GE LIFESTYLE FUNDS
ANNUAL REPORT
GE ALLOCATION FUNDS
GE CONSERVATIVE ALLOCATION FUND
GE MODERATE ALLOCATION FUND
GE AGGRESSIVE ALLOCATION FUND
[GE LOGO OMITTED]
WE BRING GOOD THINGS TO LIFE.
<PAGE>
GE LIFESTYLE FUNDS
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UNDERSTANDING YOUR REPORT
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A LETTER FROM THE PRESIDENT ............................................. 1
PERFORMANCE SUMMARY
GE CONSERVATIVE ALLOCATION FUND .................................... 2
GE MODERATE ALLOCATION FUND ........................................ 3
GE AGGRESSIVE ALLOCATION FUND ...................................... 4
PORTFOLIO MANAGER'S BIOGRAPHY ...................................... 5
NOTES TO PERFORMANCE ............................................... 5
FINANCIAL STATEMENTS
Financial Highlights ............................................... 6
Statements of Net Assets, Operations,
and Changes in Net Assets ....................................... 7
NOTES
Notes to Financial Statements ...................................... 12
REPORT OF INDEPENDENT ACCOUNTANTS ....................................... 14
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
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DEAR SHAREHOLDER:
I am pleased to provide you with the Annual Report for the GE LifeStyle Funds,
for the twelve-month period ended September 30, 2000.
MARKET OVERVIEW
The U.S. economy continued its strength into the third quarter of the year as
unemployment figures reached a new low of 3.9% and worker productivity levels
continued to rise. The Federal Reserve Board's interest rate increases over the
past 18 months began to take effect, as signs of inflation diminished and the
U.S. economy appeared to be heading for a soft landing. U.S. stock markets were
hard hit during the second quarter of the year as the NASDAQ composite index
fell 355 points, or over 30% in one day. The NASDAQ did regain much of its
losses in June and into the third quarter, however, it still finished down 9.74%
for the one-year period that ended September 30, 2000. The Dow Jones Industrial
Average and the S&P 500 Index also closed the year down, finishing at -1.39% and
-6.31%, respectively. The positive news from the major indexes was that the
market had regained some breadth after having been narrowly focused on
technology stocks for so long. Utility stocks, financials, capital goods and
energy stocks all performed well during the third quarter.
The Federal Reserve Board declined to increase interest rates at its last
meeting, meeting market expectations. The bond market reacted favorably as
interest rates lowered across the maturity spectrum, producing a positive total
return for the U.S. Treasury sector.
MARKET OUTLOOK
As we enter the fourth quarter of the year, we believe there are four areas of
concern for the economy and the markets. The first is the November presidential
elections, with concern about the future spending power of the U.S. being raised
since both candidates have made promises that will impact the surplus and could
cause the country to go back to a deficit position. The second concern is the
ability of the Federal Reserve Board to hold interest rates steady. The Board's
bias thus far has been toward tightening rates and looks to continue that way,
given the tight labor market and potential inflation effect of higher energy
costs. The third concern came into play during September as a number of large
companies, roughly 30% of the DJIA, reported earnings misses -- meaning that
they would not meet their earnings estimates for the year. The fourth area is
rising energy costs. The price of oil reached a ten-year high of $37 a barrel as
the third quarter ended. If weather forecasters are correct in predicting a very
cold winter, then oil and gas consumption will be heavy and could result in
higher prices. Higher energy prices would also affect corporate earnings, since
the cost of doing business for many companies would be negatively impacted.
With all of these uncertainties in the market, we continue to believe that our
investment strategy of stock picking, and not indexing, is the key determinant
of who will be successful going forward and who will not. We will continue to
look for investment opportunities with high-quality companies that have
strategic vision and strong earnings potential.
Thank you for your continued investment in the GE LifeStyle Funds. We look
forward to continuing to serve your financial needs and encourage you to log on
to WWW.GEFN.COM to take advantage of the many opportunities offered by the GE
Financial Network.
Sincerely,
/s/MICHAEL J. COSGROVE
Michael J. Cosgrove
CHAIRMAN, GE LIFESTYLE FUNDS
OCTOBER 16, 2000
MIKE COSGROVE IS THE PRESIDENT OF THE ASSET MANAGEMENT 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 ASSET
MANAGEMENT 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.
1
<PAGE>
GE CONSERVATIVE ALLOCATION FUND PERFORMANCE SUMMARY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN
VALUE OF A $10,000 INVESTMENT
--------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
PLOT POINTS FOLLOWS:
GE CONSERVATIVE ALLOCATION FUND COMPOSITE INDEX** COMPOSITE INDEX (OLD)***
12/31/98 10,000.00 10,000.00 10,000.00
3/99 10,160.00 10,103.89 10,144.42
6/99 10,390.00 10,363.09 10,353.26
9/99 10,270.00 10,242.71 10,318.91
12/99 11,002.56 10,952.24 11,020.23
3/00 11,258.67 11,217.68 11,193.85
6/00 11,248.43 11,161.40 11,136.18
9/00 11,279.16 11,211.71 11,126.22
PORTFOLIO ALLOCATION TO FUNDS AT 9/30/00*
--------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE Fixed Income Fund 53.0% 53.2%
GE U.S. Equity Fund 28.0% 28.1%
GE International Equity Fund 12.0% 12.0%
GE Small-Cap Value Equity Fund 5.0% 5.1%
Cash and Cash Equivalents 2.0% 1.6%
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Total 100.0% 100.0%
--------------------------------------------------------------------------------
* As a percentage of net assets
AVERAGE ANNUAL TOTAL RETURNS:
From December 31, 1998 (inception) through September 30, 2000
--------------------------------------------------------------------------------
ONE SINCE
YEAR INCEPTION
--------------------------------------------------------------------------------
GE CONSERVATIVE ALLOCATION FUND 9.83% 7.11%
Composite Index** 9.46% 6.75%
Composite Index (Old)*** 7.81% 6.29%
LB Aggregate Bond Index 6.99% 3.51%
S&P 500 Index 13.24% 10.61%
MSCI EAFE Index 3.18% 6.68%
Russell 2000 Index 23.22% 14.19%
90 Day T-Bill 5.77% 5.30%
--------------------------------------------------------------------------------
**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.
***EFFECTIVE JANUARY 28, 2000, THE UNDERLYING GE FUNDS IN WHICH THE FUND MAY
INVEST AND THEIR TARGET ALLOCATIONS WERE CHANGED. THE COMPOSITE INDEX (OLD)
IS DERIVED BY APPLYING EACH UNDERLYING GE FUNDS PREVIOUS TARGET ALLOCATIONS
TO THE RESULTS OF THE BENCHMARKS FOR EACH UNDERLYING GE FUND.
The GE Conservative Allocation Fund returned 9.83% for the one-year period ended
September 30, 2000. The Fund slightly outperformed its Composite Index, which
returned 9.46% for the same period.
The Fund allocates investments among several asset classes including U.S.
Equities, International Equities, and Fixed Income. The Fund is designed to
provide investors with a balanced, conservative investment strategy. The Fund is
structured with a conservative weighting in equities relative to fixed income.
Approximately 45% of the Fund is allocated to equities. U.S. Equities account
for 33% of the Fund, with 28% allocated to core equity and 5% to small-cap
equities. Core international equities comprise 12% of the Fund. Approximately
55% of the Fund is allocated to fixed income securities. Core fixed income
accounts for 53% of the Fund and the balance is allocated to cash and cash
equivalents. Due to the balanced approach of the Fund, the results need to be
compared to a composite which is made up of several benchmarks including: the
S&P 500 Index, the Russell 2000 Index, the MSCI EAFE Index, the Lehman Brothers
Aggregate Bond Index, and the 90 Day T-Bill.
The performance of the Fund relative to its composite benchmark was due to
positive results in fixed income, and good stock selection in U.S. and
international equities. More than half of the Fund is allocated to fixed income.
The Fixed Income markets were challenged by the Federal Reserve's mission to
keep inflation low. The Federal Reserve raised interest rates several times over
this period. As a result of investors anticipating the end to interest rate
hikes, the bond market rallied and did well over the past six months, helping
performance. The U.S. equity markets were volatile during this period, however,
solid gains in core U.S. equity and above average returns in small-cap stocks
provided positive results for the U.S. equity portion of the Fund. The
international markets were also volatile during this period, however, strong
stock selection helped deliver above average performance for this asset class.
We continue to believe that this investment strategy will provide solid results
especially when markets are reflecting economic uncertainty.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
2
<PAGE>
GE MODERATE ALLOCATION FUND PERFORMANCE SUMMARY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN
VALUE OF A $10,000 INVESTMENT
--------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
PLOT POINTS FOLLOWS:
GE MODERATE ALLOCATION FUND COMPOSITE INDEX** COMPOSITE INDEX (OLD)***
12/31/98 10,000.00 10,000.00 10,000.00
3/99 10,240.00 10,158.43 10,217.37
6/99 10,600.00 10,675.56 10,538.54
9/99 10,390.00 10,439.10 10,438.23
12/99 11,475.80 11,554.35 11,458.90
3/00 11,761.17 11,850.73 11,641.25
6/00 11,608.29 11,643.53 11,471.64
9/00 11,465.61 11,527.11 11,320.18
PORTFOLIO ALLOCATION TO FUNDS AT 9/30/00*
--------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE U.S. Equity Fund 34.0% 34.0%
GE Fixed Income Fund 28.0% 28.1%
GE International Equity Fund 16.0% 15.6%
GE Small-Cap Value Equity Fund 12.0% 12.3%
GE High Yield Fund 5.0% 5.0%
GE Emerging Markets Fund 3.0% 2.8%
Cash and Cash Equivalents 2.0% 2.2%
--------------------------------------------------------------------------------
Total 100.0% 100.0%
--------------------------------------------------------------------------------
* As a percentage of net assets
AVERAGE ANNUAL TOTAL RETURNS:
From December 31, 1998 (inception) through September 30, 2000
--------------------------------------------------------------------------------
ONE SINCE
YEAR INCEPTION
--------------------------------------------------------------------------------
GE MODERATE ALLOCATION FUND 10.35% 8.12%
Composite Index** 10.43% 8.46%
Composite Index (Old)*** 8.43% 7.34%
S&P 500 Index 13.24% 10.64%
LB Aggregate Bond Index 6.99% 3.51%
MSCI EAFE Index 3.18% 6.68%
Russell 2000 Index 23.22% 14.19%
CS First Boston Global High Yield Index 1.92% 1.77%
MSCI EMF Index 0.42% 17.80%
90 Day T-Bill 5.77% 5.30%
--------------------------------------------------------------------------------
**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.
***EFFECTIVE JANUARY 28, 2000, THE UNDERLYING GE FUNDS IN WHICH THE FUND MAY
INVEST AND THEIR TARGET ALLOCATIONS WERE CHANGED. THE COMPOSITE INDEX (OLD)
IS DERIVED BY APPLYING EACH UNDERLYING GE FUNDS PREVIOUS TARGET ALLOCATIONS
TO THE RESULTS OF THE BENCHMARKS FOR EACH UNDERLYING GE FUND.
The GE Moderate Allocation Fund returned 10.35% for the one-year period ended
September 30, 2000. The Fund slightly underperformed its Composite Index, which
returned 10.43% for the same period.
The Fund allocates investments among several asset classes including U.S.
Equities, International Equities, and Fixed Income. The Fund is designed to
provide investors with a balanced, moderate investment strategy. The Fund is
structured with a moderate weighting in equities relative to fixed income.
Approximately 65% of the Fund is allocated to equities. U.S. Equities account
for 46% of the Fund, with 34% allocated to core equity and 12% to small-cap
equities. International equities comprise 19% of the Fund, with 16% in core
international and 3% in emerging market international equities. Approximately
35% of the Fund is allocated to fixed income securities. The fixed income
weighting includes 28% in core fixed income, 5% in high yield securities, and
the balance in cash and cash equivalents. Due to the balanced approach of the
Fund, the results need to be compared to a composite which is made up of several
benchmarks including: the S&P 500 Index, the Russell 2000 Index, the MSCI EAFE
Index, the MSCI EMF Index, the Lehman Brothers Aggregate Bond Index, the CS
First Boston Global High Yield Index, and the 90 Day T-Bill.
The Fund's strong relative performance compared to its composite benchmark was
due to the asset allocation strategy of the Fund. More than 65% of the Fund is
allocated to equities. The U.S. equity markets continued to be volatile during
the period. Returns for the Fund's U.S. small-cap stocks were very strong during
this period and helped to boost overall performance for the U.S. equity portion
of the Fund. The international markets were also volatile during this period,
however, strong stock selection provided above average performance for this
asset class. The Fixed Income markets did well, as investors anticipated the end
to interest rate increases. We continue to believe that this investment strategy
will provide solid results in both up and down markets due to the balanced
diversification between equities and fixed income.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE O FUTURE RESULTS.
3
<PAGE>
GE AGGRESSIVE ALLOCATION FUND PERFORMANCE SUMMARY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN
VALUE OF A $10,000 INVESTMENT
--------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
PLOT POINTS FOLLOWS:
GE AGGRESSIVE ALLOCATION FUND COMPOSITE INDEX** COMPOSITE INDEX (OLD)***
12/31/98 10,000.00 10,000.00 10,000.00
3/99 10,340.00 10,175.48 10,285.11
6/99 10,870.00 10,921.42 10,712.06
9/99 10,560.00 10,582.65 10,551.49
12/99 12,021.65 12,053.15 11,887.01
3/00 12,325.48 12,403.89 12,074.02
6/00 12,401.90 12,060.48 11,790.06
9/00 11,788.71 11,812.91 11,493.17
PORTFOLIO ALLOCATION TO FUNDS AT 9/30/00*
--------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE U.S. Equity Fund 38.0% 37.4%
GE Small-Cap Value Equity Fund 20.0% 20.1%
GE International Equity Fund 19.0% 19.0%
GE Fixed Income Fund 9.0% 9.3%
GE High Yield Fund 7.0% 7.0%
GE Emerging Markets Fund 5.0% 4.6%
Cash and Cash Equivalents 2.0% 2.6%
--------------------------------------------------------------------------------
Total 100.0% 100.0%
--------------------------------------------------------------------------------
* As a percentage of net assets
AVERAGE ANNUAL TOTAL RETURNS:
From December 31, 1998 (inception) through September 30, 2000
--------------------------------------------------------------------------------
ONE SINCE
YEAR INCEPTION
--------------------------------------------------------------------------------
GE AGGRESSIVE ALLOCATION FUND 11.64% 9.85%
Composite Index** 11.65% 10.00%
Composite Index (Old)*** 8.90% 8.26%
S&P 500 Index 13.24% 10.61%
Russell 2000 Index 23.22% 14.19%
MSCI EAFE Index 3.18% 6.68%
LB Aggregate Bond Index 6.99% 3.51%
CS First Boston Global High Yield Index 1.92% 1.77%
MSCI EMF Index 0.42% 17.80%
90 Day T-Bill 5.77% 5.30%
--------------------------------------------------------------------------------
**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.
***EFFECTIVE JANUARY 28, 2000, THE UNDERLYING GE FUNDS IN WHICH THE FUND MAY
INVEST AND THEIR TARGET ALLOCATIONS WERE CHANGED. THE COMPOSITE INDEX (OLD)
IS DERIVED BY APPLYING EACH UNDERLYING GE FUNDS PREVIOUS TARGET ALLOCATIONS
TO THE RESULTS OF THE BENCHMARKS FOR EACH UNDERLYING GE FUND.
The GE Aggressive Allocation Fund returned 11.64% for the one-year period ended
September 30, 2000. The Fund slightly underperformed its Composite Index, which
returned 11.65% for the same period.
The Fund allocates investments among several asset classes including U.S.
Equities, International Equities, and Fixed Income. The Fund is designed to
provide investors with a balanced but aggressive investment strategy. The Fund
is structured with an aggressive weighting in equities relative to fixed income
due to its long-term goal of capital appreciation. Approximately 82% of the fund
is allocated to equities. U.S. Equities account for 58% of the Fund, with 38%
allocated to core equity and 20% to small-cap equities. International equities
comprise 24% of the Fund, with 19% in core international and 5% in emerging
market international equities. Approximately 18% of the Fund is allocated to
fixed income securities. The fixed income weighting includes 9% in core fixed
income, 7% in high yield securities, and the balance in cash and cash
equivalents. Due to the balanced approach of the Fund, the results need to be
compared to a composite which is made up of several benchmarks including: the
S&P 500 Index, the Russell 2000 Index, the MSCI EAFE Index, the MSCI EMF Index,
the Lehman Brothers Aggregate Bond Index, the CS First Boston Global High Yield
Index, and the 90 Day T-Bill.
The Fund's strong relative performance compared to its composite benchmark was
due to the asset allocation strategy of the Fund. More than 80% of the Fund is
allocated to equities with approximately 58% allocated to U.S. equities. The
U.S. equity markets continued to be volatile during the period. Returns for the
Fund's U.S. small-cap stocks were very strong during this period and helped to
boost overall performance for the U.S. equity portion of the Fund. The
international markets were also volatile during this period, however, strong
stock selection provided above average performance for this asset class. The
Fixed Income markets did well, as investors anticipated the end to interest rate
increases. We believe this investment strategy will provide positive results in
strong equity markets, and conversely, when markets retreat, the fixed income
allocation is likely to cushion negative returns.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
<PAGE>
GE LIFESTYLE FUNDS PORTFOLIO MANAGER'S BIOGRAPHY
--------------------------------------------------------------------------------
PERFORMANCE SUMMARIES ON THE PRECEDING PAGES ARE PRESENTED BY EUGENE K. BOLTON,
EXECUTIVE VICE PRESIDENT, GE ASSET MANAGEMENT.
GENE BOLTON IS RESPONSIBLE FOR THE MANAGEMENT OF THE GE LIFESTYLE FUNDS. AS THE
CHAIRMAN OF THE ASSET ALLOCATION COMMITTEE AT GE ASSET MANAGEMENT, 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
ASSET MANAGEMENT AND MANAGES TOTAL ASSETS OF APPROXIMATELY $34 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 ASSET MANAGEMENT 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)
--------------------------------------------------------------------------------
Information on the preceding pages relating to the Funds' one year total return
and portfolio allocation is audited, all other information on the performance
pages is unaudited.
Total returns are historical and assume changes in share price, reinvestment of
dividends and capital gains distributions, if any. Past performance is not
indicative of future results of a 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. Periods less than one year are not annualized.
The Adviser has voluntarily agreed to waive and/or bear certain fees and
expenses of both the Funds and the underlying GE Funds. Without these
provisions, the performance returns would have been lower. These provisions may
be renewed or discontinued 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 ), the Lehman Brothers Aggregate Bond Index (LB Aggregate), the
Russell 2000 Index (Russell 2000), the Morgan Stanley Capital International
Emerging Markets Free Index (MSCI EMF), the Credit Suisse First Boston Global
High Yield Index (CS First Boston High Yield), and the 90 Day T-Bill are
unmanaged indices and do not reflect the actual cost of investing in the
instruments that comprise each index.
The S&P 500 is a capitalization-weighted index of 500 widely held stocks
recognized by investors to be representative of the U.S. stock market in
general. The MSCI EAFE is a composite of 989 foreign securities traded in 20
developed markets representing Europe, Australasia and Far East. The LB
Aggregate is a composite of short-, medium-, and long-term bond performance and
is widely recognized as a barometer of the bond market in general. The Russell
2000 measures the performance of the smallest companies in the Russell 3000
Index, which represents approximately 10% of the total market capitalization of
the Russell 3000 Index, which measures the performance of the 3000 largest U.S.
companies based on total market capitalization, which represents approximately
98% of the investable U.S. equity market. The MSCI EMF is a composite of
securities available to non-domestic investors traded in 25 emerging markets.
The CS First Boston High Yield is a composite of below investment-grade
corporate bonds issued in the United States. The 90 Day T-Bill is the average
return on three month U.S. Treasury Bills. The results shown for the foregoing
indices assume reinvestment of net dividends or interest.
Total returns for the Composite Index are derived by applying each underlying
Fund's target allocations to the results of the corresponding benchmarks for the
domestic equity market, the S&P 500 and the Russell 2000; for the international
equity market, the MSCI EAFE the MSCI EMF; for the fixed income bond market, the
LB Aggregate and the CS First Boston High Yield; and for cash and cash
equivalents, the 90 Day T-Bill.
5
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
------------------------------------------------------------------------------------------------------------------------------------
GE CONSERVATIVE GE MODERATE GE AGGRESSIVE
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
9/30/00 9/30/99(a) 9/30/00 9/30/99(a) 9/30/00 9/30/99(a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- 12/31/98 -- 12/31/98 -- 12/31/98
Net asset value, beginning of period ........................ $ 10.27 $10.00 $ 10.39 $10.00 $ 10.56 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(d) .................................... 0.37 0.13 0.28 0.08 0.18 0.03
Net realized and unrealized gains on investments ............ 0.63 0.14(c) 0.79 0.31(c) 1.04 0.53(c)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS ..................... 1.00 0.27 1.07 0.39 1.22 0.56
------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income .................................... 0.26 -- 0.20 -- 0.13 --
Net realized gains ....................................... -- -- 0.01 -- 0.01 --
------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ......................................... 0.26 -- 0.21 -- 0.14 --
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD .............................. $ 11.01 $10.27 $ 11.25 $10.39 $ 11.64 $10.56
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) ............................................ 9.83% 2.70% 10.35% 3.90% 11.64% 5.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ................. $39,780 $ 841 $19,817 $8,422 $26,487 $7,339
Ratios to average net assets:
Net investment income* ................................. 3.47% 3.09% 2.49% 1.98% 1.43% 0.99%
Net expenses* .......................................... 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
Gross expenses* ........................................ 0.36% 2.47% 0.49% 0.45% 0.44% 0.61%
Portfolio turnover rate .................................. 44% 140% 53% 18% 38% 10%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
NOTES TO FINANCIAL HIGHLIGHTS
-----------------------------
(a) INFORMATION IS FOR THE PERIOD DECEMBER 31, 1998, INCEPTION OF INVESTMENT OPERATIONS, THROUGH SEPTEMBER 30, 1999.
(b) TOTAL RETURNS ARE HISTORICAL AND ASSUME CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
HAD THE ADVISER NOT ABSORBED A PORTION OF EXPENSES OF THE FUNDS AND OF THE UNDERLYING GE FUNDS, 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.
(d) RECOGNITION OF NET INVESTMENT INCOME IS AFFECTED BY THE TIMING OF THE
DECLARATION OF DIVIDENDS BY THE UNDERLYING GE FUNDS IN WHICH THE FUND INVESTS.
* ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
</FN>
</TABLE>
----------------
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
----------------------------------------------------------------------------------------------------------
GE CONSERVATIVE ALLOCATION FUND
SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
----------------------------------------------------------------------------------------------------------
INVESTMENTS -- 99.9%
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
GE Fixed Income Fund (Class Y) ........................ 1,805,790 $ 21,145,796
GE U.S. Equity Fund (Class Y) ......................... 345,300 11,180,800
GE International Equity Fund (Class Y) ................ 245,314 4,764,002
GE Small-Cap Value Equity Fund (Class Y) .............. 148,874 2,033,616
GEI Short-Term Investment Fund ........................ 634,054 634,054
TOTAL INVESTMENTS
(COST $39,297,299) ................................. 39,758,268
----------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.1%
----------------------------------------------------------------------------------------------------------
Other Assets .......................................... 28,155
Liabilities ........................................... (6,755)
----------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES .......................... 21,400
----------------------------------------------------------------------------------------------------------
NET ASSETS-- 100% ..................................... $39,779,668
----------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
----------------------------------------------------------------------------------------------------------
Capital paid in ....................................... $38,200,671
Undistributed net investment income ................... 868,108
Accumulated net realized gain ......................... 249,920
Net unrealized appreciation on investments ............ 460,969
----------------------------------------------------------------------------------------------------------
NET ASSETS ............................................ $39,779,668
----------------------------------------------------------------------------------------------------------
Shares outstanding (par value $.001) .................. 3,612,049
Net asset value per share ............................. $11.01
</TABLE>
---------------
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
---------------------------------------------------------------------------------------------------------
GE MODERATE ALLOCATION FUND
SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------------
Number
of Shares Value
---------------------------------------------------------------------------------------------------------
INVESTMENTS -- 100.0%
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
GE U.S. Equity Fund (Class Y) ......................... 208,090 $ 6,737,954
GE Fixed Income Fund (Class Y) ........................ 475,965 5,573,555
GE International Equity Fund (Class Y) ................ 159,510 3,097,683
GE Small-Cap Value Equity Fund (Class Y) .............. 178,091 2,432,720
GE High Yield Fund (Class Y) .......................... 114,033 992,084
GE Emerging Markets Fund (Class Y) .................... 37,685 549,068
GEI Short-Term Investment Fund ........................ 425,834 425,834
TOTAL INVESTMENTS
(COST $19,872,990) ................................. 19,808,898
---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.0%
---------------------------------------------------------------------------------------------------------
Other Assets .......................................... 14,830
Liabilities ........................................... (6,276)
---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES .......................... 8,554
---------------------------------------------------------------------------------------------------------
NET ASSETS-- 100% ..................................... $19,817,452
---------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
---------------------------------------------------------------------------------------------------------
Capital paid in ....................................... $19,249,822
Undistributed net investment income ................... 280,121
Accumulated net realized gain ......................... 351,601
Net unrealized depreciation on investments ............ (64,092)
---------------------------------------------------------------------------------------------------------
NET ASSETS ............................................ $19,817,452
---------------------------------------------------------------------------------------------------------
Shares outstanding (par value $.001) .................. 1,760,916
Net asset value per share ............................. $11.25
</TABLE>
----------------
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
---------------------------------------------------------------------------------------------------------
GE AGGRESSIVE ALLOCATION FUND
SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------------
Number
of Shares Value
---------------------------------------------------------------------------------------------------------
INVESTMENTS -- 100.0%
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
GE U.S. Equity Fund (Class Y) ......................... 305,761 $ 9,900,540
GE Small-Cap Value Equity Fund (Class Y) .............. 389,391 5,319,085
GE International Equity Fund (Class Y) ................ 258,211 5,014,448
GE Fixed Income Fund (Class Y) ........................ 210,438 2,464,229
GE High Yield Fund (Class Y) .......................... 214,326 1,864,636
GE Emerging Markets Fund (Class Y) .................... 84,207 1,226,895
GEI Short-Term Investment Fund ........................ 686,982 686,982
TOTAL INVESTMENTS
(COST $26,897,726) ................................. 26,476,815
---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.0%
---------------------------------------------------------------------------------------------------------
Other Assets .......................................... 15,296
Liabilities ........................................... (4,838)
---------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES .......................... 10,458
---------------------------------------------------------------------------------------------------------
NET ASSETS-- 100% ..................................... $26,487,273
---------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
---------------------------------------------------------------------------------------------------------
Capital paid in ....................................... $26,243,937
Undistributed net investment income ................... 179,831
Accumulated net realized gain ......................... 484,416
Net unrealized depreciation on investments ............ (420,911)
---------------------------------------------------------------------------------------------------------
NET ASSETS ............................................ $26,487,273
---------------------------------------------------------------------------------------------------------
Shares outstanding (par value $.001) .................. 2,276,111
Net asset value per share ............................. $11.64
</TABLE>
----------------
See Notes to Financial Statements.
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
GE CONSERVATIVE GE MODERATE GE AGGRESSIVE
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME:
<S> <C> <C> <C>
Dividends ....................................... $ 900,277 $375,260 $262,815
Interest ........................................ 28,920 18,868 23,471
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME ....................................... 929,197 394,128 286,286
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Transfer agent fees ............................. 40,110 41,113 41,113
Trustees' fees .................................. 179 1,808 1,577
Advisory and administration fees ................ 50,619 29,325 35,224
------------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES BEFORE REIMBURSEMENT ................ 90,908 72,246 77,914
------------------------------------------------------------------------------------------------------------------------------------
Less: Expenses reimbursed by
the Adviser .................................. (40,289) (42,921) (42,690)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses .................................... 50,619 29,325 35,224
------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME .............................. 878,578 364,803 251,062
------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain on investments .................... 250,517 355,118 484,994
Change in unrealized appreciation
(depreciation) on investments ................ 481,403 158,151 (144,075)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments ............................... 731,920 513,269 340,919
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $1,610,498 $878,072 $591,981
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
GE CONSERVATIVE GE MODERATE GE AGGRESSIVE
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
9/30/00 9/30/99* 9/30/00 9/30/99* 9/30/00 9/30/99*
------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income ........................ $ 878,578 $ 10,530 $ 364,803 $ 62,318 $ 251,062 $ 18,769
Net realized gain (loss) on investments ...... 250,517 (597) 355,118 7,164 484,994 8,059
Net increase (decrease) in unrealized
appreciation/depreciation ................. 481,403 (20,434) 158,151 (222,243) (144,075) (276,836)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from operations ...... 1,610,498 (10,501) 878,072 (152,761) 591,981 (250,008)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ........................ (21,000) -- (147,000) -- (90,000) --
Net realized gains ........................... -- -- (10,681) -- (8,637) --
------------------------------------------------------------------------------------------------------------------------------------
Total distributions ............................. (21,000) -- (157,681) -- (98,637) --
------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
operations and distributions ................. 1,589,498 (10,501) 720,391 (152,761) 493,344 (250,008)
------------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares ................. 47,320,317 1,484,866 15,410,665 10,125,126 22,411,020 8,108,990
Value of distributions reinvested ............ 21,000 -- 157,680 -- 98,632 --
Cost of shares redeemed ...................... (9,992,455) (633,057) (4,893,409)(1,550,240) (3,855,170) (519,535)
------------------------------------------------------------------------------------------------------------------------------------
Net increase from share transactions 37,348,862 851,809 10,674,936 8,574,886 18,654,482 7,589,455
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS .................... 38,938,360 841,308 11,395,327 8,422,125 19,147,826 7,339,447
NET ASSETS
Beginning of period ............................. 841,308 -- 8,422,125 -- 7,339,447 --
------------------------------------------------------------------------------------------------------------------------------------
End of period ................................... $39,779,668 $841,308 $19,817,452 $8,422,125 $26,487,273 $7,339,447
------------------------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME,
END OF PERIOD ................................... $ 868,108 $ 10,530 $ 280,121 $ 62,318 $ 179,831 $ 18,769
------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN FUND SHARES
Shares sold by subscription ........................ 4,443,929 142,946 1,377,619 958,519 1,902,374 742,852
Issued for distributions reinvested ................ 1,998 -- 14,492 -- 8,713 --
Shares redeemed .................................... (915,771) (61,053) (441,984) (147,730) (329,855) (47,973)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in fund shares ........................ 3,530,156 81,893 950,127 810,789 1,581,232 694,879
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*FOR THE PERIOD DECEMBER 31, 1998 (INCEPTION) THRU SEPTEMBER 30, 1999.
-----------------
See Notes to Financial Statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
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 (each a "Fund" and
collectively the "Funds"), three of which are included in a separate annual
report. Each Fund operates as a "fund-of-funds" in that it makes investments in
a select group of underlying GE Funds ("Underlying Funds") and cash suited to
the Fund's particular investment objective. 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 by investing among
the underlying GE Funds within carefully determined ranges. The Fund normally
invests 38% to 52% of its net assets in equity funds and 48% to 58% in income
funds.
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 by investing among the underlying GE Funds within carefully determined
ranges. The Fund normally invests 55% to 75% of its net assets in equity funds
and 25% to 41% in income funds.
GE Aggressive Allocation Fund's investment objective is capital appreciation.
The Fund seeks to achieve its objective by investing among the underlying GE
Funds within carefully determined ranges. The Fund normally invests 74% to 91%
of its net assets in equity funds and 9% to 22% in income funds.
GE Investment Management Incorporated, the Lifestyle Funds' investment advisor
and a wholly owned subsidiary of General Electric Company, changed its name to
GE Asset Management Incorporated ("GEAM") effective January 28, 2000.
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 at
the date of the financial statements. Actual results may differ from those
estimates.
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 or original
cost plus accrued interest, both of which approximate current value.
Security transactions are accounted for as of the trade date. Capital gain
distributions from investments in the Underlying Funds are included in the
Statement of Operations in realized gain/loss on investments. Realized gains and
losses on investments sold are recorded on the basis of specific identified cost
for both financial statement and federal tax purposes.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements. The Funds' custodian
takes possession of the collateral pledged for investments in repurchase
agreements on behalf of the Funds. The Funds value the underlying collateral
daily on a mark-to-market basis to determine that the value, including accrued
interest, is at least equal to 102% of the repurchase price. In the event the
seller defaults and the value of the security declines, or if the seller enters
an insolvency proceeding, realization of the collateral by the Funds may be
delayed or limited.
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 net investment income and net realized capital 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. No such net capital and currency losses
were incurred during the Fund's tax year.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
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. Reclassifications are made to the
Funds' capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations. These
reclassifications have no impact on net investment income, realized gains or
losses, or net asset value of the Funds. The calculation of net investment
income per share in the Financial Highlights table excludes these adjustments.
INVESTMENT INCOME
Income and capital gain distributions received from the underlying GE Funds, if
any, are recorded on the ex- dividend date. Interest income is recorded on the
accrual basis.
EXPENSES
The Funds pay a fee to GEAM for the Funds' advisory and administration services.
This fee includes any normal operating expenses payable by the Funds, except for
fees paid to the Trust's independent Trustees, transfer agency fees, brokerage
fees and commissions, and fees that are not normal operating expenses of the
Funds (such as extraordinary expenses, interest and taxes). Until further
notice, GEAM has agreed to reimburse the Funds for these costs.
3. FEES AND COMPENSATION PAID TO AFFILIATES
ADVISORY AND ADMINISTRATION FEES
Compensation of GEAM 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 GEAM 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 GEAM.
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.
OTHER
For the period ended September 30, 2000, 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 September 30, 2000, were as follows:
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION DEPRECIATION (DEPRECIATION)
--------------------------------------------------------------------------------
GE Conservative
Allocation Fund $1,070,899 $609,930 $460,969
GE Moderate
Allocation Fund 400,916 465,008 (64,092)
GE Aggressive
Allocation Fund 542,524 963,435 (420,911)
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at September 30, 2000.
5. INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of the Underlying Funds,
excluding short-term securities, for the period ended September 30, 2000, were
as follows:
PURCHASES SALES
--------------------------------------------------------------------------------
GE Conservative
Allocation Fund $47,832,776 $10,244,445
GE Moderate
Allocation Fund 18,191,755 7,469,791
GE Aggressive
Allocation Fund 24,856,188 6,323,418
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
6. BENEFICIAL INTEREST
The schedule below shows the number of shareholders each owning 5% or more of a
Fund. The total percentage of a Fund held by such shareholders as well as the
percentage of a Fund held by certain directly and indirectly owned subsidiaries
of General Electric Company and their respective retirement plans ("GE
Affiliates") at September 30, 2000 are:
5% OR GREATER SHAREHOLDERS
--------------------------
% OF % OF FUND HELD
NUMBER FUND HELD BY GE AFFILIATES*
----------------------------------------------------------------
GE Conservative
Allocation Fund 1 97% 97%
GE Moderate
Allocation Fund 3 87% 87%
GE Aggressive
Allocation Fund 3 92% 92%
Investment activities of these shareholders could have a material impact on
these Funds.
* INCLUDED IN THE 5% OR GREATER SHAREHOLDERS PERCENTAGE.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Trustees of GE LifeStyle Funds
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
each of the funds constituting GE LifeStyle Funds (the "Trust") at September 30,
2000, and the results of their operations, the changes in their net assets and
the financial highlights for the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 2000 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 17, 2000
15
<PAGE>
[This page is left intentionally blank.]
16
<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 SMALL-CAP VALUE EQUITY FUND
Senior Investment Committee:
Jack Feiler
Martin L. Berman
Steven E. Berman
Richard Meisenberg -
Palisade Capital Management, L.L.C.
GE HIGH YIELD FUND
Robert E. Angevine
Thomas L. Bennett
Stephen F. Esser -
Miller Anderson & Sherrerd, LLP
GE EMERGING MARKETS FUND
Team led by Ralph R. Layman
GE U.S. EQUITY FUND
Team led by Eugene K. Bolton
GE FIXED INCOME FUND
Team led by Robert A. MacDougall
INVESTMENT ADVISER
AND ADMINISTRATOR
GE Asset Management Incorporated
TRUSTEES
Michael J. Cosgrove
John R. Costantino
Alan M. Lewis
William J. Lucas
Robert P. Quinn
SECRETARY
Matthew J. Simpson
TREASURER
Michael J. Tansley
ASSISTANT TREASURER
Michael M. D'Ambrosio
DISTRIBUTOR
GE Investment Distributors, Inc.
Member NASD and SIPC
COUNSEL
Willkie Farr & Gallagher LLP
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
John J. Walker, 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, MARKETING
Don W. Torey, EVP, ALTERNATIVE INVESTMENTS AND REAL ESTATE
<PAGE>
INVESTMENT ADVISER
GE ASSET MANAGEMENT INCORPORATED
3003 SUMMER STREET
STAMFORD, CT 06905
DISTRIBUTOR
GE INVESTMENT DISTRIBUTORS, INC.
MEMBER NASD AND SIPC
777 LONG RIDGE ROAD
STAMFORD, CT 06927
[GE LOGO OMITTED]
WE BRING GOOD THINGS TO LIFE.
<PAGE>
GE LIFESTYLE FUNDS
ANNUAL REPORT
GE STRATEGY FUNDS
GE CONSERVATIVE STRATEGY FUND
GE MODERATE STRATEGY FUND
GE AGGRESSIVE STRATEGY FUND
September 30, 2000
[GE LOGO OMITTED]
WE BRING GOOD THINGS TO LIFE.
<PAGE>
GE LIFESTYLE FUNDS
--------------------------------------------------------------------------------
UNDERSTANDING YOUR REPORT
--------------------------------------------------------------------------------
A LETTER FROM THE PRESIDENT ........................................... 1
PERFORMANCE SUMMARY
GE CONSERVATIVE STRATEGY FUND .................................... 2
GE MODERATE STRATEGY FUND ........................................ 3
GE AGGRESSIVE STRATEGY FUND ...................................... 4
PORTFOLIO MANAGER'S BIOGRAPHY .................................... 5
NOTES TO PERFORMANCE ............................................. 5
FINANCIAL STATEMENTS
Financial Highlights ............................................. 6
Statements of Net Assets, Operations,
and Changes in Net Assets ..................................... 7
NOTES
Notes to Financial Statements .................................... 12
REPORT OF INDEPENDENT ACCOUNTANTS ..................................... 14
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:
I am pleased to provide you with the Annual Report for the GE LifeStyle Funds,
for the twelve-month period ended September 30, 2000.
MARKET OVERVIEW
The U.S. economy continued its strength into the third quarter of the year as
unemployment figures reached a new low of 3.9% and worker productivity levels
continued to rise. The Federal Reserve Board's interest rate increases over the
past 18 months began to take effect, as signs of inflation diminished and the
U.S. economy appeared to be heading for a soft landing. U.S. stock markets were
hard hit during the second quarter of the year as the NASDAQ composite index
fell 355 points, or over 30% in one day. The NASDAQ did regain much of its
losses in June and into the third quarter, however, it still finished down 9.74%
for the one-year period that ended September 30, 2000. The Dow Jones Industrial
Average and the S&P 500 Index also closed the year down, finishing at -1.39% and
-6.31%, respectively. The positive news from the major indexes was that the
market had regained some breadth after having been narrowly focused on
technology stocks for so long. Utility stocks, financials, capital goods and
energy stocks all performed well during the third quarter.
The Federal Reserve Board declined to increase interest rates at its last
meeting, meeting market expectations. The bond market reacted favorably as
interest rates lowered across the maturity spectrum, producing a positive total
return for the U.S. Treasury sector.
MARKET OUTLOOK
As we enter the fourth quarter of the year, we believe there are four areas of
concern for the economy and the markets. The first is the November presidential
elections, with concern about the future spending power of the U.S. being raised
since both candidates have made promises that will impact the surplus and could
cause the country to go back to a deficit position. The second concern is the
ability of the Federal Reserve Board to hold interest rates steady. The Board's
bias thus far has been toward tightening rates and looks to continue that way,
given the tight labor market and potential inflation effect of higher energy
costs. The third concern came into play during September as a number of large
companies, roughly 30% of the DJIA, reported earnings misses -- meaning that
they would not meet their earnings estimates for the year. The fourth area is
rising energy costs. The price of oil reached a ten-year high of $37 a barrel as
the third quarter ended. If weather forecasters are correct in predicting a very
cold winter, then oil and gas consumption will be heavy and could result in
higher prices. Higher energy prices would also affect corporate earnings, since
the cost of doing business for many companies would be negatively impacted.
With all of these uncertainties in the market, we continue to believe that our
investment strategy of stock picking, and not indexing, is the key determinant
of who will be successful going forward and who will not. We will continue to
look for investment opportunities with high-quality companies that have
strategic vision and strong earnings potential.
Thank you for your continued investment in the GE LifeStyle Funds. We look
forward to continuing to serve your financial needs and encourage you to log on
to WWW.GEFN.COM to take advantage of the many opportunities offered by the GE
Financial Network.
Sincerely,
/s/MICHAEL J. COSGROVE
Michael J. Cosgrove
CHAIRMAN, GE LIFESTYLE FUNDS
OCTOBER 16, 2000
MIKE COSGROVE IS THE PRESIDENT OF THE ASSET MANAGEMENT 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 ASSET
MANAGEMENT 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.
1
<PAGE>
GE CONSERVATIVE STRATEGY FUND PERFORMANCE SUMMARY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN
VALUE OF A $10,000 INVESTMENT
--------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
PLOT POINTS FOLLOWSL
GE CONSERVATIVE STRATEGY FUND COMPOSITE INDEX** COMPOSITE INDEX(OLD)***
1/5/98 10,000.00 10,000.00 10,000.00
3/98 10,629.97 10,694.06 10,705.33
6/98 10,829.97 10,918.29 10,932.35
9/98 10,320.00 105,71.64 10,647.53
12/98 11,132.91 11,541.31 11,618.54
3/99 11,312.47 11,661.22 117,86.33
6/99 11,534.29 11,960.37 12,028.97
9/99 11,396.97 11,821.43 11,989.07
12/99 12,217.74 12,640.32 12,803.89
3/00 12,541.02 12,946.67 13,005.62
6/00 12,529.87 12,881.71 12,938.61
9/00 12,563.31 12,939.78 12,927.04
PORTFOLIO ALLOCATION TO FUNDS AT 9/30/00*
--------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE Fixed Income Fund 53.0% 53.2%
GE U.S. Equity Fund 28.0% 28.1%
GE International Equity Fund 12.0% 12.0%
GE Small-Cap Value Equity Fund 5.0% 5.1%
Cash and Cash Equivalents 2.0% 1.6%
--------------------------------------------------------------------------------
Total 100.0% 100.0%
--------------------------------------------------------------------------------
* As a percentage of net assets
AVERAGE ANNUAL TOTAL TOTAL RETURNS:
From January 5, 1998 (inception) through September 30, 2000
--------------------------------------------------------------------------------
ONE SINCE
YEAR INCEPTION
--------------------------------------------------------------------------------
GE CONSERVATIVE STRATEGY FUND 10.23% 8.69%
Composite Index** 9.46% 9.87%
Composite Index (Old)*** 7.81% 9.83%
LB Aggregate Bond Index 6.99% 5.39%
S&P 500 Index 13.24% 16.98%
MSCI EAFE Index 3.18% 11.40%
Russell 2000 Index 23.22% 7.83%
90 Day T-Bill 5.77% 5.18%
--------------------------------------------------------------------------------
**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.
***EFFECTIVE JANUARY 28, 2000, THE UNDERLYING GE FUNDS IN WHICH THE FUND MAY
INVEST AND THEIR TARGET ALLOCATIONS WERE CHANGED. THE COMPOSITE INDEX (OLD)
IS DERIVED BY APPLYING EACH UNDERLYING GE FUNDS PREVIOUS TARGET ALLOCATIONS
TO THE RESULTS OF THE BENCHMARKS FOR EACH UNDERLYING GE FUND.
The GE Conservative Strategy Fund returned 10.23% for the one-year period ended
September 30, 2000. The Fund performed well compared to its Composite Index,
which returned 9.46% for the same period.
The Fund allocates investments among several asset classes including U.S.
Equities, International Equities, and Fixed Income. The Fund is designed to
provide investors with a balanced, conservative investment strategy. The Fund is
structured with a conservative weighting in equities relative to fixed income.
Approximately 45% of the Fund is allocated to equities. U.S. Equities account
for 33% of the Fund, with 28% allocated to core equity and 5% to small-cap
equities. Core international equities comprise 12% of the Fund. Approximately
55% of the Fund is allocated to fixed income securities. Core fixed income
accounts for 53% of the Fund and the balance is allocated to cash and cash
equivalents. Due to the balanced approach of the Fund, the results need to be
compared to a composite which is made up of several benchmarks including: the
S&P 500 Index, the Russell 2000 Index, the MSCI EAFE Index, the Lehman Brothers
Aggregate Bond Index, and the 90 Day T-Bill.
The performance of the Fund relative to its composite benchmark was due to
positive results in fixed income, and good stock selection in U.S. and
international equities. More than half of the Fund is allocated to fixed income.
The Fixed Income markets were challenged by the Federal Reserve's mission to
keep inflation low. The Federal Reserve raised interest rates several times over
this period. As a result of investors anticipating the end to interest rate
hikes, the bond market rallied and did well over the past six months, helping
performance. The U.S. equity markets were volatile during this period, however,
solid gains in core U.S. equity and above average returns in small-cap stocks
provided positive results for the U.S. equity portion of the Fund. The
international markets were also volatile during this period, however, strong
stock selection helped deliver above average performance for this asset class.
We continue to believe that this investment strategy will provide solid results
especially when markets are reflecting economic uncertainty.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
2
<PAGE>
GE MODERATE STRATEGY FUND PERFORMANCE SUMMARY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN
VALUE OF A $10,000 INVESTMENT
--------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
PLOT POINTS FOLLOWS:
GE MODERATE STRATEGY FUND COMPOSITE INDEX** COMPOSITE INDEX (OLD)***
1/5/98 10,000.00 10,000.00 10,000.00
3/98 10,880.00 10,911.57 10,947.31
6/98 11,080.05 10,988.00 11,192.16
9/98 10,220.06 10,146.49 10,563.10
12/98 11,416.37 11,477.16 11,945.28
3/99 11,717.36 11,659.00 12,204.93
6/99 12,115.11 12,252.51 12,588.58
9/99 11,857.11 11,981.13 12,468.76
12/99 13,100.38 13,261.12 13,687.97
3/00 13,428.17 13,601.28 13,905.79
6/00 13,236.02 13,363.47 13,703.20
9/00 13,077.77 13,229.85 13,522.27
PORTFOLIO ALLOCATION TO FUNDS AT 9/30/00*
--------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE U.S. Equity Fund 34.0% 33.6%
GE Fixed Income Fund 28.0% 28.6%
GE International Equity Fund 16.0% 16.1%
GE Small-Cap Value Equity Fund 12.0% 12.1%
GE High Yield Fund 5.0% 5.0%
GE Emerging Markets Fund 3.0% 2.8%
Cash and Cash Equivalents 2.0% 1.8%
--------------------------------------------------------------------------------
Total 100.0% 100.0%
--------------------------------------------------------------------------------
* As a percentage of net assets
AVERAGE ANNUAL TOTAL TOTAL RETURNS:
From January 5, 1998 (inception) through September 30, 2000
--------------------------------------------------------------------------------
ONE SINCE
YEAR INCEPTION
--------------------------------------------------------------------------------
GE MODERATE STRATEGY FUND 10.29% 10.30%
Composite Index** 10.43% 10.77%
Composite Index (Old)*** 8.43% 11.65%
S&P 500 Index 13.24% 16.98%
LB Aggregate Bond Index 6.99% 5.39%
MSCI EAFE Index 3.18% 11.40%
Russell 2000 Index 23.22% 7.83%
CS First Boston Global High Yield Index 1.92% 1.13%
MSCI EMF Index 0.42% (0.20%)
90 Day T-Bill 5.77% 5.18%
--------------------------------------------------------------------------------
**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.
***EFFECTIVE JANUARY 28, 2000, THE UNDERLYING GE FUNDS IN WHICH THE FUND MAY
INVEST AND THEIR TARGET ALLOCATIONS WERE CHANGED. THE COMPOSITE INDEX (OLD)
IS DERIVED BY APPLYING EACH UNDERLYING GE FUNDS PREVIOUS TARGET ALLOCATIONS
TO THE RESULTS OF THE BENCHMARKS FOR EACH UNDERLYING GE FUND.
The GE Moderate Strategy Fund returned 10.29% for the one-year period ended
September 30, 2000. The Fund slightly underperformed its Composite Index, which
returned 10.43% for the same period.
The Fund allocates investments among several asset classes including U.S.
Equities, International Equities, and Fixed Income. The Fund is designed to
provide investors with a balanced, moderate investment strategy. The Fund is
structured with a moderate weighting in equities relative to fixed income.
Approximately 65% of the Fund is allocated to equities. U.S. Equities account
for 46% of the Fund, with 34% allocated to core equity and 12% to small-cap
equities. International equities comprise 19% of the Fund, with 16% in core
international and 3% in emerging market international equities. Approximately
35% of the Fund is allocated to fixed income securities. The fixed income
weighting includes 28% in core fixed income, 5% in high yield securities, and
the balance in cash and cash equivalents. Due to the balanced approach of the
Fund, the results need to be compared to a composite which is made up of several
benchmarks including: the S&P 500 Index, the Russell 2000 Index, the MSCI EAFE
Index, the MSCI EMF Index, the Lehman Brothers Aggregate Bond Index, the CS
First Boston Global High Yield Index, and the 90 Day T-Bill.
The Fund's strong relative performance compared to its composite benchmark was
due to the asset allocation strategy of the Fund. More than 65% of the Fund is
allocated to equities. The U.S. equity markets continued to be volatile during
the period. Returns for the Fund's U.S. small-cap stocks were very strong during
this period and helped to boost overall performance for the U.S. equity portion
of the Fund. The international markets were also volatile during this period,
however, strong stock selection provided above average performance for this
asset class. The Fixed Income markets did well, as investors anticipated the end
to interest rate increases. We continue to believe that this investment strategy
will provide solid results in both up and down markets due to the balanced
diversification between equities and fixed income.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
3
<PAGE>
GE AGGRESSIVE STRATEGY FUND PERFORMANCE SUMMARY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPARISON OF CHANGE IN
VALUE OF A $10,000 INVESTMENT
--------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
PLOT POINTS FOLLOWS:
GE AGGRESSIVE STRATEGY FUND COMPOSITE INDEX** COMPOSITE INDEX (OLD)***
1/5/98 10,000.00 10,000.00 10,000.00
3/98 11,110.07 11,087.18 11,179.57
6/98 11,330.08 11,038.14 11,440.65
9/98 10,150.10 9,778.87 10,469.17
12/98 11,664.74 11,380.14 12,240.96
3/99 12,056.03 11,579.83 12,589.95
6/99 12,627.11 12,428.73 13,112.59
9/99 12,267.54 12,043.20 12,916.04
12/99 13,954.01 13,716.65 14,550.84
3/00 14,359.58 14,115.80 14,779.75
6/00 14,008.81 13,725.00 14,432.16
9/00 13,690.93 13,443.26 14,068.73
PORTFOLIO ALLOCATION TO FUNDS AT 9/30/00*
--------------------------------------------------------------------------------
TARGET ACTUAL
------ ------
GE U.S. Equity Fund 38.0% 38.0%
GE Small-Cap Value Equity Fund 20.0% 20.5%
GE International Equity Fund 19.0% 18.8%
GE Fixed Income Fund 9.0% 9.1%
GE High Yield Fund 7.0% 7.0%
GE Emerging Markets Fund 5.0% 4.7%
Cash and Cash Equivalents 2.0% 1.9%
--------------------------------------------------------------------------------
Total 100.0% 100.0%
--------------------------------------------------------------------------------
* As a percentage of net assets
AVERAGE ANNUAL TOTAL TOTAL RETURNS:
From January 5, 1998 (inception) through September 30, 2000
--------------------------------------------------------------------------------
ONE SINCE
YEAR INCEPTION
--------------------------------------------------------------------------------
GE AGGRESSIVE STRATEGY FUND 11.60% 12.16%
Composite Index** 11.65% 11.43%
Composite Index (Old)*** 8.90% 13.28%
S&P 500 Index 13.24% 16.98%
Russell 2000 Index 23.22% 7.83%
MSCI EAFE Index 3.18% 11.40%
LB Aggregate Bond Index 6.99% 5.39%
CS First Boston Global High Yield Index 1.92% 1.13%
MSCI EMF Index 0.42% (0.20%)
90 Day T-Bill 5.77% 5.18%
--------------------------------------------------------------------------------
**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.
***EFFECTIVE JANUARY 28, 2000, THE UNDERLYING GE FUNDS IN WHICH THE FUND MAY
INVEST AND THEIR TARGET ALLOCATIONS WERE CHANGED. THE COMPOSITE INDEX (OLD)
IS DERIVED BY APPLYING EACH UNDERLYING GE FUNDS PREVIOUS TARGET ALLOCATIONS
TO THE RESULTS OF THE BENCHMARKS FOR EACH UNDERLYING GE FUND.
The GE Aggressive Strategy Fund returned 11.60% for the one-year period ended
September 30, 2000. The Fund slightly underperformed its Composite Index, which
returned 11.65% for the same period.
The Fund allocates investments among several asset classes including U.S.
Equities, International Equities, and Fixed Income. The Fund is designed to
provide investors with a balanced but aggressive investment strategy. The Fund
is structured with an aggressive weighting in equities relative to fixed income
due to its long-term goal of capital appreciation. Approximately 82% of the Fund
is allocated to equities. U.S. Equities account for 58% of the Fund, with 38%
allocated to core equity and 20% to small-cap equities. International equities
comprise 24% of the Fund, with 19% in core international and 5% in emerging
market international equities. Approximately 18% of the Fund is allocated to
fixed income securities. The fixed income weighting includes 9% in core fixed
income, 7% in high yield securities, and the balance in cash and cash
equivalents. Due to the balanced approach of the Fund, the results need to be
compared to a composite which is made up of several benchmarks including: the
S&P 500 Index, the Russell 2000 Index, the MSCI EAFE Index, the MSCI EMF Index,
the Lehman Brothers Aggregate Bond Index, the CS First Boston Global High Yield
Index, and the 90 Day T-Bill.
The Fund's strong relative performance compared to its composite benchmark was
due to the asset allocation strategy of the Fund. More than 80% of the Fund is
allocated to equities with approximately 58% allocated to U.S. equities. The
U.S. equity markets continued to be volatile during the period. Returns for the
Fund's U.S. small-cap stocks were very strong during this period and helped to
boost overall performance for the U.S. equity portion of the Fund. The
international markets were also volatile during this period, however, strong
stock selection provided above average performance for this asset class. The
Fixed Income markets did well, as investors anticipated the end to interest rate
increases. We believe this investment strategy will provide positive results in
strong equity markets, and conversely, when markets retreat, the fixed income
allocation is likely to cushion negative returns.
SEE NOTES TO PERFORMANCE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
<PAGE>
GE LIFESTYLE FUNDS PORTFOLIO MANAGER'S BIOGRAPHY
--------------------------------------------------------------------------------
PERFORMANCE SUMMARIES ON THE PRECEDING PAGES ARE PRESENTED BY EUGENE K. BOLTON,
EXECUTIVE VICE PRESIDENT, GE ASSET MANAGEMENT.
GENE BOLTON IS RESPONSIBLE FOR THE MANAGEMENT OF THE GE LIFESTYLE FUNDS. AS THE
CHAIRMAN OF THE ASSET ALLOCATION COMMITTEE AT GE ASSET MANAGEMENT, 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
ASSET MANAGEMENT AND MANAGES TOTAL ASSETS OF APPROXIMATELY $34 BILLION, AS OF
SEPTEMBER 30, 2000, 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 ASSET MANAGEMENT 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)
--------------------------------------------------------------------------------
Information on the preceding pages relating to the Funds' one year total return
and portfolio allocation is audited, all other information on the performance
pages is unaudited.
Total returns are historical and assume changes in share price, reinvestment of
dividends and capital gains distributions, if any. Past performance is not
indicative of future results of a 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. Periods less than one year are not annualized.
The Adviser has voluntarily agreed to waive and/or bear certain fees and
expenses of both the Funds and the underlying GE Funds. Without these
provisions, the performance returns would have been lower. These provisions may
be renewed or discontinued 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 ), the Lehman Brothers Aggregate Bond Index (LB Aggregate), the
Russell 2000 Index (Russell 2000), the Morgan Stanley Capital International
Emerging Markets Free Index (MSCI EMF), the Credit Suisse First Boston Global
High Yield Index (CS First Boston High Yield), and the 90 Day T-Bill are
unmanaged indices and do not reflect the actual cost of investing in the
instruments that comprise each index.
The S&P 500 is a capitalization-weighted index of 500 widely held stocks
recognized by investors to be representative of the U.S. stock market in
general. The MSCI EAFE is a composite of 989 foreign securities traded in 20
developed markets representing Europe, Australasia and Far East. The LB
Aggregate is a composite of short-, medium-, and long-term bond performance and
is widely recognized as a barometer of the bond market in general. The Russell
2000 measures the performance of the smallest companies in the Russell 3000
Index, which represents approximately 10% of the total market capitalization of
the Russell 3000 Index, which measures the performance of the 3000 largest U.S.
companies based on total market capitalization, which represents approximately
98% of the investable U.S. equity market. The MSCI EMF is a composite of
securities available to non-domestic investors traded in 25 emerging markets.
The CS First Boston High Yield is a composite of below investment-grade
corporate bonds issued in the United States. The 90 Day T-Bill is the average
return on three month U.S. Treasury Bills. The results shown for the foregoing
indices assume reinvestment of net dividends or interest.
Total returns for the Composite Index are derived by applying each underlying
Fund's target allocations to the results of the corresponding benchmarks for the
domestic equity market, the S&P 500 and the Russell 2000; for the international
equity market, the MSCI EAFE and the MSCI EMF; for the fixed income bond market,
the LB Aggregate and the CS First Boston High Yield; and for cash and cash
equivalents, the 90 Day T-Bill.
5
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
------------------------------------------------------------------------------------------------------------------------------------
GE CONSERVATIVE GE MODERATE GE AGGRESSIVE
STRATEGY STRATEGY STRATEGY
FUND FUND FUND
9/30/00 9/30/99 9/30/98(a) 9/30/00 9/30/99 9/30/98(a) 9/30/00 9/30/99 9/30/98(a)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE ............................... -- -- 1/5/98 -- -- 1/5/98 -- -- 1/5/98
Net asset value, beginning of period ......... $10.79 $10.32 $ 10.00 $11.03 $10.22 $ 10.00 $11.60 $10.15 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (d) ................. 0.35 0.27 0.31 0.29 0.22 0.61 0.19 0.18 0.34
Net realized and unrealized gains
(losses) on investments ................ 0.72 0.78 0.01(c) 0.83 1.36 (0.39) 1.15 1.87 (0.19)(c)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS ...... 1.07 1.05 0.32 1.12 1.58 0.22 1.34 2.05 0.15
------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ..................... 0.28 0.36 0.00 0.26 0.40 0.00 0.17 0.31 0.00
Net realized gains ........................ 0.31 0.22 0.00 0.32 0.37 0.00 0.28 0.29 0.00
------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS .......................... 0.59 0.58 0.00 0.58 0.77 0.00 0.45 0.60 0.00
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ............... $11.27 $10.79 $ 10.32 $11.57 $11.03 $ 10.22 $12.49 $11.60 $10.15
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(B) .............................. 10.23% 10.44% 3.20% 10.29% 16.02% 2.20% 11.60% 20.86% 1.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .. $4,102 $2,058 $ 979 $40,974 $32,319 $25,148 $10,724 $5,100 $2,939
Ratios to average net assets:
Net investment income* ................. 3.47% 3.39% 5.85% 2.50% 2.83% 7.39% 1.51% 2.07% 5.79%
Net expenses* .......................... 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
Gross expenses* ........................ 1.41% 0.79% 5.65% 0.32% 0.24% 0.33% 0.65% 0.41% 1.80%
Portfolio turnover rate ................... 55% 71% 67% 52% 41% 22% 50% 27% 28%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
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 DISTRIBUTIONS,
AND NO SALES CHARGE. HAD THE ADVISER NOT ABSORBED A PORTION OF EXPENSES OF THE FUNDS AND OF THE UNDERLYING GE FUNDS, 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.
(d) RECOGNITION OF NET INVESTMENT INCOME IS AFFECTED BY THE TIMING OF THE DECLARATION OF DIVIDENDS BY THE UNDERLYING GE FUNDS IN
WHICH THE FUND INVESTS
* ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
</FN>
</TABLE>
----------------
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
GE CONSERVATIVE STRATEGY FUND
SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
---------------------------------------------------------------------------------------------------------------------------
INVESTMENTS -- 100.4%
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GE Fixed Income Fund (Class A) ................................................. 186,225 $2,182,561
GE U.S. Equity Fund (Class A) .................................................. 35,567 1,154,136
GE International Equity Fund (Class A) ......................................... 25,564 491,842
GE Small-Cap Value Equity Fund (Class A) ....................................... 15,440 209,983
GEI Short-Term Investment Fund ................................................. 80,437 80,437
TOTAL INVESTMENTS
(COST $4,073,390) ........................................................... $4,118,959
---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (0.4)%
---------------------------------------------------------------------------------------------------------------------------
Other Assets ................................................................... 2,855
Liabilities .................................................................... (20,071)
---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES ................................................... (17,216)
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS-- 100% .............................................................. $4,101,743
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
---------------------------------------------------------------------------------------------------------------------------
Capital paid in ................................................................ $3,905,341
Undistributed net investment income ............................................ 81,748
Accumulated net realized gain .................................................. 69,085
Net unrealized appreciation on investments ..................................... 45,569
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................................... $4,101,743
---------------------------------------------------------------------------------------------------------------------------
Shares outstanding (par value $.001) ........................................... 364,027
Net asset value per share ...................................................... $11.27
</TABLE>
----------------
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
GE MODERATE STRATEGY FUND
SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
---------------------------------------------------------------------------------------------------------------------------
INVESTMENTS -- 99.8%
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GE U.S. Equity Fund (Class A) .................................................. 424,674 $13,780,659
GE Fixed Income Fund (Class A) ................................................. 999,643 11,715,821
GE International Equity Fund (Class A) ......................................... 341,978 6,579,657
GE Small-Cap Value Equity Fund (Class A) ....................................... 365,627 4,972,524
GE High Yield Fund (Class A) ................................................... 235,835 2,051,766
GE Emerging Markets Fund (Class A) ............................................. 79,241 1,149,782
GEI Short-Term Investment Fund ................................................. 647,097 647,097
TOTAL INVESTMENTS
(COST $40,590,570) .......................................................... 40,897,306
---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.2%
---------------------------------------------------------------------------------------------------------------------------
Other Assets ................................................................... 83,773
Liabilities .................................................................... (7,432)
---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES ................................................... 76,341
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS-- 100% .............................................................. $40,973,647
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
---------------------------------------------------------------------------------------------------------------------------
Capital paid in ................................................................ $36,388,997
Undistributed net investment income ............................................ 635,929
Accumulated net realized gain .................................................. 3,641,985
Net unrealized appreciation on investments ..................................... 306,736
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................................... $40,973,647
---------------------------------------------------------------------------------------------------------------------------
Shares outstanding (par value $.001) ........................................... 3,542,349
Net asset value per share ...................................................... $11.57
</TABLE>
----------------
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
---------------------------------------------------------------------------------------------------------------------------
GE AGGRESSIVE STRATEGY FUND
SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------------------------------
Number
of Shares Value
---------------------------------------------------------------------------------------------------------------------------
INVESTMENTS -- 99.7%
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GE U.S. Equity Fund (Class A) .................................................. 125,669 $ 4,077,952
GE Small-Cap Value Equity Fund (Class A) ....................................... 161,474 2,196,046
GE International Equity Fund (Class A) ......................................... 105,040 2,020,963
GE Fixed Income Fund (Class A) ................................................. 83,367 977,066
GE High Yield Fund (Class A) ................................................... 85,750 746,028
GE Emerging Markets Fund (Class A) ............................................. 34,482 500,327
GEI Short-Term Investment Fund ................................................. 171,598 171,598
TOTAL INVESTMENTS
(COST $10,673,966) .......................................................... 10,689,980
---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.3%
---------------------------------------------------------------------------------------------------------------------------
Other Assets ................................................................... 36,942
Liabilities .................................................................... (2,555)
---------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES ................................................... 34,387
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS-- 100% .............................................................. $10,724,367
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
---------------------------------------------------------------------------------------------------------------------------
Capital paid in ................................................................ $ 9,999,701
Undistributed net investment income ............................................ 78,660
Accumulated net realized gain .................................................. 629,992
Net unrealized appreciation on investments ..................................... 16,014
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS ..................................................................... $10,724,367
---------------------------------------------------------------------------------------------------------------------------
Shares outstanding (par value $.001) ........................................... 858,496
Net asset value per share ...................................................... $12.49
</TABLE>
------------------
See Notes to Financial Statements.
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------------------------------
GE CONSERVATIVE GE MODERATE GE AGGRESSIVE
STRATEGY STRATEGY STRATEGY
FUND FUND FUND
---------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME:
Dividends ....................................... $108,983 $ 993,329 $136,658
Interest ........................................ 4,537 46,991 13,095
---------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME ....................................... 113,520 1,040,320 149,753
---------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Transfer agent fees ............................. 37,101 38,104 38,104
Trustees' fees .................................. 447 6,925 1,094
Advisory and administration fees ................ 6,153 76,980 17,521
---------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES BEFORE REIMBURSEMENT ................ 43,701 122,009 56,719
Less: Expenses reimbursed by
the Adviser .................................. (37,548) (45,029) (39,198)
---------------------------------------------------------------------------------------------------------------------------
Net expenses .................................... 6,153 76,980 17,521
---------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME .............................. 107,367 963,340 132,232
---------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain on investments .................... 94,409 3,832,021 701,727
Change in unrealized appreciation
(depreciation) on investments ................ 56,071 (1,451,052) (207,674)
---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments ............................... 150,480 2,380,969 494,053
---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $257,847 $3,344,309 $626,285
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
GE CONSERVATIVE GE MODERATE GE AGGRESSIVE
STRATEGY STRATEGY STRATEGY
FUND FUND FUND
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
9/30/00 9/30/99 9/30/00 9/30/99 9/30/00 9/30/99
------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income ................... $ 107,367 $ 46,746 $ 963,340 $ 898,635 $ 132,232 $ 85,581
Net realized gain on investments ....... 94,409 40,254 3,832,021 821,926 701,727 79,806
Net increase (decrease) in unrealized
appreciation/depreciation ............. 56,071 15,087 (1,451,052) 2,645,102 (207,674) 439,566
------------------------------------------------------------------------------------------------------------------------------------
Net increase
from operations ..................... 257,847 102,087 3,344,309 4,365,663 626,285 604,953
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .................. (55,000) (34,875) (750,000) (1,128,888) (82,000) (92,813)
Net realized gains ..................... (61,144) (20,720) (930,211) (1,040,888) (137,471) (86,167)
------------------------------------------------------------------------------------------------------------------------------------
Total distributions ....................... (116,144) (55,595) (1,680,211) (2,169,776) (219,471) (178,980)
------------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from
operations and distributions ........... 141,703 46,492 1,664,098 2,195,887 406,814 425,973
------------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares ........... 3,897,536 2,552,168 11,980,444 9,594,164 7,491,269 3,330,453
Value of distributions reinvested ...... 116,142 55,595 1,680,227 2,169,776 219,467 178,980
Cost of shares redeemed ................ (2,112,086) (1,574,974) (6,670,038) (6,788,532) (2,492,793) (1,775,136)
------------------------------------------------------------------------------------------------------------------------------------
Net increase from
share transactions .................. 1,901,592 1,032,789 6,990,633 4,975,408 5,217,943 1,734,297
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS .............. 2,043,295 1,079,281 8,654,731 7,171,295 5,624,757 2,160,270
NET ASSETS
Beginning of period ....................... 2,058,448 979,167 32,318,916 25,147,621 5,099,610 2,939,340
------------------------------------------------------------------------------------------------------------------------------------
End of period ............................. $4,101,743 $2,058,448 $40,973,647 $32,318,916 $10,724,367 $5,099,610
------------------------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME,
END OF PERIOD ............................. $ 81,748 $ 29,381 $ 635,929 $ 422,589 $ 78,660 $ 28,428
------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN FUND SHARES
Shares sold by subscription .................. 353,540 237,203 1,041,048 882,119 598,032 291,454
Issued for distributions reinvested .......... 10,834 5,403 150,020 211,685 18,048 16,981
Shares redeemed .............................. (191,167) (146,687) (579,236) (624,941) (197,086) (158,651)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in fund shares .................. 173,207 95,919 611,832 468,863 418,994 149,784
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
See Notes to Financial Statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
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 (each a "Fund" and
collectively the "Funds"), three of which are included in a separate annual
report. Each Fund operates as a "fund-of-funds" in that it makes investments in
a select group of underlying GE Funds ("Underlying Funds") and cash suited to
the Fund's particular investment objective. The objectives of the funds are as
follows:
GE Conservative Strategy Fund's investment objective is income and long-term
growth of capital. The Fund seeks to achieve its objective by investing among
the underlying GE Funds within carefully determined ranges. The Fund normally
invests 38% to 52% of its net assets in equity funds and 48% to 58% in income
funds.
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
by investing among the underlying GE Funds within carefully determined ranges.
The Fund normally invests 55% to 75% of its net assets in equity funds and 25%
to 41% in income funds.
GE Aggressive Strategy Fund's investment objective is capital appreciation. The
Fund seeks to achieve its objective by investing among the underlying GE Funds
within carefully determined ranges. The Fund normally invests 74% to 91% of its
net assets in equity funds and 9% to 22% in income funds.
GE Investment Management Incorporated, the Lifestyle Funds' investment advisor
and a wholly owned subsidiary of General Electric Company, changed its name to
GE Asset Management Incorporated ("GEAM") effective January 28, 2000.
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 at
the date of the financial statements. Actual results may differ from those
estimates.
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 or original
cost plus accrued interest, both of which approximate current value.
Security transactions are accounted for as of the trade date. Capital gain
distributions from investments in the Underlying Funds are included in the
Statement of Operations in realized gain/loss on investments. Realized gains and
losses on investments sold are recorded on the basis of specific identified cost
for both financial statement and federal tax purposes.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements. The Funds' custodian
takes possession of the collateral pledged for investments in repurchase
agreements on behalf of the Funds. The Funds value the underlying collateral
daily on a mark-to-market basis to determine that the value, including accrued
interest, is at least equal to 102% of the repurchase price. In the event the
seller defaults and the value of the security declines, or if the seller enters
an insolvency proceeding, realization of the collateral by the Funds may be
delayed or limited.
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 net investment income and net realized capital 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. No such net capital and
currency losses were incurred during the Funds' tax year.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
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. Reclassifications are made to the
Funds' capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations. These
reclassifications have no impact on net investment income, realized gains or
losses, or net asset value of the Funds. The calculation of net investment
income per share in the Financial Highlights table excludes these adjustments.
INVESTMENT INCOME
Income and capital gain distributions received from the underlying Funds, if
any, are recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
EXPENSES
The Funds pay a fee to GEAM for the Funds' advisory and administration services.
This fee includes any normal operating expenses payable by the Funds, except for
fees paid to the Trust's independent Trustees, transfer agency fees, brokerage
fees and commissions, and fees that are not normal operating expenses of the
Funds (such as extraordinary expenses, interest and taxes). Until further
notice, GEAM has agreed to reimburse the Funds for these costs.
3. FEES AND COMPENSATION PAID TO AFFILIATES
ADVISORY AND ADMINISTRATION FEES
Compensation of GEAM 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 GEAM 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 GEAM.
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.
OTHER
For the period ended September 30, 2000, 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 September 30, 2000, were as follows:
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
--------------------------------------------------------------
GE Conservative
Strategy Fund $ 64,013 $ 18,444 $ 45,569
GE Moderate
Strategy Fund 1,260,205 953,469 306,736
GE Aggressive
Strategy Fund 243,559 227,545 16,014
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at September 30, 2000.
5. INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of the Underlying Funds,
excluding short-term securities, for the period ended September 30, 2000, were
as follows:
PURCHASES SALES
--------------------------------------------------------------------------------
GE Conservative
Strategy Fund $ 3,553,103 $ 1,654,067
GE Moderate
Strategy Fund 26,952,058 19,670,794
GE Aggressive
Strategy Fund 9,466,800 4,204,459
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
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 September
30, 2000.
5% OR GREATER SHAREHOLDERS
---------------------------
% OF
NUMBER FUND HELD
-------------------------------------------------------
GE Conservative
Strategy Fund 3 91%
GE Moderate
Strategy Fund 3 96%
GE Aggressive
Strategy Fund 3 86%
Investment activities of these shareholders could have a material impact on
these Funds.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Trustees of GE LifeStyle Funds
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
each of the funds constituting GE LifeStyle Funds (the "Trust") at September 30,
2000, and the results of their operations, the changes in their net assets and
the financial highlights for the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 2000 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 17, 2000
15
<PAGE>
TAX INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
During the year ended September 30, 2000, the following GE LifeStyle Funds paid,
to shareholders of record on December 15, 1999, the following long-term capital
gain dividends:
FUND PER SHARE AMOUNT
-----------------------------------------------------
GE Conservative
Strategy Fund $0.08405
GE Moderate
Strategy Fund 0.31636
GE Aggressive
Strategy Fund 0.26048
16
<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 SMALL-CAP VALUE EQUITY FUND
Senior Investment Committee:
Jack Feiler
Martin L. Berman
Steven E. Berman
Richard Meisenberg -
Palisade Capital Management, L.L.C.
GE HIGH YIELD FUND
Robert E. Angevine
Thomas L. Bennett
Stephen F. Esser -
Miller Anderson & Sherrerd, LLP
GE EMERGING MARKETS FUND
Team led by Ralph R. Layman
GE U.S. EQUITY FUND
Team led by Eugene K. Bolton
GE FIXED INCOME FUND
Team led by Robert A. MacDougall
INVESTMENT ADVISER
AND ADMINISTRATOR
GE Asset Management Incorporated
TRUSTEES
Michael J. Cosgrove
John R. Costantino
Alan M. Lewis
William J. Lucas
Robert P. Quinn
SECRETARY
Matthew J. Simpson
TREASURER
Michael J. Tansley
ASSISTANT TREASURER
Michael M. D'Ambrosio
DISTRIBUTOR
GE Investment Distributors, Inc.
Member NASD and SIPC
COUNSEL
Willkie Farr & Gallagher LLP
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
John J. Walker, 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, MARKETING
Don W. Torey, EVP, ALTERNATIVE INVESTMENTS AND REAL ESTATE
<PAGE>
INVESTMENT ADVISER
GE ASSET MANAGEMENT INCORPORATED
3003 SUMMER STREET
STAMFORD, CT 06905
DISTRIBUTOR
GE INVESTMENT DISTRIBUTORS, INC.
MEMBER NASD AND SIPC
777 LONG RIDGE ROAD
STAMFORD, CT 06927
[GE LOGO OMITTED]
WE BRING GOOD THINGS TO LIFE.