<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GE INVESTMENTS FUNDS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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GE INVESTMENTS FUNDS, INC.
3003 SUMMER STREET
STAMFORD, CONNECTICUT 06905
---------
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON JULY __, 1997
To owners of variable life insurance contracts and variable
annuity contracts (collectively, the "variable contracts") issued by The Life
Insurance Company of Virginia ("LOV") entitled to give voting instructions in
connection with certain separate accounts established by LOV:
Notice is hereby given that a special meeting (the "Meetings")
of the shareholders of each of the S&P 500 Index Fund and the Real Estate
Securities Fund, each an investment portfolio of GE Investments Funds, Inc. (the
"Company"), will be held on July __, 1997 at the offices of GE Investments, 3003
Summer Street, Stamford, Connecticut 06905 in Conference Room 1A at 10:00 a.m.,
Eastern Standard Time, or any adjournment or adjournments thereof.
The Meetings will be held for the following purposes:
1. To approve or disapprove an investment sub-advisory
agreement between GE Investment Management Incorporated ("GEIM") and State
Street Global Advisors ("SSGA"), a division of State Street Bank and Trust
Company, pursuant to which SSGA will serve as investment sub-adviser to the S&P
500 Index Fund. SHAREHOLDERS OF THE S&P 500 INDEX FUND VOTING SEPARATELY.
2. To approve or disapprove an investment sub-advisory
agreement between GEIM and Seneca Capital Management, LLC ("Seneca"), pursuant
to which Seneca will continue to serve as investment sub-adviser to the Real
Estate Securities Fund. SHAREHOLDERS OF THE REAL ESTATE SECURITIES FUND VOTING
SEPARATELY.
3. To transact such other business as may properly come before
the Meetings or any adjournment(s) thereof.
LOV and certain separate accounts of LOV are the only
shareholders of the S&P 500 Index Fund and the Real Estate Securities Fund.
However, LOV hereby solicits and agrees to vote the shares of the S&P 500 Index
Fund and the Real Estate Securities Fund attributable to LOV and such separate
accounts at the Meetings in
<PAGE> 3
accordance with timely instructions received from owners of the variable
contracts having contract values allocated to such separate accounts invested in
such shares.
As a variable contract owner of record at the close of
business on June 6, 1997, you have the right to instruct LOV as to the manner in
which shares of the S&P 500 Index Fund and the Real Estate Securities Fund
attributable to your variable contract should be voted. To assist you in giving
your instructions, a Voting Instruction Form is enclosed that reflects the
number of shares of the S&P 500 Index Fund and the Real Estate Securities Fund
for which you are entitled to give voting instructions. In addition, a Proxy
Statement is attached to this Notice and describes the matters to be voted upon
at the Meetings or any adjournment(s) thereof.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETINGS, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED VOTING INSTRUCTION FORM(S) AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
By Order of the Board of Directors
Matthew J. Simpson
Secretary
Stamford, Connecticut
July 1, 1997
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GE INVESTMENTS FUNDS, INC.
3003 Summer Street
Stamford, Connecticut 06905
PROXY STATEMENT
July 1, 1997
-----------
This Proxy Statement is being furnished on behalf of the Board
of Directors of GE Investments Funds, Inc. (the "Company") by The Life Insurance
Company of Virginia ("LOV") to owners of variable annuity contracts and variable
life insurance contracts (collectively, the "variable contracts") issued by LOV
and having contract values on the record date allocated to certain separate
accounts of LOV invested in shares of the S&P 500 Index Fund (the "Index Fund")
and the Real Estate Securities Fund (the "RE Fund"), each an investment
portfolio of the Company.
This Proxy Statement is being furnished in connection with the
solicitation of voting instructions from owners of such variable contracts for
use at special meetings (the "Meetings") of shareholders of the Index Fund and
the RE Fund. The Meetings are to be held on July __, 1997, at 10:00 a.m.,
Eastern Standard Time at the offices of GE Investments, 3003 Summer Street,
Stamford, Connecticut 06905 in Conference Room 1A, for the purposes set forth
below and in the accompanying Notice of the Special Meeting. The approximate
mailing date of this Proxy Statement and Voting Instruction Form(s) is June 1,
1997.
The cost of the Index Fund Meeting, including the solicitation
of voting instructions will be paid by GE Investment Management Incorporated
("GEIM"). The cost of the RE Fund Meeting will be paid by an affiliate of Seneca
Capital Management, LLC ("Seneca"). In addition to the use of the mail, voting
instructions may be solicited, in person or by telephone, by officers of the
Company and regular employees and representatives of LOV or GEIM or their
respective affiliates, who will not be separately compensated for such
activities. If necessary, LOV may employ outside contractors to assist in the
solicitation.
At the Index Fund Meeting, the shareholders of the Index Fund
will be asked (1) to approve or disapprove an investment sub-advisory agreement
(the "Proposed Index Fund Sub-Advisory Agreement"), between GEIM and State
Street Global Advisors ("SSGA"), a division of State Street Bank and Trust
Company ("State Street"), pursuant to which SSGA will serve as investment
sub-adviser to the Index Fund, and (2) to transact such other business as may
properly come before the Meeting or any adjournment(s) thereof.
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At the RE Fund Meeting, shareholders of the RE Fund will be
asked to: (1) approve or disapprove an investment sub-advisory agreement (the
"Proposed RE Fund Sub-Advisory Agreement") between GEIM and Seneca pursuant to
which Seneca will continue to serve as investment sub-adviser to the RE Fund,
and (2) to transact such other business as may come before the Meeting or any
adjournment(s) thereof.
The following chart indicates which shareholders are entitled
to vote on each proposal:
VOTING GROUPS BY FUND
<TABLE>
<CAPTION>
================================================================================
Proposal Index Fund RE Fund
-------- ---------- -------
<S> <C> <C>
- --------------------------------------------------------------------------------
1. Approval of
Investment Sub-
Advisory X
Agreement with
SSGA
- --------------------------------------------------------------------------------
2. Approval of
Investment Sub-
Advisory X
Agreement with
Seneca
================================================================================
</TABLE>
GENERAL VOTING INFORMATION
LOV itself and certain separate accounts of LOV (the
"Accounts") are the only shareholders of the Index Fund and the RE Fund. LOV
will vote the shares of these Funds held by it and the Accounts at the Meetings
in accordance with timely instructions received from persons entitled to give
voting instructions under the variable contracts funded through the Accounts.
All properly executed Voting Instruction Forms received by LOV by the close of
business on July __, 1997 will be counted.
LOV will vote shares attributable to variable contracts as to
which no voting instructions are received in proportion (for, against or
abstain) to those for which instructions are received. LOV will also vote shares
not attributable to variable contracts (i.e., representing seed money investment
in the Fund made by LOV) in proportion to those for which instructions are
received from owners of variable contracts. If a Voting Instruction Form is
received that does not specify a choice, LOV will consider its timely receipt as
an instruction to vote in favor of the proposal(s) to which it relates. In
certain circumstances, LOV has the right to disregard voting instructions from
certain variable contract owners. LOV does not believe that these circumstances
exist with respect to the
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matters currently before shareholders. Variable contract owners may revoke
voting instructions given to LOV at any time prior to the Meetings by notifying
the Secretary of the Company in writing.
The Company, a Virginia corporation organized on May 14, 1984,
is registered with the U.S. Securities and Exchange Commission (the "SEC") as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"). The Company sells shares to the following Accounts:
Life of Virginia Separate Account I, Life of Virginia Separate Account II, and
Life of Virginia Separate Account III (which support variable life insurance
contracts); and Life of Virginia Separate Account 4 and Life of Virginia
Separate Account 5 (which support variable annuity contracts). Each of the
Accounts is a segregated asset account established by LOV and each Account,
other than Life of Virginia Separate Account 5, is registered with the SEC under
the 1940 Act as a unit investment trust. Net premiums paid by a variable
contract owner may be allocated to one or more of the eight investment
subdivisions of each Account that invest in shares of the Company. Each
investment subdivision invests in a series of capital stock corresponding to one
of the Company's investment portfolios and represents an interest in that
investment portfolio. The Index Fund and the RE Fund are each one of these
separate investment portfolios.
The Board of Directors of the Company has fixed June 6, 1997
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting. As of June 6, 1997, there were issued and
outstanding ________ shares of capital stock of the Index Fund and ________
shares of capital stock of the RE Fund.
The following table sets forth, as of June 6, 1997, the
beneficial ownership of the capital stock of the Index Fund and RE Fund by each
person known by the Company or LOV to beneficially own more than 5% of the
shares of any class of such stock. For this purpose, persons who have the right
to instruct LOV as to shares of stock attributable to a variable contract are
considered beneficial owners of such shares of stock. The table also sets forth
the beneficial ownership of the capital stock of the Index Fund and RE Fund by
directors and officers of the Company (individually and as a group) as of June
6, 1997.
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<TABLE>
<CAPTION>
================================================================================
NUMBER OF SHARES (AND % OF CLASS)
BENEFICIALLY OWNED
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NAME OF BENEFICIAL OWNER INDEX FUND RE FUND
- ------------------------ ---------- -------
<S> <C> <C>
- --------------------------------------------------------------------------------
LOV
Scott Reeks
J. Clifford Miller, III
Directors and Officers as a group
- --------------------------------------------------------------------------------
*Percentage does not exceed 1%
================================================================================
</TABLE>
The number of shares of stock in the Index Fund and the RE
Fund for which a variable contract owner (or annuitants or beneficiaries
thereunder) may give voting instructions is equal to the number of shares, or
fraction of shares, held in the Account attributable to such variable contract
owner as of the record date. Each share of the Fund's outstanding capital stock
is entitled to one vote and fractional votes are counted.
All shares for which LOV timely receives properly executed
voting instructions, which are not subsequently revoked prior to the Meeting,
will be voted at the Meeting in accordance with such instructions. To the
knowledge of the Company and LOV, no person has the right to instruct LOV with
respect to more than 5% of the shares of either the Index Fund or the RE Fund.
Prior to December 31, 1996, Aon Savings Plan, an employee
benefit plan for employees of Aon Corporation (the "Plan"), held a substantial
number of shares of each class of the Company's capital stock, including the
Index Fund and RE Fund. As a result, the trustees of Aon Savings Plan likely
were controlling persons of the Company and the Index Fund and RE Fund during
the period in which the Plan held the Company's stock.
Approval of both Proposed Sub-Advisory Agreements requires, as
to each Fund voting, the affirmative vote of the lesser of (1) more than 50% of
the shares entitled to be cast for that Fund, or (2) 67% or more of the shares
present (in person or by proxy) at the Meeting for that Fund, if the holders of
more than 50% of the shares entitled to be cast for that Fund are present.
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<PAGE> 8
ITEM 1: APPROVAL OR DISAPPROVAL OF PROPOSED INVESTMENT
SUB-ADVISORY AGREEMENT BETWEEN GEIM AND SSGA
GEIM, which is located at 3003 Summer Street, Stamford,
Connecticut 06905, serves as the Index Fund's investment adviser and
administrator. GEIM, which was formed under the laws of Delaware in 1988, is a
wholly-owned subsidiary of General Electric Company ("GE"). Pursuant to an
Investment Advisory and Administration Agreement which became effective May 1,
1997 (the "Index Fund Advisory Agreement"), GEIM is responsible for providing
the Index Fund with a continuous investment program. The Index Fund Advisory
Agreement was approved by the Board of Directors of the Company, including a
majority of the directors who are not parties to the Index Fund Advisory
Agreement or interested persons of such parties ("independent directors"), at a
meeting held for that purpose on January 29, 1997 and by the shareholders of the
Fund at a special meeting held on April 16, 1997.
MATERIAL TERMS OF ADVISORY AGREEMENT
Under the terms of the Index Fund Advisory Agreement, GEIM
provides a continuous investment program, including investment research and
management, to the Index Fund. GEIM determines what investments will be
purchased, retained or sold by the Index Fund and places purchase and sale
orders for the Index Fund's investments. GEIM provides the Company with all
executive, administrative, clerical and other personnel necessary to operate the
Index Fund and the Company and pays salaries and other employment-related costs
of employing these persons. GEIM furnishes the Index Fund and the Company 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 (1) maintains the books and records of the Index Fund; (2)
prepares reports to shareholders of the Index Fund; (3) prepares and files tax
returns for the Index Fund; (4) assists with the preparation and filing of
reports and the Company's registration statement with the SEC; (5) provides
appropriate officers for the Company, (6) provides administrative support
necessary for the Board of Directors of the Company to conduct meetings; and (7)
supervises and coordinates the activities of other service providers, including
independent auditors, legal counsel, custodians, accounting service agents and
transfer agents.
GEIM is responsible for employing sufficient staff and
consulting with other persons that it determines may be necessary or useful to
the performance of its obligations; providing services in accordance with the
Fund's investment objectives, policies and restrictions as stated in the
Company's current registration statement, as amended from time to time; and
keeping the Company informed of developments materially affecting the Index
Fund, including furnishing the Company with whatever information and reports
that the Board reasonably requests.
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<PAGE> 9
The Index Fund Advisory Agreement permits GEIM, subject to
Board approval 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 Index Fund Advisory Agreement. In this event, GEIM remains responsible for
ensuring that these entities perform the services that each undertakes pursuant
to the sub-advisory agreements.
For its services to the Index Fund, GEIM receives a monthly
advisory and administrative fee equal to .35% of the value of the Index Fund's
average daily net assets. The fee is deducted daily from the assets of the Index
Fund and paid to GEIM monthly. The Index Fund Advisory Agreement does not
contain any provisions prescribing limits on the operating expenses of the
Company or the Fund.
The Index Fund Advisory Agreement provides that GEIM may
render similar advisory and administrative services to other clients so long as
the services that it provides under the Index Fund Advisory Agreement are not
impaired thereby. The Index Fund Advisory Agreement also provides that GEIM
shall not be liable for any error of judgment or mistake of law or for any loss
arising out of the Index Fund in connection with GEIM's services pursuant to the
Index Fund Advisory Agreement, except for (1) willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of reckless
disregard of its duties or obligations under the agreement, and (2) 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.
REASONS FOR PROPOSING AN INVESTMENT SUB-ADVISER
At the time that the Board of Directors sought shareholder
approval of GEIM as the investment adviser of the Index Fund, it was the
intention of the Board and GEIM to have GEIM manage the Index Fund's investment
portfolio directly. GEIM has since learned that, for legal reasons unrelated to
the Company, it is possible that GEIM, as an affiliate of GE, could, under
certain circumstances, be temporarily handicapped in its efforts to purchase GE
common stock should GE be engaged in a "distribution" of its common stock.
Because GE common stock is an important component security of the S&P 500
Composite Stock Price Index, the Index Fund generally holds, and must frequently
purchase, GE common stock. GEIM has therefore informed the Board of Directors
that it could be temporarily handicapped in its efforts to manage the Index Fund
in an optimal manner. As a result, the Board has determined, and GEIM has
agreed, that it is in the best interests of the Index Fund and variable contract
owners invested in the Fund for GEIM to retain an unaffiliated investment
sub-adviser to independently manage the Fund's investment portfolio.
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<PAGE> 10
After consulting with the Company's Board of Directors, GEIM
selected SSGA as the proposed investment sub-adviser for the Index Fund. SSGA is
not an affiliate of GE or of any affiliate of GE and therefore would be able to
purchase GE common stock without regard to the limitations imposed on entities
affiliated with GE.
At a special meeting of the Company's Board of Directors held
on June 4, 1997, the Board of Directors, including all of the independent
directors present, unanimously approved and voted to recommend to the
shareholders of the Index Fund that they approve the Proposed Index Fund
Sub-Advisory Agreement by and between GEIM and SSGA. A copy of the Proposed
Index Fund Sub-Advisory Agreement is attached as Exhibit A.
Approval of the Proposed Index Fund Sub-Advisory Agreement
will not result in an increase in any fees payable by the Index Fund. GEIM will
be solely responsible for paying the sub-advisory fee to SSGA under the Proposed
Index Fund Sub-Advisory Agreement.
If approved by the shareholders of the Index Fund, the
Proposed Index Fund Sub-Advisory Agreement will continue in effect for an
initial term of two years, and will continue from year to year thereafter,
subject to approval annually by (a) the shareholders of the Index Fund or a
majority of the directors of the Company, and (b) the vote of a majority of the
independent directors, cast in person at a meeting called for the purpose of
voting on such approval. If the shareholders of the Index Fund fail to approve
the Proposed Index Fund Sub-Advisory Agreement, the directors shall consider
appropriate alternative action.
INFORMATION ABOUT SSGA
SSGA, a division of State Street, is located at Two
International place, Boston, Massachusetts 02110. State Street is a "bank" as
defined by the Investment Advisers Act of 1940, as amended (the "Advisers Act"),
and therefore is exempt from registration as an investment adviser under the
Advisers Act. State Street, whose predecessor was formed under the laws of
Massachusetts in 1891, is a wholly owned subsidiary of State Street Corporation,
a publicly held bank holding company. State Street currently serves as custodian
for the Company and certain of its affiliates perform accounting services for
the Company. Appendix A lists information about certain management personnel of
SSGA. Appendix B lists information about other investment companies or
portfolios for which SSGA serves as investment adviser that have a similar
investment objective to the Index Fund.
State Street is one of the largest providers of securities
processing and recordkeeping services for U.S. mutual funds and pension funds.
State Street, with over $292 billion under management as of December 31, 1996,
provides complete global investment management services from offices in the
United States, London, Sydney,
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Hong Kong, Tokyo, Toronto, Montreal, Luxembourg, Melbourne, Paris, Dubai, Munich
and Brussels.
MATERIAL TERMS OF PROPOSED INDEX FUND SUB-ADVISORY AGREEMENT
The Proposed Index Fund Sub-Advisory Agreement was approved by
the Board of Directors on June 4, 1997. The Proposed Index Fund Sub-Advisory
Agreement provides that SSGA, subject to the general supervision of the
Company's Board of Directors and GEIM, will provide a continuous investment
program for the Fund's assets, including investment research and management.
SSGA will be responsible for placing purchase and sale orders for portfolio
transactions of the Fund. In this capacity, SSGA may obtain and evaluate
appropriate economic, statistical, timing, and financial information and
formulate and implement investment programs in furtherance of the Index Fund's
investment objective. SSGA will be responsible for periodically consulting with
GEIM from time to time regarding matters pertaining to the Index Fund. The
Proposed Index Fund Sub-Advisory Agreement provides that SSGA will be permitted,
on an equitable basis, to fill orders for simultaneously placed purchases and
sales of the same security among the Index Fund and one or more accounts advised
by SSGA.
As compensation for its services to the S&P 500 Index Fund on
behalf of GEIM, SSGA will receive a monthly fee from GEIM based on the average
daily net assets of the Index Fund at the following annual rates: .05% of the
first $100,000,000; .04% of the next $200,000,000; and .03% of amounts in excess
of $300,000,000.
The Proposed Index Fund Sub-Advisory Agreement will terminate
automatically if assigned or in the event of termination of the Index Fund
Advisory Agreement, and will be terminable at any time without penalty by the
Directors of the Company or by vote of a majority of the outstanding shares of
the Index Fund on 60 days' written notice to GEIM or SSGA, and by either GEIM or
SSGA on 60 days' written notice to the other.
The Proposed Index Fund Sub-Advisory Agreement provides that
SSGA will not be liable for any error of judgment or mistake of law or for any
loss suffered by the Fund, the Company or its shareholders or by GEIM in
connection with the matters to which the Proposed Index Fund Sub-Advisory
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence by SSGA in the performance of its duties or from reckless
disregard by it of its obligations and duties under the Agreement. The Proposed
Index Fund Sub-Advisory Agreement further provides that, notwithstanding the
foregoing, SSGA will be liable for any loss suffered by the Index Fund, the
Company or its shareholders or by GEIM as a result of any negligent act or
omission by it relating to or arising out of the License Agreement between
Standard & Poor's and GEIM dated April 30, 1997.
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<PAGE> 12
DIRECTOR'S RECOMMENDATION
In determining whether it was appropriate to approve the
Proposed Index Fund Sub-Advisory Agreement and to recommend approval to
shareholders, the Board of Directors, including the independent directors,
considered among other things information about the following: (1) the
sub-advisory fee to be received by SSGA from GEIM for services to the Index
Fund; (2) the nature and quality of the services required to be performed by
SSGA; (3) the experience of SSGA in advising other mutual funds similar to the
Index Fund; (4) the personnel and research capabilities of SSGA; and (5) any
significant regulatory or compliance issues that might have affected SSGA.
In their deliberations regarding approval of the Proposed
Index Fund Sub-Advisory Agreement, the Board Directors addressed most of their
analysis to items (1) and (3) above. The Directors evaluated the value of the
services that SSGA will provide to the Index Fund and determined that these were
comparable to such services provided by other investment advisers or
sub-advisers in the mutual fund industry. In this regard the Directors carefully
considered: (1) SSGA's past experience as an adviser to similar mutual funds as
compared with that of similar mutual funds advised by others and appropriate
indices; (2) the fact that the approval of the Proposed Index Fund Sub-Advisory
Agreement will not result in an increase in any fees payable by the Index Fund;
and (3) the fact that GEIM could not continue to advise the Index Fund in an
optimal manner. The Directors determined that the proposed new arrangement
between GEIM and SSGA was fair and reasonable.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT
SHAREHOLDERS OF THE INDEX FUND VOTE "FOR" THE APPROVAL OF THE PROPOSED INDEX
FUND SUB-ADVISORY AGREEMENT WITH SSGA
ITEM 2: APPROVAL OR DISAPPROVAL OF INVESTMENT SUB-
ADVISORY AGREEMENT BETWEEN GEIM AND SENECA
GEIM, which is located at 3003 Summer Street, Stamford,
Connecticut 06905, serves as the RE Fund's investment adviser and administrator.
GEIM, which was formed under the laws of Delaware in 1988, is a wholly-owned
subsidiary of General Electric Company ("GE"). Pursuant to an Investment
Advisory and Administration Agreement which became effective May 1, 1997 (the
"RE Fund Advisory Agreement"), GEIM is responsible for providing the RE Fund
with a continuous investment program. The RE Fund Advisory Agreement was
approved by the Board of Directors of the Company, including a majority of
independent directors at a meeting held for that purpose on January 29, 1997 and
by the shareholders of the RE Fund at a special meeting held on April 16, 1997.
The terms of the RE Fund Advisory Agreement are substantially identical to the
terms of the Index Fund Advisory Agreement discussed above.
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GMG/Seneca Capital Management, LLC ("GMG/Seneca") , the
current investment sub-adviser for the RE Fund, entered into an investment
sub-advisory agreement dated May 1, 1997 (the "Current RE Fund Sub-Advisory
Agreement") with GEIM in connection with that Fund. The Current RE Fund
Sub-Advisory Agreement was approved by the Board of Directors, including a
majority of the independent directors, at a meeting held for that purpose on
January 29, 1997 and by the shareholders of the RE Fund at a special meeting
held on April 16, 1997. The terms of the Proposed RE Fund Sub-Advisory Agreement
are identical to those of the Current RE Fund-Sub Advisory Agreement. The terms
of the Current RE Fund Sub-Advisory Agreement provide that it will terminate
automatically in the event of its "assignment" (within the meaning of the 1940
Act).
INFORMATION ABOUT GMG/SENECA
GMG/Seneca is a California limited liability company located
at 909 Montgomery Street, San Francisco, California 94133. Two of the principal
stockholders of GMG/Seneca are Gail P. Seneca and Richard D. Little. Ms.
Seneca's principal occupation is Chief Investment Officer of GMG/Seneca. Mr.
Little's principal occupation is Equity Portfolio Manager of GMG/Seneca.
Certain other senior management personnel also hold equity interests in
GMG/Seneca. A group of other investors, none of whom individually holds a
controlling interest in GMG/Seneca, together hold a majority of the
outstanding stock of GMG/Seneca. These other investors do not have an active
role in managing GMG/Seneca. Ms. Seneca and Mr. Little use 909 Montgomery
Street, San Francisco, California 94133 as their business address.
REASONS FOR PROPOSING THE RE-APPROVAL OF THE CURRENT INVESTMENT SUB-ADVISER
On June 18, 1997, GMG/Seneca and Phoenix Duff & Phelps
Corporation ("Phoenix") announced that they had reached a definitive agreement
pursuant to which all of the non-management investors in GMG/Seneca will sell
their interests in GMG/Seneca to Phoenix and Phoenix will acquire certain
interests from management. In essence, this anticipated sale will result in
a recapitalization of GMG/Seneca. Under the terms of the definitive agreement,
GMG/Seneca will change its name to Seneca Capital Management, LLC and
Phoenix will become the holder of a majority of the outstanding interests
of Seneca. PM Holdings, a wholly owned subsidiary of Phoenix Home Life
Mutual Insurance Company, an insurance company organized under the laws of
New York, owns 60% of the stock of Phoenix. The remaining 40% of the
stock of Phoenix is publicly held and traded on the New York Stock Exchange,
Inc. Appendix C lists information about certain management personnel of Seneca.
Appendix D lists information about other investment companies or portfolios for
which Seneca will serve as investment adviser that have a similar investment
objective to the RE Fund.
Upon consummation of the recapitalization, the interests of
the non-management investors will be transferred to Phoenix resulting in a
change of "control" of GMG/Seneca (within the meaning of the 1940 Act). Under
the 1940 Act, a change in
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control of an investment sub-adviser, such as GMG/Seneca, results in the
assignment of any agreement that the sub-adviser may have with respect to
providing investment advice to an investment company such as the RE Fund. As
indicated above, an assignment of the Current RE Fund Sub-Advisory Agreement
will cause the Current RE Fund Sub-Advisory Agreement to terminate.
It is anticipated that when the recapitalization of GMG/Seneca
occurs, the Current RE Fund Sub-Advisory Agreement will terminate as of the
date of the recapitalization. Therefore, the shareholders of the RE Fund will be
asked at the RE Fund Meeting to approve or disapprove the Proposed RE Fund
Sub-Advisory Agreement between GEIM and Seneca which, if approved, will take
effect upon termination of the Current RE Fund Sub-Advisory Agreement. The
Proposed RE Fund Sub-Advisory Agreement was approved by the Board of Directors,
including a majority of the independent directors, at a meeting held on June 4,
1997. A copy of the Proposed RE Fund Sub-Advisory Agreement is attached as
Exhibit B.
If approved by the shareholders of the RE Fund, the Proposed
RE Sub-Advisory Agreement will continue in effect for an initial term of two
years from the date of its effectiveness, and will continue from year to year
thereafter, subject to approval annually by (a) the shareholders of the RE Fund
or a majority of the Directors of the Fund, and (b) the vote of a majority of
the independent directors, cast in person at a meeting called for the purpose of
voting on such approval. If the shareholders of the RE Fund fail to approve the
Proposed RE Fund Sub-Advisory Agreement, the Directors shall consider
appropriate alternative action.
PROPOSED RE FUND SUB-ADVISORY AGREEMENT
The Proposed RE Fund Sub-Advisory Agreement was approved by
the Board of Directors on June 4, 1997. The Proposed RE Fund Sub-Advisory
Agreement provides that Seneca, subject to the general supervision of the
Company's Board of Directors and GEIM, will provide a continuous investment
program for the Fund's assets, including investment research and management.
Seneca will be responsible for placing purchase and sale orders for portfolio
transactions of the Fund. In this capacity, Seneca may obtain and evaluate
appropriate economic, statistical, timing, and financial information and
formulate and implement investment programs in furtherance of the RE Fund's
investment objective. The Proposed RE Fund Sub-Advisory Agreement provides that
Seneca will be permitted, on an equitable basis, to fill orders for
simultaneously placed purchases and sales of the same security among the RE Fund
and one or more accounts advised by Seneca.
As compensation for its services to the RE Fund on behalf of
GEIM, Seneca will receive a monthly fee from GEIM on the average daily net
assets of the RE Fund at the following annual rates: 0.425% of the first
$100,000,000; 0.40% of the next $100,000,0000; and 0.375% of amounts in excess
of $200,000,000. During the Fund's
11
<PAGE> 15
fiscal year ended December 31, 1996, GMG/Seneca received a sub-advisory fee for
the RE Fund of approximately $81,000 under a prior sub-advisory agreement with
the investment manager that preceded GEIM. The fee under that prior sub-advisory
agreement, as well as the fee under the Current Sub-Advisory Agreement, are
identical to the fee described above for the Proposed RE Fund Sub-Advisory
Agreement.
The Proposed RE Fund Sub-Advisory Agreement will terminate
automatically if assigned or in the event of termination of the RE Fund Advisory
Agreement, and will be terminable at any time without penalty by the Directors
of the Company or by vote of a majority of the outstanding shares of the RE Fund
on 60 days' written notice to GEIM or Seneca, and by either GEIM or Seneca on 60
days' written notice to the other.
The Proposed RE Fund Sub-Advisory Agreement provides that
Seneca will not be liable for any error of judgment or mistake of law or for any
loss suffered by the Fund, the Company or its shareholders or by GEIM in
connection with the matters to which the Proposed RE Fund Sub-Advisory Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence by Seneca in the performance of its duties or from reckless disregard
by it of its obligations and duties under the Agreement.
DIRECTOR'S RECOMMENDATION
In determining whether it was appropriate to approve the
Proposed RE Fund Sub-Advisory Agreement and to recommend approval to
shareholders, the Board of Directors, including the independent directors,
considered, among other things, information about the following: (1) the
sub-advisory fee to be received by Seneca from GEIM for services to the RE Fund
and the fact that this fee is identical to the sub-advisory fee received by
GMG/Seneca from GEIM under the Current RE Fund Sub-Advisory Agreement; (2) the
expected continuity of senior management and day-to-day control at Seneca after
the recapitalization; (3) the nature and quality of the services required to be
performed by Seneca; (4) the results achieved by GMG/Seneca for the RE Fund in
the past; (5) the personnel and research capabilities of Seneca; (6) the fact
that the Board and the shareholders recently approved the Current RE Fund
Sub-Advisory Agreement; and (7) any significant regulatory or compliance issues
that might have affected GMG/Seneca.
In their deliberations regarding approval of the Proposed RE
Fund Sub-Advisory Agreement, the Directors addressed most of their analysis to
items (1), (2) and (6) above. In connection with item (2) above, the directors
carefully considered the nature of the pending recapitalization of GMG/Seneca
and the possible changes in the operations and management of GMG/Seneca that
could result from such recapitalization. In particular, the Directors made
inquiries of both GMG/Seneca's senior management and representatives of Phoenix
to determine whether or not the recapitalization was likely to
12
<PAGE> 16
result in material changes in GMG/Seneca's operations and/or management that
could affect the nature and quality of the services that Seneca would provide to
the Fund. The Board of Directors concluded that the recapitalization was not
likely to result in operational or management changes in the foreseeable future
that would have a material adverse impact on the services Seneca would provide
to the RE Fund following the recapitalization. This conclusion was based, in
part, on representations made to the Board of Directors by both GMG/Seneca's
senior management and representatives of Phoenix that Ms. Seneca would remain
the principal controlling management executive of Seneca after the
recapitalization. The Directors also carefully considered: (1) GMG/Seneca's past
performance for the RE Fund as compared with that of similar mutual funds and
appropriate indices; (2) the fact that the persons making the investment
decision on behalf of the RE Fund under the Current RE Fund Sub-Advisory
Agreement would likely continue to do so under the Proposed RE Fund Sub-Advisory
Agreement; and (3) the fact that the fees proposed to be paid by GEIM to Seneca
under the Proposed RE Fund Sub-Advisory Agreement were identical to those under
the Current RE Fund Sub-Advisory Agreement. The Directors determined that the
proposed new arrangements between GEIM and Seneca were reasonable.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE REAL ESTATE
SECURITIES PORTFOLIO VOTE "FOR" THE APPROVAL OF THE INVESTMENT SUB-ADVISORY
AGREEMENT WITH SENECA
REPORTS AVAILABLE
Copies of the Company's most recent annual report or most
recent semi-annual report will be furnished without charge upon request by
writing to the Company at 3003 Summer Street, Stamford, Connecticut 06905 or by
calling 1-800-636-7203.
SHAREHOLDER PROPOSALS
As a general matter, the Company does not hold annual meetings
of shareholders. Shareholders wishing to submit proposals for inclusion in a
proxy statement for a subsequent shareholders' meeting should send their written
proposals to the Secretary of the Company, 3003 Summer Street, Stamford,
Connecticut 06905.
OTHER INFORMATION
Pursuant to a distribution agreement, Forth Financial
Securities Corporation ("FFSC") acts without remuneration as the Company's
distributor in the distribution of the shares of each investment portfolio of
the Company. FFSC is a wholly-owned subsidiary of Forth Financial Resources,
Ltd., which is a wholly-owned subsidiary of GNA Corporation, a subsidiary of
General Electric Capital Corporation. FFSC is located at 6610 W. Broad Street,
Richmond, VA 23230. FFSC has no obligation to sell any stated number of shares.
13
<PAGE> 17
OTHER BUSINESS
Management knows of no business to be presented at the
Meetings other than the matters set forth in this Proxy Statement, but should
any other matter requiring the vote of shareholders arise, the proxies will vote
thereon according to their best judgment in the interest of the Company and the
Funds.
14
<PAGE> 18
APPENDIX A
PRINCIPAL OFFICERS OF THE SSGA DIVISION OF STATE STREET
<TABLE>
<CAPTION>
Name Principal Occupation
- ---- --------------------
<S> <C>
Nicholas A. Lopardo Chief Executive Officer
Timothy B. Harbert President
Peter Stonberg Chief Investment Officer
OTHER OFFICERS OF SSGA WHO ARE EXPECTED TO MANAGE THE INDEX FUND
James May Assistant Vice President
Anne Eisenberg Vice President
John Tucker Assistant Vice President
Sarah Meier Investment Officer
</TABLE>
<PAGE> 19
APPENDIX B
The table below provides information about other registered
investment companies or portfolios advised by SSGA that have a similar
investment objective to the Index Fund
<TABLE>
<CAPTION>
Rate of Subject to Voluntary
Name of Company or Fund Size Compensation(2) Expense Limitation
- ----------------------- ---- --------------- ------------------
<S> <C> <C> <C>
John Hancock Variable Series
Trust I -- Equity Index Portfolio $ 14.65(1) .20% Yes
SSgA S&P 500 Index Fund $ 983.2(3) .10% Yes
</TABLE>
(1) In millions, as of December 31, 1996
(2) As a percent of average daily net assets.
(3) In millions, as of February 28, 1997.
<PAGE> 20
APPENDIX C
Seneca
------
<TABLE>
<CAPTION>
Name Principal Occupation
- ---- --------------------
<S> <C>
Gail P. Seneca President, Chief Executive Officer and
Chief Investment Officer, Managing Partner,
Seneca
Sandra Westhoff Chief Operating Officer,
Seneca
Charles Dicke Fixed Income Portfolio Manager,
Seneca
Belinda Melton Marketing Director, Seneca
Ron Jacks Equity Portfolio Manager, Seneca
David Shapiro REIT Portfolio Manager
</TABLE>
Except for Mr. Shapiro, each person listed above is a member
of the Operating Committee for Seneca. The address for each person listed above
is 909 Montgomery Street, San Francisco, CA 94133.
<PAGE> 21
APPENDIX D
[UPDATE]
The table below provides information about other companies or
portfolios advised by Seneca that have a similar investment objective to the RE
Fund.
<TABLE>
<CAPTION>
Rate of Subject to Voluntary
Name of Company or Fund Size(1) Compensation(2) Expense Limitation
- ----------------------- ------- --------------- ------------------
<S> <C> <C>
Seneca Real Estate
Securities Fund $24.9 0.85% Yes
</TABLE>
(1) In millions, as of June 18, 1997
(2) As a percentage of average daily net assets.
<PAGE> 22
EXHIBIT A
PROPOSED INDEX FUND SUB-ADVISORY AGREEMENT
<PAGE> 23
EXHIBIT B
PROPOSED RE FUND SUB-ADVISORY AGREEMENT
<PAGE> 24
THE LIFE INSURANCE COMPANY VOTING INSTRUCTION FORM
OF VIRGINIA GE INVESTMENTS FUNDS, INC.
VOTING INSTRUCTION FORMS MUST BE RECEIVED
BY JULY 7, 1997 TO BE COUNTED.
- Please fold and detach at perforation. Return portion below only. -
FUND NAME PRINTS HERE
VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR A SPECIAL
MEETING OF SHAREHOLDERS OF THE GE INVESTMENTS FUNDS, INC. TO BE HELD ON JULY 8,
1997.
The undersigned hereby instructs The Life Insurance Company of Virginia
to vote all shares of the above-referenced portfolio of the GE Investments
Funds, Inc. (the "Fund") held in the account of the undersigned at the Special
Meeting of Shareholders of the Fund to be held on July 8, 1997 at the offices
of GE Investments, 3003 Summer Street, Stamford, Connecticut 60905 at 10:00
a.m., Eastern Standard Time, and at any adjournments thereof. The Life
Insurance Company of Virginia shall have all the powers the undersigned would
have if personally present to vote and to act upon each of the proposals below
and, using its best judgment, on any other matter that may properly come before
the Special Meeting. All previous instructions given with respect to the
Special Meeting are hereby revoked. By signing below, the undersigned
acknowledges receipt of the Notice of Special Meeting of Shareholders and the
Proxy Statement relating to the Special Meeting.
Date: 1997
-----------------------------------------------------
PLEASE SIGN IN BOX BELOW
Please sign exactly as your name appears on the Voting
Instruction Form. If shares are held by joint tenants, both
persons should sign. If the individual signing the form is a
fiduciary (e.g., attorney, executor, trustee, guardian) the
individual must provide his full title following the signature.
Corporate instructions should be signed be an authorized
officer.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Signature(s) Title(s), if applicable
GEIF
THIS LABEL IS FOR MISTYPESETTING PURPOSES ONLY!
LIVE OF VIRGINIA-GE INVESTMENT FUNDS (DEF)
ORIGINAL FRONT 6-4-97
REVISION #1 6-5-87
<PAGE> 25
PLEASE MARK, SIGN, DATE, AND RETURN ALL VOTING INSTRUCTION FORMS PROMPTLY IN
THE ENCLOSED ENVELOPE. INDICATE YOUR VOTE BY FILLING IN THE APPROPRIATE BOXES
IN THIS MANNER USING BLUE OR BLACK INK OR DARK PENCIL.
The voting instruction form must be signed and dated on the reverse side for
your instructions to be counted.
-Please fold and detach at perforation. Return portion below only.-
The Life Insurance Company of Virginia will vote in the manner indicated, or if
no instruction has been indicated, "FOR" each proposal.
The Board of Directors recommends voting "FOR" each proposal.
Vote on Proposals:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. S & P 500 INDEX FUND ONLY. Proposal to approve an investment sub-advisory
agreement between GE Investment Management Incorporated ("GEIM") and State
Street Global Advisors, a division of State Street Bank and Trust Company.
2. REAL ESTATE SECURITIES FUND ONLY. Proposal to approve an investment
sub-advisory agreement between GEIM and Seneca Capital Management, LLC.
GEIF
