley Capital International Europe, Australasia, Far East Index
(MSCI EAFE ) and the Lehman Brothers Intermediate Government/Corporate Bond
Index (LB Int. Gov't/Corp) 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 is a
composite of foreign securities traded in 22 developed markets representing
Europe, Australasia and Far East. The LB Int. Gov't/Corp 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.
6
<PAGE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
3/31/99(a) 3/31/99(a) 3/31/99(a)
- ---------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE 12/31/98 12/31/98 12/31/98
<S> <C> <C> <C>
Net asset value, beginning of period ........................... $10.00 $10.00 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ....................................... 0.07 0.03 0.02
Net realized and unrealized gains (losses) on investments ... 0.09 0.21 0.32
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS ........................ 0.16 0.24 0.34
- ---------------------------------------------------------------------------------------------------------------------------
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 ................................. $10.16 $10.24 $10.34
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) ............................................... 1.60% 2.40% 3.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .................... $128 $277 $192
Ratios to average net assets:
Net investment income* ................................... 2.90% 2.00% 0.95%
Net expenses* ............................................ 0.20% 0.20% 0.20%
Gross expenses* .......................................... 9.19% 6.69% 7.29%
Portfolio turnover rate ..................................... 2% 18% 0%
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
NOTES TO FINANCIAL HIGHLIGHTS
- -----------------------------
(a) INFORMATION IS FOR THE PERIOD DECEMBER 31, 1998, INCEPTION OF INVESTMENT
OPERATIONS, THROUGH MARCH 31, 1999.
(b) 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 RETURNS WOULD HAVE BEEN LOWER.
TOTAL RETURNS ARE NOT ANNUALIZED.
* ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
</FN>
</TABLE>
- -----------
See Notes to Financial Statements.
7
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
CONSERVATIVE ALLOCATION FUND
MARCH 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------
INVESTMENTS -- 100.0%
- ------------------------------------------------------------------------------
GE Premier Growth Equity Fund (Class D) ............ 191 $ 5,103
GE U.S. Equity Fund (Class D) ...................... 385 12,359
GE Mid-Cap Growth Fund (Class D) ................... 361 3,748
GE Value Equity Fund (Class D) ..................... 888 11,083
GE International Equity Fund (Class D) ............. 1,263 22,339
GE Fixed Income Fund (Class D) ..................... 5,149 62,717
GE Short-Term Government Fund (Class D) ............ 522 6,176
GEI Short-Term Investment Fund ..................... 4,468 4,468
TOTAL INVESTMENTS
(COST $126,956) ................................. 127,993
- ------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.0%
- ------------------------------------------------------------------------------
Other Assets ....................................... 85
Liabilities ........................................ (21)
- ------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES ....................... 64
- ------------------------------------------------------------------------------
NET ASSETS-- 100% .................................. $128,057
- ------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Capital paid in .................................... $126,093
Undistributed net investment income ................ 830
Accumulated net realized gain ...................... 96
Net unrealized appreciation on investments ......... 1,038
- ------------------------------------------------------------------------------
NET ASSETS ......................................... $128,057
- ------------------------------------------------------------------------------
Shares outstanding (par value $.001) ............... 12,602
Net asset value per share .......................... $ 10.16
Maximum offering price per share ................... $ 10.78
- ---------
See Notes to Financial Statements.
8
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
MODERATE ALLOCATION FUND
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------
INVESTMENTS -- 100.0%
- --------------------------------------------------------------------------
GE Premier Growth Equity Fund (Class D) ........ 802 $ 21,420
GE U.S. Equity Fund (Class D) .................. 1,051 33,725
GE Mid-Cap Growth Fund (Class D) ............... 1,006 10,442
GE Value Equity Fund (Class D) ................. 2,710 33,826
GE International Equity Fund (Class D) ......... 3,762 66,548
GE Fixed Income Fund (Class D) ................. 7,179 87,443
GE Short-Term Government Fund (Class D) ........ 1,132 13,389
GEI Short-Term Investment Fund ................. 9,613 9,613
TOTAL INVESTMENTS
(COST $272,590) ............................. 276,406
- --------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.0%
- --------------------------------------------------------------------------
Other Assets ................................... 151
Liabilities .................................... (40)
- --------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES ................... 111
- --------------------------------------------------------------------------
NET ASSETS-- 100% .............................. $276,517
- --------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------
Capital paid in ................................ $272,344
Undistributed net investment income ............ 794
Accumulated net realized (loss) ................ (436)
Net unrealized appreciation on investments ..... 3,815
- --------------------------------------------------------------------------
NET ASSETS ..................................... $276,517
- --------------------------------------------------------------------------
Shares outstanding (par value $.001) ........... 26,994
Net asset value per share ...................... $ 10.24
Maximum offering price per share ............... $ 10.86
- -----------
See Notes to Financial Statements.
9
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------
AGGRESSIVE ALLOCATION FUND
MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
INVESTMENTS -- 100.0%
- ----------------------------------------------------------------------------
GE Premier Growth Equity Fund (Class D) ..... 709 $ 18,939
GE U.S. Equity Fund (Class D) ............... 976 31,334
GE Mid-Cap Growth Fund (Class D) ............ 1,083 11,238
GE Value Equity Fund (Class D) .............. 2,355 29,392
GE International Equity Fund (Class D) ...... 3,377 59,736
GE Fixed Income Fund (Class D) .............. 2,101 25,588
GE Short-Term Government Fund (Class D) ..... 774 9,161
GEI Short-Term Investment Fund .............. 6,679 6,679
TOTAL INVESTMENTS
(COST $186,761) .......................... 192,067
- ----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.0%
- ----------------------------------------------------------------------------
Other Assets ................................ 64
Liabilities ................................. (31)
- ----------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES ................ 33
- ----------------------------------------------------------------------------
NET ASSETS-- 100% ........................... $192,100
- ----------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------
Capital paid in ............................. $186,447
Undistributed net investment income ......... 347
Accumulated net realized gain ............... --
Net unrealized appreciation on investments .. 5,306
- ----------------------------------------------------------------------------
NET ASSETS .................................. $192,100
- ----------------------------------------------------------------------------
Shares outstanding (par value $.001) ........ 18,574
Net asset value per share ................... $ 10.34
Maximum offering price per share ............ $ 10.97
- ------------
See Notes to Financial Statements.
10
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1999* (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
- --------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME:
<S> <C> <C> <C>
Dividends .............................. $ -- $ -- $ --
Interest ............................... 887 873 420
- --------------------------------------------------------------------------------------------
TOTAL INCOME .............................. 887 873 420
- --------------------------------------------------------------------------------------------
EXPENSES:
Transfer agent fees .................... 2,575 2,575 2,575
Trustees' fees ......................... 3 3 3
Advisory fees .......................... 57 79 73
- --------------------------------------------------------------------------------------------
TOTAL EXPENSES BEFORE REIMBURSEMENT ....... 2,635 2,657 2,651
- --------------------------------------------------------------------------------------------
Less: Expenses reimbursed by
the Adviser ......................... (2,578) (2,578) (2,578)
- --------------------------------------------------------------------------------------------
Net expenses ........................... 57 79 73
- --------------------------------------------------------------------------------------------
NET INVESTMENT INCOME ..................... 830 794 347
- --------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) on investments .... 96 (436) --
Increase in unrealized
appreciation on investments ......... 1,038 3,815 5,306
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments ...................... 1,134 3,379 5,306
- --------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $1,964 $4,173 $5,653
- --------------------------------------------------------------------------------------------
<FN>
* For the period December 31, 1998 (inception) through March 31, 1999.
</FN>
</TABLE>
- -------------
See Notes to Financial Statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED MARCH 31, 1999* (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
- ----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
<S> <C> <C> <C>
Net investment income ..................... $ 830 $ 794 $ 347
Net realized gain (loss) on investments ... 96 (436) --
Net increase in unrealized appreciation ... 1,038 3,815 5,306
- ----------------------------------------------------------------------------------------------
Net increase from operations .............. 1,964 4,173 5,653
- ----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ..................... -- -- --
Net realized gains ........................ -- -- --
- ----------------------------------------------------------------------------------------------
Total distributions .......................... -- -- --
- ----------------------------------------------------------------------------------------------
Increase in net assets from
operations and distributions .............. 1,964 4,173 5,653
- ----------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares .............. 126,093 272,344 187,570
Value of distributions reinvested ......... -- -- --
Cost of shares redeemed ................... -- -- (1,123)
- ----------------------------------------------------------------------------------------------
Net increase from share transactions ...... 126,093 272,344 186,447
- ----------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS ................. 128,057 276,517 192,100
- ----------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period .......................... -- -- --
- ----------------------------------------------------------------------------------------------
End of period ................................ $128,057 $276,517 $192,100
- ----------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME,
END OF PERIOD ................................ $830 $794 $347
- ----------------------------------------------------------------------------------------------
CHANGES IN FUND SHARES
Shares sold by subscription ..................... 12,602 26,994 18,683
Issued for distributions reinvested ............. -- -- --
Shares redeemed ................................. -- -- (109)
- ----------------------------------------------------------------------------------------------
Net increase in fund shares ..................... 12,602 26,994 18,574
- ----------------------------------------------------------------------------------------------
<FN>
* FOR THE PERIOD DECEMBER 31, 1998 (INCEPTION) THROUGH MARCH 31, 1999.
</FN>
</TABLE>
- ----------
See Notes to Financial Statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 (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. It is currently comprised of six investment funds , three of which
are included in a separate semi-annual report. Each GE LifeStyle Fund operates
as a "fund-of-funds" in that it makes investments in a select group of
underlying GE Funds ("Underlying Funds") and money market instruments suited to
its particular investment objective. These financial statements only represent
the activities of the GE LifeStyle Allocation series (each a "Fund" and
collectively the "Funds"). The objectives of the Funds are as follows:
GE Conservative Allocation 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
toward equity-oriented or fixed income-oriented funds to be determined by then
current market forces.
GE Moderate Allocation 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 Allocation 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 commencement date of the Funds was December 31, 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates, but are expected to be immaterial.
The following summarizes the significant accounting policies of the Trust:
SECURITY VALUATION AND TRANSACTIONS
Investments in the Underlying Funds are valued at the closing net asset value
per share of each Underlying Fund as reported on each business day. 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.
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 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.
INVESTMENT INCOME
Income and capital gain distributions, if any, are recorded on the ex-dividend
date. Interest income is recorded on accrual basis.
EXPENSES
The Funds pay an advisory and administration fee to GE Investment Management
Incorporated ("GEIM"). This fee includes any normal operating expenses payable
by the Funds, except for brokerage fees and commission, interest, taxes, fees
paid to the Trust's independent Trustees, transfer agent fees and extraordinary
expenses. Until further notice, GEIM has agreed to voluntarily reduce or
otherwise limit "other expenses."
DISTRIBUTIONS TO SHAREHOLDERS
The Funds declare and pay dividends of investment income and net realized
capital gains annually. The character of income and gains to be distributed is
determined
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
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.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements. 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 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.
3. FEES AND COMPENSATION
PAID TO AFFILIATES
ADVISORY AND ADMINISTRATION FEES
GEIM, a registered investment adviser, was retained by the Trust's Board of
Trustees effective September 11, 1996 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 administration fees
payable to GEIM for each Fund are calculated at the annual rate of 0.20%.
TRUSTEES COMPENSATION
The Funds pay no compensation to their Trustees who are employees of GEIM.
Trustees who are not such officers or employees receive an annual fee of $2,000
and an additional fee of $500 for each Trustees' meeting attended in person.
These fees are allocated equally among the Funds.
OTHER
For the period ended March 31, 1999, the Trust was informed that GE Investment
Distributors, Inc., acting as underwriter, did not receive commissions from the
sale of shares.
4. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at March 31, 1999, were as follows:
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
- ------------------------------------------------------------
GE Conservative
Allocation Fund $ 2,220 $ 1,182 $ 1,038
GE Moderate
Allocation Fund 4,183 368 3,815
GE Aggressive
Allocation Fund 5,709 403 5,306
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at March 31, 1999.
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, 1999, were as
follows:
PURCHASES SALES
- ---------------------------------------------------------------
GE Conservative
Allocation Fund $ 124,356 $ 1,964
GE Moderate
Allocation Fund 287,624 24,210
GE Aggressive
Allocation Fund 180,081 --
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
6. BENEFICIAL INTEREST
The schedule below shows the number of shareholders each owning 5% or more of a
fund and the total percentage of the fund held by such shareholders at March 31,
1999.
5% OR GREATER SHAREHOLDERS
-------------------------------
% OF
NUMBER FUND HELD
- ------------------------------------------------------------------
GE Conservative Allocation Fund 3 100%
GE Moderate Allocation Fund 3 100%
GE Aggressive Allocation Fund 3 100%
At March 31, 1999, certain directly and indirectly wholly-owned subsidiaries of
General Electric Company held the following percentage of shares outstanding of
the GE Allocation Fund:
% OF
FUND HELD
- ------------------------------------------------------------------
GE Conservative
Allocation Fund GE Investment Management Inc. 13%
General Electric Capital
Assurance Company 79%
GE Moderate
Allocation Fund GE Investment Management Inc 6%
General Electric Capital
Assurance Company 37%
GE Aggressive
Allocation Fund GE Investment Management Inc 9%
General Electric Capital
Assurance Company 54%
At March 31, 1999, an employee benefit plan of GE Railcar Services a directly
wholly-owned subsidiary of General Electric Company held 8%, 57%, and 37% of the
GE Conservative Allocation Fund, GE Moderate Allocation Fund and GE Aggressive
Allocation Fund, respectively.
Investment activities of these shareholders could have a material impact on
these funds.
15
<PAGE>
GE LIFESTYLE FUNDS' INVESTMENT TEAM
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
GE LIFESTYLE FUNDS
Eugene K. Bolton
PORTFOLIO MANAGERS OF THE
UNDERLYING FUNDS
GE INTERNATIONAL EQUITY FUND
Team led by
Ralph R. Layman
GE PREMIER GROWTH EQUITY FUND
David B. Carlson
GE MID-CAP GROWTH FUND
Ralph E. Whitman, Jr.
GE VALUE EQUITY FUND
Peter J. Hathaway
GE U.S. EQUITY FUND
Team led by
Eugene K. Bolton
GE FIXED INCOME FUND
GE SHORT-TERM GOVERNMENT FUND
GE MONEY MARKET FUND
Team led by
Robert A. MacDougall
INVESTMENT ADVISER
AND ADMINISTRATOR
GE Investment Management Incorporated
TRUSTEES
Michael J. Cosgrove
John R. Costantino
Alan M. Lewis
William J. Lucas
Robert P. Quinn
SECRETARY
Matthew J. Simpson
TREASURER
Jeffrey A. Groh
ASSISTANT TREASURERS
Michael M. D'Ambrosio
Michael J. Tansley
DISTRIBUTOR
GE Investment Distributors, Inc.
Member NASD and SIPC
COUNSEL
Willkie Farr & Gallagher
CUSTODIAN
State Street Bank & Trust Company
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers 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
Jeffrey A. Groh, EVP, CHIEF FINANCIAL OFFICER
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
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
904178