Filed pursuant to Rule 497(e)
File Nos. 33-19229; 811-5430
SSgA FUNDS
One International Place
Boston, Massachusetts 02110
1-800-997-7327
www.ssgafunds.com
<TABLE>
<S> <C> <C>
Money Market Growth and Income Emerging Markets
Yield Plus S&P 500 Index Active International
Intermediate Matrix Equity International Growth
Opportunities
Bond Market Small Cap
(Closed to new investors) Life Solutions Income
High Yield Bond and Growth
Special Equity
Life Solutions Balanced
Tuckerman Active REIT
Life Solutions Growth
Aggressive Equity
IAM SHARES
</TABLE>
As with all mutual funds, the Securities and Exchange Commission has neither
determined that the information in this prospectus is accurate and complete,
nor approved or disapproved of these securities. Any representation to the
contrary is a criminal offense.
PROSPECTUS DATED DECEMBER 17, 1999
(AS SUPPLEMENTED THROUGH AUGUST 16, 2000)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Investment Strategies and Principal Risks ............................................ 3
Investment Objectives and Principal Investment Strategies ........................... 3
Principal Risks ..................................................................... 8
Risk and Return ..................................................................... 12
Fees and Expenses of the Fund ........................................................ 18
Management of the Fund ............................................................... 21
Portfolio Management ................................................................ 21
Additional Information about the Funds' Objectives, Investment Strategies and Risks .. 23
Shareholder Information .............................................................. 29
Purchase of Fund Shares ............................................................. 29
Redemption of Fund Shares ........................................................... 31
Distribution Services and Shareholder Servicing Arrangements ........................ 33
Pricing of Fund Shares .............................................................. 33
Dividends and Distributions ......................................................... 34
Taxes ............................................................................... 35
Information Regarding Standard & Poor's Corporation .................................. 36
Financial Highlights ................................................................. 37
Money Market Fund ................................................................... 37
Yield Plus Fund ..................................................................... 38
Intermediate Fund ................................................................... 39
Bond Market Fund .................................................................... 40
High Yield Bond Fund ................................................................ 41
Growth and Income Fund .............................................................. 42
S&P 500 Index Fund .................................................................. 43
Matrix Equity Fund .................................................................. 44
Small Cap Fund ...................................................................... 45
Special Equity Fund ................................................................. 46
Tuckerman Active REIT Fund .......................................................... 47
Aggressive Equity Fund .............................................................. 48
IAM SHARES Fund ..................................................................... 49
Emerging Markets Fund ............................................................... 50
Active International Fund ........................................................... 51
International Growth Opportunities Fund ............................................. 52
Life Solutions Income and Growth Fund ............................................... 53
Life Solutions Balanced Fund ........................................................ 54
Life Solutions Growth Fund .......................................................... 55
Additional Information about the SSgA Funds .......................................... Back Cover
</TABLE>
2
<PAGE>
INVESTMENT STRATEGIES
AND PRINCIPAL RISKS
Through this prospectus, the SSgA Funds (the Investment Company) offers shares
in the following separate funds (collectively, the Funds). All of the Funds are
considered diversified as defined in the Investment Company Act of 1940 (the
1940 Act), except the SSgA Tuckerman Active REIT Fund:
o SSgA Money Market Fund ("Money Market Fund")
o SSgA Yield Plus Fund ("Yield Plus Fund")
o SSgA Intermediate Fund ("Intermediate Fund")
o SSgA Bond Market Fund ("Bond Market Fund")
o SSgA High Yield Bond Fund ("High Yield Bond Fund")
o SSgA Growth and Income Fund ("Growth and Income
Fund")
o SSgA S&P 500 Index Fund ("S&P 500 Index Fund")
o SSgA Matrix Equity Fund ("Matrix Equity Fund")
o SSgA Small Cap Fund ("Small Cap Fund")1
o SSgA Special Equity Fund ("Special Equity Fund")
o SSgA Tuckerman Active REIT Fund ("Active REIT Fund")
o SSgA Aggressive Equity Fund ("Aggressive Equity Fund")
o SSgA IAM SHARES Fund ("IAM SHARES Fund")
o SSgA Emerging Markets Fund ("Emerging Markets Fund")
o SSgA Active International Fund ("Active International
Fund")
o SSgA International Growth Opportunities Fund ("International Growth
Opportunities Fund")
o SSgA Life Solutions Income and Growth Fund ("Income and
Growth Fund")
o SSgA Life Solutions Balanced Fund ("Balanced Fund")
o SSgA Life Solutions Growth Fund ("Growth Fund")
As indicated below, some funds have a fundamental investment objective which
may be changed only with the approval of a majority of the fund's shareholders
as defined by the 1940 Act. Other funds have a nonfundamental investment
objective which may be changed by the Board of Trustees without shareholder
approval.
Investment Objectives and Principal Investment Strategies
Money Market Fund. The nonfundamental investment objective is to maximize
current income, to the extent consistent with the preservation of capital and
liquidity and the maintenance of a stable $1.00 per share net asset value, by
investing in dollar denominated securities.
The fund attempts to meet its investment objective by investing in high quality
money market instruments, including: (1) US Treasury bills, notes and bonds;
(2) other obligations issued or guaranteed as to interest and principal by the
US Government, its agencies or instrumentalities; (3) instruments of US and
foreign banks, including certificates of deposit, banker's acceptances and time
deposits; these instruments may include Eurodollar Certificates of Deposit,
Eurodollar Time Deposits and Yankee Certificates of Deposit; (4) commercial
paper of US and foreign companies; (5) asset-backed securities; (6) corporate
obligations of US and foreign companies; (7) variable and floating rate notes;
and (8) repurchase agreements.
There are risks associated with these instruments, which are described in the
section called Principal Risks.
The fund management team bases its decisions on the relative attractiveness of
different money market investments which can vary depending on the general
level of interest rates as well as supply/demand imbalances in the market.
The Money Market Fund has obtained a money market fund rating of Am from
Standard & Poor's. The Am rating indicates that the fund's safety is good and
it has a sound capacity to maintain principal value and limit exposure to loss.
To obtain such rating the fund may be required to adopt additional investment
restrictions, which may affect the fund's performance.
Yield Plus Fund. The nonfundamental investment objective is to seek high
current income and liquidity by investing primarily in a diversified portfolio
of high-quality debt securities and by maintaining a portfolio duration of one
year or less.
The fund is not a money market fund and the price of this fund may fluctuate.
The fund attempts to meet its objective by investing primarily in high-quality,
dollar denominated, investment grade debt instruments, such as mortgage related
securities, corporate notes, variable and floating rate notes and other
asset-backed securities. Unlike a money market fund, the price of the Yield
Plus Fund will fluctuate because the fund may invest in securities with higher
levels of risk and different maturities.
The fund management team bases its decisions on the relative attractiveness of
different sectors and issues which can vary depending on the general level of
interest rates, market determined risk premiums, as well as supply/demand
imbalances in the market. Risks associated with these investments are described
in the Principal Risks section.
The Yield Plus Fund has obtained a credit quality rating of AA-f and a fund
volatility rating of S1+ from Standard & Poor's. The fund is rated AA-f based
on the creditworthiness of its assets and sound management and practices. The
AA-f rating indicates the fund's holdings and counterparties provide "very
strong protection" against losses from credit
-----------
(1) Effective August 31, 1998, the SSgA Small Cap Fund is closed to purchases by
new investors except for purchases by eligible investors as described below.
o Current shareholders of the SSgA Small Cap Fund may continue to add to the
fund account.
o Participants in 401(k) plans for which the SSgA Small Cap Fund is an
option may continue to add to their fund account.
o Participants in asset allocation programs sponsored by financial advisors
may continue to add to their fund account.
3
<PAGE>
defaults. A fund volatility rating of S1+ indicates an extremely low
sensitivity to changing market conditions. To obtain such rating the fund may
be required to adopt additional investment restrictions, which may affect the
fund's performance.
Intermediate Fund. The fundamental investment objective is to seek a high
level of current income while preserving principal by investing primarily in a
diversified portfolio of debt securities with a dollar-weighted average
maturity between three and ten years.
In pursuing this goal, the fund normally invests at least 65% of its total
assets in investment grade debt instruments. Under these conditions, the fund
may be 35% in high-quality, short-term securities and other securities.
The fund management team makes investment decisions to seek to match or exceed
the return of the Lehman Brothers Intermediate Government/Corporate Bond
(LBIGC) Index. The fund seeks to match the LBIGC Index's duration at all times
while adding value through issue and sector selection. From the fixed-income
securities including, but not limited to, those represented by the LBIGC Index,
the fund management team considers interest rate trends to determine what types
of bonds to invest in. Different securities are favored depending on the
stability of interest rates. Fixed-income securities have risks explained in
the Principal Risks section.
Bond Market Fund. The nonfundamental investment objective is to maximize total
return by investing in fixed-income securities, including, but not limited to,
those represented by the Lehman Brothers Aggregate Bond (LBAB) Index.
Under normal market conditions, the fund attempts to meet its objective by
investing at least 65% of its total assets in investment grade debt
instruments. Securities may be either fixed, zero coupon, variable or floating
rate and may be denominated in US dollars or selected foreign currencies. The
fund may also invest up to 35% in derivative securities, including futures and
options, interest rate exchange agreements and other swap agreements and
collateralized mortgage obligations.
The fund management team makes investment decisions by seeking to match or
exceed the return of the LBAB Index. The fund seeks to match the LBAB Index's
duration at all times while adding value through issue and sector selection.
High Yield Bond Fund. The nonfundamental investment objective is to maximize
total return by investing primarily in fixed-income securities, including, but
not limited to, those represented by the Lehman Brothers High Yield Bond
(LBHYB) Index.
Under normal market conditions, the fund attempts to meet its objective by
investing at least 65% of its total assets in high yield, high risk
(non-investment grade) debt securities. Securities may be either fixed, zero
coupon, variable or floating rate and may be denominated in US dollars or
selected foreign currencies. The fund may invest in derivative securities,
including futures and options, interest rate exchange agreements and other swap
agreements and collateralized mortgage obligations.
Fund managers make investment decisions seeking to match or exceed the LBHYB
Index by concentrating on industry allocation and securities selection,
deciding on which industries to focus and which bonds to buy within these
industries. In making individual security selections, the Advisor looks for
securities that are undervalued.
Growth and Income Fund. The fundamental investment objective is to achieve
long-term capital growth, current income and growth of income primarily through
investments in equity securities.
The fund's goal is to provide greater long-term returns than the overall US
equity market without incurring greater risks than those commonly associated
with investments in equity securities. The fund's portfolio strategy combines
market economics with fundamental research. The Advisor begins by assessing
current economic conditions and forecasting economic expectations. The industry
sectors of the S&P 500 Index[RegTM] are examined to determine the sector's
market capitalized weighting and to estimate the performance of each sector
relative to the Index as a whole. A balance is determined for the portfolio,
giving greater weight to market sectors that are expected to outperform the
overall market. Stocks are then selected for each sector of the fund's
portfolio based on the issuer's industry classification, the stock's historical
sensitivity to changing economic events and conditions and an assessment of the
stock's current valuation and prospects. Risks associated with equity
securities are described in the Principal Risks section.
S&P 500 Index Fund. The fundamental investment objective is to seek to
replicate the total return of the S&P 500 Index.
The fund is not managed according to traditional methods of "active" investment
management, which involve the buying and selling of securities based upon
economic, financial and market analysis and investment judgment. Instead, the
fund utilizes a "passive" investment approach, attempting to replicate the
investment performance of its benchmark index through automated statistical
analytic procedures.
The fund intends to invest in all 500 stocks in the S&P 500 Index in proportion
to their weighting in the S&P 500 Index. The Fund may also invest in futures
and options. The S&P 500 Index is designed to capture the price performance of
a large cross-section of the US publicly traded stock market. To the extent
that all 500 stocks cannot be purchased, the fund will purchase a
representative sample of the stocks listed in the S&P 500 Index in proportion
to their weightings.
To the extent that the fund seeks to replicate the S&P 500 Index using such
sampling techniques, a close correlation between the fund's performance and the
performance of the
4
<PAGE>
S&P 500 Index is anticipated in both rising and falling markets. The fund will
attempt to achieve a correlation between the performance of its portfolio and
that of the S&P 500 Index of at least 0.95, before deduction of fund expenses.
A correlation of 1.00 would represent perfect correlation between portfolio and
index performance. It is anticipated that the correlation of the fund's
performance to that of the S&P 500 Index will increase as the size of the fund
increases.
Notwithstanding any investment strategy described below or any other applicable
investment restriction, the fund may invest substantially all of its investable
assets in a management investment company with substantially the same
investment objectives, policies and restrictions as the fund.
In this structure, the fund will be a "feeder" fund that invests exclusively in
a corresponding "master" portfolio with identical investment objectives. The
master portfolio may accept investments from multiple feeder funds, which bear
the master portfolio's expenses in proportion to their assets.
Each feeder fund and its master portfolio expect to maintain consistent
investment objectives, but if they do not, the fund will withdraw from the
master portfolio, receiving either cash or securities in exchange for its
interest in the master portfolio. The fund's trustees would then consider
whether the fund should hire its own investment adviser, invest in a different
master portfolio, or take other action.
Matrix Equity Fund. The fundamental investment objective is to provide total
returns that exceed over time the S&P 500 Index through investment in equity
securities.
Equity securities will be selected for the fund on the basis of a proprietary,
systematic investment process. The fund management team employs an active
equity strategy using bottom-up, quantitative stock selection from among the
securities included in the S&P 500 Index based upon a multi-factor return
forecasting model, coupled with risk-controlled, benchmark oriented portfolio
construction. This structured and disciplined approach seeks to provide
long-term total returns in excess of the S&P 500 Index over time.
Small Cap Fund. The nonfundamental investment objective is to maximize the
total return through investment in equity securities; under normal market
conditions, at least 65% of total assets will be invested in securities of
smaller capitalized issuers.
The fund will invest primarily in a portfolio of smaller domestic companies.
Smaller companies will include those stocks with market capitalization
generally ranging in value from $50 million to $3 billion. Sector and industry
weight are maintained at a similar level to that of the Russell 2000[RegTM]
Index to avoid unintended exposure to factors such as the direction of the
economy, interest rates, energy prices and inflation. The fund will also use
futures and options.
Equity securities will be selected for the fund on the basis of proprietary
analytical models of the Advisor. The fund management team uses a quantitative
approach to investment management, designed to uncover equity securities which
are undervalued, with superior growth potential. This quantitative investment
management approach involves a modeling process to evaluate vast amounts of
financial data and corporate earnings forecasts. The risks of securities of
smaller capitalized companies are described in Principal Risks.
Special Equity Fund. The nonfundamental investment objective is to maximize
total return through investment in mid- and small capitalization US equity
securities.
The fund will attempt to meets its objective through the active selection of
equity securities based on fundamental analysis. The investment approach
emphasizes bottom-up stock selection informed by a top-down macroeconomic
outlook. The Advisor focuses on identifying high quality stocks with
sustainable growth prospects, paying particular attention to changes in the
rates of growth of individual companies' earnings. This emphasis on growth
stock selection makes the fund subject to risks associated with stock selection
and the skills of the investment management team.
Active REIT Fund. The nonfundamental investment objective is to provide income
and capital growth by investing primarily in publicly traded securities of real
estate companies. The fund will attempt to meet its objective through the
active selection of Real Estate Investment Trust (REIT) securities, primarily
from those securities in the Wilshire REIT Index[RegTM] and across different
types and regions based on the fundamental research of the Advisor. REIT
securities are investment of real estate investment trusts. REITs invest in
underlying properties and may not have diversified holdings.
Aggressive Equity Fund. The nonfundamental investment objective is to maximize
total return through investing in US equity securities that are undervalued
relative to their growth potential as measured by SSgA's proprietary models.
The investable universe is constructed using the Russell 3000[RegTM] Index. The
universe is further restricted by keeping only those securities that have above
average five-year earnings growth projections. All current holdings are then
added to this universe to create an investable universe. Securities are then
ranked using SSgA's proprietary growth and value measures. Each of these
measures is combined to arrive at an overall sentiment for each security.
Securities with aggressive five-year projections are subject to risks
associated with rapid growth. The fund may invest in initial public offerings.
IAM SHARES Fund. The nonfundamental investment objective is to maximize total
return primarily through investments in equity securities of companies that
have entered into collective bargaining agreements with the International
Association of Machinists and Aerospace Workers or affiliated labor unions (IAM
companies).
The purpose of the IAM SHARES Fund is to provide an investment vehicle where
the majority of holdings are
5
<PAGE>
securities of IAM companies. Under normal market conditions, the fund will
invest at least 65% of its total assets in equity securities of IAM companies.
As of the date of this prospectus, a universe of 342 IAM-represented companies
was developed by the IAM. Based on the current model environment, nearly half
of the 342 IAM-represented companies qualify as investments by this fund. All
investments are publicly traded and sufficiently capitalized, and the current
weighted average capitalization is $99.6 billion. Investments that are not
selected in the current model environment are still included in the investable
universe and may be selected for future investment.
The fund's investment strategy is driven by an investment process that manages
portfolio exposure to fundamental attributes in a multifactor risk model
environment. These attributes include industry allocations as well as factors
such as size, style, growth expectations and valuation ratios. This model
attempts to create a portfolio with the best expected return per unit of risk.
IAM companies are diverse both geographically and by industry. The portfolio
manager will rebalance the fund frequently in order to maintain its relative
exposure to IAM companies, as well as to account for any changes to the
universe of IAM companies. While the fund seeks a high correlation with the S&P
500 Index returns, the fund will not fully replicate the S&P 500 Index,
therefore, the fund's returns will likely vary from the Index's returns.
Emerging Markets Fund. The fundamental investment objective is to provide
maximum total return, primarily through capital appreciation, by investing
primarily in securities of foreign issuers.
Under normal circumstances, the fund will invest primarily in equity securities
issued by companies domiciled, or doing a substantial portion of their
business, in countries determined by the fund's management team to have a
developing or emerging economy or securities market. The fund will diversify
investments across many countries (typically at least 10) in order to reduce
the volatility associated with specific markets. The countries in which the
fund invests will be expanded over time as the stock markets in other countries
evolve. Nearly all of the fund's assets will be invested in equity, and
equity-like, securities concentrated in emerging market countries (i.e.,
typically over 85% but no less than 65%). Currently, the definition of an
emerging market is that gross domestic product per capita is less than $10,000
per year. However, due to the status of a country's stock market, the country
may still qualify as an emerging market even if it exceeds this amount. In
determining securities in which to invest, the fund's management team will
evaluate the countries' economic and political climates with prospects for
sustained macro and micro economic growth. The fund's management team will take
into account traditional securities valuation methods, including (but not
limited to) an analysis of price in relation to assets, earnings, cash flows,
projected earnings growth, inflation, and interest rates. Liquidity and
transaction costs will also be considered. Risks of emerging markets are
discussed in the Principal Risks section.
Through the use of proprietary evaluation models, the fund invests primarily in
the International Finance Corporation Investable (IFCI) Index countries. As the
IFCI Index introduces new emerging market countries, the fund will expand to
gain exposure to new emerging countries.
Active International Fund. The nonfundamental investment objective is to
provide long-term capital growth by investing primarily in securities of
foreign issuers.
The fund will attempt to meet its objective through the active selection of
countries, currencies and securities. The fund management team will concentrate
investments in holdings that are composed of, but not limited to, countries
included in the Morgan Stanley Capital International Europe, Australia, Far
East (MSCI EAFE) Index. Through the use of the Advisor's proprietary model, a
quantitative selection process is used to select the best securities within
each underlying country in the MSCI EAFE Index.
International Growth Opportunities Fund. The nonfundamental investment
objective is to provide long-term capital growth by investing primarily in
securities of foreign issuers.
The fund will attempt to meet its objective through the active selection of
equity securities based on the fundamental analysis of companies and investment
themes. The Advisor's investment approach is defined predominantly by a
bottom-up stock selection process, informed by a top-down macroeconomic
outlook. Investments will be made in, but not limited to, countries and
securities included in the MSCI EAFE Index.
Life Solutions Funds. The Life Solutions Funds attempt to meet their
objectives by investing in shares of various combinations of the Investment
Company's portfolios (the Underlying Funds) described in this prospectus. The
Investment Company believes that these combinations offer varying degrees of
potential risk and reward. The Life Solutions Funds are designed primarily for
tax-advantaged retirement accounts and other long-term investors. Each Life
Solutions Fund's investment objective is nonfundamental:
Life Solutions Income and Growth Fund seeks income and, secondarily, long-term
growth of capital.
Life Solutions Balanced Fund seeks a balance of growth of capital and income.
Life Solutions Growth Fund seeks long-term growth of capital.
The Life Solutions Funds are not designed as market timing vehicles, but rather
as a simple approach to help investors meet retirement and other long-term
goals. Investors may choose to invest in one or more of the Life Solutions
Funds based on their personal investment goals, risk tolerance and financial
circumstances. The chart below illustrates the
6
<PAGE>
relative degree to which each Life Solutions Fund (compared to the other Life
Solutions Funds) seeks to obtain capital appreciation, income and stability of
principal, within the parameters of each of their investment objectives:
<TABLE>
<CAPTION>
Life Solutions Fund Capital Appreciation Income Volatility
--------------------- ---------------------- -------- -----------
<S> <C> <C> <C>
Income and Growth Low High Low
Balanced Medium Medium Medium
Growth High Low High
</TABLE>
In investing in the Underlying Funds, the Life Solutions Funds seek to maintain
different allocations between classes of equity, international equity,
fixed-income and short-term assets funds (including money market funds)
depending on the Life Solutions Fund's investment objective and risk profile.
Allocating investments this way permits each Life Solutions Fund to attempt to
optimize performance consistent with its investment objective. The table below
illustrates the equity, bond and short-term fund asset allocation ranges for
each Life Solutions Fund. It also shows the weightings of each Underlying Fund
as of August 31, 1999. Although the Underlying Funds invest primarily in
securities within the asset class under which they are listed, they may also
invest from time to time in other types of securities consistent with each of
their investment objectives.
<TABLE>
<CAPTION>
Asset
Class/Underlying Income and
Fund Growth Balanced Growth
---------------------------------------- ------------------ ----------------- -----------------
<S> <C> <C> <C>
Range of Total Equities 20-60% 40-80% 60-100%
Weightings in each Underlying Fund
as of August 31, 1999 (%)
US Equities
S&P 500 Index Fund 3.51 7.26 10.68
Matrix Equity Fund 15.63 23.96 32.57
Small Cap Fund 4.43 6.08 8.25
Growth and Income Fund 0.00 0.00 0.00
Special Equity Fund 0.00 0.00 0.00
Tuckerman Active REIT Fund 0.00 0.00 0.00
Aggressive Equity Fund 2.24 3.39 4.79
IAM SHARES Fund -- -- --
International Equities(1) 0-15% 0-20% 0-25%
Active International Fund 9.05 13.23 17.74
Emerging Markets Fund 0.91 1.58 2.17
International Growth
Opportunities Fund 0.00 0.00 0.00
Range of Bonds 40-80% 20-60% 0-40%
Bond Market Fund 52.74 35.52 18.21
Intermediate Fund 3.33 3.82 2.36
High Yield Bond Fund 6.56 4.45 2.33
SSgA Yield Plus Fund 0.00 0.00 0.00
Range of Short Term Assets 0-20% 0-20% 0-20%
SSgA Money Market Fund 1.60 0.71 0.90
SSgA US Government Money Market Fund(2) 0.00 0.00 0.00
</TABLE>
------------------------
(1) International equities are included in the total equity exposure indicated
above and should not exceed the listed percentages.
(2) Information about the SSgA US Government Money Market Fund is contained in
its prospectus, which you may obtain by calling (800) 647-7327 or by
accessing the SSgA Funds online at www.ssgafunds.com.
The asset allocation range for each Life Solutions Fund has been approved by
the Board of Trustees of the Investment Company and may be changed at any time
by the Board without shareholder approval. Within the asset allocation range
for each Life Solutions Fund, the Advisor will establish specific percentage
targets for each asset class and each Underlying Fund to be held by the Life
Solutions Fund based on the Advisor's outlook for the economy, financial
markets and relative market valuation of each Underlying Fund. Each Life
Solutions Fund may temporarily deviate from its asset allocation range for
defensive purposes.
The percentage allocation of a Life Solutions Fund's assets could from time to
time deviate from its asset allocation range as a result of appreciation or
depreciation of the shares of the Underlying Funds in which a Life Solutions
Fund is
7
<PAGE>
invested. The Life Solutions Funds have adopted certain policies to reduce the
likelihood of such an occurrence. First, the Advisor will rebalance each Life
Solution Fund'sholdings at least quarterly, or more frequently as the Advisor
determines is appropriate. Rebalancing is the process of bringing the asset
allocation of a Life Solutions Fund back into alignment with its asset
allocation range. In addition, the Advisor will not allocate any new investment
dollars to any Underlying Fund in an asset class whose maximum percentage has
been exceeded. Finally, the Advisor will allocate new investment dollars on a
priority basis to Underlying Funds in any asset class whose minimum percentage
has not been achieved.
Principal Risks
Investment in the funds, like any investment, has risks. Fund shares will rise
and fall in value and there is a risk you could lose money by investing in a
fund. There can be no assurance that a fund will achieve its objective. An
investment in a fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Money Market Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
fund.
Each of the funds has risks associated with it, as shown in the matrix below.
Following the matrix is a detailed description of each risk.
<TABLE>
<CAPTION>
Money Yield Bond
Risk Market Plus Intermediate Market
---- ------ ----- ------------ ------
<S> <C> <C> <C> <C>
Industry concentration X X X X
Management X X X X
Market X X X X
Liquidity X X X X
Fixed-income securities X X X X
Equity securities
IPOs
Securities of small cap companies
Securities of large cap companies
Non-investment grade fixed-income
securities X X
Asset-backed securities X X X X
Instruments of US and foreign banks
and branches and foreign corporations,
including Yankee bonds X X X X
Variable and floating rate securities X X X X
Derivatives X X X
Mortgage-backed securities X X X
Interest rate risk X
<CAPTION>
High Yield Growth and
Risk Bond Income S&P 500 Matrix
---- ---- ------ ------- ------
<S> <C> <C> <C> <C>
Industry concentration X
Management X X X X
Market X X X X
Liquidity X X X X
Fixed-income securities X
Equity securities X X X
IPOs X
Securities of small cap companies X X
Securities of large cap companies X X X
Non-investment grade fixed-income
securities X
Asset-backed securities X
Instruments of US and foreign banks
and branches and foreign corporations,
including Yankee bonds X
Variable and floating rate securities X
Derivatives X X X
Mortgage-backed securities X
Interest rate risk
<CAPTION>
Small Special Active Agressive
Risk Cap Equity REIT Equity
---- ------ ------- ------ ---------
<S> <C> <C> <C> <C>
Industry concentration X X X X
Management X X X X
Market X X X X
Liquidity risk X X X X
Fixed-income securities X X
Equity securities X X X X
IPOs X X X
Securities of small cap companies X X X X
Securities of large cap companies X X
Non-investment grade fixed-income
securities
International securities
Non-US debt securities
Analytical models X X
Derivatives X X X
Emerging market countries
Foreign currency and exchange rate
<CAPTION>
International
IAM Emerging Growth Active
Risk SHARES Markets Opportunities International
---- ------ ------- ------------- -------------
<S> <C> <C> <C> <C>
Industry concentration X
Management X X X X
Market X X X X
Liquidity risk X X X X
Fixed-income securities X X X
Equity securities X X X X
IPOs X X
Securities of small cap companies X X
Securities of large cap companies X X X
Non-investment grade fixed-income
securities X X X
International securities X X X
Non-US debt securities X X X
Analytical models X X X
Derivatives X X X
Emerging market countries X X X
Foreign currency and exchange rate X X X
</TABLE>
8
<PAGE>
Other risks:
Non-diversified fund (Active REIT Fund). The top five holdings in the Active
REIT Fund portfolio may comprise up to 40% of the fund's total assets. This
investment weighting would cause the fund to be subject to risks associated
with a non-diversified mutual fund. To the extent the Active REIT Fund chooses
to give greater weight to securities of any single issuer, developments
affecting that issuer are likely to have a greater impact on the fund's share
price. Similarly, to the extent the fund chooses to invest in fewer issuers,
the fund's ability to achieve its investment objective will depend on
investment performance of a relatively smaller group of issuers.
REITS (Active REIT Fund). REITs (real estate investment trusts) may be affected
by changes in the value of the underlying properties owned by the REITs and by
the quality of any credit extended. Moreover, the underlying portfolios of
REITs may not be diversified, and therefore are subject to heavy cash flow
dependency, defaults by borrowers, self-liquidation and the possibility of
failing to either qualify for tax-free pass through of income under federal tax
laws or to maintain their exemption from certain federal securities laws.
Real Estate Securities (Active REIT Fund). Just as real estate values go up and
down, companies involved in the industry, and in which a fund invests, also
fluctuate. Such a fund is subject to risks associated with direct ownership of
real estate. Additional risks include declines in the value of real estate,
changes in general and local economic conditions, increases in property taxes
and changes in tax laws and interest rates. The value of securities of
companies that service the real estate industry may also be affected by such
risks. Values of companies involved in the real estate industry can fluctuate
with the value of the real estate and as a result can be subject to some of the
same risks as a direct real estate investment.
Investments in the Underlying Funds (Life Solutions Funds). The investments of
each Life Solutions Fund are concentrated in the Underlying Funds, so each Life
Solutions Fund's investment performance is directly related to the investment
performance of the Underlying Funds that it holds. The ability of each Life
Solutions Fund to meet its investment objective is directly related to the
ability of the Underlying Funds to meet their objectives and to the allocation
among the Underlying Funds by the Advisor. There can be no assurance that the
investment objective of any Life Solutions Fund or Underlying Fund will be
achieved.
Affiliated Persons (Life Solutions Funds). SSgA and the officers and trustees
of the Life Solutions Funds also serve as investment advisor, officers and
trustees, respectively, of the Underlying Funds. Therefore, conflicts may arise
as these persons fulfill their fiduciary responsibilities to the Life Solutions
Funds and the Underlying Funds. The trustees believe they have structured the
Life Solutions Funds to avoid these concerns. If a situation arises that may
result in a conflict, the trustees and officers of the Life Solutions Funds
will carefully analyze the situation and take all necessary steps to minimize
or eliminate the potential conflicts.
Investment Practices of Underlying Funds (Life Solutions Funds). In addition to
their principal investments, certain Underlying Funds may invest a portion of
their assets in foreign securities; enter into forward currency transactions;
lend their portfolio securities, enter into stock index, interest rate and
currency futures contracts, and options on such contracts; engage in options
transactions; purchase zero coupon bonds and payment-in-kind bonds; purchase
restricted and illiquid securities; enter into forward roll transactions;
purchase securities on a when-issued or delayed delivery basis; enter into
repurchase or reverse repurchase agreements; borrow money; and engage in
various other investment practices. All Life Solutions Funds may invest in
Underlying Funds that in turn invest in securities of international or emerging
markets and thus are subject to additional risks of these investments,
including changes in foreign currency exchange rates and political risk.
Investments in the Other Investment Company Funds (S&P 500 Index Fund). The
investments of the fund may be concentrated in the shares of another investment
company with substantially the same investment objectives, policies and
restrictions as the fund. In that case, the fund's investment performance is
directly related to the investment performance of the investment company shares
that it holds (the "Master Fund"). The ability of the fund to meet its
investment objective is directly related to the ability of the Master Fund to
meet its objective. There can be no assurance that the investment objective of
the fund or the Master Fund will be achieved.
Affiliated Persons (S&P 500 Index Fund). SSgA and the officers and trustees of
the fund also serve as investment advisor, officers and trustees, respectively,
of the Master Fund. Therefore, conflicts may arise as these persons fulfill
their fiduciary responsibilities to the fund and the Master Fund. The Trustees
believe they have structured the fund to avoid these concerns. If a situation
arises that may result in a conflict, the Trustees and officers of the fund
will carefully analyze the situation and take all necessary steps to minimize
or eliminate the potential conflicts.
Index Correlation (S&P 500 Index Fund). The fund's ability to achieve
significant correlation between fund and Index performance may be affected by
changes in securities markets, changes in the composition of the Index and the
timing of purchases and redemptions of fund shares. The fund's management team
will monitor correlation. Should the fund fail to achieve an appropriate level
of correlation, Advisor will report to the Board of Trustees, which will
consider alternative arrangements.
9
<PAGE>
Information regarding Year 2000 applicable to the SSgA Funds:
The SSgA Funds' operations depend on the smooth functioning of its service
providers' computer systems. The Funds and its shareholders could be adversely
affected if those computer systems do not properly process and calculate date-
related information on or after January 1, 2000. If such an event occurred, the
value of the issuer's securities could be reduced.
Many computer software systems in use today cannot distinguish between the year
2000 and the year 1900. Although year 2000 related computer problems could have
a negative effect on the SSgA Funds and its shareholders, the service providers
have advised the Funds that they are working to avoid such problems and expect
all systems to be adapted in time for the event. Because it is the obligation
of those service providers to ensure the proper functioning of their computer
systems, the Funds do not expect to incur any material expense in connection
with year 2000 preparations.
A fund that invests significantly in non-US issuers may be exposed to a higher
degree of risk from year 2000 issues than other funds. It is generally believed
that non-US governments and issuers are less prepared for year 2000 related
contingencies than the US government and US-based issuers, which could result
in a more significant diminution in value of non-US issuer's securities on or
after January 1, 2000. This risk applies particularly to the Emerging Markets,
Active International and International Growth Opportunities Funds.
Descriptions of Risks:
Industry Concentration Risk. The risk that a fund concentrates its investment
in specific industry sectors that have historically experienced substantial
price volatility. A fund is subject to greater risk of loss as a result of
adverse economic, business or other developments than if its investments were
diversified across different industry sectors. Securities of issuers held by
the funds may lack sufficient market liquidity to enable a fund to sell the
securities at an advantageous time or without a substantial drop in price.
Interest Rate Risk. The risk that when interest rates increase, securities held
by a fund will decline in value. Long-term fixed-income securities will
normally have more price volatility because of this risk than short-term
securities.
Management Risk. The risk that a strategy used by the Advisor may fail to
produce the intended results.
Market Risk. The risk that the value of the securities in which a fund invests
may go up or down in response to the prospects of individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
Liquidity Risk. The risk that a fund will not be able to pay redemption
proceeds within the time period stated in this prospectus because of unusual
market conditions, an unusually high volume of redemption requests, or other
reasons. Funds that invest in non-investment grade fixed-income securities,
small capitalization stocks, REITs and emerging country issuers will be
especially subject to the risk that during certain periods the liquidity of
particular issuers or industries, or all securities within these investment
categories, will shrink or disappear suddenly and without warning as a result
of adverse economic, market or political events, or adverse investor
perceptions whether or not accurate.
Fixed-income Securities. Prices of fixed-income securities rise and fall in
response to interest rate changes. Generally, when interest rates rise, prices
of fixed-income securities fall. The longer the duration of the security, the
more sensitive the security is to this risk. A 1% increase in interest rates
would reduce the value of a $100 note by approximately one dollar if it had a
one-year duration, but would reduce its value by approximately fifteen dollars
if it had a 15-year duration. There is also a risk that one or more of the
securities will be downgraded in credit rating or go into default. Lower-rated
bonds generally have higher credit risks. These securities are subject to other
risks including:
o Credit/Default Risk--the risk that an issuer of fixed-income securities
held by a fund (which may have low credit ratings) may default on its
obligation to pay interest and repay principal.
Equity Securities. The value of equity securities will rise and fall in
response to the activities of the company that issued the stock, general market
conditions, and/or economic conditions. With respect to equity securities
purchased by the Emerging Markets Fund certain emerging markets are closed in
whole or part to the direct purchase of equity securities by foreigners. In
these markets, the fund may be able to invest in equity securities solely or
primarily through foreign government authorized pooled investment vehicles.
These foreign government pooled vehicles are also subject to risks. These
securities could be more expensive because of additional management fees
charged by the underlying pools. In addition, such pools may have restrictions
on redemptions, limiting the liquidity of the investment.
Initial Public Offerings (IPOs). Performance of a fund may be impacted by a
fund's holdings of IPOs. Because an IPO is an equity security that is new to
the public market, the value of IPOs can fluctuate dramatically. Therefore,
IPOs have greater risks than other equity investments.
Securities of Small Capitalization Companies. Investments in smaller companies
may involve greater risks because these companies often have narrower markets
and more limited managerial and financial resources than larger, more
established companies. As a result their performance can be more volatile which
could increase the volatility of the fund's portfolio.
Securities of Large Capitalization Companies. A fund's emphasis on large-cap
stocks makes it susceptible to the
10
<PAGE>
business risks of larger companies, which usually cannot change as quickly as
smaller companies in response to competitive challenges. Larger companies also
tend not to be able to maintain the high growth rates of well-managed smaller
companies, especially during strong economic periods.
Non-Investment Grade Fixed-Income Securities. Although lower-rated debt
securities generally offer a higher yield than higher rated debt securities,
they involve higher risks. They are especially subject to:
o Adverse changes in general economic conditions and in the industries in which
their issuers are engaged;
o Changes in the financial condition of their issuers; and
o Price fluctuations in response to changes in interest rates.
As a result, issuers of lower rated debt securities are more likely than other
issuers to miss principal and interest payments or to default.
Asset-Backed Securities. Asset-backed securities are often subject to more
rapid repayment than their stated maturity date would indicate as a result of
the pass-through of prepayments of principal on the underlying loans.
Asset-backed securities present certain additional risks because asset-backed
securities generally do not have the benefit of a security interest in
collateral that is comparable to mortgage assets.
International Securities. A fund's return and net asset value may be
significantly affected by political or economic conditions and regulatory
requirements in a particular country. Foreign markets, economies and political
systems may be less stable than US markets, and changes in exchange rates of
foreign currencies can affect the value of a fund's foreign assets. Foreign
laws and accounting standards typically are not as strict as they are in the US
and there may be less public information available about foreign companies.
Non-US Debt Securities. A fund's foreign debt securities are typically
obligations of sovereign governments. These securities are particularly subject
to a risk of default from political instability and fluctuations in exchange
rates. Significant emerging market debt is considered non-investment grade.
Emerging Market Countries. Investments in emerging or developing markets
involve exposure to economic structures that are generally less diverse and
mature, and to political systems which have less stability than those of more
developed countries. Emerging market securities are subject to currency
transfer restrictions and may experience delays and disruptions in securities
settlement procedures.
Instruments of US and Foreign Banks and Branches and Foreign Corporations,
Including Yankee Bonds. Non-US corporations and banks issuing dollar
denominated instruments in the US are not necessarily subject to the same
regulatory requirements that apply to US corporations and banks, such as
accounting, auditing and recordkeeping standards, the public availability of
information and, for banks, reserve requirements, loan limitations and
examinations. This increases the possibility that a non-US corporation or bank
may become insolvent or otherwise unable to fulfill its obligations on these
instruments.
Foreign Currency and Exchange Rate. A fund may be affected either favorably or
unfavorably by fluctuations in the relative rates of exchange between the
currencies of different nations, exchange control regulations and indigenous
economic and political developments. A fund attempts to buy and sell foreign
currencies on favorable terms. Price spread on currency exchange (to cover
service charges) may be incurred, particularly when a fund changes investments
from one country to another or when proceeds from the sale of shares in US
dollars are used for the purchase of securities in foreign countries. Also,
some countries may adopt policies which would prevent a fund from repatriating
invested capital and dividends, withhold portions of interest and dividends at
the source, or impose other taxes, with respect to a fund's investments in
securities of issuers of that country. Because a fund's securities may be
denominated in foreign currencies, the value of such securities to the fund
will be affected by changes in currency exchange rates and in exchange control
regulations. A change in the value of a foreign currency against the US dollar
will result in a corresponding change in the US dollar value of the fund's
securities. In addition, some emerging market countries may have fixed or
managed currencies which are not free-floating against the US dollar. Further,
certain emerging market currencies may not be internationally traded. Certain
of these currencies have experienced a steady devaluation relative to the US
dollar. Many emerging markets countries have experienced substantial and in
some periods extremely high rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had, and may continue to have
negative effects on the economies and securities markets of certain emerging
market countries.
Analytical Models. The success of a fund's principal investment strategy
depends on the Advisor's skill in designing and using its analytical model as a
tool for selecting undervalued stocks.
Derivatives. There are certain investment risks in using derivatives, such as
futures contracts, options on futures, interest rate swaps and structured
notes, as a hedging technique. If a fund incorrectly forecasts interest rates
in using derivatives, a fund could lose money. Price movements of a futures
contract, option or structured notes may not be identical to price movements of
portfolio securities or a securities index, resulting in the risk that, when a
fund buys a futures contract or option as a hedge, the hedge may not be
completely effective. The use of these management techniques also involves the
risk of loss if the Advisor is incorrect in its expectation of fluctuations in
securities prices, interest rates or currency prices.
11
<PAGE>
Mortgage-Backed Securities.
o Prepayment Risk--The investment characteristics of adjustable and fixed rate
mortgage-backed securities differ from those of traditional fixed-income
securities. The major differences include the payment of interest and
principal on mortgage-backed securities on a more frequent (usually monthly)
schedule, and the possibility that principal may be prepaid at any time due
to prepayments on the underlying mortgage loans or other assets. These
differences can result in significantly greater price and yield volatility
than is the case with traditional fixed-income securities. As a result, if a
fund purchases mortgage-backed securities at a premium, a faster than
expected prepayment rate will reduce both the market value and the yield to
maturity from these which were anticipated. A prepayment rate that is slower
than expected will have the opposite effect of increasing yield to majority
and market value. Conversely, if a fund purchased mortgage-backed securities
at a discount, faster than expected prepayments will increase, while slower
than expected prepayments will reduce yield to maturity and market values.
o Call Risk--The risk that an issuer will exercise its right to pay principal
on an obligation held by a fund (such as a mortgage-backed security) earlier
than expected. This may happen when there is a decline in interest rates.
Under these circumstances, a fund may be unable to recoup all of its initial
investment and will also suffer from having to reinvest in lower yielding
securities.
o Extension Risk--The risk that an issuer will exercise its right to pay
principal on an obligation held by a fund (such as a mortgage-backed
security) later than expected. This may happen when there is a rise in
interest rates. Under these circumstances, the value of the obligation will
decrease and a fund will also suffer from the inability to invest in higher
yielding securities.
Risk and Return
The following bar charts illustrate the risks of investing in each fund by
showing changes in a fund's performance from year to year over the life of the
fund. The accompanying tables further illustrate the risks of investing in a
fund by showing how the fund's average annual returns for 1, 5 and 10 years
(or, if less, since a fund's inception) compare to the returns of a broad-based
securities market index.
How a fund has performed in the past is not necessarily an indication of how it
will perform in the future.
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Money Market
<TABLE>
<S> <C>
1989 9.29%
1990 8.28%
1991 6.28%
1992 3.91%
1993 3.09%
1994 3.99%
1995 5.76%
1996 5.21%
1997 5.37%
1998 5.30%
</TABLE>
[END PLOT POINTS]
Best Quarter -- June 30, 1989: 2.36%
Worst Quarter -- December 31, 1993: 0.74%
Current Fiscal Quarter -- August 31, 1999: 1.19%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1, 5 and 10 years compare to
the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
---------- --------- ---------
<S> <C> <C> <C>
Money Market Fund 5.30% 5.12% 5.63%
Salomon Smith Barney
3-month Treasury bill 5.05% 5.10% 5.44%
Lipper Average Money
Market Funds 4.85% 4.78% 5.22%
</TABLE>
7-Day Yields
For the Period Ended December 31, 1998:
<TABLE>
<CAPTION>
Current Effective
--------- ----------
<S> <C> <C>
Money Market Fund 4.84% 4.96%
</TABLE>
Current yield information for the fund is available toll free by calling
1-800-647-7327 or by visiting our website at www.ssgafunds.com.
12
<PAGE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Yield Plus
<TABLE>
<S> <C>
1993 3.44%
1994 4.10%
1995 6.56%
1996 5.48%
1997 5.54%
1998 4.83%
</TABLE>
[END PLOT POINTS]
Best Quarter -- March 31, 1995: 1.78%
Worst Quarter -- September 30, 1993: 0.71%
Current Fiscal Quarter -- August 31, 1999: 0.88%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 and 5 years and since the
fund's inception compare to the returns of a broad-based securities market
index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year 5 Years Inception
---------- --------- ----------
<S> <C> <C> <C>
Yield Plus Fund 4.83% 5.30% 4.96%
LIBOR 90-day Index 5.52% 5.53% 5.12%
</TABLE>
30-Day Yields
For the Period Ended December 31, 1998:
<TABLE>
<CAPTION>
Current
----------
<S> <C>
Yield Plus Fund 5.28%
</TABLE>
Current yield information for the fund is available toll free by calling
1-800-647-7327 or by visiting our website at www.ssgafunds.com.
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Intermediate
<TABLE>
<S> <C>
1994 -4.43%
1995 16.66%
1996 3.69%
1997 7.44%
1998 7.93%
</TABLE>
[END PLOT POINTS]
Best Quarter -- June 30, 1995: 5.57%
Worst Quarter -- March 31, 1994: (3.14%)
Current Fiscal Quarter -- August 31, 1999: (0.33%)
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 and 5 years and since the
fund's inception compare to the returns of a broad-based securities market
index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year 5 Years Inception
---------- --------- ----------
<S> <C> <C> <C>
Intermediate Fund 7.93% 6.04% 5.52%
Lehman Bros. Intermediate
Government Corporate 8.44% 6.60% 6.29%
</TABLE>
30-Day Yields
For the Period Ended December 31, 1998:
<TABLE>
<CAPTION>
Current
----------
<S> <C>
Intermediate Fund 4.74%
</TABLE>
Current yield information for the fund is available toll free by calling
1-800-647-7327 or by visiting our website at www.ssgafunds.com.
13
<PAGE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Bond Market
<TABLE>
<S> <C>
1997 8.93%
1998 8.36%
</TABLE>
[END PLOT POINTS]
Best Quarter -- September 30, 1998: 4.19%
Worst Quarter -- March 31, 1997: (0.53%)
Current Fiscal Quarter -- August 31, 1999: (1.16%)
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 year and since the fund's
inception compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
---------- ----------
<S> <C> <C>
Bond Market Fund 8.36% 6.73%
Lehman Bros. Aggregate Bond Index 8.69% 7.26%
</TABLE>
30-Day Yields
For the Period Ended December 31, 1998:
<TABLE>
<CAPTION>
Current
----------
<S> <C>
Bond Market Fund 5.58%
</TABLE>
Current yield information for the fund is available toll free by calling
1-800-647-7327 or by visiting our website at www.ssgafunds.com.
Annual Total Returns--High Yield Bond Fund
The High Yield Bond Fund has not been in existence for a full calendar year.
Therefore, performance information is not available. The prospectus will be
updated when information is available. This fund began operating in May 1998.
Best Quarter -- December 31, 1998: 4.36%
Worst Quarter -- September 30, 1998: 0.33%
Current Fiscal Quarter -- August 31, 1999: 0.0%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns since the fund's inception
compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
-------- ------------
<S> <C> <C>
High Yield Bond Fund -- 6.19%
Lehman Bros. High Yield Bond Index -- (1.83%)
</TABLE>
30-Day Yields
For the Period Ended December 31, 1998:
<TABLE>
<CAPTION>
Current
----------
<S> <C>
High Yield Bond Fund 7.75%
</TABLE>
Current yield information for the fund is available toll free by calling
1-800-647-7327 or by visiting our website at www.ssgafunds.com.
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Growth and Income
<TABLE>
<S> <C>
1994 -0.26%
1995 28.62%
1996 21.43%
1997 37.64%
1998 34.74%
</TABLE>
[END PLOT POINTS]
Best Quarter--December 31, 1998: 23.77%
Worst Quarter--September 30, 1998: (8.12%)
Current Fiscal Quarter -- August 31, 1999: (0.40%)
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 and 5 years and since the
fund's inception compare to the returns of a broad-based securities market
index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year 5 Years Inception
----------- ----------- ----------
<S> <C> <C> <C>
Growth and Income Fund 34.74% 23.64% 22.30%
S&P 500[RegTM] Index 28.58% 24.06% 22.75%
</TABLE>
14
<PAGE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- S&P 500 Index
<TABLE>
<S> <C>
1993 9.61%
1994 1.30%
1995 37.02%
1996 22.65%
1997 33.10%
1998 28.35%
</TABLE>
[END PLOT POINTS]
Best Quarter -- December 31, 1998: 21.24%
Worst Quarter--September 30, 1998: (9.97%)
Current Fiscal Quarter -- August 31, 1999: 1.71%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 and 5 years and since the
fund's inception compare to the returns of a broad-based securities market
index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year 5 Years Inception
----------- ----------- ----------
<S> <C> <C> <C>
S&P 500 Index Fund 28.35% 23.80% 21.32%
S&P 500 Index 28.58% 24.06% 21.62%
</TABLE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Matrix Equity
<TABLE>
<S> <C>
1993 16.30%
1994 -0.40%
1995 28.17%
1996 23.68%
1997 34.23%
1998 21.71%
</TABLE>
[END PLOT POINTS]
Best Quarter -- December 31, 1998: 22.35%
Worst Quarter--September 30, 1998 (13.89%)
Current Fiscal Quarter -- August 31, 1999: 2.89%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 and 5 years and since the
fund's inception compare to the returns of a broad-based securities market
index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year 5 Years Inception
----------- ----------- ----------
<S> <C> <C> <C>
Matrix Equity Fund 21.71% 20.87% 19.15%
S&P 500 Index 28.58% 24.06% 20.52%
</TABLE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Small Cap
<TABLE>
<S> <C>
1993 12.96%
1994 -0.95%
1995 41.83%
1996 28.79%
1997 23.60%
1998 -7.55%
</TABLE>
[END PLOT POINTS]
Best Quarter--December 31, 1998: 19.66%
Worst Quarter--September 30, 1998: (27.21%)
Current Fiscal Quarter -- August 31, 1999: 1.89%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 and 5 years and since the
fund's inception compare to the returns of a broad-based securities market
index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year 5 Years Inception
------------ ----------- ----------
<S> <C> <C> <C>
Small Cap Fund (7.55%) 15.63% 16.29%
Russell 2000[RegTM] Index (2.55%) 11.86% 14.87%
</TABLE>
Annual Total Returns--Special Equity Fund
The Special Equity Fund has not been in existence for a full calendar year.
Therefore, performance information is not available. The prospectus will be
updated when information is available. This fund began operating in May 1998.
Best Quarter -- December 31, 1998: 21.70%
Worst Quarter -- September 30, 1998: (21.42%)
Current Fiscal Quarter -- August 31, 1999: 9.43%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns since the fund's inception
compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
-------- ------------
<S> <C> <C>
Special Equity Fund -- (8.48%)
Russell Special Small Company[RegTM] Index -- (3.37%)
</TABLE>
15
<PAGE>
Annual Total Returns--Tuckerman Active REIT Fund
The Tuckerman Active REIT Fund has not been in existence for a full calendar
year. Therefore, performance information is not available. The prospectus will
be updated when information is available. This fund began operating in May
1998.
Best Quarter -- December 31, 1998: (0.68%)
Worst Quarter -- September 30, 1998: (11.58%)
Current Fiscal Quarter -- August 31, 1999: (6.02%)
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns since the fund's inception
compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
-------- -----------
<S> <C> <C>
Active REIT Fund -- (14.23%)
Wilshire REIT Index -- (8.93%)
</TABLE>
Annual Total Returns--Aggressive Equity Fund
The Aggressive Equity Fund has not been in existence for a full calendar year.
Therefore, performance information is not available. The prospectus will be
updated when information is available. This fund began operating in December
1998.
Annual Total Returns--IAM SHARES Fund
The IAM SHARES Fund has not been in existence for a full calendar year.
Therefore, performance information is not available. The prospectus will be
updated when information is available. This fund began operating in June 1999.
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Emerging Markets
<TABLE>
<S> <C>
1995 -7.89%
1996 14.88%
1997 -8.81%
1998 -15.94%
</TABLE>
[END PLOT POINTS]
Best Quarter -- September 30, 1994: 29.65%
Worst Quarter -- December 31, 1997: (21.41%)
Current Fiscal Quarter -- August 31, 1999: 10.09%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 year and since the fund's
inception compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
------------- ------------
<S> <C> <C>
Emerging Markets Fund (15.94%) (2.61%)
IFC Investable Composite Index (22.02%) (10.11%)
</TABLE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Active International
<TABLE>
<S> <C>
1996 3.92%
1997 -10.10%
1998 13.54%
</TABLE>
[END PLOT POINTS]
Best Quarter -- March 31, 1998: 17.88%
Worst Quarter -- September 30, 1998: (15.97%)
Current Fiscal Quarter -- August 31, 1999: 10.20%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 year and since the fund's
inception compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
----------- ----------
<S> <C> <C>
Active International Fund 13.54% 4.75%
MSCI EAFE Index 20.00% 11.20%
</TABLE>
Annual Total Returns--International Growth Opportunities Fund
The International Growth Opportunities Fund has not been in existence for a
full calendar year. Therefore, performance information is not available. The
prospectus will be updated when information is available. This fund began
operating in May 1998.
Best Quarter -- December 31, 1998: 20.31%
Worst Quarter -- September 30, 1998: (17.58%)
Current Fiscal Quarter -- August 31, 1999: 10.77%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns since the fund's inception
compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
-------- ------------
<S> <C> <C>
International Growth Opportunities Fund -- (0.14%)
MSCI All Country World Index -- (0.27%)
</TABLE>
16
<PAGE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Life Solutions Income and Growth
<TABLE>
<S> <C>
1998 11.02%
</TABLE>
[END PLOT POINTS]
Best Quarter -- December 31, 1998: 7.85%
Worst Quarter -- September 30, 1998: (3.50%)
Current Fiscal Quarter -- August 31, 1999: 1.17%.
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 year and since the fund's
inception compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
----------- ----------
<S> <C> <C>
Life Solutions Income and Growth Fund 11.02% 10.70%
Composite Market Index 15.22% 15.40%
Russell 3000[RegTM] Index 24.14% 24.50%
Lehman Bros. Aggregate Bond Index 8.69% 10.15%
MSCI EAFE Index US 20.33% 6.74%
S&P 500 Index 28.77% 26.44%
</TABLE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Life Solutions Balanced
<TABLE>
<S> <C>
1998 12.30%
</TABLE>
[END PLOT POINTS]
Best Quarter -- December 31, 1998: 12.05%
Worst Quarter -- September 30, 1998: (7.74%)
Current Fiscal Quarter -- August 31, 1999: 2.45%.
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 year and since the fund's
inception compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
----------- ----------
<S> <C> <C>
Life Solutions Balanced Fund 12.30% 11.27%
Composite Market Index 18.17% 17.39%
Russell 3000 Index 24.14% 24.50%
Lehman Bros. Aggregate Bond Index 8.69% 10.15%
MSCI EAFE Index US 20.33% 6.74%
S&P 500 Index 28.77% 26.44%
</TABLE>
[PLOT POINTS FOR BAR CHART]
Annual Total Returns -- Life Solutions Growth
<TABLE>
<S> <C>
1998 13.76%
</TABLE>
[END PLOT POINTS]
Best Quarter -- December 31, 1998: 16.41%
Worst Quarter -- September 30, 1998: (11.56%)
Current Fiscal Quarter -- August 31, 1999: 3.76%
The following table further illustrates the risks of investing in the fund by
showing how the fund's average annual returns for 1 year and since the fund's
inception compare to the returns of a broad-based securities market index.
Average Annual Total Returns
For the Periods Ended December 31, 1998:
<TABLE>
<CAPTION>
1 Year Inception
----------- ----------
<S> <C> <C>
Life Solutions Growth Fund 13.76% 12.06%
Composite Market Index 20.94% 19.22%
Russell 3000 Index 24.14% 24.50%
Lehman Bros. Aggregate Bond Index 8.69% 10.15%
MSCI EAFE Index US 20.33% 6.74%
S&P 500 Index 28.77% 26.44%
</TABLE>
17
<PAGE>
FEES AND EXPENSES OF THE FUNDS
These tables describe the fees and expenses that you may pay if you buy and
hold shares of the funds.
<TABLE>
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
or Other Distributions None
Redemption Fee (All Funds except Active International, Emerging
Markets and International Growth Opportunities) None
Redemption Fee (Active International, Emerging Markets and
International Growth Opportunities) 2%
Exchange Fee None
Maximum Account Fee None
</TABLE>
Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
<TABLE>
<CAPTION>
Less Contractual Total Annual
Distribution Management Fee Expenses after
Management and Service Other Gross Waivers and Waivers and
Fund Fee (12b-1) Fees(1) Expenses Expenses Reimbursements Reimbursements
---- --- ------------- -------- -------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Money Market .25% .08% .07% .40% -- .40%
Yield Plus .25% .09% .07% .41% -- .41%
Intermediate(2) .80% .10% .21% 1.11% (.51%) .60%
Bond Market(3) .30% .06% .14% .50% -- .50%
High Yield Bond(4) .30% .09% .48% .87% (.12%) .75%
Growth and Income(5) .85% .15% .10% 1.10% -- 1.10%
S&P 500 Index(6) .045%* .09% .057% .192% (.012%) .18%
Matrix Equity .75% .13% .06% .94% -- .94%
Small Cap .75% .19% .13% 1.07% -- 1.07%
Special Equity(7) .75% .13% .69% 1.57% (.47%) 1.10%
Active REIT(8) .65% .08% .36% 1.09% (.09%) 1.00%
Aggressive Equity(9) .75% .02% 1.29% 2.06% (.96%) 1.10%
IAM SHARES(10) .25% .04% .38 .67% (.02%) .65%
Emerging Markets(11) .75% .12% .47% 1.34% (.09%) 1.25%
Active International(12) .75% .08% .54% 1.37% (.37%) 1.00%
International Growth Opportunities(13) .75% .08% .45% 1.28% (.18%) 1.10%
</TABLE>
-----------
* With respect to the S&P 500 Index Fund, the fee of .045% includes Custody
and Administration Fees.
(1) The ratio includes a certain percentage for each of 12b-1 Distribution and
Shareholder Servicing Fees, respectively, as follows: Money
Market--.04/.04; Yield Plus--0.4/.05; S&P 500--.04/.05;
Intermediate--.04/.06; Bond Market--.03/.03; High Yield Bond--.07/.02;
Active REIT--.05/.03; Growth and Income--.06/.09; Matrix Equity--.04/.09;
Small Cap--.09/.10; Special Equity--.10/.03; International Growth
Opportunities--.05/.03; Aggressive Equity--.02/.00; IAM SHARES--.02/.02;
Active International--.04/.04; Emerging Markets--.09/.03.
(2) The Advisor has contractually agreed to waive .50% of its .80% management
fee for the Intermediate Fund until December 31, 2010. In addition, until
December 31, 2002, the Advisor agrees to reimburse the fund for all
expenses in excess of .60% of average daily net assets on an annual basis.
The annual management fee after the waiver and reimbursement is .29%. The
total annual expenses shown above have been restated to reflect the waiver
and reimbursement.
(3) The Advisor has contractually agreed to reimburse the Bond Market Fund for
all expenses in excess of .50% of average daily net assets on an annual
basis until December 31, 2002.
(4) The Advisor has contractually agreed to reimburse the High Yield Bond Fund
for all expenses in excess of .75% of average daily net assets on an
annual basis until December 31, 2002. The annual management fee after the
reimbursement is .18%. The total annual expenses shown above have been
restated to reflect the reimbursement.
(5) The Advisor has contractually agreed to reimburse the Growth and Income
Fund for all expenses in excess of 1.10% of average daily net assets on an
annual basis until December 31, 2002.
18
<PAGE>
(6) The Advisor has contractually agreed to reimburse the fund for all
expenses in excess of .18% of average daily net assets on an annual basis
until December 31, 2002. The total annual expenses shown above have been
restated to reflect current fees and the reimbursement.
(7) The Advisor has contractually agreed to reimburse the Special Equity Fund
for all expenses in excess of 1.10% of average daily net assets on an
annual basis until December 31, 2002. The annual management fee after the
reimbursement is .28%. The total annual expenses shown above have been
restated to reflect the reimbursement.
(8) The Advisor has contractually agreed to reimburse the Active REIT Fund to
the extent that total expenses exceed 1.00% of average daily net assets on
an annual basis until December 31, 2002. The annual management fee after
the reimbursement is .56%. The total annual expenses shown above have been
restated to reflect the reimbursement.
(9) The Advisor has contractually agreed to reimburse the Aggressive Equity
Fund for all expenses in excess of 1.10% of average daily net assets on an
annual basis until December 31, 2002. The annual management fee after the
reimbursement is .00%. Other expenses after the reimbursement are 1.08%.
The total annual expenses shown above have been restated to reflect the
reimbursement.
(10) The Advisor has contractually agreed to reimburse the IAM SHARES Fund for
all expenses in excess of .65% of average daily net assets on an annual
basis until December 31, 2002. The annual management fee after the
reimbursement is .23%. The total annual expenses shown above have been
restated to reflect the reimbursement.
(11) The Advisor has contractually agreed to reimburse the Emerging Markets
Fund for all expenses in excess of 1.25% of average daily net assets on an
annual basis until December 31, 2002. The annual management fee after the
reimbursement is .66%. The total annual expenses shown above have been
restated to reflect the reimbursement.
(12) The Advisor has contractually agreed to reimburse the Active International
Fund for all expenses in excess of 1.00% of average daily net assets on an
annual basis until December 31, 2002. The annual management fee after the
waiver is .38%. The total annual expenses shown above have been restated
to reflect the reimbursement.
(13) The Advisor has contractually agreed to reimburse the International Growth
Opportunities Fund for all expenses in excess of 1.10% of average daily
net assets on an annual basis until December 31, 2002. The annual
management fee after the waiver is .57%. The total annual expenses shown
above have been restated to reflect the reimbursement. Annual Fund
Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
<CAPTION>
Life Solutions Life Solutions Life Solutions
Income and Growth Fund(14) Balanced Fund(14) Growth Fund(14)
<S> <C> <C> <C>
Management Fee .00% .00% .00%
Distribution and Service (12b-1) Fees(15) .15% .15% .15%
Other Expenses .35% .13% .23%
Gross Expenses .50% .28% .38%
Less Contractual Management Fee Waivers and
Reimbursements (.05%) -- --
Total Annual Expenses after Waivers and
Reimbursements .45% .28% .38%
Average Indirect Expenses Before Waivers and
Reimbursements on Underlying Funds .75% .84% .94%
Average Indirect Expenses After Waivers and
Reimbursements on Underlying Funds .67% .73% .80%
Total Annual Expenses (Including Indirect
Expenses) 1.20% 1.12% 1.32%
Total Annual Expenses (Including Indirect
Expenses) After Waivers and Reimbursements of
Underlying Funds 1.12% 1.01% 1.18%
</TABLE>
-----------
(14) The Advisor has contractually agreed to reimburse the Life Solutions Funds
to the extent that total expenses (other than distribution and service
fees) exceed .30% until December 31, 2002. The other expenses and total
annual expenses shown above have been restated to reflect the
reimbursement.
(15) The ratio includes a certain percentage for each of 12b-1 Distribution and
Shareholder Servicing Fees, respectively, as follows: Life Solutions
Balanced Fund--.02/.13; Life Solutions Growth Fund--.02/.13; Life
Solutions Income and Growth Fund--.02/.13.
19
<PAGE>
While the Life Solutions Funds are expected to operate at a .30% or lower
expense level prior to payment of 12b-1 fees, shareholders in a Life Solutions
Fund will bear indirectly the proportionate expenses of the Underlying Funds in
which the Life Solutions Fund invests. Each Life Solutions Fund intends to
invest in some, but not all, of the Underlying Funds. Based on current
expectations and the weighted exposure to the Underlying Funds, the following
is the indirect expense ratio (before and after fee waivers and/or expense
reimbursements) of each Life Solutions Fund:
<TABLE>
<CAPTION>
Average Indirect
Expense Ratios
Before and
After Fee Waiver
and/or Expense
Life Solutions Fund Reimbursement (%)
------------------- ------------------
Before After
-------- ---------
<S> <C> <C>
Income and Growth Fund 0.75 0.67
Balanced Fund 0.84 0.73
Growth Fund 0.94 0.80
</TABLE>
Example
These examples are intended to help you compare the cost of investing in a fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in a fund for the time periods
indicated, and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that a
fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
<TABLE>
<CAPTION>
Fund 1 year 3 years 5 years 10 years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market $ 41 $ 18 $ 224 $ 505
==== ==== ====== ======
Yield Plus $ 42 $132 $ 230 $ 518
==== ==== ====== ======
Intermediate $ 61 $192 $ 340 $1,762
==== ==== ====== ======
Bond Market $ 51 $160 $ 280 $ 629
==== ==== ====== ======
High Yield Bond $ 77 $240 $ 482 $1,073
==== ==== ====== ======
Growth and Income $112 $350 $ 606 $1,340
==== ==== ====== ======
S&P 500 Index $ 18 $ 58 $ 157 $ 356
==== ==== ====== ======
Matrix Equity $ 84 $262 $ 520 $1,155
==== ==== ====== ======
Small Cap $109 $340 $ 590 $1,306
==== ==== ====== ======
Special Equity $112 $350 $ 855 $1,867
==== ==== ====== ======
Active REIT $102 $318 $ 601 $1,329
==== ==== ====== ======
Aggressive Equity $112 $350 $1,114 $2,400
==== ==== ====== ======
IAM SHARES Fund $ 66 $208 $ 373 $ 835
==== ==== ====== ======
Emerging Markets $127 $397 $ 734 $1,613
==== ==== ====== ======
Active International $102 $318 $ 750 $1,646
==== ==== ====== ======
International Growth Opportunities $112 $350 $ 702 $1,545
==== ==== ====== ======
Life Solutions:
Income and Growth $ 46 $144 $ 280 $ 628
==== ==== ====== ======
Balanced $ 29 $157 $ 356 $ 356
==== ==== ====== ======
Growth $ 39 $122 $ 213 $ 480
==== ==== ====== ======
</TABLE>
Investors purchasing fund shares through a financial intermediary, such as a
bank or an investment advisor, may also be required to pay additional fees for
services provided by the intermediary. Such investors should contact the
intermediary for information concerning what additional fees, if any, will be
charged.
Long-term shareholders of the funds may pay more in Rule 12b-1 fees than the
economic equivalent of the maximum front-end sales charge permitted by the
National Association of Securities Dealers, Inc. (not applicable to the Money
Market Fund).
20
<PAGE>
MANAGEMENT OF THE FUND
Investment Advisor. State Street Bank and Trust Company (State Street or
Advisor), One International Place, Boston, Massachusetts 02110, serves as the
investment advisor for the SSgA Funds and directs the investments of each fund
in accordance with their respective investment objectives, policies and
restrictions.
State Street is one of the largest providers of securities processing and
record keeping services for US mutual funds and pension funds. State Street
Global Advisors (SSgA) is the investment management business of State Street, a
200-year old pioneer and leader in the world of financial services. State
Street is a wholly-owned subsidiary of State Street Corporation, a publicly
held bank holding company. State Street, with over $582 billion under
management as of October 19, 1999, provides complete global investment
management services from offices in North America, South America, Europe, Asia,
Australia and the Middle East. For its services as the Advisor, each fund in
this prospectus pays State Street an annual management fee, calculated daily
and paid monthly, that is equal to a certain percentage of its average daily
net assets (see the table below). However, the Advisor has voluntarily agreed
to waive or reimburse its fees for certain funds.
<TABLE>
<CAPTION>
Annual
Management
Fees (% of Average
Daily Net Assets):
--------------------------------
Management Management
Fee After Fee Before
Waivers or Waivers or
Reim- Reim-
Fund bursements (%) bursements (%)
---- -------------- --------------
<S> <C> <C>
Money Market 0.25 0.25
Yield Plus 0.25 0.25
Intermediate 0.29 0.80
Bond Market 0.30 0.30
High Yield Bond 0.18 0.30
Growth and Income 0.85 0.85
S&P 500 Index 0.00 0.10
Matrix Equity 0.75 0.75
Small Cap 0.75 0.75
Special Equity 0.28 0.75
Active REIT 0.56 0.65
Aggressive Equity 0.00 0.75
IAM SHARES 0.23 0.25
Emerging Markets 0.66 0.75
Active International 0.38 0.75
International Growth Opportunities 0.57 0.75
Life Solutions Balanced 0.00 0.00
Life Solutions Growth 0.00 0.00
Life Solutions Income and Growth 0.00 0.00
</TABLE>
The Life Solutions Funds will not be charged a fee by the Advisor. However,
each Life Solutions Fund, as a shareholder in the Underlying Funds, will bear
its proportionate share of any investment advisory fees and other expenses paid
by the Underlying Funds.
Portfolio Management
Bond Market and Intermediate Funds. Mr. John P. Kirby, Principal, is the
portfolio manager primarily responsible for investment decisions regarding the
SSgA Intermediate and Bond Market Funds. Prior to joining State Street Bank in
1995, Mr. Kirby was an account manager with Lowell, Blake & Associates. Prior
to that, Mr. Kirby was a portfolio manager at One Federal Asset Management, a
Shawmut Bank subsidiary, and at Cambridge Port Savings as an asset/ liability
risk specialist. He has a BA from Boston College. There are six other portfolio
managers working with Mr. Kirby.
High Yield Bond Fund. Mr. Bruce Walbridge, Principal, has been with State
Street since March 1987. Before joining the Fixed Income group in July 1993 as
a credit analyst, Mr. Walbridge was an assistant portfolio manager in the
International Equity group. Prior to the launch of the SSgA High Yield Bond
Fund, he managed several domestic bond portfolios including the $4 billion
Flagship Government/ Corporate Bond Fund. Utilizing his credit analysis
background, Mr. Walbridge's focus over the last four and a half years has been
on corporate bond analysis and trading. There are three other portfolio
managers who assist in managing the fund.
Yield Plus Fund. Ms. Maria Pino, CFA, Principal, is the portfolio manager
primarily responsible for investment decisions regarding the SSgA Yield Plus
Fund. Ms. Pino managed non-ERISA assets in a short term (1 to 5 year) fixed
income fund and a money market fund at Partners HealthCare System/Brigham and
Women's Hospital since 1993. Prior to that, she managed fixed income assets for
the Commonwealth of Massachusetts State Employees and Teachers Pension Fund.
Ms. Pino has been working in the investment management field since 1981. Ms.
Pino holds a BS in Accounting from Providence College, an MA in Economics from
Northeastern University, and an MBA from Boston University. Ms. Pino is a
member of the Association for Investment Management and Research and the Boston
Security Analysts Society. There are 10 other portfolio managers who assist in
managing the fund.
Matrix Equity Fund. Mr. Theodore G. Gekas, Principal, is the lead portfolio
manager primarily responsible for investment decisions regarding the SSgA
Matrix Equity Fund. Mr. Gekas has been with the firm since 1995. At SSgA, he
has managed the Global Enhanced portfolios and led the US Structured Products
Group. Prior to joining SSgA, Mr. Gekas developed asset allocation and
forecasting models for the global equity and fixed-income markets with
Citibank. There are seven other portfolio managers assisting with the
management of this fund.
S&P 500 Index Fund. Mr. James B. May, Principal, has been with State Street
since 1989. Before joining the Global Structured Products Group as a portfolio
manager in January 1994, Mr. May served as a Senior Investment Support
21
<PAGE>
Analyst for the US Structured Products Group. Mr. May has been the lead
portfolio manager for this fund since May 1995. Mr. May has been a portfolio
manager in the US Structured Products Group of State Street since January 1994.
He holds a BS in Finance from Bentley College and his MBA from Boston College.
There are five other members of the team who assist Mr. May with the management
of the fund.
Special Equity Fund. Mr. David Smith, CFA, Principal, is the portfolio manager
primarily responsible for investment decisions regarding the SSgA Special
Equity Fund. He joined the firm in 1990. Previously, Mr. Smith, was the
portfolio manager of the SSgA Tuckerman Active REIT Fund. He also has had
extensive experience as an equity analyst in SSgA's Global Fundamental
Strategies group with coverage experience in several industries including,
financial services, REITs, communications, business services and cable
television. He also has experience in managing diversified equity and fixed
income portfolios for both SSgA's Private Asset Management and Charitable Asset
Management clients. Mr. Smith holds a BA in Economics with a concentration in
Financial Markets from the University of Massachusetts/ Amherst and an MS in
Finance from the Sawyer School of Management at Suffolk University. There are
four other portfolio managers assisting with the management of the fund.
Small Cap Fund. Mr. Jeffrey P. Adams, Principal, is the portfolio manager
primarily responsible for investment decisions regarding the SSgA Small Cap
Fund. He joined State Street Global Advisors in 1989. Mr. Adams is the strategy
leader for the large cap value strategy and the co-manager of the small cap
strategy. He was also responsible for the development of the small cap
strategy. In addition, Mr. Adams is head of research for the Quantitative US
Active Equity Group and coordinates research and development projects related
to all of the strategies. Prior to his responsibility in domestic equities, Mr.
Adams was a Senior Investment Support Analyst at SSgA. He graduated from
Northeastern University with a BS in Economics. There are five other portfolio
managers who assist in management of the fund.
Active REIT Fund. Mr. Arthur Hurley, CFA, Principal, is the portfolio manager
primarily responsible for investment decisions regarding the SSgA Tuckerman
Active REIT Fund. He joined the firm in 1995. Mr. Hurley has worked on the SSgA
Tuckerman Active REIT Fund team since its inception. Prior to his current
responsibilities, Mr. Hurley was the lead analyst covering the apartment,
retail, health care, and self-storage property types. Prior to joining the REIT
team, Mr. Hurley worked for SSgA's Active Fixed Income Group, where he managed
portfolios, traded fixed income instruments, and conducted credit analyses. Mr.
Hurley graduated cum laude from the University of Massachusetts/Dartmouth with
a BA in Finance. There are two other portfolio managers who assist in managing
the fund.
Aggressive Equity Fund. Mr. Richard B. Weed, CFA, Principal, is the portfolio
manager primarily responsible for investment decisions regarding the fund. Mr.
Weed joined SSgA in November 1995. His responsibilities include research,
product development, and portfolio management for the US Active strategy. Mr.
Weed joined State Street in March 1994. He holds an MS in Finance and
Accounting from the MIT Sloan School of Management, has an MS in Chemical
Engineering from Northeastern University, and a BS in Chemical Engineering from
Worcester Polytechnic Institute. Mr. Weed is a member of the Boston Security
Analysts Society and AIMR. There are five other portfolio managers who assist
in managing the fund.
IAM SHARES Fund. Mr. Michael J. Feehily, CFA, Principal, is the portfolio
manager primarily responsible for investment decisions regarding the fund. Mr.
Feehily joined State Street Corporation in August 1992 in the Global Operations
area before moving to the Performance & Analytics group. He helped to develop
and work with a proprietary application which is used to analyze venture
capital, real estate, and other private investments. Mr. Feehily holds a BS in
Finance, Investment and Economics from Babson College and an MBA in Finance
from Bentley College. There are four other portfolio managers who assist in
managing the fund.
Growth and Income Fund. Mr. L. Emerson Tuttle, CFA, Principal, is the portfolio
manager primarily responsible for investment decisions regarding the fund and
provides investment management services for employee benefit plans and
endowments. Mr. Tuttle joined State Street in 1981. From 1987 to 1989, Mr.
Tuttle was portfolio manager for Private Client Services at State Street Bank
in Zurich, Switzerland. Mr. Tuttle is a 1973 magna cum laude graduate of Yale
College, and earned a JD degree magna cum laude from Suffolk Law School. He is
a member of the Massachusetts bar and a Chartered Financial Analyst. Mr. Tuttle
is also a member of the Boston Security Analysts Society and has 18 years of
investment experience. There are four other portfolio managers who work with
Mr. Tuttle in managing the fund.
International Growth Opportunities Fund. Mr. Edward Allinson, CFA and
Principal, is the portfolio manager primarily responsible for investment
decisions regarding the SSgA International Growth Opportunities Fund. He is the
Lead Portfolio Manager for the International Growth Opportunities Strategy
within the Global Fundamental Strategies Group. Prior to joining State Street
Global Advisors in 1999, Mr. Allinson worked at Brown Brothers Harriman, New
York, as Senior Portfolio Manager in the International Equities Group, managing
pension, endowment and mutual fund assets from July 1991 to April 1999. Mr.
Allinson worked at First Pacific Securities, Hong Kong, as Assistant Director
in institutional Asian equity sales. Prior to his employment at First Pacific
Securities, he worked in Citibank's Domestic Private Banking Group as a
portfolio manager. Mr. Allinson earned a BA at the University of Pennsylvania
and an MBA at the Wharton School, where he concentrated in Finance. There are
four other portfolio managers who assist in managing the fund.
22
<PAGE>
Emerging Markets Fund. Mr. Brad Aham, CFA, Principal, is the portfolio manager
primarily responsible for investment decisions regarding the fund. He joined
the firm in 1993. Mr. Aham has worked with the Active Emerging Markets product
since its inception, and he manages several institutional funds. In addition to
managing portfolios, he performs quantitative and qualitative research for
SSgA. There are three other portfolio managers who assist in managing the fund.
Active International Fund. Mr. Geoff Benarick, Principal, is the portfolio
manager primarily responsible for investment decisions regarding the SSgA
Active International Fund. He joined State Street Global Advisors in 1995 as an
Investment Support Associate in Global Advisor's Active International
Operations area. He is responsible for research and portfolio management
support for SSgA's active international developed markets strategies. In 1994,
Mr. Benarick worked for State Street Bank, Luxembourg, as a Senior Portfolio
Administrator in the Global Portfolio Operations area. Mr. Benarick holds a BA
in Economics from Boston College, and is currently enrolled in the MBA program
at the Wallace E. Carroll Graduate School of Management at Boston College.
There are seven other portfolio managers who assist in managing the fund.
Life Solutions Growth, Income and Growth, and Balanced Funds. Mr. Heydon Traub,
CFA, Principal, is the lead portfolio manager primarily responsible for
investment decisions regarding the SSgA Life Solutions Funds. He has been with
SSgA since 1987. Mr. Traub is the firmwide head of Global Asset Allocation. He
serves as Vice Chairman of the SSgA Investment Committee and is a member of the
State Street Bank Global Management Forum. He is one of the developers of the
firm's country, stock and currency selection processes and continues to lead
the research effort to enhance the asset allocation strategies. Mr. Traub holds
a BA in Economics from Brandeis University and an MBA in Finance and Accounting
from the University of Chicago. There are six other portfolio managers
assisting with the management of these funds.
ADDITIONAL INFORMATION ABOUT THE
FUNDS' OBJECTIVE INVESTMENT STRATEGIES
AND RISKS
The investment objective of each fund is either fundamental or non-fundamental,
as stated above. A fundamental investment objective may only be changed with
the approval of the fund's shareholders A non-fundamental investment objective
may be changed by the fund's trustees without shareholder approval. The
investment policies described below reflect the fund's current practices. In
addition to the principal risks explained above, other risks are explained in
some of the descriptions of the investment policies below:
US Government Securities (Principal Policy--Money Market, Yield Plus,
Intermediate, Bond Market, High Yield Bond. Not a Principal Policy--Growth and
Income, S&P 500 Index, Matrix Equity, Small Cap, Special Equity, Active REIT,
Aggressive Equity). US Government securities include US Treasury bills, notes,
and bonds and other obligations issued or guaranteed as to interest and
principal by the US Government and its agencies or instrumentalities.
Obligations issued or guaranteed as to interest and principal by the US
Government, its agencies or instrumentalities include securities that are
supported by the full faith and credit of the United States Treasury,
securities that are supported by the right of the issuer to borrow from the
United States Treasury, discretionary authority of the US Government agency or
instrumentality, and securities supported solely by the creditworthiness of the
issuer.
Repurchase Agreements (Principal Policy--Money Market; Not a Principal
Policy--all other Funds). Each fund may enter into repurchase agreements with
banks and other financial institutions, such as broker-dealers. In substance, a
repurchase agreement is a loan for which the fund receives securities as
collateral. Under a repurchase agreement, a fund purchases securities from a
financial institution that agrees to repurchase the securities at the fund's
original purchase price plus interest within a specified time (normally one
business day). The funds will limit repurchase transactions to those member
banks of the Federal Reserve System and broker-dealers whose creditworthiness
Advisor considers satisfactory. If the other party or "seller" defaults, a fund
might suffer a loss to the extent that the proceeds from the sale of the
underlying securities and other collateral held by the fund are less than the
repurchase price and the fund's cost associated with delay and enforcement of
the repurchase agreement. In addition, in the event of bankruptcy of the
seller, a fund could suffer additional losses if a court determines that the
fund's interest in the collateral is not enforceable.
In evaluating whether to enter into a repurchase agreement, the Advisor will
carefully consider the creditworthiness of the seller. Distributions of the
income from repurchase agreements will be taxable to a fund's shareholders.
Section 4(2) Commercial Paper (Principal Policy--
Money Market). The fund may also invest in commercial paper issued in reliance
on the so-called private placement exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 (Section 4(2) paper). Section 4(2)
paper is restricted as to disposition under the Federal securities laws and
generally is sold to institutional investors that agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2)
paper normally is resold to other institutional investors like the fund through
or with the assistance of the issuer or investment dealers that make a market
in Section 4(2) paper. As a result it suffers from a liquidity risk, the risk
that the securities may be difficult to value because of the absence of an
active market and may be disposed of only after considerable expense and delay.
Section 4(2) paper will not be subject to the Investment Company's percentage
limitations on illiquid securities
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where the Board of Trustees of the Investment Company (pursuant to guidelines
adopted by the Board) determines that a liquid trading market exists.
Asset-Backed Securities (Principal Policy--Yield Plus, Intermediate, High Yield
Bond and Bond Market; Not a Principal Policy--Money Market). Asset-backed
securities are securities whose principal and interest payments are
collateralized by pools of assets such as auto loans, credit card receivables,
leases, installment contracts and personal property. Payments of principal and
interest are passed through to holders of the securities and are typically
supported by some form of credit enhancement, such as over collateralization, a
letter of credit, surety bond, limited guarantee by another entity or by
priority to certain of the borrower's other securities. The degree of credit
enhancement varies, generally applying only until exhausted and covering only a
fraction of the security's par value. If the credit enhancement of an
asset-backed security held by a fund has been exhausted, and if any required
payments of principal and interest are not made with respect to the underlying
loans, the fund may experience loss or delay in receiving payment and a
decrease in the value of the security.
o Prepayment Risk--Like mortgage-backed securities, asset-backed securities
are often subject to more rapid repayment than their stated maturity date
would indicate as a result of the pass-through of prepayments of principal
on the underlying loans. During periods of declining interest rates,
prepayment of loans underlying asset-backed securities can be expected to
accelerate. A fund's ability to maintain positions in such securities will
be affected by reductions in the principal amount of such securities
resulting from prepayments, and its ability to reinvest the returns of
principal at comparable yields is subject to generally prevailing interest
rates at that time. To the extent that a fund invests in asset-backed
securities, the values of such fund's portfolio securities will vary with
changes in market interest rates generally and the differentials in yields
among various kinds of asset-backed securities.
o Other Risk Associated with Asset-Backed Securities-- Asset-backed securities
present certain additional risks that are not presented by mortgage-backed
securities because asset-backed securities generally do not have the benefit
of a security interest in collateral that is comparable to mortgage assets.
Credit card receivables are generally unsecured and the debtors on such
receivables are entitled to the protection of a number of state and federal
consumer credit laws, many of which give such debtors the right to set-off
certain amounts owed on the credit cards, thereby reducing the balance due.
Automobile receivables generally are secured, but by automobiles rather than
residential real property. Most issuers of automobile receivables permit the
loan servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that of the holders
of the asset-backed securities. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under
state laws, the trustee for the holders of the automobile receivables may
not have a proper security interest in the underlying automobiles.
Therefore, there is the possibility that, in some cases, recoveries on
repossessed collateral may not be available to support payments on these
securities.
Mortgage-Backed Securities (Principal Policy--Yield Plus, Intermediate, Bond
Market, High Yield Bond; Not a Principal Policy--Money Market). The funds may
invest in mortgage-backed securities. Each mortgage pool underlying
mortgage-backed securities consists of mortgage loans evidenced by promissory
notes secured by first mortgages or first deeds of trust or other similar
security instruments creating a first lien on owner occupied and non-owner
occupied one-unit to four-unit residential properties, multifamily (i.e., five
or more) properties, agricultural properties, commercial properties and mixed
use properties (the Mortgaged Properties). The Mortgaged Properties may consist
of detached individual dwelling units, multifamily dwelling units, individual
condominiums, townhouses, duplexes, triplexes, fourplexes, row houses,
individual units in planned unit developments and other attached dwelling
units. The Mortgaged Properties may also include residential investment
properties and second homes.
o Prepayment Risk--The investment characteristics of adjustable and fixed rate
mortgage-backed securities differ from those of traditional fixed-income
securities. The major differences include the payment of interest and
principal on mortgage-backed securities on a more frequent (usually monthly)
schedule, and the possibility that principal may be prepaid at any time due
to prepayments on the underlying mortgage loans or other assets. These
differences can result in significantly greater price and yield volatility
than is the case with traditional fixed-income securities. As a result, if a
fund purchases mortgage-backed securities at a premium, a faster than
expected prepayment rate will reduce both the market value and the yield to
maturity from those which were anticipated. A prepayment rate that is slower
than expected will have the opposite effect of increasing yield to maturity
and market value. Conversely, if a fund purchases mortgage-backed securities
at a discount, faster than expected prepayments will increase, while slower
than expected prepayments will reduce yield to maturity and market values.
To the extent that a fund invests in mortgage-backed securities, the Advisor
may seek to manage these potential risks by investing in a variety of
mortgage-backed securities and by using certain hedging techniques.
o Call Risk--In addition, a fund is subject to call risk. The risk that an
issuer will exercise its right to pay principal on an obligation held by a
fund (such as a mortgage-backed security) earlier than expected is a call
risk. This may happen when there is a decline in interest rates. Under
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these circumstances, a fund may be unable to recoup all of its initial
investment and will also suffer from having to reinvest in lower yielding
securities.
o Extension Risk--The fund is also subject to extension risk. The risk than an
issuer will exercise its right to pay principal on an obligation held by a
fund (such as a mortgage-backed security) later than expected is an
extension risk. This may happen when there is a rise in interest rates.
Under these circumstances, the value of the obligation will decrease and a
fund will also suffer from the inability to invest in higher yield
securities.
The funds may also invest in mortgage-related securities, including Government
National Mortgage Association (GNMA) Certificates (Ginnie Maes), Federal Home
Loan Mortgage Corporation (FHLMC) Mortgage Participation Certificates (Freddie
Macs), Federal National Mortgage Association (FNMA) Guaranteed Mortgage
Certificates (Fannie Maes) and Commercial Mortgage-Backed Securities (CMBS).
Mortgage certificates are mortgage-backed securities representing undivided
fractional interests in pools of mortgage-backed loans. These loans are made by
mortgage bankers, commercial banks, savings and loan associations and other
lenders.
Ginnie Mae is a wholly owned corporate instrumentality of the United States.
Ginnie Mae is authorized to guarantee the timely payment of the principal of an
interest on certificates that are based on and backed by a pool of mortgage
loans insured by the Federal Housing Administration (FHA Loans), or guaranteed
by the Veterans Administration (VA Loans), or by pools of other eligible
mortgage loans. In order to meet its obligations under any guaranty, Ginnie Mae
is authorized to borrow from the United States Treasury in an unlimited amount.
Fannie Mae is a stockholder owned corporation chartered under an act of the
United States Congress. Each Fannie Mae Certificate is issued and guaranteed by
Fannie Mae and represents an undivided interest in a pool of mortgage loans (a
"Pool") formed by Fannie Mae.
Fannie Mae has certain contractual responsibilities. The obligations of Fannie
Mae under its guaranty of the Fannie Mae Certificates are obligations solely of
Fannie Mae.
Freddie Mac is a publicly held US government sponsored enterprise. The
principal activity of Freddie Mac currently is the purchase of first lien,
conventional, residential mortgage loans and participation interests in such
mortgage loans and their resale in the form of mortgage securities, primarily
Freddie Mac Certificates.
Freddie Mac guarantees to each registered holder of a Freddie Mac Certificate
the timely payment of interest at the rate provided for by such Freddie Mac
Certificate (whether or not received on the underlying loans). Freddie Mac also
guarantees to each registered Certificate holder ultimate collection of all
principal of the related mortgage loans, without any offset or deduction, but
does not, generally, guarantee the timely payment of scheduled principal. The
obligations of Freddie Mac under its guaranty of Freddie Mac Certificates are
obligations solely of Freddie Mac.
Variable and Floating Rate Securities (Principal Policy--
Money Market, Yield Plus; Not a Principal Policy--Bond Market, High Yield Bond,
Intermediate). The funds may purchase variable and floating rate securities
which are instruments issued or guaranteed by entities such as the: (1) US
government, or an agency or instrumentality thereof, (2) corporations, (3)
financial institutions or (4) insurance companies. A variable rate security
provides for the automatic establishment of a new interest rate on set dates.
Variable rate obligations whose interest is readjusted no less frequently than
annually will be deemed to have a maturity equal to the period remaining until
the next readjustment of the interest rate. The funds may also purchase
floating rate securities. A floating rate security provides for the automatic
adjustment of its interest rate whenever a specified interest rate changes.
Interest rates on these securities are ordinarily tied to, and are a percentage
of, a widely recognized interest rate, such as the yield on 90-day US Treasury
bills or the prime rate of a specified bank. Generally, changes in interest
rates will have a smaller effect on the market value of variable and floating
rate securities than on the market value of comparable fixed-income
obligations. Thus, investing in variable and floating rate securities generally
allows less opportunity for capital appreciation and depreciation than
investing in comparable fixed-income securities.
Securities purchased by the fund may include variable and floating rate
instruments, which may have a stated maturity in excess of the fund's maturity
limitations but which will, except for certain US government obligations,
permit the fund to demand payment of the principal of the instrument at least
once every 13 months upon not more than 30 days' notice. Variable and floating
rate instruments may include variable amount master demand notes that permit
the indebtedness thereunder to vary in addition to providing for periodic
adjustments in the interest rate. There may be no active secondary market with
respect to a particular variable or floating rate instrument. Nevertheless, the
periodic readjustments of their interest rates tend to assure that their value
to the fund will approximate their par value. Illiquid variable and floating
rate instruments (instruments which are not payable upon seven days' notice and
do not have an active trading market) that are acquired by the fund are subject
to the fund's percentage limitations regarding securities that are illiquid or
not readily marketable. The Advisor will continuously monitor the
creditworthiness of issuers of variable and floating rate instruments in which
the Investment Company invests, and their ability to repay principal and
interest.
Variable and floating rate securities are subject to interest rate risk, the
risk that, when interest rates increase, fixed-income securities held by a fund
will decline in value. Long-term fixed-income securities will normally have
more price volatility because of this risk than short-term securities.
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They are also subject to credit/default risk, the risk that an issuer of
fixed-income securities held by a fund (which may have low credit ratings) may
default on its obligation to pay interest and repay principal.
The Yield Plus Fund will purchase variable and floating rate securities to help
enable the fund to maintain its desired portfolio duration. The Yield Plus
Fund's investments include securities with greater than one year duration, and
the reset feature on the variable and/or floating rate note can help to shorten
the duration.
Eurodollar Certificates of Deposit (ECDs), Eurodollar Time Deposits (ETDs) and
Yankee Certificates of Deposit (YCDs) (Principal Policy--Money Market; Not a
Principal Policy--Yield Plus, Bond Market, High Yield Bond, and Intermediate).
ECDs are US dollar denominated certificates of deposit issued by a bank outside
of the United States. ETDs are US dollar denominated deposits in foreign
branches of US banks and foreign banks. YCDs are US dollar denominated
certificates of deposit issued by US branches of foreign banks.
Different risks than those associated with the obligations of domestic banks
may exist for ECDs, ETDs and YCDs because the banks issuing these instruments,
or their domestic or foreign branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as loan limitations,
examinations and reserve, accounting, auditing, recordkeeping and public
reporting requirements. The banks issuing these instruments, or their domestic
or foreign branches, are not necessarily subject to the same regulatory
requirements that apply to domestic banks. Foreign laws and accounting
standards typically are not as strict as they are in the US and therefore there
may be fewer restrictions regarding loan limitations, less frequent
examinations and less stringent requirements regarding reserve accounting,
auditing, recordkeeping and public reporting requirements.
Futures Contracts and Options on Futures (Not a Principal Policy--all Funds;
not applicable to Money Market). For hedging purposes, including protecting
the price or interest rate of a security that a fund intends to buy, a fund may
enter into futures contracts that relate to securities in which it may directly
invest and indices comprised of such securities and may purchase and write call
and put options on such contracts.
A financial futures contract is a contract to buy or sell a specified quantity
of financial instruments such as US Treasury bills, notes and bonds, commercial
paper and bank certificates of deposit or the cash value of a financial
instrument index at a specified future date at a price agreed upon when the
contract is made. Under such contracts no delivery of the actual securities
making up the index takes place. Rather, upon expiration of the contract,
settlement is made by exchanging cash in an amount equal to the difference
between the contract price and the closing price of the index at expiration,
net of variation margin previously paid.
Stock Index Futures may be used by the funds to equitize all cash and cash
equivalents so that the funds may remain fully invested in the equity market.
This will enable the funds to facilitate demand for same day redemptions.
Substantially all futures contracts are closed out before settlement date or
called for cash settlement. A futures contract is closed out by buying or
selling an identical offsetting futures contract. Upon entering into a futures
contract, a fund is required to deposit an initial margin with Custodian for
the benefit of the futures broker. The initial margin serves as a "good faith"
deposit that a fund will honor its futures commitments. Subsequent payments
(called "variation margin") to and from the broker are made on a daily basis as
the price of the underlying investment fluctuates.
Options on futures contracts give the purchaser the right to assume a position
at a specified price in a futures contract at any time before expiration of the
option contract.
When trading futures contracts, a fund will not commit more than 5% of the
market value of its total assets to initial margin deposits on futures and
premiums paid for options on futures.
A fund's transactions, if any, in options, futures, options on futures and
equity swaps involve additional risk of loss. Loss can result from a lack of
correlation between changes in the value of derivative instruments and the
portfolio assets (if any) being hedged, the potential illiquidity of the
markets for derivative instruments, or the risks arising from margin
requirements and related leverage factors associated with such transactions.
The use of these management techniques also involves the risk of loss if the
Advisor is incorrect in its expectation of fluctuations in securities prices,
interest rates or currency prices.
Quality of Securities. (Principal Policy--Money Market, Yield Plus,
Intermediate, Bond Market; Not a Principal Policy--all other Funds). The Money
Market Fund will limit its portfolio investments to those United States dollar
denominated instruments which at the time of acquisition the Advisor determines
present minimal credit risk and which qualify as "eligible" securities under
the Securities and Exchange Commission rules applicable to money market mutual
funds. In general, eligible securities include securities that: (1) are rated
in the highest category by at least two Nationally Recognized Statistical
Rating Organizations (NRSRO); (2) are rated by one NRSRO, if only one rating
service has rated the security; or (3) if unrated, are of comparable quality,
as determined by the Advisor in accordance with procedures established by the
Board of Trustees.
The Bond Market Fund limits its portfolio investments to those rated investment
grade by an NRSRO or, if unrated, are determined by the Advisor to be of
comparable quality. Commercial paper must be rated in one of the two highest
categories by at least one NRSRO or, if unrated, are determined by the Advisor
to be of comparable quality. If a security is downgraded and is no longer
investment grade,
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the fund may continue to hold the security if the Advisor determines that such
action is in the best interest of the fund and if the fund would not, as a
result thereby, have more than 5% of its assets invested in non-investment
grade securities.
The Yield Plus and Intermediate Funds limit their portfolio investments to
those that at the time of acquisition: (1) are rated in one of the four highest
categories (or in the case of commercial paper, in the two highest categories)
by at least one NRSRO; or (2) if not rated, are of comparable quality, as
determined by the Advisor, in accordance with procedures established by the
Board of Trustees.
The Small Cap, Special Equity, Aggressive Equity, Active REIT, Growth and
Income and Matrix Funds may invest temporarily for defensive purposes in
investment grade securities. The Emerging Markets, Active International and
International Growth Opportunities may invest temporarily for defensive
purposes in non-investment grade securities (see High Risk Bonds below).
Investment grade securities include securities rated Baa3 by Moody's or BBB- by
S&P (and securities of comparable quality), which securities have speculative
characteristics.
High Risk, High Yield Bonds (Principal Policy--High Yield Bond, Emerging
Markets, Active International and International Growth Opportunities). The fund
may invest in debt securities rated less than BBB- by S&P or Baa by Moody's, or
in unrated securities judged by the Advisor to be of comparable quality. Lower
rated debt securities generally offer a higher yield than that available from
higher grade issues. However, lower rated debt securities involve higher risks
than investment grade bonds, in that they are especially subject to adverse
changes in general economic conditions and, in the industries in which the
issuers are engaged, to changes in the financial condition of the issuers and
to price fluctuation in response to changes in interest rates. Debt rated BB,
B, CCC, CC and C by S&P, and debt rated Ba, B, Caa, Ca and C by Moody's, is
regarded as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligation. For S&P, BB indicates the lowest degree of speculation and D the
highest. For Moody's, Ba indicates the lowest degree of speculation and C the
highest. These lower rated debt securities may include obligations that are in
default or that face the risk of default with respect to principal or interest.
Such securities are sometimes referred to as "junk bonds." Lower rated debt
securities are especially subject to risk that during certain periods the
liquidity of particular issuers or industries, or all securities within these
investment categories, will shrink or disappear suddenly and without warning as
a result of adverse economic, market or political events, or adverse investor
perceptions whether or not accurate.
Interest Rate Swaps (Principal Policy--Bond Market, High Yield Bond, Yield Plus
and Intermediate). The funds may enter into interest rate swap transactions
with respect to any security it is entitled to hold. Interest rate swaps
involve the exchange by a fund with another party of their respective rights to
receive interest, e.g., an exchange of floating rate payments for fixed rate
payments. The funds expect to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio or to protect against any increase in the price of securities it
anticipates purchasing at a later date. The funds intend to use these
transactions as a hedge and not as a speculative investment. Like other
derivative investments, interest rate swaps involve the risk that the Advisor
is incorrect in its expectations of fluctuations in interest rates.
Mortgage-Backed Rolls (Principal Policy--Bond Market, High Yield Bond, Yield
Plus and Intermediate). The funds may enter into "forward roll" transactions
with respect to mortgage-backed securities issued by GNMA, FNMA or FHLMC. In a
forward roll transaction, a fund will sell a mortgage security to a dealer or
other permitted entity and simultaneously agree to repurchase a similar
security from the institution at a later date at an agreed upon price. The
mortgage securities that are repurchased will bear the same interest rate as
those sold, but generally will be collateralized by different pools of
mortgages with different prepayment histories than those sold. There are two
primary risks associated with the roll market for mortgage-backed securities.
First, the value and safety of the roll depends entirely upon the
counterparty's ability to redeliver the security at the termination of the
roll. Therefore, the counterparty to a roll must meet the same credit criteria
as any existing repurchase counterparty. Second, the security which is
redelivered at the end of the roll period must be substantially the same as the
initial security, i.e., it must have the same coupon, be issued by the same
agency and be of the same type, have the same original stated term to maturity,
be priced to result in similar market yields and must be "good delivery."
Within these parameters, however, the actual pools that are redelivered could
be less desirable than those originally rolled, especially with respect to
prepayment characteristics.
Foreign Government Securities (Not a Principal Policy--
International Growth Opportunities, Emerging Markets and Active
International). Foreign government securities which the funds may invest in
generally consist of obligations issued or backed by the national, state or
provincial government or similar political subdivisions or central banks in
foreign countries. Foreign government securities also include debt obligations
of supranational entities, which include international organizations designated
or backed by governmental entities to promote economic reconstruction or
development, international banking institutions and related government
agencies. These securities also include debt securities of "quasi-government
agencies" and debt securities denominated in multinational currency units of an
issuer. No fund will invest a material percentage of its assets in sovereign
debt. Since these are obligations of sovereign governments, they are
particularly subject to a risk of default from political instability.
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Foreign Issuers (Principal Policy--Yield Plus). Non-US corporations and banks
issuing dollar denominated instruments in the US are not necessarily subject to
the same regulatory requirements that apply to US corporations and banks, such
as accounting, auditing and recordkeeping standards, the public availability of
information and, for banks, reserve requirements, loan limitations and
examinations. This increases the possibility that a non-US corporation or bank
may become insolvent or otherwise unable to fulfill its obligations on these
instruments. These instruments are also subject to credit/default risk. There
is the risk that an issuer of fixed-income securities held by a fund (which
have low credit ratings) may default on its obligation to pay interest and
repay principal.
Emerging Markets (Principal Policy--Emerging Markets; Not a Principal
Policy--International Growth Opportunities, Active International). The funds
may invest in equity securities issued by companies domiciled, or doing a
substantial portion of their business, in countries determined by the fund's
Advisor to have a developing or emerging economy or securities market. The fund
will diversify investments across many countries (typically at least 10) in
order to reduce the volatility associated with specific markets. The countries
in which the funds invest will be expanded over time as the stock markets in
other countries evolve. In determining securities in which to invest, the
Advisor will evaluate the countries' economic and political climates and take
into account traditional securities valuation methods, including (but not
limited to) an analysis of price in relation to assets, earnings, cash flows,
projected earnings growth, inflation, and interest rates. Liquidity and
transaction costs will also be considered.
American Depository Receipts (Not a Principal Policy--
Growth and Income, S&P 500, Matrix Equity, Small Cap, Special Equity,
Aggressive Equity, IAM SHARES, Emerging Markets, Active International,
International Growth Opportunities). The common stocks that a fund may invest
in include American Depository Receipts (ADRs). ADRs represent the right to
receive securities of foreign issuers deposited in a domestic bank or a
correspondent bank. ADRs do not eliminate the risk inherent in investing in
securities of foreign issuers, such as: (1) less publicly available
information; (2) lack of uniform accounting, auditing and financial reporting
standards, practices and requirements; (3) lower trading volume, less liquidity
and more volatility for securities; (4) less government regulation of
securities exchanges, brokers and listed companies; (5) political or social
instability; and (6) the possibility of expropriation or confiscatory taxation,
each of which could adversely affect investment in such securities. For
purposes of a fund's investment policies, a fund's investments in ADRs and
similar instruments will be deemed to be investments in the equity securities
representing securities of foreign issues into which they may be converted. The
ADRs chosen for investment by the IAM SHARES Fund will either have collective
bargaining agreements with the IAM or affiliated unions or will be constituents
of the S&P 500 Index, or both. The ADRs chosen for the S&P 500 Index Fund will
be constituents of the S&P 500 Index.
Portfolio Turnover. Because the funds will actively trade to benefit from
short-term yield disparities among different issues of fixed-income securities,
or otherwise to increase its return, the funds may be subject to a greater
degree of portfolio turnover than might be expected from a fund which invests
substantially all of its assets on a long-term basis. The portfolio turnover
rate cannot be predicted, but it is anticipated that certain of a funds' annual
turnover rates generally fall within the range of 100-300% (excluding turnover
of securities having a maturity of one year or less). A high turnover rate
(over 100%) will: (1) increase transaction expenses which will adversely affect
a fund's performance; and (2) result in increased brokerage commissions and
other transaction costs, and the possibility of realized capital gains. The
Aggressive Equity, Special Equity, Small Cap, Matrix Equity, High Yield Bond,
Bond Market, Intermediate and Yield Plus Funds had turnover rates in excess of
100% and are therefore subject to these risks.
Portfolio Duration (Principal Policy--Yield Plus; Not a Principal
Policy--Intermediate, Bond Market and High Yield Bond). The fund will maintain
a portfolio duration of one year or less. Duration is a measure of the price
sensitivity of a security to changes in interest rates. Unlike maturity, which
measures the period of time until final payment is to be made on a security,
duration measures the dollar-weighted average maturity of a security's expected
cash flows (i.e., interest and principal payments), discounted to their present
values, after giving effect to all maturity shortening features, such as call
or redemption rights. With respect to a variable or floating-rate instrument,
duration is adjusted to indicate the price sensitivity of the instrument to
changes in the interest rate in effect until the next reset date. For
substantially all securities, the duration of a security is equal to or less
than its stated maturity. The Intermediate, Bond Market and High Yield Bond
Funds have duration targets linked to specific indexes.
Portfolio Maturity (Principal Policy--Money Market; Not a Principal
Policy--Intermediate). The Money Market Fund must limit its investments to
securities with remaining maturities determined in accordance with applicable
SEC regulations and must maintain a dollar-weighted average maturity of 90 days
or less. The Money Market Fund will normally hold portfolio instruments to
maturity, but may dispose of them prior to maturity if the Advisor finds it
advantageous or necessary. Investing in short-term money market instruments
will result in high portfolio turnover. Since the cost of these transactions is
small, high turnover is not expected to adversely affect the fund's price or
yield. The Intermediate Fund has a defined maturity range between three and ten
years.
Real Estate Investment Trusts (Principal Policy--Active REIT Fund). Equity
REITs are defined as REITs with 75%
28
<PAGE>
or greater of their gross invested book assets invested directly or indirectly
in the equity ownership of real estate, and their value depends upon that of
the underlying properties. Mortgage REITs are defined as REITs with 75% or more
of their gross invested book assets invested directly or indirectly in
mortgages. Mortgage trusts make construction, development or long-term mortgage
loans, and are sensitive to the credit quality of the borrower. Hybrid REITs
are defined as not meeting the equity or mortgage tests. The value of real
estate investment trusts is also affected by management skill, cash flow, and
tax and regulatory requirements.
Real Estate-Related Industries (Principal Policy--Active REIT Fund). In
addition to real estate investment trusts, real estate industry companies may
include: brokers or real estate developers; and companies with substantial real
estate holdings, such as paper and lumber producers and hotel and entertainment
companies.
Banking Industry Risk (Principal Policy--Money Market Fund). The risk that if a
fund invests more than 25% of its total assets in bank obligations, an adverse
development in the banking industry may affect the value of the fund's
investments more than if a fund's investments were not invested to such a
degree in the banking industry. Normally, the fund intends to invest more than
25% of its total assets in bank obligations. Banks may be particularly
susceptible to certain economic factors such as interest rate changes, adverse
developments in the real estate market, fiscal and monetary policy and general
economic cycles.
Equity Swaps (Not a Principal Policy--Emerging Markets). The fund intends to
use equity swaps to preserve a return or spread on an investment and to gain
equity exposure to a market at a lower price. Equity swap agreements are
contracts between parties in which one party agrees to make payments to the
other party based on the change in market value of a specified index or asset.
In return, the other party agrees to make payments to the first party based on
the return of a different specified index or asset. Although swap agreements
entail the risk that a party will default on its payment obligations, the
portfolios will minimize this risk by entering into agreements only with
counterparties that the Advisor deems creditworthy. The Advisor will allow the
funds to enter into swap agreements only with counterparties that would be
eligible for consideration as repurchase agreement counterparties under the
SSgA Funds' repurchase agreement guidelines. Swap agreements bear the risk that
the portfolios will not be able to meet their obligation to the counterparty.
This risk will be mitigated by investing the portfolios in the specific asset
for which it is obligated to pay a return.
SHAREHOLDER INFORMATION
Purchase of Fund Shares
Distribution and Eligible Investors. Shares of the funds are offered without a
sales commission by Russell Fund Distributors, Inc. (the Distributor), to
institutional and retail investors which invest for their own account or in a
fiduciary or agency capacity.
Minimum Initial and Subsequent Investments and Account Balance. A fund requires
a minimum initial investment of $1,000, with the exception of IRA accounts, for
which the minimum initial investment is $250, and the S&P 500 Index Fund, for
which the minimum investment is $10,0001. Subsequent investments must be at
least $100. An investment in a fund (other than IRA accounts) may be subject to
redemption at the fund's discretion if the account balance is less than $1,000
($10,000 for the S&P 500 Index Fund) as a result of shareholder redemptions.
The Transfer Agent will give shareholders 60 days' notice that the account will
be closed unless an investment is made to increase the account balance to the
required minimum. Failure to bring the account balance to the required minimum
may result in the Transfer Agent closing the account at the net asset value
(NAV) next determined on the day the account is closed and mailing the proceeds
to the shareholder's address shown on the Transfer Agent's records. The SSgA
funds reserve the right to reject any purchase order. If you are purchasing
fund assets through a pension or other participation plan, you should contact
your plan administrator for further information on purchases.
Purchase Dates and Times. Fund shares may be purchased on any business day. A
business day is one on which the New York Stock Exchange is open for regular
trading. For the Money Market Fund only, a business day is one on which the
NYSE or the Boston Federal Reserve are open. All purchases must be made in US
dollars. Purchase orders in good form (described below) and payments for fund
shares by check or by wire transfer must be received by the Transfer Agent
prior to 4 p.m. Eastern time (the "Pricing Time"), to be effective on the date
received. If an order or payment is received after the Pricing Time, the order
will be effective on the next business day. Orders placed through a servicing
agent or broker-dealer that has a selling or servicing agreement with the SSgA
Funds or the Distributor must be received by the servicing agent or broker-
dealer prior to the Pricing Time. With respect to the Yield Plus Fund, purchase
orders which are accepted: (1) prior to 12 noon Eastern time will purchase
shares based on that day's closing net asset value and earn the dividend
declared on the date of purchase; and (2) at or after 12 noon Eastern time will
purchase shares based on that day's closing net asset value and earn the
dividend determined on the next day.
Order and Payment Procedures. There are several ways to invest in the funds.
The funds require a purchase order in good form, which consists of a completed
and signed Application for each new account, unless the account is opened
29
<PAGE>
through a third party which has a signed agreement with the Distributor or the
SSgA Funds and does not require a completed application to be submitted to the
SSgA Funds. For additional information, including the IRA package, additional
Applications or other forms, call the Customer Service Department at (800)
647-7327, or write: SSgA Funds, P.O. Box 8317, Boston, MA 02266-8317. You may
also access this information online at www.ssgafunds.com.
To allow the Advisor to manage the Yield Plus and Money Market Funds most
effectively, investors are strongly urged to initiate all trades (investments,
exchanges or redemptions of shares) as early in the day as possible and to
notify the Transfer Agent at least one day in advance of transactions in excess
of $25 million.
Mail. For new accounts, please mail the completed Application and check in the
return envelope provided. Additional investments should also be made by check.
You must include the fund name and account number on your check, or use the
remittance form attached to the confirmation statement (in the return envelope
provided). All checks should be made payable to the SSgA Funds or State Street
Bank. If using a servicing agent or broker-dealer, please verify with them the
proper address and instructions required before writing or mailing your check.
All purchase requests should be mailed to one of the following addresses:
<TABLE>
<CAPTION>
Regular Mail: Registered, Express or Certified Mail:
------------- --------------------------------------
<S> <C>
SSgA Funds SSgA Funds
P.O. Box 8317 2 Heritage Drive
Boston, MA 02266-8317 North Quincy, MA 02171
</TABLE>
All purchases made by check should be in US dollars from a US bank. Third party
checks and checks drawn on credit card accounts will not be accepted.
Telephone Exchange Privilege. Subject to each fund's minimum investment
requirement, investors may exchange a minimum of $100 of their fund shares
without charge for shares of any other SSgA Fund. To use this option, contact
the Customer Service Department at (800) 647-7327. Shares are exchanged on the
basis of relative net asset value per share on the business day on which the
call is placed or upon written receipt of instructions in good form by the
Transfer Agent. Exchanges may be made over the phone if the registrations of
the two accounts are identical. If the shares of the fund were purchased by
check, the shares must have been present in an account for 15 days before the
exchange is made. The exchange privilege will only be available in states which
permit exchanges and may be modified or terminated by the fund upon 60 days'
written notice to shareholders. For Federal income tax purposes, an exchange
constitutes a sale of shares, which may result in a capital gain or loss to the
shareholder.
With respect to the funds offered through this prospectus, management believes
that market timing strategies may be disruptive. For this reason, the
Investment Company reserves the right to refuse or restrict an exchange by any
person if the Investment Company reasonably believes that an exchange is part
of a market timing strategy and that a fund may be adversely affected by the
exchange. Although the Investment Company will attempt to give you prior notice
whenever it is reasonably able to do so, it may impose these restrictions at
any time. Of course, your right to redeem shares would be unaffected by these
restrictions.
Each fund reserves the right to terminate or modify the exchange privilege in
the future.
Redemptions (including exchanges) of shares of the Active International,
Emerging Markets and International Growth Opportunities Funds occurring after
September 30, 2000 and executed within 60 days of the date of purchase will be
subject to a redemption fee equal to 2% of the amount redeemed. All redemption
fees will be paid to the fund. Shareholders participating in omnibus account
arrangements will be charged the fee by their omnibus account provider.
Redemption of shares acquired as a result of reinvesting distributions are not
subject to the redemption fee.
Federal Funds Wire. You may make initial or subsequent investments by wiring
federal funds to State Street, as Transfer Agent, by:
1. Telephoning the Customer Service Department at (800) 647-7327 between 8 a.m.
and 4 p.m. Eastern time, and stating: (a) your account registration number,
address and social security or tax identification number; (b) the name of
the fund in which the investment is to be made and the account number; and
(c) the exact amount being wired.
2. Instructing the wiring bank to wire federal funds to:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
ABA #0110-0002-8
DDA #9904-631-0
SSgA (Name of Fund) Fund(s)
Account Number and Registration
Dollar Amount Per Account (if one wire is to cover more than one purchase)
If all wires, checks and transfers are not identified properly as instructed
above, the Transfer Agent may delay, reject and/or incorrectly apply the
settlement of your purchase. Any wires received at State Street Bank without a
corresponding call into the Customer Service Department will be purchased as
indicated on the wire at the next determined net asset value and will earn the
dividend declared on the next business day, if applicable according to the
fund.
-----------
(1) Shareholders with accounts established prior to December 24, 1997 are not
subject to the $10,000 minimum requirement of the S&P 500 Index Fund.
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<PAGE>
Automatic Investment Plan. Once the initial investment has been made, you may
make subsequent investments of at least $100 monthly, quarterly or annually by
direct deposit through the Automatic Clearing House (ACH) from your personal
checking account by completing the appropriate section of the Application and
attaching a voided personal check to code your account correctly with the bank
information. Shares will be purchased at the offering price next determined
following receipt of the order by the Transfer Agent.
Systematic Exchange. The funds offer the option of having $100 or more
exchanged within the SSgA Funds for accounts with identical registrations. You
can choose the date, the frequency (monthly, quarterly or annually) and the
amount. Exchanges may be done among the SSgA Funds once the minimum initial
investment per fund has been satisfied. Redemptions (including exchanges) of
shares of the Active International, Emerging Markets and International Growth
Opportunities Funds occurring after September 30, 2000 and executed within 60
days of the date of purchase will be subject to a redemption fee equal to 2% of
the amount redeemed. All redemption fees will be paid to the fund. Shareholders
participating in omnibus account arrangements will be charged the fee by their
omnibus account provider. Redemption of shares acquired as a result of
reinvesting distributions are not subject to the redemption fee.
Third Party Transactions. If you are purchasing fund shares through a program
of services offered by a financial intermediary, such as a bank, broker-dealer,
investment advisor or others, you may be required by the intermediary to pay
additional fees. You should contact the intermediary for information concerning
what additional fees, if any, may be charged.
In-Kind Exchange of Securities. State Street may, at its discretion, permit you
to purchase shares through the exchange of other securities you own. Any
securities exchanged must meet the following criteria:
1. The investment objective, policies and limitations must match that of the
fund;
2. They must have a readily ascertainable market value;
3. They must be liquid;
4. They must not be subject to restrictions on resale; and
5. The market value of any securities exchanged, plus any cash, must be at
least $25 million; State Street reserves the right to make exceptions to
this minimum or to increase the minimum at its discretion.
Shares purchased in exchange for securities generally may not be redeemed or
exchanged until the transfer has settled--within 3 business days following the
date of the exchange.
The basis of the exchange will depend upon the relative net asset value of the
shares purchased and securities exchanged. Securities accepted by the fund will
be valued in the same manner as the fund values its assets. Any interest earned
on the securities following their delivery to the Transfer Agent and prior to
the exchange will be considered in valuing the securities. All interest,
dividends subscription or other rights attached to the securities become the
property of the fund, along with the securities.
Redemption of Fund Shares
Fund shares may be redeemed on any business day at the net asset value next
determined after the receipt of a redemption request in good order by following
one of the methods described below. Typically, payments will be made as soon as
possible (but will ordinarily not exceed seven days) and will be mailed to your
address of record. Upon request, redemption proceeds will be wire transferred
to your account at a domestic commercial bank that is a member of the Federal
Reserve System. If you purchased fund shares by check or an automatic
investment program (AIP) and you elect to redeem shares within 15 days of the
purchase, you may experience delays in receiving redemption proceeds. In this
case, the fund will generally postpone sending redemption proceeds until it can
verify that the check or AIP investment has been collected. There will be no
such delay for redemptions following investments paid by federal funds wire or
by bank cashier's check, certified check or treasurer's check.
Redemptions (including exchanges) of shares of the Active International,
Emerging Markets and International Growth Opportunities Funds occurring after
September 30, 2000 and executed within 60 days of the date of purchase will be
subject to a redemption fee equal to 2% of the amount redeemed. All redemption
fees will be paid to the fund. Shareholders participating in omnibus account
arrangements will be charged the fee by their omnibus account provider.
Redemption of shares acquired as a result of reinvesting distributions are not
subject to the redemption fee.
Unless otherwise noted, redemption requests must be received prior to 4 p.m.
Eastern time in order to be effective on the date received. With respect to the
Yield Plus Fund, a dividend will be paid on shares redeemed if the redemption
request is received by State Street after 12 noon Eastern time. Redemption
requests received before 12 noon Eastern time will not be entitled to that
day's dividend. With respect to the Money Market Fund, no dividends will be
paid on shares on the date of redemption.
Checkwriting Service (Money Market Fund only). If you have authorized the
check writing feature on the Application and have completed the signature card,
you may redeem shares in your account by check, provided that the appropriate
signatures are on the check. The minimum check amount is $500. There is a
one-time service charge of $5 per fund to establish this feature, and you may
write an unlimited number of checks provided that the account minimum of $1,000
per fund is maintained.
Cash Sweep Program (Money Market and Yield Plus Fund only). Money managers of
master trust clients may participate in a cash sweep program to automatically
invest excess cash in the Money Market and Yield Plus Funds. A money manager
must select the fund, give authorization to
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<PAGE>
complete the fund's Application and authorize the investment of excess cash
into or the withdrawal of required cash from the fund on a daily basis. Where
the Advisor acts as the money manager, the Advisor will receive a management
fee from the client.
Telephone Redemption. Shareholders may normally redeem fund shares by
telephoning the Customer Service Department at (800) 647-7327 between 8 a.m.
and 4 p.m. Eastern time. You must complete the appropriate section of the
application and attach a voided check to code your account correctly with the
bank information before utilizing this feature. The SSgA Funds and the Transfer
Agent will employ reasonable procedures to confirm that instructions
communicated by telephone are properly authorized. Neither the SSgA Funds, the
Distributor nor the Transfer Agent will be responsible for any loss or expense
for executing instructions that are deemed to be authorized and genuine after
following reasonable procedures. These procedures include recording telephonic
instructions, mailing to the shareholder a written confirmation of the
transaction, performing a personal identity test with private information not
likely to be known by other individuals, and restricting mailing of redemptions
to your address of record, if the address has not been changed within 60 days
of the redemption request. To the extent the Transfer Agent fails to use
reasonable procedures as a basis for its belief, it and/or its service
contractors may be liable for telephone instructions that prove to be
fraudulent or unauthorized. The funds, the Distributor or the Transfer Agent
will be responsible for the authenticity of terminal access instructions only
if it acts with willful misfeasance, bad faith or gross negligence.
By Wire. Proceeds exceeding $1,000 may be sent via wire transfer to your bank
as previously indicated on your application or letter of instruction in good
order. Proceeds may be sent, depending on the fund, on the same or the next
business day. Although the SSgA Funds do not charge a fee for this feature,
your bank may charge a fee for receiving the wire. Please check with your bank
before requesting this feature. The wire schedule for the funds is as follows:
o Money Market--Requests received via telephone prior to 4 p.m. Eastern time
will be sent the same day according to pre-designated instructions.
o Yield Plus--Requests received prior to 12 noon Eastern time will have the
shares redeemed using that day's closing price with the proceeds wired the
same day, unless the request is for 100% of the account. Because Yield Plus
has a fluctuating NAV, redemption requests for 100% of the account (if
received prior to 12 noon Eastern time) will have 100% of the shares
redeemed using that day's closing price, with 95% of the proceeds being
wired the same day and the remaining 5% automatically wired the following
business day. All requests received after 12 noon Eastern time will have the
shares redeemed using that day's closing price and the proceeds wired the
following business day.
Redemption requests received prior to 12 noon Eastern time for the Yield Plus
Fund will not be eligible for that day's interest.
o All Other Funds--Requests must be received prior to 4 p.m. The shares will
be redeemed using that day's closing price, and the proceeds will be wired
the following business day.
Systematic Withdrawal Plan by Check. If your account balance is over $10,000,
you may request periodic cash withdrawals automatically be paid to you or any
person you designate. If the checks are returned to the SSgA Funds as
undeliverable or remain uncashed for six months or more, the systematic
withdrawal plan will be cancelled and the amount will be reinvested in the
relevant fund at the per share net asset value determined as of the date of the
cancellation of the checks. No interest will accrue on the amounts represented
by the uncashed distributions or redemption checks.
Systematic Withdrawal Plan by ACH. You may make automatic withdrawals of $100
or more by completing the appropriate sections of the Application and attaching
a voided check to code your account correctly with the bank information. You
may also choose to establish this option with pre-designated withdrawal dates
and amounts, if the account balance is over $10,000 or by calling the Customer
Service Department at (800) 647-7327, prior to 3 p.m. Eastern time, requesting
the withdrawal. Withdrawals by telephone do not require a minimum account
balance provided the fund's minimum investment is maintained.
Please note that proceeds from ACH withdrawals will be transmitted to the
investor's bank two days after the trade is placed or executed automatically.
Check. Proceeds less than $50,000 may be mailed only to the address shown on
the Transfer Agent's registration record, provided that the address has not
been changed within 60 days of the redemption request. Shares will be redeemed
using that day's closing price (NAV). All proceeds by check will normally be
sent the following business day. A check is not available for telephone
redemption requests in excess of $50,000. Requests must be in writing.
During periods of drastic economic or market changes, shareholders using this
method may encounter delays.
Mail. In certain circumstances, a shareholder will need to make a request to
sell shares in writing (please use the addresses for purchases by mail listed
under "Purchase of Fund Shares"). The shareholder may need to include
additional items with the request, as shown in the table below. Shareholders
may need to include a signature guarantee, which protects them against
fraudulent orders. A signature guarantee will be required if:
1. Your address of record has changed within the past 60 days;
2. You are redeeming more than $50,000 worth of shares; or
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<PAGE>
3. You are requesting payment other than by a check mailed to the address of
record and payable to the registered owner(s).
Signature guarantees can usually be obtained from the following sources:
1. A broker or securities dealer, registered with a domestic stock exchange;
2. A federal savings, cooperative or other type of bank;
3. A savings and loan or other thrift institution;
4. A credit union; or
5. A securities exchange or clearing agency.
Please check with the institution prior to signing to ensure that they are an
acceptable signature guarantor. A NOTARY PUBLIC CANNOT PROVIDE A SIGNATURE
GUARANTEE.
<TABLE>
<CAPTION>
Seller Requirements for Written Requests
------------------------ ----------------------------------
<S> <C>
Owner of individual, o Letter of instruction, signed
joint, sole by all persons authorized to
proprietorship, UGMA/ sign for the account stating
UTMA (custodial general titles/capacity, exactly
accounts for minors) as the account is registered; and
or general partner o Signature guarantee, if
accounts applicable (see above).
Owners of corporate or o Letter of instruction signed
association accounts by authorized person(s), stating
capacity as indicated by the
corporate resolution;
o Corporate resolution, certified
within the past 90 days; and
o Signature guarantee, if
applicable (see above).
Owners or trustees of o Letter of instruction, signed
trust accounts by all trustees;
o If the trustees are not named
in the registration, please
provide a copy of the trust
document certified within the
past 60 days; and
o Signature guarantee, if
applicable (see above).
Joint tenancy o Letter of instruction signed
shareholders whose by surviving tenant(s);
co-tenants are o Certified copy of the death
deceased certificate; and
o Signature guarantee, if
applicable (see above).
</TABLE>
Please contact the Customer Service Department at (800) 647-7327 for questions
and further instructions.
The fund may pay any portion of the redemption amount in excess of $25 million
by a distribution in kind of readily marketable securities from the portfolio
of the fund in lieu of cash. You will incur brokerage charges and may incur
other fees on the sale of these portfolio securities. In addition, you will be
subject to the market risks associated with such securities until such time as
you choose to dispose of the security. The SSgA Funds reserve the right to
suspend the right of redemption or postpone the date of payment if emergency
conditions, as specified in the 1940 Act or as determined by the Securities and
Exchange Commission, should exist.
Distribution Services and Shareholder Servicing
Arrangements
The funds have adopted a distribution plan pursuant to Rule 12b-1 (the Plan)
under the Investment Company Act of 1940. The Plan allows each fund to pay
distribution and other fees for the sale and distribution of fund shares and
for services provided to shareholders. Because these fees are paid out of fund
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Payments to the Distributor, as well as payments from the fund to service
organizations providing shareholder services to the fund, are not permitted by
the Plan to exceed .25% of the funds average net asset value per year. Any
payments that are required to be made to the Distributor or service
organization that cannot be made because of the .25% limitation may be carried
forward and paid in the following two fiscal years so long as the Plan is in
effect.
Service organizations providing shareholder services to the fund will be
responsible for prompt transmission of purchase and redemption orders and may
charge you a fee for their services.
Pricing of Fund Shares
All of the funds determine the price per share once each business day at 4 p.m.
Eastern time, or the close of the New York Stock Exchange, if earlier. The
price is computed by dividing the current value of the fund's assets, less its
liabilities, by the number of shares of the fund outstanding and rounding to
the nearest cent.
All funds but the Money Market Fund value portfolio securities at market value.
The funds value securities for which market quotations are not readily
available at fair value, as determined in good faith pursuant to procedures
established by the Board of Trustees.
Debt obligation securities maturing within 60 days of the valuation date are
valued at amortized cost unless the Board determines that the amortized cost
method does not represent market value.
The Money Market Fund seeks to maintain a $1.00 per share net asset value and,
accordingly, uses the amortized cost valuation method to value its portfolio
instruments. The amortized cost valuation method initially prices an instrument
at its cost and thereafter assumes a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument.
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<PAGE>
Dividends and Distributions
The Board of Trustees intends to declare and pay dividends as noted in the
table below. Dividends will be paid from net investment income as follows:
<TABLE>
<CAPTION>
Dividends
Fund Declared Dividends Paid
---- -------- --------------
<S> <C> <C>
Money Market Daily Last business day
of each month
Yield Plus Daily Last business
day of each month
High Yield Bond Quarterly Quarterly
Bond Market Quarterly Quarterly
Matrix Equity Quarterly Quarterly
S&P 500 Index Quarterly Quarterly
Growth and Income Quarterly Quarterly
Intermediate Quarterly Quarterly
Active REIT Monthly Monthly
Aggressive Equity Annually Annually
IAM SHARES Fund Quarterly Quarterly
Special Equity Annually Annually
Small Cap Annually Annually
International
Growth
Opportunities Annually Annually
Emerging Markets Annually Annually
Active International Annually Annually
Life Solutions
Income and Growth Annually Annually
Life Solutions
Balanced Annually Annually
Life Solutions Growth Annually Annually
</TABLE>
The Board of Trustees intends to declare capital gain distributions annually,
generally in mid-October. Distributions will be declared from net short- and
long-term capital gains, if any. It is intended that an additional distribution
may be declared and paid in December if required for the funds to avoid the
imposition of a 4% federal excise tax on undistributed capital gains. The Money
Market Fund does not expect any material long-term capital gains or losses.
Dividends declared in October, November or December and payable to shareholders
of record in such months will be deemed for Federal income tax purposes to have
been paid by the Fund and received by shareholders on December 31 of that year
if the dividend is paid prior to February 1 of the following year.
In addition, the Life Solutions funds receive capital gain distributions from
the Underlying funds. Capital gain distributions may be expected to vary
considerably from time to time.
Income dividends and capital gains distributions will be paid in additional
shares at their net asset value on the record date unless the shareholder has
elected to receive them in cash. Such election may be made by giving 30 days'
written notice to the Transfer Agent. If it is determined that the US Postal
Service cannot properly deliver Fund mailings to an investor, or if a check
remains uncashed for at least six months, the cash election will be changed
automatically and the future dividends and other distributions will be
reinvested in additional shares of the relevant Fund until the investor
notifies the SSgA funds in writing of the correct address and requests in
writing that the election to receive dividends and other distributions in cash
be reinstated. In addition, following the six-month period, any undeliverable
or uncashed checks shall be cancelled and the amounts will be reinvested in the
relevant fund at the per share net asset value determined as of the date of
cancellation of the checks. No interest will accrue on the amounts represented
by the uncashed distribution or redemption checks.
Except for the Money Market Fund, any dividend or capital gain distribution
paid by a fund shortly after a purchase of shares will reduce the per share net
asset value of a fund by the amount of the dividend or distribution. In effect,
the payment will represent a return of capital to the shareholder. However, the
shareholder will be subject to taxes with respect to such dividend or
distribution.
Distribution Option. Investors can choose from four different distribution
options as indicated on the account Application:
o Reinvestment Option--Dividends and capital gains distributions will be
automatically reinvested in additional shares of the fund. If the investor
does not indicate a choice on the Application, this option will be
automatically assigned.
o Income-Earned Option--Capital gain distributions will be automatically
reinvested, but a check or wire will be sent for each dividend distribution.
o Cash Option--A check, wire or direct deposit (ACH) will be sent for each
dividend and capital gain distribution.
o Direct Dividends Option--Dividends and capital gain distribution will be
automatically invested in another identically registered SSgA Fund.
If the cash option is selected and you chose a wire or direct deposit (ACH),
the distribution will be sent to a pre-designated bank by the payable date. If
you chose cash option and requested a check, the check will be mailed to you.
Please note that dividends will not be paid until the last business day of the
month even if an account closes during the month. If the account, at the end of
the month, has a zero balance due to a redemption, the dividend will
automatically be sent as a check to the address of record regardless of
distribution option.
For dividends declared daily and paid monthly, the proceeds will be wired (if
that option is elected) to a pre-designated bank on the first business day of
the following month in
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<PAGE>
which the dividend is payable. You should verify with the receiving bank, as it
may charge a fee to accept this wire. Direct deposits through the ACH are
transmitted to the investor's bank account two days after the payable date of
the distributions and generally are not charged a fee by a bank.
For dividends declared either quarterly or annually, the proceeds may be
transmitted (if that option is elected) by direct deposit through ACH. ACH will
transmit the proceeds to the pre-designated bank account by the payable date.
If you chose Cash Option and requested a check, the check will be mailed to
you. Proceeds from a dividend or capital gains will not be wired in federal
funds to a bank.
Taxes
The following discussion is only a summary of certain federal income tax issues
generally affecting the funds and their shareholders. Circumstances among
investors may vary and each investor is encouraged to discuss investment in a
fund with the investor's tax advisor.
Each fund intends to qualify as a regulated investment company (RIC) under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As
a RIC, no fund will be subject to federal income taxes to the extent it
distributes its net investment income and net capital gain (long-term capital
gains in excess of short-term capital losses) to shareholders. The Board
intends to distribute each year substantially all of the funds' net investment
income and net capital gain.
Dividends from net investment income and distributions of net short-term
capital gains are taxable to shareholders as ordinary income under federal
income tax laws whether paid in cash or in additional shares. Distributions
from net long-term gains are taxable as long-term gains regardless of the
length of time a shareholder has held such shares and whether paid in cash or
additional shares. The Life Solutions Funds may incur additional capital gains
on the sale of their investments in the Underlying Funds if the Life Solutions
Funds rebalance their portfolios.
Dividends and distributions may also be subject to state or local taxes.
Depending on the state tax rules pertaining to a shareholder, a portion of the
dividends paid by the fund attributable to direct obligations of the US
Treasury and certain agencies may be exempt from state and local taxes.
The sale or exchange of fund shares by a shareholder is a taxable event and may
result in capital gain or loss. A capital gain or loss may be realized from an
ordinary redemption of shares or an exchange of shares between two mutual funds
(or two series of portfolios of a mutual fund). Any loss incurred on the sale
or exchange of fund shares held for six months or less will be treated as a
long-term loss to the extent of long-term capital gain dividends received with
respect to such shares.
With respect to the Money Market Fund, no capital gain or loss for a
shareholder is anticipated because the fund seeks to maintain a stable $1.00
per share net asset value.
Shareholders will be notified after each calendar year of the amount of income
dividends and net capital gains distributed. Shareholders of a Fund will also
be advised of the percentage, if any, of the dividends by the fund that are
exempt from federal income tax and the portion, if any, of those dividends that
is a tax preference item for purposes of the alternative minimum tax. The fund
is required to withhold a legally determined portion of all taxable dividends,
distributions and redemption proceeds payable to any noncorporate shareholder
that does not provide the fund with the shareholder's correct taxpayer
identification number or certification that the shareholder is not subject to
backup withholding.
Foreign Income Taxes. Investment income received by any fund from sources
within foreign countries may be subject to foreign income taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries which would entitle a fund to a reduced rate of such taxes or
exemption from taxes on such income. It is impossible to determine the
effective rate of foreign tax for a fund in advance since the amount of the
assets to be invested within various countries is not known.
Foreign shareholders of any SSgA Fund should consult with their tax advisors as
to if and how the federal income tax and its withholding requirements applies
to them.
If more than 50% in value of any of the International Growth, Emerging Markets
and Active International Funds' total assets at the close of any taxable year
consists of securities of foreign corporations, a fund may file an election
with the Internal Revenue Service (the "Foreign Election") that would permit
shareholders to take a credit (or a deduction) for foreign income taxes paid by
a fund. The fund may be subject to certain holding period requirements relative
to securities held in order to take advantage of this credit. If the Foreign
Election is made, shareholders would include in their gross income both
dividends received from a fund and foreign income taxes paid by a fund.
Shareholders of a fund would be entitled to treat the foreign income taxes
withheld as a credit against their United States federal income taxes, subject
to the limitations set forth in the Internal Revenue Code with respect to the
foreign tax credit generally. Alternatively, shareholders could treat the
foreign income taxes withheld as a deduction from gross income in computing
taxable income rather than as a tax credit. It is anticipated that a fund will
qualify to make the Foreign Election; however, a fund cannot be certain that it
will be eligible to make such an election or that any particular shareholder
will be eligible for the foreign tax credit.
35
<PAGE>
INFORMATION REGARDING STANDARD &
POOR'S CORPORATION
"Standard & Poor's," "S&P," "Standard & Poor's 500," and "500" are trademarks
of Standard & Poor's and have been licensed for use by SSgA Fund. The fund is
not sponsored, endorsed, sold or promoted by Standard & Poor's. Standard &
Poor's makes no representation or warranty, express or implied, to the
shareholders of the fund regarding the advisability of investing in securities
generally or in the fund particularly or the ability of the S&P 500 Index to
track general stock market performance. Standard & Poor's only relationship to
the fund is the licensing of the trademarks and tradenames of Standard & Poor's
including the S&P 500 Index, which is determined, composed and calculated by
Standard & Poor's without regard to the fund. Standard & Poor's has no
obligation to take the needs of the shareholders of the fund into consideration
in determining, composing or calculating this Index. Standard & Poor's is not
responsible for and has not participated in the determination of the prices and
amount of the fund or the timing of the issuance or sale of the shares or in
the determination or calculation of the equation by which the shares of the
fund are to be redeemed. Standard & Poor's has no obligation or liability in
connection with the administration, marketing or trading of the fund.
Standard & Poor's does not guarantee the accuracy and/or the completeness of
the index or any data included therein and standard & Poor's shall have no
liability for any errors, omissions, or interruptions therein. Standard &
Poor's makes no warranty, express or implied, as to results to be obtained by
the fund or the shareholders of the fund or any other person or entity from the
use of the index or any data included therein. Standard & Poor's 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
index or any data included therein. Without limiting any of the foregoing, in
no event shall Standard & Poor's have any liability for any special, punitive,
indirect, or consequential damages (including lost profits) even if notified of
the possibility of such damages.
36
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand a fund's
financial performance for the past 5 years (or since inception if a fund has
been offered for less than 5 years). Certain information reflects financial
results for a single fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in a fund
(assuming reinvestment of all dividends and distributions). This information
has been audited by PricewaterhouseCoopers LLP, whose reports, along with the
funds' financial statements, are included in the annual reports, which are
available upon request by calling the Distributor at 1-800-647-7327.
Money Market Fund
<TABLE>
<CAPTION>
Fiscal Years Ended August 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
----------- ---------- ---------- ---------- ----------
INCOME FROM OPERATIONS:
Net investment income .0476 .0528 .0516 .0524 .0538
DISTRIBUTIONS:
Dividends from net investment income (.0476) (.0528) (.0516) (.0524) (.0538)
----------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
=========== ========== ========== ========== ==========
TOTAL RETURN (%) 4.86 5.41 5.28 5.36 5.52
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000 omitted) 10,084,283 5,477,326 4,278,165 3,475,409 2,752,895
Ratios to average net assets (%):
Operating expenses .40 .41 .39 .39 .39
Net investment income 4.74 5.28 5.17 5.20 5.37
</TABLE>
37
<PAGE>
Yield Plus Fund
<TABLE>
<CAPTION>
Fiscal Years Ended August 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.97 $ 10.01 $ 10.00 $ 10.00 $ 9.99
-------- -------- -------- -------- ----------
INCOME FROM OPERATIONS:
Net investment income .54 .57 .54 .56 .56
Net realized and unrealized gain (loss) (.07) (.04) .01 -- .02
-------- -------- -------- -------- ----------
Total From Operations .47 .53 .55 .56 .58
-------- -------- -------- -------- ----------
DISTRIBUTIONS:
Dividends from net investment income (.54) (.57) (.54) (.56) (.56)
Dividends from net realized gain on investments -- -- -- -- (.01)
-------- -------- -------- -------- ----------
Total Distributions (.54) (.57) (.54) (.56) (.57)
-------- -------- -------- -------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.90 $ 9.97 $ 10.01 $ 10.00 $ 10.00
======== ======== ======== ======== ==========
TOTAL RETURN(%) 4.67 5.40 5.67 5.73 6.01
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000 omitted) 525,494 672,465 840,055 933,485 1,447,097
Ratios to average net assets (%):
Operating expenses .41 .41 .38 .36 .38
Net investment income 5.29 5.66 5.42 5.59 5.64
Portfolio turnover rate (%) 167.12 249.10 92.38 97.05 199.69
</TABLE>
-----------
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
38
<PAGE>
Intermediate Fund
<TABLE>
<CAPTION>
Fiscal Years Ended August 31,
---------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.04 $ 9.76 $ 9.57 $ 9.72 $ 9.37
-------- ------- ------- ------- -------
INCOME FROM OPERATIONS:
Net investment income(1) .49 .53 .54 .53 .56
Net realized and unrealized gain (loss) (.35) .28 .20 (.14) .34
-------- ------- ------- ------- -------
Total From Operations .14 .81 .74 .39 .90
-------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from net investment income (.51) (.53) (.55) (.54) (.55)
Dividends from net realized gain on investments (.16) -- -- -- --
-------- ------- ------- ------- -------
Total Distributions (.67) (.53) (.55) (.54) (.55)
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 9.51 $ 10.04 $ 9.76 $ 9.57 $ 9.72
======== ======= ======= ======= =======
TOTAL RETURN (%) 1.36 8.64 8.00 4.12 10.05
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000 omitted) 71,550 76,691 53,834 41,518 33,893
Ratios to average net assets (%):
Operating expenses, net(2) .60 .60 .60 .60 .60
Operating expenses, gross(2) 1.11 1.13 1.30 1.38 1.67
Net investment income 5.02 5.51 5.78 5.57 6.29
Portfolio turnover (%) 304.47 244.58 242.76 221.73 26.31
</TABLE>
-----------
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) See Note 4 of the Annual Report for current period amounts.
39
<PAGE>
Bond Market Fund
<TABLE>
<CAPTION>
Fiscal Years/Period Ended August 31,
----------------------------------------------------
1999 1998 1997 1996++
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.35 $ 9.97 $ 9.63 $ 10.00
-------- -------- ------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .54 .55 .53 .27
Net realized and unrealized gain (loss) (.52) .40 .35 (.49)
-------- -------- ------- --------
Total Income From Operations .02 .95 .88 (.22)
-------- -------- ------- --------
DISTRIBUTIONS:
Dividends from net investment income (.54) (.54) (.54) (.15)
Dividends from net realized gain on investments (.20) (.03) -- --
-------- -------- ------- --------
Total Distributions (.74) (.57) (.54) (.15)
-------- -------- ------- --------
NET ASSET VALUE, END OF PERIOD $ 9.63 $ 10.35 $ 9.97 $ 9.63
======== ======== ======= ========
TOTAL RETURN (%)(2) .07 9.86 9.47 (2.19)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 269,284 190,151 87,670 29,015
Ratios to average net assets (%)(3):
Operating expenses, net(4) .50 .48 .50 .63
Operating expenses, gross(4) .50 .52 .74 .93
Net investment income 5.50 5.74 6.05 5.66
Portfolio turnover (%)(3) 327.83 300.77 375.72 253.30
</TABLE>
-----------
++ For the period February 7, 1996 (commencement of operations) to August 31,
1996.
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1996 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
40
<PAGE>
High Yield Bond Fund
<TABLE>
<CAPTION>
Fiscal Years/Periods
Ended August 31,
------------------------
1999 1998++
---------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.90 $ 10.00
------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .78 .18
Net realized and unrealized gain (loss) .30 (.24)
------- --------
Total Income Investment Operations 1.08 (.06)
------- --------
DISTRIBUTIONS:
Dividends from net investment income (.66) (.04)
------- --------
NET ASSET VALUE, END OF PERIOD $ 10.32 $ 9.90
======= ========
TOTAL RETURN (%)(2) 11.21 (.59)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 34,847 11,908
Ratios to average net assets (%)(3):
Operating expenses, net(4) .65 .65
Operating expenses, gross(4) .87 1.66
Net investment income 7.97 6.38
Portfolio turnover (%) 234.31 173.64
</TABLE>
-----------
+ For the period May 5, 1998 (commencement of operations) to August 31, 1998.
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1998 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
(5) The ratio for the period ended August 31, 1998 has not been annualized due
to the fund's short period of operations.
41
<PAGE>
Growth and Income Fund
<TABLE>
<CAPTION>
Fiscal Years Ended August 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.10 $ 18.08 $ 13.36 $ 11.95 $ 10.51
-------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .09 .11 .12 .15 .18
Net realized and unrealized gain (loss) 6.79 1.83 5.18 1.46 1.44
-------- -------- -------- -------- --------
Total Income From Operations 6.88 1.94 5.30 1.61 1.62
-------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.09) (.11) (.14) (.16) (.18)
Dividends from net realized gain on investments (2.36) (1.81) (.44) (.04) --
-------- -------- -------- -------- --------
Total Distributions (2.45) (1.92) (.58) (.20) (.18)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 22.53 $ 18.10 $ 18.08 $ 13.36 $ 11.95
======== ======== ======== ======== ========
TOTAL RETURN (%) 41.55 10.93 40.95 13.57 15.66
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 291,716 111,626 71,736 55,823 43,884
Ratios to average net assets (%):
Operating expenses, net(2) 1.03 .95 .95 .95 .95
Operating expenses, gross(2) 1.11 1.14 1.21 1.40 1.61
Net investment income .41 .57 .82 1.15 1.72
Portfolio turnover (%) 72.27 66.44 29.88 38.34 39.32
</TABLE>
-----------
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) See Note 4 of the Annual Report for current period amounts.
42
<PAGE>
S&P 500 Index Fund
<TABLE>
<CAPTION>
Fiscal Years Ended August 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 19.42 $ 18.96 $ 14.41 $ 12.81 $ 10.89
---------- ---------- ---------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .29 .31 .32 .32 .29
Net realized and unrealized gain (loss) 6.74 1.18 5.22 1.98 1.95
---------- ---------- ---------- -------- --------
Total From Operations 7.03 1.49 5.54 2.30 2.24
---------- ---------- ---------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.29) (.32) (.32) (.31) (.29)
Dividends from net realized gain on investment (2.42) (.71) (.67) (.39) (.03)
---------- ---------- ---------- -------- --------
Total Distributions (2.71) (1.03) (.99) (.70) (.32)
---------- ---------- ---------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 23.74 $ 19.42 $ 18.96 $ 14.41 $ 12.81
========== ========== ========== ======== ========
TOTAL RETURN (%) 39.52 7.91 40.30 18.46 21.11
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000 omitted) 2,673,963 1,615,913 1,299,571 704,683 545,200
Ratios to average net assets (%):
Operating expenses, net(2) .18 .17 .16 .18 .19
Operating expenses, gross(2) .28 .27 .26 .28 .29
Net investment income 1.29 1.50 2.00 2.32 2.76
Portfolio turnover (%) 13.80 26.17 7.54 28.72 38.56
</TABLE>
-----------
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) See Note 4 of the Annual Report for current period amounts.
43
<PAGE>
Matrix Equity Fund
<TABLE>
<CAPTION>
Fiscal Years Ended August 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.68 $ 18.41 $ 14.13 $ 13.93 $ 12.06
-------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .09 .17 .21 .24 .28
Net realized and unrealized gain (loss) 4.42 .29 5.43 1.64 1.93
-------- -------- -------- -------- --------
Total Income From Operations 4.51 .46 5.64 1.88 2.21
-------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.10) (.19) (.22) (.24) (.28)
Dividends from net realized gain on investments (2.58) (3.00) (1.14) (1.44) (.06)
-------- -------- -------- -------- --------
Total Distributions (2.68) (3.19) (1.36) (1.68) (.34)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 17.51 $ 15.68 $ 18.41 $ 14.13 $ 13.93
======== ======== ======== ======== ========
TOTAL RETURN (%) 32.83 2.09 42.75 14.67 18.81
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000 omitted) 557,029 445,077 429,397 261,888 198,341
Ratios to average net assets (%):
Operating expenses, net(2) .78 .69 .58 .66 .68
Operating expenses, gross(2) .94 .97 .96 1.04 1.06
Net investment income .52 .97 1.33 1.76 2.25
Portfolio turnover (%) 130.98 133.63 117.27 150.68 129.98
</TABLE>
-----------
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) See Note 4 of the Annual Report for current period amounts.
44
<PAGE>
Small Cap Fund
<TABLE>
<CAPTION>
Fiscal Years Ended August 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995*
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.96 $ 22.11 $ 17.44 $ 14.42 $ 11.88
-------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .03 .02 .03 .04 .13
Net realized and unrealized gain (loss) 1.78 (4.54) 5.87 3.25 3.19
-------- -------- -------- -------- --------
Total Income From Operations 1.81 (4.52) 5.90 3.29 3.32
-------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.02) (.04) (.01) (.07) (.15)
Dividends from net realized gain on investments -- (1.59) (1.22) (.20) (.63)
-------- -------- -------- -------- --------
Total Distributions (.02) (1.63) (1.23) (.27) (.78)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 17.75 $ 15.96 $ 22.11 $ 17.44 $ 14.42
======== ======== ======== ======== ========
TOTAL RETURN (%) 11.35 (22.32) 35.85 23.14 30.04
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 352,013 344,630 149,808 55,208 23,301
Ratios to average net assets (%):
Operating expenses, net 1.07 1.04 1.00 1.00 .97
Operating expenses, gross 1.07 1.04 1.09 1.18 1.58
Net investment income .17 .10 .18 .26 .81
Portfolio turnover (%) 110.82 86.13 143.79 76.85 192.88
</TABLE>
-----------
* Prior to November 22, 1994, the fund was passively managed as the S&P
Midcap Index Fund. Effective November 23, 1994, the fund increased the
management fee from .20% to .75% of its average daily net assets.
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
45
<PAGE>
Special Equity Fund
<TABLE>
<CAPTION>
Fiscal Year/Period
Ended August 31,
------------------------
1999 1998++
---------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.17 $ 10.00
------- --------
INCOME FROM OPERATIONS:
Net investment income(1) -- .01
Net realized and unrealized gain (loss) 2.01 (2.84)
------- --------
Total Income From Operations 2.01 (2.83)
------- --------
DISTRIBUTIONS
Dividends from net investment income (.01) --
------- --------
NET ASSET VALUE, END OF PERIOD $ 9.17 $ 7.17
======= ========
TOTAL RETURN (%)(2) 28.06 (28.30)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 10,621 13,146
Ratios to average net assets (%)(3):
Operating expenses, net(4) 1.10 1.10
Operating expenses, gross(4) 1.57 1.55
Net investment income .01 .24
Portfolio turnover (%)(3) 211.30 88.36
</TABLE>
-----------
++ For the period May 1, 1998 (commencement of operations) to August 31, 1998.
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1998 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
46
<PAGE>
Tuckerman Active REIT Fund
<TABLE>
<CAPTION>
Fiscal Year/Period
Ended August 31,
------------------------
1999 1998++
---------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.17 $ 10.00
------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .50 .15
Net realized and unrealized gain (loss) (.01) (1.94)
------- --------
Total Income From Operations .49 (1.79)
------- --------
DISTRIBUTIONS:
Dividends from net investment income (.58) (.04)
------- --------
NET ASSET VALUE, END OF PERIOD $ 8.08 $ 8.17
======= ========
TOTAL RETURN (%)(2) 6.09 (17.99)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 45,528 18,458
Ratios to average net assets (%)(3):
Operating expenses, net(4) 1.00 1.00
Operating expenses, gross(4) 1.09 1.38
Net investment income 6.25 5.21
Portfolio turnover (%)(3) 60.13 17.36
</TABLE>
-----------
++ For the period May 1, 1998 (commencement of operations) to August 31, 1998.
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1998 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
47
<PAGE>
Aggressive Equity Fund
<TABLE>
<CAPTION>
Fiscal
Period Ended
August 31,
-------------
1999++
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
--------
INCOME FROM OPERATIONS:
Net investment loss(1) (.04)
Net realized and unrealized gain (loss) 2.77
--------
Total Income From Operations 2.73
--------
NET ASSET VALUE, END OF PERIOD $ 12.73
========
TOTAL RETURN (%)(2) 27.30
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 7,185
Ratios to average net assets (%)(3):
Operating expenses, net(4) 1.10
Operating expenses, gross(4) 2.07
Net investment loss (.50)
Portfolio turnover rate (%)(2) 179.56
</TABLE>
-----------
++ For the period December 30, 1998 (commencement of operations) to August 31,
1999.
(1) Average month-end shares outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1999 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
48
<PAGE>
IAM SHARES Fund
<TABLE>
<CAPTION>
Fiscal
Period Ended
August 31,
-------------
1999++
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
--------
INCOME FROM OPERATIONS:
Net investment income(1) .02
Net realized and unrealized gain (loss) .12
--------
Total Income From Operations .14
--------
NET ASSET VALUE, END OF PERIOD $ 10.14
--------
TOTAL RETURN (%)(2) 1.40
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 60,316
Ratios to average net assets (%)(3):
Operating expenses, net(4) .65
Operating expenses, gross(4) .67
Net investment income .72
Portfolio turnover (%)(5) --
</TABLE>
-----------
++ For the period June 2, 1999 (commencement of operations) to August 31,
1999.
(1) Average month-end shares were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1999 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
(5) This rate is not meaningful due to the fund's short period of operation.
49
<PAGE>
Emerging Markets Fund
<TABLE>
<CAPTION>
Fiscal Years Ended August 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.52 $ 12.33 $ 10.87 $ 10.30 $ 11.45
-------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .15 .18 .12 .11 .14
Net realized and unrealized gain (loss) 4.07 (5.58) 1.51 .68 (1.19)
-------- -------- -------- -------- --------
Total From Investment Operations 4.22 (5.40) 1.63 .79 (1.05)
-------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.27) (.15) (.11) (.12) (.10)
Dividends from net realized gain on investment -- (.26) (.06) (.10) --
-------- -------- -------- -------- --------
Total Distributions (.27) (.41) (.17) (.22) (.10)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.47 $ 6.52 $ 12.33 $ 10.87 $ 10.30
======== ======== ======== ======== ========
TOTAL RETURN (%) 66.41 (45.36) 15.12 7.83 (9.28)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 335,655 206,370 252,708 120,216 68,385
Ratios to average net assets (%):
Operating expenses, net(2) 1.25 1.25 1.25 1.28 1.50
Operating expenses, gross 1.34 1.38 1.51 1.67 1.90
Net investment income 1.78 1.85 1.07 1.10 1.74
Portfolio turnover (%) 39.64 38.94 15.00 4.36 19.77
</TABLE>
-----------
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) See Note 4 of the Annual Report for current period amounts.
50
<PAGE>
Active International Fund
<TABLE>
<CAPTION>
Fiscal Years/Period Ended August 31,
------------------------------------------------------------------
1999 1998 1997 1996 1995++
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.24 $ 10.85 $ 10.96 $ 10.89 $ 10.00
------- -------- -------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .12 .16 .10 .36 .03
Net realized and unrealized gain (loss) 2.09 (1.13) .03 .28 .86
------- -------- -------- -------- --------
Total Income From Operations 2.21 (.97) .13 .64 .89
------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.39) (.15) (.18) (.57) --
Dividends from net realized gain on investments (.69) (.49) (.06) -- --
------- -------- -------- -------- --------
Total Distributions (1.08) (.64) (.24) (.57) --
------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.37 $ 9.24 $ 10.85 $ 10.96 $ 10.89
======= ======== ======== ======== ========
TOTAL RETURN (%)(2) 26.88 (9.50) 1.17 6.22 8.90
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 99,916 76,565 83,930 54,595 25,186
Ratios to average net assets (%)(3):
Operating expenses, net(4) 1.00 1.00 1.00 1.00 1.79
Operating expenses, gross(4) 1.37 1.29 1.40 1.47 2.56
Net investment income 1.30 1.23 1.12 1.16 1.11
Portfolio turnover rate (%)(3) 62.02 74.79 48.29 22.02 7.17
</TABLE>
-----------
++ For the period March 7, 1995 (commencement of operations) to August 31,
1995.
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1995 are annualized.
(4) See Note 4 of the Annual Repor for current period amounts.
51
<PAGE>
International Growth Opportunities Fund
<TABLE>
<CAPTION>
Fiscal Year/Period
Ended August 31,
------------------------
1999 1998++
---------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.42 $ 10.00
------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .11 .03
Net realized and unrealized gain (loss) 2.83 ( 1.61)
------- --------
Total Income From Operations 2.94 ( 1.58)
------- --------
DISTRIBUTIONS:
Dividends from net investment income (.05) --
------- --------
NET ASSET VALUE, END OF PERIOD $ 11.31 $ 8.42
======= ========
TOTAL RETURN (%)(2) 35.08 (15.80)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000 omitted) 53,416 22,966
Ratios to average net assets (%)(3):
Operating expenses, net(4) 1.10 1.10
Operating expenses, gross(4) 1.30 1.66
Net investment income 1.16 1.27
Portfolio turnover (%)(3) 39.19 17.24
</TABLE>
-----------
++ For the period May 1, 1998 (commencement of operations) to August 31, 1998.
(1) For the period subsequent to August 31, 1998, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1998 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
52
<PAGE>
Life Solutions Income and Growth Fund
<TABLE>
<CAPTION>
Fiscal Years/Period Ended August 31,
---------------------------------------
1999 1998 1997++
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.65 $ 12.93 $ 12.68
-------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .44 .46 --
Net realized and unrealized gain (loss) .95 (.01) .25
-------- -------- --------
Total Income From Operations 1.39 .45 .25
-------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.61) (.41) --
Dividends from net realized gain on investments (.50) (.32) --
-------- -------- --------
Total Distributions (1.11) (.73) --
-------- -------- --------
NET ASSET VALUE, END OF PERIOD 12.93 $ 12.65 $ 12.93
======== ======== ========
TOTAL RETURN (%)(2) 11.27 3.53 1.97
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000 omitted) 25,742 23,771 13,979
Ratios to average net assets (%)(3):
Operating expenses, net(4) .45 .45 .35
Operating expenses, gross(4) .50 .72 1.14
Net investment income 3.37 3.00 .16
Portfolio turnover (%)(3) 93.34 93.28 106.68
</TABLE>
-----------
++ For the period July 1, 1997 (commencement of operations) to August 31,
1997.
(1) For the periods subsequent to August 31, 1997, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1997 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
53
<PAGE>
Life Solutions Balanced Fund
<TABLE>
<CAPTION>
Fiscal Years/Period Ended August 31,
---------------------------------------
1999 1998 1997++
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.95 $ 13.98 $ 13.69
-------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .38 .50 --
Net realized and unrealized gain (loss) 1.84 (.45) .29
-------- -------- --------
Total Income From Operations 2.22 .05 .29
-------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.61) (.56) --
Dividends from net realized gain on investments (.76) (.52) --
-------- -------- --------
Total Distributions (1.37) (1.08) --
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.80 $ 12.95 $ 13.98
======== ======== ========
TOTAL RETURN (%)(2) 17.89 .33 2.12
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000 omitted) 99,092 90,804 47,003
Ratios to average net assets (%)(3):
Operating expenses, net(4) .28 .36 .35
Operating expenses, gross(4) .28 .36 .49
Net investment income 2.83 2.07 .07
Portfolio turnover (%)(3) 51.09 101.40 51.61
</TABLE>
-----------
++ For the period July 1, 1997 (commencement of operations) to August 31,
1997.
(1) For the periods subsequent to August 31, 1997, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1997 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
54
<PAGE>
Life Solutions Growth Fund
<TABLE>
<CAPTION>
Fiscal Years/Period Ended August 31,
---------------------------------------
1999 1998 1997++
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.02 $ 14.79 $ 14.44
-------- -------- --------
INCOME FROM OPERATIONS:
Net investment income(1) .26 .38 --
Net realized and unrealized gain (loss) 2.81 (.75) .35
-------- -------- --------
Total Income From Operations 3.07 (.37) .35
-------- -------- --------
DISTRIBUTIONS:
Dividends from net investment income (.55) (.71) --
Dividends from net realized gain on investments (.92) (.69) --
-------- -------- --------
Total Distributions (1.47) (1.40) --
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 14.62 $ 13.02 $ 14.79
======== ======== ========
TOTAL RETURN (%)(2) 24.72 (2.68) 2.42
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000 omitted) 65,018 53,432 43,603
Ratios to average net assets (%)(3):
Operating expenses, net(4) .38 .41 .35
Operating expenses, gross(4) .38 .41 .54
Net investment income 1.89 1.52 .09
Portfolio turnover (%)(3) 43.15 67.66 39.49
</TABLE>
-----------
++ For the period July 1, 1997 (commencement of operations) to August 31,
1997.
(1) For the periods subsequent to August 31, 1997, average month-end shares
outstanding were used for this calculation.
(2) Periods less than one year are not annualized.
(3) The ratios for the period ended August 31, 1997 are annualized.
(4) See Note 4 of the Annual Report for current period amounts.
55
<PAGE>
ADDITIONAL INFORMATION ABOUT THE SSgA FUNDS
A Statement of Additional Information includes additional information about
each fund. The Statements of Additional Information are incorporated into this
prospectus by reference.
Additional information about each fund's investments is available in each
fund's annual and semi-annual reports to shareholders. In each fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected each fund's performance during its last
fiscal year. The Statements of Additional Information and each fund's annual
and semi-annual reports are available, without charge, upon request. To request
a Statement of Additional Information, a fund's annual or semi-annual report,
other information about a fund or to make any shareholder inquiry, please
contact the SSgA Funds at:
Russell Fund Distributors, Inc.
One International Place
Boston, Massachusetts 02110
(800) 997-7327
You also can review and copy information about the fund, including the
Statement of Additional Information, at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. You can receive
information on the operation of the Public Reference Room by calling (800)
SEC-0330. Copies also may be obtained, upon payment of a duplicating fee, by
writing the Securities and Exchange Commission's Public Reference Section,
Washington, D.C. 20549-6009. The SEC also maintains a website (www.sec.gov)
that contains the Statement of Additional Information and other information
about the Funds. You may also access the SSgA Funds online at
www.ssgafunds.com.
SSgA Funds' Investment Company Act File No. 811-5430
