GE INSTITUTIONAL FUNDS, 485BXT, 1998-07-24

GE INSTITUTIONAL FUNDS
485BXT, 1998-07-24

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File Nos. 333-29337, 811-08257

As filed with the Securities and Exchange Commission on July 24, 1998

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /

Pre-Effective Amendment No. / /

Post-Effective Amendment No. 2 / X /

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 / /

Amendment No. 4 / X /

(Check appropriate box or boxes)
..................................................................
GE INSTITUTIONAL FUNDS
3003 Summer Street
Stamford, Connecticut 06905
(203) 326-4040
Registrant=s Exact Name, Address and Telephone Number)
...................................................................
Matthew J. Simpson, Esq.
Vice President, Associate General Counsel & Assistant Secretary
GE Investment Management Incorporated

3003 Summer Street
Stamford, Connecticut 06905

(Name and Address of Agent for Service)
...................................................................
Copy to:
Stephen E. Roth, Esq.
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, DC 20004-2404

It Is Proposed That this Filing Will Become Effective (check appropriate box)

[ ] Immediately upon Filing Pursuant to Paragraph (b) of Rule 485

[ X ] on July 31, 1998 Pursuant to Paragraph (b) of Rule 485

[ ] 60 Days after Filing Pursuant to Paragraph (a) of Rule 485

[ ] on (Date) Pursuant to Paragraph (a) of Rule 485

[ ] 75 Days after Filing Pursuant to Paragraph (a)(2) of Rule 485

[ ] on (Date) Pursuant to Paragraph (a)(2) of Rule 485

If appropriate, check the following box:

[ X ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.

Title of Securities Being Registered: Shares of Beneficial Interest.

<PAGE>

GE INSTITUTIONAL FUNDS

FORM N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933

----------

Showing Location of Information Required by Form N-1A in Part A (Prospectuses)
and Part B (Statement of Additional Information) of the Registration Statement

Part A
Item No. Prospectus Heading
- -------- ------------------

1. Cover Page..................................................Cover Page

2. Synopsis...........................................Expense Information

3. Condensed Financial Information...................Financial Highlights
(Investment Class only)

4. General Description of Registration........................Cover Page;
Investment Objectives and
Management Policies;
Investments in Debt Securities;
Cash Management Policies --
Non-Money Market Funds;
Additional Permitted Investments;
Risk Factors and Special Considerations;
Investment Restrictions;
Additional Matters; Appendix --
Further Information:
Certain Investment
Techniques and Strategies

5. Management of the Funds...........................Expense Information;
Investment Objectives and
Management Policies;
Management of the Trust

6. Capital Stock and Other Securities..........................Dividends,
Distributions and
Taxes; Additional Matters

<PAGE>

7. Purchase of Securities Being Offered.................Purchase of Shares;
Net Asset Value;
Distributor;
Expenses of the Funds
(Service Class shares Prospectus only)

8. Redemption or Repurchase............................Redemption of Shares

9. Legal Proceedings.........................................Not applicable

Part B Heading in Statement of
Item No. Additional Information
- -------- ----------------------

10. Cover Page....................................................Cover Page

11. Table of Contents...............................................Contents

12. General Information and History..................The Funds' Performance;
Additional Information

13. Investment Objectives and Policies.................Investment Objectives
and Management Policies;
Investment Restrictions

14. Management of the Funds..........................Management of the Trust

15. Control Persons and Principal
Holders of Securities............................Principal Stockholders;
Management of the Trust
See Prospectus --
Additional Matters

16. Investment Advisory and Other Services...........Management of the Trust

17. Brokerage Allocation and Other Practices........Investment Restrictions;
Management of the Trust

18. Capital Stock and Other Securities................Redemption of Shares;
Additional Information

<PAGE>

19. Purchase, Redemption and Pricing
of Securities Being Offered........................Redemption of Shares;
Net Asset Value;
See Prospectus --
Purchase of Shares

20. Tax Status......................................Dividends, Distributions
and Taxes

21. Underwriters..............................................Not Applicable

22. Calculation of Performance Data...................The Funds' Performance

23. Financial Statements............................Independent Accountants;
Financial Statements

PART C
- ------

Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C to this Registration Statement.

<PAGE>
[Logo] GE Institutional Funds
- --------------------------------------------------------------------------------

GE Institutional Funds

Prospectus

Emerging Markets Fund

Premier Growth Equity Fund

Small-Cap Value Equity Fund

Mid-Cap Growth Fund

International Equity Fund

Value Equity Fund

U.S. Equity Fund

S&P 500 Index Fund

Strategic Investment Fund

Income Fund

Money Market Fund

[Small Cap Growth Equity Fund

Mid-Cap Value Equity Fund

High Yield Fund]

July 31, 1998
Service Class

Prospectus begins on page 1
<PAGE>

[GE LOGO] GE INSTITUTIONAL FUNDS
- --------------------------------------------------------------------------------

GE Institutional Funds (the "Trust") is an open-end management investment
company that offers a selection of diversified managed investment portfolios
(each, a "Fund" and collectively, the "Funds"), each of which has two classes of
shares -- the Service Class and the Investment Class. Each Fund has a discrete
investment objective that it seeks to achieve by following distinct investment
policies. The Service Class shares and the Investment Class shares are
identical, except as to the services offered, and the expenses borne, by each
class. Investors may obtain a copy of the prospectus describing the Investment
Class shares free of charge by calling the telephone number listed below or
writing the Trust at the address listed below.

The Trust is currently comprised of fourteen Funds, three of which (Small-Cap
Growth Equity Fund, Mid-Cap Value Equity Fund and High Yield Fund) are not
presently being offered. This Prospectus describes the Service Class shares of
the following eleven Funds currently offered by the Trust:

o Emerging Markets Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily
in equity securities of issuers that are located in emerging markets
countries.

o Premier Growth Equity Fund's investment objective is long-term growth of
capital and future income rather than current income. The Fund seeks to
achieve this objective by investing primarily in growth-oriented equity
securities.

o Small-Cap Value Equity Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily
in equity securities of companies with small-sized market capitalizations
that the Fund's management considers to be undervalued by the market.

o Mid-Cap Growth Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily
in equity securities of companies with medium-sized market capitalizations
that have the potential for above-average growth.

o International Equity Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily
in foreign equity securities.

o Value Equity Fund's investment objective is long-term growth of capital
and future income rather than current income. The Fund seeks to achieve
this objective by investing primarily in equity securities of companies
with large-sized market capitalizations that the Fund's management
considers to be undervalued by the market.

o U.S. Equity Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing
primarily in equity securities of U.S. companies.

o S&P 500 Index Fund's investment objective is to provide growth of capital
and accumulation of income that corresponds to the investment return of
the Standard & Poor's 500 Composite Stock Price Index. The Fund seeks to
achieve this objective by investing in common stocks comprising that
Index.

o Strategic Investment Fund's investment objective is to maximize total
return, consisting of capital appreciation and current income. The Fund
seeks to achieve this objective by following an asset allocation strategy
that provides diversification across a range of asset classes and
contemplates shifts among them from time to time.

o Income Fund's investment objective is to seek maximum income consistent
with prudent investment management and the preservation of capital. The
Fund seeks to achieve this objective by investing in fixed income
securities.

o Money Market Fund's investment objective is to seek a high level of
current income consistent with the preservation of capital and maintenance
of liquidity. The Fund seeks to achieve this objective by investing in
U.S. dollar denominated, short-term money market instruments.

[o Small-Cap Growth Equity Fund's investment objective is long-term growth
of capital. The Fund seeks to achieve this objective by investing
primarily in equity securities of companies with small-sized market
capitalizations that have the potential for above-average growth.

<PAGE>

o Mid-Cap Value Equity Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily
in equity securities of companies with medium-sized market capitalizations
that the Fund's management considers to be undervalued by the market.

o High Yield Fund's investment objective is to maximize total return,
consistent with the preservation of capital and prudent investment
management. The Fund seeks to achieve this objective by investing
primarily in fixed income securities that are rated below investment grade
(as defined in this Prospectus).]

This Prospectus briefly sets forth certain information about the Funds and the
Trust, including shareholder servicing and distribution fees, that prospective
investors will find helpful in making an investment decision. Investors are
encouraged to read this Prospectus carefully and retain it for future reference.
There can be no assurance that a Fund will achieve its investment objective.

AN INVESTMENT IN THE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THIS FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

SHARES OF THE FUNDS ARE NOT DEPOSITS WITH OR OBLIGATIONS OF ANY FINANCIAL
INSTITUTION, ARE NOT GUARANTEED OR ENDORSED BY ANY FINANCIAL INSTITUTION OR ITS
AFFILIATES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUNDS
ARE SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
INVESTED.

Additional information about the Funds and the Trust, contained in a Statement
of Additional Information dated the same date as this Prospectus, has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge by calling the Trust at the telephone number listed
below or by contacting the Trust at the address listed below. The SEC maintains
a Web site (http://www.sec.gov) that contains the Statement of Additional
Information, material incorporated by reference and other information regarding
the Funds and the Trust. The Statement of Additional Information is incorporated
in its entirety by reference into this Prospectus.

GE INVESTMENT MANAGEMENT INCORPORATED
Investment Adviser and Administrator

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<PAGE>

PROSPECTUS

July 31, 1998

TABLE OF CONTENTS

Expense Information..........................................................4

Performance (Investment Class Only)..........................................6

Investment Objectives and Management Policies................................9

Investments in Debt Securities..............................................20

Cash Management Policies -- Non-Money Market Funds..........................21

Additional Permitted Investments............................................22

Investment Restrictions.....................................................26

Risk Factors and Special Considerations.....................................27

Management of the Trust.....................................................33

Purchase of Shares..........................................................38

Redemption of Shares........................................................41

Investment Switches.........................................................42

Net Asset Value.............................................................42

Dividends, Distributions and Taxes..........................................43

Custodian and Transfer Agent................................................44

Distributor.................................................................44

Additional Matters..........................................................45

Appendix -- Further Information:
Certain Investment Techniques and Strategies.................................i

3003 Summer Street
Stamford, Connecticut 06905
(800) 493-3042

<PAGE>

EXPENSE INFORMATION
- --------------------------------------------------------------------------------

Expenses are one of several factors to consider when investing in the Funds. The
following fee table and example are designed to assist investors in
understanding the various costs and expenses that they will bear directly or
indirectly as investors in the Service Class shares of a Fund. Annual Fund
Operating Expenses are paid out of each Fund's assets and include fees for
portfolio management, maintenance of shareholder accounts, accounting and other
services.

SHAREHOLDER TRANSACTION EXPENSES

The Funds have no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.

FEE TABLE
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS):

SHAREHOLDER
MAXIMUM SERVICING
ADVISORY AND AND TOTAL
ADMINISTRATION DISTRIBUTION OTHER OPERATING
FEES FEE** EXPENSES EXPENSES
- --------------------------------------------------------------------------------

Emerging Markets Fund 1.05%* .25% None 1.30%

Premier Growth Equity Fund .55%* .25% None .80%

Small-Cap Value Equity .70%* .25% None .95%
Fund

Mid-Cap Growth Fund .55%* .25% None .80%

International Equity .75%* .25% None 1.00%
Fund

Value Equity Fund .55%* .25% None .80%

U.S. Equity Fund .55%* .25% None .80%

S&P 500 Index Fund .15% .25% None .40%

Strategic Investment .45%* .25% None .70%
Fund

Income Fund .35%* .25% None .60%

Money Market Fund .25%* .25% None .50%

[Small-Cap Growth .70%* .25% None .95%
Equity Fund

Mid-Cap Value Equity .60%* .25% None .85%
Fund

High Yield Fund .45%* .25% None .70%]

- ----------

* The advisory and administration fee shown is the maximum payable by the
Fund; this fee declines incrementally as the Fund's assets increase as
described under "Management of the Trust -- Fee Structure."

** The .25% shareholder servicing and distribution fee is intended to
compensate GE Investment Management Incorporated ("GEIM"), the Trust's
investment adviser and administrator, or enable GEIM to compensate other
persons, for expenditures made on behalf of each Fund, as discussed below
under "Investment Objectives and Management Policies."

4
<PAGE>

The nature of the services provided to, and the advisory and administration fee
paid by, each Fund are described under "Management of the Trust." A Fund's
advisory and administration fee is intended to be a "unitary" fee that includes
any other operating expenses payable by a Fund, except for fees paid to the
Trust's independent Trustees, shareholder servicing and distribution fees,
brokerage fees, and expenses that are not normal operating expenses of the Funds
(such as extraordinary expenses, interest and taxes). The amount shown as the
advisory and administration fee for a Fund reflects the highest fee payable, and
does not reflect that the fee decreases incrementally as Fund assets increase.
Because the Funds have only recently commenced operations, "Other Expenses" in
the table above are based on estimated amounts for the current fiscal year.
"Other Expenses" include only Trustees' fees payable to the Trust's independent
Trustees, brokerage fees, and expenses that are not normal operating expenses of
the Funds. This amount is expected to be de minimus (less than .01%); therefore
"Other Expenses" are reflected as "None." Long-term shareholders of the Funds
may pay more than the economic equivalent of the maximum front-end sales charge
currently permitted by the rules of the National Association of Securities
Dealers, Inc. governing investment company sales charges.

EXAMPLE

The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over a one-year and three-year period
with respect to a hypothetical investment in each Fund. These amounts are based
upon (1) payment by the Fund of operating expenses at the levels set out in the
table above and (2) the specific assumptions stated below.

A SHAREHOLDER WOULD PAY THE FOLLOWING
EXPENSES ON A $1,000 INVESTMENT,
ASSUMING (1) A 5% ANNUAL RETURN, AND (2)
REDEMPTION AT THE END OF THE TIME PERIODS SHOWN:
------------------------------------------------
1 YEAR 3 YEARS
------ -------
Emerging Markets Fund $13 $41
Premier Growth Equity Fund $ 8 $26
Small-Cap Value Equity Fund $10 $30
Mid-Cap Growth Fund $ 8 $26
International Equity Fund $10 $32
Value Equity Fund $ 8 $26
U.S. Equity Fund $ 8 $26
S&P 500 Index Fund $ 4 $13
Strategic Investment Fund $ 7 $22
Income Fund $ 6 $19
Money Market Fund $ 5 $16
[Small-Cap Growth Equity Fund $10 $30
Mid-Cap Value Equity Fund $ 9 $27
High Yield Fund $ 7 $22]

The above example is intended to assist investors in understanding various costs
and expenses that an investor in the Service Class shares of a Fund will bear
directly or indirectly. Although the table assumes a 5% annual

<PAGE>

return, a Fund's actual performance will vary and may result in an actual return
that is greater or less than 5%. THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF A FUND; ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.

PERFORMANCE (INVESTMENT CLASS ONLY)
- --------------------------------------------------------------------------------

As of the date of this Prospectus, General Electric Assurance Capital Company
("GECA"), an indirect subsidiary of General Electric Company ("GE"), owned 100%
of the outstanding Service Class shares of each of the Funds (other than the
Small-Cap Value Equity Fund[, the Small-Cap Growth Equity Fund, the Mid-Cap
Value Equity Fund and the High Yield Fund]). The shares were issued to GECA for
providing the initial seed capital to the Funds. Because the Service Class
shares of each of the Funds lack an operating history, no performance figures
are provided below for the Service Class shares of the Funds.

The chart below shows the historical performance of the Investment Class shares
of the following Funds for the referenced period. The performance figures
reflected below are net of fees and expenses attributable to the Investment
Class shares of the Funds noted and assume changes in share price, reinvestment
of dividends and capital gains. Because the Investment Class shares of the Funds
do not pay a shareholder servicing and distribution fee, the performance figures
shown below for the Investment Class shares of the Funds noted can be expected
to be higher than the performance figures for the Service Class shares of the
corresponding Fund had such Service Class shares had an operating history. No
performance figures are shown below for the Investment Class shares of the
Premier Growth Equity Fund, the Value Equity Fund and the Strategic Investment
Fund because each of these Funds lacks an operating history as of the date of
this Prospectus.

AGGREGATE TOTAL RETURN*
-----------------------

Emerging Markets Fund 10.69% (11/25/97)
Mid-Cap Growth Fund 12.77% (11/25/97)
International Equity Fund 20.27% (11/25/97)
U.S. Equity Fund 15.29% (11/25/97)
S&P 500 Index Fund 16.44% (11/25/97)
Income Fund 2.91% (11/21/97)
Money Market Fund 1.79% (12/02/97)

- ----------

* From commencement of operations, as indicated in parentheses, to March 31,
1998. Performance figures shown above have not been annualized.

TOTAL RETURN

From time to time, the Trust may advertise an "average annual total return" over
various periods of time for Service Class shares of a Fund. This total return
figure shows an average percentage change in value of an investment in such
shares from the beginning date of the measuring period to the ending date of the
period. The figure reflects changes in the price of a Fund's shares and assumes
that any income, dividends and/or capital gains distributions made by the Fund
during the period are reinvested in shares of the same class. Figures will be
given for recent one-, five- and 10-year periods (if applicable), and may be
given for other periods as well (such as from commencement of a Fund's
operations, or on a year-by-year basis).

6
<PAGE>

YIELD

From time to time, the Trust may publish the yield and effective yield of the
Money Market Fund in advertisements, sales literature or reports to
shareholders. Current yield is based upon income received by a hypothetical
investment in a given seven-day period (which period will be stated in the
advertisement), and then "annualized" (that is, assuming that the seven-day
yield would be received for 52 weeks, stated in terms of an annual percentage
return on the investment). "Effective yield" for the Money Market Fund is
calculated in a manner similar to that used to calculate yield, but will reflect
the compounding effect of earnings on reinvested dividends.

The Trust may, from time to time, advertise a 30-day "yield" for each class of a
Fund. The yield of a Fund refers to the income generated by an investment in a
class over the 30-day period identified in the advertisement and is computed by
dividing the net investment income per share earned by a class during the period
by the net asset value per share for that class on the last day of the period.
This income is "annualized" by assuming that the amount of income is generated
each month over a one-year period and is compounded semi-annually. The
annualized income is then shown as a percentage of the Fund's net asset value.

TOTAL RETURN AND YIELD FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. THE STATEMENT OF ADDITIONAL INFORMATION
DESCRIBES THE METHOD USED TO DETERMINE A FUND'S TOTAL RETURN AND YIELD.

SMALL-CAP VALUE EQUITY FUND
PRIOR PERFORMANCE OF SIMILAR ACCOUNTS

The investment performance presented below represents the composite performance
of relevant private accounts (the "Accounts") managed by the investment
professionals (the "Investment Committee") of Palisade Capital Management,
L.L.C. ("Palisade"), the investment sub-adviser of the Small-Cap Value Equity
Fund (the "Small-Cap Value Fund"), while at Palisade and during their previous
employment at Smith Barney Inc. The Investment Committee, which has operated
together since September 1, 1993, consists of Jack Feiler, Martin L. Berman,
Steven E. Berman, Richard Meisenberg and Mark Degenhart. As was the case at
Smith Barney Inc., Mr. Feiler was responsible for the day-to day management of
the Accounts at Palisade and worked with the Investment Committee in developing
and executing the Accounts' respective investment programs.

The performance of the Accounts was computed by Palisade and a Level II
verification of the 1994 to 1997 performance figures was performed by Palisade's
independent accountants. The methodology of calculating the performance differs
from that required to be employed by mutual funds. The performance data of the
Accounts is net of advisory fees and other expenses.

The performance data below represents the prior performance of the Accounts, not
the prior performance of the Small-Cap Value Fund, and should not be considered
an indication of future performance of the Fund. In managing the Fund, Palisade
will employ substantially the same investment objectives, policies and
strategies that the Investment Committee employed in managing the Accounts.
However, in managing the Fund, Palisade will be subject to restrictions imposed
by the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Internal Revenue Code of 1986, as amended (the "Code"), (e.g., limits on the
percentage of assets invested in securities of issuers in a single industry and
requirements on distributing income to shareholders) that do not apply to the
Accounts. The Fund also will incur operating expenses, such as transfer agency,
legal and auditing fees, that are not borne by the Accounts. In addition, the
continuous offering of the Fund's shares and the Fund's obligation to redeem its
shares will likely cause the Fund to experience cash flows different from those
of the Accounts. All of the foregoing may adversely affect the performance of
the Fund and cause it to differ from that of the Accounts.

<PAGE>

THE INVESTMENT COMMITTEE
SMALL-CAP EQUITY COMPOSITE
Calendar Year Return (1993 to 1997)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SMALL-CAP TOTAL ASSETS
EQUITY RUSSELL 2000 # OF ACCOUNTS COMPOSITE DISPERSION TOTAL ASSETS IN UNDER
COMPOSITE INDEX IN COMPOSITE HIGH LOW COMPOSITE+ MANAGEMENT+
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
1993* 5.77% 5.51% 1 n/a n/a 172.6 220.2
1994 3.59% -1.82% 3 n/a n/a 384.6 688.0
1995 32.04% 28.44% 3 37.36% 26.88% 871.2 1,318.9
1996 23.17% 16.49% 5 25.83% 22.66% 1,118.5 1,715.0
1997 26.26% 22.37% 6 29.38% 24.90% 1,737.7 2,648.2
</TABLE>

- ----------

+ Represents total assets in millions at the end of the calendar year.

* Represents performance from 9/1/93 through 12/31/93.

ANNUALIZED RETURN (AS OF 12/31/97)

SMALL-CAP EQUITY RUSSELL 2000
COMPOSITE INDEX
--------- -----
1 Year 26.26% 22.37%
3 Years 27.11% 22.35%
Since 9/1/93 20.94% 16.32%

NOTE A -- COMPOSITE. The Small-Cap Equity Composite (the "Composite") shown
above is comprised of all fully discretionary, fee-paying, tax-exempt
institutional Accounts with assets of $10 million or greater at the beginning of
the calendar quarter that are managed in accordance with the Investment
Committee's small capitalization investment strategy.

The investment objective of the small capitalization equity strategy is
long-term growth of capital. Under normal circumstances, the Accounts managed in
accordance with this strategy are primarily invested in small capitalization
securities with the balance of an Account invested in cash equivalents.
Portfolio returns of Accounts are compared to the Russell 2000 Index (the
"Russell Index"), which is an unmanaged index of common stocks of issuers with
total market capitalizations between $221.9 million and $1.4 billion as of June
30, 1998. Both the Composite and the Russell Index reflect the reinvestment of
dividends and distributions. Portfolio structure and security holdings of
Accounts included in the Composite, however, may differ materially from those of
the Russell Index. Moreover, unlike the Russell Index, the Composite reflects
the effect of transaction and other fees and expenses and the deduction of the
actual dollar-weighted management fee rate paid by all Accounts in the
Composite.

NOTE B -- PERFORMANCE RESULTS. Palisade has prepared this presentation in
compliance with the Performance Presentation Standards of the Association for
Investment Management and Research ("AIMR"). AIMR has not been involved with the
preparation of, and has not reviewed, this report. Composite results are valued
quarterly and the results are time-weighted and asset-weighted by using
beginning-of-quarter market values. The Composite results presented for periods
prior to the commencement of operations of Palisade in April 1995 are the
investment results of the same Accounts managed by the Investment Committee
while it was employed as a separate operating group within Smith Barney Inc.
(from September 1993 to April 1995).

<PAGE>

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
- --------------------------------------------------------------------------------

The Trust is a diversified, open-end management investment company that consists
of separate series of shares, each of which is divided into two classes of
shares -- the Service Class and the Investment Class. The Service Class shares
differ from the Investment Class shares in that an additional .25% shareholder
servicing and distribution fee is charged to each Fund with respect to Service
Class shares. This .25% fee is intended to compensate GEIM, or enable GEIM to
compensate other persons, for expenditures made on behalf of each Fund to obtain
certain shareholder services, including third-party record-keeping, transfer
agency, and ongoing services related to the maintenance of Service Class
shareholder accounts and to compensate GEIM, or enable GEIM to compensate other
persons, including GE Investment Distributors, Inc. (the "Distributor"), for
providing certain services that are primarily intended to result in the sale of
Service Class shares of the Funds pursuant to a shareholder servicing and
distribution plan adopted in accordance with Rule 12b-1 under the 1940 Act. The
shareholder servicing and distribution fee paid by the Service Class shares will
cause such shares to have a higher expense ratio and lower return than the
Investment Class shares.

Investors should be aware that GE Funds, an investment company that is
affiliated with the Trust and also advised by GEIM, offers additional class
options for investors that may not meet the minimum investment requirements of
the Funds and/or require services not provided by the Funds, but that wish to
invest in portfolios (the "GE Funds") advised by GEIM with the same or similar
investment objectives and policies as those of certain of the Funds. Class A
shares of the GE Funds would be suitable for investors that require "full
service." Under the full service option, GEIM, in conjunction with the employee
retirement plan record-keeping capabilities of State Street Bank and Trust
Company ("State Street"), provides record-keeping and other shareholder services
(including shareholder communication services) to investors in the Class A
shares of the GE Funds. Class D shares of the GE Funds would be suitable for
investors that require only advisory and administration services (similar to
investors in the Investment Class shares of the Funds) but that are not able to
meet the minimum investment requirements of the Funds, as well as for
GE-affiliated employee retirement plans that require the full service option.
Because the GE Funds are marketed primarily to retail investors that generally
invest smaller amounts in such funds, the fees charged to investors in the GE
Funds are higher than those charged to investors in the corresponding Funds of
the Trust. INVESTORS SHOULD EVALUATE THE LEVELS AT WHICH THEY INTEND TO INVEST
AND THEIR INDIVIDUAL SHAREHOLDER SERVICES REQUIREMENTS TO DETERMINE THE CLASS OF
SHARES OF THE FUNDS OR THE GE FUNDS THAT BEST SUITS THEIR NEEDS AT THE LOWEST
LEVEL OF FEES.

Set forth below is a description of the investment objective and policies of
each Fund that is currently offered by the Trust. The investment objective of a
Fund may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities as defined in the 1940 Act. Such a majority
is defined in the 1940 Act as the lesser of (1) 67% or more of the shares
present at a Fund meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy or (2) more than 50% of
the outstanding shares of the Fund. No assurance can be given that a Fund will
be able to achieve its investment objective.

EMERGING MARKETS FUND

The investment objective of the Emerging Markets Fund is long-term growth of
capital. The Fund seeks to achieve this objective by investing, under normal
conditions, at least 65% of its total assets in equity securities of issuers
that are located in emerging markets countries. The determination of where an
issuer is located will be made by reference to the country in which the issuer:
(a) is organized; (b) derives at least 50% of its revenues or profits from goods
produced or sold, investments made or services performed; (c) has at least 50%
of its assets situated; or (d) has the principal trading market for its
securities (the "Country Identification Test").

GEIM allocates the Emerging Markets Fund's assets among the selected emerging
markets of newly industrializing countries in Asia, Latin America, the Middle
East, Southern Europe, Eastern Europe (including the former republics of the
Soviet Union and the Eastern Bloc) and Africa. An emerging markets country is
any country having an economy and market that are or would be considered by the
World Bank to be emerging or

<PAGE>

developing, or emerging countries that are listed on the Morgan Stanley Capital
International Emerging Markets Index.

The Emerging Markets Fund, from time to time, may invest all of its assets in a
single country. If the Fund invests all or a significant portion of its assets
at any time in a single country, events in that country are more likely to
affect the Fund's investments. GEIM bases its selection on certain relevant
factors, including the investment restrictions and tax barriers of a given
country, the outlook for economic growth, currency exchange rates, commodity
prices, interest rates, political factors and the stage of the local market
cycle in the emerging markets country.

Equity securities of emerging markets companies may include common stocks,
preferred stocks, convertible bonds, convertible debentures, convertible notes,
convertible preferred stocks and warrants or rights issued by foreign companies,
equity interests in foreign investment funds or trusts and foreign real estate
investment trust securities. The Emerging Markets Fund may invest in American
Depositary Receipts ("ADRs") (sometimes referred to as Continental Depositary
Receipts, or "CDRs"), European Depositary Receipts ("EDRs") and Global
Depositary Receipts ("GDRs").

The Emerging Markets Fund, under normal market conditions, may invest up to 35%
of its assets in debt securities, including notes, bonds and debentures issued
by corporate or governmental entities when GEIM determines that investing in
these kinds of debt securities is consistent with the Fund's investment
objective of long-term growth of capital. GEIM believes that such a
determination could be made, for example, upon the Fund's investing in the debt
securities of a company whose securities GEIM anticipates will increase in value
as a result of a development particularly or uniquely applicable to the company.
GEIM also believes such a determination could be made with respect to an
investment by the Fund in debt instruments issued by a governmental entity if
GEIM concludes that the value of the instruments will increase as a result of
improvements or changes in public finances, monetary policies, external
accounts, financial markets, exchange rate policies or labor conditions of the
country in which the governmental entity is located.

In addition, the Emerging Markets Fund may sell securities short against the box
and may engage in certain investments discussed below under "Additional
Permitted Investments" and in the Appendix. (See "Risk Factors and Special
Considerations" for a discussion of risks associated with investing in emerging
markets countries.)

PREMIER GROWTH EQUITY FUND

The investment objective of the Premier Growth Equity Fund (the "Premier Growth
Fund") is long-term growth of capital and future income rather than current
income. The Fund seeks to achieve this objective by investing primarily in
growth-oriented equity securities which, under normal market conditions, will
represent at least 65% of the Fund's assets. In pursuing its objective, the
Fund, under normal conditions, may invest in common stocks, preferred stocks,
convertible bonds, convertible debentures, convertible notes, convertible
preferred stocks and warrants or rights issued by U.S. and foreign companies.

The Premier Growth Fund will seek to identify and invest in companies it
believes will offer potential for long-term growth of capital. These companies
typically would possess one or more of a variety of characteristics, including
high quality products and/or services, strong balance sheets, sustainable
internal growth, superior financial returns, competitive position in the
issuer's economic sector and shareholder-oriented management. While the Fund may
invest in companies of varying sizes as measured by assets, sales or
capitalization, a majority of its assets, under normal market conditions, will
be comprised of companies with relatively large capitalization. In addition, the
Fund normally will be invested in companies that have above-average growth
prospects and which are typically leaders in their fields. The Fund generally
will be diversified over a cross section of industries.

<PAGE>

Market or the Nasdaq SmallCap Market (collectively, "Nasdaq Traded Securities").
The equity securities in which the Fund invests in most cases will be traded on
domestic or foreign securities exchanges, or traded in the domestic or foreign
over-the-counter markets. The Fund may invest up to 35% of its assets in bonds,
notes and debentures. For temporary defensive purposes, the Fund may invest in
fixed income securities without limitation. To the extent that the Fund invests
in fixed income securities, it may not achieve its investment objective. The
Fund also may engage in certain investments discussed below under "Additional
Permitted Investments" and in the Appendix.

SMALL-CAP VALUE EQUITY FUND

The investment objective of the Small-Cap Value Fund is long-term growth of
capital. The Fund seeks to achieve its objective by investing primarily in
equity securities of companies with small-sized market capitalizations that
Palisade, the Fund's investment sub-adviser, considers to be undervalued by the
market in relation to factors such as the company's assets, earnings, or growth
potential. The Fund uses a fundamental, "bottom-up" analysis to identify those
companies whose share price does not fully reflect the value of the company.

The Small-Cap Value Fund, under normal market conditions, invests at least 65%
of its total assets in a portfolio of equity securities of small-capitalization
companies traded on U.S. securities exchanges or in the U.S. over-the-counter
market, including common stocks, preferred stocks, convertible bonds,
convertible debentures, convertible notes, convertible preferred stocks, ADRs
and warrants or rights issued by U.S. and foreign companies. The Fund considers
a "small-capitalization" company to be one that has a market capitalization,
measured at the time it purchases a security of that company, within the range
of capitalizations of companies represented in the Russell 2000 Index. (Although
as of June 30, 1998, the Russell 2000 Index included companies with market
capitalizations between $221.9 million and $1.4 billion, currently it is
expected that the weighted average market capitalization of the Fund's portfolio
will ordinarily not exceed $1 billion.) Companies whose capitalization no longer
meets this definition after purchase continue to be considered
small-capitalization companies for purposes of the Fund's policy of investing at
least 65% of its assets in small-capitalization companies. In addition, the Fund
may invest up to 35% of its total assets in securities of companies with market
capitalizations that are higher or lower than the capitalization range of the
Russell 2000 Index. As a result of these policies, the average market
capitalization of the Fund's portfolio at any particular time may exceed $1.4
billion, particularly at times when the market values of small-capitalization
company stocks are rising. In general, investments in smaller-capitalization
companies often involve greater risks than investments in larger companies. (See
"Risk Factors and Special Considerations -- Smaller Companies.")

The Small-Cap Value Fund will invest primarily in companies whose securities are
traded in the U.S. markets, but may invest up to 10% of its assets in foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities. (See "Risk Factors and Special
Considerations -- Investment in Foreign Securities.") The Fund may also sell
securities short against the box and engage in certain investments discussed
below under "Additional Permitted Investments" and in the Appendix.

MID-CAP GROWTH FUND

The investment objective of the Mid-Cap Growth Fund is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily in the
equity securities of companies with medium-sized market capitalizations
("mid-cap") that have the potential for above-average growth. The Fund, under
normal market conditions, will invest at least 65% of its total assets in a
portfolio of equity securities of mid-cap companies traded on U.S. securities
exchanges or in the U.S. over-the-counter market, including common stocks,
preferred stocks, convertible preferred stocks, convertible bonds, convertible
debentures, convertible notes, ADRs and warrants or rights issued by foreign and
U.S. companies. The Fund defines a mid-cap company as one whose securities are
within the market capitalization range of stocks listed on the S&P MidCap 400
Index (the "S&P 400 Index"). (As of June 30, 1998, the S&P MidCap 400 Index
included companies with market capitalizations between $330 million and $22.9
billion.)

<PAGE>

Mid-cap growth companies are often still in the early phase of their life
cycles. Accordingly, investing in mid-cap companies generally entails greater
risk exposure and volatility (meaning upward or downward price swings) than
investing in large, well-established companies. However, GEIM believes that
mid-cap companies may offer the potential for more rapid growth. See "Risk
Factors and Special Considerations -- Smaller Companies."

GEIM will rely on its proprietary research to identify mid-cap companies with
potentially attractive growth prospects. These companies typically have one or
more of a variety of characteristics, including attractive products or services,
above average earnings growth potential, superior financial returns, strong
competitive position, shareholder focused management and sound balance sheets.
There is, of course, no guarantee that GEIM will be able to identify such
companies or that the Mid-Cap Growth Fund's investment in them will be
successful.

The Mid-Cap Growth Fund may invest up to 35% of its assets in: (i) securities of
companies outside the capitalization range of the S&P 400 Index; (ii) foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities; and (iii) bonds, notes and debentures.
The Fund may sell securities short against the box and engage in certain
investments discussed below under "Additional Permitted Investments" and in the
Appendix.

INTERNATIONAL EQUITY FUND

The investment objective of the International Equity Fund (the "International
Fund") is long-term growth of capital. The Fund seeks to achieve this objective
by investing primarily in foreign equity securities. The Fund may invest in
securities of companies and governments located in developed and developing
countries outside the United States, and also may invest in securities of
foreign issuers in the form of depositary receipts. Investing in securities
issued by foreign companies and governments involves considerations and
potential risks not typically associated with investing in securities issued by
the U.S. Government and U.S. corporations. (See "Risk Factors and Special
Considerations" for a discussion of the risks associated with investing in
foreign equity securities.) The Fund intends to position itself broadly among
countries and, under normal circumstances, at least 65% of the Fund's total
assets will be invested in securities of issuers collectively in no fewer than
three different countries other than the United States. The percentage of the
Fund's assets invested in particular countries or regions of the world will vary
depending on political and economic conditions. The determination of where an
issuer is located will be made by reference to the Country Identification Test,
as set forth above in "Investment Objectives and Management Policies -- Emerging
Markets Fund."

In selecting investments on behalf of the International Fund, GEIM seeks
companies that are expected to grow faster than relevant markets and whose
securities are available at a price that does not fully reflect the potential
growth of those companies. GEIM typically focuses on companies that possess one
or more of a variety of characteristics, including strong earnings growth
relative to price-to-earnings and price-to-cash earnings ratios, low
price-to-book value, strong cash flow, presence in an industry experiencing
strong growth and high quality management.

The International Fund, under normal conditions, invests at least 65% of its
assets in common stocks, preferred stocks, convertible debentures, convertible
notes, convertible preferred stocks and warrants or rights issued by companies
believed by GEIM to have a potential for superior growth in sales and earnings.
In most cases, these securities are traded on foreign or U.S. exchanges or in
the U.S. or foreign over-the-counter markets. The Fund will emphasize
established companies, although it may invest in companies of varying sizes as
measured by assets, sales or capitalization.

<PAGE>

uniquely applicable to the company, such as a liquidation, reorganization,
recapitalization or merger, material litigation, technological breakthrough or
new management or management policies. In addition, GEIM believes such a
determination could be made with respect to an investment by the Fund in debt
instruments issued by a governmental entity upon GEIM's concluding that the
value of the instruments will increase as a result of improvements or changes in
public finances, monetary policies, external accounts, financial markets,
exchange rate policies or labor conditions of the country in which the
governmental entity is located.

When GEIM believes there are unstable market, economic, political or currency
conditions abroad, the International Fund may assume a temporary defensive
posture and restrict its investments to certain securities markets and/or invest
all or a significant portion of its assets in securities of the types described
above issued by companies incorporated in and/or having their principal
activities in the United States. In addition, the Fund may sell securities short
against the box and may engage in certain investments discussed below under
"Additional Permitted Investments" and in the Appendix.

VALUE EQUITY FUND

The investment objective of the Value Equity Fund is long-term growth of capital
and future income rather than current income. The Fund seeks to achieve this
objective by investing primarily in equity securities of companies with
large-sized market capitalizations that the Fund's management considers to be
undervalued by the market. Undervalued securities are those selling for low
prices given the fundamental characteristics of their issuers. During normal
market conditions, the Fund will invest at least 65% of its assets in common
stocks, preferred stocks, convertible bonds, convertible debentures, convertible
notes, convertible preferred stocks, and warrants or rights issued by foreign
and U.S. companies.

The Value Equity Fund's investment philosophy is that the market tends to
overreact to both good and bad news about issuers. Companies experiencing faster
than expected growth tend to be overvalued as the market extrapolates current
good news well beyond a sustainable time-frame and correspondingly
over-forecasts the period and magnitude of decline of companies experiencing
near term difficulties. These difficulties can be driven by factors both
internal and external to the company. Internal factors may include operational
mismanagement or strategic mistakes. External factors may include a change in
the economic environment or a shift in the competitive dynamics of an industry.
The Fund attempts to identify firms that are out of favor for a variety of
reasons and select those which Fund management believes to be undervalued
relative to their true business prospects.

In accordance with this premise, GEIM will identify and select securities that
it believes are undervalued, using factors it considers indicative of
fundamental investment value, including: (i) a low price/earnings ratio relative
to a normalized growth rate and/or Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"); (ii) the potential for free cash flow generation
and prospects for dividend growth; (iii) a strong balance sheet with low
financial leverage; (iv) sustainable competitive advantages such as a franchise
brand name or dominant market position; (v) an experienced and capable
management team; (vi) improving returns on invested capital; and (vii) net asset
values in a restructuring/ breakup analysis framework.

GEIM believes that such investments will position the Value Equity Fund to
benefit from a positive change in business prospects from an issuing company
that adopts a turnaround strategy to increase/restore the earning power of the
company.

The Value Equity Fund, under normal market conditions, may invest (i) up to 35%
of its assets in bonds, notes and debentures, and (ii) up to 25% of its assets
in foreign securities, excluding, for purposes of this limitation, ADRs, U.S.
Listed Securities and Nasdaq Traded Securities. The Fund may sell securities
short against the box and engage in certain investments discussed below under
"Additional Permitted Investments" and in the Appendix.

13
<PAGE>

U.S. EQUITY FUND

The investment objective of the U.S. Equity Fund is long-term growth of capital.
The Fund seeks to achieve this objective by investing primarily in equity
securities of U.S. companies and, under normal conditions, it will invest at
least 65% of its assets in common stocks, preferred stocks, securities
convertible into common stocks, including convertible bonds, convertible
debentures, convertible notes, convertible preferred stocks, and warrants or
rights issued by U.S. companies. The Fund typically will invest in equity
securities that are issued by U.S. companies and traded on U.S. securities
exchanges or in the U.S. over-the-counter market. Up to 15% of the Fund's assets
may be invested in foreign securities. ADRs, U.S. Listed Securities and Nasdaq
Traded Securities will be included for purposes of the Fund's 65% minimum
described above, and excluded for purposes of the Fund's 15% maximum investments
in foreign securities.

In managing the assets of the U.S. Equity Fund, GEIM uses a combination of
"value-oriented" and "growth-oriented" investing. Value-oriented investing
involves seeking securities that may have low price-to-earnings ratios, or high
yields, or that sell for less than intrinsic value as determined by GEIM, or
that appear attractive on a dividend discount model. The Fund would sell these
securities when their prices approach targeted levels. Growth-oriented investing
generally involves buying securities with above average earnings growth rates at
reasonable prices. The Fund holds these securities until GEIM determines that
their growth prospects diminish or that they have become overvalued when
compared with alternative investments.

In investing on behalf of the U.S. Equity Fund, GEIM seeks to produce a
portfolio that GEIM believes will have characteristics similar to the S&P 500
Index, by virtue of blending investments in both "value" and "growth"
securities. Since the Fund's strategy seeks to combine these basic elements, but
is designed to select investments deemed to be the most attractive within each
category, GEIM believes that the strategy should be capable of outperforming the
U.S. equity market as reflected by the S&P 500 Index on a total return basis.

The U.S. Equity Fund, under normal market conditions, may invest up to 35% of
its assets in notes, bonds and debentures issued by corporate or governmental
entities when GEIM determines that investing in these kinds of debt securities
is consistent with the Fund's investment objective of long-term growth of
capital. GEIM believes that such a determination could be made, for example,
upon the Fund's investing in the debt securities of a company whose securities
GEIM anticipates will increase in value as a result of a development
particularly or uniquely applicable to the company, such as a liquidation,
reorganization, recapitalization or merger, material litigation, technological
breakthrough or new management or management policies. The Fund also may engage
in certain investments discussed below under "Additional Permitted Investments"
and in the Appendix.

S&P 500 INDEX FUND

The investment objective of the S&P 500 Index Fund is to provide growth of
capital and accumulation of income that corresponds to the investment return of
the S&P 500 Index. The Fund seeks to achieve this objective by investing in
common stocks comprising that Index. Standard & Poor's (also referred to herein
as "S&P")(1) chooses the 500 common stocks comprising the S&P 500 Index on the
basis of market values, industry diversification and other factors. Most of the
common stocks in the S&P 500 Index are issued by 500 of the largest companies,
in terms of the aggregate market value of their outstanding stock, and such
companies generally are listed on the New York Stock Exchange. Additional common
stocks that are not among the 500 largest market value stocks are included in
the S&P 500 Index for diversification purposes. S&P may, from time to time,
delete common stocks from, and add common stocks to, the S&P 500 Index.

- --------

(1) Standard & Poors(R), S&P(R), and S&P 500(R) are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use. The S&P 500
Index Fund is not sponsored, endorsed, sold or promoted by S&P, and S&P
makes no representation or warranty, express or implied, to the investors
of the Fund or any member of the public regarding the advisability of
investing in securities generally or in this Fund particularly or the
ability of the S&P 500 Index to track general stock market performance.

14
<PAGE>

The S&P 500 Index Fund will attempt to achieve its objective by replicating the
total return of the S&P 500 Index. To the extent that it can do so consistent
with the pursuit of its investment objective, it will attempt to keep
transaction costs low and minimize portfolio turnover. To achieve its investment
objective, the Fund will purchase equity securities that reflect, as a group,
the total investment return of the S&P 500 Index. Like the S&P 500 Index, the
Fund will hold both dividend paying and non-dividend paying common stocks
comprising the S&P 500 Index.

Active portfolio management strategies are not used in making investment
decisions for the S&P 500 Index Fund. Rather, State Street Global Advisors
("SSGA"), the investment sub-adviser to the Fund, utilizes a passive investment
management approach. From time to time SSGA also may supplement this passive
approach by using statistical selection techniques to determine which securities
to purchase or sell for the Fund in order to replicate the investment return of
the S&P 500 Index over a period of time.

The S&P 500 Index Fund may choose not to invest in all the securities that
comprise the S&P 500 Index, and its holdings may differ by industry segment from
the S&P 500 Index. The Fund may compensate for the omission from its portfolio
of stocks that are included in the S&P 500 Index, or for purchasing securities
included in the Index in proportions that are different from their weightings in
the Index, by purchasing securities that may or may not be included in the S&P
500 Index but which have characteristics similar to the omitted securities (such
as stocks from the same or similar industry groups having a similar market
capitalization and other investment characteristics). In addition, from time to
time adjustments may be made in the Fund's holdings due to changes in the
composition or weighting of issues comprising the S&P 500 Index.

The S&P 500 Index Fund will attempt to achieve a correlation between its total
return and that of the S&P 500 Index of at least 0.95, without taking expenses
into account. A correlation of 1.00 would indicate perfect correlation, which
would be achieved when the Fund's net asset value, including the value of its
dividends and capital gain distributions, increases or decreases in exact
proportion to changes in the S&P 500 Index. SSGA will monitor the Fund's
correlation to the S&P 500 Index and attempt to minimize any "tracking error"
(i.e., the statistical measure of the difference between the investment results
of the S&P 500 Index Fund and that of the S&P 500 Index). However, brokerage and
other transaction costs, as well as other Fund expenses, in addition to
potential tracking error, will tend to cause the Fund's return to be lower than
the return of the S&P 500 Index. There can be no assurance as to how closely the
Fund's performance will correspond to the performance of the S&P 500 Index.

The S&P 500 Index Fund will not invest more than 35% of its total assets in (i)
stocks and other securities not included in the S&P 500 Index and (ii) foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities. In this regard, the Fund may
temporarily invest cash balances, pending withdrawals or investments, in high
quality money market instruments. Nevertheless, the Fund will not adopt a
temporary defensive investment posture in times of generally declining stock
prices, and, therefore, investors will bear the risk of such general stock
market declines. The Fund also may engage in certain investments discussed below
under "Additional Permitted Investments" and in the Appendix.

STRATEGIC INVESTMENT FUND

The investment objective of the Strategic Investment Fund (the "Strategic Fund")
is to maximize total return, consisting of capital appreciation and current
income. The Fund seeks to achieve this objective by following an asset
allocation strategy that provides diversification across a range of asset
classes and contemplates shifts among them from time to time. This strategy may
result in the Fund's experiencing a high portfolio turnover rate. See "Risk
Factors and Special Considerations -- Portfolio Transactions and Turnover"
below.

<PAGE>

and possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities or multi-state agencies
or authorities, the interest on which is, in the opinion of issuers' counsel,
excluded from gross income for Federal income tax purposes ("Municipal
Obligations"); obligations of foreign governments or their agencies or
instrumentalities; mortgage related securities, adjustable rate mortgage related
securities ("ARMs"), collateralized mortgage related securities ("CMOs") and
government stripped mortgage related securities; asset-backed and
receivable-backed securities; and domestic and foreign money market instruments.
The U.S. equity and debt instruments in which the Fund invests are traded on
U.S. securities exchanges or in the U.S. over-the-counter market, except that
the Fund may invest up to 10% of its assets in non-publicly traded securities.
In addition, up to 30% of the Fund's total assets may be invested in foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities. The Fund also may invest in structured
and indexed securities, the value of which is linked to currencies, interest
rates, commodities, indexes or other financial indicators. Mortgage related
securities, ARMs, CMOs, government stripped mortgage related securities and
asset-backed and receivable-backed securities are subject to several risks,
including the prepayment of principal.

The Strategic Fund generally seeks to invest in equity and debt securities that
GEIM has determined offer above average potential for total return. In making
this determination, GEIM will take into account factors including earnings
growth, industry attractiveness, company management, price-to-earnings ratios,
yield, price-to-book ratios and valuation of assets.

GEIM has broad latitude in selecting the classes of investments to which the
Strategic Fund's assets are committed. Although the Fund has the authority to
invest solely in equity securities, solely in debt securities, solely in money
market instruments or in any combination of these classes of investments, GEIM
anticipates that at most times the Fund will be invested in a combination of
equity and debt instruments.

The Strategic Fund's investments are designed to achieve favorable performance
with lower volatility than a fund that invests solely in equity or debt
securities. GEIM will determine the weightings of equity and debt holdings for
the Fund at any given time in light of its assessment of the attractiveness of
each market. Although GEIM cannot predict the mix of the Fund's investments at
any one time, GEIM can delineate certain situations that can lead to a shift in
the mix of the Fund's investments. If, for example, the prices of U.S. equity
securities decline due to falling economic activity and profits, and GEIM
determines that the condition is transitory, GEIM could allocate a major portion
of the Fund's assets to the equity market. If, on the other hand, the prices of
debt instruments are depressed by rising economic activity combined with
restrictive monetary or fiscal policies, and GEIM concludes that this condition
is temporary, GEIM could allocate a major portion of the Fund's assets to debt
securities.

The Strategic Fund typically purchases a debt security if GEIM believes that the
yield and potential for capital appreciation of the security are sufficiently
attractive in light of the risks of ownership of the security. In determining
whether the Fund should invest in particular debt instruments, GEIM considers
factors such as: the price, coupon and yield to maturity; GEIM's assessment of
the credit quality of the issuer; the issuer's available cash flow and the
related coverage ratios; the property, if any, securing the obligation; and the
terms of the debt securities, including the subordination, default, sinking fund
and early redemption provisions.

GEIM's decision that the Strategic Fund invest in foreign securities would be
predicated on the outlook for the foreign securities markets of selected
countries, the underlying economies of those countries and the availability of
attractively priced individual securities.

In addition to investing as described above, the Strategic Fund may invest in
municipal leases, floating and variable rate instruments, participation
interests in certain Municipal Obligations, Municipal Obligation components,
custody receipts and zero coupon obligations and may enter into mortgage dollar
rolls. The Fund also may engage in certain investments discussed below under
"Additional Permitted Investments" and in the Appendix.

16
<PAGE>

INCOME FUND

The investment objective of the Income Fund is to seek maximum income consistent
with prudent investment management and the preservation of capital. Capital
appreciation with respect to the Fund's portfolio securities may occur but is
not an objective of the Fund. In seeking to achieve its investment objective,
the Fund invests in the following types of fixed income instruments: U.S.
Government Obligations; obligations of foreign governments or their agencies or
instrumentalities; bonds, debentures, notes and non-convertible preferred stocks
issued by U.S. and foreign companies; mortgage related securities, ARMs, CMOs
and government stripped mortgage related securities; asset-backed and
receivable-backed securities; zero coupon obligations; floating and variable
rate instruments and money market instruments. The Fund also may invest in
depositary receipts and structured and indexed securities, the value of which is
linked to currencies, interest rates, commodities, indexes or other financial
indicators. Mortgage related securities, ARMs, CMOs, government stripped
mortgage related securities and asset-backed and receivable-backed securities
are subject to several risks, including the prepayment of principal.

The Income Fund is subject to no limitation with respect to the maturities of
the instruments in which it may invest; the weighted average maturity of the
Fund's portfolio securities is anticipated to be approximately five to ten
years.

Up to 35% of the Income Fund's total assets may be invested in foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities. The Fund also may enter into mortgage
dollar rolls, and may engage in certain investments discussed below under
"Additional Permitted Investments" and in the Appendix. The Fund typically
invests not more than 35% of its assets in money market instruments if GEIM
deems such investments to be consistent with the Fund's investment objective.
See "Cash Management Policies -- Non-Money Market Funds," below.

MONEY MARKET FUND

The investment objective of the Money Market Fund is to seek a high level of
current income consistent with the preservation of capital and the maintenance
of liquidity. The Fund seeks to achieve this objective by investing in the
following U.S. dollar denominated, short-term money market instruments: (1) U.S.
Government Obligations; (2) debt obligations of banks, savings and loan
institutions, insurance companies and mortgage bankers; (3) commercial paper and
notes, including those with floating or variable rates of interest; (4) debt
obligations of foreign branches of U.S. banks, U.S. branches of foreign banks
and foreign branches of foreign banks; (5) debt obligations issued or guaranteed
by one or more foreign governments or any of their political subdivisions,
agencies or instrumentalities, including obligations of supra-national entities;
(6) debt securities issued by foreign issuers; and (7) repurchase agreements.

The Money Market Fund limits its portfolio investments to securities that the
Trust's Board of Trustees determines present minimal credit risk and that are
"Eligible Securities" at the time of acquisition by the Fund. "Eligible
Securities" as used in this Prospectus means securities rated by the requisite
nationally recognized statistical rating organizations ("NRSROs") in one of the
two highest short-term rating categories, consisting of issuers that have
received these ratings with respect to other short-term debt securities and
comparable unrated securities. "Requisite NRSROs" means (1) any two NRSROs that
have issued ratings with respect to a security or class of debt obligations of
an issuer or (2) one NRSRO, if only one NRSRO has issued such a rating at the
time that the Fund acquires the security. Currently, five organizations are
NRSROs: S&P, Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Service, Inc., Duff and Phelps, Inc. and Thomson BankWatch Inc. A discussion of
the ratings categories is contained in the appendix to the Statement of
Additional Information. By limiting its investments to Eligible Securities, the
Fund may not achieve as high a level of current income as a fund investing in
lower-rated securities.

<PAGE>

1940 Act. In addition, the Fund may not invest more than 5% of its total assets
in Eligible Securities that have not received the highest short-term rating for
debt obligations and comparable unrated securities (collectively, "Second Tier
Securities"), and may not invest more than the greater of $1,000,000 or 1% of
its total assets in the Second Tier Securities of any one issuer. The Fund may
invest more than 5% (but not more than 25%) of the then-current value of the
Fund's total assets in the securities of a single issuer for a period of up to
three business days, so long as (1) the securities either are rated by the
Requisite NRSROs in the highest short-term rating category or are securities of
issuers that have received such ratings with respect to other short-term debt
securities or are comparable unrated securities and (2) the Fund does not make
more than one such investment at any one time. Determinations of comparable
quality for purchases of unrated securities are made by GEIM in accordance with
procedures established by the Board of Trustees. The Fund invests only in
instruments that have (or, pursuant to regulations adopted by the SEC, are
deemed to have) remaining maturities of 13 months or less at the date of
purchase (except securities subject to repurchase agreements), determined in
accordance with a rule promulgated by the SEC. Up to 25% of the Fund's total
assets may be invested in foreign securities, excluding, for purposes of this
limitation, ADRs, U.S. Listed Securities and Nasdaq Traded Securities. The Fund
will maintain a dollar-weighted average portfolio maturity of 90 days or less.
The assets of the Fund are valued on the basis of amortized cost, as described
below under "Net Asset Value." The Fund also may hold liquid Rule 144A
Securities (see "Additional Permitted Investments -- Illiquid Investments and
Restricted Securities") and engage in certain other investments discussed below
under "Additional Permitted Investments" and in the Appendix.

[SMALL-CAP GROWTH EQUITY FUND]

The investment objective of the Small-Cap Growth Equity Fund (the "Small-Cap
Growth Fund") is long-term growth of capital. The Fund seeks to achieve its
objective by investing primarily in equity securities of companies with
small-sized market capitalizations that GEIM believes have the potential for
above-average growth.

The Small-Cap Growth Fund, under normal market conditions, invests at least 65%
of its total assets in a portfolio of equity securities of small-capitalization
companies traded on U.S. securities exchanges or in the U.S. over-the-counter
market, including common stocks, preferred stocks, convertible bonds,
convertible debentures, convertible notes, convertible preferred stocks and
warrants or rights issued by U.S. and foreign companies. The Fund considers a
"small-capitalization" company to be one that has a market capitalization,
measured at the time it purchases a security of that company, within the range
of capitalizations of companies represented in the Russell 2000 Index. (Although
as of June 30, 1998, the Russell 2000 Index included companies with market
capitalizations between $221.9 million and $1.4 billion, currently it is
expected that the weighted average market capitalization of the Fund's portfolio
will ordinarily not exceed $1 billion.) Companies whose capitalization no longer
meets this definition after purchase continue to be considered
small-capitalization companies for purposes of the Fund's policy of investing at
least 65% of its assets in small-capitalization companies. In addition, the Fund
may invest up to 35% of its total assets in securities of companies outside the
capitalization range of the Russell 2000 Index. As a result of these policies,
the average market capitalization of the Fund's portfolio at any particular time
may exceed $1.4 billion, particularly at times when the market values of
small-capitalization company stocks are rising. In general, investments in
smaller-capitalization companies often involve greater risks than investments in
larger companies. (See "Risk Factors and Special Considerations -- Smaller
Companies.")

GEIM relies on its proprietary research to identify small-capitalization
companies with potentially attractive growth prospects. These companies
typically have one or more of a variety of characteristics, including attractive
products or services, above average earnings growth potential, superior
financial returns, strong competitive position, shareholder focused management
and sound balance sheets. There is, of course, no guarantee that GEIM will be
able to identify such companies or that the Small-Cap Growth Fund's investment
in them will be successful.

The Small-Cap Growth Fund will invest primarily in companies whose securities
are traded in the U.S. markets, but may invest up to 35% of its assets in
foreign securities, excluding, for purposes of this limitation, ADRs,

<PAGE>

U.S. Listed Securities and Nasdaq Traded Securities. (See "Risk Factors and
Special Considerations -- Investment in Foreign Securities.") The Fund may also
sell securities short against the box and engage in certain investments
discussed below under "Additional Permitted Investments" and in the Appendix.

[MID-CAP VALUE EQUITY FUND]

The investment objective of the Mid-Cap Value Equity Fund (the "Mid-Cap Value
Fund") is long-term growth of capital. The Fund seeks to achieve its objective
by investing primarily in equity securities of companies with medium-sized
market capitalizations ("mid-cap") that GEIM considers to be undervalued by the
market. Current income, while considered important, will be secondary to the
objective of capital growth.

The Mid-Cap Value Fund, under normal market conditions, invests at least 65% of
its total assets in a portfolio of equity securities of mid-cap companies traded
on U.S. securities exchanges or in the U.S. over-the-counter market, including
common stocks, preferred stocks, convertible bonds, convertible debentures,
convertible notes, convertible preferred stocks, ADRs and warrants or rights
issued by U.S. and foreign companies. The Fund considers a "mid-cap" company to
be one that has a market capitalization, measured at the time it purchases a
security of that company, within the range of capitalizations of companies
represented in the S&P MidCap 400 Index. (As of June 30, 1998, the S&P MidCap
400 Index included companies with market capitalizations between $330 million
and $22.9 billion.) Companies whose capitalization no longer meets this
definition after purchase continue to be considered mid-cap companies for
purposes of the Fund's policy of investing at least 65% of its assets in mid-cap
companies. In addition, the Fund may invest up to 35% of its total assets in
securities of companies outside the capitalization range of the S&P MidCap 400
Index. As a result of these policies, the average market capitalization of the
Fund's portfolio at any particular time may fall below or exceed the range of
capitalizations of companies represented in the S&P MidCap 400 Index,
particularly at times when the market values of mid-cap company stocks are
fluctuating. In general, investments in smaller-capitalization companies often
involve greater risks than investments in larger companies. (See "Risk Factors
and Special Considerations -- Smaller Companies.")

GEIM seeks investments in equity securities based on its judgment of fundamental
value. Factors deemed particularly relevant include price, earnings
expectations, earnings and price histories, balance sheet characteristics and
perceived management skills. Changes in the economic and political outlooks as
well as individual corporate developments influence specific security prices.
When the Mid-Cap Value Fund's investments lose their perceived value relative to
other similar investments and investment alternatives, they are typically sold.

The Mid-Cap Value Fund will invest primarily in companies whose securities are
traded in the U.S. markets, but may invest up to 35% of its assets in foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities. (See "Risk Factors and Special
Considerations -- Investment in Foreign Securities.") The Fund may also sell
securities short against the box and engage in certain investments discussed
below under "Additional Permitted Investments" and in the Appendix.

[HIGH YIELD FUND]

The investment objective of the High Yield Fund is to maximize total return,
consistent with the preservation of capital and prudent investment management.
The Fund seeks to achieve its objective by investing primarily in fixed income
securities that are rated below investment grade (as discussed below). In
selecting securities for the Fund, GEIM utilizes economic forecasting, interest
rate anticipation, credit and call risk analysis, foreign currency exchange rate
forecasting, and other securities selection techniques. The proportion of the
Fund's assets committed to investment in securities with particular
characteristics (such as maturity, type and coupon rate) will vary based on
GEIM's outlook for the U.S. and foreign economies, the financial markets, and
other factors.

<PAGE>

B by Moody's or S&P (or, if unrated, determined by GEIM to be of comparable
quality). The remainder of the Fund's assets may be invested in investment grade
fixed income securities (i.e., securities rated at least Baa by Moody's or BBB
by S&P, or, if unrated, deemed by GEIM to be of comparable quality). The average
portfolio duration of the Fund will normally vary within a two- to six-year time
frame depending on GEIM's view of the potential for total return offered by a
particular duration strategy.

The High Yield Fund will invest at least 65% of its total assets in corporate
debt securities of domestic and foreign issuers, including convertible
securities and corporate commercial paper; mortgage-backed and other
asset-backed securities; inflation-indexed bonds issued by both governments and
corporations; structured notes, including hybrid or "indexed" securities, and
loan participations; bank certificates of deposit, fixed time deposits and
bankers' acceptances; repurchase agreements and reverse repurchase agreements;
Municipal Obligations; obligations of foreign governments or their subdivisions,
agencies and instrumentalities; and obligations of international agencies or
supranational entities. Fixed income securities may have fixed, variable, or
floating rates of interest, including rates of interest that vary inversely at a
multiple of a designated or floating rate, or that vary according to changes in
relative values of currencies. The Fund may hold different percentages of its
assets in these various types of securities and may invest all of its assets in
derivative instruments or in mortgage- or asset-backed securities. The Fund may
adhere to its investment policy by entering into a series of purchase and sale
contracts or by utilizing other investment techniques by which it may obtain
market exposure to the securities in which it primarily invests.

Investments in high yield securities, while generally providing greater
potential opportunity for capital appreciation and higher yields than
investments in higher rated securities, also entail greater risk, including the
possibility of default or bankruptcy of the issuer of the securities. Risk of
default or bankruptcy may be greater in periods of economic uncertainty or
recession, as the issuers of high yield securities may be less able to withstand
general economic downturns. GEIM seeks to reduce risk through diversification,
credit analysis and attention to current developments and trends in both the
economy and financial markets. The value of all fixed income securities,
including those held by the High Yield Fund, can be expected to change inversely
with interest rates. (See "Risk Factors and Special Considerations -- Low-rated
Securities.")

In addition to the above, up to 35% of the High Yield Fund's assets may be
invested in foreign securities, excluding, for purposes of this limitation,
ADRs, U.S. Listed Securities and Nasdaq Traded Securities. (See "Risk Factors
and Special Considerations -- Investment in Foreign Securities.") The Fund may
also sell securities short against the box and engage in certain investments
discussed below under "Additional Permitted Investments" and in the Appendix.

INVESTMENTS IN DEBT SECURITIES
- --------------------------------------------------------------------------------

Each of the Premier Growth Fund, Small-Cap Value Fund, [Small-Cap Growth Fund,
Mid-Cap Value Fund,] International Fund, Value Equity Fund, U.S. Equity Fund,
and S&P 500 Index Fund limits investment in debt securities to those that are
rated investment grade, except that each such Fund, other than the Small-Cap
Value Fund, may invest up to 5% of that Fund's assets in securities rated lower
than investment grade and the Small-Cap Value Fund may invest up to 10% of its
assets in below investment grade securities. [The High Yield Fund has no
limitation on the amount of its assets that may be invested in securities rated
lower than investment grade.] A security is considered investment grade if it is
rated at the time of purchase within the four highest rating categories assigned
by S&P or Moody's or has received an equivalent rating from another NRSRO or, if
unrated, is deemed by GEIM to be of comparable quality.

<PAGE>

not purchase any obligation rated BB or B by S&P or Ba or B by Moody's or that
have received an equivalent rating from another NRSRO if, as a result of the
purchase, more than 10% of the Fund's total assets would be invested in
obligations rated in those categories or, if unrated, in obligations that are
deemed by GEIM to be of comparable quality. A description of S&P's and Moody's
ratings relevant to a Fund's investments is included as an appendix to the
Statement of Additional Information.

CASH MANAGEMENT POLICIES -- NON-MONEY MARKET FUNDS
- --------------------------------------------------------------------------------

The Money Market Fund's policies with respect to holding cash and investing in
money market instruments are described above under "Investment Objectives and
Management Policies -- Money Market Fund." This section describes the cash
management policies of the other Funds (each, a "non-money market Fund").

A non-money market Fund, under normal circumstances, may hold cash and/or invest
in money market instruments in order to manage its cash, pending investment in
accordance with its investment objective and policies, and to meet operating
expenses.

When the Investment Manager(2) believes that economic or other conditions
warrant, a non-money market Fund, other than the S&P 500 Index Fund, may assume
a temporary defensive posture and hold cash and/or invest in money market
instruments without limitation. To the extent that a non-money market Fund holds
cash or invests in money market instruments, it may not achieve its investment
objective.

TYPES OF PERMITTED MONEY MARKET INVESTMENTS. Each non-money market Fund may
invest directly, or indirectly through its investment in the GEI Short-Term
Investment Fund (the "Investment Fund"), in the following types of money market
securities during normal market conditions and/or for temporary defensive
purposes:

(i) U.S. Government Obligations (described below);

(ii) debt obligations of banks, savings and loan institutions,
insurance companies and mortgage bankers;

(iii) commercial paper and notes, including those with variable
and floating rates of interest;

(iv) debt obligations of foreign branches of U.S. banks, U.S.
branches of foreign banks and foreign branches of foreign
banks;

(v) debt obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities, including obligations of supra-national entities;

(vi) debt securities issued by foreign issuers; and

(vii) repurchase agreements and reverse repurchase agreements (see "Risk
Factors and Special Considerations - Repurchase and Reverse
Repurchase Agreements" below for a further description).

- ----------

(2) As used in this Prospectus, the term "Investment Manager" shall refer to
GEIM, Palisade or SSGA, as applicable.

<PAGE>

GEIM collectively referred to as "GE Investments"), a sister company of GEIM
that is wholly-owned by GE. GEIM is the investment adviser to the Investment
Fund, and charges no advisory fee to the Investment Fund for these services. A
non-money market Fund would incur no sales charge and no distribution or service
fees in connection with its holdings in the Investment Fund.

A non-money market Fund may hold money market instruments that are rated no
lower than A-2 by S&P or Prime-2 by Moody's, or that have received an equivalent
rating from another NRSRO, or if unrated, are issued by an entity having an
outstanding unsecured debt issue rated within an NRSRO's three highest rating
categories. A description of the rating systems of Moody's and S&P is contained
in an appendix to the Statement of Additional Information. At no time will a
non-money market Fund's investments in bank obligations, including time
deposits, exceed 25% of the value of the Fund's assets.

ADDITIONAL PERMITTED INVESTMENTS
- --------------------------------------------------------------------------------

In addition to the investments discussed above, some or all of the Funds may
invest in the types of securities or may engage in investment techniques and
strategies discussed below.

ILLIQUID INVESTMENTS AND RESTRICTED SECURITIES. Each non-money market Fund may
invest up to 15% of its net assets in illiquid securities. Illiquid securities
are securities that a Fund cannot dispose of within seven days in the ordinary
course of business at approximately the amount at which the Fund has valued the
securities. Illiquid securities include options traded over-the-counter,
repurchase agreements maturing in more than seven days, certain mortgage related
securities, and restricted securities that the Investment Manager has determined
are not liquid under guidelines established by the Trust's Board of Trustees.

In addition, each non-money market Fund may invest up to 10% of its assets in
restricted securities. A restricted security is one that is subject to a
contractual or legal restriction on transfer, excluding for purposes of this
limitation securities sold to "qualified institutional buyers" in accordance
with Rule 144A under the Securities Act of 1933, as amended ("Rule 144A
Securities") determined to be liquid by the Trust's Board of Trustees based upon
the trading markets for the securities. If a Fund holds Rule 144A Securities,
the level of illiquidity in the Fund may increase during periods when qualified
institutional buyers lose interest in purchasing Rule 144A Securities.

U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in obligations issued by
the U.S. Government or by its agencies and instrumentalities (as defined
above, "U.S. Government Obligations"). Different types of U.S. Government
Obligations have different payment guarantees, if any. Some U.S. Government
Obligations, such as U.S. Treasury securities, are supported by the full
faith and credit of the U.S. Government or U.S. Treasury guarantees. U.S.
Treasury securities differ in their interest rates, maturities and dates of
issuance. Other U.S. Government Obligations are backed by the right of the
issuer or guarantor to borrow from the U.S. Treasury; others, by the
discretionary authority of the U.S. Government to purchase obligations of the
agency or instrumentality issuing the security; and still others, only by the
credit of the agency or instrumentality issuing the obligation.

Where U.S. Government Obligations are not backed by the full faith and credit of
the United States, the investor must look principally to the agency or
instrumentality (which may be privately owned) issuing the obligations for
repayment. There is no guarantee that the U.S. Government would provide
financial support to its agencies or instrumentalities if it is not required to
do so. A Fund will invest in U.S. Government Obligations that are not backed by
full faith and credit of the U.S. Government only if the Investment Manager
determines that the issuing agency's or instrumentality's credit risk makes the
obligations suitable for Fund investment.

The types of U.S. Government Obligations in which the Funds may invest are
listed in the Statement of Additional Information.

<PAGE>

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into
repurchase agreements involving securities that are permitted investments for
that Fund. A repurchase agreement is a transaction in which a Fund purchases a
security at one price and the seller simultaneously agrees to repurchase that
security at a specified price on a date that occurs within a relatively short
time period (usually one to seven days). Repurchase agreements allow a Fund to
earn a fixed rate of return that is not subject to market fluctuations during
the Fund's holding period, and are treated as loans by the Funds for purposes of
the 1940 Act.

The Funds may engage in repurchase agreement transactions with certain Federal
Reserve System member banks and with certain dealers listed on the Federal
Reserve Bank of New York's list of reporting dealers. If a Fund enters into a
repurchase agreement, the Investment Manager will monitor the value of the
securities underlying the agreement on an ongoing basis to ensure that the value
remains equal to the total amount of the repurchase price (including interest).
The Investment Manager also monitors the creditworthiness of the banks and
dealers that enter into repurchase agreements with the Funds in order to
identify potential risks.

Each Fund may engage in reverse repurchase agreements, subject to its investment
restrictions. A reverse repurchase agreement involves the Fund selling
securities that it holds and concurrently agreeing to repurchase the same
securities at an agreed upon price and date. Reverse repurchase agreements are
considered to be borrowings by a Fund for purposes of the 1940 Act. A Fund will
enter into reverse repurchase agreements to provide liquidity to meet redemption
requests or to pay dividends and distributions when the sale of the Fund's
portfolio securities is considered to be disadvantageous. Cash, U.S. Government
Obligations or other liquid assets equal in value to the Fund's obligations
under outstanding reverse repurchase agreements would be segregated and
maintained with State Street, the Trust's custodian and transfer agent, or a
designated sub-custodian.

STRUCTURED AND INDEXED SECURITIES. The Strategic Fund [, the High Yield Fund]
and the Income Fund may invest in structured and indexed securities. The value
of the principal of and/or interest on such securities is determined by
reference to changes in the value of specific currencies, interest rates,
commodities, indexes or other financial indicators (the "Reference") or a change
in two or more References. The interest rate or the principal amount payable
upon maturity or redemption may be increased or decreased depending upon changes
in the applicable Reference. The terms of structured and indexed securities may
provide that in certain circumstances no principal is due at maturity and,
therefore, may result in a loss of the Fund's investment. Structured and indexed
securities may be positively or negatively indexed, so that appreciation of the
Reference may produce an increase or a decrease in the interest rate or value of
the security at maturity. In addition, changes in interest rates or value of the
security at maturity may be some multiple of the change in value of the
Reference. Consequently, structured and indexed securities may entail a greater
degree of market risk than other types of debt securities because a Fund bears
the risk of the Reference. Structured and indexed securities may also be more
volatile, less liquid and more difficult to accurately price than less complex
securities.

Certain of the other Funds may invest in other investment companies that issue
securities with values that are based on an underlying index. See "Appendix --
Further Information: Certain Investment Techniques and Strategies" for a
discussion of such investments, which include WEBs,
CountryBaskets and SPDRs.

PURCHASING PUT AND CALL OPTIONS ON SECURITIES. Each non-money market Fund may
utilize up to 10% of its assets to purchase put options on portfolio securities
and an additional 10% of its assets to purchase call options on portfolio
securities. The aggregate value of the securities underlying the calls or
obligations underlying the puts, determined as of the date the options are sold,
shall not exceed 25% of the net assets of the Fund. In addition, the premiums
paid by a Fund in purchasing options on securities, options on securities
indexes, options on foreign currencies and options on futures contracts shall
not exceed 20% of the Fund's net assets.

An option holder has the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a fixed date at a
predetermined price. Each non-money market Fund may purchase put and call
options that are traded on a U.S. or foreign exchange or in the over-the-counter
market.

<PAGE>

sell the security at a given price during the option period and thereby limit
its losses on the security. If the underlying security appreciates, rather than
depreciates, the Fund would choose not to exercise the option, but any
appreciation in the value of the underlying security would be offset by the
premium the Fund paid for the relevant put option, plus any related transaction
costs.

A call option is an option to buy. A Fund may purchase a call option on a
security when the Investment Manager believes the market price of that security
will increase. A call option would allow the Fund to purchase the security at a
set price during the option period, and thereby limit its losses from rising
prices. A Fund also may purchase call options to increase its return at a time
when the call is expected to increase in value because the market anticipates
the value of the underlying security will increase.

Prior to the expiration of a put or a call option, the Fund may enter into a
closing sale transaction. In a closing sale the Fund sells an option having the
same features (i.e., is of the same series) as an option previously purchased.
Profit or loss from a closing transaction would depend on whether the amount
received is more or less than the premium paid for the option plus the related
transaction costs.

COVERED OPTION WRITING. Each non-money market Fund may write only covered put
and call options on securities. Covered puts involve a Fund selling to another
party the right to compel the Fund to purchase an underlying security from the
option holder at a specified price at any time during the option period. A
covered put generally means that the Fund segregates with its custodian cash or
liquid securities with a value at least equal to the exercise price of the
option. Covered calls involve a Fund selling the right to another party to
purchase securities that the Fund owns at a specified price at any time during
the option period. A covered call generally means that the Fund owns the
underlying securities. A Fund will realize fees (referred to as "premiums") for
granting the rights evidenced by these options.

A put or call option written by a Fund will be deemed covered in any manner
permitted under the 1940 Act or determined by the SEC to be permissible. See
"Strategies Available to Some But Not All Funds -- Covered Option Writing" in
the Statement of Additional Information for specific situations where put and
call options will be deemed to be covered by a Fund.

A Fund may engage in a closing purchase transaction to realize a profit, to
prevent an underlying security from being called or put or, in the case of a
call option, to unfreeze an underlying security (thereby allowing the Fund to
sell the security or write a new option prior to the outstanding option's
expiration). A Fund effects a closing purchase transaction by purchasing, prior
to the holder's exercise of an option written by the Fund, an option of the same
series as that on which the Fund desires to terminate its obligation. The
obligation of a Fund under an option that it has written would be terminated by
a closing purchase transaction, but the Fund would not be deemed to own an
option as the result of the transaction. To facilitate closing purchase
transactions, the Funds with option-writing authority will ordinarily write
options only if a secondary market for the options exists on a U.S. or foreign
securities exchange or in the over-the-counter market.

Option writing for a Fund may be limited by position and exercise limits
established by U.S. securities exchanges and the National Association of
Securities Dealers, Inc. and by requirements of the Code for qualification as a
regulated investment company. A Fund would enter into options transactions as
hedges to reduce investment risk, and a properly correlated hedge will result in
a loss on the portfolio's position being offset by a gain on the hedge position.

SECURITIES INDEX OPTIONS. In attempting to hedge all or a portion of its
investments, each non-money market Fund may purchase and write put or call
options on securities indexes listed on U.S. or foreign securities exchanges or
traded in the over-the-counter market. A Fund would purchase or write index
options only with respect to those indexes that include securities of the type
that the Fund would invest in. As discussed above, a Fund with option writing
authority may write only covered options. In addition to investing in securities
index options for hedging purposes, the non-money market Funds may use such
options as a means of participating in a securities market without making direct
purchases of securities.

24
<PAGE>

A securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index. Investments
in options on securities indexes generally have return characteristics similar
to direct investments in the underlying instruments.

Unlike options on securities, options on securities indexes do not involve the
delivery of an underlying security. An option on a securities index represents
the holder's right to obtain from the writer, in cash, a fixed multiple of the
amount by which the exercise price exceeds (in the case of a call) or is less
than (in the case of a put) the closing value of the underlying securities index
on the exercise date.

If a Fund writes a securities index option, that option may be deemed covered in
any manner permitted under the 1940 Act or any other method the SEC determines
to be permissible. See "Strategies Available to Some But Not All Funds --
Covered Option Writing" in the Statement of Additional Information for specific
situations where securities index options will be deemed to be covered by a
Fund. If a Fund has written a securities index option, it may terminate its
obligation by effecting a closing purchase transaction, which is accomplished by
purchasing an option of the same series as the option previously written.

FUTURES AND OPTIONS ON FUTURES. Each non-money market Fund, other than the
Small-Cap Value Fund, may enter into interest rate, financial and stock or bond
index futures contracts or related options that are traded on a U.S. or foreign
exchange or board of trade approved by the CFTC or in the over-the-counter
market. The Funds would engage in these transactions to hedge against the
effects of changes in the value of portfolio securities due to anticipated
changes in interest rates and/or market conditions, to gain market exposure for
accumulating and residual cash positions, for duration management, or when the
transactions are economically appropriate to the reduction of risks inherent in
the management of the Fund involved. No Fund will enter into a transaction
involving futures and options on futures for speculative purposes.

A Fund may not enter into futures and options contracts for which aggregate
initial margin deposits and premiums paid for unexpired options exceed 5% of the
fair market value of the Fund's total assets, after taking into account
unrealized losses or profits on futures contracts or options on futures
contracts into which it has entered. The current view of the SEC staff is that
an investment fund's long and short positions in futures contracts, as well as
put and call options on futures written by that fund, must be collateralized
with cash or other liquid assets and segregated with the fund's custodian or a
designated sub-custodian or covered in a manner similar to that for covered
options on securities (see "Strategies Available to Some But Not All Funds --
Covered Option Writing" in the Statement of Additional Information) and designed
to eliminate any potential leveraging.

An interest rate futures contract obligates the buyer to receive and the seller
to deliver a specified amount of a particular financial instrument (debt
security) at a specified price, date, time and place. Financial futures
contracts obligate the holder to deliver (in the case of a futures contract that
is sold) or receive (in the case of a futures contract that is purchased) at a
future date a specified quantity of a financial instrument, specified
securities, or the cash value of a securities index.

An index futures contract obligates the parties to contract to take or make
delivery of an amount of cash equal to the difference between the value of the
index at the close of the last trading day of the contract and the price at
which the index contract was originally written. A municipal bond index futures
contract is based on an index of long-term, tax-exempt municipal bonds; a
corporate bond index futures contract is based on an index of corporate bonds.
Stock index futures contracts are based on indices that reflect the market value
of common stock of the companies included in the indices. An option on an
interest rate or index futures contract generally gives the purchaser the right,
in return for the premium paid, to assume a position in a futures contract at a
specified exercise price at any time prior to the expiration date of the option.

FORWARD CURRENCY TRANSACTIONS. Each non-money market Fund, other than the
Small-Cap Value Fund, may hold currencies to meet settlement requirements for
foreign securities. Each non-money market Fund, other than the Premier Growth
Fund, the Small-Cap Value Fund and the S&P 500 Index Fund, may engage in
currency exchange transactions to manage currency risk, which is the risk that
fluctuations in exchange rates may adversely affect a Fund. No Fund will enter
into forward currency transactions for speculative purposes.

25
<PAGE>

Forward currency contracts are agreements to purchase or sell a specific
quantity of a currency at a future date and at a price that is fixed at the time
that a Fund enters into the contract. Forward currency contracts are traded in a
market conducted directly between currency traders (typically, commercial banks
or other financial institutions) and their customers, generally have no deposit
requirements and are typically consummated without payment of any commissions. A
Fund, however, may enter into forward currency contracts requiring deposits or
involving the payment of commissions. To assure that a Fund's forward currency
contracts are not used to achieve investment leverage, cash or other liquid
assets will be segregated with State Street or a designated sub-custodian in an
amount at all times equal to or exceeding the Fund's commitment under the
contracts.

Upon maturity of a forward currency contract, a Fund may pay for and receive the
underlying currency, negotiate a roll- over into a new forward currency contract
with a new settlement date, or negotiate a termination of the forward contract
into an offset whereby the Fund would pay the difference between the exchange
rate fixed in the contract and the then current exchange rate. The Trust also
may be able to negotiate such an offset on behalf of a Fund prior to maturity of
the original forward contract. No assurance can be given that new forward
contracts or offsets will always be available to a Fund.

In hedging a specific portfolio position, a Fund may enter into a forward
contract with respect to either the currency in which the position is
denominated or another currency deemed appropriate by the Investment Manager. A
Fund's exposure with respect to forward currency contracts is limited to the
amount of the Fund's aggregate investments in instruments denominated in foreign
currencies.

OPTIONS ON FOREIGN CURRENCIES. Each non-money market Fund, other than the
Premier Growth Fund and the Small-Cap Value Fund, may purchase or write foreign
currency options as a hedge against variations in foreign exchange rates that
would cause the U.S. dollar value of securities denominated in foreign currency
to decline or the cost of securities to be acquired to increase. Foreign
currency options provide the holder of such options the right to buy or sell a
currency at a fixed price on or before a future date. The Funds may write only
covered options, and no Fund will enter into a transaction involving options on
foreign currencies for speculative purposes. The Funds will purchase or write
options that are traded on U.S. or foreign exchanges or in the over-the-counter
market. The Trust will limit the premiums paid on a Fund's options on foreign
currencies to 5% of the value of the Fund's total assets.

ADDITIONAL INVESTMENT TECHNIQUES. Each Fund may enter into securities
transactions on a when-issued or delayed-delivery basis and may lend its
portfolio securities.

SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS" AND "APPENDIX -- FURTHER
INFORMATION: CERTAIN INVESTMENT TECHNIQUES AND STRATEGIES" FOR A DISCUSSION OF
THE RISKS AND SPECIAL CONSIDERATIONS ASSOCIATED WITH THE ADDITIONAL INVESTMENTS
AND INVESTMENT TECHNIQUES AND STRATEGIES DISCUSSED ABOVE.

INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

The Trust has adopted certain fundamental investment restrictions with respect
to each Fund that may not be changed without approval of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act). Included
among those fundamental restrictions are those listed below.

1. No Fund may borrow money, except that a Fund may enter into reverse
repurchase agreements and may borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of redemption requests and cash
payments of dividends and distributions that might otherwise require the
untimely disposition of securities, in an amount not to exceed 33 1/3% of the
value of the Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing is made. Whenever borrowings, including reverse repurchase agreements,
of 5% or more of a Fund's total assets are outstanding, the Fund will not make
any additional investments.

<PAGE>

2. No Fund may purchase securities (other than U.S. Government Obligations) of
any issuer if, as a result of the purchase, more than 5% of the Fund's total
assets would be invested in the securities of the issuer, except that up to 25%
of the value of the total assets of each non-money market Fund may be invested
without regard to this limitation. All securities of a foreign government and
its agencies will be treated as a single issuer for purposes of this
restriction.

3. No Fund may purchase more than 10% of the voting securities of any one
issuer, or more than 10% of the outstanding securities of any class of issuer,
except that (a) this limitation is not applicable to a Fund's investments in
U.S. Government Obligations and (b) up to 25% of the value of the assets of a
non-money market Fund may be invested without regard to these 10% limitations.
All securities of a foreign government and its agencies will be treated as a
single issuer for purposes of this restriction.

4. No Fund may invest more than 25% of the value of its total assets in
securities of issuers in any one industry. For purposes of this restriction, the
term industry will be deemed to include (a) the government of any country other
than the United States, but not the U.S. Government and (b) all supra-national
organizations. In addition, securities held by the Money Market Fund that are
issued by domestic banks are excluded from this restriction. For purposes of
this investment restriction, the Trust may use the industry classifications
reflected by the S&P 500 Index, if applicable at the time of determination. For
all other portfolio holdings, the Trust may use the Directory of Companies
Required to File Annual Reports with the SEC and Bloomberg Inc. In addition, the
Trust may select its own industry classifications, provided such classifications
are reasonable.

Certain other investment restrictions adopted by the Trust with respect to the
Funds are described in the Statement of Additional Information.

RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

Investing in the Funds involves risk factors and special considerations, such as
those described below.

GENERAL. Investments in a Fund are not insured against loss of principal. As
with any investment portfolio, there can be no assurance that a Fund will
achieve its investment objective. Investing in shares of a Fund should not be
considered to be a complete investment program.

OTHER INVESTORS. Investors may be materially affected by the actions of other
large institutional investors. For example, if a large institutional investor
withdraws an investment in a Fund, the Fund could diminish in size by a
substantial amount causing the remaining investors to experience higher pro rata
operating expenses, resulting in lower returns for such investors. The
withdrawal by a large investor also may result in significant portfolio
liquidation expenses that are borne by remaining shareholders.

EQUITY SECURITIES. A Fund's investments in common stocks and other equity
securities are subject to stock market risk, which is the risk that the value of
the equity securities the Fund holds may decline over short or even extended
periods. Equity securities also are subject to the risk that the value of a
particular issuer's securities will decline, even during periods when equity
securities traded in the stock market in general are rising.

DEBT INSTRUMENTS. A Fund's investments in debt securities are subject to
interest rate risk, which is the risk that increases in market interest rates
will adversely affect investments in such securities. The value of investments
in fixed income securities tend to decrease when interest rates rise and
increase when interest rates fall. Generally, the value of longer-term debt
instruments will tend to fluctuate more than shorter-term debt securities. In
addition, when interest rates are falling, the money a Fund receives from
continuously selling shares will likely be invested in portfolio instruments
producing lower yields than the balance of its portfolio, thereby reducing the
Fund's current yield. In periods of rising interest rates, the opposite result
can be expected to occur.

<PAGE>

CREDIT RISK. The Funds may invest in debt securities that are not backed by
the U.S. government. Such securities are subject to credit risk, which is
the risk that the issuer may be unable to pay principal and/or interest when
due.

INVESTMENT GRADE OBLIGATIONS. Obligations rated BBB by S&P or Baa by Moody's are
considered investment grade, but are somewhat riskier than higher-rated
investment grade obligations. Obligations rated BBB by S&P are regarded as
having only an adequate capacity to pay principal and interest, and those rated
Baa by Moody's are considered medium-grade obligations that lack outstanding
investment characteristics and have speculative characteristics as well.

LOW-RATED SECURITIES. Certain Funds are authorized to invest in high-yield
securities that are rated lower than investment grade by the primary rating
agencies (e.g., are rated "BB" or lower by S&P and "Ba" or lower by Moody's).
These securities are sometimes referred to as "junk bonds," and are considered
to be speculative. Lower-rated and comparable unrated securities (collectively,
"low-rated" securities) provide poor protection for payment of principal and
interest. They generally are subject to greater risks of default than
higher-rated securities, and securities with the lowest ratings may be in
default or have a substantial risk of default. Low-rated securities generally
are unsecured and frequently are subordinated to the prior payment of senior
indebtedness. A Fund may incur additional expenses to the extent that it is
required to seek recovery upon a default.

The market value of certain low-rated securities tends to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, low-rated securities generally are subject
to a greater risk that the issuer cannot meet principal and interest payments
when due (i.e., credit risk). Issuers of low-rated securities are often highly
leveraged and may not have access to more traditional methods of financing.
Accordingly, the ability of such issuers to service their debt obligations
during an economic downturn or during sustained periods of rising interest rates
may be impaired. These issuers tend to be more vulnerable to real or perceived
economic changes, political developments, new or proposed laws and adverse
publicity.

The market for low-rated securities may be thinner and less active than that for
higher-rated securities, which may adversely affect the price at which these
securities may be sold. Thinner markets may diminish a Fund's ability to obtain
accurate market quotations for purposes of valuing the portfolio securities and
calculating the Fund's net asset value.

ILLIQUID SECURITIES. Illiquid securities may be difficult to resell, and a
Fund's net assets may be adversely affected if there is no ready buyer willing
to purchase the Fund's illiquid securities at a price the Investment Manager
deems representative of their value.

RESTRICTED SECURITIES. Restricted securities are generally more illiquid than
publicly traded securities. The prices realized from reselling restricted
securities in privately negotiated transactions may be less than those
originally paid by a Fund. Companies whose securities are restricted are not
subject to the disclosure and other investor protection requirements applicable
to publicly traded securities.

SMALLER CAPITALIZATION COMPANIES. Investing in securities of small- and
medium-sized capitalization companies may involve greater risks than investing
in larger, more established issuers. Such smaller capitalization companies may
have limited product lines, markets or financial resources and their securities
may trade less frequently and in more limited volume than the securities of
larger or more established companies. In addition, these companies are typically
subject to a greater degree of changes in earnings and business prospects than
are larger, more established issuers. As a result, the prices of securities of
smaller capitalization companies may fluctuate to a greater degree than the
prices of securities of other issuers. Although investing in securities of
smaller capitalization companies offers potential for above-average returns, the
risk exists that the companies will not succeed and the prices of the companies'
shares could significantly decline in value.

<PAGE>

underlying securities might decline while the Fund seeks to assert its rights,
that the Fund will incur additional expenses in asserting its rights, and that
the Fund may lose all or part of the income from the agreement.

A reverse repurchase agreement involves the risk that the market value of the
securities retained by a Fund may decline below the price of the securities the
Fund has sold but is obligated to repurchase under the agreement. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds of the agreement
may be restricted pending a determination by the party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.

WARRANTS. A warrant is a security that permits, but does not obligate, its
holder to subscribe for another security. Warrant holders do not have a right to
dividends or voting rights with respect to underlying securities, and warrants
do not represent any rights to the assets of the issuer. Therefore, a warrant
may be considered more speculative than certain other types of investments. In
addition, the value of a warrant does not necessarily change with the value of
the underlying security and a warrant ceases to have value if it is not
exercised prior to its expiration date. Warrants acquired by a Fund in units or
attached to securities may be deemed to be without value.

RIGHTS. A right is a privilege granted to a corporation's existing shareholders
to purchase or subscribe to additional shares of stock at the time of a new
issuance, before the stock is offered to the general public. This allows the
stockholders to retain the same ownership percentage after the new stock
offering. Rights are freely transferable and generally entitle the holder to
purchase the stock at a price below the public offering price.

INVESTMENT IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments, including securities issued in the form of depositary
receipts, involves considerations and potential risks not typically associated
with investing in obligations issued by the U.S.
Government and U.S. corporations, including:

REGULATORY RISKS. Less information may be available about foreign
companies than about U.S. companies, and foreign companies generally are not
subject to uniform accounting, auditing and financial reporting standards or to
other regulatory practices and requirements applicable to U.S. companies. The
values of foreign investments are affected by changes in exchange control
regulations; application of foreign tax laws, including withholding taxes; and
changes in governmental administration or economic or monetary policy (in the
United States or abroad).

CURRENCY RISKS. The values of foreign investments are affected by
changes in currency rates or exchange control regulations. When a Fund holds
a security denominated in a local currency (rather than in U.S. dollars), it
may convert U.S. dollars into that local currency in order to purchase the
security and convert local currency back into dollars when the security is
sold. The value of the local currency relative to the U.S. dollar would
affect the value of that foreign security. For example, if the local
currency gains strength against the U.S. dollar, the value of the foreign
security increases. Conversely, if the local currency weakens against the
U.S. dollar, the value of the foreign security would decline. U.S. dollar
denominated securities of foreign issuers also may be affected by currency
risk.

Currency exchange rates generally are determined by the forces of supply
and demand in the foreign exchange markets and the relative merits of
investments in different countries as seen from an international perspective.
Currency exchange rates can also be affected unpredictably by intervention by
U.S. or foreign governments or central banks or by currency controls or
political developments in the United States or abroad.

MARKET RISKS. Foreign markets, particularly those of developing or
emerging countries, may be less liquid, more volatile and less subject to
governmental supervision than domestic markets. There may be difficulties in
enforcing contractual obligations and transactions could be subject to extended
clearance and settlement periods.

<PAGE>

POLITICAL/ECONOMIC RISK. A foreign government might impose restrictions or
prohibitions on the repatriation of foreign currencies, limitations on the use
or removal of funds or other assets (including the withholding of dividends). It
may adopt confiscatory tax policies or expropriate the assets or operations of a
company in which a Fund invests. Changes in the relationship or dealings between
nations may affect a Fund's investments in foreign securities.

TRANSACTION COSTS. Transaction costs of buying and selling foreign
securities, including tax, brokerage and custody costs, generally are higher
than those involving domestic transactions. Costs are incurred in connection
with conversion between various currencies.

INVESTING IN DEVELOPING OR EMERGING MARKETS. Investing in securities issued by
companies located in countries with emerging economies and/or securities markets
involves risks in addition to those described above with respect to investing in
foreign securities. The economic structures in these countries generally are
less diverse and mature than those in developed countries, and their political
systems are less stable. Other characteristics of developing countries that may
affect investment in their markets include certain national policies that may
restrict investment by foreigners in issuers or industries deemed sensitive to
relevant national interests and the absence of developed legal structures
governing private and foreign investments and private property.

The small size and inexperience of the securities markets in certain emerging or
developing countries and the low or nonexistent volume of trading in securities
in those countries may make investments in such countries illiquid and more
volatile than investments in Japan or most Western European countries. As a
result, a Fund investing in such countries may be required to establish special
custody or other arrangements before investing.

The former republics of the Soviet Union and the Eastern Bloc are emerging
markets countries that are undergoing a rapid transition from centralized,
planned economies to market-oriented economies. There can be no assurance that
such transition, including ongoing privatization efforts and recently
implemented economic reform programs, will continue. Moreover, there is a risk
that such countries might return to the centrally planned economies that existed
when they had a communist form of government. Investors should note that when
the former republics of the Soviet Union and the Eastern Bloc operated under
such centralized economies, they confiscated personal property and abrogated
property and other legal rights.

INVESTING IN A SINGLE COUNTRY. As discussed above, the Emerging Markets Fund
may, from time to time, invest all of its assets in a single emerging markets
country. There is a higher degree of risk associated with investing in one
country rather than diversifying investments among countries. If the Fund
invests all or a significant portion of its assets at any time in a single
country, events occurring in that country are more likely to affect the Fund's
investments. Specific risks associated with investing in a single country
include a greater effect on portfolio holdings of currency fluctuations and
country-specific economic, social or political factors.

MUNICIPAL OBLIGATIONS. Even though Municipal Obligations are interest-bearing
investments that promise a stable flow of income, like other debt instruments
their prices are inversely affected by changes in interest rates and, therefore,
are subject to the risk of market price fluctuations. The values of Municipal
Obligations with longer remaining maturities typically fluctuate more than those
of similarly rated Municipal Obligations with shorter remaining maturities. The
values of fixed income securities also may be affected by changes in the credit
rating or financial condition of the issuing entities.

At the time of issuance, issuers of Municipal Obligations obtain opinions from
bond counsel addressing the validity of the obligations and whether the interest
on such obligations is exempt from Federal income tax. Neither the Trust nor the
Investment Manager will review the proceedings relating to the issuance of
Municipal Obligations or the basis for opinions of counsel. The U.S. Government
has enacted various laws that have restricted or diminished the income tax
exemption on various types of Municipal Obligations and may pass similar laws in
the future.

<PAGE>

Fund to purchase a security at a certain price, the Fund may experience a loss
if the market price of the underlying security goes down. This is because the
Fund would be compelled to purchase the security at a price that is higher than
market price. The loss would be equal to the difference between the price at
which the Fund must purchase the underlying security and its market value at the
time of the option exercise, less the premium received for writing the option.
Likewise, the Fund would experience a loss if it wrote a call option and the
price of the underlying security rises. This is because the Fund would be
obligated to sell a security at a price that is lower than market price. The
loss would be equal to the excess of the security's market value at the time of
the option's exercise over the Fund's acquisition cost of the security, less the
premium received for writing the option.

In addition, no assurance can be given that a Fund will be able to close out an
option position at the desired time. A Fund's ability to enter into closing
purchase transactions depends upon the existence of a liquid secondary market.
While the Funds purchase or write options only when the Investment Manager
believes a liquid secondary market exists, there is a possibility that this
market may be absent or cease to exist, which would make it difficult or
impossible to close out a position when desired.

SECURITIES INDEX OPTIONS. As with other options, a Fund's ability to close out
positions in securities index options depends upon the existence of a liquid
secondary market. Although a Fund will generally purchase or write securities
index options only if a liquid secondary market for the options purchased or
sold appears to exist, no such secondary market may exist, or the market may
cease to exist at a later date. In addition, securities exchanges impose
position and exercise limits and other regulations on options traded on those
exchanges. The absence of a liquid secondary market and possible
exchange-imposed limitations may make it difficult or impossible to close out a
position when desired.

FUTURES AND OPTIONS ON FUTURES. The use of futures contracts and options on
futures contracts as a hedging device involves several risks. No assurance can
be given that a correlation will exist between price movements in the underlying
securities or index and price movements in the securities that are the subject
of the hedge. Positions in futures contracts and options on futures contracts
may be closed out only on the exchange or board of trade on which they were
entered, and no assurance can be given that an active market will exist for a
particular contract or option at any particular time.

FORWARD CURRENCY TRANSACTIONS. The market for forward currency contracts may be
limited with respect to certain currencies. The existence of a limited market
may in turn restrict a Fund's ability to hedge against the risk of devaluation
of currencies in which the Fund holds a substantial quantity of securities. The
successful use of forward currency contracts as a hedging technique draws upon
the special skills and experience of the Investment Manager with respect to
those instruments and will usually depend upon the ability of the Investment
Manager to forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an unexpected manner, a
Fund may not achieve the anticipated benefits of forward currency contracts or
may realize losses and thus be in a less advantageous position than if those
strategies had not been used. Many forward currency contracts are subject to no
daily price fluctuation limits so that adverse market movements could continue
with respect to those contracts to an unlimited extent over a period of time. In
addition, the correlation between movements in the prices of those contracts and
movements in the prices of the currencies hedged or used for cover will not be
perfect.

The Trust's ability to dispose of a Fund's positions in forward currency
contracts depends on the availability of active markets in those instruments and
the amount of trading interest that may exist in the future in forward currency
contracts which cannot now be predicted. Forward currency contracts may be
closed out only by the parties entering into an offsetting contract. As a
result, no assurance can be given that a Fund will be able to utilize these
contracts effectively for the intended purposes.

OPTIONS ON FOREIGN CURRENCIES. Like the writing of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received; a Fund could also be required, with
respect to any option it has written, to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on a foreign currency may constitute an

<PAGE>

effective hedge against fluctuation in exchange rates, although in the event of
rate movements adverse to a Fund's position, the Fund could forfeit the entire
amount of the premium plus related transaction costs.

DERIVATIVES. Certain of the Funds' permitted investments constitute derivatives,
including forward currency exchange contracts, stock options, currency options,
securities index options, futures contracts, swaps and options on futures
contracts involving U.S. Government and foreign government securities and
currencies. Certain derivative securities can, under certain circumstances,
significantly increase an investor's exposure to market and other risks.

INSTRUMENTS AND STRATEGIES INVOLVING SPECIAL RISKS. Certain instruments in which
the Funds can invest and certain investment strategies that the Funds may employ
could expose the Funds to various risks and special considerations. The
instruments presenting risks to a Fund that holds the instruments are: Rule 144A
Securities, depositary receipts, debt obligations of supra-national agencies,
securities of other investment funds, municipal leases, floating and variable
rate instruments, participation interests, zero coupon obligations, Municipal
Obligation components, custody receipts, mortgage related securities, government
stripped mortgage related securities, and asset-backed and receivable-backed
securities.

Among the risks that some but not all of these instruments involve are lack of
liquid secondary markets and the risk of prepayment of principal. The investment
strategies involving special risks to some or all of the Funds are: engaging in
when-issued or delayed-delivery securities transactions, lending portfolio
securities and selling securities short against the box. Among the risks that
some but not all of these strategies involve are increased exposure to
fluctuations in market value of the securities and certain credit risks. See
"Appendix -- Further Information: Certain Investment Techniques and Strategies"
for a more complete description of these instruments and strategies.

YEAR 2000 RISKS. Like other mutual funds, financial and business organizations
and individuals around the world, each of the Funds could be adversely affected
if the computer systems used by its Investment Manager and other service
providers do not properly process and calculate date-related information from
and after January 1, 2000. This is commonly known as the "Year 2000 Problem."
GEIM is taking steps that it believes are reasonably designed to address the
Year 2000 Problem with respect to the computer systems that it uses and to
obtain satisfactory assurances that comparable steps are being taken by each of
the Funds' other major service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact on the
Funds. In addition, it is possible that the markets for securities in which the
Funds invest may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000 if systems should cease to
function at that time. This may result in trade settlement problems and
liquidity issues. Corporate and governmental data processing errors may result
in production problems for individual companies and overall economic
uncertainties. Earnings of individual issuers may be affected by remediation
costs. In addition, it has been reported that foreign institutions have made
less progress in addressing the Year 2000 Problem than major U.S. entities,
which could make certain of the Funds' investments more sensitive to these
risks.

PORTFOLIO TRANSACTIONS AND TURNOVER

The Board of Trustees of the Trust has determined that, to the extent consistent
with applicable provisions of the 1940 Act and rules thereunder, transactions
for a Fund may be executed through an affiliated broker-dealer if, in the
judgment of the Investment Manager, the use of such broker-dealer is likely to
result in price and execution at least as favorable to the Fund as those
obtainable through other qualified broker-dealers, and if, in the transaction,
such broker-dealer charges the Fund a fair and reasonable rate consistent with
that payable by the Fund to other broker-dealers on comparable transactions.
Under rules adopted by the SEC, such broker-dealer may not execute transactions
for a Fund on the floor of any national securities exchange, but may effect
transactions by transmitting orders for execution providing for clearance and
settlement, and arranging for the performance of those functions by members of
the exchange not associated with such broker-dealer. Such broker-dealer will be

<PAGE>

required to pay fees charged by those persons performing the floor brokerage
elements out of the brokerage compensation that it receives from a Fund.

The Trust cannot predict precisely the turnover rate for any Fund, but expects
that the annual turnover rate will generally not exceed 50% for the Emerging
Markets Fund, 50% for the Premier Growth Fund, 150% for the Small-Cap Value
Fund, [150% for the Small-Cap Growth Fund, 150% for the Mid-Cap Value Fund, 150%
for the High Yield Fund,] 200% for the Mid-Cap Growth Fund, 50% for the
International Fund, 30% for the Value Equity Fund, 50% for the U.S. Equity Fund,
25% for the S&P 500 Index Fund, 200% for the Strategic Fund, and 300% for the
Income Fund. The portfolio turnover rate for the Money Market Fund is expected
to be zero for regulatory purposes. A 100% annual turnover rate would occur if
all of a Fund's securities were replaced one time during a period of one year.
Short-term gains realized from portfolio turnover are taxable to investors as
ordinary income. In addition, higher portfolio turnover rates can result in
corresponding increases in brokerage commissions. The Investment Manager does
not consider portfolio turnover rate a limiting factor in making investment
decisions on behalf of any Fund consistent with the Fund's investment objective
and policies. The Statement of Additional Information contains additional
information regarding portfolio transactions and turnover.

MANAGEMENT OF THE TRUST
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BOARD OF TRUSTEES

Overall responsibility for management and supervision of the Funds rests with
the Trust's Board of Trustees. The Trustees approve all significant agreements
between the Trust and the persons and companies that furnish services to the
Funds, including agreements with the Funds' investment adviser and
administrator, distributor, custodian and transfer agent. The day-to-day
operations of the Funds have been delegated to GEIM. The Statement of Additional
Information contains background information regarding each Trustee and executive
officer of the Trust.

INVESTMENT ADVISER AND ADMINISTRATOR

GEIM, located at 3003 Summer Street, P.O. Box 7900, Stamford, Connecticut 06904,
serves as the investment adviser and administrator of each Fund. GEIM was formed
under the laws of Delaware in 1988, and is a wholly-owned subsidiary of GE and a
registered investment adviser under the Investment Advisers Act of 1940, as
amended.

GEIM's principal officers, directors, and portfolio managers serve in similar
capacities with GEIC. Like GEIM, GEIC is a wholly-owned subsidiary of GE.
Through GEIM and GEIC and their predecessors, GE has more than 70 years of
investment management experience.

GE Investments provides investment management services to various institutional
accounts with total assets as of March 31, 1998, in excess of $75.5 billion, of
which more than $14.9 billion was invested in mutual funds. GEIM or GEIC serves
as the investment adviser to the following entities:

GE FUNDS. GEIM has served as the investment adviser and administrator for
GE Funds since January 1993, when GE Funds commenced operations. GE Funds is an
open-end management investment company whose portfolios (as defined above, the
"GE Funds") are offered to individual retail and institutional investors. The GE
Funds are sold through a multiple distribution system that offers an investor
the option of choosing a class that best suits the investor's needs in terms of
purchase amount and the length of time the investor intends to hold GE Fund
shares.

GE LIFESTYLE FUNDS. GEIM has served as the investment adviser and
administrator to the investment portfolios of GE LifeStyle Funds since December
1997. GE LifeStyle Funds is an open-end management investment company whose
portfolios invest in certain portfolios of GE Funds.

GE INVESTMENTS FUNDS, INC. ("GEIFI FUNDS"). GEIM has served as the
investment adviser to the investment portfolios of GEIFI Funds since May 1997.
GEIFI Funds is an open-end management investment company whose shares are
currently offered to insurance company separate accounts that fund certain
variable annuity and variable life contracts.

<PAGE>

OTHER INSTITUTIONAL ACCOUNTS. GEIM has served as the sub-adviser to
PaineWebber Global Equity Fund, a series of PaineWebber Investment Trust, since
its inception in 1991, and to the Global Growth Portfolio of PaineWebber Series
Trust and Global Small Cap Fund Inc. since March 1995. GEIM has served as
sub-adviser to the International Equity Portfolio and the U.S. Equity Portfolio
of WRL Series Fund, Inc. since January 1997 and to the International Equity
Portfolio of IDEX Series Fund since February 1997. GEIM has also served as
investment adviser to the U.S. Government Money Market Fund and U.S. Treasury
Money Market Fund of Financial Investors Trust since March 1997, and the Prime
Fund of Financial Investors Trust since May 1998.

THE ELFUN FUNDS. GEIC serves as the investment adviser to Elfun Global
Fund, Elfun Trusts, Elfun Income Fund, Elfun Money Market Fund, Elfun Tax-Exempt
Income Fund and Elfun Diversified Fund (collectively, the "Elfun Funds"). The
first Elfun Fund, Elfun Trusts, was established in 1935. Investment in the Elfun
Funds generally is limited to regular and senior members of the Elfun Society,
whose regular members are selected from active employees of GE and/or its
majority-owned subsidiaries, and whose senior members are former members who
have retired from those companies.

S&S FUNDS. Under the General Electric Savings and Security Program, GEIC
serves as investment adviser to the GE S&S Program Mutual Fund and GE S&S Long
Term Interest Fund. GEIC also serves as the investment adviser to the General
Electric Pension Trust.

The Investment Manager, subject to the supervision and direction of the Trust's
Board of Trustees, manages the Funds' portfolios in accordance with the Funds'
respective investment objectives and stated policies, makes investment decisions
for the Funds and places purchase and sale orders for the Funds' portfolio
transactions. The Investment Manager also pays the salaries of all personnel
employed by both it and the Trust and provides each Fund with investment
officers who are authorized by the Board of Trustees to execute purchases and
sales of securities on behalf of the Funds.

The Investment Manager makes investment decisions for each Fund independently
from its investment considerations with respect to the entities that it manages.
However, the Funds and these other entities may invest in the same types of
securities, particularly where they have the same or similar investment
objective or policies. When a Fund and one or more other accounts or portfolios
managed by the Investment Manager are prepared to invest in, or desire to
dispose of, the same security, available investments or sale opportunities will
be allocated in a manner that the Investment Manager believes is equitable to
each entity. In some cases, this procedure may adversely affect the price a Fund
pays or receives or the size of the position obtained or disposed of by a Fund.

The agreements governing the investment advisory services furnished to the Trust
by GEIM provide that, if GEIM ceases to act as the investment adviser to the
Trust, at GEIM's request, the Trust's license to use the initials "GE" will
terminate and the Trust will change the name of the Trust and the Funds to a
name not including the initials "GE."

FEE STRUCTURE

Each Fund pays GEIM a combined fee for advisory and administrative services that
is accrued daily and paid monthly. The advisory agreement for each Fund
specifies the advisory fee and other expenses that the Fund must pay. The
advisory and administration fee for each Fund, except the S&P 500 Index Fund,
declines incrementally as Fund assets increase. This means that investors pay a
reduced fee with respect to Fund assets over a certain level, or "breakpoint."
The advisory and administration fee or fees for each Fund, and the relevant
breakpoints, are stated in the following schedule (fees are expressed as an
annual rate):

<PAGE>

NAME OF FUND AVERAGE DAILY NET ASSETS ANNUAL RATE
OF FUND PERCENTAGE (%)
- --------------------------------------------------------------------------------
Emerging Markets Fund First $50 million 1.05
Over $50 million .95
- --------------------------------------------------------------------------------
Premier Growth Equity Fund First $25 million .55
Mid-Cap Growth Fund Next $25 million .45
Value Equity Fund Over $50 million .35
U.S. Equity Fund
- --------------------------------------------------------------------------------
Small-Cap Value Fund First $25 million .70
[Small-Cap Growth Fund] Next $25 million .65
Over $50 million .60
- --------------------------------------------------------------------------------
[Mid-Cap Value Fund] First $25 million .60
Next $25 million .55
Over $50 million .50
- --------------------------------------------------------------------------------
International Equity Fund First $25 million .75
Next $50 million .65
Over $75 million .55
- --------------------------------------------------------------------------------
S&P 500 Index Fund All assets .15
- --------------------------------------------------------------------------------
Strategic Investment Fund First $25 million .45
[High Yield Fund] Next $25 million .40
Over $50 million .35
- --------------------------------------------------------------------------------
Income Fund First $25 million .35
Next $25 million .30
Next $50 million .25
Over $100 million .20
- --------------------------------------------------------------------------------
Money Market Fund First $25 million .25
Next $25 million .20
Next $50 million .15
Over $100 million .10

From time to time, GEIM may waive or reimburse advisory or administrative fees
paid by a Fund.

INVESTMENT SUB-ADVISERS

S&P 500 INDEX FUND. SSGA is the investment sub-adviser to the S&P 500 Index Fund
pursuant to an investment sub-advisory agreement with GEIM. SSGA, a division of
State Street, is located at Two International Place, Boston, Massachusetts
02110. State Street is a wholly-owned subsidiary of State Street Corporation, a
publicly held bank holding company. State Street, with over $475 billion under
management as of March 31, 1998, provides complete global investment management
services from offices in the United States, London, Sydney, Hong Kong, Tokyo,
Toronto, Montreal, Luxembourg, Melbourne, Paris, Dubai, Munich and Brussels.
SSGA is also the investment sub-adviser to the GEIFI Funds' S&P 500 Index Fund.
GEIM pays SSGA monthly compensation in the form of an investment sub-advisory
fee at an annual rate of .05% of the first $100 million,

<PAGE>

.04% of the next $200 million and .03% for all amounts over $300 million, of the
Fund's average daily net assets.

SMALL-CAP VALUE FUND. Palisade, located at One Bridge Plaza, Fort Lee, New
Jersey 07024, is the investment sub-adviser to the Small-Cap Value Fund pursuant
to an investment sub-advisory agreement with GEIM. Although Palisade has no
previous experience managing mutual fund portfolios, Palisade has managed
various institutional and private accounts with total assets in excess of $3
billion as of March 31, 1998. Palisade is also the investment sub-adviser to the
GE Funds' GE Small-Cap Value Equity Fund. GEIM pays Palisade monthly
compensation in the form of an investment sub-advisory fee at an annual rate of
.35% of the first $200 million, .325% of the next $100 million and .30% for all
amounts over $300 million, of the Fund's average daily net assets.

PORTFOLIO MANAGEMENT

Eugene K. Bolton is responsible for the overall management of the domestic
equity investment process at GE Investments. Mr. Bolton has served in that
capacity since 1991. Mr. Bolton leads a team of portfolio managers for the U.S.
Equity Fund [and the Small-Cap Growth Fund] and has served in that capacity
since the commencement of the Funds' operations. In addition, Mr. Bolton has
served in a similar capacity with respect to the GE Funds' GE U.S. Equity Fund
[and GE Small-Cap Growth Fund] since the commencement of those Funds'
operations. Mr. Bolton has more than 12 years of investment experience and has
held positions with GE Investments since 1984. He is currently a Director and
Executive Vice President of GE Investments.

David B. Carlson is the Portfolio Manager of the Premier Growth Fund and is also
responsible for the management of the domestic equity related investments of the
portfolio of the Strategic Fund. Mr. Carlson has served those Funds since the
commencement of their operations. In addition, Mr. Carlson has served as a
Portfolio Manager to similar funds of GE Funds since the commencement of their
operations. He has more than 15 years of investment experience and has held
positions with GE Investments since 1982. Mr. Carlson is currently a Senior Vice
President of GE Investments.

Peter J. Hathaway is the Portfolio Manager of the Value Equity Fund and has
served in that capacity since the commencement of that Fund's operations. In
addition, Mr. Hathaway has served in a similar capacity with respect to GE
Funds' GE Value Equity Fund since the commencement of that Fund's operations. He
has more than 36 years of investment experience and has held positions with GE
Investments since 1985. Mr. Hathaway is currently a Senior Vice President of GE
Investments.

Ralph R. Layman leads a team of portfolio managers for the International Fund
and the Emerging Markets Fund and also is responsible for the management of the
international equity-related investments of the Strategic Fund. Mr. Layman has
served those Funds since the commencement of their operations. In addition, Mr.
Layman has served in a similar capacity with respect to GE Funds' GE
International Equity Fund since the commencement of its operations and the GE
Strategic Investment Fund since September 1997. He has more than 18 years of
investment experience and has held positions with GE Investments since 1991. Mr.
Layman is currently a Director and Executive Vice President of GE Investments.

Robert A. MacDougall leads a team of portfolio managers for the Income Fund [,
the High Yield Fund] and the Money Market Fund and is also responsible for the
management of fixed income related investments of the portfolio of the Strategic
Fund. Mr. MacDougall has served those Funds since the commencement of their
operations. In addition, Mr. MacDougall has served in a similar capacity with
respect to GE Funds' GE Fixed Income Fund [, GE High Yield Fund], GE Money
Market Fund and GE Strategic Investment Fund since the commencement of their
operations. He has more than 13 years investment experience and has held
positions with GE Investments since 1986. Mr. MacDougall is currently a Director
and Executive Vice President of GE Investments.

<PAGE>

Elaine G. Harris is the Portfolio Manager for the Mid-Cap Growth Fund [and the
Mid-Cap Value Fund] and has served in that capacity since commencement of the
Funds' operations. Ms. Harris also serves as the Portfolio Manager for GE Funds'
GE Mid-Cap Growth Fund [and the GE Mid-Cap Value Fund]. She has more than 13
years of investment experience and has held positions with GE Investments since
1993. From 1991 to 1993, Ms. Harris served as Senior Vice President and
Portfolio Manager at SunAmerica Asset Management. Ms. Harris is currently a
Senior Vice President of GE Investments.

James B. May leads a team of portfolio managers for the S&P 500 Index Fund.
Mr. May has been an investment officer and portfolio manager in the U.S.
Structured Products Group of State Street since 1994. From 1991 to 1993,
Mr. May served as an Investment Support Analyst in the U.S. Passive Service
Group of State Street. Mr. May holds a B.S. in finance from Bentley College
and a M.B.A. from Boston College.

The Small-Cap Value Fund is managed by an investment advisory committee, the
Investment Committee, composed of the following members: Jack Feiler, Martin L.
Berman, Steven E. Berman, Richard Meisenberg and Mark Degenhart. The Investment
Committee has served in that capacity since commencement of the Fund's
operations and also serves in a similar capacity with respect to GE Funds' GE
Small-Cap Value Equity Fund. Mr. Feiler, Chief Investment Officer at Palisade,
has day-to-day responsibility for managing the Fund and works with the
Investment Committee in developing and executing the Fund's investment program.
Mr. Feiler has more than 30 years of investment experience and has served as the
principal small-cap portfolio manager at Palisade since the commencement of
Palisade's operations in April 1995. Prior to joining Palisade, Mr. Feiler was a
Senior Vice President-Investments at Smith Barney from 1990 to 1995.

Investment personnel at GEIM, SSGA and Palisade may engage in securities
transactions for their own accounts pursuant to a code of ethics that
establishes procedures for personal investing and restricts certain
transactions.

EXPENSES OF THE FUNDS

Each Fund's Service Class bears its own expenses, which generally include all
costs not specifically borne by GEIM. Specifically, expenses borne by a Fund
include: investment advisory and administration fees; shareholder servicing and
distribution fees; fees paid to members of the Trust's Board of Trustees who are
not affiliated with GEIM or any of its affiliates; fees for necessary brokerage
services; and expenses that are not normal operating expenses of the Funds (such
as extraordinary expenses, interest and taxes). GEIM pays any fees and expenses
in excess of its advisory and administration fee that are not borne by the
Funds. The annual fees payable with respect to each Fund are intended to
compensate GEIM for its advisory and administration services.

The Trust has adopted a Shareholder Servicing and Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Service Class
Shares of each Fund. Under the Plan, the Trust will pay GEIM, with respect to
the Service Class shares of a Fund, fees for shareholder and distribution
services provided to that class of shares at an annual rate of .25% of the value
of the average daily net assets of such Fund attributable to the Service Class
shares. Fees to be paid with respect to the Funds under the Plan will be
calculated daily and paid monthly.

The annual fees payable with respect to the Service Class shares of a Fund are
intended to compensate GEIM, or enable GEIM to compensate other persons
("Service Providers"), for providing ongoing servicing and/or maintenance of the
accounts of shareholders of the Fund ("Shareholder Services") and to compensate
GEIM, or enable GEIM to compensate Service Providers, including any distributor
of shares of the Fund, for providing services that are primarily intended to
result in, or that are primarily attributable to, the sale of shares of the Fund
("Selling Services"). Shareholder Services means all forms of shareholder
liaison services, including, among other things, providing Service Class
shareholders with one or more of the following: (i) information on their
investments; (ii) general information regarding investing in mutual funds; (iii)
periodic newsletters containing materials relating to the Fund or to investments
in general in mutual funds; (iv) periodic financial seminars designed to assist
in the education of shareholders with respect to mutual funds generally and the
Fund specifically; (v) access to a telephone inquiry center relating to the
Fund; (vi) sub-accounting and sub-account maintenance, servicing and transaction
processing and (vii) other similar services not otherwise required to be
provided by the Trust's custodian or transfer agent. Selling Services include,
but are not limited to, the printing and distribution to prospective investors
in the Fund of prospectuses and statements of additional information that are
used in connection with sales of the Service Class shares of the Fund; the
preparation, including printing and distribution of sales literature and media
advertisements relating to the Service Class shares of a Fund; and

37
<PAGE>

distributing Service Class shares of the Fund. In providing compensation for
Selling Services in accordance with the Plan, GEIM is expressly authorized: (i)
to make, or cause to be made, payments reflecting an allocation of overhead and
other office expenses related to the distribution of the Service Class shares of
the Fund; (ii) to make, or cause to be made, payments to, or provide for the
reimbursement of expenses of, persons who provide support services in connection
with the distribution of the Service Class shares of the Fund; or (iii) to make,
or cause to be made, payments to financial intermediaries who have sold Service
Class shares of the Fund.

Payments under the Plan are not tied exclusively to the expenses for shareholder
servicing and distribution expenses actually incurred by GEIM or any Service
Provider, and the payments may exceed expenses actually incurred by a Service
Provider. The Trust's Board of Trustees evaluates the appropriateness of the
Plan and its payment terms on a continuing basis and in doing so considers all
relevant factors, including the types and extent of Shareholder Services
provided by GEIM and/or Service Providers and the amounts GEIM and/or Service
Providers receive under the Plan.

PURCHASE OF SHARES
- --------------------------------------------------------------------------------

PURCHASING SHARES -- GENERAL INFORMATION

The Distributor offers Service Class shares on a continuous basis. A purchase
order is processed at the net asset value next determined after the order (or
wire, if applicable) has been received and accepted by State Street, the Trust's
transfer agent. For a description of the manner of calculating a Fund's net
asset value, see "Net Asset Value." Shares are sold without the imposition of a
sales charge.

The Trust will accept purchase orders for shares only on each "Business Day,"
which is a day on which the Fund's net asset value is calculated as described
below under "Net Asset Value." The Trust, in its discretion, may reject any
order for the purchase of shares of a Fund. The Trust does not issue physical
certificates representing shares in any Fund.

Investors begin to earn income as of the first business day following the day
State Street has received payment for an order. Orders are accepted only upon
receipt by State Street of all documentation required to be submitted in
connection with such order. If an investor purchases or redeems shares through
an Authorized Firm (defined below), it may be subject to service fees imposed by
that Firm.

ELIGIBLE INVESTORS

The Distributor offers Service Class shares to certain investors that meet the
minimum investment requirements. The Trust was designed to appeal to
institutional investors such as corporations, foundations, endowments and trusts
established to fund employee benefit plans of various types as well as
charitable, religious and educational institutions. The Trust expects that most
of the time each Fund will have relatively few shareholders (as compared with
most mutual funds) but that these shareholders will invest substantial amounts
in a Fund. Typical institutional investors may include banks, insurance
companies, broker-dealers, investment advisers, trusts that fund qualified
pension and profit-sharing plans (Section 401 of the Code), trusts that fund
government employer non-qualified deferred compensation obligations (Section 457
of the Code), trusts that fund charitable, religious and educational
institutions (Section 501(c)(9) of the Code), non-government employers seeking
to fund non-qualified deferred compensation obligations, and investment
companies that are not affiliated persons of the Trust (or affiliated persons of
such persons).

MINIMUM INVESTMENT REQUIREMENT

<PAGE>

company (or of affiliated insurance companies) are related investors of each
other and their insurance company or companies and clients whose assets are
managed on a discretionary basis by the same bank, insurance company, investment
adviser or broker-dealer are related investors of their manager. The Distributor
also may treat institutional clients of a financial intermediary whose assets
are managed on a non-discretionary basis or who are otherwise served by the
intermediary (or its affiliate) as related investors of their manager or service
provider where Fund shares are held by that intermediary in an omnibus account
for its clients. There is no minimum investment requirement for subsequent
purchases. If the value of an investor's, or group of related investors',
investment in a Fund falls below $35 million for more than 120 days because of
redemptions (and not because of market fluctuations or Investment Switches
(defined below)), the Distributor may, in its sole discretion, refuse to sell
additional Fund shares to such investor (other than reinvestment of dividends
and capital gains distributions).

The minimum investment requirement is waived for each investor or group of
related investors so long as such person or group has invested at least $100
million in one or more investment portfolios or accounts that are advised by
GEIM and/or GEIC and at least $35 million of this $100 million amount is
invested in the Trust. If the value of such investor's, or group of related
investors', investment portfolios and accounts that are advised by GEIM and/or
GEIC falls below $100 million, or if the value of such investor's, or group of
related investors', investment in the Trust falls below $35 million, for more
than 120 days because of redemptions (and not because of market fluctuations or
Investment Switches), the Distributor may, in its sole discretion, refuse to
sell additional Fund shares to such investor (other than reinvestment of
dividends and capital gains distributions).

The minimum investment requirement is waived for up to three years from the date
of initial purchase of Fund shares for certain investors or groups of related
investors having: (a) at least $100 million of investment assets within six
months from the date of the initial purchase of Fund shares, provided they
invest in only one Fund, (b) at least $200 million of investment assets within
six months from the date of the initial purchase of Fund shares, provided they
invest in no more than two Funds, and (c) at least $500 million of investment
assets within six months from the date of the initial purchase of Fund shares,
for which they may invest in any number of Funds. If such an investor does not
have the applicable amount of investment assets within the six-month period, the
Distributor may, in its sole discretion, refuse to sell additional Fund shares
to such investor (other than reinvestment of dividends and capital gains
distributions). Even if the investor has the applicable amount of investment
assets within the six-month period, the Distributor may refuse to sell to such
investor additional Fund shares (other than reinvestment of dividends and
capital gains distributions), if such investor has not satisfied the $35 million
minimum investment requirement within three years.

For a bank, insurance company, broker-dealer, investment adviser or other
financial intermediary establishing an omnibus account for investment in the
Funds by its clients, the amount of investment assets is determined either by
(i) aggregating Client Assets (defined below) over which it has investment
discretion or (ii) aggregating Client Assets of any institution described under
"Eligible Investors" which are managed by it on a non-discretionary basis or for
which it (or its affiliates) provides recordkeeping, shareholder servicing or
other administrative services. "Client Assets" means the assets of any client of
a financial intermediary that has invested in the Trust.

<PAGE>

HOW TO OPEN AN ACCOUNT

Investors must establish an account before purchasing shares, and may do so
either by submitting an account application to the Distributor or the transfer
agent or through an Authorized Firm (defined below). Investors may obtain an
account application by telephoning the Trust at (800) 493-3042 or by writing to
the Trust at:

GE Institutional Funds
P.O. Box 120065
Stamford, CT 06912-0065

For overnight package delivery:

GE Institutional Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105

To open an account, an investor must complete and sign an application and
furnish its taxpayer identification number to the Trust. The investor also must
certify whether or not it is subject to withholding for failing to report income
to the Internal Revenue Service.

HOW TO BUY SHARES

After a completed account application has been received and processed, an
investor may purchase Fund shares from the Distributor or through brokers,
dealers, financial institutions or investment advisers that have entered into
sales agreements with the Distributor ("Authorized Firms").

An investor may purchase shares through an Authorized Firm with the assistance
of a sales representative (a "Sales Representative"). The Authorized Firm will
be responsible for transmitting the investor's order promptly to the transfer
agent. Investors should contact their Sales Representative for further
instructions.

Investors also may purchase Service Class shares directly from the transfer
agent by wiring federal funds to: State Street Bank and Trust Company (ABA #
0110-0002-8) For: GE Institutional Funds -- [Name of Fund] Account of:
[Investor's name, address and account number]. If a wire is received by the
close of regular trading on the NYSE on a Business Day, the shares will be
priced according to the net asset value of the Fund on that day. If a wire is
received after the close of regular trading on the NYSE, the shares will be
priced as of the time the Fund's net asset value per share is next determined.

Payment for orders that are not accepted will be returned to investors promptly.
An investor's financial institution may charge a fee for wiring its account.

PURCHASES IN-KIND

Investors may purchase Service Class shares in amounts of $5 million or more
with either cash or investment securities acceptable to the appropriate Fund.
The particular investment securities acceptable to a Fund may vary over time and
the Trust does not guarantee that any particular investment securities will be
accepted at any particular time or at all. Investors interested in purchasing
Service Class shares with investment securities should contact their Sales
Representative or the Distributor for information about which securities a
particular Fund will accept. The Trust reserves the right to require the
Distributor to suspend the offering of Service Class shares of the Emerging
Markets Fund or International Equity Fund for cash in amounts above $5 million
and of the other non-money market Funds in amounts above $10 million.

40
<PAGE>

REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

On any Business Day, investors may redeem all or a portion of their shares.
Redemption requests received in proper form prior to the close of regular
trading on the NYSE will be effected at the net asset value per share determined
on that Business Day. Redemption requests received after the close of regular
trading on the NYSE will be effected at the net asset value as next determined.
The Trust normally transmits redemption proceeds within seven days after receipt
of a redemption request.

If an investor holds more than one class of shares, it must specify which class
of shares it is redeeming. The investor's redemption request might be delayed if
it does not specify the appropriate class of shares or if it owns fewer shares
than specified in its redemption request.

REDEMPTIONS THROUGH AN AUTHORIZED FIRM

If an investor purchases shares through a Sales Representative, it may redeem
its shares in accordance with its Sales Representative's instructions. If State
Street's books reflect that the investor, and not its Sales Representative, is
the shareholder of record on an account, the investor also may redeem by mail or
by wire, as described below. The investor's Authorized Firm is responsible for
transmitting a redemption order (and crediting the investor with any redemption
proceeds) on a timely basis.

REDEMPTION BY MAIL

If the investor is the shareholder of record on the books of State Street, it
may redeem shares by mail by a written redemption request that (1) states the
class and the number of shares or the specific dollar amount to be redeemed, (2)
identifies the Fund or Funds from which the number or dollar amount is to be
redeemed, (3) identifies the investor's account number and (4) is signed on the
investor's behalf by an authorized person exactly as the shares are registered.
Investors should send the request to the Trust at the appropriate address listed
above under "How to Open an Account."

SIGNATURE GUARANTEES

To protect investors' accounts, the Trust and the Distributor from fraud,
signature guarantees are required to enable the Trust to verify the identity of
the person authorizing a redemption from an account. Signature guarantees will
be required for redemptions over $50,000 and requests that redemption proceeds
be (1) mailed to an address other than the address of record, (2) paid to a
person other than the shareholder, (3) wired to a bank other than the bank of
record, or (4) mailed to an address that has been changed within 30 days of the
redemption request. All signature guarantees must be guaranteed by a commercial
bank, trust company, broker, dealer, credit union, national securities exchange
or registered association, clearing agency or savings association. The Trust may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees, guardians or persons utilizing a power of
attorney. A request for redemption will not be deemed to have been submitted
until the Trust receives all documents typically required to assure the safety
of a particular account. The Trust may waive the signature guarantee on a
redemption of $50,000 or less if it is able to verify the signatures of all
registered owners from its accounts.

DISTRIBUTIONS IN-KIND

If the Trust's Board of Trustees determines that it would be detrimental to the
best interests of a Fund's shareholders to make a redemption payment wholly in
cash, the Trust may pay, in accordance with rules adopted by the SEC, any
portion of a redemption in excess of the lesser of $250,000 or 1% of the Fund's
net assets by a distribution in-kind of portfolio securities in lieu of cash.
Redemptions failing to meet this threshold must be made in cash. Portfolio
securities issued in a distribution in-kind will be deemed by GEIM to be readily
marketable. Shareholders receiving distributions in-kind of portfolio securities
may incur brokerage commissions

<PAGE>

when subsequently disposing of those securities. The Trust will redeem an
investor's shares in-kind at the request of that investor.

INVESTMENT SWITCHES
- --------------------------------------------------------------------------------

An investor may exchange Service Class shares of a Fund for Service Class shares
of another Fund or Investment Class shares of the same or another Fund
("Investment Switches"). Such Investment Switches are permitted provided the
Fund is an option available to that investor, the investor meets the minimum
investment requirement for such Fund and the shares of such Fund may legally be
sold in the investor's state of residence.

The Trust may, upon 60 days prior written notice to a Fund's shareholders,
terminate the Investment Switch privilege. An Investment Switch to shares of
another Fund is treated for Federal income tax purposes as a redemption (that
is, a sale) of shares given in exchange by the investor, followed by a deemed
purchase of shares in the other Fund, and therefore the investor may experience
a taxable gain or loss in connection with the Investment Switch. Investors may
conduct an Investment Switch by writing the Trust at the appropriate address
listed above under "How to Open an Account."

NET ASSET VALUE
- --------------------------------------------------------------------------------

Each class' net asset value per share is determined as of the close of regular
trading on the NYSE (currently 4:00 p.m., New York time) on each day the NYSE is
open by dividing the value of the Fund's net assets attributable to that class
by the total number of shares of that class outstanding. The NYSE is currently
open each day, Monday through Friday, except on the following holidays: New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and on
the preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively.

In general, a Fund's investments will be valued at market value or, in the
absence of market value, at fair value as determined by or under the direction
of the Trust's Board of Trustees. All portfolio securities held by the Money
Market Fund, and any short-term investments of the other Funds that mature in 60
days or less, will be valued on the basis of amortized cost, if the Board of
Trustees determines that amortized cost represents fair value. Amortized cost
involves valuing an investment at its cost and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the effect of
fluctuating interest rates on the market value of the investment. The Trust will
seek to maintain the Money Market Fund's net asset value at $1.00 per share for
purposes of purchases and redemptions, although no assurance can be given that
the Trust will be able to do so on a continuous basis.

A security that is primarily traded on a domestic or foreign securities exchange
will be valued at the last sale price on that exchange or, if no sales occurred
during the day, at the last quoted bid price. Certain fixed income securities
are valued by a dealer or by a pricing service based upon a computerized matrix
system, which considers market transactions and dealer supplied valuations.
Valuations for municipal bonds are based on prices obtained from a qualified
municipal bond pricing service; prices represent the mean of the bid and ask of
the secondary market. An option that is written or purchased by a Fund generally
will be valued at the last sales price or, if no sales occurred on that day, at
the last traded bid price. The value of a futures contract will be equal to the
unrealized gain or loss on the contract that is determined by marking the
contract to the current settlement price for a like contract on the valuation
date of the futures contract. A settlement price may not be used if the market
makes a limit move with respect to a particular futures contract or if the
securities underlying the futures contract experience significant price
fluctuations after the determination of the settlement price. Fund positions
which cannot be valued as set forth above will be valued at their fair market
value as determined by or under the direction of the Board of Trustees.

<PAGE>

value of those securities will be determined by consideration of other factors
by or under the direction of the Board. Trading in foreign markets may not take
place on every NYSE business day. In addition, trading may take place in various
foreign markets on Saturdays or on other days when the NYSE is not open and on
which a Fund's net asset value is not calculated. Therefore, such calculation
does not take place contemporaneously with the determination of the prices of
many of the portfolio securities used in such calculation and the value of a
Fund's portfolio may be significantly affected on days when shares of the Fund
may not be purchased or redeemed.

All assets and liabilities of a Fund initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean between the bid and
offered quotations of the currencies against U.S. dollars as last quoted by any
recognized dealer. If the bid and offered quotations are not available, the rate
of exchange will be determined in good faith by the Board of Trustees. In
carrying out the Board's valuation policies, the Investment Manager may consult
with an independent pricing service or services retained by the Trust. Further
information regarding the Trust's valuation policies is contained in the
Statement of Additional Information.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gain distributions paid to investors will be automatically
reinvested in shares of the same class. Dividends attributable to the Income
Fund [, the High Yield Fund] and the Money Market Fund are declared daily and
paid monthly. Dividends attributable to the net investment income of each of the
other Funds are declared and paid annually. If an investor redeems all of the
shares that it may own in the Income Fund [, the High Yield Fund] or the Money
Market Fund at any time during a month, the investor's dividends (if any) will
be paid to it along with the proceeds of its redemption.

The Trust will send investors written confirmations relating to the automatic
reinvestment of daily dividends within five days following the end of each
quarter for the Income Fund [and the High Yield Fund], and within five days
following the end of each month for the Money Market Fund. Distributions of any
net realized long-term and short-term capital gains earned by a Fund will be
made annually. Earnings of the Income Fund [, the High Yield Fund] and the Money
Market Fund for Saturdays, Sundays and holidays will be declared as dividends on
the business day immediately preceding the Saturday, Sunday or holiday. As a
result of the different service fees applicable to the Investment Class shares,
dividends and distributions will be higher for the Investment Class shares. See
"Fee Table" and "Purchase of Shares."

Each Fund is subject to a 4% non-deductible excise tax measured with respect to
certain undistributed amounts of net investment income and capital gains. If
necessary to avoid the imposition of this tax, or if in the best interests of
the Fund's shareholders, the Trust will declare and pay dividends and
distributions more frequently than stated above.

TAXES

The following discussion may not be relevant to tax-deferred retirement accounts
or other tax exempt investors, and is not a complete analysis of the federal tax
implications of investing in the Funds. Investors should consult their own tax
advisor regarding the application of Federal, state, local and foreign tax laws
to their specific tax situation.

TAXES ON THE FUNDS. The Trust intends that each Fund qualify as a separate
regulated investment company under the Code. As a regulated investment company,
each Fund should not be subject to Federal income tax or Federal excise taxes if
substantially all of its net investment income and net realized capital gains
are distributed within prescribed time limits, as provided under the Code. It is
important that the Funds meet these time limits and the requirements for
qualifying as regulated investment companies under the Code so that any earnings
on an investment will not be taxed twice.

43
<PAGE>

Net investment income or capital gains earned by a Fund from investing in
foreign securities may be subject to foreign income taxes withheld at the
source. The Trust intends that the Funds operate in a manner that they qualify
for foreign tax rates that have been reduced under tax treaties with the United
States. Provided certain requirements are met under the Code, a Fund may elect
to treat foreign income taxes paid by that Fund as passed through to
shareholders as a foreign tax credit. The Trust anticipates that each of the
International Fund and the Emerging Markets Fund will seek to qualify for and
make this election in most, but not necessarily all, of its taxable years. The
Trust will report to shareholders any amount per share that must be included in
gross income and that may be available as a credit or a deduction. An investor
may not claim a deduction for foreign taxes if it does not itemize deductions,
and certain limitations will be imposed on the extent to which the credit (but
not the deduction) for foreign taxes may be claimed.

TAXES ON DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions an investor
receives from a Fund, whether reinvested or taken as cash, are subject to
Federal income tax. Dividends from a Fund's net investment income and
distributions of the Fund's short-term capital gains will be taxed as ordinary
income, and distributions of long-term capital gains will be taxed as long-term
capital gains, regardless of how long an investor has held its shares. As a
general rule, any gain or loss when an investor sells or redeems (including a
redemption in-kind) its Fund shares will be a long-term capital gain or loss if
it has held its shares for more than one year and a short-term capital gain or
loss if it has held its shares for one year or less. Some dividends received in
January may be taxable as if they had been paid the previous December.

Dividends and distributions paid by the Income Fund [, the High Yield Fund] and
the Money Market Fund, and distributions of capital gains paid by all the Funds,
will not qualify for the Federal dividends-received deduction for corporations.
Dividends paid by the Premier Growth Fund, Small-Cap Value Fund, [Small-Cap
Growth Fund, Mid-Cap Value Fund,] Mid-Cap Growth Fund, Value Equity Fund, U.S.
Equity Fund, S&P 500 Index Fund and Strategic Fund, to the extent derived from
dividends attributable to certain types of stock issued by U.S. corporations,
will qualify for the dividends-received deduction for corporations. Some states,
if certain asset and diversification requirements are satisfied, permit
shareholders to treat their portion of a Fund's dividends that are attributable
to interest on U.S. Treasury securities and certain U.S. Government Obligations
as income that is exempt from state and local income taxes.

Statements regarding the tax status of income dividends and capital gains
distributions will be mailed to investors on or before January 31st of each
year.

CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------

State Street, located at 225 Franklin Street, Boston, Massachusetts 02101,
serves as the Trust's custodian and transfer agent, and is responsible for
receiving acceptance orders for the purchase of shares and processing redemption
requests.

DISTRIBUTOR
- --------------------------------------------------------------------------------

GE Investment Distributors, Inc. (formerly known as GE Investment Services
Inc.), located at 777 Long Ridge Road, Building B, Stamford, Connecticut 06927,
serves as distributor of the Funds' shares. The Distributor, an indirect
wholly-owned subsidiary of GE, also serves as Distributor for the Elfun Funds,
GE LifeStyle Funds, GE Investments Funds, Inc. and GE Funds. GEIM or its
affiliates, at their own expense, may allocate portions of their revenues or
other resources to assist the Distributor in distributing shares of the Funds,
by providing additional promotional incentives to dealers. In some instances,
these incentives may be limited to certain dealers who have sold or may sell
significant numbers of shares of the Funds. The Distributor routinely offers
dealers in Fund shares the opportunity to participate in contests for which
prizes include tickets to theater and sporting events, dining, travel to
meetings and conferences held in locations remote from their offices and other
items.

44
<PAGE>

ADDITIONAL MATTERS
- --------------------------------------------------------------------------------

The Trust was formed as a business trust under the laws of Delaware pursuant to
a Certificate of Trust on May 23, 1997. The Trust's Declaration of Trust dated
August 29, 1997, as amended from time to time (the "Declaration"), authorizes
the Trust's Board of Trustees to create separate series, and within each series
separate classes, of an unlimited number of shares of beneficial interest, par
value $.001 per share. Currently, fourteen series of the Trust have been
authorized.

As of the date of this Prospectus, GECA, an indirect subsidiary of GE, owned
100% of the outstanding shares of the Premier Growth Fund, the Value Equity Fund
and the Strategic Fund. The shares were issued to GECA for providing the initial
seed capital to these Funds. In addition, as of July 1, 1998: (i) Leaseway
Transportation Corp. owned more than 25% of the outstanding voting securities of
the Emerging Markets Fund, Mid-Cap Growth Fund, International Fund, U.S. Equity
Fund, S&P 500 Index Fund, Income Fund and Money Market Fund; (ii) AID
Association for Lutherans owned more than 25% of the outstanding voting
securities of the International Fund; and (iii) MRA Systems, Inc. owned more
than 25% of the outstanding voting securities of the Money Market Fund. So long
as the above entities own more than 25% of the outstanding voting securities of
the Funds noted, they may be deemed to control these Funds.

As issued, shares of a Fund will be fully paid and non-assessable. Shares are
freely transferable and have no preemptive, subscription or conversion rights.
Each of the Service Class and the Investment Class represents an identical
interest in a Fund's investment portfolio. As a result, each class has the same
rights, privileges and preferences, except with respect to: (1) the designation
of each class; (2) the sales arrangement; (3) certain expenses allocable
exclusively to each class; and (4) voting rights on matters exclusively
affecting a single class. The Board of Trustees does not anticipate that there
will be any conflicts among the interests of the holders of the two classes. The
Trustees, on an ongoing basis, will consider whether any conflict exists and, if
so, take appropriate action. Certain aspects of the shares may be changed, upon
notice to Fund shareholders, to satisfy certain tax regulatory requirements, if
the Trust's Board of Trustees deems the change necessary.

When matters are submitted for shareholder vote, each shareholder of each Fund
will have one vote for each full share held and proportionate, fractional votes
for fractional shares held. In general, shares of each Fund vote by individual
Fund on all matters except (1) matters affecting the interests of one or more of
the Funds, in which case only shares of the affected Funds would be entitled to
vote, (2) matters affecting only the interests of one class, in which case only
shares of the affected class would be entitled to vote, or (3) when the 1940 Act
requires that shares of the Funds be voted in the aggregate.

Normally, no meetings of shareholders of the Funds will be held for the purpose
of electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders of the Trust, at which
time the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Shareholders of record of no less than two-thirds of the
outstanding shares of the Trust may remove a Trustee through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. A meeting will be called for the purpose of voting on the removal of a
Trustee at the written request of holders of 10% of the Trust's outstanding
shares.

Shareholders who satisfy certain criteria will be assisted by the Trust in
communicating with other shareholders in seeking the holding of the meeting.

The Trust only recently commenced operations and therefore has not yet generated
an audited annual report. The Trust will send investors a copy of its
semi-annual report, dated March 31, 1998, and annual report (the latter, when
issued), each of which includes a list of the investment securities held by each
Fund in which it has invested. Only one report each will be mailed to an
investor's address. Investors may request additional copies of any report, or
make shareholder inquiries, by calling or writing the Trust. The toll-free
number and the address of the Trust are set forth on the front cover page of the
Prospectus.

45
<PAGE>
APPENDIX

FURTHER INFORMATION: CERTAIN INVESTMENT
TECHNIQUES AND STRATEGIES

The Funds may engage in a number of investment techniques and strategies,
including those described below. No Fund is under any obligation to use any of
the techniques or strategies at any given time or under any particular economic
condition. No assurance can be given that the use of any practice will have its
intended result or that the use of any practice is, or will be, available to any
Fund.

STRATEGIES AVAILABLE TO ALL FUNDS

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. Each Fund may purchase when-issued
or delayed delivery securities, which means that delivery of and payment for the
securities will take place at a future time, i.e., beyond normal settlement. The
Funds purchase such securities to secure advantageous prices or yields, and not
for the purpose of leverage. When-issued securities purchased by a Fund may
include securities purchased on a "when, as and if issued" basis, meaning that
issuance of the securities depends on the occurrence of a subsequent event, such
as approval of a merger, corporate reorganization or debt restructuring.

The Funds do not earn interest or accrue income on when-issued or
delayed-delivery securities until settlement and bear the risk of market
fluctuation between the purchase and settlement dates. At the time of
settlement, a when-issued or delayed-delivery security may be valued at less
than its purchase price. In order to avoid the leveraging effect that may occur
with when-issued or delayed-delivery commitments, the Funds will maintain with
State Street, or with a designated sub-custodian, a separate account with a
segregated portfolio containing cash or other liquid assets in an amount equal
to the amount of such commitments.

LENDING PORTFOLIO SECURITIES. Each Fund may lend its portfolio securities to
well-known and recognized U.S. and foreign brokers, dealers and banks. Such
loans may not exceed 30% of the Fund's assets, and must be collateralized by
cash, letters of credit or U.S. Government Obligations. Cash or instruments
collateralizing a Fund's loans of securities will be segregated and maintained
at all times with State Street, or with a designated sub-custodian, in an amount
at least equal to the current market value of the loaned securities. A Fund that
lends portfolio securities will be subject to the risk of loss of rights in the
collateral if the borrower fails financially.

SUPRA-NATIONAL AGENCIES. Each Fund may invest in debt obligations of
supra-national agencies, which are agencies whose members make capital
contributions to support agency activities. Such agencies include the World
Bank, the European Coal and Steel Community, and the Asian Development Bank.
Debt obligations of supra-national agencies are not considered U.S.
Government Obligations and are not supported, directly or indirectly, by the
U.S. Government.

STRATEGIES AVAILABLE TO SOME BUT NOT ALL FUNDS

INVESTMENTS IN OTHER INVESTMENT COMPANIES. Each non-money market Fund, other
than the U.S. Equity Fund, may purchase securities of other investment
companies, provided that those other companies' investments are consistent with
the Fund's investment objective and policies and are permissible under the 1940
Act. Pursuant to the 1940 Act each Fund: (i) may invest a maximum of 10% of its
total assets in the securities of other investment companies; (ii) may not
invest more than 5% of its total assets in any one investment company; and (iii)
may not own more than 3% of the securities of any one investment company. The
non-money market Funds' investments in the Investment Fund are not considered
investment in another investment company for purposes of this paragraph and the
restrictions just described. To the extent a Fund invests in another investment
company, the Fund's shareholders will incur certain duplicative fees and
expenses, including two levels of investment advisory fees.

i
<PAGE>

DEPOSITARY RECEIPTS. Each non-money market Fund may invest in American
Depositary Receipts, or "ADRs," European Depositary Receipts, or "EDRs"
(sometimes referred to as Continental Depositary Receipts, or "CDRs") and Global
Depositary Receipts, or "GDRs." Depositary receipts evidence an ownership
interest in securities of foreign corporations that are held on deposit with a
financial institution. ADRs are U.S. dollar-denominated receipts that represent
interests in shares of a foreign-based corporation held on deposit in a U.S.
bank or trust company. ADRs are traded on exchanges or over-the-counter in the
United States. EDRs represent interests in foreign or domestic securities held
in trust in a foreign bank, and are traded in European markets. EDRs may not
necessarily be denominated in the same currency as the securities they
represent. GDRs are receipts for shares in a foreign or domestic corporations
that are traded in capital markets around the world. While ADRs are intended to
permit foreign corporations to offer shares to Americans, and EDRs are designed
for use in European markets, GDRs allow companies to offer shares in many
markets. A Fund may purchase ADRs from institutions that are not sponsored by
the issuer of the underlying foreign securities, in which case the Fund may not
receive as much information about the ADRs that it would have received if it had
purchased them from a sponsored depository.

WEBS AND OTHER INDEX-RELATED SECURITIES. Each of the Emerging Markets Fund,
International Fund and Strategic Fund may invest in shares in a particular
series issued by Foreign Fund, Inc., an investment company whose shares also are
known as "World Equity Benchmark Shares" or "WEBS." WEBS have been listed for
trading on the American Stock Exchange, Inc. The Funds also may invest in shares
in a particular series issued by CountryBaskets Index Fund, Inc., or another
fund the shares of which are the substantial equivalent of WEBS. Each of the
U.S. Equity Fund, Premier Growth Fund, Value Equity Fund and Strategic Fund may
invest in Standard & Poor's Depositary Receipts, or "SPDRs." SPDRs are
securities that represent ownership in a long-term unit investment trust that
holds a portfolio of common stocks designed to track the performance of the S&P
500 Index. A Fund investing in a SPDR would be entitled to receive proportionate
quarterly cash distributions corresponding to the dividends that accrue to the
S&P 500 stocks in the underlying portfolio, less trust expenses.

EMERGING MARKETS. The Emerging Markets Fund, International Fund, Strategic Fund
and Income Fund each may invest more than 5% of its total assets in securities
of issuers located in one or more emerging markets countries. The Mid-Cap Growth
Fund, Premier Growth Fund, Value Equity Fund, U.S. Equity Fund and S&P 500 Index
Fund each may invest up to 5% of its total assets in such securities. Emerging
markets countries are located primarily in Asia, Latin America, the Middle East,
Southern Europe, Eastern Europe (including the former republics of the Soviet
Union and the Eastern Bloc) and Africa. Risks and special considerations
associated with investing in emerging markets countries are discussed above
under "Risk Factors and Special Considerations -- Investing in Developing or
Emerging Markets."

MUNICIPAL LEASES. The Strategic Fund [and the High Yield Fund] may invest in
municipal leases, which may take the form of a lease or an installment purchase
or a conditional sales contract to acquire equipment and facilities. Interest
payments on qualifying municipal leases are exempt from Federal income tax and
state income taxes within the state of issuance. The Fund may hold municipal
leases that are rated investment grade (or its issuer's senior debt is rated
investment grade) and unrated, if GEIM (subject to oversight and approval by the
Board of Trustees) deems such unrated leases to be of comparable quality to
rated issues. Risks and special considerations applicable to certain investment
grade obligations are described above under "Risk Factors and Special
Considerations -- Investment Grade Obligations." Municipal leases will be
considered illiquid securities unless the Trust's Board of Trustees determines
on an ongoing basis that the leases are readily marketable.

Municipal leases have special risks. They represent a type of financing that has
not yet developed the depth of marketability generally associated with other
Municipal Obligations. Some municipal leases contain "non-appropriation"
clauses, which means that the governmental issuer is under no obligation to make
future payments under the lease or contract unless money is appropriated for
that purpose by the appropriate legislative body on a yearly or other periodic
basis. Moreover, although a municipal lease will be secured by financed
equipment or facilities, disposing of such collateral might prove difficult in
the event of foreclosure. To limit these risks, the Fund will invest no more
than 5% of its total assets in municipal leases. In addition, the Fund will
purchase leases with non-appropriation clauses only when the lease payments will
commence amortization of principal at an early date, so that the leases will
have an average life of five years or less.

ii
<PAGE>

FLOATING AND VARIABLE RATE INSTRUMENTS. The Strategic Fund, [High Yield Fund,]
Income Fund and Money Market Fund each may invest in floating and variable rate
instruments (collectively, "adjustable rate securities"), which are securities
with floating or variable rates of interest or dividend payments. The floating
or variable rate is adjusted periodically according to a specified formula,
which may be determined by reference to a market interest rate or some interest
rate index, or determined through an auction or re-marketing process. The
variable and floating rates of interest permit these Funds to take advantage of
increases in interest rates, and therefore these securities tend to be less
sensitive than fixed rate securities to interest rate changes and to have higher
yields when interest rates increase.

The amount by which the rates paid on an income security may increase or
decrease may be subject to periodic or lifetime reset limits (or "caps"), which
means that the interest rate does not increase beyond a certain level. If
interest rates exceed these levels, the values of certain capped adjustable rate
securities will fall. In addition, fluctuations in interest rates above these
caps could cause adjustable rate securities to behave more like fixed rate
securities in response to extreme movements in interest rates. Moreover, during
periods of rising interest rates, changes in the interest rate of an adjustable
rate security may lag changes in market rates. The Strategic Fund [, High Yield
Fund] and Income Fund may invest in adjustable rate securities that have
interest rates that vary inversely with changes in market rates of interest.
Such securities also may pay a rate of interest determined by applying a
multiple to the variable rate. Increases and decreases in the value of
securities whose rates vary inversely with changes in market rates of interest
generally will be larger than comparable changes in the value of an equal
principal amount of a fixed rate security having similar credit quality,
redemption provisions and maturity.

The Strategic Fund [and the High Yield Fund] may purchase floating and variable
rate demand bonds and notes, which are Municipal Obligations ordinarily having
stated maturities in excess of one year but which permit their holder to demand
payment of principal at any time or at specified intervals. Variable rate demand
notes include master demand notes, which permit the Fund to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct arrangements
between the Fund, as lender, and the borrower. These obligations have interest
rates that fluctuate from time to time and frequently are secured by letters of
credit or other credit support arrangements provided by banks. Use of letters of
credit or other credit support arrangements will not adversely affect the
tax-exempt status of variable rate demand notes. Because they are direct lending
arrangements between the lender and borrower, variable rate demand notes
generally will not be traded and no established secondary market generally
exists for them, although they are redeemable at face value. If variable rate
demand notes are not secured by letters of credit or other credit support
arrangements, the Fund's right to demand payment will be dependent on the
ability of the borrower to pay principal and interest on demand. Each obligation
purchased by the Fund will meet the quality criteria established by GEIM for the
purchase of Municipal Obligations. GEIM, on behalf of the Fund, considers on an
ongoing basis the creditworthiness of the issuers of the floating and variable
rate demand obligations in the Fund's portfolio.

PARTICIPATION INTERESTS. The Strategic Fund [and the High Yield Fund] may
purchase participation interests in certain Municipal Obligations from financial
institutions. A participation interest gives the Fund an undivided interest in
the Municipal Obligation in the proportion that the Fund's participation
interest bears to the total principal amount of the Municipal Obligation. These
instruments may have fixed, floating or variable rates of interest. If the
participation interest is unrated, or has been given a rating below one that is
otherwise permissible for purchase by the Fund, the participation interest will
be backed by an irrevocable letter of credit or guarantee of a bank that the
Trust's Board of Trustees has determined meets certain quality standards, or the
payment obligation otherwise will be collateralized by U.S. Government
Obligations. The Fund will have the right, with respect to certain participation
interests, to demand payment, on a specified number of days' notice, for all or
any part of the Fund's participation interest in the Municipal Obligation, plus
accrued interest. The Trust intends that the Fund exercise its right to demand
payment only upon a default under the terms of the Municipal Obligation, or to
maintain or improve the quality of its investment portfolio. The Fund will
invest no more than 5% of the value of its total assets in participation
interests.

iii

<PAGE>

Instead, the interest accrues (or builds up) and is paid in a lump sum at
maturity. Investors purchase zero coupon obligations at a deep discount, or
prices far lower than par value. Because zero coupon securities bear no
interest, they are more volatile than other fixed income securities. When
interest rates rise, their values fall more rapidly than securities paying
interest on a current basis. Conversely, when interest rates fall, the values of
zero coupon bonds rise more rapidly than securities paying interest on a current
basis, because the zeros have locked in a particular rate of reinvestment that
becomes more attractive the further rates fall.

Even though each Fund receives no payments on its zero coupon securities prior
to maturity or disposition, for Federal income tax purposes it must distribute
income to shareholders as if payments had actually been made. Each Fund must pay
these dividends to shareholders from its cash assets, from borrowing or by
liquidating portfolio securities. The Fund may have to liquidate portfolio
securities at an inopportune time, such as when securities are thinly traded,
and therefore would sell securities at lower prices. Moreover, to the extent
that portfolio assets must be used to pay distributions, the Fund would lose the
opportunity to use those assets to purchase additional income-producing
securities, and therefore current income may be reduced.

The Strategic Fund [and the High Yield Fund] may invest up to 10% of its assets
in zero coupon Municipal Obligations, which are generally divided into two
categories: "Pure Zero Obligations," which pay no interest for their entire life
and "Zero/Fixed Obligations," which pay no interest for some initial period and
thereafter pay interest currently. In the case of a Pure Zero Obligation, the
failure to pay interest currently may result from the obligation's having no
stated interest rate, in which case the obligation pays only principal at
maturity and is sold at a discount from its stated principal. A Pure Zero
Obligation may, in the alternative, provide for a stated interest rate, but
provide that no interest is payable until maturity, in which case accrued,
unpaid interest on the obligation may be capitalized as incremental principal.
The value to the investor of a zero coupon Municipal Obligation consists of the
economic accretion either of the difference between the purchase price and the
nominal principal amount (if no interest is stated to accrue) or of accrued,
unpaid interest during the Municipal Obligation's life or payment deferral
period.

MUNICIPAL OBLIGATION COMPONENTS. The Strategic Fund [and the High Yield Fund]
may invest in Municipal Obligations, the interest rate on which has been divided
by the issuer into two different and variable components, which together result
in a fixed interest rate. Typically, the first of the components (the "Auction
Component") pays an interest rate that is reset periodically through an auction
process, whereas the second of the components (the "Residual Component") pays a
residual interest rate based on the difference between the total interest paid
by the issuer on the Municipal Obligation and the auction rate paid on the
Auction Component. The Fund may purchase both Auction and Residual Components.
Because the interest rate paid to holders of Residual Components is generally
determined by subtracting the interest rate paid to the holders of Auction
Components from a fixed amount, the interest rate paid to Residual Component
holders will decrease as the Auction Component's rate increases and increase as
the Auction Component's rate decreases. Moreover, the extent of the increases
and decreases in market value of Residual Components may be larger than
comparable changes in the market value of an equal principal amount of a fixed
rate Municipal Obligation having similar credit quality, redemption provisions
and maturity.

CUSTODY RECEIPTS. The Strategic Fund [and the High Yield Fund] may acquire
custody receipts or certificates underwritten by securities dealers or banks
that evidence ownership of future interest payments, principal payments, or
both, on certain Municipal Obligations. Similar to depositary receipts, the
actual Municipal Obligations are held in an irrevocable trust or custodial
account with a custodian bank, which then issues receipts or certificates that
evidence ownership. Custody receipts evidencing specific coupon or principal
payments have the same general attributes as zero coupon Municipal Obligations
described above. Although under the terms of a custody receipt, the Fund would
be typically authorized to assert its rights directly against the issuer of the
underlying obligation, the Fund could be required to assert through the
custodian bank its rights against the underlying issuers. Thus, in the event the
underlying issuer fails to pay principal and/or interest when due, the Fund may
be subject to delays, expenses and risks that are greater than those that would
have been involved if the Fund had purchased a direct obligation of the issuer.

<PAGE>

MORTGAGE RELATED SECURITIES. The mortgage related securities in which the
Strategic Fund [, High Yield Fund] and Income Fund may invest represent pools of
mortgage loans assembled for sale to investors by various governmental agencies,
such as the Government National Mortgage Association ("GNMA"), by government
related organizations, such as the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by
private issuers, such as commercial banks, savings and loan institutions,
mortgage bankers and private mortgage insurance companies.

Several risks are associated with mortgage related securities. The monthly cash
inflow from the underlying loans may be insufficient to meet the monthly payment
requirements of the mortgage related security. Early returns of principal (such
as from prepayments or foreclosures) will shorten the term of the underlying
mortgage pool for a mortgage related security and will affect the average life
of the mortgage related securities the Funds continue to hold. Factors affecting
the occurrence of mortgage prepayments include the level of interest rates,
general economic conditions, the location and age of the mortgaged property and
other social and demographic conditions. When interest rates fall, prepayments
tend to increase, and when they rise, prepayments tend to decrease.

Because prepayments of principal generally occur when interest rates are
declining, each Fund will likely have to reinvest the proceeds of prepayments at
lower interest rates than those at which its assets were previously invested,
resulting in a corresponding decline in the Fund's yield. Thus, mortgage related
securities may have less potential for capital appreciation in periods of
falling interest rates than other fixed income securities of comparable
maturity. To the extent that a Fund purchases mortgage related securities at a
premium, unscheduled prepayments, which are made at par, will result in a loss
equal to any unamortized premium.

Adjustable rate mortgages, or "ARMs," have interest rates that reset at periodic
intervals. The Funds may invest in ARMs that have maximum annual or lifetime
caps. ARMs have the advantages and risks associated with variable and floating
rate securities (including capped adjustable rate securities) discussed above.

Collateralized mortgage obligations, or "CMOs," are obligations fully
collateralized by a portfolio of mortgages or mortgage related securities.
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the type of CMOs in which
the Strategic Fund or the Income Fund invests, the investment may be subject to
a greater or lesser risk of prepayment than other types of mortgage related
securities.

To the extent GEIM determines any mortgage related securities are not readily
marketable, each of the Funds would limit its investments in these securities,
together with other illiquid instruments, to not more than 15% of the value of
its net assets.

GOVERNMENT STRIPPED MORTGAGE RELATED SECURITIES. The Strategic Fund [, High
Yield Fund] and Income Fund each may invest in government stripped mortgage
related securities (i.e., the issuer has stripped the security into its interest
and principal components) issued and guaranteed by GNMA, FNMA or FHLMC. These
securities represent beneficial ownership interests in either periodic principal
distributions ("principal-only") or interest distributions ("interest-only") on
mortgage related certificates. The certificates underlying the government
stripped mortgage related securities represent all or part of the beneficial
interest in pools of mortgage loans. Each Fund will invest in government
stripped mortgage related securities in order to enhance yield or to benefit
from anticipated appreciation in value of the securities at times when GEIM
believes that interest rates will remain stable or increase. In periods of
rising interest rates, the expected increase in the value of government stripped
mortgage related securities may offset all or a portion of any decline in value
of the Fund's securities.

Investing in government stripped mortgage related securities involves risks
normally associated with investing in mortgage related securities issued by
government or government related entities. In addition, the yields on government
stripped mortgage related securities are extremely sensitive to the prepayment
experience on the mortgage loans underlying the certificates collateralizing the
securities. If a decline in the level of prevailing interest rates results in a
rate of principal prepayments higher than anticipated, distributions of
principal will be

<PAGE>

accelerated, thereby reducing the yield to maturity on interest-only government
stripped mortgage related securities and increasing the yield to maturity on
principal-only government stripped mortgage related securities. Sufficiently
high prepayment rates could result in the Strategic Fund or the Income Fund not
fully recovering its initial investment in an interest-only government stripped
mortgage related security.

Under current market conditions, the Funds expect to invest in interest-only
government stripped mortgage related securities. Government stripped mortgage
related securities are currently traded in an over-the-counter market maintained
by several large investment banking firms. The Funds will acquire government
stripped mortgage related securities only if a secondary market for the
securities exists at the time of acquisition, but there can be no assurance that
either Fund will be able to effect a trade of such a security at a desired time.
Except for government stripped mortgage related securities based on fixed rate
FNMA and FHLMC mortgage certificates that meet certain liquidity criteria
established by the Trust's Board of Trustees, the Trust treats government
stripped mortgage related securities as illiquid and will limit each of these
Funds' investments in these securities, together with other illiquid
investments, to not more than 15% of its net assets.

ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES. The Strategic Fund [, High Yield
Fund] and Income Fund each may invest in asset-backed and receivable-backed
securities. These instruments are secured by and payable from pools of assets,
including credit card receivables and pools of motor vehicle retail installment
sales contracts and security interests in the vehicles securing those contracts.
A Fund's return on an asset- or receivable-backed security may be adversely
affected by early prepayment of underlying sales contracts. In periods of
falling interest rates, there is a general tendency for prepayments to increase,
shortening the average maturity of an asset- or receivable-backed security,
making it difficult to lock in higher interest rates. If a creditor defaults on
an underlying sales contract, asset- or receivable-backed securities might be
adversely affected if the full amount receivable on such contract cannot be
realized.

MORTGAGE DOLLAR ROLLS. The Strategic Fund [, High Yield Fund] and Income Fund
each may use up to 25% of its total assets to enter into mortgage dollar rolls.
A mortgage dollar roll transaction requires a Fund to sell a security and
simultaneously contract with the purchaser to buy similar, but not identical,
securities at some future date. The Fund loses the right to principal and
interest payments on the securities sold. The Fund benefits from a dollar roll
to the extent that (i) the price at which the Fund sells the security exceeds
the price at which it buys (i.e., the "drop" price) similar securities in the
future, and (ii) the Fund earns interest on the cash proceeds from the sale.
However, these gains are offset by foregone interest income and capital
appreciation on the securities sold. Therefore a Fund's overall gains from
mortgage dollar roll transactions depend upon GEIM's ability to predict
correctly mortgage prepayments and interest rates. To the extent that GEIM
incorrectly analyzes these factors, the Fund's investment performance may be
diminished compared to what it would have been without the use of mortgage
dollar rolls.

SHORT SALES AGAINST THE BOX. The Small-Cap Value Fund, International Fund, Value
Equity Fund, Mid-Cap Growth Fund [, Small-Cap Growth Fund, Mid-Cap Value Fund,
High Yield Fund] and Emerging Markets Fund may sell securities "short against
the box." A short sale "against the box" means that at all times when the short
position is open, the Fund owns at least an equal amount of the securities, or
securities convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities sold short. Short sales against
the box are typically used by sophisticated investors to defer recognition of
capital gains or losses.

<PAGE>

GE INSTITUTIONAL FUNDS

Emerging Markets Fund

Premier Growth Equity Fund

Small-Cap Value Equity Fund

Mid-Cap Growth Fund

International Equity Fund

Value Equity Fund

U.S. Equity Fund

S&P 500 Index Fund

Strategic Investment Fund

Income Fund

Money Market Fund

[Small-Cap Growth Equity Fund

Mid-Cap Value Equity Fund

High Yield Fund]

For information, contact your investment professional or call the Trust at
1-800-493-3042.

No person has been authorized to give any information or to make any
representations other than those contained in this prospectus or in the
statement of additional information incorporated into this prospectus by
reference in connection with the offering of shares of GE Institutional Funds,
and if given or made, such other information or representations must not be
relied upon as having been authorized by GE Institutional Funds. This prospectus
does not constitute an offer in any state in which, or to any person whom, an
offer may not lawfully be made.

<PAGE>
[Logo] GE Institutional Funds
- --------------------------------------------------------------------------------

GE Institutional Funds

Prospectus

Emerging Markets Fund

Premier Growth Equity Fund

Small-Cap Value Equity Fund

Mid-Cap Growth Fund

International Equity Fund

Value Equity Fund

U.S. Equity Fund

S&P 500 Index Fund

Strategic Investment Fund

Income Fund

Money Market Fund

[Small Cap Growth Equity Fund

Mid-Cap Value Equity Fund

High Yield Fund]

July 31, 1998

Investment Class

Prospectus begins on page 1

<PAGE>

[GE LOGO] GE INSTITUTIONAL FUNDS
- --------------------------------------------------------------------------------

GE Institutional Funds (the "Trust") is an open-end management investment
company that offers a selection of diversified managed investment portfolios
(each, a "Fund" and collectively, the "Funds"), each of which has two classes of
shares -- the Investment Class and the Service Class. Each Fund has a discrete
investment objective that it seeks to achieve by following distinct investment
policies. The Investment Class shares and the Service Class shares are
identical, except as to the services offered, and the expenses borne, by each
class. Investors may obtain a copy of the prospectus describing the Service
Class shares free of charge by calling the telephone number listed below or
writing the Trust at the address listed below.

The Trust is currently comprised of fourteen Funds, three of which (Small-Cap
Growth Equity Fund, Mid-Cap Value Equity Fund and High Yield Fund) are not
presently being offered. This Prospectus describes the Investment Class shares
of the following eleven Funds currently offered by the Trust:

o International Equity Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily
in foreign equity securities.

o U.S. Equity Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing
primarily in equity securities of U.S. companies.

<PAGE>

This Prospectus briefly sets forth certain information about the Funds and the
Trust that prospective investors will find helpful in making an investment
decision. Investors are encouraged to read this Prospectus carefully and retain
it for future reference. There can be no assurance that a Fund will achieve its
investment objective.

GE INVESTMENT MANAGEMENT INCORPORATED
Investment Adviser and Administrator

<PAGE>

PROSPECTUS

July 31, 1998

TABLE OF CONTENTS

Expense Information............................................................4

Financial Highlights...........................................................5

Performance....................................................................8

Investment Objectives and Management Policies ................................10

Investments in Debt Securities................................................22

Cash Management Policies -- Non-Money Market Funds............................22

Additional Permitted Investments..............................................23

Investment Restrictions.......................................................28

Risk Factors and Special Considerations.......................................28

Management of the Trust.......................................................34

Purchase of Shares............................................................38

Redemption of Shares..........................................................41

Investment Switches...........................................................42

Net Asset Value...............................................................42

Dividends, Distributions and Taxes............................................43

Custodian and Transfer Agent..................................................44

Distributor...................................................................44

Additional Matters............................................................44

Appendix -- Further Information:
Certain Investment Techniques and Strategies...................................i

3003 Summer Street
Stamford, Connecticut 06905
(800) 493-3042

<PAGE>

EXPENSE INFORMATION
- --------------------------------------------------------------------------------

Expenses are one of several factors to consider when investing in the Funds. The
following fee table and example are designed to assist investors in
understanding the various costs and expenses that they will bear directly or
indirectly as investors in the Investment Class shares of a Fund. Annual Fund
Operating Expenses are paid out of each Fund's assets and include fees for
portfolio management, maintenance of shareholder accounts, accounting and other
services.

SHAREHOLDER TRANSACTION EXPENSES

The Funds have no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.

FEE TABLE
- --------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS):

MAXIMUM ADVISORY
AND ADMINISTRATION OTHER TOTAL OPERATING
FEES EXPENSES EXPENSES
- --------------------------------------------------------------------------------
Emerging Markets Fund 1.05%* None 1.05%
Premier Growth Equity Fund .55%* None .55%
Small-Cap Value Equity .70%* None .70%
Fund
Mid-Cap Growth Fund .55%* None .55%
International Equity Fund .75%* None .75%
Value Equity Fund .55%* None .55%
U.S. Equity Fund .55%* None .55%
S&P 500 Index Fund .15% None .15%
Strategic Investment Fund .45%* None .45%
Income Fund .35%* None .35%
Money Market Fund .25%* None .25%
[Small-Cap Growth Equity .70%* None .70%
Fund
Mid-Cap Value Equity Fund .60%* None .60%
High Yield Fund .45%* None .45%]

- ----------
* The advisory and administration fee shown is the maximum payable by the Fund;
this fee declines incrementally as the Fund's assets increase as described
under "Management of the Trust -- Fee Structure."

The nature of the services provided to, and the advisory and administration fee
paid by, each Fund are described under "Management of the Trust." A Fund's
advisory and administration fee is intended to be a "unitary" fee that includes
any other operating expenses payable by a Fund, except for fees paid to the
Trust's independent Trustees, brokerage fees, and expenses that are not normal
operating expenses of the Funds (such as extraordinary expenses, interest and
taxes). The amount shown as the advisory and administration fee for a Fund
reflects the highest fee payable, and does not reflect that the fee decreases
incrementally as Fund assets increase. Because the Funds have only recently
commenced operations, "Other Expenses" in the table above are based on estimated
amounts for the current fiscal year. "Other Expenses" include only Trustees'
fees payable to the Trust's independent Trustees, brokerage fees, and expenses
that are not normal operating expenses of the Funds. This amount is expected to
be de minimus (less than .01%); therefore "Other Expenses" are reflected as
"None."

4
<PAGE>

EXAMPLE

A SHAREHOLDER WOULD PAY THE FOLLOWING
EXPENSES ON A $1,000 INVESTMENT,
ASSUMING A (1) 5% ANNUAL RETURN; AND (2)
REDEMPTION AT THE END OF THE TIME PERIODS SHOWN:
------------------------------------------------
1 YEAR 3 YEARS
------ -------
Emerging Markets Fund $11 $33
Premier Growth Equity Fund $6 $18
Small-Cap Value Equity Fund $7 $22
Mid-Cap Growth Fund $6 $18
International Equity Fund $8 $24
Value Equity Fund $6 $18
U.S. Equity Fund $6 $18
S&P 500 Index Fund $2 $ 5
Strategic Investment Fund $5 $14
Income Fund $4 $11
Money Market Fund $3 $ 8
[Small-Cap Growth Equity Fund $7 $22
Mid-Cap Value Equity Fund $6 $19
High Yield Fund $5 $14]

The above example is intended to assist investors in understanding various costs
and expenses that an investor in the Investment Class shares of a Fund will bear
directly or indirectly. Although the table assumes a 5% annual return, a Fund's
actual performance will vary and may result in an actual return that is greater
or less than 5%. THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF
PAST OR FUTURE EXPENSES OF A FUND; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN.

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The tables below provide selected unaudited data for an Investment Class Fund
share outstanding throughout the period presented. The Trust refers to, and
hereby incorporates by reference into the Prospectus, the Trust's Semi-Annual
Report dated March 31, 1998. Copies of the Trust's Semi-Annual Report may be
obtained without charge upon request made to the Trust by calling the toll free
number listed on the back cover page of the Prospectus or by writing to the
Trust at the address listed on the first page of the Prospectus. The following
unaudited data for the fiscal period ended March 31, 1998 should be read in
conjunction with the financial statements and the notes to the financial
statements which are incorporated by reference into the Statement of Additional
Information.

5
<PAGE>

FINANCIAL HIGHLIGHTS (continued)

Selected data based on a share outstanding throughout the period indicated
(unaudited)

- -------------------------------------------------------------------------------------------------
EMERGING INTERNATIONAL U.S. MID-CAP
MARKETS EQUITY EQUITY GROWTH
FUND FUND FUND FUND
3/31/98(c) 3/31/98(c) 3/31/98(c) 3/31/98(c)
- -------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
INCEPTION DATE 11/25/97 11/25/97 11/25/97 11/25/97

Net asset value, beginning of
period................................ $ 10.00 $ 10.00 $ 10.00 $ 10.00

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

Net investment income.............. 0.03 0.03 0.05 0.02
Net realized and unrealized gains
(losses) on investments.......... 1.03 2.00 1.48 1.26
- -------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations............................ 1.06 2.03 1.53 1.28
- -------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:

Net investment income.............. 0.03 0.01 0.01 0.01
Net realized gains................. 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------
Total distributions................... 0.03 0.01 0.01 0.01
- -------------------------------------------------------------------------------------------------
Net asset value, end of period........ $ 11.03 $ 12.02 $ 11.52 $ 11.27
- -------------------------------------------------------------------------------------------------
TOTAL RETURN(a)....................... 10.69% 20.27% 15.29% 12.77%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)........................ $7,186 $129,032 $114,293 $14,612

Ratios to average net assets:
Net investment income*............ 0.93% 1.22% 1.38% 0.53%
Net expenses*..................... 1.06% 0.68% 0.43% 0.56%

Portfolio turnover rate.............. 32% 19% 13% 8%

Average brokerage commissions(b)..... $0.003 $0.010 $0.043 $0.055

</TABLE>

<PAGE>

FINANCIAL HIGHLIGHTS (continued)

Selected data based on a share outstanding throughout the period indicated
(unaudited)

- --------------------------------------------------------------------------------
S&P 500 MONEY
INDEX INCOME MARKET
FUND FUND FUND
3/31/98(c) 3/31/98(d) 3/31/98(e)
- --------------------------------------------------------------------------------

INCEPTION DATE 11/25/97 11/21/97 12/2/97
Net asset value, beginning of period....... $ 10.00 $10.00 $ 1.00

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

Net investment income................... 0.05 0.21 0.02
Net realized and unrealized gains
(losses) on investments............... 1.59 0.08 0.00
- --------------------------------------------------------------------------------
Total income (loss) from investment
operations................................. 1.64 0.29 0.02
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:

Net investment income................... 0.01 0.21 0.02
Net realized gains...................... 0.00 0.00 0.00
- --------------------------------------------------------------------------------
Total distributions........................ 0.01 0.21 0.02
- --------------------------------------------------------------------------------
Net asset value, end of period............. $ 11.63 $ 10.08 $1.00
- --------------------------------------------------------------------------------
TOTAL RETURN(a) 16.44% 2.91% 1.79%

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)... $20,125 $59,692 $32,532

Ratios to average net assets:

Net investment income*.................. 1.42% 5.79% 5.44%
Net expenses*........................... 0.21% 0.32% 0.24%

Portfolio turnover rate.................... 1% 187% N/A

Average brokerage commissions(b)........... $ 0.042 N/A N/A

NOTES TO FINANCIAL HIGHLIGHTS

(a) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains, and assume no sales charge.
Periods less than one year are not annualized.

(b) Mark-ups, mark-downs and spreads on shares traded on a principal basis are
not included unless they are disclosed on confirmations prepared in
accordance with rule 10b-10 under the Securities Exchange Act of 1934, as
amended.

(d) Information is for the period November 21, 1997, inception of investment
operations, through March 31, 1998.

(e) Information is for the period December 2, 1997, inception of investment
operations, through March 31, 1998.

* Annualized for periods less than one year.

<PAGE>
PERFORMANCE
- --------------------------------------------------------------------------------

AGGREGATE TOTAL RETURN*
-----------------------
Emerging Markets Fund 10.69% (11/25/97)
Mid-Cap Growth Fund 12.77% (11/25/97)
International Equity Fund 20.27% (11/25/97)
U.S. Equity Fund 15.29% (11/25/97)
S&P 500 Index Fund 16.44% (11/25/97)
Income Fund 2.91% (11/21/97)
Money Market Fund 1.79% (12/02/97)

- ----------

* From commencement of operations, as indicated in parentheses, to March 31,
1998. Performance figures shown above have not been annualized.

As of the date of this Prospectus, General Electric Capital Assurance Company
("GECA"), an indirect subsidiary of General Electric Company ("GE"), owned 100%
of the outstanding Investment Class shares of the Premier Growth Equity Fund,
the Value Equity Fund and the Strategic Investment Fund. The shares were issued
to GECA for providing the initial seed capital to these Funds. Because each of
these Funds lacks an operating history, no performance figures are provided for
these Funds.

TOTAL RETURN

From time to time, the Trust may advertise an "average annual total return" over
various periods of time for Investment Class shares of a Fund. This total return
figure shows an average percentage change in value of an investment in such
shares from the beginning date of the measuring period to the ending date of the
period. The figure reflects changes in the price of a Fund's shares and assumes
that any income, dividends and/or capital gains distributions made by the Fund
during the period are reinvested in shares of the same class. Figures will be
given for recent one-, five- and 10-year periods (if applicable), and may be
given for other periods as well (such as from commencement of a Fund's
operations, or on a year-by-year basis).

YIELD

8
<PAGE>

SMALL-CAP VALUE EQUITY FUND
PRIOR PERFORMANCE OF SIMILAR ACCOUNTS

The performance data below represents the prior performance of the Accounts, not
the prior performance of the Small-Cap Value Fund, and should not be considered
an indication of future performance of the Fund. In managing the Fund, Palisade
will employ substantially the same investment objectives, policies and
strategies that the Management Group employed in managing the Accounts. However,
in managing the Fund, Palisade will be subject to restrictions imposed by the
Investment Company Act of 1940, as amended (the "1940 Act), and the Internal
Revenue Code of 1986, as amended (the Code"), (e.g., limits on the percentage of
assets invested in securities of issuers in a single industry and requirements
on distributing income to shareholders) that do not apply to the Accounts. The
Fund also will incur operating expenses, such as transfer agency, legal and
auditing fees, that are not borne by the Accounts. In addition, the continuous
offering of the Fund's shares and the Fund's obligation to redeem its shares
will likely cause the Fund to experience cash flows different from those of the
Accounts. All of the foregoing may adversely affect the performance of the Fund
and cause it to differ from that of the Accounts.

9
<PAGE>

THE INVESTMENT COMMITTEE
SMALL-CAP EQUITY COMPOSITE
Calendar Year Return (1993 to 1997)

- ----------

+ Represents total assets in millions at the end of the calendar year.

* Represents performance from 9/1/93 through 12/31/93.

ANNUALIZED RETURN (AS OF 12/31/97)

- --------------------------------------------------------------------------------
SMALL-CAP EQUITY RUSSELL 2000
COMPOSITE INDEX
- --------------------------------------------------------------------------------
1 Year 26.26% 22.37%
3 Years 27.11% 22.35%
Since 9/1/93 20.94% 16.32%

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
- --------------------------------------------------------------------------------

The Trust is a diversified, open-end management investment company that consists
of separate series of shares, each of which is divided into two classes of
shares -- the Investment Class and the Service Class. The Service Class shares
differ from the Investment Class shares in that an additional .25% shareholder
servicing and distribution fee is charged to each Fund with respect to Service
Class shares. This .25% fee is intended to compensate GE Investment Management
Incorporated ("GEIM"), the Trust's investment adviser and administrator, or
enable GEIM to compensate other persons,

<PAGE>

for expenditures made on behalf of each Fund to obtain certain shareholder
services, including third-party record-keeping, transfer agency, and ongoing
services related to the maintenance of Service Class shareholder accounts and to
compensate GEIM, or enable GEIM to compensate other persons, including GE
Investment Distributors, Inc. (the "Distributor"), for providing certain
services that are primarily intended to result in the sale of Service Class
shares of the Funds pursuant to a shareholder servicing and distribution plan
adopted in accordance with Rule 12b-1 under the 1940 Act. The shareholder
servicing and distribution fee paid by the Service Class shares will cause such
shares to have a higher expense ratio and lower return than the Investment Class
shares.

EMERGING MARKETS FUND

<PAGE>

PREMIER GROWTH EQUITY FUND

Up to 25% of the Premier Growth Fund's total assets may be invested in foreign
securities, excluding, for purposes of this limitation, ADRs and securities of a
foreign issuer with a class of securities registered with the SEC and listed on
a U.S. national securities exchange ("U.S. Listed Securities") or traded on the
Nasdaq National Market or the Nasdaq SmallCap Market (collectively, "Nasdaq
Traded Securities"). The equity securities in which the Fund invests in most
cases will be traded on domestic or foreign securities exchanges, or traded in
the domestic or foreign over-the-counter markets. The Fund may invest up to 35%
of its assets in bonds, notes and debentures. For temporary defensive purposes,
the Fund may invest in fixed income securities without limitation. To the extent
that the Fund invests in fixed income securities, it may not achieve its
investment objective. The Fund also may engage in certain investments discussed
below under "Additional Permitted Investments" and in the Appendix.

SMALL-CAP VALUE EQUITY FUND

<PAGE>

the Fund's investment sub-adviser, considers to be undervalued by the market in
relation to factors such as the company's assets, earnings, or growth potential.
The Fund uses a fundamental, "bottom-up" analysis to identify those companies
whose share price does not fully reflect the value of the company.

MID-CAP GROWTH FUND

The investment objective of the Mid-Cap Growth Fund is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily in the
equity securities of companies with medium-sized market capitalizations
("mid-cap") that have the potential for above-average growth. The Fund, under
normal market conditions, will invest at least 65% of its total assets in a
portfolio of equity securities of mid-cap companies traded on U.S. securities
exchanges or in the U.S. over-the-counter market, including common stocks,
preferred stocks, convertible preferred stocks, convertible bonds, convertible
debentures, convertible notes, ADRs and warrants or rights, issued by foreign
and U.S. companies. The Fund defines a mid-cap company as one whose securities
are within the market capitalization range of stocks listed on the S&P MidCap
400 Index (the "S&P 400 Index"). (As of June 30, 1998, the S&P MidCap 400 Index
included companies with market capitalizations between $330 million and $22.9
billion.)

<PAGE>

against the box and engage in certain investments discussed below under
"Additional Permitted Investments" and in the Appendix.

INTERNATIONAL EQUITY FUND

The investment objective of the International Equity Fund (the "International
Fund") is long-term growth of capital. The Fund seeks to achieve this objective
by investing primarily in foreign equity securities. The Fund may invest in
securities of companies and governments located in developed and developing
countries outside the United States, and also may invest in securities of
foreign issuers in the form of depositary receipts. Investing in securities
issued by foreign companies and governments involves considerations and
potential risks not typically associated with investing in securities issued by
the U.S. Government and U.S. corporations. (See "Risk Factors and Special
Considerations" for a discussion of the risks associated with investing in
foreign equity securities.) The Fund intends to position itself broadly among
countries and, under normal circumstances, at least 65% of the Fund's total
assets will be invested in securities of issuers collectively in no fewer than
three different countries other than the United States. The percentage of the
International Fund's assets invested in particular countries or regions of the
world will vary depending on political and economic conditions. The
determination of where an issuer is located will be made by reference to the
Country Identification Test, as set forth above in "Investment Objectives and
Management Policies -- Emerging Markets Fund."

The International Fund, under normal market conditions, may invest up to 35% of
its assets in notes, bonds and debentures issued by corporate or governmental
entities when GEIM determines that investing in those kinds of debt securities
is consistent with the Fund's investment objective of long-term growth of
capital. GEIM believes that such a determination could be made, for example,
upon the Fund's investing in the debt securities of a company whose securities
GEIM anticipates will increase in value as a result of a development
particularly or uniquely applicable to the company, such as a liquidation,
reorganization, recapitalization or merger, material litigation, technological
breakthrough or new management or management policies. In addition, GEIM
believes such a determination could be made with respect to an investment by the
Fund in debt instruments issued by a governmental entity upon GEIM's concluding
that the value of the instruments will increase as a result of improvements or
changes in public finances, monetary policies, external accounts, financial
markets, exchange rate policies or labor conditions of the country in which the
governmental entity is located.

<PAGE>

VALUE EQUITY FUND

U.S. EQUITY FUND

<PAGE>

these securities until GEIM determines that their growth prospects diminish or
that they have become overvalued when compared with alternative investments.

In investing on behalf of the U.S. Equity Fund, GEIM seeks to produce a
portfolio that GEIM believes will have characteristics similar to the S&P 500
Index by virtue of blending investments in both "value" and "growth" securities.
Since the Fund's strategy seeks to combine these basic elements, but is designed
to select investments deemed to be the most attractive within each category,
GEIM believes that the strategy should be capable of outperforming the U.S.
equity market as reflected by the S&P 500 Index on a total return basis.

S&P 500 INDEX FUND

The investment objective of the S&P 500 Index Fund is to provide growth of
capital and accumulation of income that corresponds to the investment return of
the S&P 500 Index. The Fund seeks to achieve this objective by investing in
common stocks comprising that Index. Standard & Poor's (also referred to herein
as "S&P")1 chooses the 500 common stocks comprising the S&P 500 Index on the
basis of market values, industry diversification and other factors. Most of the
common stocks in the S&P 500 Index are issued by 500 of the largest companies,
in terms of the aggregate market value of their outstanding stock, and such
companies generally are listed on the New York Stock Exchange. Additional common
stocks that are not among the 500 largest market value stocks are included in
the S&P 500 Index for diversification purposes. S&P may, from time to time,
delete common stocks from, and add common stocks to, the S&P 500 Index.

- --------
1 Standard & Poor's(R), S&P(R), and S&P 500(R) are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use. The S&P 500
Index Fund is not sponsored, endorsed, sold or promoted by S&P, and S&P
makes no representation or warranty, express or implied, to the investors of
the Fund or any member of the public regarding the advisability of investing
in securities generally or in this Fund particularly or the ability of the
S&P 500 Index to track general stock market performance.

<PAGE>

included in the S&P 500 Index but which have characteristics similar to the
omitted securities (such as stocks from the same or similar industry groups
having a similar market capitalization and other investment characteristics). In
addition, from time to time adjustments may be made in the Fund's holdings due
to changes in the composition or weighting of issues comprising the S&P 500
Index.

STRATEGIC INVESTMENT FUND

The Strategic Fund invests in the following classes of investments: common
stocks, preferred stocks, convertible securities and warrants or rights issued
by U.S. and foreign companies; bonds, debentures and notes issued by U.S. and
foreign companies; securities issued or guaranteed by the U.S. Government or one
of its agencies or instrumentalities ("U.S. Government Obligations"); debt
obligations issued by, or on behalf of, states, territories and possessions of
the United States and the District of Columbia and their political subdivisions,
agencies and instrumentalities or multi-state agencies or authorities, the
interest on which is, in the opinion of issuers' counsel, excluded from gross
income for Federal income tax purposes ("Municipal Obligations"); obligations of
foreign governments or their agencies or instrumentalities; mortgage related
securities, adjustable rate mortgage related securities ("ARMs"), collateralized
mortgage related securities ("CMOs") and government stripped mortgage related
securities; asset-backed and receivable-backed securities; and domestic and
foreign money market instruments. The U.S. equity and debt instruments in which
the Fund invests are traded on U.S. securities exchanges or in the U.S.
over-the-counter market, except that the Fund may invest up to 10% of its assets
in non-publicly traded securities. In addition, up to 30% of the Fund's total
assets may be invested in foreign securities, excluding, for purposes of this
limitation, ADRs, U.S. Listed Securities and Nasdaq Traded Securities. The Fund
also may invest in structured and indexed securities, the value of which is
linked to currencies, interest rates, commodities, indexes or other financial
indicators. Mortgage related securities, ARMs, CMOs, government stripped
mortgage related securities and asset-backed and receivable-backed securities
are subject to several risks, including the prepayment of principal.

17
<PAGE>

INCOME FUND

<PAGE>

such investments to be consistent with the Fund's investment objective. See
"Cash Management Policies -- Non-Money Market Funds," below.

MONEY MARKET FUND

The Money Market Fund may not invest more than 5% of its total assets in the
securities of any one issuer, except for U.S. Government Obligations and except
to the extent permitted under rules adopted by the SEC under the 1940 Act. In
addition, the Fund may not invest more than 5% of its total assets in Eligible
Securities that have not received the highest short-term rating for debt
obligations and comparable unrated securities (collectively, "Second Tier
Securities"), and may not invest more than the greater of $1,000,000 or 1% of
its total assets in the Second Tier Securities of any one issuer. The Fund may
invest more than 5% (but not more than 25%) of the then-current value of the
Fund's total assets in the securities of a single issuer for a period of up to
three business days, so long as (1) the securities either are rated by the
Requisite NRSROs in the highest short-term rating category or are securities of
issuers that have received such ratings with respect to other short-term debt
securities or are comparable unrated securities and (2) the Fund does not make
more than one such investment at any one time. Determinations of comparable
quality for purchases of unrated securities are made by GEIM in accordance with
procedures established by the Board of Trustees. The Fund invests only in
instruments that have (or, pursuant to regulations adopted by the SEC, are
deemed to have) remaining maturities of 13 months or less at the date of
purchase (except securities subject to repurchase agreements), determined in
accordance with a rule promulgated by the SEC. Up to 25% of the Fund's total
assets may be invested in foreign securities, excluding, for purposes of this
limitation, ADRs, U.S. Listed Securities and Nasdaq Traded Securities. The Fund
will maintain a dollar-weighted average portfolio maturity of 90 days or less.
The assets of the Fund are valued on the basis of amortized cost, as described
below under "Net Asset Value." The Fund also may hold liquid Rule 144A
Securities (see "Additional Permitted Investments -- Illiquid Investments and
Restricted Securities") and engage in certain other investments discussed below
under "Additional Permitted Investments" and in the Appendix.

[SMALL-CAP GROWTH EQUITY FUND]

<PAGE>

The Small-Cap Growth Fund will invest primarily in companies whose securities
are traded in the U.S. markets, , but may invest up to 35% of its assets in
foreign securities, excluding, for purposes of this limitation, ADRs, U.S.
Listed Securities and Nasdaq Traded Securities. (See "Risk Factors and Special
Considerations -- Investment in Foreign Securities.") The Fund may also sell
securities short against the box and engage in certain investments discussed
below under "Additional Permitted Investments" and in the Appendix.

[MID-CAP VALUE EQUITY FUND]

20
<PAGE>

[HIGH YIELD FUND]

The High Yield Fund, under normal market conditions, invests at least 65% of its
total assets in a diversified portfolio of fixed income securities rated lower
than Baa by Moody's or lower than BBB by S&P but rated at least B by Moody's or
S&P (or, if unrated, determined by GEIM to be of comparable quality). The
remainder of the Fund's assets may be invested in investment grade fixed income
securities (i.e., securities rated at least Baa by Moody's or BBB by S&P, or, if
unrated, deemed by GEIM to be of comparable quality). The average portfolio
duration of the Fund will normally vary within a two- to six-year time frame
depending on GEIM's view of the potential for total return offered by a
particular duration strategy.

<PAGE>

INVESTMENTS IN DEBT SECURITIES
- --------------------------------------------------------------------------------

Each of the Premier Growth Fund, Small-Cap Value Fund, [Small-Cap Growth Fund,
Mid-Cap Value Fund,] International Fund, Value Equity Fund, U.S. Equity Fund and
S&P 500 Index Fund limits investment in debt securities to those that are rated
investment grade, except that each such Fund, other than the Small-Cap Value
Fund, may invest up to 5% of that Fund's assets in securities rated lower than
investment grade and the Small-Cap Value Fund may invest up to 10% of its assets
in below investment grade securities. [The High Yield Fund has no limitation on
the amount of its assets that may be invested in securities rated lower than
investment grade.] A security is considered investment grade if it is rated at
the time of purchase within the four highest rating categories assigned by S&P
or Moody's or has received an equivalent rating from another NRSRO or, if
unrated, is deemed by GEIM to be of comparable quality.

Each of the Emerging Markets Fund, Mid-Cap Growth Fund, Strategic Fund and
Income Fund limits its purchases of debt instruments to those that are rated
within the six highest rating categories by S&P, Moody's or another NRSRO, or if
unrated, are deemed by GEIM to be of comparable quality. Each of these Funds
will not purchase a debt security if, as a result of the purchase, more than 25%
of the Fund's total assets would be invested in securities rated BBB by S&P or
Baa by Moody's or that have received an equivalent rating from another NRSRO or,
if unrated, deemed by GEIM to be of comparable quality. In addition, each such
Fund will not purchase any obligation rated BB or B by S&P or Ba or B by
Moody's, or that have received an equivalent rating from another NRSRO if, as a
result of the purchase, more than 10% of the Fund's total assets would be
invested in obligations rated in those categories or, if unrated, in obligations
that are deemed by GEIM to be of comparable quality. A description of S&P's and
Moody's ratings relevant to a Fund's investments is included as an appendix to
the Statement of Additional Information.

CASH MANAGEMENT POLICIES -- NON-MONEY MARKET FUNDS
- --------------------------------------------------------------------------------

(i) U.S. Government Obligations (described below);

(ii) debt obligations of banks, savings and loan institutions, insurance
companies and mortgage bankers;

- --------

(2) As used in this Prospectus, the term "Investment Manager" shall refer to
GEIM, Palisade or SSGA, as applicable.

22
<PAGE>

(iii) commercial paper and notes, including those with variable and
floating rates of interest;

(iv) debt obligations of foreign branches of U.S. banks, U.S. branches of
foreign banks and foreign branches of foreign banks;

(v) debt obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities, including obligations of supra-national entities;

(vi) debt securities issued by foreign issuers; and

(vii) repurchase agreements and reverse repurchase agreements (see "Risk
Factors and Special Considerations -- Repurchase and Reverse
Repurchase Agreements" below for a further description).

Each non-money market Fund may invest up to 25% of its assets in the Investment
Fund. The Investment Fund invests exclusively in the money market instruments
described in (i) through (vii) above, and serves as the investment vehicle that
facilitates the collective investment of the cash accounts of the non-money
market Funds and other entities advised by GEIM or General Electric Investment
Corporation ("GEIC," and together with GEIM collectively referred to as "GE
Investments"), a sister company of GEIM that is wholly-owned by GE. GEIM is the
investment adviser to the Investment Fund, and charges no advisory fee to the
Investment Fund for these services. A non-money market Fund would incur no sales
charge and no distribution or service fees in connection with its holdings in
the Investment Fund.

ADDITIONAL PERMITTED INVESTMENTS
- --------------------------------------------------------------------------------

In addition to the investments discussed above, some or all of the Funds may
invest in the types of securities or may engage in investment techniques and
strategies discussed below.

ILLIQUID INVESTMENTS AND RESTRICTED SECURITIES. Each non-money market Fund may
invest up to 15% of its net assets in illiquid securities. Illiquid securities
are securities that a Fund cannot dispose of within seven days in the ordinary
course of business at approximately the amount at which the Fund has valued the
securities. Illiquid securities include options traded over-the-counter,
repurchase agreements maturing in more than seven days, certain mortgage related
securities and restricted securities that the Investment Manager has determined
are not liquid under guidelines established by the Trust's Board of Trustees.

U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in obligations issued by the
U.S. Government or by its agencies and instrumentalities (as defined above,
"U.S. Government Obligations"). Different types of U.S. Government Obligations
have different payment guarantees, if any. Some U.S. Government Obligations,
such as U.S. Treasury securities, are supported by the full faith and credit of
the U.S. Government or U.S. Treasury guarantees. U.S. Treasury securities differ
in their interest rates, maturities and dates of issuance. Other U.S. Government
Obligations are backed by the right of the issuer or guarantor to borrow from
the U.S. Treasury; others, by the discretionary authority of the

<PAGE>

U.S. Government to purchase obligations of the agency or instrumentality issuing
the security; and still others, only by the credit of the agency or
instrumentality issuing the obligation.

The types of U.S. Government Obligations in which the Funds may invest are
listed in the Statement of Additional Information.

<PAGE>

A put option is an option to sell. If the Investment Manager believes that the
market value of a security a Fund owns will decline, the Fund may purchase a put
option on that security. The put option would allow the Fund to sell the
security at a given price during the option period and thereby limit its losses
on the security. If the underlying security appreciates, rather than
depreciates, the Fund would choose not to exercise the option, but any
appreciation in the value of the underlying security would be offset by the
premium the Fund paid for the relevant put option, plus any related transaction
costs.

<PAGE>

investment company. A Fund would enter into options transactions as hedges to
reduce investment risk, and a properly correlated hedge will result in a loss on
the portfolio's position being offset by a gain on the hedge position.

<PAGE>

exempt municipal bonds; a corporate bond index futures contract is based on an
index of corporate bonds. Stock index futures contracts are based on indices
that reflect the market value of common stock of the companies included in the
indices. An option on an interest rate or index futures contract generally gives
the purchaser the right, in return for the premium paid, to assume a position in
a futures contract at a specified exercise price at any time prior to the
expiration date of the option.

Upon maturity of a forward currency contract, a Fund may pay for and receive the
underlying currency, negotiate a roll-over into a new forward currency contract
with a new settlement date, or negotiate a termination of the forward contract
into an offset whereby the Fund would pay the difference between the exchange
rate fixed in the contract and the then current exchange rate. The Trust also
may be able to negotiate such an offset on behalf of a Fund prior to maturity of
the original forward contract. No assurance can be given that new forward
contracts or offsets will always be available to a Fund.

ADDITIONAL INVESTMENT TECHNIQUES. Each Fund may enter into securities
transactions on a when-issued or delayed-delivery basis and may lend its
portfolio securities.

27
<PAGE>

INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

Certain other investment restrictions adopted by the Trust with respect to the
Funds are described in the Statement of Additional Information.

RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

Investing in the Funds involves risk factors and special considerations, such as
those described below.

28
<PAGE>

CREDIT RISK. The Funds may invest in debt securities that are not backed by the
U.S. government. Such securities are subject to credit risk, which is the risk
that the issuer may be unable to pay principal and/or interest when due.

<PAGE>

volume than the securities of larger or more established companies. In addition,
these companies are typically subject to a greater degree of changes in earnings
and business prospects than are larger, more established issuers. As a result,
the prices of securities of smaller capitalization companies may fluctuate to a
greater degree than the prices of securities of other issuers. Although
investing in securities of smaller capitalization companies offers potential for
above-average returns, the risk exists that the companies will not succeed and
the prices of the companies' shares could significantly decline in value.

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS. A Fund entering into a repurchase
agreement may suffer a loss if the other party to the transaction defaults on
its obligations and the Fund is delayed or prevented from exercising its rights
to dispose of the underlying securities. Specifically, there are risks that the
value of the underlying securities might decline while the Fund seeks to assert
its rights, that the Fund will incur additional expenses in asserting its
rights, and that the Fund may lose all or part of the income from the agreement.

CURRENCY RISKS. The values of foreign investments are affected by changes
in currency rates or exchange control regulations. When a Fund holds a security
denominated in a local currency (rather than in U.S. dollars), it may convert
U.S. dollars into that local currency in order to purchase the security and
convert local currency back into dollars when the security is sold. The value of
the local currency relative to the U.S. dollar would affect the value of that
foreign security. For example, if the local currency gains strength against the
U.S. dollar, the value of the foreign security increases. Conversely, if the
local currency weakens against the U.S. dollar, the value of the foreign
security would decline. U.S. dollar denominated securities of foreign issuers
also may be affected by currency risk.

<PAGE>

COVERED OPTION WRITING. A Fund that writes puts and calls may experience losses
if the Investment Manager incorrectly predicts the direction in which the market
will move. If a Fund writes a put option obligating that Fund to purchase a
security at a certain price, the Fund may experience a loss if the market price
of the underlying security goes down. This is because the Fund would be
compelled to purchase the security at a price that is higher than market price.
The loss would be equal to the difference between the price at which the Fund
must purchase the underlying security and its market value at the time of the
option exercise, less the premium received for writing the option. Likewise, the
Fund would experience a loss if it wrote a call option and the price of the
underlying security rises. This is because the Fund would be obligated to sell a
security at a price that is lower than market price. The loss would be equal to
the excess of the security's market value at the time of the option's exercise
over the Fund's acquisition cost of the security, less the premium received for
writing the option.

<PAGE>

in exchange rates, although in the event of rate movements adverse to a Fund's
position, the Fund could forfeit the entire amount of the premium plus related
transaction costs.

PORTFOLIO TRANSACTIONS AND TURNOVER

<PAGE>

Fund, [150% for the Small-Cap Growth Fund, 150% for the Mid-Cap Value Fund, 150%
for the High Yield Fund,] 200% for the Mid-Cap Growth Fund, 50% for the
International Fund, 30% for the Value Equity Fund, 50% for the U.S. Equity Fund,
25% for the S&P 500 Index Fund, 200% for the Strategic Fund, and 300% for the
Income Fund. The portfolio turnover rate for the Money Market Fund is expected
to be zero for regulatory purposes. A 100% annual turnover rate would occur if
all of a Fund's securities were replaced one time during a period of one year.
Short-term gains realized from portfolio turnover are taxable to investors as
ordinary income. In addition, higher portfolio turnover rates can result in
corresponding increases in brokerage commissions. The Investment Manager does
not consider portfolio turnover rate a limiting factor in making investment
decisions on behalf of any Fund consistent with the Fund's investment objective
and policies. The Statement of Additional Information contains additional
information regarding portfolio transactions and turnover.

MANAGEMENT OF THE TRUST
- --------------------------------------------------------------------------------

BOARD OF TRUSTEES

INVESTMENT ADVISER AND ADMINISTRATOR

GEIM, located at 3003 Summer Street, P.O. Box 7900 Stamford, Connecticut 06904,
serves as the investment adviser and administrator of each Fund. GEIM was formed
under the laws of Delaware in 1988, and is a wholly-owned subsidiary of GE and a
registered investment adviser under the Investment Advisers Act of 1940, as
amended.

GE Investments provides investment management services to various institutional
accounts with total assets as of March 31, 1998 in excess of $75.5 billion, of
which more than $14.9 billion was invested in mutual funds. GEIM or GEIC serves
as the investment adviser to the following entities:

<PAGE>

Government Money Market Fund and U.S. Treasury Money Market Fund of Financial
Investors Trust since March 1997, and the Prime Fund of Financial Investors
Trust since May 1998.

FEE STRUCTURE

<PAGE>

ANNUAL RATE
NAME OF FUND AVERAGE DAILY NET ASSETS OF FUND PERCENTAGE (%)
- --------------------------------------------------------------------------------
Emerging Markets Fund First $50 million 1.05
Over $50 million .95
- --------------------------------------------------------------------------------
Premier Growth Equity Fund First $25 million .55
Mid-Cap Growth Fund Next $25 million .45
Value Equity Fund Over $50 million .35
U.S. Equity Fund
- --------------------------------------------------------------------------------

Small-Cap Value Fund First $25 million .70
[Small-Cap Growth Fund] Next $25 million .65
Over $50 million .60

- --------------------------------------------------------------------------------
[Mid-Cap Value Fund] First $25 million .60
Next $25 million .55
Over $50 million .50
- --------------------------------------------------------------------------------
International Equity Fund First $25 million .75
Next $50 million .65
Over $75 million .55
- --------------------------------------------------------------------------------
S&P 500 Index Fund All assets .15
- --------------------------------------------------------------------------------
Strategic Investment Fund First $25 million .45
[High Yield Fund] Next $25 million .40
Over $50 million .35
- --------------------------------------------------------------------------------
Income Fund First $25 million .35
Next $25 million .30
Next $50 million .25
Over $100 million .20
- --------------------------------------------------------------------------------
Money Market Fund First $25 million .25
Next $25 million .20
Next $50 million .15
Over $100 million .10

From time to time, GEIM may waive or reimburse advisory or administrative fees
paid by a Fund.

INVESTMENT SUB-ADVISERS

<PAGE>

PORTFOLIO MANAGEMENT

Elaine G. Harris is the Portfolio Manager for the Mid-Cap Growth Fund [and the
Mid-Cap Value Fund] and has served in that capacity since commencement of the
Funds' operations. Ms. Harris also serves as the Portfolio Manager for GE Funds'
GE Mid-Cap Growth Fund [and GE Mid-Cap Value Fund]. She has more than 13 years
of investment experience and has held positions with GE Investments since 1993.
From 1991 to 1993, Ms. Harris served as Senior Vice President and Portfolio
Manager at SunAmerica Asset Management. Ms. Harris is currently a Senior Vice
President of GE Investments.

<PAGE>

EXPENSES OF THE FUNDS

Each Fund's Investment Class bears its own expenses, which generally include all
costs not specifically borne by GEIM. Specifically, expenses borne by a Fund
include: investment advisory and administration fees; fees paid to members of
the Trust's Board of Trustees who are not affiliated with GEIM or any of its
affiliates; fees for necessary brokerage services; and expenses that are not
normal operating expenses of the Funds (such as extraordinary expenses, interest
and taxes). GEIM pays any fees and expenses in excess of its advisory and
administration fee that are not borne by the Funds. The annual fees payable with
respect to each Fund are intended to compensate GEIM for its advisory and
administration services.

PURCHASE OF SHARES
- --------------------------------------------------------------------------------

PURCHASING SHARES -- GENERAL INFORMATION

The Distributor offers Investment Class shares on a continuous basis. A purchase
order is processed at the net asset value next determined after the order (or
wire, if applicable) has been received and accepted by State Street, the Trust's
transfer agent. For a description of the manner of calculating a Fund's net
asset value, see "Net Asset Value." Shares are sold without the imposition of a
sales charge.

ELIGIBLE INVESTORS

The Distributor offers Investment Class shares to certain investors that meet
the minimum investment requirements. The Trust was designed to appeal to
institutional investors such as corporations, foundations, endowments and trusts
established to fund employee benefit plans of various types as well as
charitable, religious and educational institutions. The Trust expects that most
of the time each Fund will have relatively few shareholders (as compared with
most mutual funds) but that these shareholders will invest substantial amounts
in a Fund. Typical institutional investors may include banks, insurance
companies, broker-dealers, investment advisers, trusts that fund qualified
pension and profit-sharing plans (Section 401 of the Code), trusts that fund
government employer non-qualified deferred compensation obligations (Section 457
of the Code), trusts that fund charitable, religious and educational
institutions (Section 501(c)(9) of the Code), non-government employers seeking
to fund non-qualified deferred compensation obligations, and investment
companies that are not affiliated persons of the Trust (or affiliated persons of
such persons).

38
<PAGE>

MINIMUM INVESTMENT REQUIREMENT

The minimum initial investment in each Fund is $35 million for each investor or
group of related investors. Related investors are investors that are affiliated
persons of each other within the meaning of the 1940 Act. For this purpose,
common trust funds and collective trust funds of the same bank (or of affiliated
banks) are considered related investors of each other and their bank(s).
Likewise, separate accounts of the same insurance company (or of affiliated
insurance companies) are related investors of each other and their insurance
company or companies and clients whose assets are managed on a discretionary
basis by the same bank, insurance company, investment adviser or broker-dealer
are related investors of their manager. The Distributor also may treat
institutional clients of a financial intermediary whose assets are managed on a
non-discretionary basis or who are otherwise served by the intermediary (or its
affiliate) as related investors of their manager or service provider where Fund
shares are held by that intermediary in an omnibus account for its clients.
There is no minimum investment requirement for subsequent purchases. If the
value of an investor's, or group of related investors', investment in a Fund
falls below $35 million for more than 120 days because of redemptions (and not
because of market fluctuations or Investment Switches (defined below)), the
Distributor may, in its sole discretion, refuse to sell additional Fund shares
to such investor (other than reinvestment of dividends and capital gains
distributions).

<PAGE>

HOW TO OPEN AN ACCOUNT

Investors must establish an account before purchasing shares, and may do so
either by submitting an account application to the Distributor or the transfer
agent, or through an Authorized Firm (defined below). Investors may obtain an
account application by telephoning the Trust at (800) 493-3042 or by writing to
the Trust at:

GE Institutional Funds
P.O. Box 120065
Stamford, CT 06912-0065

For overnight package delivery:

GE Institutional Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105

HOW TO BUY SHARES

Investors also may purchase Investment Class shares directly from the transfer
agent by wiring federal funds to: State Street Bank and Trust Company (ABA #
0110-0002-8) For: GE Institutional Funds-[Name of Fund] Account of: [Investor's
name, address and account number]. If a wire is received by the close of regular
trading on the NYSE on a Business Day, the shares will be priced according to
the net asset value of the Fund on that day. If a wire is received after the
close of regular trading on the NYSE, the shares will be priced as of the time
the Fund's net asset value per share is next determined.

Payment for orders that are not accepted will be returned to investors promptly.
An investor's financial institution may charge a fee for wiring its account.

PURCHASES IN-KIND

Investors may purchase Investment Class shares in amounts of $5 million or more
with either cash or investment securities acceptable to the appropriate Fund.
The particular investment securities acceptable to a Fund may vary over time and
the Trust does not guarantee that any particular investment securities will be
accepted at any particular time or at all. Investors interested in purchasing
Investment Class shares with investment securities should contact their Sales
Representative or the Distributor for information about which securities a
particular Fund will accept. The Trust reserves the right to require the
Distributor to suspend the offering of Investment Class shares of the Emerging
Markets Fund or International Equity Fund for cash in amounts above $5 million
and of the other non-money market Funds in amounts above $10 million.

<PAGE>

REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

REDEMPTIONS THROUGH AN AUTHORIZED FIRM

REDEMPTION BY MAIL

SIGNATURE GUARANTEES

DISTRIBUTIONS IN-KIND

<PAGE>

INVESTMENT SWITCHES
- --------------------------------------------------------------------------------

An investor may exchange Investment Class shares of a Fund for Investment Class
shares of another Fund or Service Class shares of the same or another Fund
("Investment Switches"). Such Investment Switches are permitted provided the
Fund is an option available to that investor, the investor meets the minimum
investment requirement for such Fund and the shares of such Fund may legally be
sold in the investor's state of residence.

NET ASSET VALUE
- --------------------------------------------------------------------------------

Securities that are primarily traded on a foreign exchange generally will be
valued for purposes of calculating a Fund's net asset value at the preceding
closing value of the securities on the exchange, except that, when an occurrence
subsequent to the time a value was so established is likely to have changed that
value, the fair market value of those securities will be determined by
consideration of other factors by or under the direction of the Board. Trading
in foreign markets may not take place on every NYSE business day. In addition,
trading may take place in various foreign markets on Saturdays or on other days
when the NYSE is not open and on which a Fund's net asset value is not
calculated. Therefore, such calculation does not take place contemporaneously
with the determination of the prices of many of the

<PAGE>

portfolio securities used in such calculation and the value of a Fund's
portfolio may be significantly affected on days when shares of the Fund may not
be purchased or redeemed.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

Dividends and capital gain distributions paid to investors will be automatically
reinvested in shares of the same class. Dividends attributable to the Income
Fund [, and the High Yield Fund] and the Money Market Fund are declared daily
and paid monthly. Dividends attributable to the net investment income of each of
the other Funds are declared and paid annually. If an investor redeems all of
the shares that it may own in the Income Fund [, the High Yield Fund] or the
Money Market Fund at any time during a month, the investor's dividends (if any)
will be paid to it along with the proceeds of its redemption.

The Trust will send investors written confirmations relating to the automatic
reinvestment of daily dividends within five days following the end of each
quarter for the Income Fund [and the High Yield Fund], and within five days
following the end of each month for the Money Market Fund. Distributions of any
net realized long-term and short-term capital gains earned by a Fund will be
made annually. Earnings of the Income Fund [, the High Yield Fund] and the Money
Market Fund for Saturdays, Sundays and holidays will be declared as dividends on
the business day immediately preceding the Saturday, Sunday or holiday. As a
result of the different service fees applicable to the Service Class shares,
dividends and distributions will be higher for the Investment Class shares. See
"Fee Table" and "Purchase of Shares."

TAXES

<PAGE>

amount per share that must be included in gross income and that may be available
as a credit or a deduction. An investor may not claim a deduction for foreign
taxes if it does not itemize deductions, and certain limitations will be imposed
on the extent to which the credit (but not the deduction) for foreign taxes may
be claimed.

Statements regarding the tax status of income dividends and capital gains
distributions will be mailed to investors on or before January 31st of each
year.

CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------

DISTRIBUTOR
- --------------------------------------------------------------------------------

ADDITIONAL MATTERS
- --------------------------------------------------------------------------------

<PAGE>

the initial seed capital to these Funds. In addition, as of July 1, 1998: (i)
Leaseway Transportation Corp. owned more than 25% of the outstanding voting
securities of the Emerging Markets Fund, Mid-Cap Growth Fund, International
Fund, U.S. Equity Fund, S&P 500 Index Fund, Income Fund and Money Market Fund;
(ii) AID Association for Lutherans owned more than 25% of the outstanding voting
securities of the International Fund; and (iii) MRA Systems, Inc. owned more
than 25% of the outstanding voting securities of the Money Market Fund. So long
as the above entities own more than 25% of the outstanding voting securities of
the Funds noted, they may be deemed to control these Funds.

As issued, shares of a Fund will be fully paid and non-assessable. Shares are
freely transferable and have no preemptive, subscription or conversion rights.
Each of the Investment Class and the Service Class represents an identical
interest in a Fund's investment portfolio. As a result, each class has the same
rights, privileges and preferences, except with respect to: (1) the designation
of each class; (2) the sales arrangement; (3) certain expenses allocable
exclusively to each class; and (4) voting rights on matters exclusively
affecting a single class. The Board of Trustees does not anticipate that there
will be any conflicts among the interests of the holders of the two classes. The
Trustees, on an ongoing basis, will consider whether any conflict exists and, if
so, take appropriate action. Certain aspects of the shares may be changed, upon
notice to Fund shareholders, to satisfy certain tax regulatory requirements, if
the Trust's Board of Trustees deems the change necessary.

Shareholders who satisfy certain criteria will be assisted by the Trust in
communicating with other shareholders in seeking the holding of the meeting.

<PAGE>

APPENDIX

FURTHER INFORMATION: CERTAIN INVESTMENT
TECHNIQUES AND STRATEGIES

STRATEGIES AVAILABLE TO ALL FUNDS

SUPRA-NATIONAL AGENCIES. Each Fund may invest in debt obligations of
supra-national agencies, which are agencies whose members make capital
contributions to support agency activities. Such agencies include the World
Bank, the European Coal and Steel Community, and the Asian Development Bank.
Debt obligations of supra-national agencies are not considered U.S. Government
Obligations and are not supported, directly or indirectly, by the U.S.
Government.

STRATEGIES AVAILABLE TO SOME BUT NOT ALL FUNDS

<PAGE>

MUNICIPAL LEASES. The Strategic Fund [and High Yield Fund] may invest in
municipal leases, which may take the form of a lease or an installment purchase
or a conditional sales contract to acquire equipment and facilities. Interest
payments on qualifying municipal leases are exempt from Federal income tax and
state income taxes within the state of issuance. The Fund may hold municipal
leases that are rated investment grade (or its issuer's senior debt is rated
investment grade) and unrated, if GEIM (subject to oversight and approval by the
Board of Trustees) deems such unrated leases to be of comparable quality to
rated issues. Risks and special considerations applicable to certain investment
grade obligations are described above under "Risk Factors and Special
Considerations -- Investment Grade Obligations." Municipal leases will be
considered illiquid securities unless the Trust's Board of Trustees determines
on an ongoing basis that the leases are readily marketable.

<PAGE>

The Strategic Fund [, High Yield Fund] and Income Fund may invest in adjustable
rate securities that have interest rates that vary inversely with changes in
market rates of interest. Such securities also may pay a rate of interest
determined by applying a multiple to the variable rate. Increases and decreases
in the value of securities whose rates vary inversely with changes in market
rates of interest generally will be larger than comparable changes in the value
of an equal principal amount of a fixed rate security having similar credit
quality, redemption provisions and maturity.

The Strategic Fund [and High Yield Fund] may purchase floating and variable rate
demand bonds and notes, which are Municipal Obligations ordinarily having stated
maturities in excess of one year but which permit their holder to demand payment
of principal at any time or at specified intervals. Variable rate demand notes
include master demand notes, which permit the Fund to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct arrangements
between the Fund, as lender, and the borrower. These obligations have interest
rates that fluctuate from time to time and frequently are secured by letters of
credit or other credit support arrangements provided by banks. Use of letters of
credit or other credit support arrangements will not adversely affect the
tax-exempt status of variable rate demand notes. Because they are direct lending
arrangements between the lender and borrower, variable rate demand notes
generally will not be traded and no established secondary market generally
exists for them, although they are redeemable at face value. If variable rate
demand notes are not secured by letters of credit or other credit support
arrangements, the Fund's right to demand payment will be dependent on the
ability of the borrower to pay principal and interest on demand. Each obligation
purchased by the Fund will meet the quality criteria established by GEIM for the
purchase of Municipal Obligations. GEIM, on behalf of the Fund, considers on an
ongoing basis the creditworthiness of the issuers of the floating and variable
rate demand obligations in the Fund's portfolio.

PARTICIPATION INTERESTS. The Strategic Fund [and High Yield Fund] may purchase
participation interests in certain Municipal Obligations from financial
institutions. A participation interest gives the Fund an undivided interest in
the Municipal Obligation in the proportion that the Fund's participation
interest bears to the total principal amount of the Municipal Obligation. These
instruments may have fixed, floating or variable rates of interest. If the
participation interest is unrated, or has been given a rating below one that is
otherwise permissible for purchase by the Fund, the participation interest will
be backed by an irrevocable letter of credit or guarantee of a bank that the
Trust's Board of Trustees has determined meets certain quality standards, or the
payment obligation otherwise will be collateralized by U.S. Government
Obligations. The Fund will have the right, with respect to certain participation
interests, to demand payment, on a specified number of days' notice, for all or
any part of the Fund's participation interest in the Municipal Obligation, plus
accrued interest. The Trust intends that the Fund exercise its right to demand
payment only upon a default under the terms of the Municipal Obligation, or to
maintain or improve the quality of its investment portfolio. The Fund will
invest no more than 5% of the value of its total assets in participation
interests.

iii

<PAGE>

ZERO COUPON OBLIGATIONS. The U.S. Equity Fund, Strategic Fund [, High Yield
Fund] and Income Fund may invest in zero coupon obligations. Zero coupon
obligations pay no interest to their holders prior to maturity. Instead, the
interest accrues (or builds up) and is paid in a lump sum at maturity. Investors
purchase zero coupon obligations at a deep discount, or prices far lower than
par value. Because zero coupon securities bear no interest, they are more
volatile than other fixed income securities. When interest rates rise, their
values fall more rapidly than securities paying interest on a current basis.
Conversely, when interest rates fall, the values of zero coupon bonds rise more
rapidly than securities paying interest on a current basis, because the zeros
have locked in a particular rate of reinvestment that becomes more attractive
the further rates fall.

The Strategic Fund [and High Yield Fund] may invest up to 10% of its assets in
zero coupon Municipal Obligations, which are generally divided into two
categories: "Pure Zero Obligations," which pay no interest for their entire life
and "Zero/Fixed Obligations," which pay no interest for some initial period and
thereafter pay interest currently. In the case of a Pure Zero Obligation, the
failure to pay interest currently may result from the obligation's having no
stated interest rate, in which case the obligation pays only principal at
maturity and is sold at a discount from its stated principal. A Pure Zero
Obligation may, in the alternative, provide for a stated interest rate, but
provide that no interest is payable until maturity, in which case accrued,
unpaid interest on the obligation may be capitalized as incremental principal.
The value to the investor of a zero coupon Municipal Obligation consists of the
economic accretion either of the difference between the purchase price and the
nominal principal amount (if no interest is stated to accrue) or of accrued,
unpaid interest during the Municipal Obligation's life or payment deferral
period.

MUNICIPAL OBLIGATION COMPONENTS. The Strategic Fund [and High Yield Fund] may
invest in Municipal Obligations, the interest rate on which has been divided by
the issuer into two different and variable components, which together result in
a fixed interest rate. Typically, the first of the components (the "Auction
Component") pays an interest rate that is reset periodically through an auction
process, whereas the second of the components (the "Residual Component") pays a
residual interest rate based on the difference between the total interest paid
by the issuer on the Municipal Obligation and the auction rate paid on the
Auction Component. The Fund may purchase both Auction and Residual Components.
Because the interest rate paid to holders of Residual Components is generally
determined by subtracting the interest rate paid to the holders of Auction
Components from a fixed amount, the interest rate paid to Residual Component
holders will decrease as the Auction Component's rate increases and increase as
the Auction Component's rate decreases. Moreover, the extent of the increases
and decreases in market value of Residual Components may be larger than
comparable changes in the market value of an equal principal amount of a fixed
rate Municipal Obligation having similar credit quality, redemption provisions
and maturity.

CUSTODY RECEIPTS. The Strategic Fund [and High Yield Fund] may acquire custody
receipts or certificates underwritten by securities dealers or banks that
evidence ownership of future interest payments, principal payments, or both, on
certain Municipal Obligations. Similar to depositary receipts, the actual
Municipal Obligations are held in an irrevocable trust or custodial account with
a custodian bank, which then issues receipts or certificates that evidence
ownership. Custody receipts evidencing specific coupon or principal payments
have the same general attributes as zero coupon Municipal Obligations described
above. Although under the terms of a custody receipt, the Fund would be
typically authorized to assert its rights directly against the issuer of the
underlying obligation, the Fund could be required to assert through the
custodian bank its rights against the underlying issuer. Thus, in the event the
underlying issuer fails to pay principal and/or interest when due, the Fund may
be subject to delays, expenses and risks that are greater than those that would
have been involved if the Fund had purchased a direct obligation of the issuer.

<PAGE>

Collateralized mortgage obligations, or "CMOs," are obligations fully
collateralized by a portfolio of mortgages or mortgage related securities.
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the type of CMOs in which
the Strategic Fund or Income Fund invests, the investment may be subject to a
greater or lesser risk of prepayment than other types of mortgage related
securities.

<PAGE>

MORTGAGE DOLLAR ROLLS. The Strategic Fund [, High Yield Fund] and Income Fund
each may use up to 25% of its total assets to enter into mortgage "dollar
rolls." A mortgage dollar roll transaction requires a Fund to sell a security
and simultaneously contract with the purchaser to buy similar, but not
identical, securities at some future date. The Fund loses the right to principal
and interest payments on the securities sold. The Fund benefits from a dollar
roll to the extent that (i) the price at which the Fund sells the security
exceeds the price at which it buys (i.e., the "drop" price) similar securities
in the future, and (ii) the Fund earns interest on the cash proceeds from the
sale. However, these gains are offset by foregone interest income and capital
appreciation on the securities sold. Therefore a Fund's overall gains from
mortgage dollar roll transactions depend upon GEIM's ability to predict
correctly mortgage prepayments and interest rates. To the extent that GEIM
incorrectly analyzes these factors, the Fund's investment performance may be
diminished compared to what it would have been without the use of mortgage
dollar rolls.

vi
<PAGE>

GE INSTITUTIONAL FUNDS

Emerging Markets Fund

Premier Growth Equity Fund

Small-Cap Value Equity Fund

Mid-Cap Growth Fund

International Equity Fund

Value Equity Fund

U.S. Equity Fund

S&P 500 Index Fund

Strategic Investment Fund

Income Fund

Money Market Fund

[Small-Cap Growth Equity Fund

Mid-Cap Value Equity Fund

High Yield Fund]

For information, contact your investment professional or call the Trust at
1-800-493-3042.

No person has been authorized to give any information or to make any
representations other than those contained in this prospectus or in the
statement of additional information incorporated into this prospectus by
reference in connection with the offering of shares of GE Institutional
Funds, and if given or made, such other information or representations must
not be relied upon as having been authorized by GE Institutional Funds.
This prospectus does not constitute an offer in any state in which, or to
any person whom, an offer may not lawfully be made.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

JULY 31, 1998

GE INSTITUTIONAL FUNDS

3003 Summer Street, Stamford, Connecticut 06905
For information, call 1-800-493-3042

* Emerging Markets Fund * Value Equity Fund
* Premier Growth Equity Fund * U.S. Equity Fund
* Small-Cap Growth Equity Fund * S&P 500 Index Fund
* Small-Cap Value Equity Fund * Strategic Investment Fund
* Mid-Cap Growth Fund * High Yield Fund
* Mid-Cap Value Equity Fund * Income Fund
* International Equity Fund * Money Market Fund

CONTENTS

PAGE

Investment Objectives and Management Policies.........................1
Investment Restrictions..............................................12
Management of the Trust..............................................15
Compensation Table...................................................18
Redemption of Shares.................................................24
Investment Switches..................................................24
Net Asset Value......................................................25
Dividends, Distributions and Taxes...................................26
The Funds' Performance...............................................29
Performance Calculation..............................................29
Principal Stockholders...............................................33
Additional Information...............................................37
Counsel..............................................................39
Independent Accountants..............................................39
Financial Statements.................................................39
Appendix............................................................A-1

This Statement of Additional Information supplements the information contained
in, and should be read in conjunction with, the current Prospectuses of GE
Institutional Funds (the "Trust"), each dated July 31, 1998. Copies of the
Prospectuses may be obtained without charge by calling the Trust at the
telephone number listed above. Information regarding the status of shareholder
accounts may be obtained by calling the Trust at the telephone number listed
above or by writing to the Trust at P.O. Box 120065, Stamford, CT 06912-0065.
This Statement of Additional Information, although not a prospectus, is
incorporated in its entirety by reference into each Prospectus. Terms that are
defined in the Prospectuses shall have the same meanings in this Statement of
Additional Information.

<PAGE>

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

The Prospectuses dated July 31, 1998 discuss the investment objectives and
policies of the following eleven managed investment funds currently offered by
the Trust: Emerging Markets Fund, Premier Growth Equity Fund (the "Premier
Growth Fund"), Small-Cap Value Equity Fund (the "Small-Cap Value Fund"), Mid-Cap
Growth Fund, International Equity Fund (the "International Fund"), Value Equity
Fund, U.S. Equity Fund, S&P 500 Index Fund,(1) Strategic Investment Fund (the
"Strategic Fund"), Income Fund, and Money Market Fund. Small-Cap Growth Equity
Fund (the "Small-Cap Growth Fund"), Mid-Cap Value Equity Fund (the "Mid-Cap
Value Fund") and High Yield Fund, each an additional series of the Trust, are
not currently being offered by the Trust. Supplemental information is set out
below concerning certain of the securities and other instruments in which the
Funds may invest, the investment policies and strategies that the Funds may
utilize and certain risks attendant to those investments, policies and
strategies.

STRATEGIES AVAILABLE TO ALL FUNDS

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. When-issued and
delayed-delivery securities transactions involve the purchase of a security with
payment and delivery at a future date. When a Fund engages in when-issued or
delayed-delivery securities transactions, it relies on the other party to
consummate the trade. Failure of the seller to do so may result in the Fund's
incurring a loss or missing an opportunity to obtain a price considered to be
advantageous.

- ----------

(1) The S&P 500 Index Fund is not sponsored, endorsed, sold or promoted by
Standard & Poor's ("S&P"). S&P makes no representation or warranty, express
or implied, to the investors of the Fund or any member of the public
regarding the advisability of investing in securities generally or in this
Fund particularly or the ability of the S&P 500 Index to track general
stock market performance. S&P's only relationship to the Fund is the
licensing of certain trademarks and trade names of S&P and of the S&P 500
Index which is determined, composed and calculated by S&P without regard to
the Fund. S&P has no obligation to take the needs of the Fund or the
investors in the Fund into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has not
participated in the determination of the prices or composition of the S&P
500 Index Fund or the timing of the issuance or sale of the shares of that
Fund. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Fund.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS
OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY THE FUND, INVESTORS IN THE
FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR
ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL
S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES.

1
<PAGE>

LENDING PORTFOLIO SECURITIES. If a Fund loans its portfolio securities, it
will adhere to the following conditions: (a) the Fund must receive at least 100%
cash collateral or equivalent securities from the borrower; (b) the borrower
must increase the collateral whenever the market value of the securities loaned
rises above the level of the collateral; (c) the Fund must be able to terminate
the loan at any time; (d) the Fund must receive reasonable interest on the loan,
as well as any dividends, interest or other distributions on the loaned
securities, and any increase in market value; (e) the Fund may pay only
reasonable custodian fees in connection with the loan; and (f) voting rights on
the loaned securities may pass to the borrower except that, if a material event
adversely affecting the investment in the loaned securities occurs, the Trust's
Board of Trustees must terminate the loan and regain the right to vote the
securities. From time to time, a Fund may pay a part of the interest earned from
the investment of collateral received for securities loaned to the borrower
and/or a third party that is unaffiliated with the Fund and is acting as a
"finder."

BANK OBLIGATIONS. Domestic commercial banks organized under Federal law are
supervised and examined by the U.S. Comptroller of the Currency and are required
to be members of the Federal Reserve System and to be insured by the Federal
Deposit Insurance Corporation ("FDIC"). Foreign branches of U.S. banks and
foreign banks are not regulated by U.S. banking authorities and generally are
not bound by mandatory reserve requirements, loan limitations, accounting,
auditing and financial reporting standards comparable to those binding U.S.
banks. Obligations of foreign branches of U.S. banks and foreign banks are
subject to the risks associated with investing in foreign securities generally.
These obligations entail risks that are different from those of investments in
obligations in domestic banks, including foreign economic and political
developments outside the United States, foreign governmental restrictions that
may adversely affect payment of principal and interest on the obligations,
foreign exchange controls and foreign withholding or other taxes on income.

A U.S. branch of a foreign bank may or may not be subject to reserve
requirements imposed by the Federal Reserve System or by the state in which the
branch is located if the branch is licensed in that state. In addition, branches
licensed by the Comptroller of the Currency and branches licensed by certain
states ("State Branches") may or may not be required to: (a) pledge to the
regulator by depositing assets with a designated bank within the state, an
amount of its assets equal to 5% of its total liabilities; and (b) maintain
assets within the state in an amount equal to a specified percentage of the
aggregate amount of liabilities of the foreign bank payable at or through all of
its agencies or branches within the state. The deposits of State Branches may
not necessarily be insured by the FDIC. In addition, less information may be
available to the public about a U.S. branch of a foreign bank than about a U.S.
bank.

RATINGS AS INVESTMENT CRITERIA. The ratings of nationally recognized
statistical rating organizations ("NRSROs") such as S&P or Moody's Investors
Service, Inc. ("Moody's") represent the opinions of those organizations as to
the quality of securities that they rate. These ratings are relative, subjective
and are not absolute standards of quality. Although the

<PAGE>

Investment Manager(2) uses these ratings as initial criteria for the selection
of the Funds' portfolio securities, the Investment Manager also relies upon its
own analysis to evaluate potential investments.

A Fund may purchase a security that subsequently ceases to be rated or is
downgraded to a rating below the minimum required for purchase by the Fund.
Although neither event will require a non-money market Fund to sell the
security, the Investment Manager will consider the event in its determination of
whether the Fund should continue to hold the security. In the event of a
lowering of the rating of a security held by the Money Market Fund or a default
by the issuer of the security, that Fund will dispose of the security as soon as
practicable, unless the Trust's Board of Trustees determines that disposal of
the security would not be in the best interests of the Fund. To the extent that
an NRSRO's ratings change as a result of a change in the NRSRO or its rating
system, the Funds will attempt to use comparable ratings as standards for their
investments in accordance with their respective investment objectives and
policies.

SUPRA-NATIONAL AGENCIES. Supra-national agencies include: the International
Bank for Reconstruction and Development (commonly referred to as the World
Bank), which was chartered to finance development projects in developing member
countries; the European Community, which is a twelve-nation organization engaged
in cooperative economic activities; the European Coal and Steel Community, which
is an economic union of various European nations' steel and coal industries; and
the Asian Development Bank, which is an international development bank
established to lend funds, promote investment and provide technical assistance
to member nations in the Asian and Pacific regions. Debt obligations of
supra-national agencies are not considered U.S. Government Obligations and are
not supported, directly or indirectly, by the U.S. Government.

STRATEGIES AVAILABLE TO SOME BUT NOT ALL FUNDS

SECURITIES OF OTHER INVESTMENT COMPANIES. A Fund other than the Money
Market Fund (each, a "non-money market Fund") and the U.S. Equity Fund may
invest in securities of other investment companies to the extent permitted under
the Investment Company Act of 1940, as amended (the "1940 Act"). Presently,
under the 1940 Act, a non-money market Fund may hold securities of another
investment company in amounts which (a) do not exceed 3% of the total
outstanding voting stock of such company, (b) do not exceed 5% of the value of
the Fund's total assets and (c) when added to all other investment company
securities held by the Fund, do not exceed 10% of the value of the Fund's total
assets. Each non-money market Fund may invest up to 25% of its assets in the GEI
Short-Term Investment Fund (the "Investment Fund"), an investment Fund advised
by GEIM. The Investment Fund was specifically created to serve as a vehicle for
the collective investment of cash balances of the

- ----------
(2) As used in this Statement of Additional Information, the term "Investment
Manager" shall refer to GE Investment Management Incorporated ("GEIM"), the
Funds' investment adviser and administrator, or Palisade Capital
Management, L.L.C., the investment sub-adviser to the Small-Cap Value Fund,
or State Street Global Advisors, the investment sub-adviser to the S&P 500
Index Fund, as applicable.

<PAGE>

investment portfolios of other management investment companies and accounts
advised by either GEIM or its affiliate, General Electric Investment Corporation
("GEIC"). The Investment Fund is not considered an investment in another
investment company for purposes of this restriction.

COVERED OPTION WRITING. The Funds with option-writing authority will write
(i.e., sell) only options that are covered. A call option written by a Fund will
be deemed covered (a) if the Fund owns the securities underlying the call or has
an absolute and immediate right to acquire those securities without additional
cash consideration upon conversion or exchange of other securities held in its
portfolio, (b) if the Fund holds a call at the same exercise price for the same
exercise period and on the same securities as the call written, (c) in the case
of a call option on a stock index, if the Fund owns a portfolio of securities
substantially replicating the movement of the index underlying the call option,
or (d) if at the time the call is written, an amount of cash, U.S. Government
Obligations or other liquid assets equal to the fluctuating market value of the
optioned securities, is segregated with the Trust's custodian or with a
designated sub-custodian. A put option will be deemed covered (a) if, at the
time the put is written, an amount of cash, U.S. Government Obligations or other
liquid assets, having a value at least equal to the exercise price of the
underlying securities is segregated with the Trust's custodian or with a
designated sub-custodian, or (b) if the Fund continues to own an equivalent
number of puts of the same "series" (that is, puts on the same underlying
securities having the same exercise prices and expiration dates as those written
by the Fund), or an equivalent number of puts of the same "class" (that is, puts
on the same underlying securities) with exercise prices greater than those that
it has written (or if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, the difference is segregated with the
Trust's custodian or with a designated sub-custodian).

The principal reason for writing covered call options on a securities
portfolio is to attempt to make more money from the receipt of premiums than
would be realized on the securities alone. In return for a premium, the writer
of a covered call option forfeits the right to any appreciation in the value of
the underlying security above the strike price for the life of the option (or
until a closing purchase transaction can be effected). Nevertheless, the call
writer retains the risk of a decline in the price of the underlying security.
Similarly, the principal reason for writing covered put options is to realize
income in the form of premiums. The writer of a covered put option accepts the
risk of a decline in the price of the underlying security. The size of the
premiums that a Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase their
option-writing activities.

Options written by a Fund normally will have expiration dates between one
and nine months from the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying securities at the
times the options are written. The exercise prices relative to the market is
referred to as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. In-the-money options are those where the current market price is
above the strike price for calls and below it for puts. At-the-money options are
those where the current price and the strike price are the same.
Out-of-the-money options are those

<PAGE>

whose strike price is higher than its current market value in the case of a
call, or lower in the case of a put.

So long as the obligation of a Fund as the writer of an option continues,
the Fund may be assigned an exercise notice by the broker-dealer through which
the option was sold, requiring the Fund to deliver, in the case of a call, or
take delivery of, in the case of a put, the underlying security against payment
of the exercise price. This obligation terminates when the option expires or the
Fund effects a closing purchase transaction. A Fund can no longer effect a
closing purchase transaction with respect to an option once it has been assigned
an exercise notice. To secure its obligation to deliver the underlying security
when it writes a call option, or to pay for the underlying security when it
writes a put option, a Fund will be required to deposit in escrow the underlying
security or other assets in accordance with the rules of the Options Clearing
Corporation (the "Clearing Corporation") and of the securities exchange on which
the option is written.

An option position may be closed out only if a secondary market exists for
an option of the same series on a recognized securities exchange or in the
over-the-counter market. In light of the need for a secondary market in which to
close an option position, the Funds are expected to purchase only call or put
options issued by the Clearing Corporation. The Investment Manager expects that
the Funds will write options, other than those on U.S. Government Obligations,
only on national securities exchanges. Options on U.S. Government Obligations
may be written by the Funds in the over-the-counter market.

A Fund may realize a profit or loss upon entering into closing
transactions. When a Fund has written an option, it will realize a profit if the
cost of the closing purchase transaction is less than the premium received upon
writing the original option; the Fund will incur a loss if the cost of the
closing purchase transaction exceeds the premium received upon writing the
original option. When a Fund has purchased an option and engages in a closing
sale transaction, whether the Fund realizes a profit or loss will depend upon
whether the amount received in the closing sale transaction is more or less than
the premium the Fund initially paid for the original option plus the related
transaction costs.

STOCK INDEX OPTIONS. Certain Funds may purchase and write put and call
options on stock indexes or stock index futures contracts that are traded on a
U.S. exchange or board of trade or a foreign exchange, to the extent permitted
under rules and interpretations of the Commodity Futures Trading Commission
("CFTC"), as a hedge against changes in market conditions and interest rates,
and for duration management, and may enter into closing transactions with
respect to those options to terminate existing positions. A stock index
fluctuates with changes in the market values of the stocks included in the
index. Stock index options may be based on a broad or narrow market index or on
an industry or market segment.

The delivery requirements of options on stock indexes differ from options
on stock. Unlike a stock option, which contemplates the right to take or make
delivery of stock at a specified price, an option on a stock index gives the
holder the right to receive a cash "exercise settlement amount" equal to (a) the
amount, if any, by which the fixed exercise price of the

<PAGE>

option exceeds (in the case of a put) or is less than (in the case of a call)
the closing value of the underlying index on the date of exercise, multiplied by
(b) a fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the stock index upon which the option is based being greater
than, in the case of a call, or less than, in the case of a put, the exercise
price of the option. The amount of cash received will be equal to the difference
between the closing price of the index and the exercise price of the option
expressed in dollars times a specified multiple. The writer of the option is
obligated, in return for the premium received, to make delivery of this amount.
The writer may offset its position in stock index options prior to expiration by
entering into a closing transaction on an exchange or the purchaser may allow
the option to expire unexercised.

The effectiveness of purchasing or writing stock index options as a hedging
technique will depend upon the extent to which price movements in the portion of
a securities portfolio being hedged correlate with price movements of the stock
index selected. Because the value of an index option depends upon movements in
the level of the index rather than the price of a particular stock, whether a
Fund realizes a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. As a result,
successful use by a Fund of options on stock indexes is subject to the
Investment Manager's ability to predict correctly movements in the direction of
the stock market generally or of a particular industry. This ability
contemplates different skills and techniques from those used in predicting
changes in the price of individual stocks.

OVER-THE-COUNTER ("OTC") OPTIONS. Certain Funds may purchase OTC or dealer
options or sell covered OTC options. Unlike exchange-listed options where an
intermediary or clearing corporation, such as the Clearing Corporation, assures
that all transactions in such options are properly executed, the responsibility
for performing all transactions with respect to OTC options rests solely with
the writer and the holder of those options. A listed call option writer, for
example, is obligated to deliver the underlying stock to the clearing
organization if the option is exercised, and the clearing organization is then
obligated to pay the writer the exercise price of the option. If a Fund were to
purchase a dealer option, however, it would rely on the dealer from whom it
purchased the option to perform if the option were exercised. If the dealer
fails to honor the exercise of the option by the Fund, the Fund would lose the
premium it paid for the option and the expected benefit of the transaction.

Listed options generally have a continuous liquid market while dealer
options have none. Consequently, a Fund will generally be able to realize the
value of a dealer option it has purchased only by exercising it or reselling it
to the dealer who issued it. Similarly, when a Fund writes a dealer option, it
generally will be able to close out the option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which the Fund
originally wrote the option. Although the Funds will seek to enter into dealer
options only with dealers who will agree to and that are expected to be capable
of entering into closing transactions with the Funds, there can be no assurance
that a Fund will be able to liquidate a dealer option at a favorable price at
any time prior to expiration. The inability to enter into a

<PAGE>

closing transaction may result in material losses to a Fund. Until a Fund, as a
covered OTC call option writer, is able to effect a closing purchase
transaction, it will not be able to liquidate securities (or other assets) used
to cover the written option until the option expires or is exercised. This
requirement may impair a Fund's ability to sell portfolio securities or, with
respect to currency options, currencies at a time when such sale might be
advantageous. In the event of insolvency of the other party, the Fund may be
unable to liquidate a dealer option.

FUTURES CONTRACTS. A Fund neither pays nor receives consideration upon
trading a futures contract. Upon entering into a futures contract, cash,
short-term U.S. Government Obligations or other U.S. dollar-denominated,
high-grade, short-term money market instruments, equal to approximately 1% to
10% of the contract amount, will be segregated with the Trust's custodian or a
designated sub-custodian. This amount, which is subject to change by the
exchange on which the contract is traded, is known as "initial margin" and is in
the nature of a performance bond or good faith deposit on the contract. The
initial margin is returned to the Fund upon termination of the futures contract,
so long as all contractual obligations have been satisfied. The broker will have
access to amounts in the margin account if the Fund fails to meet its
contractual obligations. Subsequent payments, known as "variation margin," to
and from the broker, will be made daily as the price of the securities
underlying the futures contract fluctuates, making the long and short positions
in the contract more or less valuable, a process known as "marking-to-market".
At any time prior to the expiration of a futures contract, a Fund may elect to
close a position by taking an opposite position, which will operate to terminate
the Fund's existing position in the contract.

Although the Trust intends that the Funds enter into futures contracts only
if an active market exists for the contracts, no assurance can be given that an
active market will exist for the contracts at any particular time. Most U.S.
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made on that day at a
price beyond that limit. Futures contract prices may move to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and subjecting some futures traders to
substantial losses. In such a case, and in the event of adverse price movements,
a Fund would be required to make daily cash payments of variation margin. In
such circumstances, an increase in the value of the portion of the portfolio
being hedged, if any, may partially or completely offset losses on the futures
contract.

If a Fund has hedged against the possibility of an increase in interest
rates and rates decrease instead, the Fund will lose part or all of the benefit
of the increased value of securities that it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund had insufficient cash, it may have to sell securities to meet daily
variation margins requirements at a time when it may be disadvantageous to do
so. These sales of securities may, but will not necessarily, be at increased
prices that reflect the decline in interest rates.

7
<PAGE>

OPTIONS ON FUTURES CONTRACTS. An option on a futures contract, unlike a
direct investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in the futures contract at a
specified exercise price at any time prior to the expiration date of the option.
Upon exercise of an option, the delivery of the futures position by the writer
of the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the option
on the futures contract. The potential loss related to the purchase of an option
on futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the price of the option to the purchaser is fixed at
the point of sale, no daily cash payments are made to reflect changes in the
value of the underlying contract. The value of the option, however, does change
daily and that change would be reflected in the net asset value of the Fund
holding the options.

FORWARD CURRENCY TRANSACTIONS. The cost to a Fund of engaging in currency
transactions varies with factors such as the currency involved, the length of
the contract period and the market conditions then prevailing. Because
transactions in currency exchange are usually conducted on a principal basis, no
fees or commissions are involved. The use of forward currency contracts does not
eliminate fluctuations in the underlying prices of the securities, but it does
establish a rate of exchange that can be achieved in the future. In addition,
although forward currency contracts limit the risk of loss due to a decline in
the value of the hedged currency, at the same time they limit any potential gain
that might result should the value of the currency increase. If a devaluation is
generally anticipated, a Fund may not be able to sell currency at a price above
the anticipated devaluation level. A Fund will not enter into a currency
transaction if, as a result, it will fail to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code") for a
given year.

OPTIONS ON FOREIGN CURRENCIES. Certain transactions involving options on
foreign currencies are undertaken on contract markets that are not regulated by
the CFTC. Options on foreign currencies traded on national securities exchanges
are within the jurisdiction of the Securities and Exchange Commission (the
"SEC"), as are other securities traded on those exchanges. As a result, many of
the protections provided to traders on organized exchanges will be available
with respect to those transactions. In particular, all foreign currency option
positions entered into on a national securities exchange are cleared and
guaranteed by the Clearing Corporation, thereby reducing the risk of
counterparty default. In addition, a liquid secondary market in options traded
on a national securities exchange may exist, potentially permitting a Fund to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.

The purchase and sale of exchange-traded foreign currency options are
subject to the risks of the availability of a liquid secondary market as
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exercise and settlement of
exchange-traded foreign

<PAGE>

currency options must be made exclusively through the Clearing Corporation,
which has established banking relationships in applicable foreign countries for
this purpose. As a result, the Clearing Corporation may, if it determines that
foreign governmental restrictions or taxes would prevent the orderly settlement
of foreign currency option exercises, or would result in undue burdens on the
Clearing Corporation or its clearing members, impose special procedures on
exercise and settlement, such as technical changes in the mechanics of delivery
of currency, the fixing of dollar settlement prices or prohibitions on exercise.

Options on foreign currencies may be traded on foreign exchanges, to the
extent permitted by the CFTC. These transactions are subject to the risk of
governmental actions affecting trading in or the prices of foreign currencies or
securities. The value of these positions could also be adversely affected by (a)
other complex foreign political and economic factors, (b) lesser availability of
data on which to make trading decisions than in the United States, (c) delays in
a Fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (d) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States and (e) lesser trading volume.

MUNICIPAL OBLIGATIONS. The term "Municipal Obligations" as used in each
Prospectus and this Statement of Additional Information means debt obligations
issued by, or on behalf of, states, territories and possessions of the United
States and the District of Columbia and their political subdivisions, agencies
and instrumentalities or multistate agencies or authorities, the interest from
which debt obligations is, in the opinion of bond counsel to the issuer,
excluded from gross income for Federal income tax purposes. Municipal
Obligations generally are understood to include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities, refunding of outstanding obligations, payment of
general operating expenses and extensions of loans to public institutions and
facilities. Private activity bonds that are issued by or on behalf of public
authorities to finance privately operated facilities are considered to be
Municipal Obligations if the interest paid on them qualifies as excluded from
gross income (but not necessarily from alternative minimum taxable income) for
Federal income tax purposes in the opinion of bond counsel to the issuer.

Municipal Obligations may be issued to finance life care facilities, which
are an alternative form of long-term housing for the elderly that offer
residents the independence of a condominium life-style and, if needed, the
comprehensive care of nursing home services. Bonds to finance these facilities
have been issued by various state industrial development authorities. Because
the bonds are secured only by the revenues of each facility and not by state or
local government tax payments, they are subject to a wide variety of risks,
including a drop in occupancy levels, the difficulty of maintaining adequate
financial reserves to secure estimated actuarial liabilities, the possibility of
regulatory cost restrictions applied to health care delivery and competition
from alternative health care or conventional housing facilities.

Municipal leases are Municipal Obligations that may take the form of a
lease or an installment purchase contract issued by state and local governmental
authorities to obtain funds

<PAGE>

to acquire a wide variety of equipment and facilities such as fire and
sanitation vehicles, computer equipment and other capital assets. Although
municipal lease obligations do not normally constitute general obligations of
the municipality, a lease obligation is ordinarily backed by the municipality's
agreement to make the payments due under the lease obligation. These obligations
have evolved to make it possible for state and local government authorities to
acquire property and equipment without meeting constitutional and statutory
requirements for the issuance of debt. Thus, municipal leases have special risks
not normally associated with Municipal Obligations. These obligations frequently
contain "non-appropriation" clauses that provide that the governmental issuer of
the obligation has no obligation to make future payments under the lease or
contract unless money is appropriated for those purposes by the legislative body
on a yearly or other periodic basis. In addition to the non-appropriation risk,
municipal leases represent a type of financing that has not yet developed the
depth of marketability associated with other Municipal Obligations. Some
municipal lease obligations may be, and could become, illiquid. Moreover,
although municipal leases will be secured by the leased equipment, the
disposition of the equipment in the event of foreclosure might prove to be
difficult.

Municipal lease obligations may be deemed to be illiquid as determined by
or in accordance with methods adopted by the Board. In determining the liquidity
and appropriate valuation of a municipal lease obligation, the following factors
relating to the security are considered, among others: (a) the frequency of
trades and quotes; (b) the number of dealers willing to purchase or sell the
security; (c) the willingness of dealers to undertake to make a market; (d) the
nature of the marketplace trades; and (e) the likelihood that the obligation
will continue to be marketable based on the credit quality of the municipality
or relevant obligor.

Tax legislation in recent years has included several provisions that may
affect the supply of, and the demand for, Municipal Obligations, as well as the
tax-exempt nature of interest paid on those obligations. Neither the Trust nor
the Investment Manager can predict with certainty the effect of recent tax law
changes upon the Municipal Obligation market, including the availability of
instruments for investment by a Fund. In addition, neither the Trust nor the
Investment Manager can predict whether additional legislation adversely
affecting the Municipal Obligation market will be enacted in the future. The
Trust monitors legislative developments and considers whether changes in the
objective or policies of a Fund need to be made in response to those
developments.

MORTGAGE RELATED SECURITIES. The average maturity of pass-through pools of
mortgage related securities in which certain of the Funds may invest varies with
the maturities of the underlying mortgage instruments. In addition, a pool's
stated maturity may be shortened by unscheduled payments on the underlying
mortgages. Factors affecting mortgage prepayments include the level of interest
rates, general economic and social conditions, the location of the mortgaged
property and age of the mortgage. Because prepayment rates of individual
mortgage pools vary widely, the average life of a particular pool cannot be
predicted accurately.

10
<PAGE>

Mortgage related securities may be classified as private, governmental or
government-related, depending on the issuer or guarantor. Private mortgage
related securities represent pass-through pools consisting principally of
conventional residential mortgage loans created by non-governmental issuers,
such as commercial banks, savings and loan associations and private mortgage
insurance companies. Governmental mortgage related securities are backed by the
full faith and credit of the United States. The Government National Mortgage
Association ("GNMA"), the principal U.S. guarantor of these securities, is a
wholly-owned U.S. government corporation within the Department of Housing and
Urban Development. Government-related mortgage related securities are not backed
by the full faith and credit of the United States. Issuers include the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"). FNMA is a government-sponsored corporation owned entirely
by private stockholders, which is subject to general regulation by the Secretary
of Housing and Urban Development. Pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA. FHLMC is a
corporate instrumentality of the United States, the stock of which is owned by
the Federal Home Loan Banks. Participation certificates representing interests
in mortgages from FHLMC's national portfolio are guaranteed as to the timely
payment of interest and ultimate collection of principal by FHLMC.

Private, governmental or government-related entities may create mortgage
loan pools offering pass-through investments in addition to those described
above. The mortgages underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal or interest payments
may vary or whose terms to maturity may be shorter than previously customary.
The Investment Manager assesses new types of mortgage related securities as they
are developed and offered to determine their appropriateness for investment by
the relevant Fund.

ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES. To date, several types of
asset-backed and receivable-backed securities have been offered to investors,
including Certificates for Automobile Receivables ("CARssm") and interests in
pools of credit card receivables. CARssm represent undivided fractional
interests in a trust, the assets of which consist of a pool of motor vehicle
retail installment sales contracts and security interests in the vehicles
securing the contracts. Payments of principal and interest on CARssm are passed
through monthly to certificate holders and are guaranteed up to certain amounts
and for a certain time period by a letter of credit issued by a financial
institution unaffiliated with the trustee or originator of the trust.

An investor's return on CARssm may be affected by early prepayment of
principal on the underlying vehicle sales contracts. If the letter of credit is
exhausted, an investor may be prevented from realizing the full amount due on a
sales contract because of state law requirements and restrictions relating to
foreclosure sales of vehicles and the availability of deficiency judgments
following these sales; depreciation, damage or loss of a vehicle; and/or the
application of Federal and state bankruptcy and insolvency laws or other
factors. Certificate holders may experience delays in payment if the letter of
credit is exhausted.

<PAGE>

INVESTMENT RESTRICTIONS

Investment restrictions numbered 1 through 12 below have been adopted by
the Trust as fundamental policies of all of the Funds. Under the 1940 Act, a
fundamental policy may not be changed with respect to a Fund without the vote of
a majority of the outstanding voting securities (as defined in the 1940 Act) of
the Fund. Investment restrictions 13 and 14 may be changed by a vote of the
Board of Trustees at any time.

2. No Fund may lend its assets or money to other persons, except through
(a) purchasing debt obligations, (b) lending portfolio securities in an amount
not to exceed 30% of the Fund's total assets taken at market value, (c) entering
into repurchase agreements, (d) trading in financial futures contracts, index
futures contracts, securities indexes and options on financial futures
contracts, options on index futures contracts, options on securities and options
on securities indexes and (e) entering into variable rate demand notes.

3. No Fund may purchase securities (other than U.S. Government Obligations)
of any issuer if, as a result of the purchase, more than 5% of the Fund's total
assets would be invested in the securities of the issuer, except that up to 25%
of the value of the total assets of each non-money market Fund may be invested
without regard to this limitation. All securities of a foreign government and
its agencies will be treated as a single issuer for purposes of this
restriction.

4. No Fund may purchase more than 10% of the voting securities of any one
issuer, or more than 10% of the outstanding securities of any class of issuer,
except that (a) this limitation is not applicable to a Fund's investments in
U.S. Government Obligations and (b) up to 25% of the value of the assets of a
non-money market Fund may be invested without regard to these 10% limitations.
All securities of a foreign government and its agencies will be treated as a
single issuer for purposes of this restriction.

5. No Fund may invest more than 25% of the value of its total assets in
securities of issuers in any one industry. For purposes of this restriction, the
term industry will be deemed to include (a) the government of any one country
other than the United States, but not the U.S. Government and (b) all
supra-national organizations. In addition, securities held by the Money Market
Fund that are issued by domestic banks are excluded from this restriction.

12
<PAGE>

6. No Fund may underwrite any issue of securities, except to the extent
that the sale of portfolio securities in accordance with the Fund's investment
objective, policies and limitations may be deemed to be an underwriting, and
except that the Fund may acquire securities under circumstances in which, if the
securities were sold, the Fund might be deemed to be an underwriter for purposes
of the Securities Act of 1933, as amended.

7. No Fund may purchase or sell real estate or real estate limited
partnership interests, or invest in oil, gas or mineral leases, or mineral
exploration or development programs, except that a Fund may (a) invest in
securities secured by real estate, mortgages or interests in real estate or
mortgages, (b) purchase securities issued by companies that invest or deal in
real estate, mortgages or interests in real estate or mortgages, (c) engage in
the purchase and sale of real estate as necessary to provide it with an office
for the transaction of business or (d) acquire real estate or interests in real
estate securing an issuer's obligations in the event of a default by that
issuer.

8. No Fund may make short sales of securities or maintain a short position,
unless at all times when a short position is open, the Fund owns an equal amount
of the securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and equal
in amount to, the securities sold short.

9. No Fund may purchase securities on margin, except that a Fund may obtain
any short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with futures contracts, financial futures
contracts or related options, and options on securities, options on securities
indexes and options on currencies will not be deemed to be a purchase of
securities on margin by a Fund.

10. No Fund may invest in commodities, except that each non-money market
Fund may invest in futures contracts (including financial futures contracts,
index futures contracts or securities index futures contracts) and related
options and other similar contracts (including foreign currency forward, futures
and options contracts) as described in this Statement of Additional Information
and in each Prospectus.

11. No Fund may invest in companies for the purpose of
exercising control or management.

12. No Fund may issue senior securities except as otherwise permitted by
the 1940 Act and as otherwise permitted herein.

13. No Fund may purchase illiquid securities if more than 15% of the net
assets of the Fund would be invested in illiquid securities; the Money Market
Fund will not purchase illiquid securities. For purposes of this restriction,
illiquid securities are securities that cannot be disposed of by a Fund within
seven days in the ordinary course of business at approximately the amount at
which the Fund has valued the securities.

<PAGE>

14. No Fund may purchase restricted securities if more than 10% of the
total assets of the Fund would be invested in restricted securities. Restricted
securities are securities that are subject to contractual or legal restrictions
on transfer, excluding for purposes of this restriction, restricted securities
that are eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended ("Rule 144A Securities"), that have been determined to be
liquid by the Trust's Board of Trustees based upon the trading markets for the
securities.

The Trust may make commitments more restrictive than the restrictions
listed above with respect to a Fund to permit the sale of shares of the Fund in
certain states. Should the Trust determine that any such commitment is no longer
in the best interests of a Fund and its shareholders, the Trust will revoke the
commitment by terminating the sale of shares of the Fund in the state involved
or may otherwise modify its commitment based on a change in the state's
restrictions. The percentage limitations in the restrictions listed above apply
at the time of purchases of securities. For purposes of investment restriction
number 5, the Trust may use the industry classifications reflected by the S&P
500 Composite Stock Price Index, if applicable at the time of determination. For
all other portfolio holdings, the Trust may use the Directory of Companies
Required to File Annual Reports with the SEC and Bloomberg Inc. In addition, the
Trust may select its own industry classifications, provided such classifications
are reasonable.

PORTFOLIO TRANSACTIONS AND TURNOVER

Decisions to buy and sell securities for each Fund are made by the
Investment Manager, subject to review by the Trust's Board of Trustees.
Transactions on domestic stock exchanges and some foreign stock exchanges
involve the payment of negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary among different
brokers. On most foreign exchanges, commissions are fixed. No stated commission
will be generally applicable to securities traded in U.S. over-the-counter
markets, but the prices of those securities include undisclosed commissions or
mark-ups. The cost of securities purchased from underwriters include an
underwriting commission or concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's mark-up or mark-down. U.S.
Government Obligations generally will be purchased on behalf of a Fund from
underwriters or dealers, although certain newly issued U.S. Government
Obligations may be purchased directly from the U.S. Treasury or from the issuing
agency or instrumentality.

In selecting brokers or dealers to execute securities transactions on
behalf of a Fund, the Investment Manager seeks the best overall terms available.
In assessing the best overall terms available for any transaction, the
Investment Manager considers factors that it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In addition, the investment advisory agreement between the
Trust and the Investment Manager relating to a Fund authorizes the Investment
Manager, on behalf of the Fund, in selecting brokers or dealers to execute a
particular transaction, and in evaluating the best overall terms available, to

<PAGE>

consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
the Fund and/or other accounts over which the Investment Manager or its
affiliates exercise investment discretion. The fees under each investment
advisory agreement relating to a Fund will not be reduced by reason of the
Fund's receiving brokerage and research services. The Trust's Board of Trustees
periodically reviews the commissions paid by a Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits inuring to the Fund. Over-the-counter purchases and sales on
behalf of the Funds will be transacted directly with principal market makers
except in those cases in which better prices and executions may be obtained
elsewhere. A Fund will not purchase any security, including U.S. Government
Obligations, during the existence of any underwriting or selling group relating
to the security of which any affiliate of the Fund or the Investment Manager is
a member, except to the extent permitted under rules, interpretations or
exemptions of the SEC. The Investment Manager may select broker-dealers who are
affiliated with the Trust or the Investment Manager. The Investment Manager will
pay brokerage commissions to affiliates only if it believes that such
commissions are fair and reasonable.

The Money Market Fund may attempt to increase its yield by trading to take
advantage of short-term market variations, which trading would result in the
Fund's experiencing high portfolio turnover. Because purchases and sales of
money market instruments are usually effected as principal transactions,
however, this type of trading by the Money Market Fund will not result in the
Fund's paying higher brokerage commissions.

MANAGEMENT OF THE TRUST

TRUSTEES AND OFFICERS

The names of the Trustees and executive officers of the Trust, their
addresses and their principal occupations during the past five years and their
other affiliations are shown below. The executive officers of the Trust are
employees of organizations that provide services to the Funds. An asterisk
appears before the name of each Trustee who is an "interested person" of the
Trust, as defined in the 1940 Act.

POSITIONS HELD AGE AND PRINCIPAL
NAME AND ADDRESS WITH TRUST OCCUPATION(S) DURING PAST FIVE YEARS
- ---------------- ---------- ------------------------------------

*Michael J. Cosgrove+ Chairman of the Age 49. President, GE
3003 Summer Street Board and Investment Services Group
Stamford, CT 06905 President of GE Financial Assurance
Holdings, Inc. ("GEFA"), an indirect
wholly-owned subsidiary of General
Electric Company ("GE"), since February
1997; Executive Vice President - Mutual
Funds of GEIM and GEIC, wholly-owned
subsidiaries of GE that are registered

15
<PAGE>

POSITIONS HELD AGE AND PRINCIPAL
NAME AND ADDRESS WITH TRUST OCCUPATION(S) DURING PAST FIVE YEARS
- ---------------- ---------- ------------------------------------

as investment advisers under the
Investment Advisers Act of 1940, as
amended, since March 1993; Director of
GEIC and Executive Vice President and
Director of GEIM since 1988; from 1988
until 1993, Mr. Cosgrove served as
Executive Vice President - Finance and
Administration of GEIM and GEIC.

*Alan M. Lewis+ Trustee and Age 52. Executive Vice
3003 Summer Street Executive Vice President, General
Stamford, CT 06905 President Counsel and Secretary of
GEIM since 1988 and of GEIC since
October 1987.

John R. Costantino++ Trustee Age 52. Managing Director,
150 East 58th Street WaldenPartners, Ltd.,
New York, NY 10055 consultants and investors, since August
1992; President, CMG Acquisition Corp.,
Inc., a holding company, since 1988;
Vice Chairman, Acoustiguide Holdings,
Inc., a holding company, since 1989;
President CMG/IKH, Inc., a holding
company, since 1991; Director,
Crossland Federal Savings Bank, a
financial institution; Director,
Brooklyn Bankcorp, Inc., a financial
institution; Director, IK Holdings,
Inc., a holding company, since 1991;
Director, I. Kleinfeld & Son, Inc., a
retailer, since 1991; Director, High
Performance Appliances, Inc., a
distributor of kitchen appliances
("HPA"), since 1991; Director, HPA Hong
Kong, Ltd., a service subsidiary of
HPA, since 1991; Director, Lancit Media
Productions, Ltd., a children's and
family television film and videotape
production company, since 1995.

<PAGE>

POSITIONS HELD AGE AND PRINCIPAL
NAME AND ADDRESS WITH TRUST OCCUPATION(S) DURING PAST FIVE YEARS
- ---------------- ---------- ------------------------------------

William J. Lucas++ Trustee Age 51. Vice President
Fairfield University and Treasurer of
North Benson Road Fairfield University
Fairfield, CT 06430 since 1983.

Robert P. Quinn++ Trustee Age 62. Retired since
45 Shinnecock Road 1983 from Salomon
Quogue, NY 11959 Brothers Inc; Director,
GP Financial Corp., a holding company,
since 1994; Director, The Greenpoint
Savings Bank, a financial institution,
since 1987.

*Jeffrey A. Groh Treasurer Age 36. Vice President -
3003 Summer Street Operations of GEIM and
Stamford, CT 06905 GEIC since January 1997
and Treasurer and Controller of GEIM
and GEIC since August 1994; prior to
August 1994, Senior Manager in
Investment Company Services Group and
certified public accountant with Price
Waterhouse LLP.

*Matthew J. Simpson Secretary Age 37. Vice President
3003 Summer Street and General Counsel,
Stamford, CT 06905 Investment Services Group
of GEFA since February 1997; Vice
President, Associate General Counsel
and Assistant Secretary of GEIM and
GEIC since October 1992.

+ As of the date of this Statement of Additional Information, Mr. Cosgrove
serves as Trustee of four investment companies advised by GEIM, Mr. Lewis
serves as Trustee for three investment companies advised by GEIM and
Messrs. Cosgrove and Lewis serve as Trustees of eight investment companies
advised by GEIC. They are considered to be interested persons of each
investment company advised by GEIM or GEIC, as defined under Section
2(a)(19) of the 1940 Act, and, accordingly, serve as Trustees thereof
without compensation.

++ Messrs. Costantino, Lucas and Quinn serve as Trustees of four investment
companies advised by GEIM and receive compensation for their services as
Trustees of all companies.

No employee of GE or any of its affiliates receives any compensation from
the Trust for acting as a Trustee or officer of the Trust. Each Trustee of the
Trust who is not a director, officer or employee of GEIM, GE Investment
Distributors, Inc. (the "Distributor"), GE, or any affiliate of those companies,
receives an annual fee of $5,000 for services as Trustee. In

<PAGE>

addition, each Trustee receives $500 for each meeting of the Trust's Board of
Trustees attended by the Trustee and is reimbursed for expenses incurred in
connection with attendance at Board meetings.

COMPENSATION TABLE*

TOTAL COMPENSATION
FOR ALL INVESTMENT
TOTAL COMPENSATION COMPANIES MANAGED
NAME OF TRUSTEE FROM THE TRUST BY GEIM AND/OR GEIC
- --------------- -------------- -------------------
Michael J. Cosgrove None None
Alan M. Lewis None None
John R. Costantino $5,000 $25,000
William J. Lucas $5,000 $25,000
Robert P. Quinn $5,000 $25,000

- ----------

* The Trust has not yet completed a full fiscal year since its organization.
The amounts shown are estimates of future payments that will be received by
the Trustees for the fiscal year ended September 30, 1998. The Trustees
will not receive any pension or retirement benefits accrued as part of Fund
expenses.

INVESTMENT ADVISER AND ADMINISTRATOR

GEIM serves as the Trust's investment adviser and administrator. GEIM is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, and is located at 3003 Summer Street, Stamford, Connecticut 06905.
GEIM, which was formed under the laws of Delaware in 1988, is a wholly owned
subsidiary of GE. GEIM currently provides advisory services with respect to a
number of other mutual funds and private institutional accounts. The
professionals responsible for the investment operations of GEIM serve in similar
capacities with respect to GEIC, a sister company of GEIM wholly owned by GE,
which provides investment advisory services with respect to GE's pension and
benefit plans and a number of funds offered exclusively to GE employees,
retirees and certain related persons. These funds include the Elfun family of
Funds (the first of which, Elfun Trusts, was established in 1935) and the funds
offered as part of GE's 401(k) program (also known as the GE Savings and
Security Program), which are referred to as the GE S&S Program Mutual Fund and
the GE S&S Long Term Interest Fund. The investment professionals at GEIM and
GEIC and their predecessors have managed GE's pension assets since 1927. GEIM
and GEIC managed assets in excess of $75.5 billion as of March 31, 1998, of
which more than $14.9 billion was invested in mutual fund assets.

GEIM INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS

The duties and responsibilities of GEIM are specified in investment
advisory and administration agreements (each, an "Advisory Agreement" and
collectively, the "Advisory

<PAGE>

Agreements") between GEIM and the Trust on behalf of the respective Funds. Under
each Advisory Agreement, GEIM, subject to the supervision of the Trust's Board
of Trustees, provides a continuous investment program for the relevant Fund's
assets, including investment research and management. GEIM determines from time
to time what investments are purchased, retained or sold by the Fund and places
purchase and sale orders for the Fund's investments. GEIM provides the Trust
with all executive, administrative, clerical and other personnel necessary to
operate each Fund, and pays salaries and other employment-related costs of
employing these persons. GEIM furnishes the Trust and each Fund with office
space, facilities, and equipment and pays the day-to-day expenses related to the
operation of such space, facilities and equipment. GEIM, as administrator, also:
(a) maintains the books and records of each Fund; (b) prepares reports to
shareholders of each Fund; (c) prepares and files tax returns for each Fund; (d)
assists with the preparation and filing of reports and the Trust's registration
statement with the SEC; (e) provides appropriate officers for the Trust; (f)
provides administrative support necessary for the Board of Trustees to conduct
meetings; and (g) supervises and coordinates the activities of other service
providers, including independent auditors, legal counsel, custodians, accounting
service agents and transfer agents.

GEIM is generally responsible for employing sufficient staff and consulting
with other persons that it determines to be necessary or useful in the
performance of its obligations under each Advisory Agreement. Each Advisory
Agreement obligates GEIM to provide services in accordance with the relevant
Fund's investment objective, policies and restrictions as stated in the Trust's
current registration statement, as amended from time to time, and to keep the
Trust informed of developments materially affecting that Fund, including
furnishing the Trust with whatever information and reports the Board of Trustees
reasonably requests.

Except for those expenses assumed by a Fund as described below, GEIM bears
all of each Fund's expenses, including, but not limited to: charges and expense
of any registrar; the costs of custody, transfer agency and recordkeeping
services in connection with the Fund; registration costs of the Fund and its
shares under Federal and state securities laws; the cost and expense of
printing, including typesetting, and distributing of prospectuses describing the
Fund and supplements to those prospectuses to regulatory authorities and the
Fund's shareholders; all expenses incurred in conducting meetings of the Fund's
shareholders and meetings of the Board relating to the Fund, excluding fees paid
to members of the Board who are not affiliated with GEIM or any of its
affiliates; all expenses incurred in preparing, printing and mailing proxy
statements and reports to shareholders of the Fund; all expenses incident to any
dividend, withdrawal or redemption options provided to Fund shareholders;
charges and expenses of any outside service used for pricing the Fund's
portfolio securities and calculating the net asset value of the Fund's shares;
fees and expenses of legal counsel, including counsel to the members of the
Board who are not interested persons of the Fund, or GEIM, and independent
auditors; membership dues of industry associations; postage; insurance premiums
on property or personnel (including officers and Trustees) of the Trust that
inure to their benefit; and all other costs of the Fund's operations.

Each Fund will bear the following expenses: advisory and administration
fees described in that Fund's Advisory Agreement; shareholder servicing and
distribution fees

<PAGE>

under the terms of the shareholder servicing and distribution plan adopted by
the Trust with respect to the Fund pursuant to Rule 12b-1 under the 1940 Act;
brokerage fees and commissions and other expenses incurred in the acquisition or
disposition of any securities or other investments; fees and travel expenses of
members of the Board of Trustees or members of any advisory board or committee
who are not affiliated with GEIM, or any of its affiliates; and expenses that
are not normal operating expenses of the Fund (such as extraordinary expenses,
interest and taxes).

Each Advisory Agreement permits GEIM, subject to the approval of the Board
of Trustees and other applicable legal requirements, to enter into any advisory
or sub-advisory agreement with affiliated or unaffiliated entities whereby such
entity would perform some or all of GEIM's responsibilities under the Advisory
Agreement. In this event, GEIM remains responsible for ensuring that these
entities perform the services that each undertakes pursuant to a sub-advisory
agreement.

Each Advisory Agreement provides that GEIM may render similar advisory and
administrative services to other clients so long as when a Fund or any other
client served by GEIM are prepared to invest in or desire to dispose of the same
security, available investments or opportunities for sales will be allocated in
a manner believed by GEIM to be equitable to the Fund. The Advisory Agreements
also provide that GEIM shall not be liable for any error of judgment or mistake
of law or for any loss incurred by a Fund in connection with GEIM's services
pursuant to the Agreement, except for a loss resulting from willful misfeasance,
bad faith or gross negligence in the performance of its duties or from reckless
disregard of its obligations and duties under the Agreement.

Each Advisory Agreement is effective from its date of execution, and
continues in effect for an initial two-year term and will continue from year to
year thereafter so long as its continuance is approved annually by (a) the Board
of Trustees or (b) a vote of a majority of the relevant Fund's outstanding
voting securities, provided that in either event the continuance also is
approved by the vote of a majority of the Trustees who are not parties to the
Agreement or interested persons, as such term is defined in the 1940 Act, of any
party to the Agreement by a vote cast in person at meeting called for the
purpose of voting on such approval.

Each Advisory Agreement is not assignable and may be terminated without
penalty by either the Trust or GEIM upon no more than 60 days' nor less than 30
days' written notice to the other or by vote of holders of a majority of the
relevant Fund's outstanding voting securities.

GEIM INVESTMENT ADVISORY FEES

For its services to each Fund of the Trust, GEIM receives a monthly
advisory and administrative fee. The fee is deducted daily from the assets of
each of the Funds and paid to GEIM monthly. The advisory and administration fee
for each fund, except the S&P 500 Index Fund, declines incrementally as Fund
assets increase. This means that investors pay a reduced fee with respect to
Fund assets over a certain level or "breakpoint." The fees payable to GEIM are
based on the average daily net assets of each Fund at the following rates:

20
<PAGE>

AVERAGE DAILY ANNUAL RATE
NAME OF FUND NET ASSETS OF FUND PERCENTAGE (%)*
- ------------ ------------------ ---------------

Emerging Markets Fund First $50 million 1.05
Over $50 million .95

Premier Growth Equity Fund First $25 million .55
Mid-Cap Growth Fund Next $25 million .45
Value Equity Fund Over $50 million .35
U.S. Equity Fund

Small-Cap Value Fund First $25 million .70
Small-Cap Growth Fund Next $25 million .65
Over $50 million .60

Mid-Cap Value Fund First $25 million .60
Next $25 million .55
Over $50 million .50

International Equity Fund First $25 million .75
Next $50 million .65
Over $75 million .55

S&P 500 Index Fund All assets .15

Strategic Investment Fund First $25 million .45
High Yield Fund Next $25 million .40
Over $100 million .35

Income Fund First $25 million .35
Next $25 million .30
Next $50 million .25
Over $100 million .20

Money Market Fund First $25 million .25
Next $25 million .20
Next $50 million .15
Over $100 million .10

* From time to time, GEIM may waive advisory or administrative fees paid by a
Fund.

The Advisory Agreement does not contain any provisions prescribing limits
on the operating expenses of the Trust or any Fund.

21
<PAGE>

INVESTMENT SUB-ADVISERS

S&P 500 INDEX FUND. GEIM has retained State Street Global Advisors
("SSGA"), a division of State Street Bank and Trust Company ("State Street"), as
investment sub-adviser to the S&P 500 Index Fund. SSGA and State Street are
located at Two International Place, Boston, Massachusetts 02110. State Street is
a wholly-owned subsidiary of State Street Corporation, a publicly held bank
holding company. State Street, with over $475 billion under management as of
March 31, 1998, provides complete global investment management services from
offices in the United States, London, Sydney, Hong Kong, Tokyo, Montreal,
Luxembourg, Melbourne, Paris, Dubai, Munich and Brussels.

For SSGA's services, GEIM pays SSGA monthly compensation in the form of an
investment sub-advisory fee. The fee is paid by GEIM monthly and is a percentage
of the average daily net assets of the Fund at the annual rate of .05% of the
first $200 million, .04% of the next $200 million and .03% for all amounts over
$300 million.

SMALL-CAP VALUE FUND. Palisade Capital Management, L.L.C. ("Palisade"),
located at One Bridge Plaza, Fort Lee, New Jersey 07024, has been retained by
GEIM to act as an investment sub-adviser to the Small-Cap Value Fund. Although
Palisade has no previous experience managing mutual fund portfolios, Palisade
has managed various institutional and private accounts with total assets in
excess of $3 billion as of March 31, 1998.

For Palisade's services, GEIM pays Palisade monthly compensation in the
form of an investment sub-advisory fee. The fee is paid by GEIM monthly and is a
percentage of the average daily net assets of the Fund at the annual rate of
.35% of the first $200 million, .325% of the next $100 million and .30% for all
amounts over $300 million.

INVESTMENT SUB-ADVISORY AGREEMENTS

SSGA and Palisade serve as investment sub-advisers to the S&P 500 Index
Fund and the Small-Cap Value Fund, respectively, pursuant to investment
sub-advisory agreements with GEIM (the "Sub-Advisory Agreements"). Each of the
Sub-Advisory Agreements is not assignable and may be terminated without penalty
by either the investment sub-adviser or GEIM upon 60 days' written notice to the
other or by the Board of Trustees, or by the vote of a majority of the
outstanding voting securities of the Fund, on 60 days' written notice to the
investment sub-adviser. The Sub-Advisory Agreements provide that the investment
sub-adviser may render similar sub-advisory services to other clients so long as
the services that it provides under the Agreement are not impaired thereby. The
Sub-Advisory Agreements also provide that the investment sub-adviser shall not
be liable for any error of judgment or mistake of law or for any loss incurred
by the Fund in connection with the investment sub-adviser's services pursuant to
the Sub-Advisory Agreement, except for a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties or
from reckless disregard of its obligations and duties under the Sub-Advisory
Agreement.

22
<PAGE>

SECURITIES ACTIVITIES OF THE INVESTMENT MANAGER

Securities held by the Funds also may be held by other funds or separate
accounts for which the Investment Manager or GEIC acts as an adviser. Because of
different investment objectives or other factors, a particular security may be
bought by the Investment Manager or GEIC for one or more of their clients, when
one or more other clients are selling the same security. If purchases or sales
of securities for a Fund or other client of the Investment Manager or GEIC arise
for consideration at or about the same time, transactions in such securities
will be made, insofar as feasible, for the Fund and other clients in a manner
deemed equitable to all. To the extent that transactions on behalf of more than
one client of the Investment Manager or GEIC during the same period may increase
the demand for securities being purchased or the supply of securities being
sold, there may be an adverse effect on price.

On occasions when the Investment Manager (under the supervision of the
Board of Trustees) deems the purchase or sale of a security to be in the best
interests of the Trust as well as other funds or accounts it may, to the extent
permitted by applicable laws and regulations, but will not be obligated to,
aggregate the securities to be sold or purchased for the Trust with those to be
sold or purchased for other funds or accounts in order to obtain favorable
execution and low brokerage commissions. In that event, allocation of the
securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Investment Manager in the manner it considers
to be most equitable and consistent with its fiduciary obligations to the Trust
and to such other funds or accounts. In some cases this procedure may adversely
affect the size the position obtainable for a Fund.

SHAREHOLDER SERVICING AND DISTRIBUTION PLAN

The Trust's Board of Trustees adopted a Shareholder Servicing and
Distribution Plan with respect to the Trust's Service Class shares pursuant to
Rule 12b-1 under the 1940 Act (the "Plan"). Under the Plan, the Trust pays GEIM,
with respect to the Service Class shares of each Fund, an annual fee of .25% of
the value of the average daily net assets attributed to such Service Class
shares. The shareholder servicing and distribution fee is intended to (a)
compensate GEIM, or enable GEIM to compensate other persons ("Service
Providers"), for providing ongoing servicing and/or maintenance of the accounts
of Service Class shareholders of a Fund and (b) compensate GEIM, or enable GEIM
to compensate Service Providers (including any distributor of Service Class
shares of the Fund), for providing services primarily intended to result in, or
are primarily attributable to, the sale of Service Class shares.

The Plan was approved by the sole initial shareholder of the Trust. Under
its terms, the Plan continues from year to year, provided its continuance is
approved annually by vote of the Trust's full Board of Trustees, as well as by a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan ("Independent Trustees"). The Plan may not be
amended to increase materially the amount of the fees paid under the Plan with
respect to a Fund without approval of Service Class shareholders of the Fund. In

23
<PAGE>

addition, all material amendments of the Plan must be approved by the Trustees
and Independent Trustees in the manner described above. The Plan may be
terminated with respect to a Fund at any time, without penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Service Class shares of that Fund (as
defined in the 1940 Act).

CUSTODIAN AND TRANSFER AGENT

State Street, located at 225 Franklin Street, Boston, Massachusetts 02101,
serves as custodian and transfer agent of the Funds' investments. Under its
custodian contract with the Trust, State Street is authorized to appoint one or
more banking institutions as sub-custodians of assets owned by each Fund. For
its custody services, State Street receives monthly fees charged to the Funds
based upon the month-end, aggregate net asset value of the Funds, plus certain
charges for securities transactions. The assets of the Trust are held under bank
custodianship in accordance with the 1940 Act. As transfer agent, State Street
is responsible for processing redemption requests and crediting dividends to the
accounts of shareholders of the Funds.

DISTRIBUTOR

GE Investment Distributors, Inc. (formerly known as GE Investment Services
Inc.), located at 777 Long Ridge Road, Building B, Stamford, Connecticut 06927,
serves as the distributor of shares of the Funds on a best efforts basis.

REDEMPTION OF SHARES

Detailed information on how to redeem shares of a Fund is included in each
Prospectus. The right of redemption of shares of a Fund may be suspended or the
date of payment postponed (a) for any periods during which the NYSE is closed
(other than for customary weekend and holiday closings), (b) when trading in the
markets the Fund normally utilizes is restricted, or an emergency, as defined by
the rules and regulations of the SEC, exists, making disposal of a Fund's
investments or determination of its net asset value not reasonably practicable
or (c) for such other periods as the SEC by order may permit for the protection
of the Fund's shareholders.

INVESTMENT SWITCHES

As described in the Prospectuses, a shareholder of the Investment Class of
a Fund may exchange such shares for Investment Class shares of another Fund or
for Service Class shares of the same or another Fund ("Investment Switches").
Likewise, shareholders of the Service Class shares of a Fund may exchange such
shares for Service Class shares of another Fund or for Investment Class shares
of the same or another Fund. Upon receipt of proper instructions and all
necessary supporting documents, and provided the Fund is an available option,
the shareholder meets the minimum investment requirement for the Fund that is
the "target" of the Investment Switch, and such Fund may be legally sold in the
shareholder's state of residence, shares subject to an Investment Switch would
be redeemed at the then-current net asset value

<PAGE>

and the proceeds would be immediately invested in shares of the class being
acquired. The Trust reserves the right to reject any request for an Investment
Switch and may, upon 60 days' prior written notice to a Fund's shareholders,
terminate the Investment Switch privilege.

NET ASSET VALUE

The Trust will not calculate net asset value on certain holidays
(currently, those holidays when the NYSE is closed). On those days, securities
held by a Fund may nevertheless be actively traded, and the value of the Fund's
shares could be significantly affected.

Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of the net asset value of a
class of a Fund may not take place contemporaneously with the determination of
the prices of many of its portfolio securities used in the calculation. A
security that is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for the security.
All assets and liabilities of the Funds initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean between the bid and
offered quotations of the currencies against U.S. dollars as last quoted by any
recognized dealer. If these quotations are not available, the rate of exchange
will be determined in good faith by the Trust's Board of Trustees. In carrying
out the Board's valuation policies, GEIM may consult with one or more
independent pricing services (each, a "Pricing Service") retained by the Trust.

Debt securities of U.S. issuers (other than U.S. Government Obligations and
short-term investments), including Municipal Obligations, are valued by a dealer
or by a pricing service based upon a computerized matrix system, which considers
market transactions and dealer supplied valuations. Valuations for municipal
bonds are obtained from a qualified municipal bond pricing service; prices
represent the mean of the secondary market. GEIM, under the general supervision
and responsibility of the Board of Trustees, periodically reviews the procedures
of the Pricing Service.

Under Rule 2a-7 of the 1940 Act, the Money Market Fund's portfolio
securities may be valued based upon amortized cost, which does not take into
account unrealized capital gains or losses. Amortized cost valuation involves
initially valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the effect of
fluctuating interest rates on the market value of the instrument. Although this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Money Market Fund would receive if it sold the instrument.

The use of the amortized cost method of valuing the portfolio securities of
the Money Market Fund is permitted by a Rule 2a-7 under the 1940 Act. Under this
rule, the Money Market Fund must maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase only instruments having remaining
maturities of 397 days or less, and invest only in eligible securities as
defined in the rule, which are determined by GEIM to present minimal

<PAGE>

credit risks. Pursuant to the rule, GEIM has established procedures designed to
stabilize, to the extent reasonably possible, the Fund's price per share as
computed for the purpose of sales and redemptions at $1.00. These procedures
include review of the Money Market Fund's portfolio holdings at such intervals
as GEIM may deem appropriate, to determine whether the Fund's net asset value
calculated by using available market quotations or market equivalents deviates
from $1.00 per share based on amortized cost.

The rule regarding amortized cost valuation provides that the extent of any
deviation between the Money Market Fund's net asset value based upon available
market quotations or market equivalents and the $1.00 per share net asset value
based on amortized cost must be examined by the Trust's Board of Trustees. In
the event the Board of Trustees determines that a deviation exists that may
result in material dilution or other unfair results to investors or existing
shareholders of the Money Market Fund, the Board of Trustees must, in accordance
with the rule, cause the Fund to take such corrective action as the Board of
Trustees regards as necessary and appropriate, including: selling portfolio
instruments of the Fund prior to maturity to realize capital gains or losses or
to shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
establishing a net asset value per share by using available market quotations.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Set forth below is a summary of certain Federal income tax considerations
generally affecting the Funds and their shareholders. The summary is not
intended as a substitute for individual tax planning, and shareholders are urged
to consult their tax advisors regarding the application of Federal, state, local
and foreign tax laws to their specific tax situations.

TAX STATUS OF THE FUNDS AND THEIR SHAREHOLDERS

Each Fund is treated as a separate entity for Federal income tax purposes.
Each Fund's net investment income and capital gains distributions are determined
separately from any other series that the Trust may designate.

The Trust intends for each Fund to continue to qualify each year as a
"regulated investment company" under the Code. If a Fund (a) is a regulated
investment company and (b) distributes to its shareholders at least 90% of its
net investment income (including for this purpose its net realized short-term
capital gains) and 90% of its tax-exempt interest income (reduced by certain
expenses), the Fund will not be liable for Federal income tax to the extent that
its net investment income and its net realized long-term and short-term capital
gains, if any, are distributed to its shareholders. In addition, in order to
avoid a 4% excise tax, a Fund must declare, no later than December 31 and
distribute no later than the following January 31, at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital gain net
income for the year period ending on October 31 of such calendar year. One
requirement for qualification as a regulated investment company is that each
Fund must diversify its holdings so that, at the end of each quarter, (a) at
least 50% of the market value of the Fund's assets is represented by cash and
cash items, securities of other regulated investment companies, U.S. Government
Obligations and other securities, with such other

<PAGE>

securities limited for purposes of this calculation in respect of any one issuer
to an amount not greater than 5% of the value of the Fund's assets and not
greater than 10% of the outstanding voting securities of such issuer, and (b)
not more than 25% of the value of its total assets is invested in the securities
of any one issuer or of two or more issuers that are controlled by the Fund
(within the meaning of Section 851(b)(3)(B) of the Code) that are engaged in the
same or similar trades or businesses or related trades or businesses (other than
U.S. Government Obligations or the securities of other regulated investment
companies).

The requirements for qualification as a regulated investment company also
include a significant rule as to investment results. A Fund must earn at least
90% of its gross income from dividends, interest, payments with respect to
securities loans, gains from the disposition of stock or securities (including
gains from related investments in foreign currencies) and income (including
gains from options, futures or forward contracts) derived with respect to its
business of investing in such stocks, securities or currencies (the "90% Income
Test").

Dividends and distributions paid by the Income Fund [, the High Yield Fund]
and the Money Market Fund, and distributions of capital gains paid by all the
Funds, will not qualify for the Federal dividends-received deduction for
corporations. Dividends paid by the Premier Fund, the Small-Cap Value Fund, [the
Small-Cap Growth Fund, the Mid-Cap Value Fund,] the U.S. Equity Fund, the
Mid-Cap Growth Fund, the Strategic Fund, the S&P 500 Index Fund, the
International Fund, the Emerging Markets Fund and the Value Equity Fund, to the
extent derived from dividends attributable to certain types of stock issued by
U.S. corporations, will qualify for the dividends-received deduction for
corporations. Some states, if certain asset and diversification requirements are
satisfied, permit shareholders to treat their portions of a Fund's dividends
that are attributable to interest on U.S. Treasury securities and certain U.S.
Government Obligations as income that is exempt from state and local income
taxes. Dividends attributable to repurchase agreement earnings are, as a general
rule, subject to state and local taxation.

Net investment income or capital gains earned by the Funds investing in
foreign securities may be subject to foreign income taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries that entitle the Funds to a reduced rate of tax or exemption from tax
on this related income and gains. The effective rate of foreign tax cannot be
determined at this time since the amount of these Funds' assets to be invested
within various countries is not now known. The Trust intends that the Funds seek
to operate so as to qualify for treaty-reduced rates of tax when applicable. In
addition, if a Fund qualifies as a regulated investment company under the Code,
if certain distribution requirements are satisfied, and if more than 50% of the
value of the Fund's assets at the close of the taxable year consists of stocks
or securities of foreign corporations, the Trust may elect, for U.S. Federal
income tax purposes, to treat foreign income taxes paid by the Fund that can be
treated as income taxes under U.S. income tax principles as paid by its
shareholders. The International Fund and the Emerging Markets Fund each
anticipates that it will seek to qualify for and make this election in most, but
not necessarily all, of its taxable years. If a Fund were to make an election,
an amount equal to the foreign income taxes paid by the Fund would be included
in the income of its shareholders and the shareholders would be entitled to
credit their

<PAGE>

portions of this amount against their U.S. tax liabilities, if any, or to deduct
those portions from their U.S. taxable income, if any. Shortly after any year
for which it makes an election, the Trust will report to the shareholders of the
Fund, in writing, the amount per share of foreign tax that must be included in
each shareholder's gross income and the amount that will be available as a
deduction or credit. No deduction for foreign taxes may be claimed by a
shareholder who does not itemize deductions. Certain limitations will be imposed
on the extent to which the credit (but not the deduction) for foreign taxes may
be claimed.

A Fund's transactions in options and futures contracts are subject to
special provisions of the Code that, among other things, may affect the
character of gains and losses realized by the Fund (that is, may affect whether
gains or losses are ordinary or capital), accelerate recognition of income to
the Fund and defer losses of the Fund. These rules (a) could affect the
character, amount and timing of distributions to shareholders of a Fund, (b)
will require the Fund to "mark to market" certain types of the positions in its
portfolio (that is, treat them as if they were closed out) and (c) may cause the
Fund to recognize income without receiving cash with which to make distributions
in amounts necessary to satisfy the distribution requirements for avoiding
income and excise taxes described above and in the Prospectuses. The Trust seeks
to monitor transactions of each Fund, will seek to make the appropriate tax
elections on behalf of the Fund and seeks to make the appropriate entries in the
Fund's books and records when the Fund acquires any option, futures contract or
hedged investment, to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.

As a general rule, a shareholder's gain or loss on a sale or redemption of
shares of a Fund will be a long-term capital gain or loss if the shareholder has
held the shares for more than one year. The gain or loss will be a short-term
capital gain or loss if the shareholder has held the shares for one year or
less.

A Fund's net realized long-term capital gains are distributed as described
in the Prospectuses. The distributions ("capital gain dividends"), if any, are
taxable to a shareholder of a Fund as long-term capital gains, regardless of how
long a shareholder has held the shares, and will be designated as capital gain
dividends in a written notice mailed by the Trust to the shareholders of the
Fund after the close of the Fund's prior taxable year. If a shareholder receives
a capital gain dividend with respect to any share of a Fund, and if the share is
sold before it has been held by the shareholder for six months or less, then any
loss on the sale or exchange of the share, to the extent of the capital gain
dividend, will be treated as a long-term capital loss. Investors considering
buying shares of a Fund on or just prior to the record date for a taxable
dividend or capital gain distribution should be aware that the amount of the
dividend or distribution payment will be a taxable dividend or distribution
payment.

Special rules contained in the Code apply when a shareholder of a Fund
disposes of shares of the Fund through a redemption or exchange within 90 days
of purchase and subsequently acquires shares of a Fund on which a sales charge
normally is imposed without paying a sales charge in accordance with the
exchange privilege described in each Prospectus. In these cases, any gain on the
disposition of the shares of the Fund will be increased, or loss

<PAGE>

decreased, by the amount of the sales charge paid when the shares were acquired,
and that amount will increase the adjusted basis of the shares of the Fund
subsequently acquired. In addition, if shares of a Fund are purchased within 30
days of redeeming shares at a loss, the loss will not be deductible and instead
will increase the basis of the newly purchased shares.

If a shareholder of a Fund fails to furnish the Trust with a correct
taxpayer identification number, fails to report fully dividend or interest
income, or fails to certify that he or she has provided a correct taxpayer
identification number and that he or she is not subject to backup withholding,
then the shareholder may be subject to a 31% "backup withholding" tax with
respect to (a) taxable dividends and distributions from the Fund and (b) the
proceeds of any redemptions of shares of the Fund. An individual's taxpayer
identification number is his or her social security number. The 31% backup
withholding tax is not an additional tax and may be credited against a
taxpayer's regular Federal income tax liability.

THE FUNDS' PERFORMANCE

The Trust, from time to time, may quote a Fund's performance, in terms of a
class' yield and/or total return, in reports or other communications to
shareholders of the Fund or in advertising material. Additional information
regarding the manner in which performance figures are calculated is provided
below.

PERFORMANCE CALCULATION

YIELD

From time to time, the Trust may publish the yield and effective yield of
each class of shares of the Money Market Fund in advertisements, sales
literature or reports to shareholder. "Current yield" is based upon the income
that a hypothetical investment in a class of shares of the Fund would earn over
a stated seven-day period. This amount is then "annualized," by assuming that
the amount of investment income generated over that week is generated each week
over a 52-week period and is shown as a percentage of the investment. The Money
Market Fund's "effective yield" is calculated similarly, but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. For
any stated period, the effective yield is slightly higher than the current yield
because of the compounding effect of this presumed reinvestment.

The yield for the Money Market Fund is computed by (a) determining the net
change in the value of a hypothetical preexisting account in the Fund having a
balance of one share at the beginning of a seven-calendar-day period for which
yield is to be quoted, (b) dividing the net change by the value of the account
at the beginning of the period to obtain the base period return, and (c)
annualizing the results (that is, multiplying the base period return by 365/7).
The net change in the value of the account reflects the value of additional
shares purchased with dividends declared on the original share and any such
additional shares, but does not include realized gains and losses or unrealized
appreciation and depreciation. In addition, the Trust may calculate a compound
effective annualized yield by adding one to the base period

29
<PAGE>

return (calculated as described above), raising the sum to a power equal to
365/7 and subtracting one.

A Fund's yield is calculated using a standardized formula the income
component of which is computed from the yields to maturity of all debt
obligations in the Fund's portfolio based on the market value of such
obligations (with all purchases and sales of securities during such period
included in the income calculation on a settlement date basis). Yield quotations
will be computed based on a 30-day period by dividing (a) the net income based
on the yield to maturity of each security earned during the period by (b) the
average daily number of shares outstanding during the period that were entitled
to receive dividends multiplied by the offering price per share on the last day
of the period.

The 30-day yield figure is calculated for a class according to a formula
prescribed by the SEC. The formula can be expressed as follows:

Yield = 2[(a-b + 1)(Superior)6-1]
---
cd

Where:

a = dividends and interest earned during the period.

b = expenses accrued for the period (net of reimbursement).

c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.

d = the maximum offering price per share on the last day
of the period.

For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations that were purchased by a Fund at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect changes
in the market values of the debt obligations.

Investors should recognize that, in periods of declining interest rates,
the yield will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yield will tend to be somewhat lower. In
addition, when interest rates are falling, moneys received by a Fund from the
continuous sale of its shares will likely be invested in portfolio instruments
producing lower yields than the balance of the Fund's portfolio, thereby
reducing the current yield of the Fund. In periods of rising interest rates, the
opposite result can be expected to occur.

Yield information is useful in reviewing the performance of a Fund, but
because yields fluctuate, this information cannot necessarily be used to compare
an investment in shares of the Fund with bank deposits, savings accounts and
similar investment alternatives that often provide an agreed or guaranteed fixed
yield for a stated period of time. Shareholders of a

<PAGE>

Fund should remember that yield is a function of the kind and quality of the
instruments in the Fund's portfolio, portfolio maturity, operating expenses and
market conditions.

TOTAL RETURN

From time to time, the Trust may advertise a Fund's "average annual total
return," which represents the average annual compounded rates of return over
one-, five- and ten-year periods, or other periods, or over the life of the Fund
(as stated in the advertisement) for each class of shares of a Fund. This total
return figure shows an average percentage change in value of an investment in
the Fund from the beginning date of the measuring period to the ending date of
the period, reflects changes in the price of a class of shares and assumes that
any income, dividends and/or capital gains distributions made by the Fund during
the period are reinvested. When considering average annual total return figures
for periods longer than one year, investors should note that a Fund's annual
total return for any one year in the period might have been greater or less than
the average for the entire period.

The Trust may use "aggregate total return" in advertisements, which
represents the cumulative change in value of an investment in a class of shares
of a Fund for a specific period, and which reflects changes in the Fund's share
price and reinvestment of dividends and distributions. Aggregate total return
may be shown by means of schedules, charts or graphs, and may indicate subtotals
of the various components of total return (that is, the change in value of
initial investment, income dividends and capital gains distributions). Because
there is a .25% shareholder servicing fee imposed on the Service Class shares,
the total returns for each of the Investment Class and the Service Class will
differ. Aggregate total return data reflects compounding over a longer period of
time than does annual total return data, and therefore aggregate total return
will be higher.

The Trust also may advertise the actual annual and annualized total return
performance data for various periods of time, which may be shown by means of
schedules, charts or graphs. Actual annual or annualized total return data
generally will be lower than average annual total return data, because the
latter reflects compounding of return.

AVERAGE ANNUAL TOTAL RETURN COMPUTATION:

The "average annual total return" figures for the Funds described in the
Prospectuses are computed for a class according to a formula prescribed by the
SEC. The formula can be expressed as follows:

31
<PAGE>

P(1 + T)(Superior)n = ERV

Where P = a hypothetical initial payment of $1,000;

T = average annual total return;

n = number of years; and

ERV = Ending Redeemable Value of a hypothetical $1,000 investment made at
the beginning of a 1-, 5- or 10-year period at the end of a 1-, 5- or 10-year
period (or fractional portion thereof), assuming reinvestment of all dividends
and distributions.

The ERV assumes complete redemption of the hypothetical investment at the
end of the measuring period.

AGGREGATE TOTAL RETURN COMPUTATION:

The "aggregate total return" figures described in the Prospectuses
represent the cumulative change in the value of an investment in a class for the
specified period are computed by the following formula:

Aggregate Total Return = ERV - P
-------
P

Where P = a hypothetical initial payment of $1,000; and

ERV = Ending Redeemable Value of a hypothetical $1,000 investment
made at the beginning of a 1-, 5- or 10-year period at the end of
the 1-, 5- or 10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and distributions.

Yield and total return figures are based on historical earnings and are not
intended to indicate future performances.

DISTRIBUTION RATE

The Trust may advertise a Fund's distribution rate and/or effective
distribution rate. A Fund's distribution rate differs from yield and total
return and therefore is not intended to be a complete measure of performance.

A Fund's distribution rate measures dividends distributed for a specified
period. A Fund's distribution rate is computed by dividing the most recent
monthly distribution per share annualized by the current net asset value per
share. A Fund's effective distribution rate is computed by dividing the
distribution rate by the ratio used to annualize the distribution and
reinvesting the resulting amount for a full year on the basis of such ratio. The
effective distribution rate will be higher than the distribution rate because of
the compounding effect of the assumed reinvestment. A Fund's yield is calculated
using the standardized formula

<PAGE>

described above. In contrast, the distribution rate is based on the Fund's last
monthly distribution, which tends to be relatively stable and may be more or
less than the amount of net investment income and short-term capital gain
actually earned by the Fund during the month.

COMPARATIVE PERFORMANCE INFORMATION

In addition, the Trust may from time to time publish performance of a Fund
relative to certain performance rankings and indices. In particular, the Trust
may compare or contrast the Fund's performance with: (a) the performance of
other mutual funds as listed in the rankings prepared by Lipper Analytical
Services, Inc. or similar independent services that monitor the performance of
mutual funds, (b) various unmanaged indices, including the Russell Index, S&P
500 Index, 90 Day U.S. Treasury Index, Lehman Brothers Aggregate Bond Index,
Morgan Stanley Capital International EAFE Index and the Dow Jones Industrial
Average or (c) other appropriate indexes of investment securities or with data
developed by GEIM derived from those indices.

The performance information also may include evaluations of a Fund
published by nationally recognized ranking services and by financial
publications that are nationally recognized, such as Barron's, BusinessWeek,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance, Money
Magazine, Morningstar Mutual Fund Values, The New York Times, The Wall Street
Journal and USA Today. These ranking services or publications may compare a
Fund's performance to, or rank it within, a universe of mutual funds with
investment objectives and policies similar, but not necessarily identical to,
the Fund's. Such comparisons or rankings are made on the basis of several
factors, including, the Fund's objectives and policies, management style and
strategy, and portfolio composition, and may change over time if any of those
factors change.

PRINCIPAL STOCKHOLDERS

As of the date of this Statement of Additional Information, General
Electric Capital Assurance Company ("GECA"), located at 6604 West Broad Street,
Richmond, Virginia 23230, an indirect subsidiary of GE, owned 100% of the
outstanding shares of the Premier Growth Fund, the Value Equity Fund and the
Strategic Fund. The shares were issued to GECA for providing the initial seed
capital to these Funds. So long as GECA owns more than 25% of the outstanding
voting securities of the Premier Growth Fund, the Value Equity Fund and the
Strategic Fund, it may be deemed to control each of these Funds.

The following person are the only persons known by the Trust to hold
beneficially more than 5% of the outstanding Investment Class shares of the
following Funds as of July 1, 1998:

33
<PAGE>

AMOUNT OF
NAME AND ADDRESS OF RECORD OWNER OWNERSHIP PERCENT OF CLASS
- -------------------------------- --------- ----------------

EMERGING MARKETS FUND (INVESTMENT CLASS)

Saxon & Co. 650,331 87.54%
FBO Leaseway Transport shares
ABC Trust Institutional Service
200 Stevens Dr. - Suite 260
Lester, PA 19113-1522

Defined Benefit Plans Master Trust 77,059 10.37%
Agreement between MRA Sys. Inc. & shares
State Street Bank & Trust
c/o Joe Mays
1 Newmann Way J-103
Evendale, OH 45215

MID-CAP GROWTH FUND (INVESTMENT CLASS)

Saxon & Co. 1,295,107 87.19%
FBO Leaseway Transport shares
ABC Trust Institutional Service
200 Stevens Dr. - Suite 260
Lester, PA 19113-1522

Defined Benefit Plans Master Trust 150,877 10.16%
Agreement between MRA Sys. Inc. & shares
State Street Bank & Trust
c/o Joe Mays
1 Newmann Way J-103
Evendale, OH 45215

INTERNATIONAL FUND (INVESTMENT CLASS)

AID Association for Lutherans 4,851,926 42.52%
Ron Anderson Trustee shares
Attn: David J. Schnarsky
4321 N. Ballard Rd.
Appleton, WI 54919

Saxon & Co. 3,115,689 27.31%
FBO Leaseway Transport shares
ABC Trust Institutional Service
200 Stevens Dr. - Suite 260
Lester, PA 19113-1522

34
<PAGE>

AMOUNT OF
NAME AND ADDRESS OF RECORD OWNER OWNERSHIP PERCENT OF CLASS
- -------------------------------- --------- ----------------

AID Association for Lutherans 1,473,401 12.91%
Ron Anderson Trustee shares
Attn: David J. Schnarsky
4321 N. Ballard Rd.
Appleton, WI 54919

AID Association for Lutherans 982,962 8.61%
Ron Anderson Trustee shares
Attn: David J. Schnarsky
4321 N. Ballard Rd.
Appleton, WI 54919

U.S. EQUITY FUND (INVESTMENT CLASS)

Saxon & Co. 8,510,730 78.34%
FBO Leaseway Transport shares
ABC Trust Institutional Service
200 Stevens Dr. - Suite 260
Lester, PA 19113-1522

GELCO Corp. DBA GE Capital Fleet Svc. 1,344,827 12.38%
Norwest Bank N A shares
Attn: Mutual Funds
510 Marquette, Suite 500
Minneapolis, MN 55402-1118

Defined Benefit Plans Master Trust 836,457 7.70%
Agreement between MRA Sys. Inc. & shares
State Street Bank & Trust
c/o Joe Mays
1 Newmann Way J-103
Evendale, OH 45215

S&P 500 INDEX FUND (INVESTMENT CLASS)

Saxon & Co. 1,729,946 93.06%
FBO Leaseway Transport shares
ABC Trust Institutional Services
200 Stevens Dr. - Suite 260
Lester, PA 19113-1522

35
<PAGE>

AMOUNT OF
NAME AND ADDRESS OF RECORD OWNER OWNERSHIP PERCENT OF CLASS
- -------------------------------- --------- ----------------

Defined Benefit Plans Master Trust 104,907 5.64%
Agreement Between MRA Sys Inc. & shares
State Street Bank & Trust
c/o Joe Mays
1 Newmann Way J-103
Evendale, OH 45215

INCOME FUND (INVESTMENT CLASS)

Saxon & Co. 5,001,252 72.96%
FBO Leaseway Transport shares
ABC Trust Institutional Service
200 Stevens Dr. - Suite 260
Lester, PA 19113-1522

GELCO Corp. DBA GE Capital Fleet Svc. 1,006,644 14.68%
Norwest Bank N A shares
Attn: Mutual Funds
510 Marquette, Suite 500
Minneapolis, MN 55402-1118

Defined Benefit Plans Master Trust 709,742 10.35%
Agreement Between MRA Sys. Inc. & shares
State Street Bank & Trust
c/o Joe Mays
1 Newmann Way J-103
Evendale, OH 45215

MONEY MARKET FUND (INVESTMENT CLASS)

Saxon & Co. 4,516,026 64.65%
FBO Leaseway Transport shares
ABC Trust Institutional Service
200 Stevens Dr. - Suite 260
Lester, PA 19113-1522

Defined Benefit Plans Master Trust 2,074,409 29.70%
Agreement Between MRA Sys. Inc. & shares
State Street Bank & Trust
c/o Joe Mays
1 Newmann Way J-103
Evendale, OH 45215

36
<PAGE>

AMOUNT OF
NAME AND ADDRESS OF RECORD OWNER OWNERSHIP PERCENT OF CLASS
- -------------------------------- --------- ----------------

Information Alliance Co. 384,843 5.51%
Gary L. Kriechbaum shares
877 South St.
Pittsfield, MA 01201-8229

As of July 1, 1998: (i) the current Trustees and officers of each Fund, as
a group, beneficially owned less than 1% of each Fund's outstanding shares; (ii)
Leaseway Transportation Corp. owned 87.54%, 87.19%, 27.31%, 78.34%, 93.06%,
72.96% and 64.65% of the outstanding shares of the Emerging Markets Fund,
Mid-Cap Growth Fund, International Fund, U.S. Equity Fund, S&P 500 Index Fund,
Income Fund and Money Market Fund, respectively; (iii) AID Association for
Lutherans owned 64.10% of the outstanding shares of the International Fund; and
(iv) MRA Systems, Inc. owned 29.70% of the outstanding shares of the Money
Market Fund. So long as the above entities own more than 25% of the outstanding
shares of the Funds noted, they may be deemed to control these Funds.

ADDITIONAL INFORMATION

SHARES OF BENEFICIAL INTEREST

The Trust was organized as an unincorporated business trust under the laws
of Delaware pursuant to a Certificate of Trust dated May 23, 1997, as amended
from time to time. The Trust's Declaration of Trust, dated August 29, 1997 (the
"Declaration of Trust") permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest of the Trust par value $.001
per share. Under the Declaration of Trust, the Trustees have the authority to
create and classify shares of beneficial interest in separate series, without
further action by shareholders. The Emerging Markets Fund, Premier Growth Fund,
Mid-Cap Growth Fund, International Fund, Value Equity Fund, U.S. Equity Fund,
S&P 500 Index Fund, Strategic Fund, Income Fund and Money Market Fund were
established as series of the Trust on November 13, 1997. The Small-Cap Value
Fund, Small-Cap Growth Fund, Mid-Cap Value Fund and High Yield Fund were added
as series of the Trust on May 8, 1998. Additional series may be added in the
future. The Declaration of Trust also authorizes the Trustees to classify and
reclassify the shares of the Trust, or new series of the Trust, into one or more
classes. As of the date of this Statement of Additional Information, the
Trustees have authorized the issuance of two classes of shares of the Funds,
designated as the Investment Class shares and the Service Class shares. State
Street maintains a record of each shareholder's ownership of shares of a Fund.
The shares of each class of each Fund represent an equal proportionate interest
in the aggregate net assets attributable to that class of that Fund. Holders of
Service Class shares have certain exclusive voting rights on matters relating to
the Plan. The different classes of the Fund may bear different expenses relating
to the cost of holding shareholder meetings necessitated by the exclusive voting
rights of any class of shares. In the interest of economy and convenience,
certificates representing shares of a Fund are not physically issued.

37
<PAGE>

Dividends paid by each Fund, if any, with respect to each class of shares
will be calculated in the same manner, at the same time and on the same day and
will be in the same amount, except for differences resulting from the facts
that: (a) the distribution and service fees relating to Service Class shares
will be borne exclusively by that class; and (b) each of the Service Class
shares and the Investment Class shares will bear any other class expenses
properly allocable to such class of shares, subject to the requirements imposed
by the Internal Revenue Service on funds having a multiple-class structure.
Similarly, the NAV per share may vary depending on whether Service Class shares
or Investment Class shares are purchased. In the event of liquidation,
shareholders of each class of each Fund are entitled to share pro rata in the
net assets of the class of the Fund available for distribution to these
shareholders. Shares entitle their holders to one vote per share, are freely
transferable and have no preemptive, subscription or conversion rights. When
issued, shares are fully paid and non-assessable.

Unless otherwise required by the 1940 Act or the Declaration of Trust, the
Trust has no intention of holding annual meetings of shareholders. Fund
shareholders may remove a Trustee by the affirmative vote of at least two-thirds
of the Trust's outstanding shares and the Trustees shall promptly call a meeting
for such purpose when requested to do so in writing by the record holders of not
less than 10% of the outstanding shares of the Trust.

Generally, Delaware business trust shareholders are not personally liable
for obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act ("DBTA") provides that a shareholder of a Delaware business
trust shall be entitled to the same limitation of liability extended to
shareholders of private for-profit corporations. The Declaration expressly
provides that the Trust has been organized under the DBTA and that the
Declaration is to be governed by and interpreted in accordance with Delaware
law. It is nevertheless possible that a Delaware business trust, such as the
Trust, might become a party to an action in another state whose courts refuse to
apply Delaware law, in which case the Trust's shareholders could possibly be
subject to personal liability.

To guard against this risk, the Declaration: (a) contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides that notice of such disclaimer may be given in each agreement,
obligation and instrument entered into or executed by the Trust or its Trustees,
(b) provides for the indemnification out of Trust property of any shareholders
held personally liable for any obligations of the Trust or any Fund, and (c)
provides that the Trust shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust and satisfy
any judgment thereon. Thus, the risk of a shareholder incurring financial loss
beyond his or her investment because of shareholder liability is limited to
circumstances in which all of the following factors are present: (a) a court
refuses to apply Delaware law; (b) the liability arose under tort law or, if
not, no contractual limitation of liability was in effect; and (c) the Trust
itself would be unable to meet its obligations. In the light of DBTA, the nature
of the Trust's business, and the nature of its assets, the risk of personal
liability to a shareholder is remote.

<PAGE>

LIMITATION OF TRUSTEE AND OFFICER LIABILITY

The Declaration further provides that the Trust shall indemnify each of its
Trustees and officers against liabilities and expenses reasonably incurred by
them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Trust.
The Declaration does not authorize the Trust to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.

LIMITATION OF INTERSERIES LIABILITY

All persons dealing with a Fund must look solely to the property of that
particular Fund for the enforcement of any claims against that Fund, as neither
the Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of a Fund or the Trust. No Fund is liable for
the obligations of any other Fund.

COUNSEL

Sutherland, Asbill & Brennan LLP, 1275 Pennsylvania Avenue, N.W.,
Washington, D.C. 20004-2404 serves as counsel for the Trust.

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts
02110, serves as independent accountants of the Trust.

FINANCIAL STATEMENTS

The Trust recently commenced operations and has not been in operation long
enough to have generated an Annual Report. The audited Balance Sheet with
respect to the Trust's initial capitalization and the Report of the Independent
Accountants dated October 15, 1997 is incorporated herein by reference to pages
F-1 and F-2, respectively, of the Trust's statement of additional information
filed as part of pre-effective amendment number two to the Trust's registration
statement on November 7, 1997. The Trust's Semi-Annual Report dated March 31,
1998, which either accompanies this Statement of Additional Information or has
previously been provided to the person to whom this Statement of Additional
Information is being sent, is incorporated herein by reference. The Trust will
furnish, without charge, a copy of the Semi-Annual Report and Annual Report (the
latter, when issued) upon request to the Trust at P.O. Box 120065, Stamford, CT
06912-0065, (800) 493-3042.

39
<PAGE>

APPENDIX

DESCRIPTION OF RATINGS

COMMERCIAL PAPER RATINGS

The rating A-1+ is the highest, and A-1 the second highest commercial paper
rating assigned by S&P. Paper rated A-1+ must have either the direct credit
support of an issuer or guarantor that possesses excellent long-term operating
and financial strength combined with strong liquidity characteristics
(typically, such issuers or guarantors would display credit quality
characteristics that would warrant a senior bond rating of AA or higher) or the
direct credit support of an issuer or guarantor that possesses above average
long-term fundamental operating and financing capabilities combined with ongoing
excellent liquidity characteristics. Paper rated A-1 must have the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated A or better; the issuer has access to at least
two additional channels of borrowing; basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned. Capacity for timely payment on issues rated A-2 is satisfactory.
However, the relative degree of safety is not as high as issues designated
"A-1."

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (a) evaluation of the management of the issuer; (b) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks that may be inherent in certain areas; (c) evaluation of
the issuer's products in relation to competition and customer acceptance; (d)
liquidity; (e) amount and quality of long-term debt; (f) trend of earnings over
a period of ten years; (g) financial strength of parent company and the
relationships that exist with the issue; and (h) recognition by the management
of obligations that may be present or may arise as a result of public interest
questions and preparations to meet the obligations.

Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This normally will be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Short-term obligations, including commercial paper, rated A-1+ by IBCA
Limited or its affiliate IBCA Inc. are obligations supported by the highest
capacity for timely repayment. Obligations rated A-1 have a very strong capacity
for timely repayment. Obligations rated A-2 have a strong capacity for timely
repayment, although that capacity may be susceptible to adverse changes in
business, economic and financial conditions.

Fitch Investors Services, Inc. employs the rating F-1+ to indicate issues
regarded as having the strongest degree of assurance of timely payment. The
rating F-1 reflects an assurance of timely payment only slightly less in degree
than issues rated F-1+, while the

A-1

<PAGE>

rating F-2 indicates a satisfactory degree of assurance of timely payment
although the margin of safety is not as great as indicated by the F-1+ and F-1
categories.

Duff & Phelps Inc. employs the designation of Duff 1 with respect to top
grade commercial paper and bank money instruments. Duff 1+ indicates the highest
certainty of timely payment: short-term liquidity is clearly outstanding and
safety is just below risk-free U.S. Treasury short-term obligations. Duff 1-
indicates high certainty of timely payment. Duff 2 indicates good certainty of
timely payment; liquidity factors and company fundamentals are sound.

Thompson BankWatch Inc. employs the rating TBW-1 to indicate issues having
a very high degree of likelihood of timely payment. TBW-2 indicates a strong
degree of safety regarding timely payment, however, the relative degree of
safety is not as high as for issues rated TBW-1. While the rating TBW-3
indicates issues that are more susceptible to adverse developments than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate. The lowest rating category is TBW-4; this
rating is regarded as non-investment grade and, therefore, speculative.

Various NRSROs utilize rankings within ratings categories indicated by a
plus or minus sign. The Funds, in accordance with industry practice, recognize
such ratings within categories or gradations, viewing for example S&P's ratings
of A-1+ and A-1 as being in S&P's highest rating category.

DESCRIPTION OF S&P CORPORATE BOND RATINGS

AAA -- This is the highest rating assigned by S&P to a bond and indicates
an extremely strong capacity to pay interest and repay principal.

AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.

A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB -- Bonds rated BBB have an adequate capacity to pay interest and repay
principal. Adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay principal for bonds in
this category (even though they normally exhibit adequate protection parameters)
than for bonds in higher rated categories.

BB, B and CCC -- Bonds rated BB and B are regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB represents a lower
degree of speculation than B, and CCC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

A-2
<PAGE>

To provide more detailed indications of credit quality, the ratings from AA
to B may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS

Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.

A -- Bonds that are rated A possess favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds that are rated Baa are considered as medium-grade obligations,
that is, they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds that are rated B generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa -- Bonds that are rated Caa are of poor standing. These issues may be
in default, or present elements of danger may exist with respect to principal or
interest.

Moody's applies numerical modifiers (1, 2 and 3) with respect to the bonds
rated Aa through B, The modifier 1 indicates that the bond being rated ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.

A-3
<PAGE>

DESCRIPTION OF S&P MUNICIPAL BOND RATINGS

AAA -- Prime -- These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.

General Obligation Bonds -- In a period of economic stress, the issuers
will suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements. Quality of
management appears superior.

Revenue Bonds -- Debt service coverage has been, and is expected to remain,
substantial. Stability of the pledged revenues is also exceptionally strong due
to the competitive position of the municipal enterprise or to the nature of the
revenues. Basic security provisions (including rate covenant, earnings test for
issuance of additional bonds, debt service reserve requirements) are rigorous.
There is evidence of superior management.

AA -- High Grade -- The investment characteristics of bonds in this group
are only slightly less marked than those of the prime quality issues. Bonds
rated AA have the second strongest capacity for payment of debt service.

A -- Good Grade -- Principal and interest payments on bonds in this
category are regarded as safe although the bonds are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
bonds in higher rated categories. This rating describes the third strongest
capacity for payment of debt service. The ratings differ from the two higher
ratings of municipal bonds, because:

General Obligations Bonds -- There is some weakness, either in the local
economic base, in debt burden, in the balance between revenues and expenditures,
or in quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.

Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.

BBB -- Medium Grade -- Of the investment grade ratings, this is the lowest.
Bonds in this group are regarded as having an adequate capacity to pay interest
and repay principal. Adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category (even though they normally exhibit adequate
protection parameters) than for bonds in higher rated categories.

General Obligation Bonds -- Under certain adverse conditions, several of
the above factors could contribute to a lesser capacity for payment of debt
service. The difference between A and BBB ratings is that the latter shows more
than one fundamental weakness, or

A-4

<PAGE>

one very substantial fundamental weakness, whereas, the former shows only one
deficiency among the factors considered.

Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly being
subject to erosion over time. Basic security provisions are no more than
adequate. Management performance could be stronger.

BB, B, CCC and CC -- Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB includes
the lowest degree of speculation and CC the highest degree of speculation. While
these bonds will likely have some quality and protective characteristics, these
characteristics are outweighed by large uncertainties or major risk exposures to
adverse conditions.

C -- The rating C is reserved for income bonds on which no interest is
being paid.

D -- Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.

S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.

DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS

Municipal notes with maturities of three years or less are usually given
note ratings (designated SP-1, -2 or -3) to distinguish more clearly the credit
quality of notes as compared to bonds. Notes rated SP-1 have a very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given the designation of SP-1+.
Notes rated SP-2 have satisfactory capacity to pay principal and interest.

DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS

Aaa -- Bonds that are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there

A-5

<PAGE>

may be other elements present that make the long-term risks appear somewhat
larger than in Aaa securities.

A -- Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds that are rated Baa are considered as medium grade obligations,
that is, they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

B -- Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa -- Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca -- Bonds that are rated Ca represent obligations that are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

C -- Bonds that are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's applies the numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic ratings category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic ratings category.

DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS

Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG 1/VMIG 1 are the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both. Loans bearing the designation MIG 2/VMIG 2 are of high
quality, with margins of

A-6

<PAGE>

protection ample, although not as large as the preceding group. Loans bearing
the designation MIG 3/VMIG3 are of favorable quality, with all security elements
accounted for but lacking the undeniable strength of the higher grades. Market
access for refinancing, in particular, is likely to be less well established.
Loans bearing the designation MIG 4/VMIG 4 are of adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.

A-7
<PAGE>
PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

FINANCIAL STATEMENTS:

Included in Part A:

Financial Highlights for the following periods:

From November 21, 1997 (inception date) to March 31, 1998
for the Investment Class shares of the Income Fund.

From November 25, 1997 (inception date) to March 31, 1998
for the Investment Class shares of the Emerging Markets,
International Equity, U.S. Equity, Mid-Cap Growth, and
S&P 500 Index Funds.

From December 2, 1997 (inception date) to March 31, 1998
for the Investment Class shares of the Money Market Fund.

Included in Part B:

(1) Financial Highlights for the periods set forth above
under "Included in Part A" (Investment Class shares
only).*

(2) Statements of Assets and Liabilities at March 31, 1998
(Investment Class shares only).*

(3) Statements of Operations for the periods ended March 31, 1998
(Investment Class shares only).*

(4) Statements of Changes in Net Assets for the periods ended
March 31, 1998 (Investment Class shares only).*

(5) Schedules of Investments at March 31, 1998 (unaudited).*

(6) Audited Balance Sheet with respect to Registrant's initial
capitalization.**

(7) Report of Independent Accountants dated October 15, 1997.**

- --------------

* Incorporated into the Statement of Additional Information by reference to
GE Institutional Funds' Semi-Annual Report dated March 31, 1998.

** Incorporated into the Statement of Additional Information by reference to
pre-effective amendment number two to GE Institutional Funds' Form N-1A
registration statement (File Nos. 333-29337; 811-08257).

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<PAGE>

(b) EXHIBITS:

Exhibit No. Description of Exhibit
----------- ----------------------

1(a) Certificate of Trust, incorporated herein by
reference to Exhibit 1(a) to GE Institutional Funds'
("Registrant") Form N-1A registration statement (File
Nos. 333-29337; 811-08257) (the "Registration
Statement") filed with the Securities and Exchange
Commission (the "Commission") on June 16, 1997.

1(b) Amended and Restated Declaration of Trust
dated June 2, 1998 is filed herewith.

2 Inapplicable.

3 Inapplicable.

4 Inapplicable.

5(a) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Emerging Markets
Fund, and GE Investment Management Incorporated
("GEIM") is incorporated herein by reference to
Exhibit 5(a) to pre-effective amendment number two to
the Registration Statement, filed with the Commission
on November 7, 1997.

5(b) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Premier Growth
Equity Fund, and GEIM is incorporated herein by
reference to Exhibit 5(b) to pre-effective amendment
number two to the Registration Statement, filed with
the Commission on November 7, 1997.

5(c) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Mid-Cap Growth
Fund, and GEIM is incorporated herein by reference to
Exhibit 5(c) to pre-effective amendment number two to
the Registration Statement, filed with the Commission
on November 7, 1997.

5(d) Investment Advisory and Administration Agreement
between Registrant, on behalf of the International
Equity Fund, and GEIM is incorporated herein by
reference to Exhibit 5(d) to pre-effective amendment
number two to the Registration Statement, filed with
the Commission on November 7, 1997.

C-3
<PAGE>

5(e) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Value Equity
Fund, and GEIM is incorporated herein by reference to
Exhibit 5(e) to pre-effective amendment number two to
the Registration Statement, filed with the Commission
on November 7, 1997.

5(f) Investment Advisory and Administration Agreement
between Registrant, on behalf of the U.S. Equity
Fund, and GEIM is incorporated herein by reference to
Exhibit 5(f) to pre-effective amendment number two to
the Registration Statement, filed with the Commission
on November 7, 1997.

5(g) Investment Advisory and Administration Agreement
between Registrant, on behalf of the S&P 500 Index
Fund, and GEIM is incorporated herein by reference to
Exhibit 5(g) to pre-effective amendment number two to
the Registration Statement, filed with the Commission
on November 7, 1997.

5(h) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Strategic
Investment Fund, and GEIM is incorporated herein by
reference to Exhibit 5(h) to pre-effective amendment
number two to the Registration Statement, filed with
the Commission on November 7, 1997.

5(i) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Income Fund, and
GEIM is incorporated herein by reference to Exhibit
5(i) to pre-effective amendment number two to the
Registration Statement, filed with the Commission on
November 7, 1997.

5(j) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Money Market
Fund, and GEIM is incorporated herein by reference to
Exhibit 5(j) to pre-effective amendment number two to
the Registration Statement, filed with the Commission
on November 7, 1997.

5(k) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Small-Cap
Growth Equity Fund, and GEIM is filed herewith.

C-4
<PAGE>

5(l) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Small-Cap Value
Equity Fund, and GEIM is filed herewith.

5(m) Investment Advisory and Administration Agreement
between Registrant, on behalf of the Mid-Cap Value
Equity Fund, and GEIM is filed herewith.

5(n) Investment Advisory and Administration Agreement
between Registrant, on behalf of the High Yield Fund
and GEIM, is filed herewith.

5(o) Sub-Advisory Agreement between GEIM and State Street
Bank and Trust Company ("State Street") is
incorporated herein by reference to Exhibit 5(k) to
pre-effective amendment number two to the
Registration Statement, filed with the Commission on
November 7, 1997.

5(p) Sub-Advisory Agreement between GEIM and
Registrant, on behalf of the Small-Cap Value
Equity Fund, and Palisade Capital Management,
L.L.C. is filed herewith.

6(a) Distribution Agreement between Registrant and GE
Investment Services Inc. is incorporated herein by
reference to Exhibit 6(a) to pre-effective
amendment number two to the Registration
Statement, filed with the Commission on November
7, 1997.

6(b) Shareholder Servicing and Distribution Agreement
between Registrant and GEIM is incorporated herein by
reference to Exhibit 6(b) to pre-effective amendment
number two to the Registration Statement, filed with
the Commission on November 7, 1997.

7 Inapplicable.

8 Custodian Contract is incorporated herein by
reference to the Form N-1A registration statement
of GE Investments Funds, Inc. (File Nos. 2-91369;
811-4041), filed with the Commission on October
24, 1997.

9 Transfer Agency and Service Agreement between
Registrant and State Street is incorporated herein
by reference to Exhibit 9 to pre-effective
amendment number two to the Registration
Statement, filed with the Commission on November
7, 1997.

C-5
<PAGE>

10 Opinion and consent of Sutherland, Asbill & Brennan L.L.P.
is filed herewith.

11 Consent of PricewaterhouseCoopers LLP is filed herewith.

12 Inapplicable.

13 Purchase Agreement between Registrant and General Electric
Capital Assurance Company is incorporated herein by
reference to Exhibit 13 to pre-effective amendment number
two to the Registration Statement, filed with the Commission
on November 7, 1997.

14 Inapplicable.

15 Shareholder Servicing and Distribution Plan Adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act") is incorporated herein by reference
to Exhibit 15 to pre-effective amendment number two to the
Registration Statement, filed with the Commission on
November 7, 1997.

16 Schedule of Computation of Performance Quotations is filed
herewith.

17 Financial Data Schedules are filed herewith.

18 Multiple Class Plan for Registrant adopted pursuant to Rule
18f-3 under the 1940 Act is incorporated herein by reference
to Exhibit 18 to pre-effective amendment number two to the
Registration Statement, filed with the Commission on
November 7, 1997.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

The list required by this Item 25 of persons controlled by or under common
control with Registrant, which includes the subsidiaries of General Electric
Company ("GE"), is incorporated herein by reference to Exhibit

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<PAGE>

21, "Subsidiaries of Registrant," of the Form 10-K filed by GE pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (SEC File
No. 1-35) for the fiscal year ended December 31, 1997 (the "Form 10-K").
Additional information about persons controlled by or under common control with
Registrant is incorporated herein by reference to pages 10-12 of the Form 10-K,
beginning under the caption "GECs Segments."

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

Number of Record Holders
Title of Class as of July 1, 1998*
-------------- ------------------

Shares of Beneficial Interest, Par Value $0.001 per share

Emerging Markets Fund (Investment Class) Five (5)

Emerging Markets Fund (Service Class) One (1)

Premier Growth Equity Fund (Investment Class) One (1)

Premier Growth Equity Fund (Service Class) One (1)

Small-Cap Value Equity Fund (Investment Class) None

Small-Cap Value Equity Fund (Service Class) None

Mid-Cap Growth Fund (Investment Class) Five (5)

Mid-Cap Growth Fund (Service Class) One (1)

International Equity Fund (Investment Class) Ten (10)

International Equity Fund (Service Class) One (1)

Value Equity Fund (Investment Class) One (1)

Value Equity Fund (Service Class) One (1)

U.S. Equity Fund (Investment Class) Six (6)

U.S. Equity Fund (Service Class) One (1)

S&P 500 Index Fund (Investment Class) Five (5)

S&P 500 Index Fund (Service Class) One (1)

Strategic Investment Fund (Investment Class) One (1)

Strategic Investment Fund (Service Class) One (1)

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<PAGE>

Income Fund (Investment Class) Six (6)

Income Fund (Service Class) One (1)

Money Market Fund (Investment Class) Five (5)

Money Market Fund (Service Class) One (1)

Small-Cap Growth Equity Fund (Investment Class) None

Small-Cap Growth Equity Fund (Service Class) None

Mid-Cap Value Equity Fund (Investment Class) None

Mid-Cap Value Equity Fund (Service Class) None

High Yield Fund (Investment Class) None

High Yield Fund (Service Class) None

* General Electric Capital Assurance Company owns 100% of the Service Class
shares of each Fund (except the Small-Cap Value Equity Fund, the Small-Cap
Growth Equity Fund, the Mid-Cap Value Equity Fund and the High Yield Fund)
and all of the Investment Class Shares of the Premier Growth Equity Fund,
the Value Equity Fund and the Strategic Investment Fund.

ITEM 27. INDEMNIFICATION

As a Delaware business trust, the operations of Registrant are governed by
its Amended and Restated Declaration of Trust dated June 2, 1998 (the
"Declaration of Trust"). Generally, Delaware business trust shareholders are not
personally liable for obligations of the Delaware business trust under Delaware
law. The Delaware Business Trust Act (the DBTA) provides that a shareholder of a
trust shall be entitled to the same limitation of liability extended to
shareholders of private for-profit Delaware corporations. Registrant's
Declaration of Trust expressly provides that it has been organized under the
DBTA and that the Declaration of Trust is to be governed by Delaware law. It is
nevertheless possible that a Delaware business trust, such as Registrant, might
become a party to an action in another state whose courts refuse to apply
Delaware law, in which case Registrant's shareholders could be subject to
personal liability.

To protect Registrant's shareholders against the risk of personal
liability, the Declaration of Trust: (i) contains an express disclaimer of
shareholder liability for acts or obligations of Registrant and provides that
notice of such disclaimer may be given in each agreement, obligation and
instrument entered into or executed by Registrant or its Trustees; (ii) provides
for the indemnification out of Trust property of any shareholders held
personally liable for any obligations of Registrant or any series of Registrant;
and (iii) provides that Registrant shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation

C-8
<PAGE>

of Registrant and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss beyond his or her investment because of shareholder
liability is limited to circumstances in which all of the following factors are
present: (i) a court refuses to apply Delaware law; (ii) the liability arose
under tort law or, if not, no contractual limitation of liability was in effect;
and (iii) Registrant itself would be unable to meet its obligations. In the
light of Delaware law, the nature of Registrant's business and the nature of its
assets, the risk of personal liability to a shareholder is remote.

The Declaration of Trust further provides that Registrant shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of Registrant. The Declaration of Trust does not authorize Registrant to
indemnify any Trustee or officer against any liability to which he or she would
otherwise be subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification may
be against public policy as expressed in the Act and may be, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or paid
by a Trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such Trustee, officer
or controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Reference is made to "Management of the Trust" in the Prospectus forming
Part A, and "The Management of the Trust" in the Statement of Additional
Information forming Part B, of this Registration Statement.

The list required by this Item 28 of officers and directors of GEIM, the
Funds' investment adviser, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by those
officers and directors during the past two years, is incorporated herein by
reference to Schedules A and D of the Form ADV filed by GEIM pursuant to the
Investment Advisers Act of 1940, as amended (SEC File No. 801-31947).

C-9
<PAGE>

The list required by this Item 28 of officers and directors of State Street
Global Advisors ("SSGA"), the investment sub-adviser to the S&P 500 Index Fund,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by those officers and directors
during the past two years, is incorporated herein by reference to Schedules A
and D of the Form ADV filed by SSGA pursuant to the Investment Advisers Act of
1940, as amended (SEC File No. 801-49368).

The list required by this Item 28 of officers and directors of Palisade
Capital Management, L.L.C. (Palisade), the investment sub-adviser to the
Small-Cap Value Equity Fund, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by those
officers and directors during the past two years, is incorporated herein by
reference to Schedules A and D of the Form ADV filed by Palisade pursuant to the
Investment Advisers Act of 1940, as amended (SEC File No. 801-48401).

ITEM 29. PRINCIPAL UNDERWRITERS

(a) GE Investment Distributors, Inc. ("GEID") also serves as distributor
for the investment portfolios of GE Funds, GE Investments Funds, Inc. and GE
LifeStyle Funds and for Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun
Global Fund, Elfun Money Market Fund, Elfun Trusts and Elfun Diversified Fund.

(b) The information required by this Item 29 with respect to each director
and officer of GEID is incorporated herein by reference to Schedule A of Form BD
filed by GEID pursuant to the Securities Exchange Act of 1934, as amended (SEC
File No. 8-45710).

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the 1940 Act, and the rules thereunder,
are maintained at the offices of: Registrant located at 3003 Summer Street,
Stamford, Connecticut 06905; 777 Long Ridge Road, Stamford, Connecticut 06927;
State Street, Registrant's custodian and transfer agent, located at 225 Franklin
Street, Boston, Massachusetts 02101; and National Financial Data Services Inc.,
an indirect subsidiary of State Street, located at P.O. Box 419631, Kansas, MO
64141-6631.

ITEM 31. MANAGEMENT SERVICES

Inapplicable.

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<PAGE>

ITEM 32. UNDERTAKINGS

(a) Inapplicable.

(b) Inapplicable.

(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.

(d) Registrant undertakes to call a meeting of the shareholders of each
Fund for the purpose of voting upon the question of removal of a trustee or
trustees of Registrant when requested in writing to do so by the holders of at
least 10% of Registrant's outstanding shares and, in connection with the
meeting, to comply with the provisions of Section 16(c) of the 1940 Act relating
to communications with the shareholders of certain common-law trusts.

C-11
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, Registrant certifies that it
meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933,
as amended, and has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 24th day of July, 1998.

By: /s/ MICHAEL J. COSGROVE
---------------------------
Michael J. Cosgrove
President and Chairman
of the Board

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to Registrant's Registration Statement on Form N-1A has been
signed below by the following persons in the capacities and on the dates
indicated.

Signature Title Date
- --------- ----- ----

/s/ MICHAEL J. COSGROVE Trustee, President and July 24, 1998
- -------------------------- Chairman of the Board
Michael J. Cosgrove (Chief Executive Officer)

/s/ JOHN R. COSTANTINO Trustee July 24, 1998
- ------------------------
John R. Costantino

/s/ ALAN M. LEWIS Trustee July 24, 1998
- -----------------
Alan M. Lewis

/s/ WILLIAM J. LUCAS Trustee July 24, 1998
- --------------------
William J. Lucas

/s/ ROBERT P. QUINN Trustee July 24, 1998
- -------------------
Robert P. Quinn

/s/ JEFFREY A. GROH Treasurer July 24, 1998
- ------------------- (Chief Financial and
Jeffrey A. Groh Accounting Officer)

<PAGE>

EXHIBIT INDEX

EX-99.B1(b) Amended and Restated Declaration of Trust dated June 2, 1998

EX-99.B5(k) Investment Advisory and Administration Agreement between
Registrant, on behalf of the Small-Cap Growth Equity Fund, and
GEIM

EX-99.B5(l) Investment Advisory and Administration Agreement between
Registrant, on behalf of the Small-Cap Value Equity Fund, and
GEIM

EX-99.B5(m) Investment Advisory and Administration Agreement between
Registrant, on behalf of the Mid-Cap Value Equity Fund, and GEIM

EX-99.B5(n) Investment Advisory and Administration Agreement between
Registrant, on behalf of the High Yield Fund, and GEIM

EX-99.B5(p) Sub-Advisory Agreement between GEIM and Registrant, on behalf of
the Small-Cap Value Equity Fund, and Palisade Capital Management,
L.L.C.

EX-99.B10 Opinion and consent of Sutherland, Asbill & Brennan L.L.P.

EX-99.B11 Consent of PricewaterhouseCoopers LLP

EX-99.B16 Schedule of PricewaterhouseCoopers LLP

EX-99.B27 Financial Data Schedules

EXHIBIT 99.B1(b)

AMENDED AND RESTATED
DECLARATION OF TRUST

GE INSTITUTIONAL FUNDS

June 2, 1998

<PAGE>

TABLE OF CONTENTS

ARTICLE 1 Name and Definitions 1
Section 1.1. NAME 1
Section 1.2. DEFINITIONS 2

ARTICLE 2 Nature and Purpose of Trust 3
Section 2.1. NATURE OF TRUST 3
Section 2.2. PURPOSE OF TRUST 3
Section 2.3. INTERPRETATION OF DECLARATION OF TRUST 3
Section 2.3.1. GOVERNING INSTRUMENT 3
Section 2.3.2. NO WAIVER OF COMPLIANCE WITH APPLICABLE LAW 3
Section 2.3.3. POWER OF THE TRUSTEES GENERALLY 3

ARTICLE 3 Registered Agent; Offices 3
Section 3.1. REGISTERED AGENT 3
Section 3.2. OFFICES 3

ARTICLE 4 Shares of Beneficial Interest 4
Section 4.1. SHARES OF BENEFICIAL INTEREST 4
Section 4.2. NUMBER OF AUTHORIZED SHARES 4
Section 4.3. OWNERSHIP AND CERTIFICATION OF SHARES 4
Section 4.4. STATUS OF SHARES 4
Section 4.4.1. FULLY PAID AND NON-ASSESSABLE 4
Section 4.4.2. PERSONAL PROPERTY 4
Section 4.4.3. PARTY TO DECLARATION OF TRUST 4
Section 4.4.4. DEATH OF SHAREHOLDER 5
Section 4.4.5. TITLE TO TRUST; RIGHT TO ACCOUNTING 5
Section 4.5. DETERMINATION OF SHAREHOLDERS 5
Section 4.6. SHARES HELD BY TRUST 5
Section 4.7. SHARES HELD BY PERSONS RELATED TO TRUST 5
Section 4.8. PREEMPTIVE AND APPRAISAL RIGHTS 5
Section 4.9. SERIES AND CLASSES OF SHARES 6
Section 4.9.1. GENERALLY 6
Section 4.9.2. ESTABLISHMENT AND DESIGNATION 6
Section 4.9.3. CONVERSION RIGHTS 6
Section 4.9.4. SEPARATE AND DISTINCT NATURE 6
Section 4.9.5. RIGHTS AND PREFERENCES OF SERIES 6
Section 4.9.5.1. ASSETS AND LIABILITIES
"BELONGING" TO A SERIES 7

2
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Section 4.9.5.2. TREATMENT OF PARTICULAR ITEMS 7
Section 4.9.5.3. LIMITATION ON INTERSERIES LIABILITIES 7
Section 4.9.5.4. DIVIDENDS 8
Section 4.9.5.5. REDEMPTION BY SHAREHOLDER 8
Section 4.9.5.6. REDEMPTION BY TRUST 8
Section 4.9.5.7. PREVENTION OF PERSONAL HOLDING
COMPANY STATUS 9
Section 4.9.5.8. NET ASSET VALUE 9
Section 4.9.5.9. MAINTENANCE OF STABLE NET ASSET VALUE 9
Section 4.9.5.10. TRANSFER OF SHARES 9
Section 4.9.5.11. EQUALITY OF SHARES 10
Section 4.9.5.12. FRACTIONAL SHARES 10
Section 4.9.6. RIGHTS AND PREFERENCES OF CLASSES 10

ARTICLE 5 Trustees 11
Section 5.1. MANAGEMENT OF THE TRUST 11
Section 5.2. QUALIFICATION 11
Section 5.3. NUMBER 11
Section 5.4. TERM AND ELECTION 11
Section 5.5. COMPOSITION OF THE BOARD OF TRUSTEES 11
Section 5.6. RESIGNATION AND RETIREMENT 12
Section 5.7. REMOVAL 12
Section 5.8. VACANCIES 12
Section 5.9. OWNERSHIP OF ASSETS OF THE TRUST 12
Section 5.10. POWERS 13
Section 5.10.1. BYLAWS 13
Section 5.10.2. OFFICERS, AGENTS, AND EMPLOYEES 13
Section 5.10.3. COMMITTEES 13
Section 5.10.3.1. GENERALLY 13
Section 5.10.3.2. EXECUTIVE COMMITTEE 13
Section 5.10.4. ADVISERS, ADMINISTRATORS, DEPOSITORIES,
AND CUSTODIANS 14
Section 5.10.5. COMPENSATION 14
Section 5.10.6. DELEGATION OF AUTHORITY 14
Section 5.10.7. SUSPENSION OF SALES 14
Section 5.11. CERTAIN ADDITIONAL POWERS 14
Section 5.11.1. INVESTMENTS 14
Section 5.11.2. DISPOSITION OF ASSETS 14
Section 5.11.3. OWNERSHIP 15
Section 5.11.4. SUBSCRIPTION 15

<PAGE>

Section 5.11.5. PAYMENT OF EXPENSES 15
Section 5.11.6. FORM OF HOLDING 15
Section 5.11.7. REORGANIZATION, CONSOLIDATION, OR MERGER 15
Section 5.11.8. COMPROMISE 15
Section 5.11.9. PARTNERSHIPS 15
Section 5.11.10. BORROWING 15
Section 5.11.11. GUARANTEES 16
Section 5.11.12. INSURANCE 16
Section 5.11.13. INDEMNIFICATION 16
Section 5.11.14. PENSIONS 16
Section 5.12. MEETINGS AND VOTE OF TRUSTEES 16
Section 5.12.1. REGULAR MEETINGS 16
Section 5.12.2. SPECIAL MEETINGS 16
Section 5.12.3. TELEPHONIC MEETINGS 17
Section 5.12.4. QUORUM 17
Section 5.12.5. REQUIRED VOTE 17
Section 5.12.6. CONSENT IN LIEU OF A MEETING 17

ARTICLE 6 Officers 17
Section 6.1. ENUMERATION 17
Section 6.2. QUALIFICATION 17
Section 6.3. ELECTION 18
Section 6.4. TERM OF OFFICE 18
Section 6.5. POWERS 18
Section 6.6. TITLES AND DUTIES 18
Section 6.6.1. CHAIRPERSON OF THE BOARD; PRESIDENT 18
Section 6.6.2. VICE PRESIDENT 18
Section 6.6.3. TREASURER 18
Section 6.6.4. ASSISTANT TREASURER 19
Section 6.6.5. SECRETARY 19
Section 6.6.6. ASSISTANT SECRETARY 19
Section 6.6.7. TEMPORARY SECRETARY 19
Section 6.7. RESIGNATION, RETIREMENT, AND REMOVAL 19
Section 6.8. VACANCIES 20

ARTICLE 7 Transactions with Officers and Trustees 20
Section 7.1. PURCHASE AND REDEMPTION OF SHARES OF THE TRUST 20
Section 7.2. PURCHASE AND SALE OF OTHER SECURITIES 20

ARTICLE 8 Service Providers 20

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Section 8.1. INVESTMENT ADVISER 20
Section 8.2. UNDERWRITER AND TRANSFER AGENT 20
Section 8.3. CUSTODIANS 21
Section 8.4. ADMINISTRATOR 21
Section 8.5. OTHER CONTRACTS 21
Section 8.6. PARTIES TO CONTRACTS 21

ARTICLE 9 Shareholders' Voting Powers and Meetings 21
Section 9.1 VOTING POWERS 22
Section 9.1.1. MATTERS REQUIRING SHAREHOLDERS ACTION 22
Section 9.1.2. SEPARATE VOTING BY SERIES AND CLASS 22
Section 9.1.3. NUMBER OF VOTES 22
Section 9.1.4. CUMULATIVE VOTING 22
Section 9.1.5. VOTING OF SHARES; PROXIES 23
Section 9.1.6. ACTIONS PRIOR TO THE ISSUANCE OF SHARES 23
Section 9.2. MEETINGS OF SHAREHOLDERS 23
Section 9.2.1. ANNUAL OR REGULAR MEETINGS 23
Section 9.2.2. SPECIAL MEETINGS 23
Section 9.2.3. NOTICE OF MEETINGS 23
Section 9.2.4. CALL OF MEETINGS 24
Section 9.3. RECORD DATES 24
Section 9.4. QUORUM 24
Section 9.5. REQUIRED VOTE 24
Section 9.6. ADJOURNMENTS 24
Section 9.7. ACTIONS BY WRITTEN CONSENT 24
Section 9.8. INSPECTION OF RECORDS 25
Section 9.9. ADDITIONAL PROVISIONS 25

ARTICLE 10 Limitation of Liability and Indemnification 25
Section 10.1. GENERAL PROVISIONS 25
Section 10.1.1. GENERAL LIMITATION OF LIABILITY 25
Section 10.1.2. NOTICE OF LIMITED LIABILITY 25
Section 10.1.3. LIABILITY LIMITED TO ASSETS OF THE TRUST 25
Section 10.2. LIABILITY OF TRUSTEES 26
Section 10.2.1. LIABILITY FOR OWN ACTIONS 26
Section 10.2.2. LIABILITY FOR ACTIONS OF OTHERS 26
Section 10.2.3. ADVICE OF EXPERTS AND REPORTS OF OTHERS 26
Section 10.2.4. BOND 26
Section 10.2.5. DECLARATION OF TRUST GOVERNS
ISSUES OF LIABILITY 26
Section 10.3. LIABILITY OF THIRD PERSONS
DEALING WITH TRUSTEES 26

5
<PAGE>

Section 10.4. LIABILITY OF SHAREHOLDERS 27
Section 10.4.1. LIMITATION OF LIABILITY 27
Section 10.4.2. INDEMNIFICATION OF SHAREHOLDERS 27
Section 10.5. INDEMNIFICATION 27
Section 10.5.1. INDEMNIFICATION OF COVERED PERSONS 27
Section 10.5.2. EXCEPTIONS 28
Section 10.5.3. RIGHTS OF INDEMNIFICATION 28
Section 10.5.4. EXPENSES OF INDEMNIFICATION 28
Section 10.5.5. CERTAIN DEFINED TERMS
RELATING TO INDEMNIFICATION 29

ARTICLE 11 Termination or Reorganization 29
Section 11.1. TERMINATION OF TRUST OR SERIES OR CLASS 29
Section 11.1.1. TERMINATION 29
Section 11.1.2. DISTRIBUTION OF ASSETS 29
Section 11.1.3. CERTIFICATE OF CANCELLATION 30
Section 11.2. SALE OF ASSETS 30
Section 11.3. MERGER OR CONSOLIDATION 30
Section 11.3.1. AUTHORITY TO MERGE OR CONSOLIDATE 30
Section 11.3.2. NO SHAREHOLDER APPROVAL REQUIRED 31
Section 11.3.3. SUBSEQUENT AMENDMENTS 31
Section 11.3.4. CERTIFICATE OF MERGER OR CONSOLIDATION 31

ARTICLE 12 Amendments 31
Section 12.1. GENERALLY 31
Section 12.2. CERTIFICATE OF AMENDMENT 31
Section 12.3. PROHIBITED RETROSPECTIVE AMENDMENTS 31

ARTICLE 13 Miscellaneous Provisions 31
Section 13.1. CERTAIN INTERNAL REFERENCES 32
Section 13.2. CERTIFIED COPIES 32
Section 13.3. EXECUTION OF PAPERS 32
Section 13.4. FISCAL YEAR 32
Section 13.5. GOVERNING LAW 32
Section 13.6. HEADINGS 32
Section 13.7. RESOLUTION OF AMBIGUITIES 33
Section 13.8. SEAL 33
Section 13.9. SEVERABILITY 33
Section 13.10. SIGNATURES 33

<PAGE>

DECLARATION OF TRUST
OF
GE INSTITUTIONAL FUNDS

This DECLARATION OF TRUST of the GE Institutional Funds is amended and
restated as of this 2nd day of June, 1998 by the Trustees hereunder.

W I T N E S S E T H

WHEREAS, the Trustees desire to form a Delaware business trust for the
purpose of carrying on the business of an open-end management investment
company; and

WHEREAS, in furtherance of such purpose, the initial Trustees and any
successor Trustees elected in accordance with Article 5 hereof are acquiring and
may hereafter acquire assets which they will hold and manage as trustees of a
Delaware business trust in accordance with the provisions hereinafter set forth;
and

WHEREAS, this Trust is authorized to issue its shares of beneficial
interest in one or more separate series and classes of series, all in accordance
with the provisions set forth in this Declaration of Trust;

NOW, THEREFORE, the initial Trustees hereby declare that they and any
successor Trustees elected in accordance with Article 5 hereof will hold in
trust all cash, securities, and other assets which they may from time to time
acquire in any manner as Trustees hereunder, and that they and any successor
Trustees will manage and dispose of the same upon the following terms and
conditions for the benefit of the holders of shares of beneficial interest in
this Trust as hereinafter set forth.

ARTICLE 1
Name and Definitions

Section 1.1. NAME. This Trust shall be known as GE Institutional Funds and
the Trustees shall conduct the business of the Trust under that name or any
other name or names as they may from time to time determine.

<PAGE>

Section 1.2. DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided below:

(a) The "Code" refers to the Internal Revenue Code of 1986 (and any
successor statute) and the rules and regulations thereunder, all as amended from
time to time.

(b) "Commission" shall mean the United States Securities and Exchange
Commission (or any successor agency thereto);

(c) The "DBTA" refers to the Delaware Business Trust Act, Chapter 38 of
Title 12 of the Delaware Code (and any successor statute), as amended from time
to time; and

(d) "Declaration of Trust" or "Declaration" shall mean this Declaration of
Trust as amended or restated from time to time;

(e) The "1940 Act" refers to the Investment Company Act of 1940 (and any
successor statute) and the rules and regulations thereunder, all as amended from
time to time;

(f) "Person," "Interested Person," and "Principal Underwriter" shall have
the meanings given them in the 1940 Act;

(g) "Series" shall mean any of the separate series of Shares established
and designated under or in accordance with the provisions of Article 4 and to
which the Trustees have allocated assets and liabilities of the Trust in
accordance with Article 4;

(h) "Shares" shall mean the shares of beneficial interest in the Trust
described in Article 4 hereof and shall include fractional and whole Shares;

(i) "Shareholder" shall mean a beneficial owner of Shares;

(j) The "Trust" shall mean the Delaware business trust established by this
Declaration of Trust, as amended from time to time;

(k) "Trustee" and "Trustees" shall mean the signatories to this Declaration
of Trust so long as such signatories shall continue in office in accordance with
the terms hereof, and all other individuals who at the time in question have
been duly elected or appointed and qualified in accordance with Article 5 hereof
and are then in office;

2
<PAGE>

ARTICLE 2
Nature and Purpose of Trust

Section 2.1. NATURE OF TRUST. The Trust is a business trust of the type
referred to in the DBTA. The Trustees shall file a certificate of trust in
accordance with Section 3810 of the DBTA. The Trust is not intended to be, shall
not be deemed to be, and shall not be treated as, a general or a limited
partnership, joint venture, corporation or joint stock company, nor shall the
Trustees or Shareholders or any of them for any purpose be deemed to be, or be
treated in any way whatsoever as though they were, liable or responsible
hereunder as partners or joint venturers.

Section 2.2. PURPOSE OF TRUST. The purpose of the Trust is to engage in,
operate and carry on the business of an open-end management investment company
and to do any and all acts or things as are necessary, convenient, appropriate,
incidental or customary in connection therewith.

Section 2.3. INTERPRETATION OF DECLARATION OF TRUST.

Section 2.3.1. GOVERNING INSTRUMENT. This Declaration of Trust shall
be the governing instrument of the Trust and shall be governed by and
construed according to the laws of the State of Delaware.

Section 2.3.2. NO WAIVER OF COMPLIANCE WITH APPLICABLE LAW. No
provision of this Declaration shall be effective to require a waiver of
compliance with any provision of the Securities Act of 1933, as amended, or
the 1940 Act, or of any valid rule, regulation or order of the Commission
thereunder.

Section 2.3.3. POWER OF THE TRUSTEES GENERALLY. Except as otherwise
set forth herein, the Trustees may exercise all powers of trustees under
the DBTA on behalf of the Trust.

ARTICLE 3
Registered Agent; Offices

Section 3.1. REGISTERED AGENT. The name of the registered agent of the
Trust is Corporation Service Company and the registered agent's business address
in Delaware is 1013 Centre Road, Wilmington, Delaware 19805.

Section 3.2. OFFICES. The Trust shall maintain an office within the State
of Delaware which shall be identical to the business office of the Registered
Agent of the Trust as set forth in

<PAGE>

Section 3.1. The Trustees may, at any time, establish branch or subordinate
offices at any place or places where the Trust intends to do business.

ARTICLE 4
Shares of Beneficial Interest

Section 4.1. SHARES OF BENEFICIAL INTEREST. The beneficial interests in the
Trust shall be divided into Shares, par value $.001 per share. The Trustees
shall have the authority from time to time to divide the Shares into two (2) or
more separate and distinct series of Shares ("Series") and to divide each such
Series of Shares into two (2) or more classes of Shares ("Classes"), all as
provided in Section 4.9 of this Article 4.

Section 4.2. NUMBER OF AUTHORIZED SHARES. The Trustees are authorized to
issue an unlimited number of Shares. The Trustees may issue Shares for such
consideration and on such terms as they may determine (or for no consideration
if pursuant to a Share dividend or split), all without action or approval of the
Shareholders.

Section 4.3. OWNERSHIP AND CERTIFICATION OF SHARES. The Secretary of the
Trust, or the Trust's transfer or similar agent, shall record the ownership and
transfer of Shares of each Series and Class separately on the record books of
the Trust. The record books of the Trust, as kept by the Secretary of the Trust
or any transfer or similar agent, shall contain the name and address of and the
number of Shares held by each Shareholder, and such record books shall be
conclusive as to who are the holders of Shares and as to the number of Shares
held from time to time by such Shareholders. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of share certificates, transfer of Shares, and
similar matters for the Trust or any Series or Class.

Section 4.4. STATUS OF SHARES.

Section 4.4.1. FULLY PAID AND NON-ASSESSABLE. All Shares when issued
on the terms determined by the Trustees shall be fully paid and
non-assessable.

Section 4.4.2. PERSONAL PROPERTY. Shares shall be deemed to be
personal property giving only the rights provided in this Declaration of
Trust.

Section 4.4.3. PARTY TO DECLARATION OF TRUST. Every Person by virtue
of having become registered as a Shareholder shall be held to have
expressly assented and agreed to the terms of this Declaration of Trust and
to have become a party thereto.

<PAGE>

Section 4.4.4. DEATH OF SHAREHOLDER. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the Trust nor
entitle the representative of any deceased Shareholder to an accounting or
to take any action in court or elsewhere against the Trust or the Trustees.
The representative shall be entitled to the same rights as the decedent
under this Trust.

Section 4.4.5. TITLE TO TRUST; RIGHT TO ACCOUNTING. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or
any part of the Trust property or right to call for a partition or division
of the same or for an accounting.

Section 4.5. DETERMINATION OF SHAREHOLDERS. The Trustees may from time to
time close the transfer books or establish record dates and times for the
purposes of determining the Shareholders entitled to be treated as such, to the
extent provided or referred to in Section 9.3.

Section 4.6. SHARES HELD BY TRUST. The Trustees may hold as treasury
shares, reissue for such consideration and on such terms as they may determine,
or cancel, at their discretion from time to time, any Shares of any Series or
Class reacquired by the Trust.

Section 4.7. SHARES HELD BY PERSONS RELATED TO TRUST. Any Trustee, officer
or other agent of the Trust, and any organization in which any such person is
interested may acquire, own, hold and dispose of Shares to the same extent as if
such person were not a Trustee, officer or other agent of the Trust; and the
Trust may issue and sell or cause to be issued and sold and may purchase Shares
from any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or purchase
of such Shares generally.

Section 4.8. PREEMPTIVE AND APPRAISAL RIGHTS. Shareholders shall not, as
Shareholders, have any right to acquire, purchase or subscribe for any Shares or
other securities of the Trust which it may hereafter issue or sell, other than
such right, if any, as the Trustees in their discretion may determine.
Shareholders shall have no appraisal rights with respect to their Shares and,
except as otherwise determined by resolution of the Trustees in their sole
discretion, shall have no exchange or conversion rights with respect to their
Shares. No action may be brought by a Shareholder on behalf of the Trust unless
Shareholders owning no less than a majority of the then outstanding Shares, or
Series or Class thereof, join in the bringing of such action. A Shareholder
shall not be entitled to participate in a derivative or class action lawsuit on
behalf of any other Series or any other Class or on behalf of the Shareholders
in any other Series or any other Class of the Trust than the Series or Class of
Shares owned by such Shareholder.

5
<PAGE>

Section 4.9. SERIES AND CLASSES OF SHARES.

Section 4.9.1. GENERALLY. In addition to the Series and Classes
established and designated in Section 4.9.2, the Shares of the Trust shall
be divided into one or more separate and distinct Series or Classes of a
Series as the Trustees shall from time to time establish and designate.

Section 4.9.2. ESTABLISHMENT AND DESIGNATION. The Trustees shall have
exclusive power without the requirement of Shareholder approval to
establish and designate separate and distinct Series of Shares and with
respect to any Series of Shares, to establish and designate separate and
distinct Classes of Shares. The establishment and designation of any Series
(in addition to those established and designated in this Section below) or
Class shall be effective upon the execution by an officer of the Trust,
pursuant to a vote of a majority of the Trustees, of an instrument setting
forth such establishment and designation and the relative rights and
preferences of the Shares of such Series or Class, or as otherwise provided
in such instrument. Each such instrument shall have the status of an
amendment to this Declaration of Trust. Without limiting the authority of
the Trustees to establish and designate any further Series or Classes, the
Trustees hereby establish and designate the following fourteen Series:
Emerging Markets Fund, International Equity Fund, Mid-Cap Growth Fund,
Premier Growth Equity Fund, Value Equity Fund, U.S. Equity Fund, S&P 500
Index Fund, Strategic Investment Fund, Income Fund, Money Market Fund,
Small-Cap Value Equity Fund, Small-Cap Growth Equity Fund, Mid-Cap Value
Equity Fund and High Yield Fund. The Shares of such Series shall be divided
into two Classes designated as "Investment Class" Shares and "Service
Class" Shares.

Section 4.9.3. CONVERSION RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series or Class within a Series shall
have the right to convert such Shares into Shares of one or more other
Series or Classes in accordance with such requirements and procedures as
may be established by the Trustees.

Section 4.9.4. SEPARATE AND DISTINCT NATURE. Each Series and Class,
including without limitation Series and Classes specifically established in
Section 4.9.2, shall be separate and distinct from any other Series and
Class and shall maintain separate and distinct records on the books of the
Trust, and the assets belonging to any such Series and Class shall be held
and accounted for separately from the assets of the Trust or any other
Series and Class.

Section 4.9.5. RIGHTS AND PREFERENCES OF SERIES. The Trustees shall
have exclusive power without the requirement of Shareholder approval to fix
and determine the relative rights and preferences as between the Shares of
the separate Series. The initial Series and any further Series that may
from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further
Series at the time of establishing and designating the same) have relative
rights and preferences as set forth in this Section 4.9.5, subject to the
relative rights and preferences of Classes within each such Series as set
forth in Section 4.9.6.

6
<PAGE>

Section 4.9.5.1. ASSETS AND LIABILITIES "BELONGING" TO A SERIES.
All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall be held and accounted for separately from
the other assets of the Trust and of every other Series and may be
referred to herein as "assets belonging to" that Series. The assets
belonging to a particular Series shall belong to that Series for all
purposes, and to no other Series, subject only to the rights of
creditors of that Series. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any
funds or payments which are not readily identifiable as belonging to
any particular Series (collectively "General Items"), the Trustees
shall allocate to and among any one or more of the Series in such
manner and on such basis as they, in their sole discretion, deem fair
and equitable. Any General Items so allocated to a particular Series
shall belong to that Series. Each such allocation by the Trustees
shall be conclusive and binding upon all Shareholders for all
purposes. The assets belonging to each particular Series shall be
charged with the liabilities in respect of that Series and all
expenses, costs, charges and reserves attributable to that Series, and
any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the Trustees to
and among any one or more of the Series established and designated
from time to time in such manner and on such basis as the Trustees in
their sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon all Shareholders for all
purposes.

Section 4.9.5.2. TREATMENT OF PARTICULAR ITEMS. The Trustees
shall have full discretion, to the extent consistent with the 1940 Act
and consistent with generally accepted accounting principles, to
determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders.

Section 4.9.5.3. LIMITATION ON INTERSERIES LIABILITIES. Subject
to the right of the Trustees in their discretion to allocate general
liabilities, expenses, costs, charges or reserves as provided in
Section 4.9.5.1, the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a
particular Series shall be enforceable against the assets of such
Series only, and not against the assets of any other Series. Notice of
this limitation on liabilities between and among Series shall be set
forth in the certificate of trust of the Trust (whether originally or
by amendment) as filed or to be filed in the Office of the Secretary
of State of the State of Delaware pursuant to the DBTA, and upon the
giving of such

<PAGE>

notice in the certificate of trust, the statutory provisions of
Section 3804 of the DBTA relating to limitations on liabilities
between and among series (and the statutory effect under Section 3804
of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series.

Section 4.9.5.4. DIVIDENDS. Dividends and capital gain
distributions on Shares of a particular Series may be paid with such
frequency, in such form, and in such amount as the Trustees may
determine by resolution adopted from time to time, or pursuant to a
standing resolution or resolutions adopted only once or with such
frequency as the Trustees may determine. All dividends and
distributions on Shares of a particular Series shall be distributed
pro rata to the holders of Shares of that Series in proportion to the
number of Shares of that Series held by such holders at the date and
time of record established for the payment of such dividends or
distributions. Such dividends and distributions may be paid in cash,
property or additional Shares of that Series, or a combination
thereof, as determined by the Trustees or pursuant to any program that
the Trustees may have in effect at the time for the election by each
Shareholder of the form in which dividends or distributions are to be
paid to that Shareholder. Any such dividend or distribution paid in
Shares shall be paid at the net asset value thereof as determined in
accordance with Section 4.9.5.8.

Section 4.9.5.5. REDEMPTION BY SHAREHOLDER. Each Shareholder
shall have the right at such times as may be permitted by the Trust
and as otherwise required by the 1940 Act to require the Trust to
redeem all or any part of such Shareholder's Shares of a Series at a
redemption price per Share equal to the net asset value per Share of
such Series next determined in accordance with Section 4.9.5.8 after
the Shares are properly tendered for redemption, less such redemption
fee, if any, as may be established by the Trustees in their sole
discretion. Payment of the redemption price shall be in cash;
provided, however, that the Trust may, subject to the requirements of
the 1940 Act, make payment wholly or partly in securities or other
assets belonging to the Series of which the Shares being redeemed are
part at the value of such securities or assets used in such
determination of net asset value. Notwithstanding the foregoing, the
Trust may postpone payment of the redemption price and may suspend the
right of the holders of Shares of any Series to require the Trust to
redeem Shares of that Series during any period or at any time when and
to the extent permissible under any applicable provision of the 1940
Act.

Section 4.9.5.6. REDEMPTION BY TRUST. The Trustees may cause the
Trust to redeem at net asset value the Shares of any Series held by a
Shareholder upon such conditions as may from time to time be
determined by the Trustees. Upon redemption of Shares pursuant to this
Section 4.9.5.6, the Trust shall promptly cause payment of the full
redemption price to be made to such Shareholder for Shares so
redeemed, less any applicable redemption fee.

8
<PAGE>

Section 4.9.5.7. PREVENTION OF PERSONAL HOLDING COMPANY STATUS.
The Trust may reject any purchase order, refuse to transfer any
Shares, and compel the redemption of Shares if, in its opinion, any
such rejection, refusal, or redemption would prevent the Trust from
becoming a personal holding company as defined by the Code.

Section 4.9.5.8. NET ASSET VALUE. The net asset value per Share
of any Series shall be determined in accordance with the methods and
procedures established by the Trustees from time to time and, to the
extent required by applicable law, as disclosed in the then current
prospectus or statement of additional information for the Series.

Section 4.9.5.9. MAINTENANCE OF STABLE NET ASSET VALUE. The
Trustees may determine to maintain the net asset value per Share of
any Series at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for
the continuing declarations of income attributable to that Series as
dividends payable in additional Shares of that Series at the
designated constant dollar amount and for the handling of any losses
attributable to that Series. Such procedures may provide that in the
event of any loss each Shareholder shall be deemed to have contributed
to the capital of the Trust attributable to that Series his or her pro
rata portion of the total number of Shares required to be canceled in
order to permit the net asset value per Share of that Series to be
maintained, after reflecting such loss, at the designated constant
dollar amount. Each Shareholder of the Trust shall be deemed to have
agreed, by his or her investment in any Series with respect to which
the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any
such loss. The Trustees may delegate any of their powers and duties
under this Section 4.9.5.9 with respect to appraisal of assets and
liabilities in the determination of net asset value or with respect to
a suspension of the determination of net asset value to an officer or
officers or agent or agents of the Trust designated from time to time
by the Trustees.

Section 4.9.5.10. TRANSFER OF SHARES. Except to the extent that
transferability is limited by applicable law or such procedures as may
be developed from time to time by the Trustees or the appropriate
officers of the Trust, Shares shall be transferable on the records of
the Trust only by the record holder thereof or by his or her agent
thereunto duly authorized in writing, upon delivery to the Trustees or
the Trust's transfer agent of a duly executed instrument of transfer,
together with a Share certificate, if one is outstanding, and such
evidence of the genuineness of each such execution and authorization
and of such other matters as may be required by the Trustees. Upon
such delivery the transfer shall be recorded on the register of the
Trust.

Section 4.9.5.11. EQUALITY OF SHARES. All Shares of each
particular Series shall represent an equal proportionate interest in
the assets belonging to that Series (subject to

<PAGE>

the liabilities belonging to that Series), and each Share of any
particular Series shall be equal in this respect to each other Share
of that Series. This Section 4.9.5.11 shall not restrict any
distinctions otherwise permissible under this Declaration of Trust
with respect to any Classes within a Series.

Section 4.9.5.12. FRACTIONAL SHARES. Any fractional Share of any
Series, if any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole Share of
that Series, including rights and obligations with respect to voting,
receipt of dividends and distributions, redemption of Shares, and
liquidation of the Trust or any Series.

Section 4.9.6. RIGHTS AND PREFERENCES OF CLASSES. The Trustees shall
have exclusive power without the requirement of Shareholder approval to fix
and determine the relative rights and preferences as between the separate
Classes within any Series. The initial Classes (Investment Class and
Service Class) and any further Classes that may from time to time be
established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Class at the time of
establishing and designating the same) have relative rights and preferences
as set forth in this Section 4.9.6. If a Series is divided into multiple
Classes, the Classes may be invested with one or more other Classes in the
common investment portfolio comprising the Series. Notwithstanding the
provisions of Section 4.9.5, if two or more Classes are invested in a
common investment portfolio, the Shares of each such Class shall be subject
to the following preferences, conversion and other rights, voting powers,
restrictions, conditions of redemption, and, if there are other Classes
invested in a different investment portfolio comprising a different Series,
shall also be subject to the provisions of Section 4.9.5 at the Series
level as if the Classes invested in the common investment portfolio were
one Class:

(a) The income and expenses of the Series shall be allocated among the
Classes comprising the Series in such manner as may be determined by the
Trustees in accordance with applicable law;

(b) As more fully set forth in this Section 4.9.6, the liabilities and
expenses of the Classes comprising the Series shall be determined
separately from those of each other and, accordingly, the net asset values,
the dividends and distributions payable to Shareholders, and the amounts
distributable in the event of liquidation of the Trust or termination of a
Series to Shareholders may vary within the Classes comprising the Series.
Except for these differences and certain other differences set forth in
this Section 4.9.6 or elsewhere in this Declaration of Trust, the Classes
comprising a Series shall have the same preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption.

(c) The dividends and distributions of investment income and capital
gains with respect to the Classes comprising a Series shall be in such
amounts as may be declared from time to time by the Trustees, and such
dividends and distributions may vary among the Classes

10
<PAGE>

comprising the Series to reflect differing allocations of the expenses and
liabilities of the Trust among the Classes and any resultant differences
between the net asset values per Share of the Classes, to such extent and
for such purposes as the Trustees may deem appropriate. The allocation of
investment income, capital gains, expenses, and liabilities of the Trust
among the Classes comprising a Series shall be determined by the Trustees
in a manner that is consistent with applicable law.

ARTICLE 5
Trustees

Section 5.1. MANAGEMENT OF THE TRUST. The business and affairs of the Trust
shall be managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility, including those specifically set
forth in Sections 5.10 and 5.11 herein.

Section 5.2. QUALIFICATION. Each Trustee shall be a natural person. A
Trustee need not be a Shareholder, a citizen of the United States, or a resident
of the State of Delaware.

Section 5.3. NUMBER. The number of Trustees which shall constitute the
entire Board of Trustees is currently five (5) and thereafter shall be fixed
from time to time by resolution by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be less than one (1) nor
more than fifteen (15), but shall never be less than the minimum number
permitted by the DBTA. No decrease in the number of Trustees shall have the
effect of removing any Trustee from office prior to the expiration of his or her
term, but the number of Trustees may be decreased in conjunction with the
removal of a Trustee pursuant to Section 5.7.

Section 5.4. TERM AND ELECTION. Each Trustee shall hold office until the
next meeting of Shareholders called for the purpose of considering the election
or re-election of such Trustee or of a successor to such Trustee, and until his
or her successor is elected and qualified, and any Trustee who is appointed by
the Trustees in the interim to fill a vacancy as provided hereunder shall have
the same remaining term as that of his or her predecessor, if any, or such term
as the Trustees may determine.

Section 5.5. COMPOSITION OF THE BOARD OF TRUSTEES. No election or
appointment of any Trustee shall take effect if such election or appointment
would cause the number of Trustees who are Interested Persons to exceed the
number permitted by Section 10 of the 1940 Act.

Section 5.6. RESIGNATION AND RETIREMENT. Any Trustee may resign or retire
as a Trustee (without need for prior or subsequent accounting) by an instrument
in writing signed by such Trustee and delivered or mailed to the Chairman, if
any, the President, or the Secretary of the

<PAGE>

Trust. Such resignation or retirement shall be effective upon such delivery, or
at a later date according to the terms of the instrument.

Section 5.7. REMOVAL. Any Trustee may be removed with or without cause at
any time: (1) by written instrument signed by two-thirds (2/3) of the number of
Trustees in office prior to such removal, specifying the date upon which such
removal shall become effective, or (2) by the affirmative vote of Shareholders
holding not less than two-thirds (2/3) of Shares outstanding, cast in person or
by proxy at any meeting called for that purpose.

Section 5.8. VACANCIES. Any vacancy or anticipated vacancy resulting for
any reason, including without limitation the death, resignation, retirement,
removal, or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees may (but need not unless required by the 1940 Act) be
filled by a majority of the Trustees then in office, subject to the provisions
of Section 16 of the 1940 Act, through the appointment in writing of such other
person as such remaining Trustees in their discretion shall determine. The
appointment shall be effective upon the written acceptance of the person named
therein to serve as a Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such appointment in
anticipation of a vacancy occurring by reason of the resignation, retirement, or
increase in number of Trustees to be effective at a later date shall become
effective only at or after the effective date of such resignation, retirement,
or increase in number of Trustees.

Section 5.9. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
shall be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or any successor
Trustees. Legal title to all the Trust property shall be vested in the Trust as
a separate legal entity under the DBTA, except that the Trustees shall have the
power to cause legal title to any Trust property to be held by or in the name of
one or more of the Trustees or in the name of any other Person on behalf of the
Trust on such terms as the Trustees may determine. In the event that title to
any part of the Trust property is vested in one or more Trustees, the right,
title and interest of the Trustees in the Trust property shall vest
automatically in each person who may hereafter become a Trustee upon his or her
due election and qualification. Upon the resignation, removal or death of a
Trustee he or she shall automatically cease to have any right, title or interest
in any of the Trust property, and the right, title and interest of such Trustee
in the Trust property shall vest automatically in the remaining Trustees. To the
extent permitted by law, such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered. No
Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or any right of partition or possession thereof.

Section 5.10. POWERS. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and they
shall have all powers necessary or

<PAGE>

convenient to carry out that responsibility and the purpose of the Trust
including, but not limited to, those enumerated in this Section 5.10.

Section 5.10.1. BYLAWS. The Trustees may adopt Bylaws not inconsistent with
this Declaration of Trust providing for the conduct of the business and affairs
of the Trust and may amend and repeal them to the extent that such Bylaws do not
reserve that right to the Shareholders. Nothing in this Declaration shall be
construed to require the adoption of Bylaws by the Trustees.

Section 5.10.2. OFFICERS, AGENTS, AND EMPLOYEES. The Trustees may, as they
consider appropriate, elect and remove officers and appoint and terminate agents
and consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee, and may provide for the compensation of all
of the foregoing.

Section 5.10.3. COMMITTEES.

Section 5.10.3.1. GENERALLY. The Trustees, by vote of a majority of
the Trustees then in office, may elect from their number an Audit
Committee, Executive Committee, Nominating Committee, or any other
committee, and may delegate thereto some or all of their powers except
those which by law, by this Declaration of Trust, or by the Bylaws (if any)
may not be delegated. Except as the Trustees may otherwise determine, any
such committee may make rules for the conduct of its business, but unless
otherwise provided by the Trustees or in such rules, its business shall be
conducted so far as possible in the same manner as is provided by this
Declaration of Trust or the Bylaws (if any) of the Trust for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any committee at any
time. Any committee to which the Trustees delegate any of their powers or
duties shall keep records of its meetings and shall report its actions to
the Trustees. The Trustees shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.

Section 5.10.3.2. EXECUTIVE COMMITTEE. The Executive Committee, if
there shall be one, shall have all of the powers and authority of the
Trustees that may lawfully be exercised by an executive committee, except
the power to: (i) declare dividends or distributions on Shares; (ii) issue
Shares; (iii) recommend to the Shareholders any action which requires the
Shareholders' approval; or (iv) approve any merger, reorganization, or
share exchange which does not require Shareholder approval. Notwithstanding
the foregoing, the Trustees may limit the powers and authority of the
Executive Committee at any time.

Section 5.10.4. ADVISERS, ADMINISTRATORS, DEPOSITORIES, AND
CUSTODIANS. The Trustees may, in accordance with Article 8, employ one or
more advisers, administrators, depositories, custodians, and other persons
and may authorize any depository or custodian to

<PAGE>

employ subcustodians or agents and to deposit all or any part of such
assets in a system or systems for the central handling of securities and
debt instruments, retain transfer, dividend, accounting or shareholder
servicing agents or any of the foregoing, provide for the distribution of
Shares by the Trust through one or more distributors, principal
underwriters or otherwise, and set record dates or times for the
determination of Shareholders.

Section 5.10.5. COMPENSATION. The Trustees may compensate or provide
for the compensation of the Trustees, officers, advisers, administrators,
custodians, other agents, consultants and employees of the Trust or the
Trustees on such terms as they deem appropriate.

Section 5.10.6. DELEGATION OF AUTHORITY. In general, the Trustees may
delegate to any officer of the Trust, to any committee of the Trustees and
to any employee, adviser, administrator, distributor, depository,
custodian, transfer and dividend disbursing agent, or any other agent or
consultant of the Trust such authority, powers, functions and duties as
they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including without implied limitation, the power and
authority to act in the name of the Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.

Section 5.10.7. SUSPENSION OF SALES. The Trustees shall have the
authority to suspend or terminate the sales of Shares of any Series or
Class at any time or for such periods as the Trustees may from time to time
decide.

Section 5.11. CERTAIN ADDITIONAL POWERS. Without limiting the foregoing and
to the extent not inconsistent with the 1940 Act, other applicable law, and the
fundamental policies and limitations of the applicable Series or Class, the
Trustees shall have power and authority for and on behalf of the Trust and each
separate Series or Class as enumerated in this Section 5.11.

Section 5.11.1. INVESTMENTS. The Trustees shall have the power to
invest and reinvest cash and other property, and to hold cash or other
property uninvested without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees.

Section 5.11.2. DISPOSITION OF ASSETS. The Trustees shall have the
power to sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust.

Section 5.11.3. OWNERSHIP. The Trustees shall have the power to vote,
give assent, or exercise any rights of ownership with respect to securities
or other property; and to execute and deliver proxies or powers of attorney
to such person or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with relation to
securities or other property as the Trustees shall deem proper.

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<PAGE>

Section 5.11.4. SUBSCRIPTION. The Trustees shall have the power to
exercise powers and rights of subscription or otherwise which in any manner
arise out of ownership of securities.

Section 5.11.5. PAYMENT OF EXPENSES. The Trustees shall have the power
to pay or cause to be paid all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust or any Series
or Class thereof, or in connection with the management thereof, including,
but not limited to, the Trustees' compensation and such expenses and
charges for the Trust's officers, employees, investment advisers,
administrator, distributor, principal underwriter, auditor, counsel,
depository, custodian, transfer agent, dividend disbursing agent,
accounting agent, shareholder servicing agent, and such other agents,
consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur.

Section 5.11.6. FORM OF HOLDING. The Trustees shall have the power to
hold any securities or other property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name of
the Trustees or of the Trust or of any Series or in the name of a
custodian, subcustodian or other depositary or a nominee or nominees or
otherwise.

Section 5.11.7. REORGANIZATION, CONSOLIDATION, OR MERGER. The Trustees
shall have the power to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security of which is or was held in the Trust, and to consent to any
contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security
held in the Trust.

Section 5.11.8. COMPROMISE. The Trustees shall have the power to
arbitrate or otherwise adjust claims in favor of or against the Trust, any
Series, or Class on any matter in controversy, including but not limited to
claims for taxes.

Section 5.11.9. PARTNERSHIPS. The Trustees shall have the power to
enter into joint ventures, general or limited partnerships and any other
combinations or associations.

Section 5.11.10. BORROWING. The Trustees shall have the power to
borrow funds and to mortgage and pledge the assets of the Trust or any
Series or any part thereof to secure obligations arising in connection with
such borrowing, consistent with the provisions of the 1940 Act.

Section 5.11.11. GUARANTEES. The Trustees shall have the power to
endorse or guarantee the payment of any notes or other obligations of any
person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust
property (or Series property) or any part thereof to secure any of or all
such obligations.

15
<PAGE>

Section 5.11.12. INSURANCE. The Trustees shall have the power to
purchase and pay for entirely out of Trust property such insurance as they
may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of
the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the
Trust individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or omitted
by any such person in any such capacity, including any action taken or
omitted that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such person against such liability.

Section 5.11.13. INDEMNIFICATION. The Trustees shall have the power to
indemnify any person with whom the Trust or any Series has dealings,
including the Investment Adviser, Administrator, Distributor, Transfer
Agent and selected dealers, to such extent as the Trustees shall determine.

Section 5.11.14. PENSIONS. The Trustees shall have the power to pay
pensions for faithful service, as deemed appropriate by the Trustees, and
to adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and benefit
plans, including the purchasing of life insurance and annuity contracts as
a means of providing such retirement and other benefits, for any or all of
the Trustees, officers, employees and agents of the Trust.

Section 5.12. MEETINGS AND VOTE OF TRUSTEES.

Section 5.12.1. REGULAR MEETINGS. The Trustees from time to time may
provide for the holding of regular meetings of the Trustees and fix their
time and place.

Section 5.12.2. SPECIAL MEETINGS. Special meetings of the Trustees may
be called by the President or Secretary of the Trust on twenty-four (24)
hours notice to each Trustee, either personally, by mail, by telegram, or
by facsimile transmission. Special meetings shall be called by the
President or Secretary in like manner and on like notice on the written
request of a majority of the Trustees then in office or a majority of the
members of any executive (or comparable) committee of the Trustees.

16
<PAGE>

Section 5.12.3. TELEPHONIC MEETINGS. Trustees may participate in a
meeting of the Trustees by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time. Except to the extent that the
1940 Act has been interpreted otherwise, participation by such means shall
constitute presence in person at the meeting.

Section 5.12.4. QUORUM. A majority of the Trustees then in office
being present in person or by proxy shall constitute a quorum.

Section 5.12.5. REQUIRED VOTE. Except as otherwise provided by the
1940 Act or other applicable law, this Declaration of Trust, or the Bylaws
(if any), any action to be taken by the Trustees on behalf of the Trust or
any Series or Class may be taken by a majority of the Trustees present at a
meeting of Trustees at which a quorum is present.

Section 5.12.6. CONSENT IN LIEU OF A MEETING. Except as otherwise
provided by the 1940 Act or other applicable law, the Trustees may, by
unanimous written consent of the Trustees then in office, take any action
which may have been taken at a meeting of the Trustees or any committee
thereof.

ARTICLE 6
Officers

Section 6.1. ENUMERATION. The officers of the Trust shall be a President,
one or more Vice Presidents, a Treasurer, and a Secretary. The Trustees may also
appoint such other officers, including a Chairperson of the Board, Assistant
Treasurers, and/or Assistant Secretaries. The Trust may also have such agents as
the Trustees from time to time may in their discretion appoint. Any two or more
offices may be held by the same person except that the same person may not be
both President and Vice President, and that a person who holds more than one
office may not act in more than one capacity to execute, acknowledge, or verify
an instrument required by law to be executed, acknowledged, or verified by more
than one officer.

Section 6.2. QUALIFICATION. The Chairperson of the Board, if there shall be
one, shall be a Trustee and may, but need not be, a Shareholder. Any other
officer may, but need not be, a Trustee or Shareholder.

Section 6.3. ELECTION. The President, Treasurer, and Secretary shall be
elected by the Trustees at the first meeting of the Trustees. Other officers, if
any, may be elected or appointed by the Trustees at any meeting of the Trustees
or at any other time. The President, all Vice Presidents, the Treasurer, and the
Secretary shall be elected at each annual meeting of the Trustees.

17
<PAGE>

Section 6.4. TERM OF OFFICE. The Chairperson of the Board, the President,
the Treasurer, and the Secretary shall hold office until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed, or becomes disqualified. Each other officer shall
hold office and each agent shall retain authority at the pleasure of the
Trustees.

Section 6.5. POWERS. Subject to the other provisions of these Bylaws, each
officer shall have, in addition to the duties and powers set forth herein and in
the Declaration of Trust, such duties and powers as are commonly incident to the
office occupied by such officer as if the Trust were organized as a Delaware
business corporation and such other duties and powers as the Trustees may from
time to time designate.

Section 6.6. TITLES AND DUTIES.

Section 6.6.1. CHAIRPERSON OF THE BOARD; PRESIDENT. Unless the
Trustees otherwise provide, the Chairperson of the Board, or, if there is
no Chairperson or in the absence of the Chairperson, the President, shall
preside at all meetings of the Shareholders and of the Trustees. Unless the
Trustees otherwise provide, the President shall be the Chief Executive
Officer of the Trust. The Chairperson of the Board and the President shall
each also perform such other duties and have such other powers as the Board
of Trustees may from time to time prescribe.

Section 6.6.2. VICE PRESIDENT. In the absence of the President or in
the event of his or her inability or refusal to act, the Vice President, or
if there is more than one Vice President, the Vice Presidents in their
order of election or in such other order as determined by the Trustees,
shall perform the duties of the President, and when so acting shall have
all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall also perform such other duties and
have such other powers as the Board of Trustees or the President may from
time to time prescribe.

Section 6.6.3. TREASURER. The Treasurer shall be the chief financial
and accounting officer of the Trust, and shall, subject to the provisions
of the Declaration of Trust and to any arrangement made by the Trustees
with a custodian, investment adviser or manager, or transfer, shareholder
servicing or similar agent, be in charge of the valuable papers, books of
account and accounting records of the Trust. The Treasurer shall also
perform such other duties and have such other powers as the Board of
Trustees or the President may from time to time prescribe.

Section 6.6.4. ASSISTANT TREASURER. In the absence of the Treasurer or
in the event of his or her inability or refusal to act, the Assistant
Treasurer, or if there is more than one, the

<PAGE>

Assistant Treasurers in their order of election or in such other order as
determined by the Trustees, shall perform the duties of the Treasurer, and
when so acting shall have all the powers of and be subject to all the
restrictions upon the Treasurer. The Assistant Treasurers shall also
perform such other duties and have such other powers as the Board of
Trustees or the President may from time to time prescribe.

Section 6.6.5. SECRETARY. The Secretary shall record all proceedings
of the Shareholders and the Trustees in books to be kept for such purposes,
which books or a copy thereof shall be kept at the principal office of the
Trust or at such other place as designated by the Trustees. The Secretary
shall also perform such other duties and have such other powers as the
Board of Trustees or the President may from time to time prescribe.

Section 6.6.6. ASSISTANT SECRETARY. In the absence of the Secretary or
in the event of his or her inability or refusal to act, the Assistant
Secretary, or if there is more than one, the Assistant Secretaries in their
order of election or in such other order as determined by the Trustees,
shall perform the duties of the Secretary, and when so acting shall have
all the powers of and be subject to all the restrictions upon the
Secretary. The Assistant Secretaries shall also perform such other duties
and have such other powers as the Board of Trustees or the President may
from time to time prescribe.

Section 6.6.7. TEMPORARY SECRETARY. In the absence of the Secretary
and all Assistant Secretaries from any meeting of the Shareholders or
Trustees, the Trustees may appoint a temporary secretary at such meeting,
who shall perform the duties of the Secretary for the purposes of such
meeting.

Section 6.7. RESIGNATION, RETIREMENT, AND REMOVAL. Any officer may resign
at any time by written instrument signed by him or her delivered to the
Chairperson of the Board, President, or Secretary or delivered to a meeting of
the Trustees. Such resignation shall be effective upon receipt unless specified
to be effective at some other time. The Trustees may remove any officer elected
by them with or without cause by the vote or written consent of a majority of
the Trustees then in office. To the extent that any officer or Trustee of the
Trust receives compensation from the Trust and except as may otherwise be
expressly provided in a written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any compensation for
any period following his or her resignation or removal, or any right to damages
on account of such removal.

Section 6.8. VACANCIES. Any vacancy or anticipated vacancy resulting for
any reason, including without limitation the death, resignation, retirement,
removal, or incapacity of the Chairperson of the Board, the President, the
Treasurer, or the Secretary may be filled by a majority of the Trustees then in
office through the appointment in writing of such other person as such remaining
Trustees in their discretion shall determine. The appointment shall be effective
upon the written acceptance of the person named therein to serve as in the
capacity named

<PAGE>

therein. Other vacancies may be filled, if at all, by the Trustees at a meeting
of the Trustees or at any other time.

ARTICLE 7
Transactions with Officers and Trustees

Section 7.1. PURCHASE AND REDEMPTION OF SHARES OF THE TRUST. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if he or she were not a Trustee, officer or agent, and the
Trustees may accept subscriptions to purchase Shares or orders to redeem Shares
from any firm or company in which any Trustee, officer or other agent of the
Trust may have an interest.

Section 7.2. PURCHASE AND SALE OF OTHER SECURITIES. The Trust shall not
purchase any securities (other than Shares) from, or sell any securities (other
than Shares) to, any Trustee or officer of the Trust, or any director, trustee,
officer, or partner of any firm which acts as investment adviser or principal
underwriter for the Trust acting as principal, except to the extent permitted by
the 1940 Act or the rules or regulations thereunder or by appropriate order or
written advice of the Commission.

ARTICLE 8
Service Providers

Section 8.1. INVESTMENT ADVISER. The Trust may enter into written contracts
with one or more persons to act as investment adviser or investment sub-adviser
to each of the Series, and as such, to perform such functions as the Trustees
may deem reasonable and proper, including, without limitation, investment
advisory, management, research, valuation of assets, clerical and administrative
functions, under such terms and conditions, and for such compensation, as the
Trustees may in their discretion deem advisable.

Section 8.2. UNDERWRITER AND TRANSFER AGENT. The Trust may enter into
written contracts with one or more persons to act as principal underwriter or
underwriter or distributor whereby the Trust may either agree to sell Shares to
the other party or parties to the contract or appoint such other party or
parties its sales agent or agents for such Shares and with such other provisions
as the Trustees may deem reasonable and proper, and the Trustees may in their
discretion from time to time enter into transfer agency, dividend disbursement,
and/or shareholder service contract(s), in each case with such terms and
conditions, and providing for such compensation, as the Trustees may in their
discretion deem advisable.

Section 8.3. CUSTODIANS. The Trust may enter into written contracts with
one or more

<PAGE>

persons to act as custodian to perform such functions as the Trustees may deem
reasonable and proper, under such terms and conditions, and for such
compensation, as the Trustees may in their discretion deem advisable. Each such
custodian shall be a bank or trust company having an aggregate capital, surplus,
and undivided profits of at least five hundred thousand dollars ($500,000).

Section 8.4. ADMINISTRATOR. The Trust may enter into written contracts with
one or more persons to act as an administrator to perform such functions,
including accounting functions, as the Trustees may deem reasonable and proper,
under such terms and conditions, and for such compensation, as the Trustees may
in their discretion deem advisable.

Section 8.5. OTHER CONTRACTS. The Trust may enter into such other written
contracts as the Trustees deem necessary and desirable, including contracts with
one or more persons for the coordination or supervision of persons providing
services to the Trust under one or more of the contracts described in Sections
8.1, 8.2, 8.3, and 8.4.

Section 8.6. PARTIES TO CONTRACTS. Any contract of the character described
in Sections 8.1, 8.2, 8.3, and 8.4 or in Article 10 hereof may be entered into
with any corporation, firm, partnership, trust or association, including,
without limitation, the investment adviser, any investment sub-adviser, or any
affiliated person of the investment adviser or investment sub-adviser, although
one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, or member of such other party to the contract,
or may otherwise be interested in such contract, and no such contract shall be
invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or be accountable for any profit realized directly or
indirectly therefrom; provided, however, that the contract when entered into was
not inconsistent with the provisions of this Article 8, Article 10, or the
Bylaws (if any). The same person (including a firm, corporation, partnership,
trust or association) may provide more than one of the services identified in
this Article 8.

ARTICLE 9
Shareholders' Voting Powers and Meetings

Section 9.1 VOTING POWERS. The Shareholders shall have power to vote only
with respect to matters expressly enumerated in Section 9.1.1 or with respect to
such additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the Bylaws (if any), any registration of the
Trust with the Commission or any state, or as the Trustees may otherwise deem
necessary or desirable.

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Section 9.1.1. MATTERS REQUIRING SHAREHOLDERS ACTION. Action by the
Shareholders shall be required as to the following matters:

(a) The election or removal of Trustees as provided in Sections 5.4
and 5.7;

(b) The approval of a contract with a third party provider of services
as to which Shareholder approval is required by the 1940 Act;

(d) The amendment of this Declaration of Trust to the extent and as
may be provided by this Declaration of Trust or applicable law; and

(e) Any court action, proceeding or claim brought or maintained
derivatively or as a class action on behalf of the Trust, any Series or
Class thereof or the Shareholders of the Trust; provided, however, that a
Shareholder of a particular Series or Class shall not be entitled to vote
upon a derivative or class action on behalf of any other Series or Class or
Shareholder of any other Series or Class.

Section 9.1.2. SEPARATE VOTING BY SERIES AND CLASS. On any matter
submitted to a vote of the Shareholders, all Shares shall be voted
separately by individual Series, except: (i) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series; and
(ii) when the Trustees have determined that the matter affects the
interests of more than one Series, then the Shareholders of all such Series
shall be entitled to vote thereon. The Trustees may also determine that a
matter affects only the interests of one or more Classes within a Series,
in which case any such matter shall only be voted on by such Class or
Classes.

Section 9.1.3. NUMBER OF VOTES. On any matter submitted to a vote of
the Shareholders, each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote.

Section 9.1.4. CUMULATIVE VOTING. There shall be no cumulative voting
in the election of Trustees.

Section 9.1.5. VOTING OF SHARES; PROXIES. Votes may be cast in person
or by proxy. A proxy with respect to Shares held in the name of two or more
persons shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its

<PAGE>

exercise, and the burden of proving the invalidity of a proxy shall rest on
the challenger. No proxy shall be valid more than eleven months after its
date, unless it provides for a longer period.

Section 9.1.6. ACTIONS PRIOR TO THE ISSUANCE OF SHARES. Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, this Declaration of Trust or the Bylaws
(if any) to be taken by Shareholders.

Section 9.2. MEETINGS OF SHAREHOLDERS.

Section 9.2.1. ANNUAL OR REGULAR MEETINGS. No annual or regular
meetings of Shareholders are required to be held.

Section 9.2.2. SPECIAL MEETINGS. Special meetings of Shareholders may
be called by the President of the Trust or the Trustees from time to time
for the purpose of taking action upon any matter requiring the vote or
authority of the Shareholders as herein provided or upon any other matter
upon which Shareholder approval is deemed by the Trustees to be necessary
or desirable. A special meeting shall be called by the Secretary of the
Trust upon (i) the request of a majority of the Trustees then in office, or
(ii) the written request of Shareholders entitled to cast at least ten
percent (10%) of all the votes entitled to be cast at such meeting,
provided that (a) such request shall state the purpose or purposes of the
meeting and the matters proposed to be acted upon at such meeting, and (b)
the Shareholders requesting such meeting shall have paid to the Trust the
reasonably estimated cost of preparing and mailing the notice thereof,
which the Secretary shall determine and specify to such Shareholders. Upon
payment of these costs to the Trust, the Secretary shall notify each
Shareholder entitled to notice of the meeting. Unless requested by
Shareholders entitled to cast at least a majority of all the votes entitled
to be cast at such meeting, a special meeting need not be called to
consider any matter which is substantially the same as a matter voted on at
any special meeting of Shareholders held during the preceding twelve (12)
months.

Section 9.2.3. NOTICE OF MEETINGS. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by
mailing or transmitting such notice not less than ten (10) nor more than
ninety (90) days before such meeting, postage prepaid, stating the time,
place and purpose of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust.

Section 9.2.4. CALL OF MEETINGS. The Trustees shall promptly call and
give notice of a meeting of Shareholders for the purpose of voting upon
removal of any Trustee of the Trust when requested to do so in accordance
with Section 9.2.2. For all other matters, the Trustees shall call or give
notice of a meeting within thirty (30) days after written application by
Shareholders entitled to cast at least ten percent (10%) of all the votes
entitled to be cast on the matter requesting a meeting be called.

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Section 9.3. RECORD DATES. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time fix a date and
time not more than ninety (90) days nor less than ten (10) days prior to any
meeting of Shareholders or other action as the date and time of record for the
determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes of
such other action. Any Shareholder who was a Shareholder at the date and time so
fixed shall be entitled to vote at such meeting or any adjournment thereof or to
be treated as a Shareholder of record for purposes of such other action, even
though such Shareholder has since that date and time disposed of its Shares, and
no Shareholder becoming such after that date and time shall be so entitled to
vote at such meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action.

Section 9.4. QUORUM. Except as otherwise required by the 1940 Act or other
applicable law, this Declaration of Trust, or the Bylaws (if any) , the presence
in person or by proxy of Shareholders entitled to cast at least thirty percent
(30%) of the votes entitled to be cast on any particular matter shall be a
quorum as to such matter; provided, however, that any lesser number shall be
sufficient for matters upon which the Shareholders vote at adjournments.

Section 9.5. REQUIRED VOTE. Notwithstanding any provision of law requiring
the authorization of any matter by a greater proportion, any matter upon which
the Shareholders vote shall be approved by the affirmative vote of a majority of
the votes cast on such matter at a meeting of the Shareholders at which a quorum
is present, except that Trustees shall be elected by the affirmative vote of a
plurality of the votes cast at such a meeting.

Section 9.6. ADJOURNMENTS. Adjourned meetings may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice.

Section 9.7. ACTIONS BY WRITTEN CONSENT. Except as otherwise required by
the 1940 Act or other applicable law, this Declaration of Trust, or the Bylaws
(if any), any action taken by Shareholders may be taken without a meeting if
Shareholders entitled to cast at least a majority of all the votes entitled to
be cast on the matter (or such larger proportion thereof as shall be required by
the 1940 Act or by any express provision of this Declaration of Trust or the
Bylaws (if any)) consent to the action in writing and such written consents are
filed with the records of the meetings of Shareholders. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.

Section 9.8. INSPECTION OF RECORDS. The records of the Trust shall be open
to inspection

<PAGE>

by Shareholders to the same extent as is required for stockholders of a Delaware
business corporation under the Delaware General Corporation Law.

Section 9.9. ADDITIONAL PROVISIONS. The Bylaws (if any) may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.

ARTICLE 10
Limitation of Liability and Indemnification

Section 10.1. GENERAL PROVISIONS.

Section 10.1.1. GENERAL LIMITATION OF LIABILITY. No personal liability
for any debt or obligation of the Trust shall attach to any Trustee of the
Trust. Without limiting the foregoing, a Trustee shall not be responsible
for or liable in any event for any neglect or wrongdoing of any officer,
agent, employee, investment adviser, sub-adviser, administrator, principal
underwriter or custodian of the Trust, nor shall any Trustee be responsible
or liable for the act or omission of any other Trustee. Every note, bond,
contract, instrument, certificate, Share or undertaking and every other act
or thing whatsoever executed or done by or on behalf of the Trust or the
Trustees or any Trustee in connection with the Trust shall be conclusively
deemed to have been executed or done only in or with respect to their, his
or her capacity as Trustees or Trustee and neither such Trustees or Trustee
nor the Shareholders shall be personally liable thereon.

Section 10.1.2. NOTICE OF LIMITED LIABILITY. Every note, bond,
contract, instrument, certificate or undertaking made or issued by the
Trustees or by any officers or officer may recite that the same was
executed or made by or on behalf of the Trust by them as Trustees or
Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property
of the Trust or belonging to a Series thereof, and may contain such further
recitals as they, he or she may deem appropriate, but the omission thereof
shall not operate to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually.

Section 10.1.3. LIABILITY LIMITED TO ASSETS OF THE TRUST. All persons
extending credit to, contracting with or having any claim against the Trust
shall look only to the assets of the Trust or belonging to a Series
thereof, as appropriate, for payment under such credit, contract or claim,
and neither the Shareholders nor the Trustees nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor.

Section 10.2. LIABILITY OF TRUSTEES. The exercise by the Trustees of their
powers and discretion hereunder shall be binding upon the Trust, the
Shareholders, and any other person

<PAGE>

dealing with the Trust. The liability of the Trustees, however, shall be limited
by this Section 10.2.

Section 10.2.1. LIABILITY FOR OWN ACTIONS. A Trustee shall be liable
to the Trust or the Shareholders only for his or her own willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or
law.

Section 10.2.2. LIABILITY FOR ACTIONS OF OTHERS. The Trustees shall
not be responsible or liable in any event for any neglect or wrongdoing of
any officer, agent, employee, consultant, adviser, administrative agent,
distributor, principal underwriter, custodian, transfer agent, dividend
disbursing agent, shareholder servicing agent, or accounting agent of the
Trust, nor shall any Trustee be responsible for any act or omission of any
other Trustee.

Section 10.2.3. ADVICE OF EXPERTS AND REPORTS OF OTHERS. The Trustees
may take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as Trustees
hereunder, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. In
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written
reports made to the Trustees by any officer appointed by them, any
independent public accountant and (with respect to the subject matter of
the contract involved) any officer, partner or responsible employee of any
other party to any contract entered into hereunder.

Section 10.2.4. BOND. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.

Section 10.2.5. DECLARATION OF TRUST GOVERNS ISSUES OF LIABILITY . The
provisions of this Declaration of Trust, to the extent that they restrict
the duties and liabilities of the Trustees otherwise existing at law or in
equity, are agreed by the Shareholders and all other Persons bound by this
Declaration of Trust to replace such other duties and liabilities of the
Trustees.

Section 10.3. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.

Section 10.4. LIABILITY OF SHAREHOLDERS. Without limiting the provisions of
this Section 10.4 or the DBTA, the Shareholders shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations organized for profit under the General Corporation Law of the State
of Delaware.

<PAGE>

Section 10.4.1. LIMITATION OF LIABILITY. No personal liability for any
debt or obligation of the Trust shall attach to any Shareholder or former
Shareholder of the Trust, and neither the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise.

Section 10.4.2. INDEMNIFICATION OF SHAREHOLDERS. In case any
Shareholder or former Shareholder of the Trust shall be held to be
personally liable solely by reason of being or having been a Shareholder
and not because of such Shareholder's acts or omissions or for some other
reason, the Shareholder or former Shareholder (or, in the case of a natural
person, his or her heirs, executors, administrators or other legal
representatives or, in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets
of the Trust to be held harmless from and indemnified against all loss and
expense arising from such liability; provided, however, there shall be no
liability or obligation of the Trust arising hereunder to reimburse any
Shareholder for taxes paid by reason of such Shareholder's ownership of any
Shares or for losses suffered by reason of any changes in value of any
Trust assets. The Trust shall, upon request by the Shareholder or former
Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Trust and satisfy any judgment thereon.

Section 10.5. INDEMNIFICATION.

Section 10.5.1. INDEMNIFICATION OF COVERED PERSONS. Subject to the
exceptions and limitations contained in Section 10.5.2, every person who
is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors,
trustees, officers, employees or agents of another organization in which
the Trust has an interest as a shareholder, creditor or otherwise
(hereinafter referred to as a Covered Person"), shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him or her in connection with
any claim, action, suit or proceeding in which he or she becomes involved
as a party or otherwise by virtue of his or her being or having been such a
Trustee, director, officer, employee or agent and against amounts paid or
incurred by him or her in settlement thereof.

Section 10.5.2. EXCEPTIONS. No indemnification shall be provided
hereunder to a Covered Person:

(a) For any liability to the Trust or its Shareholders arising out of
a final adjudication by the court or other body before which the proceeding
was brought that the Covered Person engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office;

27
<PAGE>

(b) With respect to any matter as to which the Covered Person shall
have been finally adjudicated not to have acted in good faith in the
reasonable belief that his or her action was in the best interests of the
Trust; or

(c) In the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b) of this Section
10.5.2) and resulting in a payment by a Covered Person, unless there has
been either a determination that such Covered Person did not engage in
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office by the court or
other body approving the settlement or other disposition, or a reasonable
determination, based on a review of readily available facts (as opposed to
a full trial-type inquiry), that he or she did not engage in such conduct,
such determination being made by: (i) a vote of a majority of the
Disinterested Trustees (as such term is defined in Section 10.5.5) acting
on the matter (provided that a majority of Disinterested Trustees then in
office act on the matter); or (ii) a written opinion of independent legal
counsel.

Section 10.5.3. RIGHTS OF INDEMNIFICATION. The rights of
indemnification herein provided may be insured against by policies
maintained by the Trust, and shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be a Covered Person, and shall
inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification
to which Trust personnel other than Covered Persons may be entitled by
contract or otherwise under law.

Section 10.5.4. EXPENSES OF INDEMNIFICATION. Expenses of preparation
and presentation of a defense to any claim, action, suit or proceeding
subject to a claim for indemnification under this Section 10.5 shall be
advanced by the Trust prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he or she is not entitled to indemnification
under this Section 10.5, provided that either:

(a) Such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or

(b) A majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or independent legal counsel in a written opinion shall
determine, based upon a review of the readily available facts (as opposed
to the facts available upon a full trial), that there is reason to believe
that the recipient ultimately will be found entitled to indemnification.

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<PAGE>

Section 10.5.5. CERTAIN DEFINED TERMS RELATING TO INDEMNIFICATION. As
used in this Section 10.5, the following words shall have the meanings set
forth below:

(a) A "Disinterested Trustee" is one (i) who is not an Interested
Person of the Trust (including anyone, as such Disinterested Trustee, who
has been exempted from being an Interested Person by any rule, regulation
or order of the Commission), and (ii) against whom none of such actions,
suits or other proceedings or another action, suit or other proceeding on
the same or similar grounds is then or has been pending;

(b) "Claim," "action," "suit" or "proceeding" shall apply to all
claims, actions, suits, proceedings (civil, criminal, administrative or
other, including appeals), actual or threatened; and

(c) "Liability" and "expenses" shall include without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.

ARTICLE 11
Termination or Reorganization

Section 11.1. TERMINATION OF TRUST OR SERIES OR CLASS. Unless terminated as
provided herein, the Trust and each Series and Class designated and established
pursuant to this Declaration of Trust shall continue without limitation of time.

Section 11.1.1. TERMINATION. Subject to approval by the affected
Shareholders, the Trust, any Series, or any Class (and the establishment
and designation thereof) may be terminated by an instrument executed by a
majority of the Trustees then in office; provided, however, that no
approval of affected Shareholders is necessary if a majority of the
Trustees then in office determines that the continuation of the Trust,
Series, or Class is not in the best interests of the Trust, such Series,
such Class, or the affected Shareholders as a result of factors or events
adversely affecting the ability of the Trust, Series, or Class to conduct
its business and operations in an economically viable manner.

Section 11.1.2. DISTRIBUTION OF ASSETS. Upon termination of the Trust
or any Series or Class, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or
anticipated, as may be determined by the Trustees, the Trust shall, in
accordance with such procedures as the Trustees consider appropriate,
reduce the remaining assets of the Trust to distributable form in cash or
other securities, or any combination thereof, and distribute the proceeds
to the affected Shareholders in the manner set forth by resolution of the
Trustees. To the extent permitted by the 1940 Act or other applicable law,
the Trustees may require affected Shareholders to receive Shares of any
remaining Series or Class in lieu of such proceeds.

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<PAGE>

Section 11.1.3. CERTIFICATE OF CANCELLATION. Upon termination of the
Trust, the Trustees shall file a certificate of cancellation in accordance
with Section 3810 of the DBTA.

Section 11.2. SALE OF ASSETS. The Trustees may sell, convey, or transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares corresponding to such other Series) with such transfer either (i) being
made subject to, or with the assumption by the transferee of, the liabilities
belonging to each Series the assets of which are so transferred, or (ii) not
being made subject to, or not with the assumption of, such liabilities.
Following such transfer, the Trustees shall distribute such cash, Shares or
other securities (giving due effect to the assets and liabilities belonging to
and any other differences among the various Series the assets belonging to which
have so been transferred) among the Shareholders of the Series corresponding to
the Series the assets belonging to which have been so transferred. If all of the
assets of the Trust have been so transferred, the Trust shall be terminated
pursuant to Section 11.1.

Section 11.3. MERGER OR CONSOLIDATION.

Section 11.3.1. AUTHORITY TO MERGE OR CONSOLIDATE. The Trust, or any
one or more Series, may, either as the successor, survivor, or
non-survivor, (i) consolidate with one or more other trusts, partnerships,
associations or corporations organized under the laws of the State of
Delaware or any other state of the United States, to form a new
consolidated trust, partnership, association or corporation under the laws
under which any one of the constituent entities is organized, or (ii) merge
into one or more other trusts, partnerships, associations or corporations
organized under the laws of the State of Delaware or any other state of the
United States, or have one or more such trusts, partnerships, associations
or corporations merged into it, any such consolidation or merger to be upon
such terms and conditions as are specified in an agreement and plan of
reorganization entered into by the Trust, or one or more Series as the case
may be, in connection therewith. The terms "merge" or "merger" as used
herein shall also include the purchase or acquisition of any assets of any
other trust, partnership, association or corporation which is an investment
company organized under the laws of the State of Delaware or any other
state of the United States.

Section 11.3.2. NO SHAREHOLDER APPROVAL REQUIRED. Any such
consolidation or merger shall not require the vote of the Shareholders
affected thereby, unless such vote is required by the 1940 Act or other
applicable laws, or unless such merger or consolidation would result in an
amendment of this Declaration of Trust which would otherwise require the
approval of such Shareholders.

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<PAGE>

Section 11.3.3. SUBSEQUENT AMENDMENTS. In accordance with Section
3815(f) of DBTA, an agreement of merger or consolidation may effect any
amendment to this Declaration of Trust or the Bylaws (if any) or effect the
adoption of a new declaration of trust or Bylaws (if any) of the Trust if
the Trust is the surviving or resulting business trust.

Section 11.3.4. CERTIFICATE OF MERGER OR CONSOLIDATION. Upon
completion of the merger or consolidation, the Trustees shall file a
certificate of merger or consolidation in accordance with Section 3810 of
the DBTA.

ARTICLE 12
Amendments

Section 12.1. GENERALLY. Except as otherwise specifically provided herein
or as required by the 1940 Act or other applicable law, this Declaration of
Trust may be amended at any time by an instrument in writing signed by a
majority of the Trustees then in office.

Section 12.2. CERTIFICATE OF AMENDMENT. In the event of any amendment to
this Declaration of Trust which affects the certificate of trust filed by the
Trust in accordance with Section 2.1, the Trustees shall file a certificate of
amendment in accordance with Section 3810 of the DBTA.

Section 12.3. PROHIBITED RETROSPECTIVE AMENDMENTS. No amendment of this
Declaration of Trust or repeal of any of its provisions shall limit or eliminate
the limitation of liability provided to Trustees and officers hereunder with
respect to any act or omission occurring prior to such amendment or repeal.

ARTICLE 13
Miscellaneous Provisions

Section 13.1. CERTAIN INTERNAL REFERENCES. In this Declaration of Trust or
in any such amendment, references to this Declaration of Trust, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
this Declaration of Trust as a whole and as amended or affected by any such
amendment.

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<PAGE>

Section 13.2. CERTIFIED COPIES. The original or a copy of this Declaration
of Trust and of each amendment hereto shall be kept in the office of the Trust
where it may be inspected by any Shareholder. Anyone dealing with the Trust may
rely on a certificate by an officer or Trustee of the Trust as to whether or not
any such amendments have been made and as to any matters in connection with the
Trust hereunder, and with the same effect as if it were the original, may rely
on a copy certified by an officer or Trustee of the Trust to be a copy of this
Declaration of Trust or of any such amendments.

Section 13.3. EXECUTION OF PAPERS. Except as the Trustees may generally or
in particular cases authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the Trustees shall
be signed by the President, any Vice President, Treasurer, any Assistant
Treasurer, Secretary, or any Assistant Secretary, or any officer authorized to
do so by the Trustees or any of the foregoing.

Section 13.4. FISCAL YEAR. The fiscal year of the Trust shall end on
September 30, or such other date as fixed by resolution of the Trustees.

Section 13.5. GOVERNING LAW. This Declaration of Trust is executed and
delivered with reference to DBTA and the laws of the State of Delaware by all of
the Trustees whose signatures appear below, and the rights of all parties and
the validity and construction of every provision hereof shall be subject to and
construed according to DBTA and the laws of the State of Delaware (unless and to
the extent otherwise provided for and/or preempted by the 1940 Act or other
applicable federal securities laws); provided, however, that there shall not be
applicable to the Trust, the Trustees, or this Declaration of Trust (a) the
provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the DBTA) pertaining to trusts which are inconsistent with the rights,
duties, powers, limitations or liabilities of the Trustees set forth or
referenced in this Declaration of Trust. All references to sections of the DBTA
or the 1940 Act, or any rules or regulations thereunder, refer to such sections,
rules, or regulations in effect as of the date of this Declaration of Trust, or
any successor sections, rules, or regulations thereto.

Section 13.6. HEADINGS. Headings are placed herein for convenience of
reference only, and in case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any number
of counterparts, each of which shall be deemed an original.

Section 13.7. RESOLUTION OF AMBIGUITIES. The Trustees may construe any of
the provisions of this Declaration insofar as the same may appear to be
ambiguous or inconsistent with any other provisions hereof, and any such
construction hereof by the Trustees in good faith shall be conclusive as to the
meaning to be given to such provisions. In construing this Declaration, the
presumption shall be in favor of a grant of power to the Trustees.

32
<PAGE>

Section 13.8. SEAL. No official seal of the Trust shall be required to
execute any instruments on behalf of the Trust in accordance with Section 13.3.

Section 13.9. SEVERABILITY. The provisions of this Declaration of Trust are
severable, and if the Trustees shall determine, with the advice of counsel, that
any of such provision is in conflict with the 1940 Act, the DBTA, or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration of Trust; provided, however, that
such determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination. If any provision of this Declaration of Trust shall
be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration of Trust in any jurisdiction.

Section 13.10. SIGNATURES. To the extent permitted by applicable law, any
instrument signed pursuant to a validly executed power of attorney shall be
deemed to have been signed by the Trustee or officer executing the power of
attorney.

33
<PAGE>

IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust, have
executed this Declaration of Trust as of the date first written above.

/s/ Michael J. Cosgrove
__________________________________
Michael J. Cosgrove, Trustee

/s/ Alan M. Lewis
__________________________________
Alan M. Lewis, Trustee

/s/ John R. Costantino
__________________________________
John R. Costantino, Trustee

/s/ William J. Lucas
__________________________________
William J. Lucas, Trustee

/s/ Robert P. Quinn
__________________________________
Robert P. Quinn, Trustee

EXHIBIT 99.B5(k)

INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT

GE INSTITUTIONAL FUNDS
SMALL-CAP GROWTH EQUITY FUND

GE INVESTMENT MANAGEMENT INCORPORATED

Agreement made as of June 2, 1998 between GE INVESTMENT MANAGEMENT
INCORPORATED ("GEIM") and GE INSTITUTIONAL FUNDS (the "Trust") on behalf of its
Small-Cap Growth Equity Fund (the "Fund").

RECITALS

The Trust is a business trust organized under the laws of the State of
Delaware on May 23, 1997 and registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Trust is authorized to divide shares of
beneficial interests in the Trust into two or more separate series and to divide
each such series into two or more classes of Shares. The Fund is a series of the
Trust.

GEIM is a Delaware corporation registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act").

The Trust wishes to retain GEIM to serve as investment adviser and
administrator to the Fund and GEIM wishes to serve in this capacity.

SECTION 1. APPOINTMENT

The Trust hereby appoints GEIM as investment adviser and administrator with
respect to the Fund's assets for the period and on the terms set forth in this
Agreement. GEIM accepts this appointment and hereby agrees to render the
services herein set forth for the compensation herein provided.

Subject to the approval of the Board and to other applicable legal
requirements, GEIM may enter into any advisory or sub-advisory agreement or
contract with another affiliated or unaffiliated entity pursuant to which such
entity will carry out some or all of GEIM's responsibilities listed herein.

SECTION 2. SERVICES AS INVESTMENT ADVISER AND ADMINISTRATOR

(a) Subject to the oversight and supervision of the Trust's board of
trustees (the "Board"), GEIM agrees to provide a continuous investment program
for the Fund's assets, including investment research and management. GEIM will
determine from time to time what investments will be purchased, retained or sold
by the Fund. GEIM will place purchase and sale orders for the Fund's
investments. GEIM will provide services under this Agreement in

<PAGE>

accordance with the Fund's investment objectives, policies and restrictions as
stated in the Trust's current Registration Statement on Form N-1A, as amended
from time to time (the "Registration Statement").

(b) The Trust has furnished or will furnish GEIM with copies of the
Registration Statement, its articles of incorporation and by-laws, if any, as
currently in effect and agrees during the continuance of this agreement to
furnish GEIM with copies of any amendment or supplements thereto before or at
the time such amendments or supplements become effective. GEIM may rely on all
documents furnished to it by the Trust.

(c) Subject to the oversight and supervision of the Board, GEIM agrees to
serve as administrator to the Trust and the Fund and, in this capacity, will:
(i) insure the maintenance of the books and records of the Fund (including those
required to be maintained or preserved by Rules 31a-1 and 31a-2 under the 1940
Act); (ii) prepare reports to shareholders of the Fund, (iii) prepare and file
tax returns for the Fund, (iv) assist with the preparation and filing of reports
and the Registration Statement with the Securities and Exchange Commission (the
"Commission"), (v) provide appropriate officers for the Trust, including a
Secretary or Assistant Secretary, (vi) provide administrative support necessary
for the Board to conduct meetings, and (vii) supervise and coordinate the
activities of other service providers, including independent auditors, legal
counsel, custodians, accounting service agents, and transfer agents.

(d) GEIM will, at its own expense, maintain sufficient staff, and employ or
retain sufficient personnel and consult with any other persons that it
determines may be necessary or useful to the performance of its obligations
under this agreement.

(e) GEIM will keep the Trust informed of developments materially affecting
the Fund, and will, on its own initiative, furnish the Trust from time to time
with whatever information and reports that the Board reasonably requests as
appropriate for this purpose.

SECTION 3. SELECTION OF INVESTMENTS ON BEHALF OF THE FUND.

Unless otherwise set forth in the Registration Statement or directed by the
Trust, GEIM will, in selecting brokers or dealers to effect transactions on
behalf of the Fund select the best overall terms available. In so doing, GEIM
may consider the breadth of the market on the investment, the price of the
security, the size and difficulty of the order , the willingness of the broker
or dealer to position, the reliability, financial condition and execution and
operational capabilities of the broker or dealer, and the reasonableness of the
commission or size of the dealer's "spread", if any, for the specific
transaction and on a continuing basis. GEIM may also consider brokerage and
research services provided to the Fund and /or other accounts over which GEIM or
its affiliates exercise investment discretion. The Trust recognizes the
desirability of GEIM's having access to supplemental investment and market
research and security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to the Trust than
would be the case if the transactions were executed on the basis of the most
favorable price and efficient execution. The Trust, thus, authorizes GEIM, to
the extent permitted by applicable law and regulations, to pay higher brokerage

2
<PAGE>

commissions or dealer spreads for the purchase and sale of securities for the
Fund to brokers who provide supplemental investment and market research and
security and economic analyses, subject to GEIM's determining in good faith that
such commissions are reasonable in terms either of the particular transaction or
of the overall responsibility of GEIM to the Fund and its other clients and that
the total commissions paid by the Fund will be reasonable in relation to the
benefits to the Fund over the long term. In no instance will portfolio
securities be purchased from or sold to GEIM, or any affiliated person thereof
or any investment advisory client thereof, except in accordance with the federal
securities laws and the rules and regulations thereunder.

SECTION 4. COSTS AND EXPENSES.

GEIM will bear the cost of rendering the services it is obligated to
provide under this Agreement and will provide the Trust with all executive,
administrative, clerical and other personnel necessary for the investment and
administrative operations of the Fund and will pay salaries and other
employment-related costs of employing these persons. GEIM will furnish the Trust
and the Fund with office space, facilities, and equipment and will pay the
day-to-day expenses related to the operation of such space, facilities and
equipment.

Except for those expenses assumed by the Fund as provided below, GEIM shall
bear all of the Fund's expenses, including, but not limited to: charges and
expenses of any registrar, the costs of custody, transfer agency and
recordkeeping services in connection with the Fund; registration costs of the
Fund and its shares under Federal and state securities laws; the cost and
expense of printing, including typesetting, and distributing of prospectuses
describing the Fund and supplements to those prospectuses to regulatory
authorities and the Fund's shareholders; all expenses incurred in conducting
meetings of the Fund's shareholders and meetings of the Board relating to the
Fund, excluding fees paid to members of the Board who are not affiliated with
GEIM or any of its affiliates; all expenses incurred in preparing, printing and
mailing proxy statements and reports to shareholders of the Fund; all expenses
incident to any dividend, withdrawal or redemption options provided to Fund
shareholders (except for purchase premiums and redemption fees, if any, charged
directly to shareholders); charges and expenses of any outside service used for
pricing the Fund's portfolio securities and calculating the net asset value of
the Fund's shares; fees and expenses of legal counsel, including counsel to the
members of the Board who are not interested persons of the Fund, or GEIM, and
independent auditors; membership dues of industry associations; postage;
insurance premiums on property or personnel (including officers and Trustees) of
the Trust that inure to their benefit; and all other costs of the Fund's
operations.

The Fund will bear the following expenses: advisory and administration fees
as described in Section 5 of this Agreement; shareholder servicing and
distribution fees under the terms of the shareholder servicing and distribution
plan adopted by the Trust with respect to the Fund pursuant to Rule 12b-1 (the
"Plan") under the 1940 Act; brokerage fees and commissions and other expenses
incurred in the acquisition or disposition of any securities or other
invest-ments; fees and travel expenses of members of the Board or members of any
advisory board or committee who are not affiliated with GEIM, or any of its
affiliates; and expenses that are not normal operating expenses of the Fund
(such as extraordinary expenses, interest and taxes).

3
<PAGE>

SECTION 5. COMPENSATION.

In consideration of services rendered and the expenses paid by GEIM
pursuant to this Agreement, the Trust will pay GEIM on the first business day of
each month a fee calculated as a percentage of the average daily net assets of
the Fund during the previous month at the following annual rates:

AVERAGE DAILY NET ASSETS ANNUAL RATE PERCENTAGE OF FUND (%)
------------------------ ----------------------------------
First $25 million .70
Next $25 million .65
Over $50 million .60

For the purpose of determining fees payable to GEIM under this Agreement,
the value of the Fund's net assets will be computed in the manner described in
the Registration Statement.

SECTION 6. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

(a) The Trust understands and acknowledges that GEIM now acts and will
continue to act as investment manager or adviser to various fiduciary or other
managed accounts ("Other Accounts") and the Trust has no objection to GEIM's so
acting, so long as that when the Fund and any Other Account served by GEIM are
prepared to invest in, or desire to dispose of the same security, available
investments or opportunities for sales will be allocated in a manner believed by
GEIM to be equitable to the Fund and the Other Account. In addition, the Trust
understands and acknowledges that GEIM may, to the extent permitted by
applicable laws and regulations, aggregate securities to be sold or purchased
for the Trust with those to be sold or purchased for Other Accounts so long as
the securities purchased or sold, as well as the expenses incurred in the
transaction, are allocated in a manner believed by GEIM to be equitable to the
Trust and the Other Accounts. The Trust recognizes that, in some cases, the
above procedures may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund.

(b) It is agreed that GEIM may use any supplemental investment research and
other services provided by brokers or dealer obtained for the benefit of the
Fund or the Trust in providing investment advice to Other Accounts.

(c) The Trust understands and acknowledges that the persons employed by
GEIM to assist in the performance of its duties under this Agreement will not
devote their full time to that service and agrees that nothing contained in this
Agreement will be deemed to limit or restrict the right of GEIM or any affiliate
of GEIM to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.

4
<PAGE>

SECTION 7. CONTINUANCE AND TERMINATION OF THE AGREEMENT.

(a) This Agreement will become effective as of the date hereof and will
continue for an initial two-year term and will continue thereafter so long as
the continuance is specifically approved at least annually (a) by the Board or
(b) by a vote of a majority of the Fund's outstanding voting securities, as
defined in the 1940 Act, provided that in either event the continuance is also
approved by a majority of the Trustees who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on the approval.

(b) This Agreement is terminable without penalty, by the Trust on not more
than 60 nor less than 30 days' written notice to GEIM, by vote of holders of a
majority of the Fund's outstanding voting securities, as defined in the 1940
Act, or by GEIM on not more than 60 nor less than 30 days' notice to the Trust.

(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act or in rules adopted under the 1940 Act).

SECTION 8. LIMITATION OF LIABILITY.

(a) GEIM will exercise its best judgment in rendering the services
described in this Agreement, except that GEIM will not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, other than a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of GEIM in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement or to the extent specified in
Section 36(b) of the 1940 Act concerning loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services. Any
person, even though also an officer, director, employee or agent of GEIM, who
may be or become an officer, Trustee, employee or agent of the Trust, will be
deemed, when rendering services to the Trust or acting on any business of the
Trust, to be rendering services to, or acting solely for, the Trust and not as
an officer, director, employee or agent, or one under the control or direction
of, GEIM even though paid by GEIM.

(b) The Trust and GEIM agree that the obligations of the Trust under this
Agreement will not be binding upon any of the Trustees, shareholders, nominees,
officers, employees or agents, whether past, present or future, of the Trust,
individually, but are binding only upon the assets and property of the Fund, as
provided in the Declaration of Trust. The execution and delivery of this
Agreement have been authorized by the Trustees of the Trust, and signed by an
authorized officer of the Trust, acting as such, and neither the authorization
by the Trustees nor the execution and delivery by the officer will be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but will bind only the trust property of the Trust as provided
in the Declaration of Trust. No series of the Trust, including the Fund, will be
liable for any claims against any other series.

<PAGE>

SECTION 9. MISCELLANEOUS.

The Trust recognizes that trustees, officers and employees of GEIM and its
affiliates may from time to time serve as trustees, trustees, officers and
employees of corporations, partnerships, group trusts and business trusts
(including other investment companies) and that such other entities may include
the initials "GE" or the words "General Electric" as part of their name, and
that GEIM or its affiliates may enter into distribution, investment advisory or
other agreements with such other corporations and trusts. If GEIM ceases to act
as the investment adviser to the Trust, the Trust agrees that, at GEIM's
request, any license granted to the Trust for the use of the initials "GE" will
terminate and that the Trust will cease and discontinue completely further use
of such initials and will take all necessary action to change the name of the
Trust and the Fund to a name not including the initials of "GE."

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.

GE INSTITUTIONAL FUNDS

By: /s/ Michael J. Cosgrove
---------------------------------------
Name: Michael J. Cosgrove
Title: Chairman of the Board and President

GE INVESTMENT MANAGEMENT INCORPORATED

By: /s/ Alan M. Lewis
---------------------------------------
Name: Alan M. Lewis
Title: Executive Vice President

EXHIBIT 99.B5(l)

INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT

GE INSTITUTIONAL FUNDS
SMALL-CAP VALUE EQUITY FUND

GE INVESTMENT MANAGEMENT INCORPORATED

Agreement made as of June 2, 1998 between GE INVESTMENT MANAGEMENT
INCORPORATED ("GEIM") and GE INSTITUTIONAL FUNDS (the "Trust") on behalf of its
Small-Cap Value Equity Fund (the "Fund").

RECITALS

GEIM is a Delaware corporation registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act").

The Trust wishes to retain GEIM to serve as investment adviser and
administrator to the Fund and GEIM wishes to serve in this capacity.

SECTION 1. APPOINTMENT

SECTION 2. SERVICES AS INVESTMENT ADVISER AND ADMINISTRATOR

<PAGE>

SECTION 3. SELECTION OF INVESTMENTS ON BEHALF OF THE FUND.

2
<PAGE>

SECTION 4. COSTS AND EXPENSES.

3
<PAGE>

SECTION 5. COMPENSATION.

AVERAGE DAILY NET ASSETS ANNUAL RATE PERCENTAGE OF FUND (%)
------------------------ ----------------------------------

First $25 million .70
Next $25 million .65
Over $50 million .60

For the purpose of determining fees payable to GEIM under this Agreement,
the value of the Fund's net assets will be computed in the manner described in
the Registration Statement.

<PAGE>

SECTION 6. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

4
<PAGE>

SECTION 7. CONTINUANCE AND TERMINATION OF THE AGREEMENT.

(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act or in rules adopted under the 1940 Act).

SECTION 8. LIMITATION OF LIABILITY.

5
<PAGE>

SECTION 9. MISCELLANEOUS.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.

GE INSTITUTIONAL FUNDS

By: /s/ Michael J. Cosgrove
---------------------------------------
Name: Michael J. Cosgrove
Title: Chairman of the Board and President

GE INVESTMENT MANAGEMENT INCORPORATED

By: /s/ Alan M. Lewis
---------------------------------------
Name: Alan M. Lewis
Title: Executive Vice President

EXHIBIT 99.B5(m)

INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT

GE INSTITUTIONAL FUNDS
MID-CAP VALUE EQUITY FUND

GE INVESTMENT MANAGEMENT INCORPORATED

Agreement made as of June 2, 1998 between GE INVESTMENT MANAGEMENT
INCORPORATED ("GEIM") and GE INSTITUTIONAL FUNDS (the "Trust") on behalf of its
Mid-Cap Value Equity Fund (the "Fund").

RECITALS

GEIM is a Delaware corporation registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act").

The Trust wishes to retain GEIM to serve as investment adviser and
administrator to the Fund and GEIM wishes to serve in this capacity.

SECTION 1. APPOINTMENT

SECTION 2. SERVICES AS INVESTMENT ADVISER AND ADMINISTRATOR

<PAGE>

SECTION 3. SELECTION OF INVESTMENTS ON BEHALF OF THE FUND.

Unless otherwise set forth in the Registration Statement or directed by the
Trust, GEIM will, in selecting brokers or dealers to effect transactions on
behalf of the Fund select the best overall terms available. In so doing, GEIM
may consider the breadth of the market on the investment, the price of the
security, the size and difficulty of the order, the willingness of the broker
or dealer to position, the reliability, financial condition and execution and
operational capabilities of the broker or dealer, and the reasonableness of the
commission or size of the dealer's "spread", if any, for the specific
transaction and on a continuing basis. GEIM may also consider brokerage and
research services provided to the Fund and /or other accounts over which GEIM or
its affiliates exercise investment discretion. The Trust recognizes the
desirability of GEIM's having access to supplemental investment and market
research and security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to the Trust than
would be the case if the transactions were executed on the basis of the most
favorable price and efficient execution. The Trust, thus, authorizes GEIM, to
the extent permitted by applicable law and regulations, to pay higher brokerage

2
<PAGE>

SECTION 4. COSTS AND EXPENSES.

3
<PAGE>

SECTION 5. COMPENSATION.

AVERAGE DAILY NET ASSETS ANNUAL RATE PERCENTAGE OF FUND (%)
------------------------ ----------------------------------
First $25 million .60
Next $25 million .55
Over $50 million .50

For the purpose of determining fees payable to GEIM under this Agreement,
the value of the Fund's net assets will be computed in the manner described in
the Registration Statement.

SECTION 6. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

4
<PAGE>

SECTION 7. CONTINUANCE AND TERMINATION OF THE AGREEMENT.

(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act or in rules adopted under the 1940 Act).

SECTION 8. LIMITATION OF LIABILITY.

5
<PAGE>

SECTION 9. MISCELLANEOUS.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.

GE INSTITUTIONAL FUNDS

By: /s/ Michael J. Cosgrove
---------------------------------------
Name: Michael J. Cosgrove
Title: Chairman of the Board and President

GE INVESTMENT MANAGEMENT INCORPORATED

By: /s/ Alan M. Lewis
---------------------------------------
Name: Alan M. Lewis
Title: Executive Vice President

EXHIBIT 99.B5(n)

INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT

GE INSTITUTIONAL FUNDS
HIGH YIELD FUND

GE INVESTMENT MANAGEMENT INCORPORATED

Agreement made as of June 2, 1998 between GE INVESTMENT MANAGEMENT
INCORPORATED ("GEIM") and GE INSTITUTIONAL FUNDS (the "Trust") on behalf of its
High Yield Fund (the "Fund").

RECITALS

GEIM is a Delaware corporation registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act").

The Trust wishes to retain GEIM to serve as investment adviser and
administrator to the Fund and GEIM wishes to serve in this capacity.

SECTION 1. APPOINTMENT

SECTION 2. SERVICES AS INVESTMENT ADVISER AND ADMINISTRATOR

<PAGE>

SECTION 3. SELECTION OF INVESTMENTS ON BEHALF OF THE FUND.

Unless otherwise set forth in the Registration Statement or directed by the
Trust, GEIM will, in selecting brokers or dealers to effect transactions on
behalf of the Fund select the best overall terms available. In so doing, GEIM
may consider the breadth of the market on the investment, the price of the
security, the size and difficulty of the order, the willingness of the broker
or dealer to position, the reliability, financial condition and execution and
operational capabilities of the broker or dealer, and the reasonableness of the
commission or size of the dealer's "spread", if any, for the specific
transaction and on a continuing basis. GEIM may also consider brokerage and
research services provided to the Fund and /or other accounts over which GEIM or
its affiliates exercise investment discretion. The Trust recognizes the
desirability of GEIM's having access to supplemental investment and market
research and security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to the Trust than
would be the case if the transactions were executed on the basis of the most
favorable price and efficient execution. The Trust, thus, authorizes GEIM, to
the extent permitted by applicable law and regulations, to pay higher brokerage

2
<PAGE>

SECTION 4. COSTS AND EXPENSES.

3
<PAGE>

SECTION 5. COMPENSATION.

AVERAGE DAILY NET ASSETS ANNUAL RATE PERCENTAGE OF FUND (%)
------------------------ ----------------------------------

First $25 million .45
Next $25 million .40
Over $50 million .35

For the purpose of determining fees payable to GEIM under this Agreement,
the value of the Fund's net assets will be computed in the manner described in
the Registration Statement.

SECTION 6. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

4
<PAGE>

SECTION 7. CONTINUANCE AND TERMINATION OF THE AGREEMENT.

(c) This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act or in rules adopted under the 1940 Act).

SECTION 8. LIMITATION OF LIABILITY.

<PAGE>

SECTION 9. MISCELLANEOUS.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.

GE INSTITUTIONAL FUNDS

By: /s/ Michael J. Cosgrove
---------------------------------------
Name: Michael J. Cosgrove
Title: Chairman of the Board and President

GE INVESTMENT MANAGEMENT INCORPORATED

By: /s/ Alan M. Lewis
---------------------------------------
Name: Alan M. Lewis
Title: Executive Vice President

EXHIBIT 99.B5(p)

GE INSTITUTIONAL FUNDS
SMALL-CAP VALUE EQUITY FUND

SUB-ADVISORY AGREEMENT

This agreement ("Agreement") is made as of June 29, 1998, between GE
INVESTMENT MANAGEMENT INCORPORATED ("GEIM"), a Delaware corporation, GE
INSTITUTIONAL FUNDS, a Delaware business trust ("Company"), on behalf of the
SMALL-CAP VALUE EQUITY FUND ("Fund"), a series of the Company, solely with
respect to Section 6(b) of this Agreement, and PALISADE CAPITAL MANAGEMENT,
L.L.C., a New Jersey limited liability company ("Sub-Adviser").

RECITALS

GEIM has entered into an Investment Advisory and Administration Agreement
dated June 2, 1998 ("Advisory Agreement") with the Company, an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"), with respect to the Fund, a series of the
Company;

Pursuant to Section 1 of the Advisory Agreement, GEIM is authorized to
delegate its investment advisory responsibilities to other investment advisers,
subject to the requirements of the 1940 Act;

GEIM wishes to retain the Sub-Adviser to furnish certain investment
advisory services to GEIM and the Fund, and the Sub-Adviser is willing to
furnish those services; and

GEIM intends that this Agreement will become effective when approved in
accordance with Section 15 of the 1940 Act;

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:

1. APPOINTMENT. GEIM hereby appoints the Sub-Adviser as an investment
sub-adviser with respect to the Fund's assets for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts that appointment
and agrees to render the services herein set forth, for the compensation
herein provided.

2. DUTIES AS SUB-ADVISER.

(a) Subject to the oversight and supervision of GEIM and the Board of
Trustees of the Company ( "Board"), the Sub-Adviser will provide a
continuous investment program for the Fund's assets, including investment
research and management. The Sub-Adviser will determine from time to time
what investments will be purchased, retained or sold by the Fund. The
Sub-Adviser will be responsible for placing purchase and sell orders for
Fund investments. The

<PAGE>

Sub-Adviser will consult with GEIM from time to time regarding matters
pertaining to the Fund, including market strategy and portfolio
characteristics. The Sub-Adviser will provide services under this Agreement
in accordance with the Fund's investment objective, policies and
restrictions as stated in the Company's current Registration Statement on
Form N-1A and any amendments or supplements thereto ("Registration
Statement") and the Company's Declaration of Trust and By-Laws, if any,
("Constituent Documents"). In this connection and in connection with the
further duties set forth in paragraphs 2(b) - (k) below, the Sub-Adviser
shall provide GEIM and the Board with such periodic reports and
documentation as GEIM or the Board shall reasonably request regarding the
Sub-Adviser's management of the Fund's assets, compliance with applicable
laws and rules and the Registration Statement and all requirements
hereunder.

(b) The Sub-Adviser shall carry out its responsibilities under this
Agreement in compliance with: (1) the Fund's investment objective, policies
and restrictions as set forth in the Registration Statement, (2) the
Constituent Documents, (3) all investment guidelines, policies, procedures
or directives of the Company or GEIM provided to the Sub-Adviser, (4) the
1940 Act and the rules promulgated thereunder, and (5) other applicable
federal and state laws and related regulations. In particular, in carrying
out its duties as Sub-Adviser, Sub-Adviser shall, to the extent within its
control, make every effort to ensure that the Fund continuously qualifies
as a regulated investment company under sub-chapter M of the Internal
Revenue Code of 1986, as amended ("Code") and the regulations promulgated
thereunder. GEIM shall promptly notify the Sub-Adviser of changes to (1),
(2) or (3) above and shall consult with Sub-Adviser before making any
changes relating solely to the Fund's investment objective, policies and
restrictions as set forth in the Registration Statement.

(c) The Sub-Adviser shall take all actions which it considers
necessary to implement the investment objectives and policies of the Fund,
and in particular, to place all orders for the purchase or sale of
securities or other investments for the Fund with brokers or dealers
selected by it, and to that end, the Sub-Adviser is authorized as the agent
of the Company to give instructions to the Company's custodian(s) as to
deliveries of securities or other investments and payments of cash for the
account of the Fund. In connection with the selection of brokers or dealers
and the placing of purchase and sale orders with respect to investments of
the Fund, the Sub-Adviser is directed at all times to seek to obtain best
execution and price within the policy guidelines determined by the Board.

In addition to seeking the best price and execution, to the extent
covered by Section 28(e) of the Securities Exchange Act of 1934, as amended
("1934 Act"), the Sub-Adviser is also authorized to take into consideration
research and statistical information and wire and other quotation services
provided by brokers and dealers to the Sub-Adviser. The Sub-Adviser is also
authorized to effect individual securities transactions at commission rates
in excess of the minimum commission rates available, if it determines in
good faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or
dealer, viewed in terms of either that particular transaction or the
Sub-Adviser's overall responsibilities with respect to the Fund. The
policies with respect to brokerage allocation, determined from time to time
by the Board, are disclosed in the Registration Statement. The Sub-Adviser
will periodically evaluate the statistical data, research

2
<PAGE>

and other investment services provided to it by brokers and dealers. Such
services may be used by the Sub-Adviser in connection with the performance
of its obligations under this Agreement or in connection with other
advisory or investment operations, including using such information in
managing its own accounts. The Sub-Adviser is also authorized to use
soft-dollar services as requested by the Board from time to time. Whenever
the Sub-Adviser simultaneously places orders to purchase or sell the same
security on behalf of the Fund and one or more other accounts advised by
the Sub-Adviser, the orders will be allocated as to price and amount among
all such accounts in a manner believed to be equitable by the Sub-Adviser
to each account.

(d) Subject to: (1) the requirement that the Sub-Adviser seek to
obtain best execution and price within the policy guidelines determined by
the Board and set forth in the Registration Statement, (2) the provisions
of the 1940 Act and the Investment Advisers Act of 1940, as amended
("Advisers Act"), (3) the provisions of the 1934 Act, and (4) other
applicable provisions of law, the Sub-Adviser or an affiliated person of
the Sub-Adviser or of GEIM may act as broker for the Fund in connection
with the purchase or sale of securities or other investments for the Fund.
Such brokerage services are not within the scope of the duties of the
Sub-Adviser under this Agreement. Subject to the requirements of applicable
law and any procedures adopted by the Board, the Sub-Adviser or its
affiliated persons may receive brokerage commissions, fees or other
remuneration from the Fund or the Company for such services in addition to
the Sub-Adviser's fees for services under this Agreement.

(e) The Sub-Adviser will maintain all books and records required to be
maintained by the Company pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf
of the Fund, and will furnish the Board and GEIM with such periodic and
special reports as the Board or GEIM reasonably may request. The
Sub-Adviser shall permit the books and records maintained with respect to
the Fund to be inspected and audited by the Company, GEIM or their
respective agents at all reasonable times during normal business hours upon
reasonable notice. In compliance with the requirements of Rule 3la-3 under
the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Company, agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act any records
which it maintains for the Company and which are required to be maintained
by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly
to the Company any records which it maintains for the Company upon request
by the Company.

(f) At such times as shall reasonably be requested, the Sub-Adviser
will provide to the Board and GEIM economic and investment analyses and
reports, information required in the Registration Statement and information
necessary for GEIM and the Board to review the Fund or discuss the
management of it. The Sub-Adviser will provide quarterly reports setting
forth the Fund's performance and the Sub-Adviser's private account
composite performance and will complete on a quarterly basis the checklist
provided to it by GEIM regarding the Fund's investments and transactions.
The Sub-Adviser shall make available to the Board and GEIM any economic,
statistical and investment services normally available to institutional or
other customers of the Sub-Adviser. The Sub-Adviser will make available its
officers and employees to meet with the Board on reasonable notice to
review the Fund's investments.

3
<PAGE>

(g) In accordance with procedures adopted by the Board, as amended
from time to time, the Sub-Adviser is responsible for assisting the Board
in determining the fair valuation of any illiquid portfolio securities and
will assist the Company's accounting services agent or GEIM to obtain
independent sources of market value for all other portfolio securities.

(h) At such times as shall be reasonably requested by GEIM, the
Sub-Adviser shall review and certify in writing that the information stated
in the Company's Registration Statement relating to the Sub-Adviser, its
management of the Fund, including investment objectives, strategies and
related risks, and its performance history is true, correct and complete to
the best of its knowledge.

(i) The Sub-Adviser will promptly notify GEIM of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders or members, as applicable, and any changes in the key
personnel of the Sub-Adviser, including without limitation portfolio
management personnel responsible for the Fund's assets, in each case prior
to or promptly after such change. Notwithstanding the foregoing, the
Sub-Adviser will promptly notify GEIM of any existing agreement, or upon
entering into any agreement, that may result in a change of control of the
Sub-Adviser, including without limitation the retention of an agent to
assist in the sale of all, or a significant portion, of the business of the
Sub-Adviser.

(j) The Sub-Adviser will calculate its private account composite
performance in compliance with the Performance Presentation Standards of
the Association for Investment Management Research and such performance
will be reviewed at least annually by an independent accounting firm.

(k) Within fifteen days of the end of the last calendar quarter of
each year that this Agreement is in effect, the president or a vice
president of the Sub-Adviser shall certify to GEIM that the Sub-Adviser has
complied with the requirements of Rule 17j-1 during the previous year and
that there has been no violation of the Sub-Adviser's code of ethics or, if
such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of GEIM, the
Sub-Adviser shall permit GEIM, its employees or its agents to examine the
reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1) and all
other records relevant to the Sub-Adviser's code of ethics.

3. EXPENSES. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in connection with its investment sub-advisory
services under this Agreement.

4. COMPENSATION.

For the services rendered, the facilities furnished and the expenses
assumed by the Sub-Adviser, the Adviser shall pay the Sub-Adviser no later than
the twentieth (20th) business day following the end of each calendar month a fee
based on the average daily net assets of the Fund at the following annual rates:

4
<PAGE>

.350% of the first $200,000,000; .325% of the next $100,000,000; and
.300% of amounts in excess of $300,000,000.

The Sub-Adviser's fee shall be paid by GEIM out of GEIM's advisory fee
to the extent such fee is received by GEIM pursuant to the Advisory
Agreement. To the extent that GEIM determines to waive, or to reimburse the
Fund for, all or a portion of its advisory fee, the Sub-Adviser agrees to a
reduction of its fee pro-rata.

The Sub-Adviser's fee shall be accrued daily at 1/365th of the
applicable annual rate set forth above. For the purpose of accruing
compensation, the net assets of the Fund shall be determined in the manner
and on the dates set forth in the current prospectus of the Company, and,
on dates on which the net assets are not so determined, the net asset value
computation to be used shall be as determined on the next day on which the
net assets shall have been determined. In the event of termination of this
Agreement, all compensation due through the date of termination will be
calculated on a pro-rated basis through the date of termination and paid
within thirty (30) business days of the date of termination.

During any period when the determination of net asset value is suspended,
the net asset value of the Fund as of the last business day prior to such
suspension shall for this purpose be deemed to be the net asset value at the
close of each succeeding business day until it is again determined.

5. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable to the
Company or GEIM for any loss resulting from the Sub-Adviser's acts or omissions
as Sub-Adviser to the Fund, except to the extent any such losses result from bad
faith, willful misfeasance, reckless disregard or gross negligence on the part
of the Sub-Adviser or any of its directors, officers or employees in the
performance of the Sub-Adviser's duties and obligations under this Agreement.

6. INDEMNIFICATION.

(a) GEIM agrees to indemnify and hold the Sub-Adviser, its officers and
directors, and any person who controls the Sub-Adviser within the meaning of
Section 15 of the Securities Act of 1933, as amended ("1933 Act") harmless from
any and all direct or indirect liabilities, losses or damages (including
reasonable attorneys' fees) suffered by Sub-Adviser resulting from (i) GEIM's
breach of its duties under the Advisory Agreement or (ii) bad faith, willful
misfeasance, reckless disregard or gross negligence on the part of GEIM or any
of its directors, officers or employees in the performance of GEIM's duties and
obligations under this Agreement, except to the extent such loss results from
the Sub-Adviser's own willful misfeasance, bad faith, reckless disregard or
gross negligence in the performance of Sub-Adviser's duties and obligations
under this Agreement.

(b) The Fund agrees to indemnify and hold the Sub-Adviser, its officers and
directors, and any person who controls the Sub-Adviser within the meaning the
1933 Act harmless from any and all direct or indirect liabilities, losses or
damages (including reasonable

<PAGE>

attorneys' fees) suffered by Sub-Adviser resulting from any misrepresentation of
a material fact in the Registration Statement or the omission of a fact
necessary to make information contained in the Registration Statement not
misleading, except to the extent that such loss results from information in the
Registration Statement that was provided by Sub-Adviser.

(c) The Sub-Adviser agrees to indemnify and hold GEIM, its officers and
directors, and any person who controls GEIM within the meaning of Section 15 of
the 1933 Act, and the Company harmless from any and all direct or indirect
liabilities, losses or damages (including reasonable attorneys' fees) suffered
by GEIM, its officers and directors, and any person who controls GEIM within the
meaning of Section 15 of the 1933 Act, and the Company resulting from (i)
Sub-Adviser's breach of its duties hereunder or (ii) bad faith, willful
misfeasance, reckless disregard or gross negligence on the part of the
Sub-Adviser or any of its directors, officers or employees in the performance of
the Sub-Adviser's duties and obligations under this Agreement, except to the
extent such loss results from the Company's or GEIM's own willful misfeasance,
bad faith, reckless disregard or gross negligence in the performance of their
respective duties and obligations under the Advisory Agreement or this
Agreement.

7. REPRESENTATIONS AND WARRANTIES OF SUB-ADVISER. The Sub-Adviser
represents, warrants and agrees as follows:

(a) The Sub-Adviser (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement;
(iii) has met, and will seek to continue to meet for so long as this
Agreement remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform the
services contemplated by the Advisory Agreement; (iv) has the authority to
enter into and perform the services contemplated by this Agreement and the
execution, delivery and performance by the Sub-Adviser of this Agreement
does not contravene or constitute a default under any agreement binding
upon the Sub-Adviser; (v) will promptly notify GEIM of the occurrence of
any event that would disqualify it from serving as an investment adviser of
an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise; (vi) has filed a notice of exemption pursuant to Rule 4.14 under
the Commodity Exchange Act with the Commodity Futures Trading Commission
and the National Futures Association, or is not required to file such
exemption; and (vii) is duly organized and validly existing under the laws
of the state in which it was organized with the power to own and possess
its assets and carry on its business as it is now being conducted.

(b) The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and will provide
GEIM and the Board with a copy of that code of ethics, together with
evidence of its adoption.

(c) The Sub-Adviser certifies that the information stated in
Post-Effective Amendment No. 1 to the Company's Registration Statement
relating to the Sub-Adviser, its management of the Fund and its performance
history is true, correct and complete to the best of

6
<PAGE>

its knowledge.

8. REPRESENTATIONS AND WARRANTIES OF GEIM. GEIM represents, warrants and
agrees that GEIM (i) is registered as an investment adviser under the Advisers
Act and will continue to be so registered for so long as this Agreement remains
in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by the Advisory Agreement; (iii) has met,
and will seek to continue to meet for so long as this Agreement remains in
effect, any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by the Advisory Agreement;
(iv) has the authority to enter into and perform the services contemplated by
the Advisory Agreement and the execution, delivery and performance by GEIM of
the Advisory Agreement does not contravene or constitute a default under any
agreement binding upon GEIM; (v) will promptly notify the Sub-Adviser of the
occurrence of any event that would disqualify GEIM from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise; (vi) has filed a notice of exemption pursuant to Rule 4.14 under the
Commodity Exchange Act with the Commodity Futures Trading Commission and the
National Futures Association, or is not required to file such exemption; (vii)
is duly organized and validly existing under the Laws of the State of Delaware
with the power to own and possess its assets and carry on its business as it is
now being conducted; and (viii) it has furnished the Sub-Adviser with true and
complete copies of the Constituent Documents and the Registration Statement and
will provide to the Sub-Adviser copies of any amendments or supplements to any
of these materials as soon as practicable after such materials become available.

9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE INFORMATION.
All representations and warranties made by the Sub-Adviser and GEIM pursuant to
Sections 7 and 8, respectively, shall survive for the duration of this Agreement
and the parties hereto shall promptly notify each other in writing upon becoming
aware that any of the foregoing representations and warranties are no longer
true.

10. DURATION AND TERMINATION.

(a) This Agreement shall become effective upon the date first above written
and will continue for an initial two-year term and will continue thereafter so
long as the continuance is specifically approved at least annually (a) by the
Board or (b) by a vote of a majority of the Fund's outstanding voting
securities, as defined in the 1940 Act, provided that in either event the
continuance is also approved by a majority of the Board who are not parties to
this Agreement or "interested persons" (as defined in the 1940 Act) of any party
to this Agreement, by vote cast in person at a meeting called for the purpose of
voting on the approval.

(b) This Agreement may be terminated at any time without the payment of any
penalty, by the Board, or by vote of a majority of the Fund's outstanding voting
securities, on 60 days' written notice to the Sub-Adviser. This Agreement may
also be terminated, without the payment of any penalty, by GEIM: (i) upon 60
days' written notice to the Sub-Adviser; (ii) upon material breach by the
Sub-Adviser of any of the representations and warranties set forth in

7
<PAGE>

Paragraph 8 of this Agreement; or (iii) if the Sub-Adviser becomes unable to
discharge its duties and obligations under this Agreement, including
circumstances such as financial insolvency of the Sub-Adviser or other
circumstances that could adversely affect the Fund. The Sub-Adviser may
terminate this Agreement at any time, without the payment of a penalty, on 60
days' written notice to GEIM. This Agreement will terminate automatically in the
event of its assignment, including without limitation, a change of control of
the Sub-Adviser, or upon termination of the Advisory Agreement.

11. CHANGE OF CONTROL OF THE SUB-ADVISER. The Sub-Adviser will be liable to
the Company and GEIM for all direct and indirect costs resulting from a change
of control of the Sub-Adviser, including without limitation all costs associated
with proxy solicitations, Board meetings, revisions to prospectuses, statements
of additional information and marketing materials, and the hiring of another
sub-adviser to the Fund. The understandings and obligations set forth in this
Section 11 shall survive the termination of this Agreement and shall be binding
upon the Sub-Adviser's successor(s) and/or assign(s).

12. EXCLUSIVITY. During the term of this Agreement, the Sub-Adviser shall
not, without the written consent of GEIM and the Board, serve as investment
adviser or investment sub-adviser to another management investment company
registered under the 1940 Act (or series thereof) with substantially similar
investment objectives, policies and restrictions as those of the Fund ("Another
Small-Cap Fund"), other than a management investment company registered under
the 1940 Act (or series thereof) that is advised by GEIM, PROVIDED, HOWEVER,
that such consent is not required if the Fund has, upon GEIM's receipt of
written notification ("Notification Date") of Sub-Adviser's intent to act as
investment adviser or investment sub-adviser to Another Small-Cap Fund, (i) more
than $25 million of net assets, if the Notification Date is on or after one year
and six months from the date that the first one hundred Fund shares are issued,
(ii) more than $75 million of net assets, if the Notification Date is on or
after two years and six months from the date that the first one hundred Fund
shares are issued or (iii) more than $125 million of net assets, if the
Notification Date is on or after three years and six months from the date that
the first one hundred Fund shares are issued.

13. RIGHT OF FIRST REFUSAL. Subject to the provisions of Section 12 of this
Agreement, the Sub-Adviser shall not serve as investment adviser or investment
sub-adviser to any other management investment company registered under the 1940
Act (or series thereof) ("Other Fund") without having first offered in writing
to serve as investment sub-adviser to a fund advised by GEIM with similar
investment objectives, policies and restrictions for an investment sub-advisory
fee not to exceed the lesser of (a) the investment sub-advisory fee contemplated
for the Other Fund and (b) the median investment sub-advisory fee for the
applicable asset class described in Lipper Analytical Services ("Lipper"), or if
Lipper no longer provides such information, an independent mutual fund data
provider mutually agreed upon by GEIM and the Sub-Adviser ("Offer"). The Offer
shall be valid for thirty (30) days from the date of its receipt by GEIM. If
GEIM accepts the Offer, the Sub-Adviser shall not serve as investment adviser or
investment sub-adviser to the Other Fund, unless the Board does not approve the
sub-advisory agreement with GEIM or the amount of the sub-advisory fee
contemplated.

8
<PAGE>

14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no material amendment to the terms of
this Agreement shall be effective until approved by a vote of a majority of the
Fund's outstanding voting securities (unless the Company receives an SEC order
or opinion of counsel, or the issue is the subject of a position of the SEC or
its staff, permitting it to modify the Agreement without such vote).

15. GOVERNING LAW. This Agreement shall be construed in accordance with the
1940 Act and the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of New York conflict with the applicable provisions of the 1940 Act,
the latter shall control.

16. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto. As used in this Agreement, the terms "majority of
the outstanding voting securities," "affiliated person," "interested person,"
"assignment," "broker," "investment adviser," "net assets," "sale," "sell" and
"security" shall have the same meaning as such terms have in the 1940 Act,
subject to such exemption as may be granted by the SEC by any rule, regulation
or order. Where the effect of a requirement of the federal securities laws
reflected in any provision of this Agreement is made less restrictive by rule,
regulation or order of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. This Agreement may be signed in counterpart.

9
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.

GE INVESTMENT MANAGEMENT INCORPORATED

BY: /s/ Michael J. Cosgrove
------------------------------
Name: Michael J. Cosgrove
Title:Executive Vice President

GE INSTITUTIONAL FUNDS, ON
BEHALF OF THE SMALL-CAP VALUE EQUITY
FUND, A SERIES OF GE INSTITUTIONAL FUNDS,
SOLELY WITH RESPECT TO SECTION 6(b) OF THIS
AGREEMENT

BY: /s/ Michael J. Cosgrove
------------------------------
Name: Michael J. Cosgrove
Title:President

PALISADE CAPITAL MANAGEMENT, L.L.C.

BY: /s/ Steven Berman
------------------------------
Name: Steven Berman
Title: Senior Executive Vice President

EXHIBIT 99.B10

Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
TEL: (202) 383-0100
FAX: (202) 637-3593

July 23, 1998

Board of Trustees
GE Institutional Funds
3003 Summer Street
Stamford, CT 06905

RE: POST-EFFECTIVE AMENDMENT NUMBER 2
GE INSTITUTIONAL FUNDS
(FILE NOS. 333-29337, 811-08257)
------------------------------------

Trustees:

We have acted as counsel to GE Institutional Funds (the "Trust"), a
business trust organized under the laws of the State of Delaware, in connection
with its registration of an indefinite number of shares of beneficial interest
in the Small-Cap Growth Equity Fund, the Small-Cap Value Equity Fund, the
Mid-Cap Value Equity Fund and the High Yield Fund, each an investment portfolio
of the Trust (the "Shares") under the Securities Act of 1933, as amended (the
"1933 Act"). In this connection, we have prepared post-effective amendment
number 2 to the registration statement to be filed by you with the Securities
and Exchange Commission on Form N-1A (File No. 333-29337) (the "registration
statement"). We also are familiar with the actions taken by you by at the board
of trustees meeting on June 2, 1998 in connection with the authorization,
issuance and sale of the Shares.

We have examined such Trust records, certificates and other documents and
reviewed such questions of law as we have considered necessary or appropriate
for purposes of this opinion. In our examination of such materials, we have
assumed the genuineness of all signatures and the conformity to the original
documents of all copies submitted to us. As to certain questions of fact
material to our opinion, we have relied upon statements of officers of the Trust
and upon representations of the Trust made in the registration statement.

<PAGE>

Board of Trustees

July 23, 1998
Page 2

Based upon the foregoing, we are of the opinion that the Shares, when
issued and sold in the manner described in the registration statement, will be
legally issued, fully paid and non-assessable.

We are attorneys licensed to practice only in the State of Georgia and the
District of Columbia.

We hereby consent to the reference to our name in the prospectuses and
statement of additional information filed as part of the registration statement.
In giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the 1933 Act.

Very truly yours,

SUTHERLAND, ASBILL & BRENNAN LLP

By: /s/ STEPHEN E. ROTH
-----------------------------
Stephen E. Roth

EXHIBIT 99.B11

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 2
to the registration statement on Form N-1A (the "Registration Statement") of our
report dated October 15, 1997, relating to the Statement of Assets and
Liabilities of the GE Institutional Funds, as of October 9, 1997, which is also
incorporated by reference into the Registration Statement. We also consent to
the reference to us under the heading "Independent Accountants" in the Statement
of Additional Information.

/s/ PricewaterhouseCoopers LLP
- ------------------------------

PricewaterhouseCoopers LLP
Boston, Massachusetts
July 24, 1998

EXHIBIT 99.B16

GE Institutional Funds Emerging Markets Fund

Calculation of Aggregate Total Return

This method compares a fund's net asset value (NAV), at the beginning and end of
a period with the results being expressed as a percent of the beginning net
asset value. The net asset value is adjusted to reflect the compounding effect
of reinvesting dividends as well as capital gains distributions, if any.
Dividends and distributions are reinvested on the ex-dividend date at the
Ex-dividend NAV.

The following computation illustrates this methodology for the period since the
Fund's inception to March 31, 1998.

Factual Data
Investment
Class
---------------
1 Opening NAV 10.00

2 Closing NAV - 3/31/98 11.03

3 Income Distributions
Ex-Date 12/29/97
Amount / Unit 0.0344
NAV on ex-date 9.89

Income Sources
Ordinary Income 0.0344
Short Term Capital Gains -
Long Term Capital Gains -

Computation

Investment Class = { ( 9.89 + .0344 ) / 10.00 * ( 11.03 / 9.89 ) } - 1

= { .99244 * 1.11527 } - 1

= .1069 or 10.69%

Page 1
<PAGE>

GE Institutional Funds International Equity Fund

Calculation of Aggregate Total Return

The following computation illustrates this methodology for the period since the
Fund's inception to March 31, 1998.

Factual Data
Investment
Class
----------
1 Opening NAV 10.00

2 Closing NAV - 3/31/98 12.02

3 Income Distributions
Ex-Date 12/29/97
Amount / Unit 0.0063
NAV on ex-date 10.23

Income Sources
Ordinary Income 0.0063
Short Term Capital Gains -
Long Term Capital Gains -

Computation

Investment Class = { ( 10.23 + .0063 ) / 10.00 * ( 12.02 / 10.23 ) } - 1

= { 1.02363 * 1.17498 } - 1

= .2027 or 20.27%

Page 2

<PAGE>
GE Institutional Funds U.S. Equity Fund

Calculation of Aggregate Total Return

The following computation illustrates this methodology for the period since the
Fund's inception to March 31, 1998.

Factual Data
Investment
Class
---------------
1 Opening NAV 10.00

2 Closing NAV - 3/31/98 11.52

3 Income Distributions
Ex-Date 12/29/97
Amount / Unit 0.0080
NAV on ex-date 10.07

Income Sources
Ordinary Income 0.0080
Short Term Capital Gains -
Long Term Capital Gains -

Computation

Investment Class = { ( 10.07 + .0080 ) / 10.00 * ( 11.52 / 10.07 ) } - 1

= { 1.00780 * 1.14399} - 1

= .1529 or 15.29%

Page 3

<PAGE>

GE Institutional Funds Mid-Cap Growth Fund

Calculation of Aggregate Total Return

The following computation illustrates this methodology for the period since the
Fund's inception to March 31, 1998.

Factual Data
Investment
Class
---------------
1 Opening NAV 10.00

2 Closing NAV - 3/31/98 11.27

3 Income Distributions
Ex-Date 12/29/97
Amount / Unit 0.0058
NAV on ex-date 9.82

Income Sources
Ordinary Income 0.0058
Short Term Capital Gains -
Long Term Capital Gains -

Computation

Investment Class = { ( 9.82 + .0058 ) / 10.00 * ( 11.27 / 9.82 ) } - 1

= { .98258 * 1.14766} - 1

= .1277 or 12.77%

Page 4
<PAGE>

GE Institutional Funds S&P 500 Index Fund

Calculation of Aggregate Total Return

The following computation illustrates this methodology for the period since the
Fund's inception to March 31, 1998.

Factual Data
Investment
Class
---------------
1 Opening NAV 10.00

2 Closing NAV - 3/31/98 11.63

3 Income Distributions
Ex-Date 12/29/97
Amount / Unit 0.0118
NAV on ex-date 10.02

Income Sources
Ordinary Income 0.0118
Short Term Capital Gains -
Long Term Capital Gains -

Computation

Investment Class = { ( 10.02 + .0118 ) / 10.00 * ( 11.63 / 10.02 ) } - 1

= { 1.00318 * 1.16068 } - 1

= .1644 or 16.44%

Page 5

<PAGE>
GE Institutional Funds Income Fund

Calculation of Aggregate Total Return

This method compares a fund's account value, at the end of a period with a
fund's account value, at the beginning of a period.

( Ending Account Value / Beginning Account Value ) - 1

where:

Beginning Account Value = Net asset value (NAV) at the beginning of the
period multiplied by 1000 "beginning units"
(a hypothetical number of Units).

Ending Account Value = Ending Units * NAV at end of the period

Total Units = Beginning Units = numb or units purchased month 1
+ number of units purchased month 2 .....
continued through the end of the period

Units Purchased = Total Income Earned that Month /
NAV at end of Month

Income Earned = Income per unit multiplied by total
number of units
through end of prior months

The following computation illustrates this methodology for the period since
the Fund's inception to March 31, 1998. ( Investment Class Only)

Factual Data

A B C D E F G H I J
INCOME REINVEST. UNIT INCOME INCOME UNITS TOTAL ACCOUNT CURRENT YTD
DATE PER UNIT VALUE VALUE EARNED PURCHASED UNITS VALUE MONTH RETURN RETURN
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
21-Nov-97 10.00 1,000.000 10,000.00
Nov-97 0.01433 10.01 10.00 14.33 1.432 1,001.432 10,014.32 0.14% 0.14%
Dec-97 0.04752 10.06 10.05 47.59 4.730 1,006.162 10,111.93 0.98% 1.13%
Jan-98 0.04816 10.08 10.14 48.45 4.807 1,010.969 10,251.22 1.39% 2.53%
Feb-98 0.04910 10.08 10.08 49.64 4.925 1,015.894 10,240.21 -0.11% 2.42%
Mar-98 0.04800 10.09 10.08 48.76 4.833 1,020.726 10,288.92 0.48% 2.91%

</TABLE>

Input numbers for columns A, B, C, D, E

A = Month - Year

B = Income per Unit

C = Reinvestment NAV

D = NAV per unit at Month End

E = G^ * B, where G^ is from prior month

F = E / D

G = E + F

H = G * D

I = H / H^ -1, where H^ is from prior month

J = ( ( J^ + 1) * ( I + 1) ) - 1, where J^ is from prior month

Page 6

<PAGE>
GE Institutional Funds Money Market Fund

Calculation of Aggregate Total Return

This method compares a fund's account value, at the end of a period with a
fund's account value, at the beginning of a period.

( Ending Account Value / Beginning Account Value ) - 1

where:

Beginning Account Value = Net asset value (NAV) at the beginning of the
period multiplied by 1000 "beginning units"
(a hypothetical number of Units).

Ending Account Value = Ending Units * NAV at end of the period

Total Units = Beginning Units = numb or units purchased month 1
+ number of units purchased month 2 ..... continued
through the end of the period

Units Purchased = Total Income Earned that Month /
NAV at end of Month

Income Earned = Income per unit multiplied by total number of units
through end of prior months

The following computation illustrates this methodology for the period since
the Fund's inception to March 31, 1998. ( Investment Class Only)

Factual Data

A B C D E F G H I J
INCOME REINVEST. UNIT INCOME INCOME UNITS TOTAL ACCOUNT CURRENT YTD
DATE PER UNIT VALUE VALUE EARNED PURCHASED UNITS VALUE MONTH RETURN RETURN
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2-Dec-97 1.00 1,000.000 1,000.00
Dec-97 0.00451 1.00 1.00 4.51 4.513 1,004.513 1,004.51 0.45% 0.45%
Jan-98 0.00462 1.00 1.00 4.64 4.642 1,009.155 1,009.16 0.46% 0.92%
Feb-98 0.00409 1.00 1.00 4.13 4.129 1,013.284 1,013.28 0.41% 1.33%
Mar-98 0.00452 1.00 1.00 4.58 4.584 1,017.868 1,017.87 0.45% 1.79%

</TABLE>

Input numbers for columns A, B, C, D, E

A = Month - Year

B = Income per Unit

C = Reinvestment NAV

D = NAV per unit at Month End

E = G^ * B, where G^ is from prior month

F = E / D

G = E + F

H = G * D

I = H / H^ -1, where H^ is from prior month

J = ( ( J^ + 1) * ( I + 1) ) - 1, where J^ is from prior month

Page 7

<ARTICLE> 6
<CIK> 0001040061
<NAME> GE INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 011
<NAME> GE INSTITUTIONAL EMERGING MARKETS FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> NOV-25-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 6602
<INVESTMENTS-AT-VALUE> 7295
<RECEIVABLES> 33
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7333
<PAYABLE-FOR-SECURITIES> 140
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 147
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6513
<SHARES-COMMON-STOCK> 651
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (1)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (19)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 693
<NET-ASSETS> 7186
<DIVIDEND-INCOME> 40
<INTEREST-INCOME> 7
<OTHER-INCOME> (2)
<EXPENSES-NET> (24)
<NET-INVESTMENT-INCOME> 21
<REALIZED-GAINS-CURRENT> (18)
<APPREC-INCREASE-CURRENT> 693
<NET-CHANGE-FROM-OPS> 696
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 651
<NUMBER-OF-SHARES-REDEEMED> (2)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 7186
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 24
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24
<AVERAGE-NET-ASSETS> 6583
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 1.030
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.030
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0001040061
<NAME> GE INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 031
<NAME> GE INSTITUTIONAL MID-CAP GROWTH FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> NOV-25-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 12864
<INVESTMENTS-AT-VALUE> 14602
<RECEIVABLES> 17
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14619
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 7
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12958
<SHARES-COMMON-STOCK> 1296
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (100)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1737
<NET-ASSETS> 14612
<DIVIDEND-INCOME> 35
<INTEREST-INCOME> 16
<OTHER-INCOME> 0
<EXPENSES-NET> (26)
<NET-INVESTMENT-INCOME> 25
<REALIZED-GAINS-CURRENT> (100)
<APPREC-INCREASE-CURRENT> 1737
<NET-CHANGE-FROM-OPS> 1662
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1309
<NUMBER-OF-SHARES-REDEEMED> (14)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 14612
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26
<AVERAGE-NET-ASSETS> 13376
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.020
<PER-SHARE-GAIN-APPREC> 1.260
<PER-SHARE-DIVIDEND> (0.010)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.270
<EXPENSE-RATIO> 0.56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0001040061
<NAME> GE INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 021
<NAME> GE INSTITUTIONAL INTERNATIONAL EQUITY FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> NOV-25-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 116595
<INVESTMENTS-AT-VALUE> 128851
<RECEIVABLES> 673
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 129525
<PAYABLE-FOR-SECURITIES> 427
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66
<TOTAL-LIABILITIES> 493
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 116036
<SHARES-COMMON-STOCK> 10736
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 218
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 514
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12264
<NET-ASSETS> 129032
<DIVIDEND-INCOME> 345
<INTEREST-INCOME> 61
<OTHER-INCOME> (32)
<EXPENSES-NET> (134)
<NET-INVESTMENT-INCOME> 240
<REALIZED-GAINS-CURRENT> 514
<APPREC-INCREASE-CURRENT> 12264
<NET-CHANGE-FROM-OPS> 13018
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10750
<NUMBER-OF-SHARES-REDEEMED> (16)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 129032
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 133
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 134
<AVERAGE-NET-ASSETS> 56637
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 2.000
<PER-SHARE-DIVIDEND> (0.010)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 12.020
<EXPENSE-RATIO> 0.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0001040061
<NAME> GE INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 061
<NAME> GE INSTITUTIONAL US EQUITY FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> NOV-25-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 100843
<INVESTMENTS-AT-VALUE> 114693
<RECEIVABLES> 485
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115178
<PAYABLE-FOR-SECURITIES> 307
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 578
<TOTAL-LIABILITIES> 885
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99451
<SHARES-COMMON-STOCK> 9922
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 417
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 555
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13870
<NET-ASSETS> 114293
<DIVIDEND-INCOME> 577
<INTEREST-INCOME> 78
<OTHER-INCOME> (3)
<EXPENSES-NET> (155)
<NET-INVESTMENT-INCOME> 497
<REALIZED-GAINS-CURRENT> 555
<APPREC-INCREASE-CURRENT> 13870
<NET-CHANGE-FROM-OPS> 14922
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (80)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10054
<NUMBER-OF-SHARES-REDEEMED> (140)
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> 114293
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 152
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 155
<AVERAGE-NET-ASSETS> 103411
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 1.480
<PER-SHARE-DIVIDEND> (0.010)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.520
<EXPENSE-RATIO> 0.43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0001040061
<NAME> GE INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 071
<NAME> GE INSTITUTIONAL S & P 500 INDEX FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> NOV-25-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 17427
<INVESTMENTS-AT-VALUE> 20117
<RECEIVABLES> 25
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20145
<PAYABLE-FOR-SECURITIES> 17
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3
<TOTAL-LIABILITIES> 20
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17308
<SHARES-COMMON-STOCK> 1731
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 68
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 51
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2698
<NET-ASSETS> 20125
<DIVIDEND-INCOME> 94
<INTEREST-INCOME> 8
<OTHER-INCOME> 0
<EXPENSES-NET> (13)
<NET-INVESTMENT-INCOME> 89
<REALIZED-GAINS-CURRENT> 50
<APPREC-INCREASE-CURRENT> 2698
<NET-CHANGE-FROM-OPS> 2835
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (21)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1734
<NUMBER-OF-SHARES-REDEEMED> (5)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 20125
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13
<AVERAGE-NET-ASSETS> 17992
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 1.590
<PER-SHARE-DIVIDEND> (0.010)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.630
<EXPENSE-RATIO> 0.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0001040061
<NAME> GE INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 091
<NAME> GE INSTITUTIONAL INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> NOV-21-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 65627
<INVESTMENTS-AT-VALUE> 65638
<RECEIVABLES> 1071
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66709
<PAYABLE-FOR-SECURITIES> 6945
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72
<TOTAL-LIABILITIES> 7017
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59241
<SHARES-COMMON-STOCK> 5922
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 437
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11
<NET-ASSETS> 59692
<DIVIDEND-INCOME> 11
<INTEREST-INCOME> 1247
<OTHER-INCOME> 0
<EXPENSES-NET> (66)
<NET-INVESTMENT-INCOME> 1192
<REALIZED-GAINS-CURRENT> 437
<APPREC-INCREASE-CURRENT> 11
<NET-CHANGE-FROM-OPS> 1640
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1189
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5849
<NUMBER-OF-SHARES-REDEEMED> (41)
<SHARES-REINVESTED> 114
<NET-CHANGE-IN-ASSETS> 59692
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 65
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 66
<AVERAGE-NET-ASSETS> 57316
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.210
<PER-SHARE-GAIN-APPREC> 0.080
<PER-SHARE-DIVIDEND> (0.210)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.080
<EXPENSE-RATIO> 0.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0001040061
<NAME> GE INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 101
<NAME> GE INSTITUTIONAL MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> DEC-02-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 32521
<INVESTMENTS-AT-VALUE> 32521
<RECEIVABLES> 8
<ASSETS-OTHER> 38
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32567
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35
<TOTAL-LIABILITIES> 35
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32532
<SHARES-COMMON-STOCK> 32532
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 32532
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 265
<OTHER-INCOME> 0
<EXPENSES-NET> (11)
<NET-INVESTMENT-INCOME> 254
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 254
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (254)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 32452
<NUMBER-OF-SHARES-REDEEMED> (13)
<SHARES-REINVESTED> 93
<NET-CHANGE-IN-ASSETS> 32532
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11
<AVERAGE-NET-ASSETS> 14213
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.020
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.020)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>